I wrote Monday “how” and on Tuesday “why” precious metals (and all markets for that matter) are manipulated, today I will tell you “what” will remedy and the results. First, the manipulation in U.S. markets has become so blatant and so obvious that foreigners are taking note and altering their future plans. All you have to do is look around to see nation after nation, friend or foe, making plans to live and trade in a world without using dollars. China is at the center of these plans but the list is very long of nations who plan to trade in their own (or Chinese) currency. Off the top of my head, we have seen announcements from Argentina, Brazil, India, South Africa, Britain, France, Germany, Venezuela, and Australia and of course let’s not forget about Iran and Russia. This is not all inclusive but the point is …the thought process and preparation is far and wide.
Oddly, the CME group who “oversees” COMEX has made several announcements over the last couple of weeks. It seems they would like to be seen as putting their foot down on “disruptive” (manipulative) trading practices. Even odder was a story which came out last week that showed “central banks” as a category of CME customers. This “category” it seems has been given financial “incentives” to trade. Very curious indeed, why would central banks have any need to trade in the S+P futures? Why would they be given financial rebates from CME to transact trades? I see it as some sort of joke so to speak because if a central bank needs “more” money, they would just print it up right? So why the rebates? More importantly, why would CME allow central banks in as their clients? Doesn’t this look or “smell” bad in our supposed free and fair markets society? Then of course you get the skeptics out there who might wonder what gets said over a few drinks after the markets close? Nothing too important I would imagine except for where the S+P, Treasuries, oil, natural gas , silver and gold will close at TOMORROW? Ya’ think?
I wrote yesterday that gold and little cousin silver were at “the core” of it all, gold (and silver) could not be let loose to fly far above the scene shining a spotlight on the fraud. This is “why” they have been locked down …creating and opening an Asian physical exchange is the “what.” “The what” as in what is being done about it. The Chinese it seems are in the process of going live with an exchange for gold and silver which will settle physically. “Physically” as in real gold or real silver will be required and “cash” settlement will not be allowed. In fact, it will be illegal to cash settle. I can only say, this is like the dog taking his body back and refusing to let his tail wag him anymore!
Shanghai, Hong Kong and Singapore are all now in the process of creating live physical exchanges. Shanghai plans to go live on September 26th Shanghai Gold Exchange Said to Plan FTZ Contract for Sept so COMEX will have more competition as of then. Currently Shanghai operates a “futures” exchange, this as I understand will be a spot or cash exchange. Koos Jansen reports the futures exchange in Shanghai to now only have 92.5 tons remaining of silver, down from 1,200 tons a year back. Koos Jansen: China again buys the dip in gold and silver gets scarcer | Gold and Precious Metals. He also reports that silver is trading in backwardation, this should NEVER be the case unless investors are in fear of not receiving their silver (or gold) at a future date. I do want to also point out what is happening in London, they will no longer publish these “forward rates” (GOFO) so we will no longer see any backwardation when it occurs. Interesting isn’t it… the West becoming more secretive while the East becomes more transparent!
“What” I think is happening is the “two tier” market beginning to take shape that I’ve spoken of for so long. COMEX and LBMA are making changes, the “fixes” have been changed, CME no longer allowing “disruptive trading practices” (yeah right!), and forward rates no longer being published amongst others. The East on the other hand is becoming more transparent and “real” so to speak. Why do you think these events are both happening at the same time? Cause and effect or action creates reaction maybe? The East is clearly positioning itself to “price” both silver and gold. If (when) there are 2 different “prices” for one ounce of silver or one ounce of gold …which one will be the real one? Which one will designate the price for a real ounce to change hands somewhere (anywhere) in the world?
Do you see “what” is happening? China and the East are in the process of taking away the pricing mechanism from New York and London …and there is absolutely NOTHING the West can do about it! If and this “if” is a very big one, the West had vaults overflowing with silver and gold they could then thwart China by making delivery of metal. But, this “was” 10 years ago! We have already crossed this bridge and delivered out whatever metal we could get our hands on and retained the ability to “price.” We have in my opinion already thrown or “used” this card as inventories and available metal is drying up at the same time international demand remains voracious. China has plans to “guard the dog” so to speak and disallow the Western tail to wag it. Derivatives will no longer hold sway as the overriding pricing mechanism, the real deal physical is in the process of taking over and is being sponsored by the East, who’d of ever thunk it years ago? This, is “what” is happening!
Bill, I’m not sure if you saw, but the Shanghai Gold Exchange is going live 11 days earlier than planned. It’s now opening tomorrow.
http://www.reuters.com/article/2014/09/16/us-china-gold-contract-idUSKBN0HB17F20140916
this is good because there is ALWAYS a reason for what China does, I wonder if they see urgency?
since the physical Shanghai Gold Exchange is due to be live soon, one would presume that physicals, especially producer production, from everywhere excepting the US will be moving to whichever market is paying more.
I would like your view on how the FX will be working in the near term. A Canadian Miner operating in Brazil or Mexico would need Reais or Pesos for OPEX. The Greenback is still liquid everywhere, RMB not so much.
Will Shanghai be willing to use the “PEG” so miners can pay their bills?
yes, miners will now have another option for selling. I believe the Chinese will be accommodative in purchase settlement terms but cannot say for sure.
Great three part series, much appreciated.
If metals markets have been manipulated, and I have no doubt they are, I am reminded of a billboard we used to pass on the highway. It said, “Be sure…your sin will find you out.” Hopefully tomorrow’s opening of the state-controlled Shanghai Gold Exchange’s physical dealing will go a long way to exposing and rectifying the sin of precious metals price controls.
thanks Sally, by accident it sort of turned into a 4 parter, please read tomorrow.
Three great articles Bill. So, we know the “Who”, “What”, “How”, “Where”, and “Why”. The last piece to the Manipulation Puzzle is “When”. Personally, I’m with you on this and believe it will be “Soon”. “When” I say “Soon”, I’m talking the next 12 to 14 months. Keep up the good work Bill.
please read tomorrow.
Man the metals have been a real snoozer over the past year. And as far as Bills writings go, nothing short of simplistic brilliance. I look forward to each and every blog you write cowboy.
As far as price action goes, I think the perfect storm is very close.
Hope to hear Bill over at TFMR soon for another A to A with Turd for a third time. Gracias.
thanks Jeff, ask Turd, I’d love to do it.
“Forty members of the Exchange including global banks UBS, Goldman Sachs, HSBC and Standard Chartered, will participate in gold trading on the SGE’s international board”
http://www.goldcore.com/goldcore_blog/Gold_Demand_In_India_Triples_As_China_Launches_Global_Gold_Bourse_This_Thursday
It seems the usual suspects will still have their fingers in the loot. I wonder what their involvement will be. The real question is, have the Rothschilds infiltrated and corrupted China and Russia? If so then our analysis may be off and there may be more going on than what appears. I suspect however that they are not in control of the East because their actions have destroyed the western world and they want to expand their empires, not destroy one and then just merely move on and take over another. Presumably they have possession of a very large hoard of gold and plan to use this rule the smouldering remains of the west after it crumbles. But who knows, anything is possible, maybe they will become the leaders of the entire world.
let me point out that China “executes” people for fraud as they just recently did a billionaire. I would be surprised if this exchange got hijacked.
Bill, I haven’t read your article yet, but the first Wednesday Question that David answered is what I am curious about. I will understand if you do not answer my question since it might not pertain to your article.
If a $100,000 loan can’t be covered by selling $100,000 of gold, what is going to happen to a Blue Collar worker that has a $100,000 mortgage to pay and does not have savings of any kind — let alone actual gold to sell? What is going to happen to a wage earner who won’t be able to pay moderate debt or even buy the needs of life. Is this when we drop into the New Great Dark Ages? This is all probably elementary but for human civilization is seems like it may introduce the end times.
will probably lose the house.
Sell the house and payout mortgage.
Better to be debt free,its quite liberating.
Janet Yellen is wearing her gold necklace again. But I’ve got the sound off as nothing she’s saying is new. As a long-time follower of Sinclair, I am trying to “sit tight and be right”. But more and more I feel like Linus sitting in the pumpkin patch sucking thumb clutching blanket, waiting for the Great Pumpkin to rise!
WW, please know that your logic is sound and it is “all is well” contingent who are waiting for the “Great recovery” to rise. Be patient.
Wow, it appears China wants an honest gold and silver market without fraud and games.
If this would have happened 5 to 10 years ago the USA would have threatened to bomb China, but not so today as the White House stays silent!
I’m looking forward to honest markets, but will the USA ever see them?
maybe.
Bill, how does the launch of Shanghai metals exchange coincide with the COMEX silver trap you believe the Chinese have? Does this have any weight in the PBOC announcing their official gold holdings anytime soon?
it would coincide perfectly if I am correct wouldn’t it? They would also announce their holdings to aid in springing the trap shut while revaluing gold higher.
Exactly Bill…! Think you’re onto something here.. the Chinese know the west is running on fumes when it comes to physical.
they will not move until everything is in place and in their favor.
I do not see any reason to buy silver at this point in time.
It remains in a very strong downtrend
It is looking very weak and if it goes below 1820 look out below.
A 100% retracement takes it to $8.40 and there will be plenty available, inspite of all the supposition
Currently I am naked short gold. (its a bit of sport)
Be nimble,be patient.
Good things come to those who wait.
SPAM!
I used to love SPAM…not really.
Haven’t seen it around for years.
Pork shoulder and ham in a can with lots of other mystery ingredients and all kept safe with sodium nitrite. Only in America could such a culinary delight even find its way into existence.
Had it for Xmas lunch one day many years ago ( 45yrs ?) when I was ‘gone bush’ and surfing my backside off.
When you are hungry you will eat anything.
Its a bit like looking for non existent positive reinforcement by reading what is mostly poorly written, vague scenarios and misinformation dreamt up by, dare I say Bill Holter.
China advances gold exchange launch, Singapore delays contract
(Reuters) – China will launch its international gold exchange 11 days ahead of schedule, sources said on Tuesday, racing ahead in the scramble to set up an Asian bullion benchmark as rival Singapore is forced to delay its gold contract due to technical issues.
Asia, home to the world’s top two gold buyers – China and India, has been clamoring to gain pricing power over the metal and challenge the dominance of London and New York in trading.
The state-run Shanghai Gold Exchange (SGE) will launch the global gold bourse in the Shanghai free-trade zone on Thursday, two sources familiar with the matter told Reuters. The SGE had initially planned the launch for Sept. 29.
The change was made based on the availability of some government officials to participate in the launch event, one of the sources said, adding that all 11 physical gold contracts will begin trading on Thursday.
The ability to bring forward the launch, which will mark the first time foreign players will be allowed to participate directly in China’s physical gold market – the biggest in the world, shows the country’s preparedness with the exchange that it is hoping will become the center of Asian gold trading.
The response has been strong, with the bourse exceeding expectations in signing up trading members, Reuters reported earlier.
Meanwhile, Singapore has delayed the launch of its gold contract to October, two other sources said. The 25 kg contract was set to be launched on the Singapore Exchange this month. The delay was due to some technical issues in setting up the trading system, the sources said.
Officials at the Singapore Exchange and SGE were not immediately available for comment.
CME Group will launch a physically deliverable contract in Hong Kong later this year, while Dubai is also preparing to launch a contract. Thailand is also considering setting up a spot gold exchange.
(Editing by Himani Sarkar)
http://www.reuters.com/article/2014/09/16/us-china-gold-contract-idUSKBN0HB17F20140916
Bill – Why is China opening their gold exchange 11 days earlier than expected?
Why is Singapore delaying the opening of their exchange until October?
Regards
Anita
China never does anything by chance, there is a reason but I cannot tell you what it is.
http://www.thestar.com.my/Business/Business-News/2014/09/18/China-launches-gold-market-to-bolster-fortunes-of-FTZ/