Tag Archives: LMBA

The Trading Action In Gold

There’s no question in my mind that the intervention in the gold market is similar to the intervention that occurred in 2008 ahead of the financial crisis. However, I believe that,
because of the massive physical off-take in the eastern hemisphere, the western Central
Banks and bullion banks will be unable to push the price gold down on the same scale as it
was taken down in 2008 from March to October. Currently, gold is 15% above the low it hit at the end of 2015. It’s 7% above the interim low it hit at the end of 2016.

As of last week, money managers (hedge funds primarily) held the biggest net-short position in futures and options in records going back to 2006. A measure of gold volatility is near the lowest since January.

My good friend and colleague, Chris Marcus, invited me onto his podcast show that he produces for Miles Franklin.  We discuss the gold market, the deterioration U.S. economy and the reasons I believe that the trading action in gold and silver is preceding another financial collapse similar to 2008 only worse:


In the latest issue of the Mining Stock Journal, which was released this afternoon, I present data that suggests the current decline in the price of gold is beginning to bottom and is setting up for a big move in to the fall. Also discuss my view of the theory that China has pegged the price of gold to the yuan and I present a gold stock idea that has dropped price to a level that makes it “stupid cheap.” You can learn more about this newsletter here: Mining Stock Journal information

Is China Intentionally Making It Harder To Manipulate Gold?

A new gold futures contract is being introduced by the Hong Kong Futures Exchange (two contracts actually).  The two contracts will be physically settled $US and CNH (offshore renminbi) gold futures contracts.   The key to this contract is that it requires physical settlement of the underlying gold, which is a 1 kilo gold bar.

The difference between this contract and the Comex gold futures contract is that the Comex contract allows cash (dollar aka fiat currency) settlement. The Comex does not require physical settlement.  In fact, there are provisions in the Comex contract that enables the short-side of the trade to settle in cash or GLD shares even if the long-side demands physical gold as settlement.

With the new HKEX contract, any entity that is long or short a contract on the day before the last trading day has to unwind their position if they have not demonstrated physical settlement capability.

The new contract also carries position limits.  For the spot month, any one entity can not hold more than a 10,000 contract long/short position.   In all other months, the limit is 20,000 contracts.   A limit like this on the Comex would pre-empt the ability of the bullion banks to manipulate the price of gold using the fraudulent paper gold contracts printed by the Comex.  It would also force a closer alignment between the open interest in Comex gold/silver contracts and the amount of gold/silver reported as available for delivery on the Comex.

To be sure, the contract specifications of the new HKEX contracts leave the door open to a limited degree of manipulation.  But at the end of the day, the physical settlement requirement and position limits greatly reduce the ability to conduct price control via naked contract shorting such as that permitted on the Comex and tacitly endorsed by the Commodity Futures Trading Commission.

You can read about the new HKEX contract here – HKEX Physically Settled Contract – and there’s a link at the bottom of that article with the preliminary term sheet.

Will this new contract help moderate the blatant price manipulation in the gold market by the western banking cartel?  Maybe not on a stand-alone basis.  But several developments occurring in the eastern hemisphere and among the emerging bloc of eastern super-powers – as discussed in today’s episode of the Shadow of Truth – will begin to close the window on the ability of the west’s efforts to prevent the price of gold from transmitting the truth about the decline of the U.S. dollar’s reserve status and the rising geopolitical instability:

The “New” LBMA Gold Fix Is Just As Rigged As The Old One

As my undergrad English major advisor used to say:  “This is old wine in a new bottle.”   Meaning, you can dress up a pig but underneath the fancy clothes it’s still a pig.  The “new” London gold fix will enable the big bullion banks to continue rigging the paper gold market and looting investor money.  They are now emboldened to do it in broad daylight and without masks.

This applies wholeheartedly to the “new” LBMA fix.  Given that the reporting of the GOFO rates has been eliminated and the “new” price data has fancy lipstick but is even less informative than the LBMA’s old data reporting, the “new” London gold price fix is at least – if not more – corrupted than the old fix.

As I expected, the “new” LBMA gold fix will even more opaque  than the previous process, despite the appearance of more transparency.  Four banks have already been named:  Scotia, HSBC, SocGen and Barclays.   Seen those names before?  Here’s a brief update:  LINK.

Scotia is one of the most corrupt bullion banks and one of the primary paper manipulators of gold and silver on the Comex.  If you keep your bullion at Scotia, get it out.  If you read thru custodial documents available from funds who “safekeep” metal at Scotia, you see that there’s a good chance your gold and silver bars have been hypothecated.

HSBC – not much needs to be said there.  HSBC has been one of the most frequently prosecuted and fined banks for market manipulation in areas other than precious metals.  Sure, HSBC rigs the trading and its books in every other business line it operates but not precious metals…Of course, there is the issue of HSBC closing its NYC “retail” vaults in 2009 and its London “retail” vaults this year…

SocGen and Barclays – both primary LBMA bullion banks who participate openly in market rigging and gold leasing.

We don’t know who the last two banks will be, but up to this point the Intercontinental Exchange (ICE) – which will administer and manage the “new” gold fix process – has indicated that a Chinese bank will not be involved.

The likely candidates to fill the remaining two spots include JP Morgan and Citibank.  I don’t think anything more needs to be said about this matter.   The crooks who control the paper gold trading markets in London and NYC have been enabled to continue their illegal trading activities and looting of investor money.

Ronan Manly of Bullionstar has written an excellent description of the “new” gold fix:   London Gold Fixing.

India Expected To Import At Least 100 Tonnes Of Gold In March

Unofficially India imported about 25 tonnes in February, as buyers waited to see if the Government would reduce the 10% import duty imposed by the previous Government in July 2013.   But Bloomberg is reporting that “snap-back” demand could boost India’s imports to 100 tonnes in March as India heads into another festival season – Bloomberg link.

As John Brimelow of JB’s Gold Jottings avers:

India in November demonstrated an ability to import prodigious quantities of gold legally even with duty at an effective 10.3%. This could happen again with weak world gold or, just as possible, a strong rupee. For the immediate future the question is if Indian demand really was inhibited by the prospect of lower duty…

That last sentence references the fact that including smuggled gold, it’s not clear if the 10% import duty actually reduced the amount of gold that entered India either officially or “unofficially.”   Of course, the World Gold Council will only use the official numbers and will completely disregard any reference to smuggled gold.

Meanwhile India announced plans to try and monetize India’s gold stock by introducing gold deposit accounts that would pay interest on gold deposited into the accounts and by introducing a “sovereign gold bond” which would be gold-backed bonds that pay interest and would be redeemable in cash.  It’s my view that this “monetization” scheme will be fail miserably, as Indians – more than any other culture – demand gold that is delivered to their possession in the form of coins and jewelry.

I really can’t figure out the motive of the Indian Government in introducing this “monetization”  idea other than, despite being a BRICS member, India’s Government occasionally plays the role of a lap-dog to the U.S. and England.  The Bank of England and the Fed have been aggressively pushing a fractional gold system on India for quite some now.  Clearly the west desperate to divert as much global capital as possible away from buying deliverable physical gold and into paper gold derivatives.  This plan in India will be a colossal failure.