1. Gold and Silver Manipulation
Possible manipulation and outcomes
Jeff Glenn

2. Gold and Silver Manipulation
Down the Rabbit Hole
The Players
History
Gold Manipulation
Silver Manipulation
Physical Shortages
A Rigged Game
Possible Outcomes
Deeper Implications

3. The Players Treasury - Paulson Fed Reserve - Benanke
Central Banks – Trichet, et al
Bullion Banks
JP Morgan
Goldman Sachs
Citibank
Barrick
Deutche Bank
UBS …
Comex

4. History US Revolutionary war – Continental 1st failed currency
Constitution a response to ensure non-fiat currency
Gold/Silver based Money = prosperity for hundreds of years
st National bank of the US – Inflationary failure
nd National bank of the US
1834 Gold price set at $20.67
1907 Bank failures used as rationale for
1913 Federal Reserve and IRS
Still backed by Gold convertibility
1929 Stock Market collapse – Gold falls a bit during deflation

5. History 1933 - FDR responds to depression
Requires Gold be turned in at $20.67 oz
Devalues dollar by setting the price of gold to $35 oz to end depression
1944 Bretton Woods – Strong US dollar becomes reserve currency backed by Gold
1971 Nixon stops Gold convertibility – US insolvent
1972 $38 oz
1973 $ oz
1974 Gold Legalized
2009 Reserve Status? (75+ Trillion in obligations)
Dollar has been devalued by 98% since 1913 (96% just since 1974)

6. Gold Manipulation Gold Leasing
Initial paper on the usefulness of Gold manipulation to prevent Gold’s early warnings
Stop auditing of government reserves
Paul Volcker’s comment
“In 1980 we neglected to control the price of gold. That was a mistake.”
Alan Greenspan’s comment
"Central banks stand ready to lease gold in increasing quantities should the price rise.“ testimony to Congress on July 24, 1998

7. Gold Manipulation Direct Selling
Central Banks – Washington Agreement US
TITLE 31 > SUBTITLE IV > CHAPTER 51 > SUBCHAPTER II > #5116 (as of Jan. 2, 2006) – Treasury may buy sell gold/silver with approval of president
IMF may sell gold
Comex futures exhibit manipulated patterns
Price rises overseas and during the 1st hour in NY it is crushed.

8. Gold Manipulation - Missing Gold
US gold has not been audited since 1955
8,133 tons of Gold on US books
1,700 tons at West Point gold reclassified as "Custodial Gold"
“U.S. gold reserved” reclassified as "Deep Storage”
Much may have been leased out which may mean there is little or no gold left
Accounting changes could imply many things
Government is actively preventing auditing of our Gold reserves.
IMF’s gold looks to really be a claim on sovereign gold which means proposed IMF sales will probably never happen.

9. Gold Manipulation – GATA lawsuits
1st dismissed no standing
Blanchard coin then sued
Barrick gold tried to have it dismissed claiming that they are an agent of the government
Settled out of court
GATA Freedom of Information suits being fought tooth and nail
Fed redacting key portions and entire documents
Word games at all levels

10. Gold Manipulation Possible Explanations
Deleveraging and flight to safety
Mining companies hedging of production
My evaluation – they manipulate as needed because in the end this is a confidence game

11. Gold Supply Supply Demand Deficit of ~700 tons
4-5 Billion oz (125, ,000 tons) of above ground gold
~2,500 tons (~2%) is mined every year but this has been going down for years
~800 tons of scrap gold is recycled
Demand
~4,000 tons
Deficit of ~700 tons
The deficit is currently supplied by Central Governments
All Gold would cost only ~$3.4 Trillion ($730/oz)
~$700 Billion for all Central Bank Gold.
12/2-4 Gold in backwardation (spot price > future price)
Antal

12. Gold - Holders ~19% held by Central Banks and Official Organizations
US 8,133 tons
Germany 3,413 tons
IMF 3,217 tons *claims against others?
France 2,540 tons
Italy 2,451 tons
Switzerland 1,064 tons
Japan 765 tons
GLD tons
Netherlands 621 tons
China 600 tons
ECB 563 tons
Russia 457 tons

13. Silver Manipulation Case for Silver Manipulation
Similar story different verse
Manipulation directly by bullion banks
Bullion banks take big short positions and kill leveraged longs
Derivative contracts exert leveraged movement
Silver market is tiny and thus easy to manipulate
In 1997, Warren Buffett purchased 130 million ounces (4,000 metric tons) of silver at $4.41 per ounce (total value $572 million).
All available silver could be bought for only ~$7.5 billion ($10/oz).

14. Silver Manipulation Most Central banks do not have silver reserves
China had massive reserves but there do not seem to be any records of what has happened to them
Not viewed as strongly as money mostly a commodity
Manipulation is likely as 1-3 banks have massive short positions and drive the market
Bear sterns position was not liquidated as would be the normal practice in a default but was simply transferred to JP Morgan.

15. Silver Manipulation - Supply
Silver is much closer to an acute shortage only Billion oz (15,000-31,000 tons) because silver is consumed
In ground Silver to gold ratio 8-20 to 1
Physical – Paper premiums approaching 50%
Current pricing is reducing supply
60-80% of silver comes as a byproduct of other metals (Nickel, Copper, …) and many of those mines have already been shut down
Some estimates of as much as 60% of all silver mines are unprofitable now and will likely be shut down.
New exploration is falling off a cliff because juniors cannot obtain funding. Existing discoveries unlikely to move forward.
It takes a long time to reopen mines (Financing, Hire workers, etc.)

16. Silver Manipulation - Demand
Industrial demand is inelastic (i.e. $2 silver in a $500 item) TV
Mirrors
Electronics
Industrial demand has exceeded supply for 15 years
Current above ground stockpile is probably <500 million oz.
Compare this with the current Gold stockpile of 1 billion oz.
This is one of the most under reported stories out there

17. Silver Manipulation – Mispriced Market
In the ground the ratio of silver to gold is estimated at somewhere between 8 to 16 ounces of silver to 1 ounce of gold.
The market is currently pricing 88 ounces
of silver to 1 ounce of gold. From
mean ratio is
Given the above ground stock imbalance (a new situation) we will probably see a massive correction when the world wakes up to this reality.
The monetization (viewing silver as money) of silver is a key driver in this ratio and is why silver has far more volatility than gold.

18. Physical Shortages
Physical gold and silver have traditionally sold for a nominal price over spot
Current demand for Gold is so high that these prices have jumped from $5 to $40 per ounce over Comex futures price
The demand is causing delivery delay or outright suspension of orders at dealers and mints
US Mint
Suspension of sales of Golden Eagles and Golden Buffalos
Very limited allocation of Golden Eagles
Interestingly the US mint was able to handle 10x the current demand in the past
Perth Mint
Working 24x7 with three shifts the Perth mint on 11/22 suspended new orders to resume 1/12/2009 possibly with allocation.

19. Physical Shortages
Price differences result in physical shortages and is often the hallmark of a manipulated market

20. A Rigged Game Government action against alternative gold money systems
Liberty dollar shut down and Gold coins confiscated
E-Gold executives charged for not complying with money laundering laws
Have been unable to shut down goldmoney.com since it is domiciled outside of the US

21. Possible Outcomes - Comex failure
Investors are taking delivery in increasing volumes.
Bullion banks taking delivery – Do they know something?
JP Morgan
Goldman
Citibank
Current demand increasingly driven by the spread between Comex prices and physical prices.

22. Possible Outcomes - Comex failure

23. Possible Outcomes – Comex failure

24. Possible Outcomes – Comex failure
Recent Changes in Central Banks Views
Many nations have sold gold to support the illusion that it is not of value. UK
Washington Agreement to limit sales
Many signatories have stopped sales (only 34 tons so far)
A number of rumors of countries buying Gold
Iran
Oil countries (Dubai, Saudis, Russia)
India
China
Russia
Qualitative Easing = Inflation (beyond the already high 10%+)

25. Possible Outcomes Possible outcomes Government Responses
Deflation/Disinflation followed by Recovery
Result – You probably make a profit since historically precious metals do well during recoveries.
Deflation/Disinflation followed by Inflation
Result – You could double your money.
Deflation/Disinflation followed by Hyper-Inflation
Result – Jackpot*
Government Responses
Currency Devaluation
Result - Jackpot*
Replacement currency
* Unless the house changes the rules

26. Deeper Implications Because the government manipulates
Statistics (CPI/PPI/GDP/Employment/…)
Stock markets via the plunge protection team
Bankruptcy via government takeover
Treasuries via Fed actions most clearly by buying them
Gold/Silver only makes sense
Are we really free when government can choose winners and losers and manipulates what should be free markets?
Transparency must be demanded of our government and the federal reserve so we can enjoy real Free Markets
Contact your congressmen
Tell everyone
If true how will Americans react upon learning the truth?

27. References http://www.gata.org http://www.dailyreckoning.com
Outstanding and detailed information on gold manipulation. Daily links to global news related to gold manipulation. Many other links on website.
Overall view of failing fiat dollar and government manipulation of gold and silver markets.
In depth silver market analysis.
Movement created by Ron Paul to campaign for government and monetary reform.