Gold Manipulation theories ripped on by Bill Fleckenstein

[Awoke]

I am listening to this KWN broadcast and Bill rips on the manipulation accustions unrelentingly. I would like to hear some GSus opinions on what he says.

If you click the link and let the page load, there will be a picture of Bill.
Fastforward by dragging the marker so it is pretty much directly underneath the left lapel of his coat, which is on your right-hand side.

...then listen and discuss.

He makes some pretty stong statements, at the least, however he hasn't made mention of the 100:1 fractional reserve stlye ratio that the banks are selling paper gold at yet...

http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/5/6_Bill_Fleckenstein.html


(Yes, I see the "stein" in his name.)

[gunDriller]

often i listen to a good webcast more than once because it takes a while to absorb it all & i miss things.

what Fleckenstein had to say - says more than him than it does about the market.

he's a troll, a shill, something like that.

[Awoke]

That was the feeling I had when I listened too...

[Book]

Fleckenstein

His name says it all.

:oo-->

[Awoke]

Now check this out, after listening to Bill try to convince people that Silver and Gold manipulation do not exist;

From GATA:



In Treasury report, shocking evidence of silver price suppression

Submitted by cpowell on 10:42AM ET Friday, May 7, 2010. Section: Daily Dispatches
By Adrian Douglas
Friday, May 7, 2010

The U.S. Treasury Department's Office of the Comptroller of the Currency (OCC) has just released the Quarter 4 2009 bank derivatives report, which can be found here:

http://www.occ.treas.gov/ftp/release/2010-33a.pdf

This report contains shocking new evidence that can be interpreted only as blatant manipulation of the silver market. Before looking at that evidence specifically, consider some other important points in the report:

"Executive Summary.

"-- The notional value of derivatives held by U.S. commercial banks increased $8.5 trillion in the fourth quarter, or 4.2 percent, to $212.8 trillion.

"-- U.S. commercial banks reported trading revenues of $1.9 billion in the fourth quarter, down 66 percent from $5.7 billion in the third quarter. For the year, banks reported record trading revenues of $22.6 billion, compared to a loss of $836 million in 2008.

"-- In the fourth quarter, net current credit exposure decreased 18 percent, or $86 billion, to $398 billion. Net current credit exposure dropped 50 percent during 2009.

"-- Derivative contracts remain concentrated in interest rate products, which comprise 84 percent of total derivative notional values. The notional value of credit derivative contracts, at $14 trillion, represents 7 percent of total notionals. Credit derivatives notional totals increased by 8 percent during the quarter."

Imagine: an increase of $8.5 trillion in notional value of derivatives in just three months.

It sure looks like the banks are working hard to reduce risk and avoid a recurrence of the financial meltdown of 2008 that was caused by the failure of Lehman Bros. and its monstrously oversized derivatives book.

It also looks like the regulators are working hard to make sure that the risks are not concentrated in a few banks that are "too big to fail." The comments in parentheses are mine, not those of the OCC, although you could probably have worked that out for yourself:

"A total of 1,030 insured U.S. commercial banks reported derivatives activities at the end of the fourth quarter, a decrease of 35 banks from the prior quarter.

"Derivatives activity in the U.S. banking system continues to be dominated by a small group of large financial institutions. Five large commercial banks represent 97 percent of the total banking industry notional amounts and 88 percent of industry net current credit exposure. While market or product concentrations are normally a concern for bank supervisors, there are three important mitigating factors with respect to derivatives activities.

"First, because this report focuses on U.S. commercial banking companies, there are a number of other providers of derivatives products whose activity is not reflected in the data in this report."

(Do you seriously expect us to believe that these other providers significantly dilute a 97 percent monopoly?)

"Second, because the highly specialized business of structuring, trading, and managing derivatives transactions requires sophisticated tools and expertise, derivatives activity is concentrated in those banking companies that have the resources needed to be able to operate this business in a safe and sound manner."

(You have to be kidding me! Where have you guys at the Treasury been the last two years?)

"Third, the OCC and other supervisors have examiners on-site at the largest banks to continuously evaluate the credit, market, operation, reputation, and compliance risks of derivatives activities."

(And how did that work out for you in 2008?)

"In addition to the OCC's on-site supervisory activities, the OCC continues to work with other financial supervisors and major market participants to address infrastructure issues in OTC derivatives, including development of objectives and milestones for stronger trade processing and improved market transparency across all OTC derivatives categories."

(How much more "transparency" do you need to "see" that $206 trillion of derivatives in five banks with combined assets of a measly $5.4 trillion is a "daisy-cutter" bomb big enough to wipe out all things paper on the planet?)

You have to love those "mitigating factors" that the regulators offer as to why five banks owning 97 percent of $213 trillion of derivatives is not a problem. The increase in notional value of all derivatives in just three months is equal to 75 percent of the U.S. gross domestic product. Do the "sophisticated tools" that these bankers require to write derivative contracts include bongs and the strongest hallucinatory drugs on the planet?

Let's have a look at the gold and precious metals derivatives and compare Q3 to Q4 2009.

The gold derivatives of all maturities declined 1.3 percent to $99.9 billion, which was due to a decline in JPMorgan Chase (JPM) holdings of 1 percent to $82.1 billion and a decline in HSBC holdings of 11.2 percent to $16.2 billion.

But the real shocker is in silver. The precious metals (silver) derivatives of all maturities increased by a mind-boggling 37 percent, from $9.29 billion to $12.8 billion. This came principally from increases in the less-than-one-year maturities where the JPM holdings increased 34 percent to $6.76 billion and HSBC holdings increased 58 percent to $4.7 billion. (Despite the radically different percentage increases, interestingly the increases at JPM and HSBC were identical in dollar amounts at $1.7 billion.)

This increase in notional value of silver derivatives represents approximately 220 million ounces, which is 125 percent of the global production of silver during the quarter -- and that is only the increase. The entire notional value represents 106 percent of annual global production.

What possible legitimate purpose could such a monstrous derivative position be serving with a maturity of less than one year?

The only purpose I can think of is for manipulation of the silver market. I am not a regulator but I can't think of any "mitigating factors" for that.-----

Adrian Douglas is publisher of the Market Force Analysis letter (www.MarketForceAnalysis.com) and a member of GATA's Board of Directors.

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[JDRock]

(Yes, I see the "stein" in his name.)


thats the only thing i need to see....

[Ash_Williams]

I can't listen to the thing at work but the gold and silver manipulation may not be all it's cracked up to be.

Silver has investment demand and industrial demand. Industrial demand uses up silver.
Investment demand is split into two camps... the people that are buying because they will sell later, and those that have been psychologically conditioned to never sell. The second camp takes silver off the market for a longer period of time than the first camp.

Industrial demand is always met with physical supply. A company producing plumbing solder can't just buy a piece of paper saying they have 1 ton of silver and melt that into their product. They need the real silver. An investor, however, can purchase that piece of paper because the only use they have for it is to later sell that piece of paper. The paper silver is only satisfying the demand for paper silver, which is merely investment demand. Those people holding paper silver don't care if they ever get a heavy bar of metal because what they want is more cash. They don't care if they can't take delivery... they don't want to take delivery...

In the short term the price can be manipulated but I don't believe that without the paper we'd be seeing $150 silver or anything. Much of the supply is fake paper but at the same time so is much of the demand. We might see the price spike for a short while if everyone had to cover their short positions, but it would return again to a price much like today's. Investment demand is temporary and will turn into supply when the price is right.

Gold is different because of it's use in backing money and as a reserve. If it was decided that physical gold was needed to back money then there would be an increase in the price for as long as that lasted.

[gunDriller]

Gold is different because of it's use in backing money and as a reserve. If it was decided that physical gold was needed to back money then there would be an increase in the price for as long as that lasted.

i have to wonder if there are any forward thinking central bankers out there who are adding silver, as well as gold, to their currency reserves. and maybe palladium & platinum too.

[Awoke]

Much of the supply is fake paper but at the same time so is much of the demand.

Good point.