Tag Archives: paper gold

The Traitors Who Enable The Deep State’s Dying War On Gold

Stewart Dougherty returns with another guest post. I am grateful for the time and effort Mr. Dougherty puts into his articles for the purpose of shining a light on the truth.

Evidence is mounting that the Deep State (DS) is starting to lose the dirtiest financial war in history: their War on Gold. More deeply, it is a war against something the Deep State profoundly loathes: personal financial liberty. The War on Gold, which has raged for 37+ years, has generated more than $1 trillion in criminal profits for the Deep State plunderers, while costing the worldwide owners of physical gold multiple trillions of dollars. All of this is coming to an end.

Due to its criminal hyper-manipulation, gold’s price has become a paradox: its weakness actually reflects its strength. With everything that has been thrown at it, it is astounding that its price is anything north of zero. The fact that it has been resilient at around $1,200.00 per ounce should concern the manipulators, because if this is as low as they can take it despite their full-spectrum, multi-billion dollar assault against it, then it is defeating them. Which is not surprising. By every conceivable, objective financial and monetary measure, gold is one of the most underpriced assets on earth. It is not going to stay that way. (Most of the dynamics we will discuss also apply to silver, but to streamline this article, we will focus on gold.)

The Deep State’s first strategic objective in the War on Gold has been to steal as much money as possible by conspiratorially rigging its price. They have perpetrated this crime in the full knowledge that it will never be investigated or prosecuted, because it is state sponsored. The Deep State is the state, and never prosecutes itself for its own crimes, no matter how flagrant and egregious they are.

The second, broader strategic objective has been to discredit gold as a monetary asset and safe financial haven throughout the west. The Deep State realized at the outset of the war that it would be impossible to achieve this in the east, which has a deep, cultural affinity for gold, so they have confined this gambit the west.

There are eight primary tactics in the War on Gold.  TO CONTINUE READING CLICK HERE: TRAITORS/GOLD

Is Demand For Physical Gold Really Collapsing?

Seriously? “Simon Black” (it’s a nom de plume) wrote an article titled “Demand For Physical Is Collapsing.”  He focused on retail bullion demand numbers. The headline and the content is largely fake news as it focuses on the demand for minted coins vs the paper gold market. We’re not really sure about the intent of article, but the content was devoid of any relevance to the actual global demand for physical gold.

While the retail minted coin and small-size bar demand is down from last year’s levels, there’s two factors to explain this. First is price. The price of gold and silver was lower in early 2016 than it is now. The price of gold in February 2017 averaged $1230-$1240 while the price of gold a year ago February averaged $1175. Retail buyers of gold/silver coins are highly sensitive to price and tend to chase the price higher, up to a point. On this basis, it’s not surprising that more minted coins were sold a year ago compared to this year. This “price effect” on the demand for retail gold and silver coins likely explains about 25% of the demand comparison between 2016 and now.

The second factor is the economy. Remember, the end user of minted bullion products is largely the retail buyer.  In the first two months of 2017, real wages have declined. Even more negative for retail sales of any sort is the fact that real disposable income has been declining on a year over basis since December 2015:

While we at the Shadow of Truth do not consider buying and owning bullion to be “discretionary,” retail sales, including sales of bullion coins, is highly dependent on the relative level of real disposable income. Thus once again it should not surprise, based on just looking at retail demand for physical bullion, that retail bullion sales are falling.

On the other hand, the Black article purports the idea that retail bullion sales represents global demand for gold and silver. Nothing could be further from the truth. Retail demand at the margin has no affect on price other than maybe the price premiums in the coin market based on mint supply and retail demand.

The majority of gold bullion demand comes from the jewelry industry, eastern hemisphere Central Banks and sophisticated wealthy and institutional investors. India and China alone import more gold than is produced from mines globally. This is why Black’s “paper gold” price is rising. It’s why the BIS and western Central Banks have failed to eliminate the significance of gold in the global monetary system.

Gold imports into India jumped 175% in February from February 2016 to 96.4 tonnes (LINK). In fact, official gold imports into India have been rising since December.  And that does not include dore bars or smuggled gold.  179 tonnes of gold was withdrawn from the Shanghai Gold Exchange in February.  This is 60% higher than February 2016.  The Russian Central Bank gold reserves have been rising almost monthly since mid-2007.

To claim that the global demand for physical gold is collapsing is seeded in either ignorance or  mal-intent.  But either way, the assertion is outright idiotic when the facts are examined, which we do in today’s episode of the Shadow of Truth:

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Indian Gold Imports In February Tripled

Mehul Choksi, chairman of jewellery store chain Gitanjali Gems Ltd., is quoted as saying: “We expect some heavy buying in April as a large number of weddings are expected to take place. – LINK

Legal Indian gold imports jumped up to 96.4 tonnes in February vs. February 2016. These numbers come from the finance ministry and not the World Gold Council or bullion banks. This reinforces the observations by many that the BIS-directed attempt to curtail Indian gold demand by removing cash from the financial system has failed.  Gresham’s Law in action.   This number also does not include smuggled gold which, based on the increase in airport arrests so far in 2017, has ramped up considerably.

Amusingly, Cititgroup is forecasting total 2017 demand in India to be 725 tonnes.  This number is laughable.  Smuggling alone is thought to account for about 300 tonnes per year of gold going in to India.  As a bullion bank with an untenable paper gold short position, Citigroup can only dream that India’s gold importation will be that low in 2017.

There will be a big “snap-back” effect on India’s gold demand after the brief intervention by the Government in late 2016.  Based on yesterday’s response in the paper gold market in NYC after the Fed’s rate hike announcement, it seems that the western Central Banks/bullion banks are losing control of the bullion market.

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The Deep State’s Gold Scam And The Demonization Of Russia

To me, what’s really going on needs to be explained to people or they are going to completely give up on the hope of finding / preserving a way to protect their financial freedom … in other words, getting out of the corrupt monetary system and into metals, while they still can.

This price pummeling [of gold and silver this week] is absolutely state-of-the-art Psy-Op…managed by the Fed and Bank State, using the most sophisticated techniques developed over decades by the CIA and related agencies. – Stewart Dougherty in an email exchange about his latest article

Must-read Guest Post from Stewart Dougherty

As the Fiscal Year 2018 budget, and particularly its war component are floated, it has become clear that without continued, massive military spending, paid for with mass-produced electrons masquerading as money, U. S. GDP would collapse, taking the country’s financial and monetary systems with it. The nation, whose real economy has been hollowed out, for profit, by the Deep State plunderers, has become significantly reliant upon deliberately contrived wars and military tensions for its economic survival.

With systemic monetary risk now at an unprecedented level, intensified by a new, partisan, “politics of defeat,” scorched earth agenda being implemented by those displeased with the results of the 2016 election, there has never been a more dangerous time for people to denominate their wealth in unbacked, baseless, debt-drugged dollars.

The absolute last thing the Deep State, and particularly its Banking Division (the Bank State), can allow the people to figure out at this time is that there is a far more safe, secure and potentially profitable way for them to position their financial assets than dollar-denominated bank deposits: precious metals. A widespread movement into metals at this time would damage the Bank State and its umbrella organization, the Deep State, because their future profits require the control and progressive expropriation of the people’s money.

Therefore, a March rate hike is guaranteed, for three primary reasons. First, precious metals prices must be pummeled as much as possible, in order to scare uninformed people away from the easy, safe and logical financial refuge metals provide. Even though the “rates up, metals prices down” reflexive reaction is absurd, it has been baked into the trading algorithms so that it will occur no matter what other factors might be in play when rates are increased. Strategic Deep State price fraud, which is perpetrated by internationally signaled, time-coordinated and algorithmic inside trading, ensures that metals prices can reliably be controlled. At least for now. When physical demand finally increases in a material way, the price fixing fraud will collapse.

Second, the Bank State must increase the incentive for people to keep their money in its institutions, while it pushes forward, as fast as possible, with its cash elimination agenda. Once cash is eliminated, the banks will no longer have to worry about bank runs, which would otherwise be historic when the  wheels coming flying off the thoroughly debauched monetary system, an event we view as inevitable.

Third, the Federal Reserve System is now 100% politicized, and run by sneaky, die-hard political ideologues who lie about why they do what they do and what they really think. Those who run the Fed are despondent that despite implementing for eight YEARS an interest rate policy specifically designed to enable Obama to create a totally false illusion of economic “recovery” by massively increasing government spending with trillions of phony, deficit, zero-interest-rate “dollars,” the people saw through the economic lie and defeated the Fed’s next intended puppet, Clinton.

Yellen, Fischer and the other partisan Fed governors are simply not going to allow Trump to turn around, in a matter of months, an economy that the Deep State and the Fed have systematically been looting, at mind-boggling and astronomical profit to themselves, for the past decade. Nor are they going to allow Trump to bask in DJIA-record glory. Therefore, the power- and money-obsessed functionaries at the Fed and within the Deep State, who all totally buy into the scorched earth agenda, are going to bring down the economy and markets, even if it means that every single private pension fund and the net worth of every non-connected citizen collapses with it. They couldn’t care less about that, as we are about to see, because they will have a scapegoat for what they, themselves have wrought: Trump. The Fed, in league with many others, is now doing everything in its power to rig the 2018 mid-term elections, in order to live up to its Sole Mandate, which is the preservation of political power.

While we deeply admire what President Trump is trying to do to expose to the people and turn around the fake economy in which the nation is drowning, we believe the challenge of reversing, in the short amount of time available to him, decades’ worth of asset stripping, corruption and for-profit economic destruction is beyond extreme. And the constant political obstructionism he is up against, which is increasingly treasonous, might make the achievement of his worthy objective impossible.

With this as our backdrop, let us move on to the geopolitics of gold, which while it might seem abstract and removed, we believe is highly relevant to your personal financial situation.

Aside from being tedious, politicized and baseless drama, the ongoing demonization of Russia, particularly with respect to its so-called rigging of the 2016 U.S. Presidential election, makes no common sense. But it makes perfect Deep State sense. It is about war-mongering, global destabilization, internationalized looting and the continued plunder of the American people, the for-profit enterprises in which the Deep State specializes.

We believe that there is actually a more specific reason for the demonization of Russia than the above, usual suspects. This is a case where one should not just follow the money; one should follow the gold.

For the past fifteen plus years, physical gold supplies have been like Lazarus: they keep rising from the Dead. Just when it appears that a serious supply-demand imbalance is about to precipitate futures market delivery problems and therefore increased prices, supply miraculously appears out of nowhere to alleviate the shortage and stabilize or depress prices.

This surprise supply has primarily come from sovereign central banks: for example, 1,500 metric tonnes from one-time sound money nation Switzerland; 600 from France; 430 from the United Kingdom (most at the bear market’s absolute low price of around $255.00/ ounce; central bank “genius” for all to see); 300 from Netherlands; 225 from Portugal; 240 from Spain; 180 from Venezuela and counting; 90 from Brazil. And the list goes on.

Each sovereign sale has produced needed physical gold at times of supply – demand imbalance, many of which have been critical. This has enabled the paper gold price manipulation fraud to persist without any failures to deliver or the need to set a true, as opposed to fake gold price. A delivery failure, even a minor one, would expose and terminate the Deep State’s enormously profitable price rigging fraud, and has therefore been prevented at all cost.

The Deep State’s overthrow of legitimate, sovereign governments has been another means by which needed gold supply has been injected into the pipeline. After Libya was overthrown, 143 tonnes of the nation’s gold disappeared. Dozens of additional tonnes disappeared from Iraq subsequent to its invasion.

Ukraine provides another example. Immediately after Neocon, Deep State functionary and State Department plant Victoria “F**k the EU” Nuland launched the for-profit coup d’etat in Ukraine, 43 tonnes of the nation’s gold, worth $1.7 billion at $1,200 per ounce, were airlifted out of the country in the middle of the night and went missing.

(As a side note, it is worth mentioning that while the cargo plane’s exhaust was dissipating into the Ukrainian atmosphere, Vice President Biden’s storied son, Hunter, miraculously appeared on the Board of Directors of Burisma Holdings, the largest private natural gas producer in Ukraine. Biden was joined by close friend Devon Archer, a lead fundraiser for by-then Secretary of State John Kerry’s 2004 presidential bid. Archer is also the former college roommate and current business partner of Kerry’s stepson, Christopher Heinz (an heir to the H. J. Heinz fortune). These two ascendancies to Burisma’s Board were curious, given that Biden and Archer had no natural gas production or Ukrainian business experience whatsoever, did not speak one word of Ukrainian and had never previously stepped foot in the country. This gives us better insight into the true nature of the Deep State’s murderous, gold-seeking and highly profitable coups.)

While the perfectly-timed materializations of sovereign gold have plugged the Delivery Failure dike at various critical moments, there have been two persistent demand problems that have bedeviled the Deep State’s designs: Russia and China.

China’s official gold reserves surged from 395 tonnes in Q2, 2000 to 1,838 tonnes in Q3, 2016. This number, impressive in itself, dramatically understates China’s actual, official gold reserves, which many well-informed analysts put at 5,000 tonnes, minimum. China’s official reserves do not include the thousands of additional tonnes imported into the country for the private sector during the same period.

While the Deep State routinely pummels the paper price of gold both to mint fraudulent profits on the futures exchanges and scare financially naïve western citizens away from it, the Chinese government urges its citizens to buy gold, which they do by the millions of ounces. The Chinese government knows what is coming, and wants its citizens to be prepared. Apparently, capitalism and communism have traded places, which will result in an exorbitant cost to the people of the west.

Meantime, Russia’s gold supply increased from 343 tonnes in Q2 2000 to 1543 tonnes in Q3, 2016.

Remarkably, it increased by 508 tonnes from Q1, 2014 to Q3, 2016, alone. This occurred when Russian sanctions, which were intended to destroy Russia’s economy and currency, were in place. The sanctions were not only expected to halt Russia’s ongoing gold purchases, but also force them to sell some or all of their existing reserves in order to raise cash, which is exactly what Venezuela has been forced to do since early 2014.

Chess Master Putin went in the exact opposite direction, by dramatically increasing the nation’s purchases of gold. This was unexpected and has put the Deep State on the defensive. It had counted on fresh supply from Russian to keep the supply – demand balance in equilibrium, and to prevent the Delivery Failure dike from breaching.

One way the Deep State reacted to Russia’s unexpected, continued demand was to engineer the out-of-nowhere Indian rupee demonetization, which stripped the Indian people of the cash they have traditionally used to purchase gold. This plan was effective at reducing Indian gold demand in the beginning, but is now backfiring, just as the attempt to reduce Russian gold demand backfired.

If China and Russia continue to buy gold at current rates, the only way the Deep State’s paper gold price manipulation fraud can continue is if other sovereign gold reserves are put into play, or, if physical demand is somehow diminished. While the Deep State is pursuing both tactics, their options are shrinking.

Even though sovereign gold sale risks remain, the value of nations’ reserves at the current fake price of gold is absolutely meaningless when compared to their exploding debts.

For example, Italy’s 2,452 tonnes of gold are worth $95 billion at $1,200 per ounce; the government’s debt is $2.45 trillion. France’s 2,436 tonnes are worth about the same, $95 billion; it national debt is $2.44 trillion. The same situation exists in virtually every western nation. Therefore, even if these countries were to sell all of their gold, it would not buy them any meaningful or lasting fiscal or financial relief whatsoever. There has never been a more pointless time for nations to sell their gold, particularly at today’s fake price.

To further amplify this point, the United States is reported to own 8,133 tonnes of gold, supposedly the world’s largest stockpile. (We disagree; to us, the arithmetic is clear that China now owns more.) This is the equivalent of 261.5 million ounces troy ounces, or about 0.82 troy ounces per citizen. At $1,200 per ounce, the reserve is worth $314 billion. The nation’s actual, annual deficits are roughly $1 trillion per year, more than three times the value of the entire gold reserve. The nation’s existing debt and contingent, unfunded liabilities exceed $200 trillion. Therefore, the nation’s gold supply could only pay off 0.16%, or one sixth of one percent of the nation’s current obligations. If it has not already done so, the United States could sell every ounce of the people’s gold and it would not make one bit of difference to the nation’s fiscal situation.

The U.S. gold reserve has not been professionally, comprehensively audited since 1953. We will not go into the U.S. gold audit topic here, because it has already been well documented. You can find the details with a simple search, if you wish to learn more. But we would like to point out something that is not typically noted.

In order to create positive “optics,” the United States government consistently massages, manipulates and even totally misrepresents a wide variety of financial, economic and monetary statistics (such as GDP, unemployment, inflation, money supply, interest rates, retail sales and many others). These positive optics are viewed as being crucial to preserving confidence in the nation’s economy and fiat currency.

Accordingly, one would expect that if the United States gold reserve actually exists, physically and unencumbered, the government would go out of its way to prove and advertise it, in order to create the favorable optics it spends so much time and effort engineering about everything else.

Instead, they refuse to conduct a professional audit, invoking the truly ridiculous excuse that it would be too costly to do so. One specialist has estimated that a comprehensive, independent audit would cost $10 million, which is approximately 1 MINUTE of federal spending, literally. So the expense excuse makes no common sense, and arouses serious and legitimate suspicion about the true state of America’s gold reserve.

The foregoing factors help explain the intensifying demonization and scapegoating of Russia. The Deep State needs to prevent Russia from continuing to buy gold in quantity, and is therefore intensifying its efforts to damage the country’s reputation, economy and currency.

Based on these and several other factors, the Inferential Analytics model is signaling that there is a strong probability the Deep State’s gold price manipulation fraud is dying, and that the imbalance in physical gold supply is becoming systemic and reaching a point where it can no longer be bridged with sovereign, stolen or fake supplies. This increases the risk of futures market delivery failure. The occurrence of any significant endogenous event at this time, such as an unexpected military, social, economic or financial disruption, that provokes a further reduction in supply or even a modest increase in demand, would dramatically increase the probability of delivery failure and a resulting, necessary, sharp increase in the price of gold.

The fact that the paper gold price manipulation fraud is reaching the end of the line due to deteriorating supply – demand fundamentals is exactly why we are seeing a radical, concurrent Deep State escalation of the War on Cash. Cashlessness is the Deep State’s upcoming Looting Field, and is designed to replace Gold market price fixing as its next, organized, long-term method of plunder. The elimination of cash will result in the largest looting spree ever orchestrated by the Deep State.

Every time the Deep State hatches a new looting scheme, they dress it up in false righteousness, phony morality and motherhood. In the case of cash elimination, they say it is needed to fight terrorism, drug laundering, tax evasion and crime. This is a huge, concocted, pre-packaged lie; the same kind that Hitler and Goebbels used. Hitler said and proved that if you make the lie big, and repeat it again and again, the people will come to believe it. This is the exact kind of lie the Deep State is telling to push its corrupt, greed-diseased, epically evil cash elimination scam.

While the Deep State demonizes Russia to perpetuate its gold price fixing profit center for as long as possible, it is simultaneously building, as fast as it can maximum security prisons for the people’s money. For the bricks, they intend to use your cash; for the mortar, they are mixing a stinking amalgam of their lies, corruption and greed. We can be sure of one thing: if we allow them to imprison our money in their cashless prisons, they will grind it into oblivion by fees and fraud, and our financial slavery will become inescapable. Please, do not underestimate what is happening all around you, and use your current quasi-freedom wisely.

Stewart Dougherty
March 2, 2017

Stewart Dougherty is the creator of Inferential Analytics (IA), a forecasting method that applies to events proprietary, time-tested principles of human instinct, desire and action. In his view, forecasting methods not fundamentally based upon principles of human action are unlikely to be reliable over time. He is a graduate of Tufts University (BA) and Harvard Business School (MBA), is a 35+ year veteran of the business trenches and has developed IA over a period of 15+ years.

Bill Murphy: The Fundamentals Will Push Gold & Silver To Spectacular Levels

“Some sort of Black Swan event will come out of nowhere and cause an explosive move in gold and silver” – Bill Murphy on Shadow of Truth

In the absence of intervention, gold and silver would be trading at a level that is a few multiples higher from they “trade” now. At some point, some entity will want to take possession of a big “chunk” of gold or silver and will stand for delivery of the physical with the intent to remove that gold or silver from Comex vaults.

For now the big accumulators of physical gold (China, Russia, India) are content with the current rigged market price of gold as long as the west can continue to make deliveries into these countries. But at some point the west’s “cupboard” will be bare and big buyers will see what the Comex really has in its vaults. It’s at that point when the precious metals market will become interesting.

There is always the threat that the Shanghai Gold Exchange begins arbitraging out the price difference between the physical market (eastern hemisphere) and paper market (Comex, LBMA). Currentlysilver trades in China’s physical settlement market (Shanghai Futures Exchange) at a significant premium to the price on the COMEX paper market. The week of October 17, 2016 the average difference was well above $0.80 per ounce. This represents approximately a 45% difference. How large must the difference become before the physical market naturally overwhelms the paper market? The difference in the physical gold market is not quiet as dramatic as the physical silver market, but it seems a natural progression will occur in the not too distant future. The physical market is filled with people that are not interested in paper contracts. These people are in real markets located in the eastern hemisphere – China, India and other countries. In these countries gold is either part of the culture or there is an understanding of gold’s role as a currency.

In today’s episode with GATA/LeMetropolecafe.com’s Bill “Midas” Murphy about the extreme intervention in the precious metals market and the catalysts that will eventually override the Central Bank intervention.

Paper Gold Is Legalized Fraud

A lot of questions were raised when it was reported that Deutsche Borse failed to deliver physical gold in exchange for its Xetra-Gold Notes.  But the only real answer to those questions is simple:  the only way you ever own physical gold is if you buy actual physical gold and take possession.

The allegations that Xetra-Gold or Deutsche Bank or Deutsche Borse committed fraud or failed to deliver gold are strictly false.  One thorough reading of the Xetra-Gold prospectus dispels those allegations.  The prospectus little more than a blanket legal disclaimer.   The language is clear.  It says right in the prospectus that the an investment in the Notes “does not constitute a purchase or other acquisition of Gold.”  There is not case for fraud because none of the participants in Deutsche Borse, and Deutsche Borse itself, did not commit any breach of contract per the terms of the prospectus.

The term “economic” in the prospectus is defined (pg 12) to mean that the “bears the market risk associated therewith. If the gold price decreases, provided that all other conditions remain unchanged, such decrease may result in a partial or complete depreciation of the invested capital. If the gold price increases, provided that all other conditions remain unchanged, such increase may result in an increase in the invested capital.

In this latest episode of the Shadow of Truth we discuss why buying paper forms of gold like GLD or Xetra-Gold is nothing more than an investment in a paper claim to the rate of return on gold during the period in which you own the security.  If you don’t hold your gold in your own possession, you don’t own it:

There Is No Default Or Fraud Committed On The Xetra-Gold Securities

Anyone who purchases paper gold with the belief that it is an investment in gold is an imbecile.

Last week Zerohedge broke a story about an investor who tried to redeem shares in Xetra-Gold “notes” in exchange for the designated amount of gold represented by those notes. The story gained legs on the internet as a “refused delivery” and a “delivery default.”  I received several inquiries about this and my only response was that someone needs to go through the prospectus in order to determine what type of event has occurred.

I went through the prospectus and so far, everything published on the internet, including any claims made by Zerohedge, are reckless, useless and incorrect.   Here’s a link to the prospectus:  Xetra-Gold Notes.   Ultimately, there has not been a legal default. Furthermore, here has not been any fraud committed because there has not been any breach of contract.

Let’s start with some facts directly from the prospectus.   1)  The Issuer is Deutsche Borse Commodities GmbH;  2) The Custodian is Clearstream Banking AG;  3)  The Debtor of the Gold Delivery Claims is Umicore AG.   That latter aspect is interesting.  Unicore is a Swiss metals refiner and trader.   Any claims of failure to deliver  should be directed at Unicore. The securities in question are unsecured Notes of the Issuer and the only “asset” of the Issuer is a “claim for delivery of one gram of Gold in accordance with the Terms and Conditions.”  That’s it, there are not any other assets in Deutsche Borse Commodities GmbH.

Deutsche  Bank is one of the redemption agents.  But Zerohedge labelled Deutsche Bank as a “Designated Sponsor” as if it meant that DB had obligations beyond what was defined by the prospectus.  In fact, DB is a “designated sponsor in the electronic trading system” of the notes.  In other words, DB is the primary market maker in the trading of the securities.   Nowhere in the prospectus does it specify that DB is obligated to fulfill delivery of gold in exchange for redeemed Xetra-Gold Notes.  Note:  This is not a defense of DB – I regard DB as one of the most vile and corrupt banks on earth;  but legal facts are facts that need to understood and regarded.

Here’s the other relevant facts:   1)   The purchasers of the Notes will only acquire the rights securitised by the Notes. The purchasers of the Notes will not acquire any title to, or security interests or beneficial ownership in, the physical Gold held in custody on behalf of the Issuer. An investment in the Notes does not constitute a purchase or other acquisition of Gold.   This means that the notes are unsecured and the only right is to submit a claim against Unicore, the Debtor of the Gold Delivery Claims.  Good luck with that.

2) The gold price is determined based on demand for and supply of gold. The value of the Notes is a function of the demand for and supply of the Notes as such. This distinguishes an investment in the Notes from a direct investment in gold. The purchasers of the Notes will only acquire the rights  securitised by the Notes. The purchasers of the Notes will not acquire any title to, or security interests or beneficial ownership in, the physical Gold held in custody on behalf of the Issuer. An investment in the Notes does not constitute a purchase or other acquisition of Gold. This means that you are investing in paper plus the right to make a delivery claim.

3)  Deutsche Bank AG is not, in any way, obliged to protect the interests of the investors.  That’s self-explanatory and it is legal refutation of all of the accusations made against DB by reckless blog posts.

4) Umicore AG & Co. KG as the responsible agent for all physical delivery processes in connection with the Notes and in its capacity as the Debtor of the Gold Delivery Claims will be actively trading in gold. This activity may also lead to various potential and actual conflicts of interests. Umicore AG & Co. KG is not obliged to decide any such conflict of interests in favour of the investors, but will in connection with the trading in gold take such decisions and measures at its sole discretion as it may deem
necessary or expedient to protect its own interests and will act in this context as if the Notes did not exist.   That basically says that if you expect to be guaranteed delivery of gold when you send your notes to Deutsche Bank, who is a redemption agent, then pay your lawyer to file a claim in German and Swiss courts.

The prospectus makes it very clear that the purpose of the notes is to make profits for the entities who are the shareholders in Deutsche  Borse.   In that regard, the prospectus states that:  The only business activity of Deutsche Börse Commodities GmbH is the ongoing issuance of the Notes which are the subject matter of this Prospectus and transactions associated with such issuance. All activities resulting from the issue of the Notes, e.g., the safekeeping of Gold and the fulfilment of claims for delivery of holders, have been outsourced by the Issuer to third parties.  Those third  parties are generally the shareholders of Deutsche Borse.

The bottom line on the failed delivery incident reported by Zerohedge and strangulated by several other blogs is that Deutsche Bank has no obligation with respect to delivering gold to any note-holder who submits the paperwork required to redeem notes for gold other than to pass on the request to Umicore, which is specified as “the responsible agent for all physical delivery processes in connection with the Notes.”  In fact, the prospectus reiterates that “Deutsche Bank AG is not, in any way, obligated to protect the interests of investors.”

It goes on to state that Unicore, in its capacity as Debtor of the Gold Delivery Claims, will be actively trading in gold and that “this activity may also lead to various potential and actual conflicts of interests. Unicore AG & Co. KG is not obliged to decide any such conflict of interests in favour of the investors, but will in connection with the trading in gold take such decisions and measures at its sole discretion as it may deem necessary or expedient to protect its own interests and will act in this context as if the Notes did not exist.”

With the above as legal context, I’m not surprised that Deutsche Bank did not offer any remedy when it was asked to respond to the allegations of a failed delivery of gold.  In fact, the prospectus does not contain any specific remedies in this case.   The only possible conclusion is that there has been a “breach of morals and ethics.”   Boo hoo.

Ironically, the Xetra-Gold notes have more loopholes and lack of investor protections than GLD.  Anyone who buys GLD thinking they are investing in gold is an idiot.  What does that make anyone investing in Xetra-Gold with the belief that it’s an investment in gold?

The easy conclusion in this situation is that the entities that are involved in Xetra-Gold do not have the gold that is supposed to be delivered.  That’s probably the most likely explanation but unfortunately the prospectus does not specify any legal remedies.  I guess a gold-delivery-note-holder could file a lawsuit against the Issuer and Unicore.  Until someone with deep pockets who is interested in truth discovery takes that initiative, we are left with no definitive explanations.

They’re Making It Easier To Buy Gold Cheap

To begin with, this statement by the Bank of Japan’s Kuroda validates my blog post yesterday about Japan’s monetary pivot to gold and to the east:  “no need and no possibility for helicopter money.”

My best guess is that the only productive activity for Bernanke on his last trip to Japan was eating blowfish sushi and hitting the teenage stripper establishments.

The manipulators are making it easier for us to accumulate gold at a cheap price.  I moved money from my fiat checking account into Bitgold every day this week and twice yesterday. I managed to catch what looks like the low of this latest manipulated pullback.  Every time they hit gold I buy.

I exchanged emails with Dr. Paul Craig Roberts yesterday about the  sell-off of the price of gold this week caused by the obvious “invisible” hand of the Fed.  Note this was a week in which Japan was supposedly going to drop $100 billion in helicopter money at Ben Bernanke’s behest – an announcement which should have sent gold soaring:

Me:   I agree this was a manipulated take-down of the price but,  you know as well anyone, markets never go straight up except the Dow/S&P 500 when the Fed wants to make those indices go straight up – like now.    Gold was overdue for a trading correction. I agree there’s some idiots out there who think the Fed is powerless now over gold – that’s ignorance or sensationalism.

Dr. Roberts:   Is there such a thing as a trading correction when the price is controlled and manipulated? Is it a trading correction when the bullion banks dump, as we have shown numerous times, massive paper shorts in the futures market?

Me:  I agree with your point there – but to be honest, I like to see any market pullback after it has the type of run that gold has had since early February. Should it be pulling back from a much higher price platform? Yes.  But gold was on the verge of going parabolic, which is never healthy in any market. The Fed is doing us a favor. I have been moving a lot of money from my checking account into my Bitgold account this week every morning. If gold was not being pushed down, I might not have added any.

The other interesting aspect of your point there is the amount of paper the Fed is needing to throw at gold to keep the price down. The open interest has been more or less at an all-time high on the Comex for a few weeks now. The last time the open interest was this high was when gold was pushing $1900.

In other words, it is requiring a much bigger relative effort for the Fed to prevent the price of gold from spinning out of its control now than it did when gold was about to launch over $2000.

They have not lost complete control yet, but they are much closer to that event now than they were in 2011.

On another note, the fact that the SPX spiked higher on the original Japan helicopter money announcement but has not sold off on the withdrawal of that threat underscores that fact that the Fed is pulling out all stops to push the market higher

But this is just the “marquee” indices – the Dow, SPX and Naz – as plenty of stocks have been and are heading lower because the core economy in the U.S. is falling apart.

 

The Audit The Fed Movement In Congress Is A Joke

CNBC announced yesterday that “The ‘audit the Fed’ movement is taking a big step in Congress this week.”  Only here’s the problem:

The bill seeks not a financial exam of the U.S. central bank but rather a peek behind the curtain of how monetary decision-making happens.   LINK

The first time I read that, it me left somewhat stunned.  “A peek behind the curtain” of how monetary decisions happen?  Seriously?  I think we get to see this in action every day between FOMC meetings, when the various Federal Reserve retards step up to the podium to drool all over themselves as they as mumble incoherently about raising interest rates at the next meeting.  In fact, just today some chode from the Atlanta Fed named Lockhart stated that:

June certainly could be a meeting at which action could be taken. I think it is a little early at second-quarter data to draw a conclusion, so I am at this stage inconclusive about how I am going to be thinking about June, but I wouldn’t take it off the table.

Here’s SF Fed Head John Williams – this is just priceless:   “I think the incoming data have actually been quite good and reassuring in terms of policy decisions, so, in my view, June is a live meeting.”

Really John, June is going to a “live” meeting?  Does that mean that the rest of them have been fake?   From where are you getting your data- the toy chest at your dentist’s office?

I hope that guy didn’t actually  have to pay for his education because it was a colossal waste of money if he did.  Do we really need Congress wasting time passing legislation to mandate a “peek” at that?

I just don’t understand how these Fed officials can threaten to raise rates predicated on the economic “data” that’s being released.   It’s childish. Everyone knows the Fed can’t raise rates without collapsing the house of cards it has created.  The sharp sell-off in the Untitledstock market today was attributed to the turret’s syndrome outbursts by these two idiots. But nothing could be further from the truth.  The market sold off today in a reversal of the manipulated spike higher yesterday.  The momentum-chasing computer algos began dumping the historically overvalued shares they gobbled up yesterday.

One of the big banks issued a study a couple weeks ago which showed that the only entities buying stocks right now are pension funds.  “Smart” money is dumping shares at an unprecedented rate and really smart money is getting extremely net short and/or loading up on gold (it was revealed yesterday in an SEC filing that Soros Funds made gold its largest holding).

I said 12 years ago that the last asset remaining  after housing for the elitists to loot would be the retirement assets.   It’s starting:  severely underfunded pension funds loading up on the overvalued stocks being dumped by insiders and “smart” money.  “Underfunded” is a socially polite way to say “the pension fund has a big debt obligation to future beneficiaries.”  An underfunded pension fund buying stocks on margin is no different than someone buying stocks in a IRA on margin, only the latter is not allowed by law.

An audit of the Fed will NEVER happen.  This country will collapse before any kind of reform or change is ever possible.  I knew the possibility of an audit of any substance died the very first time Ron Paul tried to pull a proposal through the House Financial Services Committee.  Chairman Barney Frank sat on it before deciding to use it as toilet paper.

What do we need an audit for anyway?  Everyone knows the Fed does not have the gold that it claims to be “safekeeping” on behalf of the U.S. Treasury.   The Fed knows everyone knows.   But as long as no one forces the Fed to open up its “deep storage” vaults, everyone can keep pretending that the gold is there.

A reader asked this question today:  “if naked shorts are allowed to be dumped on the Gold and Silver exchanges without any regard for reality, how can the companies that are shorting be stopped from shorting? It seems to me they control the deck and the rules on the Comex and CFTC have been tailored to allow them to manipulate the market and if that is the case what can stop them?”

My answer is that the physical market will eventually cause a massive default by the naked shorts.  But my view for the last 15 years has been that the U.S. will start a world war before it is forced by the physical market  to reveal the truth.  I stand by that call.   A non-audit of the Fed is likely deferring the inevitable…

Guest Post: Precious Metals Bull Snorts, Resumes Move

The character of the precious metals market has changed.  The manipulation efforts using paper derivatives masquerading as gold and silver futures contracts is losing traction.  I believe that the supply/demand dynamic in the physical gold and silver market is beginning to drive the price.  Control over the price of the metals is likely shifting from NY/London to Moscow and Shanghai.  I’ll have more to say about soon.

The  News Doctor’s Eric Dubin posted commentary and analysis of the blatant paper attack on the price of gold and silver that took place about 40 minutes into the floor trading session on the Comex on Thursday morning (April 21).  The initial price attack occurred in the space of about seven minutes in which $2 billion of paper gold and 1,218 tonnes of paper silver were  dumped on the Comex.   Over the last five years,  an attack like this was usually the start of bigger systematic price-takedown of the precious metals over a period of several days.  However, in the last couple of months, the market seems to shrug off these paper attacks and head higher.

“We’re setting up for an epic battle, and if silver keeps motoring forward, we may very well have an $18 handle on silver smack in the middle of the expiring contracts window.  Buckle-up!  There’s going to be fireworks, one way or another” – Eric Dubin, The News Doctors  You can read the rest of Eric’s commentary here:   The Precious Metals Bull 

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