Derivatives Collapse and the China Gold and Silver Markets

Apparently the US government forgot to mention these upcoming events and salient facts to the Chinese and now the Chinese have understandably decided to renege. Basically, the Chinese are saying: Up your nose with a rubber hose!

So now the COMEX gold and silver commercial shorts, the owners of the COMEX exchange, and all the past CFTC officials who allowed this nefarious paper fraud in gold and silver to rise to new criminal heights based on bogus backing by unregulated derivative contracts written and guaranteed by an often contentious and even hostile foreign government, are all doing double shots in their knickers. If the very angry, and very duped, Chinese renege, the entire COMEX is going down, big-time baby!!! The whole system is about to blow if the Chinese renege on these contracts!!! We wonder what the Chinese want in return for not reneging! Whatever it is, we can guarantee you that the US government is not going to like it very much.

Without the Chinese OTC derivative backing, all COMEX gold and silver positions would be totally naked. That is because COMEX inventory reports for both gold and silver are a total fairytale fraud. Despite many hundreds of requests for physical delivery which were satisfied over the course of many months, the gold and silver inventories reported by COMEX have remained unchanged. The COMEX even had to enlist the help of the ECB and the Canadian mint to satisfy those requests for delivery, thereby demonstrating that what the COMEX reports as inventory is nothing but a phantasm. We recommend that any and all COMEX gold and silver positions be abandoned as being outright naked and fraudulent.

Take physical delivery of your gold and silver bullion from COMEX if they have any, or take your ETF share in lieu of physical delivery and convert it into bullion immediately, and take physical possession of it. Do not trust any bank, any mint or any ETF or pooled fund to hold your gold and silver. Otherwise you potentially face a total loss of principal

When the COMEX goes down in a blaze of glory, which is now inevitable, everyone who owns any ETF gold and silver shares, and especially those who have received these shares in settlement of their imploding COMEX contracts, are going to ask for physical delivery from the ETF's because all confidence will be lost in the system. Then comes the implosion of the ETF Ponzi schemes as everyone finds out that not only did the COMEX have no gold or silver to back its contracts, but that all the gold and silver ETF's were nothing more than gold and silver naked-shorting, leasing and price suppression schemes. We now predict that the requests for physical delivery from the ETF's will far exceed what they planned for, and further that the whole nefarious scheme will be exposed as being a Madoff-like Ponzi scheme, because their touted gold and silver bullion holdings have all been sold off, leased or otherwise encumbered.

(*SNIP*)

Currency investors have been obsessed with the prospect of central banks diversifying out of the dollar. The fixation has been fueled by meetings under the G20/G8 framework, as well as candid comments from some of the largest reserve managers, namely Russia and China. The prospects of a massive diversification are low though, at least in the short-term, because most of the alternatives, including using SDRs as a global reverse currency are unrealistic.

The three-month London Interbank Offer Rate, commonly known as the Libor, which reached a record low of 30 basis points and that also contributed to the dollar's slide. "It makes the dollar the cheapest interest rate differential in the G10 on a Libor basis," Hoversen said.

The dollar's fall follows a United Nations report released Monday calling for a reduced role of the dollar as the world's primary reserve currency.

"This is not the first time the U.N. has called for this, but it's the most recent," Hoversen said. The report, which was produced by the U.N. conference on Trade and Development, stated that a viable solution to the exchange-rate problem would be a system of managed flexible exchange rates targeting a rate that is consistent with a sustainable current-account position.

"What the U.N. may be trying to do is eliminate global dependence on the dollar," Hoversen said. "However, more details would be needed on the mechanism for adjustment to judge how it would affect the global currency markets."

Read the massive article here:
www.globalresearch.ca...

I still say you should spend your money on survival gear and equipment. There is no telling how this fall/winter will go except to say that it looks bad. And if things do go bad, wouldn't you have rather invested in survival rather than things that are worthless?



[edit on 10-9-2009 by warrenb]

agreed, survival gear first, then with extra extra money can be put into heavy, and hard to carry around metal. Living is more important than trinkets

S&F

This shouldn't be any surprise. Afterall, look at what these theives were doing in the stock market with their CDS's and the like. It was all smoke and mirrors. The professional investment industry has been lobbying tirelessly to get the restraints imposed on them after the crash of '29 removed. Beginning with Reagan they've been increasingly successful allowing us --- with the help of a government that abdicated their oversight responsibilities --- to end up where we are. The people over at COMEX are no different. They've found their own ways of gaming the system.

These schemes work fine as long as people are making money and new money is coming in. Like musical chairs, it only gets dicey when the music stops. The music stopped last fall. The fact that these markets are allowed to operate the way they do when the government has explicit oversight responsibilities speaks to the criminal nature of the whole thing. The SEC was specifically warned multiple times about Madoff going back longer than 15yrs and the best explanation they can offer is "We didn't catch him'? Really? That's the best you've got? Essentially what they are saying is, 'we don't give a crap'.

When I first realized the magnitude of the derivatives scam I knew it would be a harbinger of heavy metal manipulations.

Here we go...,

I just wish I had any to worry about

Great find warrenb.

I follow Jim Sinclair and he has been saying for months people need to take physical delivery while they still can.

China tells it like it is
cnbc

At a conference in Lake Como, Italy, a leading Chinese economic spokesman—Cheng Siwei—criticized Ben Bernanke’s loose monetary policy. “If they keep printing money to buy bonds it will lead to inflation,” said Cheng, “and after a year or two the dollar will fall hard.” Cheng went on to say that China was diversifying its roughly $700 billion of U.S. foreign-exchange reserves into gold. “Gold is definitely an alternative, but when we buy, the price goes up,” he said. “We have to do it carefully so as not to stimulate the market.”

I still need a good sleeping bag . 308 would be nice too. will work for survival gear

Back to topic , I have told all my friends to pull money and get some real metals for a few years now. I bet none listened...sigh.

Originally posted by liveandlearn
“We have to do it carefully so as not to stimulate the market.”

Yep otherwise they loose money when people notice they are trying to pull out. Better for them to try and be very stealthy. On the other hand it they pull all out in one swoop they could preserve much of the value....maybe

So when does the derivitive problem finaly come to a head? Will they slowly manipulate markets behind the scenes to try and cover the losses (the govts that is) ?

reply to post by warrenb


I've heard for years that the ETFs don't really have the gold and silver and it may be true. OTOH, you may simply be in the business of selling precious metals yourself and that's why you want us to ditch the ETFs and buy physical.

Originally posted by Make Speed Limit 45
reply to post by warrenb

 

I've heard for years that the ETFs don't really have the gold and silver and it may be true. OTOH, you may simply be in the business of selling precious metals yourself and that's why you want us to ditch the ETFs and buy physical.

ETFs do have physical gold deposits to back the shares they sell. In fact, if you own enough shares (I think for GLD it's like 100,000 shares), you can exchange them for physical gold. EDIT: I was thinking about a currency ETF I looked at last year, which you could exchange shares for currency. I'm not too sure what the story with GLD is, but the idea is still the same. They have real gold to back the shares in the ETF, and if you read into the ETF, you'll probably find that X amount of shares can be redeemed in physical gold.

ETNs do not have physical deposits to back their shares. They are uncollateralized debt. Big difference between an ETN and an ETF.

On a separate note, buying physical gold is stupid. Gold is not a great investment, especially gold coins. If you want to play the gold market, you need to invest in liquid contracts that can actually be bought and sold when the price fluctuates, as opposed to physical gold which just sits in a safe collecting dust.

[edit on 10-9-2009 by Kaytagg]

Warren you are my favorite person on ats. I've come to respect your input and I've been afraid of a post like this.

What would you do if you were broke? I've been living check to ckeck paying interest only trying to keep my over valued house. I've got 2 weeks of food and a few hundred shotgun shells.I've got 4 young kids and one due in january.

For the first time in a long time I am frightened. Even a 3rd world peasant understands a run on gold prices means all faith in modern capitalism is shot.

What is your take on the societal implications over the next few months. Its easy to say stock up on survival gear but do you really mean take my family out of our urban home and move into the woods?

reply to post by zarp3333


I'd recommend learning something about finance. Without at least a nominal education in finance, your life and fate in a capitalist society is bobbing in the tide.

I find it strange that so many Americans don't understand business.

reply to post by warrenb


S&F!

Great find as usual Warren. I find it funny this article doesn't have as much steam as say this one,

Fed's Beige Book sees signs economy is improving

WASHINGTON (Reuters) – Half of the Federal Reserve's 12 districts saw evidence the U.S. economy had improved by the end of August, although labor markets remained weak and retail sales were flat, a Fed report said on Wednesday.

Dallas, Boston, Cleveland, Philadelphia, Richmond and San Francisco noted gains. Other areas reported the economy was stable or showing signs of stabilization while St. Louis said the pace of economic decline appeared to be moderating.

Source:

news.yahoo.com...



That was an article that was plastered on the front page of several news sites. Funny how it has a much less ominous tone. But of course the MSM wouldn't want to release data that goes against their masters wishes.

Do a little digging and you will find other articles similar to Warren's showing that the end isn't as close as they would like you to believe. Here ya go:

U.S. poverty rate hits 11-year high as recession bites

WASHINGTON (Reuters) – The U.S. poverty rate hit its highest level in 11 years in 2008 as the worst recession since the Great Depression threw millions of Americans out of work, a government report showed on Thursday.

The Census Bureau said the poverty rate -- the percentage of people living in poverty -- jumped to 13.2 percent, the highest level since 1997, from 12.5 percent in 2007.

About 39.8 million Americans were living in poverty, up from 37.3 million in 2007.

Source:

news.yahoo.com...


So from a non-conspiracy perspective, why are they doing this? The Federal Reserve rests on the public's opinion on the dollar as its value. If we all think the dollar is worthless and weak, which is the majority of the international community, then the dollar continues to depreciate.

I tend to be more of the skeptic and cynic on here and personally view it as a way to control the masses. They are telling us what we want to hear which coincidentally is what they want us to believe. And that is that everything is recovering and we should be content in our Reality TV ridden worlds and focus on the distractions around us.

But I digress before I continue a quasi-relavent rant...

Yes, The Derivatives issue is still spiraling downward and is a dark and gloomy forecast indeed. So in closing, might as well stock up on the necessary items while your dollar is still worth anything. Thanks again Warren for digging this story up!


-Sliadon

[edit on 9/10/2009 by Sliadon]

S&F! I just wish my current situation would allow me to invest in survival gear and food stuffs... I suppose I will have to ride out the storm if.. Sorry when TSHTF. Side note : I wonder if the Chinese flag being hoisted on the 20th is more of a symbolic gesture sort of handing over financial power?

Great post warren..

I do trade the gold, crude and the usd markets and here is where we have the conundrum.

We have been informed they are going to devalue the dollar...gold goes up.

The Chinese fail to cover their short positions.......gold goes down.

I short the USD and it goes down to 20...I make a gazillion dollars that are worthless. I can now buy a loaf of bread with 1/2 my gazillion. Did I really profit?

When TSHTF, you have a gold bar and you want to trade it to your neighbor for food....What's he gonna buy with it?..Food?

You cannot buy "security"...I'll bet Madoff felt secure at one time with all those assets and look what happened. Be secure in "yourself" and you have nothing to worry about...

Just my 2 million cents worth...

Good luck everyone.....Here comes the coin toss....it's heads!!!! Heads or tails, either way you win...hahahah

seeya

oh noes were all dead again

reply to post by theonlyrusty

The way I see it is that you'd trade your neighbor hir food for your other food or something they want.Your gold is to pay big stuff like the mortgage.Silver is for smaller items like a coin for shoveling the walk.If the gold is jewelery you get to enjoy it,coins can be played with I guess,but I prefer silver for the pretty sounds it makes.And silver is a better investment as it is going up too,but cheaper,for the little guy.

This is a complex issue.

First, the world still depends on the U$D. If it were to collapse (it's not falling very much by the way, still waiting) the whole world would suffer. If it stops becoming a world currency, that process would take decades (Maybe it's just starting now, so no need to worry).

Also, keep in mind that the UN is a worthless (and corrupt) organization. No one listens to them, and no one follows the rules. Iran is a member of the UN, and they've broken so many rules on human rights it's insane! So have most countries, including America, broken the UN rules, and NONE have gotten any sort of punishment. It's all just talk.

Originally posted by Grayelf2009
I still need a good sleeping bag . 308 would be nice too. will work for survival gear

Back to topic , I have told all my friends to pull money and get some real metals for a few years now. I bet none listened...sigh.

You can sometimes make money guarding estates. I have. Just listened to G. Noory all night and drifted in and out of sleep.

Don't get a rep. for stealing or dishonesty, stay away from dishonest friends.

I am a Gold and Silver Broker and I must say that I have known about this for many months as I am sure many have. September is going to be the month that economic news will come into the public eye and news will be released that will shock the economic world. It is my job to follow these things and I have no doubt this is THE MONTH. I still have alot of clients that dont believe me about this. I am getting orders for Gold and Silver Bullion at amazing paces. I would specifically watch the price of Silver. The Gold to silver ratio is way off sitting at 60/1 and historically it sits at 17/1. (this means it takes 17 Oz of silver to buy 1 Oz of Gold). Plus world Silver production is now at the lowest level since 1937. I dont even need to get into how the dollar is collapsing on this fine forum.