Wednesday, July 30, 2014

The War on Gold and Silver Continues

Trading is hard, and best left for the professionals. Buying can be hard too, particularly after a mini-crash. But the emotion can be removed when you have a set plan to purchase a certain amount of physical metal every month as your savings.
Anyway, the war on gold and silver continues. Perhaps the next battle will be fought next week when options expire. And maybe the central planners will win another battle, but what is clear is that the central planners are losing the war.

There is one other point I would like to mention, Eric: Maybe last week’s quick mini-crash is telling us something important. With both gold and silver - as well as the mining stocks - being so undervalued, the central planners can’t keep downward pressure on the precious metals for days or even weeks like they used to.

In other words, maybe last week was a historic turning point, and that one-day mini crashes - instead of long, drawn out corrections - will become the norm. Carrying this point one step further, maybe sub-$1300 gold is history, just like we will never see $1050 gold again. Given the strong performance gold has put in the past few days, it is possible that another important low was made last week in the uptrends for gold and silver that are now 13 months old.

- James Turk via a recent King World News interview

Sunday, July 27, 2014

Central Planners Can Only Push Gold Lower for so Long

This buying of physical metal explains why gold and silver bounced up off their support so quickly, Eric. The central planners can only push the short side so far, and their agents in the select bullion banks that trade for them know when to cover. These guys all know their limits, but we will continue to get the anti-gold propaganda.

For example, the media was quick to tell everyone last week that Goldman Sachs is keeping their year-end gold price target at $1,050. That ‘news’ - coming as it did right after last week’s price slam - probably scared some people and kept them from buying physical metal at those good prices when gold and silver were testing support.

Putting aside the propaganda, we have to remember that these attacks on gold and silver don’t always work. And some - like this last one - are short lived. So if you had money on the sidelines waiting to buy and blinked, you missed the low. It’s another reason why I always recommend accumulating gold on a regular basis rather than trying to trade it.

- Source, James Turk via King World News

Thursday, July 24, 2014

Money on the Sidelines is Waiting to Move Into Precious Metals

The experience of the last several years tells us that we will see more attacks on the precious metals like the one the central planners engineered last week. We know from experience that these mini-crashes particularly occur before testimony before Congress by Fed officials, release of FOMC minutes, at month-end during option expiry, and before the U.S. unemployment report.

I am sure the hedge funds that trade gold have these dates marked in their calendars. But regardless, I do know that there is a lot of money on the sidelines waiting to buy physical gold and physical silver whenever we get bargain basement prices like we saw last week.

- James Turk via a recent King World News interview

Monday, July 21, 2014

Gold and Silver Look Ready to Move Higher

"The big drubbing the precious metals took last week is already pretty much forgotten. Both gold and silver stabilized at the support we discussed last Monday, around $1300 for gold and just under $21 for silver. They have since turned around, and look ready to head higher again. Today’s strong close is very encouraging."

- James Turk via King World News

Saturday, July 19, 2014

Debasement of Money Drives Gold and Silver Higher

Gold and silver are now back at support, around $1,300 for gold and just under $21 for silver. And the price manipulators are walking away with big day-trading profits. They are covering here at support all the shorts they sold last week and early this morning when Europe and the US were asleep. And because the shorts they put on this morning are traded intraday and mainly off the Comex, no one will ever see any Comex or other exchange report of their huge build up in short selling and the disappearance of these positions later the same day.

It is tough living with the irony of it all. There are record high prices everywhere except the gold price and the silver price. Many stocks, bonds, works of art and real estate in many safe-havens around the world are already at historic highs. But it will change.

We have to put aside today’s drubbing and focus on what’s important, namely, what drives the gold price. It is of course central bank debasement of currencies, which is making gold and silver increasingly undervalued and explains why both precious metals remain in uptrends that began over a year ago. And notwithstanding what happened today, let’s remember that both gold and silver are up 8% so far this year.

- Source, James Turk via King World News

Wednesday, July 16, 2014

Bank Shorts Orchestrating Gold & Silver Smash

The central planners today won another battle in the precious metal arena, Eric. They got the short sellers to dig in their heels over the past few days, which is clear from the increase in the open interest on the Comex, particularly for silver....

If we look at what happened last week, approximately 21% more silver was sold short on the Comex than was actually mined in those 5 days. The Comex open interest increase in gold was about 88% of all the gold mined those five days.

When comparing how much gold and silver were sold short than was actually mined, it only takes logic to conclude that it was paper selling that stopped gold and silver’s price advance last week. And these results are only for the Comex, which is generally said to represent just 10% of paper derivative trading in silver and gold.

Clearly, the paper sellers were out in full force last week. They were trying to keep gold and silver prices capped. Nevertheless, from Monday to Friday’s close, gold rose 1.6% while silver jumped 2.1%. But these shorts turned the tide in their favor early this morning.

Before Europe opened, the paper sellers were out in full force painting the tape with short selling during the most illiquid time of the day. By the time the metals opened for trading in New York, the spec longs were ready to be flushed out. Also, because precious metal prices today broke below their short-term moving averages, the black-box proprietary traders had to flip their positions from long to short. The selling pressure on gold and silver prices was relentless.

- Source, James Turk via King World News

Saturday, July 5, 2014

All You Need To Know About Negative Interest Rates


On Thursday, the European Central Bank (ECB) took the historically unprecedented step of lowering certain of its interest rates below 0%. In a report to our premium subscribers immediately following the announcement, Chris likened the move to the policy equivalent of dropping a neutron bomb.

In the days following, despite the ECB attempting to clarify its stance further, many questions still linger; most notably: What exactly will the implications of this negative interest rate (NIRP) policy be?

We've asked our European correspondent, Alasdair Macleod, to lay things out in black as white as much as is possible. In this detailed podcast with Chris, he explains exactly what steps the ECB is undertaking, what the most probable ramifications will be, and where the highest degrees of risk now lie.


- Alasdair Macleod of James Turk Gold Money, Source, Peak Prosperity


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Wednesday, July 2, 2014

How to Prevent the Manipulation in Gold and Silver

There is a practical way to eliminate the manipulation of gold and silver prices. It is to require that anyone selling short any derivatives contract that provides for the delivery of physical metal must meet margin requirements by having physical silver in a vault, and further that the margin requirement be reasonably high to control the fractional-reserve leveraging.

This step would prevent price manipulations like the one where Barclays Bank was caught and fined. Traders, whether acting for their bank’s account or as agents for government central planners, would no longer be able to conjure up out of thin air London good delivery bars in an attempt to force gold and silver prices lower by making believe that they have physical gold available for sale when in fact they don’t. A reasonably high margin requirement in terms of physical metal imposed on short sellers of physical metal would move price discovery in gold and silver back to where it should be based, which is the market for physical metal and not the derivatives market.

My recommendation is that a 50-percent margin requirement be imposed on short sellers of contracts of physical metal. So if someone sells short a contract obligating the delivery of physical metal, the short-seller needs to prove that he has at least 1 ounce of silver in a vault for every 2 ounces sold short.

This measure will reduce the fractional-reserve aspect of precious metal trading to a reasonable level from the 100-to-1 level, which some market participants have stated is the present ratio of paper commitments to actual physical metal available. Not only will reasonable margin requirements reduce the opportunity to manipulate gold and silver prices with derivatives, it will also offer the added benefit of lowering the possibility of systemic risk like what occurred in 2008.

Now here’s the important point. Fractional-reserve systems are not only fraudulent because of the inability to deliver all commitments; they are also inherently unstable and come with incalculable risks. For this reason I therefore always recommend avoiding paper products, and owning only physical gold and physical silver. When you own physical metal, you are going to be safe when the next 2008-like systemic collapse arrives.”

- James Turk via King World News


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Sunday, June 29, 2014

James Turk Responds to the LBMA

Over the past two weeks the LBMA has been conducting a survey of market participants that trade physical silver. They are taking this step in response to the decision to end the daily silver fix.

The LBMA said: “In view of the recent announcement by the London Silver Market Fixing Ltd., it is important to gather the views of the global market to find a solution that meets the needs of market users around the world. The launch of the survey is an integral part of this process.

The LBMA reported that more than 250 people responded to its survey, which ended Friday. Here is my response to the key questions the LBMA posed....

“1. Is the current silver price discovery method sufficient?

The market for silver derivatives dominates price discovery for physical silver, which explains why gold and silver have been in backwardation more often than not since July 2013. This backwardation is proof positive of the abnormal influence of silver derivatives on the pricing structure, as is the fact that commitments to deliver silver in the aggregate far exceed the annual new supply; they even exceed available above-ground supplies. In this regard, an analysis of U.S. Commodity Futures Trading Commission data shows that futures derivatives of commodities such as corn or soybeans do not exceed annual supply. Backwardation in gold in theory is impossible because it would mean participants are passing up the free arbitrage. Given that silver is a gold substitute in that at present 66 ounces of silver provide the same safe-haven characteristics as one ounce of gold (that is, money outside the banking system), backwardation in silver is impossible too, yet backwardation has prevailed on and off for months. That the LBMA 18 months ago stopped reporting SIFO shows how artificial the price curve is for silver. Back then the LBMA stated in effect that customers were unable to transact at the SIFO rate being quoted, which meant that paper pricing was unrealistic because sellers of paper were unable to commit to physical delivery at the prices being posted (that is, posted but not true dealing quotes). If silver derivatives did not dominate the pricing structure, the price of physical silver would be much higher. A similar situation prevails in gold, but is not as extreme (that is, prices in gold are not as unrealistically low as they are in silver).

2. What new improvements would you like to see/recommend?

There are two very different silver markets. One is for physical silver, which is a tangible asset of limited availability. The other one is for paper silver, which includes derivatives of all sorts that can be issued in essentially unlimited supply, meaning that it is impossible for ALL sellers of these derivatives to meet their commitments to deliver physical silver if called on to do so. The paper silver market is in effect a fractional reserve system, which obviously could result in adverse systemic consequences for banks and other participants should a silver squeeze occur (as it did in September 1979 to January 1980). These two silver markets need to be clearly delineated for the benefit of market participants, and the short side of the paper silver market needs to be controlled with rigid governors to impose discipline on the quantity of paper issued. If the prices of silver along the curve (that is, spot or forward) in these two different markets are to intersect as they do now, the shorts in the paper market need to prove that they can deliver physical metal. Doing so would improve the accuracy of any price discovery in the silver market by making spot and forward prices more realistic because they would become an authentic reflection of true supply conditions. Namely, there would be an acknowledgement that the supply of physical silver is limited. Thus, silver price discovery would be improved by imposing discipline that would prevent the paper shorts from dominating the price of physical silver.

3. What are the essential features that you would wish to see in any replacement?

Derivative contracts can settle in either cash or metal. Both the buyer and the seller need to put up margin as evidence of their ability to fulfill the terms of the contact they enter into. These margin requirements are now met generally by providing cash. Though margins can also be met with physical metal in some cases, it is rare. My proposal would be for cash settlement contracts to be margined with cash, regardless whether the participant is long or short the contract, and can be essentially unlimited in terms of the number of contracts issued. In contrast, derivatives that commit to deliver physical metal should be margined differently, in effect controlling the shorts which in turn also would result in disciplined control of the longs of these contracts. Those who have bought a contract that could result in the delivery of physical silver should meet their margin requirement with cash. But those who have sold short a contract that could result in the delivery of physical silver should meet their margin requirement by having physical metal stored in an LBMA-approved vault. As is now the case, the size of the margin requirement can be periodically set by an exchange for exchange-traded derivatives or a regulatory body such as the Bank of England for over-the-counter trade derivatives. Note that even though the short sellers of contracts that could result in the physical delivery of metal are meeting their margin requirement with physical metal, the fractional-reserve nature of the physical market will not disappear. For example, if a 50-percent margin requirement was imposed, the commitments to deliver physical metal in the aggregate could grow to twice the available stock, unless of course the short sellers have additional physical metal available that is not being put into LBMA vaults for margin. But the objective of requiring these short sellers to meet margin requirements with physical metal is not to try eliminating the fractional-reserve aspect of the market, which is probably an impossible task given the human tendency to expand credit. Rather it is simply a method of imposing prudent discipline on the silver market by controlling short sellers of silver derivatives.

4. Which market participants would be the ideal contributors to the pricing mechanism? (for example, bullion banks, manufacturers, refiners, others?).

All market participants should be the contributors to the pricing mechanism. When a trade takes place on an exchange or over the counter, the data of that trade should be immediately provided to neutral third parties to collect and report (for example, Bloomberg, Reuters, et al.). Aggregate data should also be reported. For example, this would include measurements of the total outstanding commitments for physical metal by size and forward date.

5. Other comments on the pricing mechanism?

While I have focused almost exclusively on silver, my analysis and recommendations also apply to gold."

- Source, James Turk via King World News


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Thursday, June 26, 2014

Government is the Real Manipulator of Gold

A select group of bullion banks are simply the front-men, acting as agents of the gold price suppression scheme devised and engineered by governments, and Barclays Bank may not even be among this chosen group. After all, it was accused of manipulating the gold price by a dollar around the London fix, but the FCA did not investigate the big $18 drop in the gold price that had already occurred from the previous day. The FCA only went so far to note the impact on the gold price from extreme selling in the US market by reporting that there was “a drop in the price of August COMEX Gold Futures (which was caused by significant selling in the August COMEX Gold Futures market, independent of Barclays and Mr Plunkett).”

So who was the real manipulator of the gold price that day? Why isn’t the CFTC doing its job by investigating this manipulation? And what about investigating the flash-crashes where imponderable weights of gold are sold on the COMEX in mere seconds?

You will get old waiting for an investigation. We all know that the CFTC turns a blind eye to the manipulations by the US government. But at least something is being done in London. The FCA made a small step in the right direction, and so has the LBMA.


- Source, James Turk via King World News


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Monday, June 23, 2014

Gold Manipulation Starting to be Covered by Mainstream Media

We’ve seen manipulations like this time and again over the years, but there has been a major new development. The mainstream media is starting to write about these manipulations in the wake of the fine imposed on Barclays Bank by the Financial Conduct Authority, which is the UK’s regulator.

This £26 million fine is of course a drop in the ocean when compared to fortunes made over the years by the price manipulators. But the fine is big enough to start drawing mainstream media attention to the skulduggery going on in gold.

An article by Bloomberg is particularly revealing, relying as it does on the FCA’s document that reports its investigation of this one particular gold price manipulation by Barclays Bank. It makes clear how the paper market is being used to manipulate the price of physical gold, which ignores the reality that the supply of physical gold is limited, while the supply of paper commitments to deliver gold is essentially unlimited.

This means that gold - and silver too - operates on a fractional reserve basis. In other words, there are far more commitments to deliver physical metal than there is physical metal available, so when the music stops - which it always does eventually - the result will be a systemic failure as occurred in 2008 when Lehman Brothers was unable to meet all of its derivative commitments.

The important point is that the FCA report illustrates how the Barclays “exotic options” trader, Daniel Plunkett, twice conjured up out of thin air up to 150 LBMA good delivery bars that he did not own (then valued at $93.5 million) in order to force the price of gold lower during the fixing process. He then covered this short position by ‘buying back’ these non-existent bars from the trader at Barclays spot metal desk.


- Source, James Turk via King World News


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Friday, June 20, 2014

Derivatives, Sound Money and the Move to Tangible Assets


Chris Martenson, economic analyst at and author of The Crash Course and James Turk, Director of the GoldMoney Foundation talk about banking, derivatives, sound money and the move to tangible assets. James Turk mentions that today, commercial banks as well as central banks are leveraged at unsustainable levels. While both agree that it makes sense to get back to less risky traditional banking and a sound money system, Martenson raises the question of how it will be possible to bring the leverage down to prudent levels again and how to get rid of the huge amount of complex derivatives. That said, Martenson argues that the gold standard has been proven to be a working monetary system with automatic leveling functions. As a result of the coming structural changes to our monetary system, both men recommend owning tangible assets. They point out, that those who act first have a great advantage.

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