The James Joyce Table
Midas du Metropole
Topic du Jour
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Bundesbank Revelation A Huge Score For GATA
“Stand upright, speak thy thoughts, declare the truth thou hast, that all may share; be bold, proclaim it everywhere. They only live who dare”… Voltaire
GO GATA!!!
I am kicking myself. When gold was at $965 our STALKER source called and told me that one of their London traders was looking for gold to retreat to $940 and then take off for much greater heights. The reason I failed to bring it to your attention at the time was that it was a bit fuzzy and my MIDAS was ready to go for the day. Today’s low was $941.60.
Just got another call (and I am not sure this is from THE trader who has been so spot on for so long), the revised call is for $918/$920. He also said the investors for these traders have insisted that only a portion of the investment funds be traded … that a core gold position is to be kept all times.
What’s more important at the moment is his latest price prediction fits into place with what the STALKER’s star trader told us last Spring …that gold had topped out and wouldn’t really take off again until sometime near the end of summer. Veteran Café members know just how good this guy has been over the years.
Gold was neither here nor there this morning, although weaker, until we came into the Comex opening. Then…
Courtesy of Rob Kirby
Silver was hit hard at the same time. Most perturbing to long time tape watchers was that only gold and silver were making significant moves. The dollar and US interest rates were little changed, base metals (including copper) were on the move again to the upside, and oil was higher.
The bottom line: this was nothing more than an orchestrated Gold Cartel raid again … set into motion at the end of last week.
Is it another coincidence gold is getting smashed when we have another massive US Treasury auction this week? Doubt it! The yields on the 10 yr T note and 30 year bonds moved up sharply last week, with the 10 yr at 3.86%. One would think Summers and Geithner have to be a bit nervous about how these auctions will fare … SO MUCH supply.
To set the stage US so inflation is not a major issue, gold and silver are sent down ahead of time.
Andy over the weekend…
Re gold cot report
They obviously want a smash, but each time they try now the smashes have been smaller and quicker.
The COT’s were roughly identically short in early June (at $980 gold), and all they got was a very short-lived drop to $920 before gold rocketed right back to $970 early this week, and silver to $15.
I just can’t get myself too worked up about it. Not to mention, apparently the Treasury will be selling MORE bonds this coming week than last week, and at the long end of the yield curve, you know the one with far more inflation risk.
And with T-bonds closing at their lows this week, and stories everywhere showing that the Fed actually bought a big piece of the short-dated bonds, the Cartel will have their work cut out for them if they want another smash.
A
Dave from Denver…
This Comex open was so predictable
Ted Butler is dead wrong about the intent of Gary Gensler to regulate gold and silver futures trading. Amazing how blind he is to the ongoing corruption, for someone who is so knowledgeable about the silver market.
I wonder how this is going to unravel. The public is getting aggressively angry - witness the tempers flaring and some violence erupting at town hall meetings around the country held by Congressmen. The widespread corruption and massive ripping off of the taxpayer is becoming more obvious to all and it’s also become obvious, from Obama’s unprecendented first-six-month plunge in public approval ratings, that the public sees Obama for the fraud that he is.
I don’t know when the Comex blatant corruption will backfire on them, but it will be quite a sight to behold. Unfortunately it will also be accompanied by severely deteriorated living and societal conditions in this country. We will fully understand why guys like Jim Rogers left this country for Asia.
***
On a big picture note…
Bill,
A major historical timing cycle for Gold begins on 8-11. As such, Gold should take off to the upside. However, the Gartman boat anchor is currently tied to Gold along with another massive Treasury auction this week. Let’s see if the cartel can push aside another cycle of nature.
Joe M.
Speaking of big picture, a central aspect of GATA’s assertions is that over the past decade+ central bank gold has been surreptitiously mobilized and fed into the physical marketplace. This excess supply has kept the price far lower than where it would have been otherwise and has depleted the central bank coffers, leaving them with less than half the gold they say they have.
What sent a hoard of GATA consultants and supporters into our camp were the British gold sales announced in May 1999. They made no sense in the way they were announced and in the manner in which the gold would be sold. Ironically, in this case it was the fact they weren’t kept unannounced which was the obvious problem.
Then in April 2001 James Turk reported that the 1700 tonnes of US gold reserves at West Point were re-classified from “Gold Bullion Reserve” to “Custodial Gold,” … just those reserves, not the rest of the 8130 tonnes in Denver and Fort Knox. Now what does “custodial” mean to you? GATA made a big stink at the time, and not long after, the US Mint changed the name of all US gold reserves.
Simply put, GATA felt at the time that US gold was swapped to be put into play to keep the price of gold down. Let us revisit some excerpts from James Turk’s brilliant piece written so long ago…
Letter No. 283
April 23, 2001
Behind Closed Doors
by James Turk
© by The Freemarket Gold & Money Report
…Let’s put one and one together here to see if we can come up with an answer. According to Virgil Mattingly, the ESF has authorized gold swaps, presumably in the recent past (circa 1995). According to Ted Truman, the only outstanding swap facility of the ESF (circa 1995) other than the one established for Mexico is their facility with the Bundesbank. Ergo, the ESF has a gold swap facility with the Bundesbank.
It’s an interesting proposition, and one that fits well with another newly discovered fact. Some very interesting sleuthing by Mike Bolser, who has been assisting Reg Howe in his lawsuit against the BIS, has revealed that the Treasury has made a small but very significant accounting change. Mike noticed that the Treasury Department has changed the designation of nearly 1700 tonnes of inventoried gold at the US Mint’s facility in West Point, New York (approximately 21% of the total US Gold Reserve) from “Gold Bullion Reserve” to “Custodial Gold”.
The August 2000 Status Report on US Treasury Owned Gold stored at West Point has a designation of “Gold Bullion Reserve”. See: 207.87.26.43/gold/00-08.html. But the September 2000 and subsequent status reports inexplicably designate this same gold that is stored at the US Mint in West Point as “Custodial Gold”. See: 207.87.26.43/gold/00-09.html
This change was made without explanation, so rather than let the matter remain unexplained, Mike diligently contacted the Treasury asking what seemingly are two uncomplicated questions. Would the Treasury please explain why they made this change, and what does this change in designation mean with respect to the ownership status of the gold at West Point?
They are simple questions, but perhaps they touch too close to a nerve. Not surprisingly, the Treasury so far has not responded to Mike. I have some views on what Mike discovered, and why the Treasury is so quiet about it. I think this change in asset classification is related to the ESF gold swaps. Here’s my thinking.
The change Mike spotted possibly occurred as a result of accountants looking at the financial statements of the US Mint being prepared for its annual report ending fiscal year 2000. Note that the previous director of the Mint (Phillip Diehl) resigned in early 2000, so this was the first annual report signed by the new director (Jay Johnson). If there is one thing that government bureaucrats do well, they take great pains to call things by their right name. To do otherwise would put their job in jeopardy if something under their responsibility came under Congressional scrutiny, and it was subsequently determined that the name assigned to something was incorrect or misleading.
Therefore, this change in the descriptive label for nearly 1,700 tonnes of gold at West Point from “Gold Bullion Reserve” to “Custodial Gold” was purposeful. It happened for a reason. This conclusion is all the more plausible because the Treasury did not change the classification from “Gold Bullion Reserve” to “Custodial Gold” to describe the gold stored in Fort Knox or at the US Mint in Denver. Maybe new US Mint director Johnson saw something he didn’t like. What could that have been?
I’ve already put one-and-one together to establish that the ESF has “gold swaps” with the Bundesbank. It therefore does not require much conjecture to add one supposition to the equation by concluding that the gold in West Point has been swapped with gold owned by the Bundesbank, thereby necessitating its reclassification from “Gold Bullion Reserve” to “Custodial Gold”. Here’s what I think has happened.
The Treasury Department wanted to make gold available to some bullion banks. This statement is based on my basic premise that several of the big banks have gold books that are hopelessly imbalanced. By having borrowed short and loaned long, these banks have in their quest for profits imprudently fallen into the alluring but usually fatal banker’s deathtrap – a mismatched loan book. But what’s worse for these banks, it is even more difficult and treacherous to try extricating themselves from this particular deathtrap because they haven’t mismatched their loan book of dollars, which we all know can be created by the Federal Reserve ‘out of thin air’ if dollars are needed to bailout banks from a deathtrap predicament. Instead, these banks have mismatched their gold book. And no one – not even the Federal Reserve – can create gold out of thin air.
So given this reality about the nature of gold, the Treasury had to turn elsewhere to find the gold necessary (1) to keep these banks from defaulting on their bullion obligations arising from their mismatched gold books in an environment where metal had become increasingly difficult to come by and/or (2) to keep the gold price low so that the likelihood of default by the banks would be lessened, even though metal would remain tight because fabrication year after year was exceeding newly mined supply. Rather than accept the bitter pill that certain banks were about to default on their bullion obligations, the Treasury looked for alternatives and found one – they put their hand into the till, until recently known as the Gold Bullion Reserve at West Point. They swapped this gold with the Bundesbank. I’ll explain how they did it, but let’s first consider the practical aspects of this transaction.
In all likelihood, these particular bullion banks needed gold in Europe where their obligations were originally established. There is very little gold lending in New York. It is a practical problem to ship the gold out of West Point without raising the alarm of government auditors. It is costly too. Also, it is likely that some of the gold in West Point is coin-melt from the 1933 gold confiscation. Even if it could be smuggled out of the West Point vault into the market without raising suspicions, the alarm bells would go off at the refiner and soon thereafter in the market because everyone knows that only the US government has coin-melt bars. The appearance of coin-melt bars in the market would immediately raise suspicions that the US Gold Reserve was being dishoarded, an outcome that the Treasury would obviously take steps to avoid in concocting its scheme because the US Gold Reserve cannot be depleted without Congressional approval. Therefore, one is faced with the practical considerations of overcoming these hurdles, but the answer is relatively simple.
The Treasury has gold in West Point. The Bundesbank has gold in Europe. The Treasury cannot directly do a deal with the Bundesbank because unlike the ESF, the Treasury is subject to Congressional oversight. So instead the Secretary of the Treasury and the President decide to use the ESF to set up a swap line for gold with the Bundesbank.
By so doing, the gold in the Bundesbank’s vault in Europe becomes ESF gold, to do with as they please – i.e., the ESF lends this metal to bailout certain bullion banks. And the Bundesbank now owns the gold in West Point, which as a result was purposefully re-classified from Gold Bullion Reserve to Custodial Gold because the Treasury no longer owns this gold, having swapped it out through the ESF in exchange for gold in Europe owned by the Bundesbank. Case closed. The mystery of the abnormally low gold price is solved. The ESF did it.
The abnormally low gold price is the result of the mounting irrefutable evidence that the ESF is deeply involved in the gold market, and I do mean deep. They are involved in some 1,700 tonnes worth because that is the weight of gold stored in West Point, which was probably being swapped at the rate of a few hundred tonnes per year from circa 1995 through 2000. There are two other tidbits that I would like to share with you that add even more validity to this supposition.
First, a couple of months ago I was analyzing the 1998 and 1999 balance sheets of the ESF. Being an ex-banker, I know a little bit about accounting, including where to find the big holes through which the proverbial truck can be driven. And suffice it to say, I found one of those, which could suggest that in these two years 975 tonnes of gold came into the market from the ESF. Interestingly, after reaching this conclusion, I wanted to test it. So I called a top gold market expert whose supply/demand analyses are second to none, and who believes that gold from the US reserves has been coming into the market for several years.
Without telling him about my analysis of the ESF balance sheet, I asked him how much gold he thought came out of the Treasury/ESF in 1998 and 1999 in total. His response was 1,000 tonnes, a mere 25 tonnes difference from what I deduced from the ESF financial statements. When I told him this, that we had both reached the same conclusion from different sources, he chuckled but was not in the least bit surprised, being so convinced that the Treasury/ESF has been a major source of metal for years. I have thoroughly reviewed his supply/demand numbers since 1994 and have determined that as much as 2,000 tonnes of gold from the US reserve may have entered the market in order to make the gold price as low as it is, which leads me to the second tidbit that I would like to share with you. It is just as intriguing.
This same individual told me several months ago about some astonishing intelligence he had learned from a source in Europe. He told me that the Bundesbank’s gold vault was empty, which seemed so preposterous that I found it hard to believe. He also admitted that this news startled him when he learned about it, and that he did not have an adequate explanation for it. He knew that the Bundesbank was an active lender of gold, but he had a difficult time accepting the possibility that all 3,400 tonnes that it owned had been loaned. Yet he was confident that his source had provided him with accurate information.
We now know what has happened. The Bundesbank has loaned 1,700 tonnes, one-half of its 3,400 tonnes reserve; the other 1,700 tonnes were swapped for gold in the US reserves, requiring the change in the West Point vault from Gold Bullion Reserve to Custodial Gold. In other words, the Bundesbank’s vault is empty because one-half of their gold is stored in West Point not Europe, and the other half has been loaned out…
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A few weeks later we held our GATA African Gold Summit in Durban, South Africa and that was the bottom of the market with gold at $256 at the time.
Now we can fast forward (so many years later) to this weekend and the dispatch put out by CP…
Germany’s gold is in U.S. custody, Bundesbank confirms
International journalist Max Keiser has just posted a nine-minute documentary he has done about the British government’s gold sales that were begun in 1999 and now are disparaged as “Brown’s Bottom,” after then-Chancellor, now-Prime Minister Gordon Brown, who decided upon the sales and remains unashamed that they marked the bottom of the gold market. Keiser’s documentary is based largely on an interview with Conservative Party opposition Member of Parliament Phillip Hammond, who is shadow chief secretary of the treasury and who remarks that the British gold sales seem to have been structured precisely to knock the price of gold down rather than to maximize the return to the British government. Hammond also wonders aloud whether “something other than achieving the best price” might have been the objective of the gold sales scheme.
But Keiser’s documentary may be sensational for getting an acknowledgement from the German central bank, the Bundesbank, that Germany’s gold reserves are actually in the custody of the United States. This is a detail the Bundesbank long has denied to others who have inquired and is potentially a matter of great controversy in Germany. It raises the question of whether the German gold reserves are actually intact at all or whether they have been used by the U.S. government as part of its long-time gold price suppression scheme or have been comingled and diminished with the gold reserves of other countries held in the United States.
While Keiser’s documentary does not identify the Bundesbank spokesman who confirmed the transfer of the German gold reserves to New York, it does provide the date and location of the confirmation: March 17, 2008, at Bundesbank headquarters in Frankfurt. The documentary shows that Keiser was there and got the interview.
After his interview at the Bundesbank, Keiser remarks: “The most fascinating thing I’ve heard is that all the gold in Germany is in New York.” Indeed.
Keiser’s documentary is titled “Brown’s Bottom” and you can watch it at YouTube here:
www.youtube.com/watch?v=EzVhzoAqMhU
-END-
This is no minor revelation as it confirms a major thesis of GATA’s work. MORE importantly for Café readers, it is further confirmation that much of central bank gold is no longer there. It is in the jewelry boxes of Indian women around the world, etc. It also supports our notion the central banks are gradually running out of available gold to manipulate the price. Slowly, but surely, they are hitting the wall … which is another reason why the European central banks are withdrawing from the market.
With mine supply headed lower and demand for gold headed higher, we are headed for an air pocket when there won’t be enough central bank gold available to prevent the price from going bonkers. This air pocket is also likely to set off a short squeeze.
Bottom line: the ups and downs of late are just noise … the prelude before the fireworks start. The GATA camp has been right the last nine years about what gold would do and why. All of us are predicting MUCH MUCH higher prices. My long held forecast is for $3,000 to $5,000 per ounce. The latest revelation from the Bundesbank ought to be of comfort for all of us on days like this
