I wonder if this story is true? if it is who knows what will happen! Sources from GATA (the Gold Anti-Trust Action committee) report growing distress for participants in the COMEX gold contracts, where a commercial party is very short and in deep trouble. They have sold more gold bullion than they can deliver. They are likely one of the big banks who violate the law with impunity, with USGovt sanctioned protection. By that is meant they routinely do not post 90% of the metal as collateral that they illegally sell. This is naked shorting by any other name. There are reports of grave concern over the upcoming June gold option expiration. If too many deliveries are ordered, then the commercial shorts would be under stress for exposure for naked shorting. They will eventually be caught in a bind and default on contracts. The important loaded monthly contracts are March, June, September, and December. The COMEX has tried to limit the ability of buyers to take delivery, running them around in circles, and entangling them in red tape, all clearly restraint of trade endorsed by the USGovt. Such rules are not in effect for cotton or soybeans or crude oil or pork bellies. After all, a financial crime syndicate has taken control of the USGovt, ever since Robert Rubin took charge at the USDept Treasury in 1992. His major project was to gut the nation of its gold, for the private profit of his friends. Recall Rubin came from Goldman Sachs. Rubin was the author of the Strong Dollar Policy which brought ruin to the nation. Hey, just my opinion! Background inventory strain has come from unexpected sources. The Germans have demanded that gold bullion held in US custodial accounts be returned to their owners, with physical gold shipped back to Germany. The Dubai bankers have demanded that gold bullion held in London custodial accounts be returned to their owners, with physical gold shipped back to the United Arab Emirates. They are following the hired German counsel. In all likelihood, neither US nor London sources are in possession of all the gold held in those custodial accounts, since at least some of it probably was improperly leased. By that is meant without owner permission or knowledge. So an uproar could come soon with charges of gold bullion theft, or at least failure of fiduciary responsibility. Theft is a simpler description
How times change. When I was in journalism school almost 60 years ago "Sources from (insert name of party with ax to grind here) report . . ." was classified as "rumor", not "news".
Similar stories about a Comex default for a couple of years. The reasoning is sound, but so far it hasn't happened and the shorts have somehow managed to meet deliveries.
Hi Yankee, The whole of the article you quote is on the Web at http://news.goldseek.com/GoldenJackass/1243519200.php It's fascinating but, in my view, a bit over the top. He's certainly correct that many Comex contracts, for 100 ounces of gold each, are sold by people who do not expect to be asked for a 100 oz bar when the contract expires ... they expect to settle up in cash. And he's probably correct that many of them do not have a 100 oz bar for each contract in the first place. This merry-go-round is threatened by Germany and Dubai taking physical metal out of the system: in the first quarter of 2009, Germany imported 59 tonnes and Dubai 140 tonnes. But I doubt whether this is due to any attempt "to lay waste to the vehicles used by the US-UK bond trafficking syndicate totally saturated with corruption, dishonesty, and collusion, replete with greed, totally absent conscience." In the case of Germany, a lot of citizens are buying physical gold as a hedge against any damage the credit crunch may do to the euro. An entrepreneur has even set up his first slot machine dispensing gold bars: http://jetzt.sueddeutsche.de/texte/anzeigen/476803 In the case of Dubai, the success of Exchange Traded Funds tied to gold has meant the purchase of many tonnes of gold ... which they want to keep in the vaults of the Dubai Multi Commodities Centre rather than in London: http://www.business24-7.ae/articles...5132009_4d115a2aa5da4d69b8e7350a8875bd9d.aspx Both of these developments will reduce the liquidity of the markets in New York and London, but I'm not (quite) willing to read conspiracies in them. Later, John
I'm not sure if this is a serious concern or not (I'm betting not), but if you're especially concerned whether or not any given company can fufill a gold contract or not, one simple solution presents itself: don't buy gold on contract or paper. Buy physical gold instead. You have it in your hand, there's no risk of not getting what you paid for, because you already did. Only thing you have to worry about then is if it gets stolen (well, just put it in a safe or in a safety deposit box) or if it goes down in value.
Agriculture commodities are shorted all the time. I've sold 80% of my expected yeild for future delivery several times. When the crop is harvested - I buy the shorts back and sell my crop under cash contracts.
Right on. Thanks, hontonai. Yes, this is definitely NOT legitimate news. There's a lot of crapita out there masquerading as "news" and "documentary".
Hi Farmer (nobody is "just" a farmer) You're quite right, of course, and many gold mines do the same sort of commercial shorting. They need money to dig or extend the mine; so--instead of borrowing the money from a bank--they sell some of the gold in the mine for future delivery in a few years. They may gain by doing this, they may lose, but even the wildest conspiracy theorist isn't worried by it. What raises the rumour level is the number of speculative shorts ... gold futures sold by people who have only borrowed gold ... or maybe even no gold at all. If you can get away with massive "naked shorting" you can create the impression in the market of a lot of gold available for sale ... and thus depress the real gold price. To get away with this you would need the assistance--or the incompetence--of those in authority. Therein lie the roots of many fine conspiracy theories! :bigeyes: One of the wildest is that the UK Prime Minister, Gordon Brown, is not a fool. Between 1999 and 2002, he sold 400 tonnes of the UK's gold reserves at an average price of $275 an ounce. Conventional wisdom is that this was a ghastly and expensive mistake. Conspiracy theory says a number of large financial institutions, which the Government could not allow to fail, had gambled and lost in gold derivatives, and needed to deliver large quantities (many tonnes) of physical gold. The cheapest and quietest way for the Government to bail them out was to sell them gold. Later, John
