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Posted Thursday, 15 October 2009 | Source: GoldSeek.com By: Rob Kirby Earlier this week, I wrote about possible “incongruities” in the gold bar registry of GLD. Specifically, here is what has happened to the GLD bar list which is published each Friday at approximately 4:30 pm EST. An alert reader I communicate with [who shall remain anonymous] has been documenting the length of the published GLD bar list: -
on Friday, Sept. 25 – the list was 1,381 pages long -
on Friday, Oct. 2 – the list was 208 pages long -
on Friday, Oct. 9 – the list was 195 pages long -
then, on Wednesday, Oct. 14 – after questions were being raised about the strange machinations with the bar list in chat rooms on the internet – the list was back up to 855 pages long Something TRULY stinks here. No explanation has been offered for the DRAMATIC swings in this list. Where gold is concerned nothing happens by accident.
I discussed these irregularities with a very informed source [the same one who informed me of specific [allocated] trades settled last week] and the reply I received was as follows: “What can I tell you that you don't already know? They are all scrambling big time since a number of large interests have demanded audits. Independent auditors are NOW descending onto the various vaults to verify, validate and certify. They can move this as many times in circles as they like to try to fool people. In an Asian depository they’ve found “Good Delivery” bricks that had been gutted and filled with tungsten. Soon, there will be xxxx hitting the fan all over place.”
On October 10 I published an article that postulated that the gold market is a Ponzi scheme because it sells gold that doesn't exist by implementation of the principles of fractional reserve banking. (See www.gata.org...) Since writing that article further information has come to light that supports this claim and allows an estimate of how much gold has been sold that doesn't exist if the owners of the gold ask for it. In other words, there are several owners for each ounce of physical gold.
That people are buying and selling gold without ever taking delivery means that there is the opportunity for bullion houses to sell gold that doesn't exist.
Now the bullion houses probably don't view this as illegal or dishonest because they will operate a fractional reserve type of system, just as the banks do with fiat currency, and will make sure they have enough gold on hand for what would be the maximum estimated volume of gold that could be called for delivery. After all, trading is done with unallocated gold, so how much more unallocated can it get if it doesn't exist at all?
This basic scam is at the center of modern gold market manipulation. Instead of real gold, paper substitutes for gold are sold through derivatives, futures, pooled accounts, exchange-traded funds, gold certificates, etc. I estimate that each actual physical ounce of gold has multiple ownership claims to it.
For the scam to be sustained there must always be plentiful physical gold for those who want it. The market is, in effect, a giant inverted pyramid with a huge paper gold market being supported by a small amount of physical gold at the tip of the inverted pyramid. The scam can continue until there are indications of a shortage of physical gold. If all the claimants of each ounce of real gold demand their gold, then there is the potential for a squeeze such as has never been seen before. To lend support to the idea that all the gold in the world has been sold several times over I cite the case of Morgan Stanley, which was sued in 2005 for selling non-existent precious metals. Morgan Stanley even had the audacity to charge storage fees. The firm settled the class-action lawsuit out of court but no criminal charges were ever filed. If Morgan Stanley was doing this, you can bet that it is the tip of the iceberg.
But as discussed above, the daily volume traded does not in and of itself prove that a fraudulent fractional reserve operation is being conducted. Mylchreest did some more work using statistics from the GFMS metals consultancy to determine the maximum quantity of gold stock the OTC market could be holding with which it can back the huge daily trade volume. The gold that is traded has to be in the form of London Good Delivery (LGD) bars, which are 400-ounce bars. Mylchreest estimates that there can be only about 15,000 tonnes of such bars in the world. Let us assume that the London OTC market holds them all. We will show that by comparison with the trading of other unallocated gold products that 15,000 tonnes is nowhere near enough gold stock for the gold not to have more than one ownership claim to each ounce.
Probably the GLD comparison is the most relevant, as that exchange-traded fund claims to hold 1,100 tonnes gold, which is comparable to the maximum 15,000 tonnes that could be held by the OTC participants. However, the OTC is restricted to wholesale traders and has a minimum trade limit of 1,000 ounces. In GLD the minimum trade is a tenth of an ounce and trading is open to everyone. Considering these limitations it is likely that OTC participants would turn over a lot less than 1/30th of the inventory in a day. But even taking the GLD estimate, the OTC participants should be holding 64,000 tonnes when according to what can be deduced from GFMS statistics they can be holding only 15,000 tonnes.
MUMBAI: You might have to do a bit of a rethink if you thought all that glittered was gold. In fact, it could be a fusion with steel, tungsten or titanium. With gold prices now scaling new highs and affecting the demand for jewellery, manufacturers are devising new ways to propel demand and attract customers. Today, light weight jewellery seems to be in vogue and new designs that fuse gold and diamond with other metals like steel, tungsten, titanium form the new offering. Jewellers are also making use of coloured stones to make affordable pieces of jewellery pieces in an attempt to revive demand. The price of gold is up by over 20% at Rs 15,000 per 10 gm levels compared to last years’ average price of Rs 12,147. Demand for gold has taken a hit in India, a market that is considered price-sensitive. According to estimates from the World Gold Council, demand for the first quarter of the current year fell 83% to 17.7 tonnes compared to the corresponding period last year. Vinod Hayagriv, chairman, All India Gems & Jewellery Trade Federation says there is fluctuation in gold purchases apart from a drop in the quantum of gold being purchased. “I have seen few companies who are moving towards offering the option of diamond jewellery studded in metals like steel, titanium, tungsten,” he said. He is quick to add that these metals cannot be used as a replacement for gold but are instead added in the jewellery portfolio of companies.
Originally posted by 1011001
other than that if you as a joe doe try to purchase gold you can only get it in shops at a much higher rate, privately but then how do you know what it is worth? and you can buy stocks in gold eg you go online and purchase gold that never left the vaults and never will and therefore is claimed to be secure and pure, not losing its true value. These vaults are in a secret place. Now what if someone were to steal that gold from the vault? no one would know if there was any gold in there in the first place and how much gold was there. These online companies sell you gold at the current price. They do not state where they get the gold from and how come they can still sell if it has been in the vault for so long, all should have been sold with the goldrush that is going on.