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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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Gold & Silver Soar After The Fed’s Clown Show
Stocks rally as the Fed once again shows how clueless they are at trying to manage the economy. – from @Stalingrad & Poorski
The Federal Reserve’s FOMC predictably nudged the Fed Funds rate up 25 basis points (one quarter of one percent) to set its “target” Fed Funds rate level at .75%-1%. Nine of the faux-economists voted in favor of and one, Minneapolis Fed’s Neil Kashkari, voted against the meaningless rate hike.
Or is it meaningless? Ex-Goldman Sachs banker Neil Kashkari was one of the Treasury’s Assistant Secretaries when the Government made the decision to bail out Wall Street’s biggest banks with nearly $1 trillion in taxpayer money. It was also when the Fed dropped the Fed Funds rate from about 5% to near-zero percent. Despite Yellen’s official stance that the economy is expanding and the labor market is “tight” (with 37% of the working age population not considered part of the Labor Force – a little more than 94 million people) Kashkari voted against the tiny bump in interest rates. This is likely because he is fully aware of risk to the banking system – perched catastrophically on hundreds of trillions in debt and derivatives – of moving interest rates higher.
The Fed’s goal is to “normalize” interest rates. The financial media and Wall Street analysts embrace and discuss this idea of “normalized” interest rates but never define exactly what that means. For the better part of the Fed’s existence, the “rule of thumb” was that long term rates (e.g. the 10-yr Treasury rate) should be about 3% above the rate of inflation. And the Fed Funds rates should be equal to or slightly above the rate of inflation.
Using the Government’s highly rigged CPI index, it implies the Fed Funds rate would be “normalized” at approximately 2.7% and the 10-yr bond around 6% based on Wednesday’s CPI report. Currently the Fed Funds rate is 3/4 – 1% and the 10-yr is 2.5%. Of course, since the early 1970’s, the CPI calculation has been continuously reconstructed in order to hide the true rate of price inflation. For instance, the current CPI index does not properly account for the rising cost of housing, education, healthcare and automobiles.
John Williams’ of Shadowstat.com keeps track of price inflation using the methodology used by the Government to calculate the CPI in 1990 and 1980. Using just the 1990 methodology, the rate of price inflation is 6.3%. This would imply that a “normalized” Fed Funds rate would be around 6.5% and the 10-yr bond yield should be around 9.5%. So much for this idea of “normalizing” interest rates. Using the Government’s 1980 CPI methodology, Williams calculates that the stated CPI would be 10.3%.
Most of the hyperinflated money supply has been directed into stocks, bonds and real estate. But based on the cost of a basket of groceries, healthcare and housing alone, price inflation is accelerating. If the Fed were to “normalize” interest rates at 6.3%, it would crash the financial and economic system. In other words, the Fed is powerless to use monetary policy in order to promote price stability, which is one of its mandates.
In today’s episode of the Shadow of Truth, we discuss the insanity that has gripped the markets as symbolized by the Federal Reserve’s FOMC meetings:
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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Gold & Silver Manipulation: The Biggest Financial Crime In History
Investment Research Dynamics is pleased to present another truth-seeking missile launched by Stewart Dougherty:
This crime is already 285 times bigger than the LIBOR scandal, and 500 times bigger than Madoff’s swindle. It is, in fact, the largest, most destructive financial crime in history.
According to the mainstream financial media (MFM), the biggest financial frauds in history are the Bernie Madoff Ponzi scheme, with roughly $20 billion in net investor losses, and the Bank State rigging of LIBOR, which resulted in 16 guilty banks paying $35 billion in fines, which supposedly equated to their theft.
The MFM have conveniently ignored a far larger financial crime that has been perpetrated for 37 years and counting, and that has netted its orchestrators more than $1,000,000,000,000.00 ($1 trillion) in stolen profits. This crime is so powerful that it can produce fraudulent proceeds of $1+ billion on demand and in minutes, making it unique in the annals of theft. It is a crime that has been committed literally thousands of times since 1980, and is now being committed in the most blatant and brazen manner ever. This crime is already 285 times bigger than the LIBOR scandal, and 500 times bigger than Madoff’s swindle. It is, in fact, the largest, most destructive financial crime in history.
To read the rest of this, please click here: Gold & Silver Manipulation
Can Valeant Go To Zero?
Valeant (VRX) stock is now at $10. After a brief, Roman Candle launch to $260, $10 is the level where it traded in early 2009. It may be one of the few stocks that has gone back its financial crisis trading level. It is now likely on a long, slow death march to zero.
It was reported that Bill Ackman has completely liquidated his Pershing Square hedge fund position in VRX. Any institutional investment manager or pension fund who left its investment in Pershing Square long enough to see this happen should be investigated for breach of fiduciary duty. Ackman’s fund reportedly lost over $4 billion in VRX. I suspect that number was massaged to the low side for public consumption purposes.
I began to look at VRX with a fine-tooth comb just about 12 months ago. On March 15, 2016, I wrote: “The SEC Should Suspend VRX Trading: The Company Smells Like Enron.” The stock had dropped fro $260 to $37 in less than a year:
The initial triggers were concerns over the Valeant’s drug-pricing policies and questions surrounding its methodology for booking revenues. However, with just a casual “look under the hood” at VRX’s SEC-filed financials, there is likely a great deal of fraud lurking beneath what’s already been questioned. In fact, this is starting to smell a lot like Enron or Bear Stearns. The only component missing from this story is a CNBC rant from Cramer issuing a table-pounding buy on VRX stock. That may yet occur.
To begin with, the Company is carrying $30.2 billion in long term debt against just $9 billion of tangible assets. $39 billion of VRX’s assets is in the form of goodwill and intangibles. VRX’s self-assessed book value is $6.4 billion. But VRX’s tangible book value is negative $32.6 billion.
On March 18, 2016, I wrote: “Valeant (VRX): ‘Hope’ Is Not A Valid Investment Strategy,” after the stock had dropped another 28% from March 15th:
VRX will not default because the banks will grant as much leeway to VRX as is needed to keep the corpse alive. At this point in time, VRX’s assets likely are worth enough to cover the bank debt obligations. Just like a vampire would want to keep a body warm and the pulse ticking while sucking out the blood, the banks will hold up VRX in order to get as much money out as possible.
Of course, the longer this drags out, the uglier it will become for all economically interested parties. Because there’s accounting and disclosure fraud involved, we can expect the class-action shareholder lawsuits to pile up once the lawyers get a whiff of the blood being sucked out by the banks.Untitled
But keeping VRX alive for creditor purposes won’t help the stock. At this stage in the game, VRX stock will descend – sometimes quickly, sometimes slowly – below $10. In other words, VRX’s stock has entered the Irreversible Debt Spiral.
On April 5, 2016, I wrote: “Valeant (VRX): The Short Seller’s ATM Machine” after the stock popped up on news that an “internal review” showed that its books were clean. There’s that “hope” trade again:
The Company’s declaration that its financials are now valid is based on a review of the matter conducted by a committee that was composed of VRX’s board of directors. In no way can the case be made that this review was in any respect independent or “arm’s length.” This is another trait of a Company that is on the ropes: self-declared exoneration.
Without a doubt, the path of VRX’s stock to much lower stock prices will be littered with news-driven price-spikes like today. This is why VRX stock is a short-seller’s ATM. Every spike can be shorted for short-term profits. Make sure to hold on to some amount of a “core” position in order to profit from the next eventual new-driven waterfall. This is how similar stocks before VRX – like Enron, Bear Stearns, Countrywide FInancial, etc – traded until they finally dropped below $10.
Over the next few months I followed the VRX drama including its attempted asset sales. The Company was unloading “core” businesses for a fraction of the price it had paid for them over the previous few years. To this day I can not understand how: 1) Ackman continued to throw good money after bad in an attempt to prop up a house of cards and 2) how Ackman’s investors allowed him to continue throwing good money after bad. It only took one detailed review of VRX’s business history and 10-K to see that VRX was quite similar to Enron.
The Valeant saga is emblematic of the entire U.S. political, economic and financial system. The entire system is enveloped by the criminality of the people and entities running it – a criminality cloaked in catastrophically unpayable debt and now blatant fraud. It was a similar environment in this country when Enron imploded and those of us who understood what was happening had hoped that Enron would be the warning signal to everyone that would inspire the badly needed reform. Unfortunately, Greenspan inflated an even bigger fraudulent asset bubble than the one he had previously inflated that had led to Enron. You know the rest of the story from there.
Now our system is beset with a monetary and debt bubble that has inflated all asset classes beyond any conceivably recognizable “intrinsic” value. The Valeants and Enrons were fair warning and no one listened. The next collapse is going to dwarf the implosion of the two asset bubbles that preceded it. Fortunately, for those who are willing to “see” and accept this inevitable fate, gold and silver (precious metals) is the one asset class that has been fraudulently held down well below their intrinsic value.
If you are still holding on to some Valeant stock, let go of that insanely irrational “hope,” sell your shares and use the money to buy some gold and silver.
The U.S. System Needs To Reset – It Will Be Painful
In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists, and will persist. – from President Eisenhower’s final speech from the White House
To anyone who has researched the facts in search of “the truth,” it’s painfully obvious that the U.S. political and financial system needs to be reset. The most productive way to do this would be be build a wall around Capitol Hill and Wall Street, burn them to the ground and move the new Government capitol somewhere far from the east coast. It many ways, it’s quite fitting that the U.S. Government is physically situated on what was formerly swamp land because the Government itself has become nothing but a murky, filthy and foul smelling entity populated by horrifyingly corrupt creatures. Sub-humans, if you will.
At the bottom of this sewage is a nebulous conglomeration known as the “Deep State.” The Deep State is an amalgamation of the Defense Department, CIA, NSA, the biggest corporations (Big Pharma, Big Tech, Big Oil, Big Defense, Big Media) and Wall Street. Orwell’s infamous “Thought Police” is the mainstream media. The mainstream media is controlled primarily by six big corporate conglomerates and 95% of what gets reported is a highly controlled substance mistaken by the masses as “news.” Put it on CNN or report in the New York Times and it must be true.
Unfortunately, Eisenhower’s warning about the military industrial complex fell on the deaf ears of an ever-more complacent American populace. And now that military industrial complex has become a terminal cancer that has taken over the political system and replaced it with a hybrid form of Crony Capitalism and Totalitarian rule.
This process began in 1913, with the founding of the Federal Reserve. Taking control of a population and confiscating its wealth begins with taking control of the money supply. Without even realizing it, we use the U.S. dollar as currency because of a law that was imposed upon us by the Government. The dollar has no intrinsic value other than the “full faith and credit” of the U.S. Government. The dollars are created and issued by a Federal Reserve with a de facto negative balance sheet net worth.
But the joke’s on us. While 99% of the populace in the U.S. regards gold and silver as barbarous relics that just “sit there” doing nothing, gold and silver to this day remain the only form of Constitutionally authorized money for settling debts. In the U.S. Constitution, Article 1, Section 10 states: No State shall emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts.
In today’s episode of the Shadow of Truth, we tie the evolution of the Deep State to the erection of the Federal Reserve and the extinguishment of the gold standard:
Bank Loans Take A Dive: It’s The Economy, Stupid
I am compelled to correct a report posted on Zerohedge about the cliff-dive going on in commercial, industrial and consumer loans. The report in ZH suggested the plunge is connected to two possibilities: 1) this one from a Wall Street sleazebag from Barclays: “it is possible that companies have shifted from the loan to the bond market, and are selling more bonds to lock in cheap financing before rates rise, while not encumbering assets with issuing unsecured debt;” and 2) political uncertainty connected to Trump.
The first possibility could have some small amount of legitimacy except that if you parse through all the data available at the Fed, you’ll see that bank credit has plunged across the entire spectrum of U.S. business (I used size of loan as the proxy). Smaller businesses do not have access to public credit markets and thus the first explanation is the typical apology for a negative economic report that we would expect from a Wall Street con-artist. Furthermore, some people are forgetting that this decline of bank loans could be down to the fact that there are now more options for people to get loans. More people are looking into loans like the smaller Auto Title Loans as a way to get quick money rather than look to the banks for help. This is happening all over the world, with Swedens using snabblån utan UC to help when they are looking for some quick cash and others using payday lenders. The second possibility is part of the anti-Trump narrative found in the fake news reports coming from the ignorant.
“It’s The Economy, Stupid”
That quote was created by James Carville as one of Bill Clinton’s campaign slogans in 1992. Those words ring even truer today. A primary example is the restaurant industry numbers discussed above. “Hope” and “confidence” do not generate economic activity. And “hope” is not a valid investment strategy. A better guide to what’s happening to economic activity on Main Street is to see what banks are doing with their lending capital. I borrowed the two graphs below from the @DonDraperClone Twitter feed (click to enlarge):
Commercial bank lending is a great barometer of economic activity. For more information on secured commercial lending, go to this website. It could help you if you’re the sort of business looking for financial assistance to help with growth. The top graph above shows the year over year percentage change in commercial and industrial loans for all commercial banks. You can see that the rate of bank lending to businesses is falling doing a cliff-dive. These are primarily senior secured and revolving credit loans that sit at the top of the capital structure. If bank lending is slowing down like this, it means two things: 1) the ability of businesses to repay new loans is declining and 2) the asset values used to secure new loans will likely decline. Most companies now are opting for small loans with loan companies and not banks, such as https://xn--sm-ln-nrac.com/. In fact, it is highly probable that the tightening of credit by the banks is a directive from the Fed. Yes, the Fed. Despite its public commentary suggesting otherwise, the Fed knows as well as anyone that the economy is tanking. This is why the Fed can’t hike rates up to a level that would bring real interest rates up to at a “neutral” level (using a real price inflation measure, Fed Funds needs to be reset to at least 6%, and likely higher, to get the real rate of interest up to zero).
The only reason the Fed might “nudge” interest rates higher next week is for credibility purposes. Everyone knows inflation is escalating, which makes it difficult for the Fed to keep interest rates so close to zero. In addition, a rate hike now, even though it will be insignificant in magnitude, will give the Fed room to take rates back to zero when the public and Congress begin to scream about economy.
The second graph shows the year over year percentage change in auto loans. The implications there are fairly self-explanatory. Auto sales are slowing down because the “universe” of potential prime and subprime rated car buyers, new and used cars, has been largely exhausted. In fact, with the default rate on subprime auto loans beginning to hit double-digits, the next phase in the automobile credit market will likely be credit implosion crisis.
The above commentary was an excerpt from the latest issue of the Short Seller’s Journal.
What Will Catch The Falling Housing Market Knife This Time?
“There’s so much inventory, and that influx is hitting across all price points, even studios.” – director of leasing at Douglas Elliman (NYC). NYC was one of the first markets hit hard in 2007-2008.
For awhile, any weakness in the NYC housing market was attributed exclusively to the high end. I am on record stating that price dynamic would spread to all price segments. It’s not rocket-science, it’s simple supply/demand/price economics. Studio rents in NYC dropped the most on record in February. This same dynamic is also beginning to happen in many of the other hottest cities across the country. To compound the spreading price weakness in the rental market, a record number of new units will hit the markets coast to coast over the next two years. It would be a mistake to assume that price weakness in the apartment market will not affect the home rental market. Again, the laws of supply, demand, price, income and substitution will once again invade the entire housing market and take sales volume and prices lower.
Eventually the housing market implosion that occurred in 2008 will repeat, only this time it will likely be worse. Why? Because the institutional money that soaked up most of the foreclosed inventory are either fully invested in the asset class or outright selling down their buy-to-rent portfolios. Where will the money come from to catch the falling housing knife again?
Interest rates were dropped from 5% in 2008 to zero percent. This created a reservoir of cheap capital with which to fund new homebuyers with marginal credit. The cheap money and reduced requirements to qualify for a Government-backed mortgage (FHA, FNM, FRE) transformed a subprime borrower in 2008 into a prime/conventional buyer by 2015. While it may not look exactly like the junk mortgages issued by the likes of Countrywide et al during the big housing bubble, most of the low-to-no-to-borrowed down payment agency mortgages issued to the average homebuyer look quite similar in terms of absolute debt to income and income to monthly payment ratios. Just like more than 50% of American households are unable to write a $500 emergency payment check, many of the new homeowners in the last 2-3 years are living on the edge of defaulting on either their car payment, their mortgage payment or both.
A fairly large proportion of the home “buyers” over the last couple of years have been mom and pop speculators looking to “get in” on flipping or buying and renting. A large percentage of that cohort has been using debt to finance their flips/investments. When the music stops, many of these buyers will be left without a buyer or renter. Again, this is similar to the dynamic that unfolded in the housing market leading up to the 2008 collapse.
The above analysis is an excerpt from the latest Short Seller’s Journal, released earlier today. There’s a lot more information and analysis, most of it not found in your primary alternative media websites or in the mainstream media. The issue also has two primary short ideas and a couple other ongoing short trades highlighted plus ideas for using options. SSJ is a weekly, email-delivery based subscription service. Subscribers also have the option of subscribing to the Mining Stock Journal for half-price. To learn more, click here: Short Seller’s Journal
Hugo Salinas Price: The World Will Hyperinflate Into A Gold Standard
If one can only see value in paper currency terms, one cannot see value at all
Hugo Salinas Price – website link – posted a couple of comments on Stewart Dougherty’s guest post earlier this week. I concluded that his insights needed to be shared on the front of this blog and he gave me permission to edit them together to make them easier to read for everyone. “I know my comment was complex but I wanted to condense the thoughts I have developed over three decades:”
I would like to take this chance to share a few of my thoughts on this. To me it is pretty clear that the American gold is encumbered. Not because of the usual reasons found on the web but because America defaulted on its gold under the Nixon administration. There are still, many foreign claims on that gold. If America starts to use that gold officially, the gold vultures, like the bond vulture funds, will be out en masse and with force. So it is in America’s best interest to ignore that gold – and gold in general.
The world has (finally) realized that a country with the reserve currency is not something a country should want and that the dollar can fail. The danger is that it will fail to soon. That is why the euro was created for example. The currencies from the individual countries were all issued from the US treasury. Meaning that if the dollar went the way of the dodo, the European currencies would die with it. Enter the euro, issued from gold [the euro was originally partially backed by gold]. The gold held by the ECB is priced on a mark to market basis. You can check the website of the ECB, its number one asset is listed as gold and, sadly, gold receivables [meaning that gold is leased out]. Most of the Eurasian landmass followed this initiative
Seems to me the world is ready to hyperinflate into gold. After all, all currencies have already hyperinflated in the financial world. When the run on real things happens, as a system operator, you don’t want that since a functioning printing press is worth way more than gold. So you want to guide the hyperinflation into a useless metal and use this gold to help equalize the tradeflows. They cannot implement a global political & economic system when things are unstable because it will fail again and soon. Just as all reserve currencies did since late 1400. If I were in the position of the globalists, I would aim for the Roman model. Split the money concept. Currency for spending and settling debts but use gold and silver as a final debt extinguisher. This would function to prevent the kind of mess the EU countries are now in. The debts of the south are the assets of the North. This is a recipe for disaster.
Let me elaborate on why I think that the world is ready to hyperinflate in gold terms. The Western public will not hold an asset that goes nowhere, at least in currency terms. The public in the East were never fooled that way. Some – I think rightly – joke “if one can only see value in paper currency terms, one cannot see value at all”. I also think gold is wealth and not money. Gold has always been funny in that way. So many people worldwide think of it as money even though its supply tends to dry up as the price rises.
First the Comex will be thrown under the bus to destroy the paper leverage (price suppression) game. Maybe the LBMA as well though I would not be surprised as well if it’s allowed to stay alive. Then the prices can rise and the message will sent: “gold is the new wealth reserve to balance trade imbalances and then the Western hyperinflation will be killed.” Central banks lose most of their gold reserves (and that is good) and gold can do what it did for millennia again, settle trade imbalances.
As usual, in historical terms, most of the average people wont have it besides a few grams. But it will be people, not institutions that control it and will help to create a decentralised counterforce to the centralized system we live in that is hopelessly out of touch with reality.
A last thing, courtesy of JS mineset, of the countries that value their gold on a mark to market basis (a few others may have followed since this graph was created:
Gold And Silver: Legal Weapons Against The Deep State
- Question: Why do Central Banks and Governments hate gold?
- Answer: Because they can’t print it
“An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense – perhaps more clearly and subtly than many consistent defenders of laissez-faire – that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.” – Alan Greenspan, “Gold and Economic Freedom”
Just like everything else in the western financial system, the paper trading markets are leveraged beyond redemption. The amount of paper “claims” on actual physical gold was estimated to be 100:1 in 2010. We can assure you that ratio is much higher now. On the Comex alone, for instance, if more than 9% of the April open interest in gold futures were to stand for delivery – based on the currently declared 1.4 million ounces of gold reported as being “available for delivery” (registered) – the Comex would default. The entire open interest in gold futures is 60x greater than the amount of gold available for delivery.
This is just the publicly traded paper gold derivatives. There’s also the shady world of OTC gold derivatives. We have no idea what kind of leverage is embedded in these contracts. But the total notional amount of OTC “precious metals” derivatives according to the OCC’s latest quarterly report on OTC derivatives (Office of the Comptroller of the Currency) is over $28 billion. Just to highlight the degree to which the Government goes in order to hide the facts about the gold and silver market, the OCC used to break out OTC precious metals derivatives into the categories of “gold” and “silver and other.” Now the OCC reports just “precious metals.” What is it that the Government and banks are hiding?
The amount of leverage embedded in a Comex futures contract, based on the current amount of margin required, is about 25:1. There’s no telling how much leverage is embedded in the OTC derivatives agreements. All we know is that the disclosure requirements are becoming increasingly more opaque.
Silver futures began trading on the CBOT in 1969. But gold futures were not around until 1974, three years after the U.S. closed the gold window, completely disconnecting the dollar from gold. Gold futures were developed to enable the Fed and the U.S. Treasury to control the price of gold as a means of reinforcing the legitimacy of the dollar as a fiat currency used as the world’s reserve currency.
While the price of gold has been heavily manipulated since at least the 1960’s, when the U.S. was running out of enough gold to fulfill its obligations under Bretton Woods, the manipulation and “shock and awe” price attacks are used as a form of propaganda that is designed to discourage investors from converting fiat dollars into gold and silver. It’s a powerful weapon used by the Deep State against gold and economic freedom.
In today’s episode of the Shadow of Truth we discuss the manipulation of gold and silver and how it’s used by the Deep State to increase the Government’s control over the population: