Dear Friend of GATA and Gold:

A friend at a bullion shop, B.W., calls attention to the TF Metals Report's notation this week that the total stock of gold bullion registered and readily deliverable on the New York Commodities Exchange has sunk below 5 tonnes and that the ratio of Comex gold contract claims to readily deliverable gold has risen to nearly 300 to 1:

http://www.tfmetalsreport.com/blog/7249/bullion-bank-leverage-soars-near...

B.W. writes: "We can hardly believe our eyes."

The TF Metals Report keeps up with this Comex data not just to suggest that gold is running out but also to complain about the unfairness of the commodity trading system in the United States. For your secretary/treasurer, that unfairness is a given, part of the architecture of government intervention in the monetary metals markets, intervention fully authorized by law under which the U.S. government, through the Treasury Department's Exchange Stabilization Fund, can intervene secretly in any market at any time:

http://www.treasury.gov/resource-center/international/ESF/Pages/esf-inde...

As for the Comex data itself, it long has struck your secretary/treasurer as irrelevant.

For Comex gold vault figures, for both "registered" and "eligible" gold, mean little if the bullion banks have easy access to gold outside the Comex system, particularly access to government and central bank gold, or if the bullion banks are executing trades as agents of governments and central banks, as surely they are doing:

http://www.gata.org/node/15441

http://www.gata.org/node/15241

http://www.gata.org/node/14385

http://www.gata.org/node/14411

http://www.gata.org/node/13373

Gold from governments and central banks can be added to the Comex system almost instantaneously, and governments and central banks will never let the market know how much metal remains available to them for currency market control.

Indeed, that information -- the true location and disposition of government gold reserves -- is the most sensitive information on the planet, for it would reveal the amount of ammunition available to governments for market intervention. This sensitivity was noted by the secret March 1999 report of the staff of the International Monetary Fund, which explained why central banks insist on keeping the information secret:

http://www.gata.org/node/12016

Meanwhile, GATA’s friend R.W. writes:

"After so many consecutive down days for gold I'm finding it difficult to round up the rationale for hanging on to my hoard.

"Old-fashioned supply-and-demand economics is now obsolete, having succumbed to high-frequency trading and nano-second spoofing. Throw in the criminally negligent regulatory agencies and they're all really piling on gold. I need some clarity here.

"I have admired your courage, eloquence, and integrity going on 12 years now, so I will not ask for advice here, but is there a strong possibility that the cabal will never lose control without a complete implosion of the world financial system? I thought I understood this but find myself puzzled.

"I had thought that if you suppress the price of a desired commodity for an extended time, there eventually would be an extreme shortage and force majeure in the futures markets along with a price explosion. I'm 80 so it probably will not happen in my lifetime. Any thoughts would be greatly appreciated.”

Your secretary/treasurer replied:

"History suggests that things will change only when 1) the gold available to central banks for price suppression is exhausted, including all central bank reserves, or 2) central banks want to devalue their currencies to devalue debt and decide do this in part by raising the gold price dramatically. Both kinds of events have happened repeatedly.

"The first sort of event can be hastened by retail buyers and would signify a loss of control by central banks, so central banks have to discourage retail buying. That's why, for example, the Indian government is striving to induce the Indian people, the biggest private holders of gold, to exchange their metal for paper so their metal can be used to flood the world market for price suppression. The World Gold Council actually supports this, signifying that its true objective is to subvert gold's independent monetary function and the industry the council purports to represent.

"The current round of gold price suppression has been much lengthened by derivatives, high-frequency trading, the intimidation of the gold-mining industry, and, perhaps just as important, the complicity of mainstream financial news organizations, which refuse to report about central bank intervention in the gold market and other markets even as this intervention has gone far beyond obvious.

"Yet the U.S. economists and fund managers Paul Brodsky and Lee Quaintance speculated a few years ago that the second possibility above -- a dramatic increase in the gold price -- is the objective of the major central banks, once the world's gold reserves have been redistributed to indemnify the nations that hold large foreign-exchange reserves in U.S. dollars and U.S. government debt:

http://www.gata.org/node/11373

"The recent unguarded comments of an Austrian central banker seem to lend support to such speculation:

http://www.gata.org/node/15898

"In any case it is hard to invest in an industry that will do nothing to defend itself against an existential threat, an industry that acts no differently than it would act if it was owned entirely by central banks.

"But GATA is not an investment adviser. We're not urging people to put their wealth at risk to fight totalitarianism. Rather we're trying to keep the flag flying for free and transparent markets, limited and accountable government, and individual liberty.

"Vital as it is, gold is just a means to those ends, not an end in itself."

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org

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 -- Published: Friday, 6 November 2015 | E-Mail  | Print  | Source: GoldSeek.com

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