Was The July 19 Paper Raid On Gold Implemented To Remove Gold From GLD?

Craig Hemke of the TF Metals Report wrote an article which has sniffed out the probable motive behind the shamelessly blatant paper smash of gold on Sunday evening July 19 at one of the quietest trading periods of the week:

As a readily-accessible source of instantly-available gold, The Authorized Participant Bullion Banks are once again redeeming their 100,000 share lots for physical gold from the GLD “inventory”. That this gold is then utilized to settle physical demand from around the globe is hardly arguable, given recent history.  – Craig Hemke, TFMetalsReport.com

I believe Craig has hit the nail on head here.  Ever since first reading James Turk’s original dissection of the GLD Trust legal structure from the Prospectus, it’s been pretty obvious that GLD was created to act as a “holding reservoir” of physical gold that would be used by the Central Banks/bullion banks as a source of gold to required to settle LBMA forward commitments to buyers (i.e. China, India and Russia) who would refuse to settle in cash.  99% of all Comex trades are settled in cash.

The one unresolved question, for me anyway, is the issue of how much gold really still exists in unencumbered (e.g. leases or hypothecation agreements) physical bar form in HSBC’s vault or the vaults of designated subcustodians.  It’s an question that won’t be answered until the system implodes because GLD, by design, has made it impossible for anyone to conduct a bona fide, independent audit.

This is an excerpt from a post I wrote on the The Golden Truth, the predecessor blog to Investment Research Dynamics – it looks like my analysis was correct back then which reaffirms Craig’s analysis of what happened two weeks ago:

We have witnessed a stunning drain of gold from the GLD ETF trust.  Through last Friday, an incredible 479 tonnes – more than 35% – of GLD’s gold has been removed and has disappeared, most likely to Asia – in the space of about 10 months.  The biggest chunk of that 479 tonnes was removed shortly after Germany’s Bundesbank issued it’s feeble and hopeless request to the U.S. that the Federal Reserve start shipping back some portion of the 1500 tonnes of gold that is supposedly being “safe-kept” on behalf of Germany by the Fed in its vault in New York City.   Gold luck, Angela…

I have looked at GLD suspiciously ever since James Turk issued the first analysis of GLD’s prospectus back in 2004.  Those of us who are familiar with securities laws and investor “safe guards” supposedly enforced by the SEC were absolutely shocked that the SEC approved the GLD prospectus as it was filed because of the egregious lack of GLD sponsor and custodian legal accountability standards typically required by the SEC for publicly traded securities.

Given this fact, I believed at the time that GLD was a scheme devised to suck  in retail and institutional cash that might otherwise flow in massive quantities into actual physical gold that would be safe-kept in private vaults in this country.  Although GLD has a mechanism to enable investors with a minimum of 100,000 shares to convert those shares into gold that would be delivered to the investor, the procedure is exceedingly cumbersome and expensive and there’s a mechanism embedded in the language of the prospectus that enables the trustee of GLD to deny such requests.

But I also knew – through GATA’s invaluable research – that there would eventually be a shortage of physical gold that would be available to allow the western Central Banks and bullion banks to maintain their oppressive and incessant manipulation of the paper gold market for the purposes of maintaining a cap on the price of gold, for the purposes of defending the credibility of the U.S. dollar.  I figured that at some point the gold in GLD would used for this purpose once the Central Bank stocks of gold were largely if not fully depleted.  In this context, please recall that about three years, the ECB system, which had been selling 400 tonnes per year on average, pretty much stopped selling any gold.  That’s sign-post #1 that I was right.

Then along comes the Bundesbank in early 2013, with a request that the Fed start shipping Germany’s gold held in in New York back to Germany.  That’s when all hell broke loose:

(The graph above is from the TFMetalsReport.com)

There’s something really wrong with that picture because the intuitive response from the market by Germany’s request of the Fed should have been a quickly rising price of gold.  But as you we all know, the Fed defaulted on the request – for all intents and purposes – and that’s when the massive drain of gold from GLD commenced.

The truth is that my original hunch was correct.  100% correct.  The gold in the GLD trust is being used to satisfy the enormous physical delivery demands from China and the other big gold buying countries because the western Central Banks have run out of gold to deliver.  That is an unmistakable fact. Reports and data ad nauseum have been published in the last six months describing and verifying the voluminous, unprecedented amount of gold bars that have been moved – literally physical transferred – from the Comex in NY and  the LBMA and Bank of England vaults in London to Switzerland and then on to Hong Kong, where it flows to its ultimate destinations in China.  Anyone who would deny that this is the case has a blatant and catastrophic disregard for the truth as supported by provable facts.

So the question is, how much longer can the depletion of gold from GLD continue before this scheme falls apart?  Let me first say that it is likely that the U.S Government’s “Waterloo” in this situation will be the gross miscalculation – when GLD was originally devised – of the growth and size of China’s appetite for physical gold for which actual physical delivery is demanded.

Along with all the other manipulated schemes of the western Central Banks/Governments, I believe that the GLD fraud is starting to unravel.  I would argue that the ability to execute successfully the intervention  in interest rates, currencies and equities requires the unfettered ability to manipulate the price of gold.  In my view, the western Central Banks are losing their grips on gold and this will likely bring the entire western financial system down.

13 thoughts on “Was The July 19 Paper Raid On Gold Implemented To Remove Gold From GLD?

  1. just to add a little flavor, just before the April 11 , 2013 hit on metals Goldman Sachs came out with a short gold rec with a price target of ether 1000 or 1100.

    Subsequent to that, I think on a 13k or something like that for the 2nd quarter of the year reported in July, it was disclosed that Goldman bought 3.7 million shares of GLD with presumably the intent to take delivery in a cheap and efficient manner that only the big boys can do.

    It all ties together.

    we need to remember that the magnitude of trading at odd times on comex electronic trading off hours is size wise only handled by someone of size. Not many entities can or should even handle a 2.7 Billion trade. Not miners, not refiners, not dealers, only central banks and if you stretch a bit perhaps all the algo hedge funds. However, how would their investors like to hear about the blind algo trading going on by firms using opm to gain huge bonuses recklessly.

    which brings me to another topic: the concept of risk adjusted returns. The entire stock and bond market has an appalling risk adjusted return profile. A ton of risk is taken to squeeze out meager profits.

    Our superficially reviewing companies like Amazon (most only look at 2% recent quarter revenue increase and .4% profit margin per books) and Facebook (doubles eps using non gaap expense exclusions) tells you we have a ton of money managers, mutual funds and investors buying stocks like Amazon without doing the requisite homework. Daves prior study of AMZN exposes the problems well, his upcoming one and the prior one is doing the work that the big money managers should be doing (and disclosing).

    Heaven knows the big firms have the staff to turn out beautiful long reports that currently say nothing-but are good at unearthing problems after the fact.

  2. There is still some gold around. But as Jim Willie rightfully pointed out in your interview every now and then the US has to start a little war to steal some gold, eg. from Lybia and Ukraine, to keep the farce keep going. When China and India won’t get any more gold from the West the price of gold will explode to the upside. Every partipicant in this fraud is happy with the current situation. But China and India won’t once the flow of gold from West to East ceases.

    The imbalance of the financial markets and the physical market is too big. Paper contracts stating something about gold – but no physial gold is moved – can be created at will. Gold itself not! It’s that easy. Gold is the bet against the criminal central banks in the world. They are very powerful. But they also have limits. I have the feeling we will see their limits very soon.

  3. It should come as no surprise that Turd desperately needs to find and sell some type of reason why gold or silver aren’t cooperating with his broken record outlook on those two metals.
    A much simpler and logical explanation would acknowledge the weakness across most commodities globally along with the current Chinese stock market gyrations and the slow down in Chinese growth overall.

    This constant referencing by Turd of “inventory” seems to suggest he doesn’t really believe that any real physical inventory of gold exists yet he lays out some twisted explanation that tries to show or prove that the imaginary “inventory” (that actually exists in in HSBC’s completely or mostly golf filled London vaults) is then used by an authorized participant to smash or manipulate gold elsewhere.
    And here’s the kicker in his twisted hypocrisy…he then states that once the non-existent “inventory” leaves the full London vaults that it’s gone for good and never to be seen again because it’s all going to China blah, blah, blah etc.

    So, is the physical gold in GLD (that doesn’t really exist in his “mind”) he speaks of real or is it a clever hoax or con?
    Because if he believes that GLD is just a paper certificate vault then why logically would he care or claim that the “inventory” is gone for good???
    What difference would it make one way or another except to provide some twisted and desperate reason that he needs to provide to his distraught followers who by all appearances have tuned out the constant stream of excuses for years of missed calls or predictions.


    1. Actually, Turd is not the originator of the view and analysis on GLD and many people who have looked at the GLD Prospectus line by line have come to the same conclusion. I assume you have not. Anyone who knows anything about reading legal contracts and reads through the GLD prospectus will find glaring legal loopholes which enable the Trustee and Custodian to do what Turd has described in his latest article.

      My advice to you would be to go read the GLD prospectus carefully before you take shots at people who have been studying GLD since its inception because your comment is seeded in either ignorance or stupidity.

  4. “Then along comes the Bundesbank in early 2013, with a request that the Fed start shipping Germany’s gold held in in New York back to Germany. That’s when all hell broke loose” ….

    I noticed that too … it’s almost like the FED had to smash the Gold price in order to generate enough Gold sellers to free up some Gold inventory – probably because the FED had already leased out all the German Gold and needed to go into the market to purchase Gold inventory to return to the Germans….. smashing the Gold price in the futures (paper) market did 2 things; (1.) generate some sellers. (2.) distort price signals in the open market.

    1. The fact that the Fed will not return Germany’s gold says it all. If they had it and if gold is as plentiful as government lies then why not return it?

  5. Dave yours and James Turk’s analysis of GLD is being proven true. With the murky accounting there is noway to predict the failure date. As far a paper is concerned do you think that the COMEX will continue to honor cash settlement of call and futures when the price blows up to the upside due to a physical shortage that can’t be covered?

  6. 5 words: Bullion Direct and Morgan Stanley

    seems bullion direct took money to buy gold and silver for customers and “forgot” to buy the actual gold and silver.

    Morgan Stanley tried that over 10 years ago, got fined either 500k or 500 million. It added insult to injury by charging storage fees for PM not in storage.

    more than a few people at MS had to know about it and nobody went to jail. Probably got great severance packages and went on to screw around at another brokerage at higher pay.

  7. We all know that when United States launches a war on India (for the purpose of stealing gold & silver) that the world would have come to an end.

  8. It is no secret that the western Central Banks control the Western Governments and Japan. They also have control over the most powerful intelligence agencies of the most powerful of those Governments. The CB’s also control All markets of the world.

    The manipulation of these Governments and markets have allowed the inevitable collapse of this present world financial System to be dragged out many years longer than even the most savvy of financial investigators to discern – Name anybody you want.

    I have read them all and narrowed it down to 7 or 8 who are even worth reading over the last 14 years, since about the time of 911 when I realized huge changes were under way for the U.S. and the world.

    Fact is that The Powers That Be (TPTB) have such a tight grip on the whole world wide financial System – That it will Not come down till They say it will and we common people will not know when that time is unless They tell us.

    Lindsey Williams elitist friend, as he calls him, says it is All coming down this September/October 2015. You may say Baloney. Well, hold on for just 60 to 90 more days with your Baloney. You may just need it to make sandwiches with.

  9. It seems to me we are at a cross point now where on the one hand the bullion banks need/are told to keep playing the same game and keep the paper price down to keep the US $ as the only alternative currency but now to do so there is no more profit to made in the paper game. Jim Sinclair says they turn when this happens. You can’t have it both ways. The Commercials lost with this raid. How will the commercials continue to make paper profits keeping the price where it is? Will they continue to press/hold the price and profit little to keep their mastrrs happy or turn and make a fortune on the way up? Maybe one more smash to clear out GLD bars and then it’s time to turn? Just my guess.

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