More Than One Experienced Observer Sees Desperation in City of London Gold Rig
Harvey Organ has been analyzing the bullion markets closely for decades. The quality and accuracy of his work is respected enough to have earned him an invitation to testify before the CFTC on position limits for precious metals back in 2010.
And he minces no words: Gold and silver prices are suppressed. With extreme prejudice.
In this detailed interview, Harvey explains to Chris the mechanics of how he sees this manipulation occurring, why he predicts this fraudulent pricing scheme will collapse soon, and why it’s critical to be holding physical (vs. paper) bullion when it does.
The real suppression of the metals started in 1988. That’s when the leasing game started and was invented by J.P. Morgan.
These guys would go around to the mining companies and say, “Listen, I’m going to pay you for your gold in the ground and I will sell it. You just pay me as you bring it out.” So that was cheap financing to the miners. Barrick, the biggest mining company of them all, went in on this and it financed a lot of Nevada projects.
Once the leasing game came, the actual selling, the extra selling, suppressed the price. In the first five years, it started at maybe three hundred to four hundred tons. It didn’t start to get really bad until probably ’97-’98 with the Long Term Capital affair. And that’s when the leasing started to become around maybe 1,000 tons of gold. And it hasn’t stopped.
And silver is the same.
And that’s why you’ve had a long-term, 20 years of suppression of the metals. The problem now is that the physical is now gone. Where is going? It’s gone from West to East.
A lot of people don’t know that China used to refine close to 80% of the world’s supplies of silver, because it’s very toxic. Up until probably ’85, the Chinese handled 80% of the world’s refining of silver. Now they’re down to 40%, but that’s still a major part of China’s industry. They are keeping every single silver ounce they refine, and gold. They are keeping it for themselves; their reserves are rising (though they don’t tell exactly). Two years ago they went up to 1,054 tons and I can assure you it’s probably triple that now. These guys are not stopping. Just like they are not stopping in oil. They know what the game is and they are slowly taking all their U.S. dollars that are on their shelf and converting them to gold, oil, copper – anything that’s real.
And the game ends when the last ounce of gold has left London — not COMEX, because in a nanosecond it will come back to here.
The big problem in London is that their derivatives on gold are about 50 to 100-to-1. That’s the amount of derivatives. So if I take out that 1 ounce, the balloon around it — the derivative – is getting bigger and bigger and bigger until it’s ready to totally implode.
And that’s what you are seeing now. So right now, people are going to say: how high can it go? And I’m going to tell you: you are going to go to sleep on Thursday night and gold may be $1,670. And then you wake up the next day and it’s going to be a banking holiday. And gold will be $3,000 bid, no offer. No offer — and it will be a banking holiday. Because there will be a failure to deliver.
You’ve got to have physical coins or bars. If all you have is a piece of paper — that’s all it is! It will just blow up in smoke.
So just go buy your physical and be thankful that you are getting it at a cheaper price today.
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Now we are to blame for the Anglo-Zionists machinations and all the problems. This guy is a lunatic of the first order- a prerequisite for working for MI6. Largely a waste of time but as MI6/English Crowns leading spokesperson you have to read his rubbish. Such a drama queen.
Oil Declines After MFG Shrinks in China and Europe
Everyone’s a Dollar Bull Now
There’s at least one thing that bulls and bears on the U.S. economy agree on: the dollar, the most undervalued major currency in the world, is due to rise as Europe’s sovereign debt crisis threatens the global recovery.
Strategists who as recently as November were predicting the dollar would depreciate against currencies of the Group of 10 nations, now say it will climb by year-end. After weakening against all but the Mexican peso among its 16 most actively traded peers over the past decade, it has gained against 13 of them since February.
Bulls say the dollar will benefit from increased U.S. hiring and an economy that’s projected to grow 2.3 percent this year, almost double the 1.26 percent for the Group of 10, according to Bloomberg surveys of economists. The currency will also gain if global and U.S. growth slows as Europe’s debt crisis worsens, boosting demand for dollar assets such as Treasuries as traditional havens from market turmoil diminish.
“We’ve become more bullish on the dollar because the economic prospects in the U.S. are improving,” Ken Dickson, an investment director of currencies at Standard Life Investments in Edinburgh, which manages about $235 billion, said on April 18 by telephone. “There are additional reasons including problems in the periphery, and a weaker euro is required to help the transition to a better economic situation in Europe.”
Scotland’s second-biggest money manager is “overweight” the dollar against the yen and the euro, meaning it owns a greater percentage denominated in the currency than is contained in benchmark indexes. The greenback may climb about 9 percent to $1.20 per euro in the next six months, Dickson said.
Currency analysts predict it will appreciate 1 percent versus other G-10 currencies by the end of this year, according to the average median estimates of strategists surveyed by Bloomberg, from a 4 percent drop expected in November.
It strengthened 0.7 percent to 81.52 yen last week and fell 1.1 percent to $1.3219 per euro. The dollar slid 0.6 percent to 81.06 yen as of 9:59 a.m. London time, and appreciated 0.5 percent to $1.3147 per euro.
Currency strategists expect the dollar to advance to $1.30 per euro and 84 yen by year-end, based on the median estimate of at least 46 analysts compiled by Bloomberg. That compares with November estimates of $1.41 per euro and 80 yen.
Demand is being buoyed as central banks in Japan and Switzerland resist gains in their currencies, with both nations seeking to protect their exporters from rising prices for their goods. That leaves the dollar as the sole haven for investors seeking refuge from Europe’s crisis.
Japan has intervened to curb the yen’s 60 percent appreciation over the past decade. The currency surged to a post-World War II record of 75.35 per dollar in October before slipping about 8 percent. The Swiss National Bank imposed a 1.20 franc per euro ceiling on Sept. 6, and the franc has fallen 0.3 percent versus the dollar since the end of that month.
Global gross domestic product will expand 3.5 percent this year and 4.1 percent in 2013, theInternational Monetary Fund said last week in its World Economic Outlook, raising forecasts made in January from 3.3 percent for 2012 and 4 percent for next year. The U.S. will grow 2.1 percent this year and the euro area is projected to decline by 0.3 percent in 2012.
The euro zone’s $12.1 trillion economy is the world’s second-largest, after the U.S.’s $14.6 trillion, according to data compiled by Bloomberg.
There’s a risk of the euro sliding to $1.25 “if sovereign funding conditions deteriorate significantly,” John Normand, the London-based head of currency strategy at JPMorgan Chase & Co., said April 19. “Our view is that the funding stress, although intense sometimes, is manageable” and the euro may rebound to $1.34 this quarter, he said in an interview.
While the dollar has benefited from its role as the world’s reserve currency, with 62 percent of global holdings, its value fell in foreign-exchange markets as the Federal Reserve printed $2.3 trillion to inject into the economy after the financial crisis began five years ago.
IntercontinentalExchange Inc.’s Dollar Index, which tracks the currency against those of six trading partners, tumbled 14 percent during the Fed’s two rounds of asset purchases, known as quantitative easing, or QE, between December 2008 and June 2011.
Strategists who expect the dollar to decline say that while the U.S. unemployment rate is at the lowest in three years, payrolls increased by the least in five months in March and the Fed may introduce more QE before year-end.
More Americans than forecast filed applications for unemployment benefits in the week through April 14, a government report showed on April 19, adding to signs the improvement in labor-market conditions may be faltering.
Fed Chairman Ben S. Bernanke said last month that further “significant” improvements in employment would probably require a more-rapid expansion.
“Prospects of QE3 had never left the table,” said Michael Woolfolk, senior currency strategist inNew York at Bank of New York Mellon Corp., the world’s largest custodial bank, with more than $26 trillion in assets under custody and administration.
Woolfolk expects the dollar to weaken to $1.40 per euro and to appreciate to 90 yen by the end of the year.
“QE3 would send a signal that the Fed wants to continue to grow the balance sheet and continue with the foot on the accelerator in terms of monetary policy,” he said. “This would be viewed as negative for the dollar by the market.”
The odds of more easing measures by the Fed are 50 percent or higher, the majority in a Bloomberg News survey of the 21 primary dealers that trade with the Fed showed this month.
Longer-term depreciation has left the dollar as the only G- 10 currency undervalued versus the euro, by 5.6 percent, based on an index by the Organization for Economic Cooperation and Development that uses relative costs of goods and services.
The dollar is too weak by 31 percent against the yen and 24 percent compared with its Canadian counterpart, according to the Paris-based OECD.
“The dollar is probably about 20 percent undervalued,” John Taylor, who manages about $4.5 billion as founder and chief executive officer of New York-based currency hedge fund FX Concepts LLC, said in an April 20 telephone interview. “It will be stronger against the euro and yen and even against the emerging markets.”
Central Bank Steps
Like the Fed, policy makers in Japan and Europe have taken steps to support their economies with fiscal stimulus.
The Bank of Japan is “committed” to monetary easing, Governor Masaaki Shirakawa said April 18 in a speech in New York. The European Central Bank issued about 1 trillion euros ($1.3 trillion) in three-year loans to area banks in two longer- term refinancing operations, or LTROs, in December and February.
New Fed stimulus may be sterilized, which would involve the simultaneous draining of cash from the banking system through the repurchase agreement market. The central bank is now replacing $400 billion in shorter-term holdings with longer-term debt in a program called Operation Twist that expires in June.
“The bias at this point is toward steady monetary policy in the U.S. relative to other central banks that could ease further,” Nick Bennenbroek, head of currency strategy at Wells Fargo & Co. in New York, said in an April 17 telephone interview. “The economy in the U.S. is going to be steady, so when we look at those trends elsewhere, we feel the dollar should benefit overall.”
Dollar Index Rally
Wells Fargo revised its year-end forecast for the dollar against the yen to 84 last week, after predicting 80 yen at the beginning of the year. It expects the greenback to end the year at $1.24 per euro.
The Dollar Index (DXY) has rallied more than 2 percent since the Fed announced the start of Operation Twist on Sept. 21. Indicators such as retail sales, manufacturing and consumer confidence signal a pickup in the recovery.
Consumer sentiment has been above 70 every month this year, according to the Thomson Reuters/University of Michigan index. The gauge averaged 64.2 during the last recession and 89 in the five years before the crisis. Retail sales rose 0.8 percent in March, exceeding the 0.3 percent median estimate of 81 economists surveyed by Bloomberg, Commerce Department data last week showed.
The ISM index of manufacturing activity jumped to 53.4 last month, from a two-year low of 51.4 reached in July. It is down from a high of 59.9 in January 2011.
Bets on dollar gains are growing as Europe’s debt crisis, which started in Greece in October 2009, persists. Italy last week delayed its goal to balance the budget by one year to 2014, joiningSpain in missing fiscal targets amid a worsening recession.
Hedge funds and other large speculators increased bets the dollar will rise against the euro to 118,125 contracts in the week ended April 17 from 101,364 the previous week, according to Commodity Futures Trading Commission data. Against the yen, futures traders are long the dollar by 57,803 contracts.
“We expect the U.S. economy to outperform a lot of Europe, therefore we look for the dollar to appreciate over the course of this year,” Sara Yates, a foreign-exchange strategist at Barclays Plc in London, who sees the dollar climbing to $1.25 in six months and $1.20 in a year, said in an interview on April 17. “It’s also the case that if we get euro-area risk really coming back to the fore, then the dollar will do well.”
U.S. Stocks Drop Amid Concern About Europe’s Debt Crisis
U.S. stocks fell, joining a global slump, as Dutch Prime Minister Mark Rutte offered to quit after lawmakers split over austerity plans and French President Nicolas Sarkozy lost the first round of his re-election bid.
Bank of America Corp. and Citigroup Inc. (C) dropped more than 1.6 percent as the cost of insuring against default on European sovereign debt jumped. Alcoa Inc. and Newmont Mining Corp. (NEM) fell at least 0.9 percent as commodities sank after manufacturing in Europe and China shrank. Wal-Mart Stores Inc. (WMT) slumped 5 percent amid a bribery probe in Mexico. Kellogg Co. tumbled 5.4 percent after cutting its full-year earnings estimate.
The Standard & Poor’s 500 Index lost 1.1 percent to 1,364.11 at 12:04 p.m. New York time, after last week’s gain. The Dow Jones Industrial Average decreased 133.80 points, or 1 percent, to 12,895.46 today. Trading in S&P 500 companies was 11 percent above the 30-day average for this time of day.
“Markets are realizing that messy European national politics could aggravate already complex economic and financial conditions,” Mohamed El-Erian, the chief executive officer of Pacific Investment Management Co., said in an e-mail today.
Equities from Hong Kong (HSI) to Paris and Sao Paulo slumped as the Dutch prime minister offered his cabinet’s resignation today after losing the Freedom Party’s support over the weekend on disagreements about an austerity package. French President Sarkozy and challenger Francois Hollandethrew themselves into the second round of election, vying to lead a country split over tackling immigration and ending a sovereign debt crisis.
Concern about the global economy grew as euro-area services and manufacturing declined more than estimated in April, while data indicated China’s production will contract for a sixth month, according to Markit Economics and HSBC Holdings Plc.
“There’s enough out there that can justify taking the market down,” Mark Bronzo, who helps manage about $125 billion at Guggenheim Investments in Irvington, New York, said in a telephone interview. “There’s more work to be done in Europe, yet there’s political and social pressure not to do more. The economic news was disappointing. In addition, we’re digesting a big advance in the market.”
Today’s losses reduced this year’s gain in the S&P 500 to 8.4 percent. Investors bought stocks amid better-than-estimated economic and corporate data. Earnings per share have topped forecasts at 84 percent of S&P 500 companies that reported results since April 10, according to data compiled by Bloomberg. Per-share profits grew 3.3 percent in the first three months of the year, the data showed.
Tied to Economy
The Morgan Stanley Cyclical Index of companies most-tied to economic growth lost 1.4 percent. The Dow Jones Transportation Average, a proxy for the economy, tumbled 1.7 percent. The KBW Bank Index of 24 shares dropped 0.5 percent.
American banks joined a 3 percent drop in a gauge of European lenders. Bank of Americadeclined 1.6 percent to $8.23. Citigroup decreased 2.2 percent to $33.13.
A measure of commodity shares had the biggest loss among 10 S&P 500 groups, dropping 1.9 percent. Alcoa (AA), the largest U.S. aluminum producer, slid 0.9 percent to $9.61. Newmont Mining, the largest U.S. gold producer, retreated 2.6 percent to $46.03.
Hedge funds cut their bets on higher commodity prices by the most in four months on mounting concern that Europe’s debt crisis will derail global growth and curb demand for raw materials. Money managers lowered net-long positions across 18 U.S. futures and options by 11 percent to 898,022 contracts in the week ended April 17, the most since Dec. 20, data from the Commodity Futures Trading Commission show.
Wal-Mart slumped 5 percent to $59.36. The company’s probe of possible bribery in Mexico may prompt executive departures and steep U.S. government fines if it reveals senior managers knew about the payments and didn’t take strong enough action, corporate governance experts said.
Kellogg (K) tumbled 5.4 percent to $51.10. Earnings per share, including the impact of its acquisition of Pringles potato chips, will be $3.18 to $3.30 for the year, the Battle Creek, Michigan-based company said today in a statement. Kellogg previously predicted $3.25 to $3.37 a share. Analysts projected $3.48, the average of estimates compiled by Bloomberg.
Apple Inc. (AAPL), which reports results tomorrow, fell 0.7 percent to $568.75. Quarterly reports scheduled for this week also include economic bellwether United Parcel Service Inc. and AT&T Inc., the largest U.S. phone company. Caterpillar Inc., the world’s biggest maker of construction and mining-equipment, and Amazon.com Inc., the world’s largest Internet retailer, are due to announce their results.
SunTrust Banks Inc. (STI) jumped 4.2 percent, the most in the S&P 500, to $23.55. The eighth-largest U.S. lender by deposits reported first-quarter profit that beat analysts’ estimates.
Xerox Corp. (XRX) added 2 percent to $8.03. The provider of printers and business services reported first-quarter earnings that exceeded analysts’ estimates after businesses and governments farmed out more tasks to cut costs.
Amylin Pharmaceuticals Inc. (AMLN) rallied 10 percent to $25.23. The maker of the diabetes drugs Bydureon and Byetta is seeking a buyer after rejecting an unsolicited bid from Bristol-Myers Squibb Co., two people with knowledge of the matter said.