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It’s Friday already, my last day of filling in for David. He is officially a “snowbird,” but raring to get back at it following a week of unprecedented political and market turmoil (which will only INCREASE in the coming weeks). I’m already salivating at writing my RANT, as tomorrow is Guy Fawkes’ day, when Europeans remember one of history’s most notorious, and celebrated, acts of treason.

Today, I want to discuss two disparate subjects – the investor FEAR instilled by the Gold Cartel over the past decade, and the fraudulent GLD Exchange Traded Fund, possibly the most nefarious of all Cartel suppression tools.

The inspiration for the former topic emanates from an email I received this morning from a colleague in the gold wars, a portfolio manager heavily invested in both bullion and PM mining stocks. In this email, titled “Major PM Smash Imminent?” he refers to this disclosure regarding MF Global’s 150,000 frozen commodity accounts:
According to the trustee handling the liquidation of MF Global Inc., no other broker dealers have agreed to accept the transfer of the 150,000 MF Global accounts that were frozen on Oct 31, of which 50,000 were regulated commodities accounts.  The trustee states that if no one agrees to transfer the accounts to their brokerage, all commodities accounts WILL BE LIQUIDATED BY END OF TRADING ON FRIDAY 11/4!
Such FEAR among PM investors is exactly what the Gold Cartel preys on, as TRUST ME I understand the nervous feeling that, AT ANY SECOND, another major smash will occur. However, a decade of experience has conditioned me to such attacks, and helped me adjust my portfolio to immunize it against such actions, not to mention allow me to SLEEP more peacefully.

The Gold Cartel will do ANYTHING to manipulate PERCEPTION, seeking to attack PAPER gold under essentially any pretense. It’s the exact opposite of how the PPT operates, goosing the Dow when new developments emerge to provoke media and Wall Street “analysis” that “positive news” was received well by the “all-knowing market.” To quote my friend and hero, Bill Murphy, “Price action makes commentary.” In other words, if PAPER gold collapses the day MF Global is scheduled to liquidate accounts, the media will dutifully report that as the reason.

The primary reason PM investors are so FEARFUL of the Cartel is because the majority of their portfolios consist of PAPER gold and silver investments, particularly ETFs (such as GLD and SLV) and PM mining shares. Mining stocks are heavily suppressed, and such suppression will only heighten as the END GAME nears, either via “rule changes” (such as increased capital gains taxes) or, simply, increased naked shorting algorithms. And don’t forget that gold and silver mining offtake agreements relate specifically to PAPER prices, despite what REAL, PHYSICAL metal is trading at. Moreover, per what I am about to discuss, “tracking” ETFs such as GLD and SLV are DESTINED to continually erode versus the underlying commodities.

It took me ten years to realize PHYSICAL gold and silver ownership not only GUARANTEES victory against the Cartel, and ultimately INFLATION, but IMMUNIZES the impact of PAPER gold and silver smashes, NEUTRALIZING the nefarious forces determined to prevent you from PROTECTING YOURSELF.

Regarding GLD, I learned a VERY alarming piece of information today. As regular readers are aware, I published a RANT last Monday depicting the COLLAPSE of the tracking ETF USO relative to its underlying commodity, West Texas Intermediate Crude oil, or WTIC. USO is now trading at a 60%+ discount to WTIC, justifying the title of that RANT, THE BEST WAY TO LOSE MONEY IN THE WORLD.

Regarding GLD, read this alarming article by Jeff Nielson, which I also published yesterday in the Miles Franklin daily blog.

‘D-Day’ Near For GLD

As I’ve discussed ad nauseumfor years, GLD has a litany of investment risks that make Enron and Madoff Securities, look like pikers. I have NO DOUBT GLD and SLV were created as Cartel slush funds, aiming solely to draw investor funds away from PHYSICAL gold and silver and into these opaque, unaudited, and for all intents and purposes, unregulated PAPER ETFs. I’d go into greater detail, but I’ve done so in minute detail on numerous occasions already (please contact me if you’d like the related RANTS).

Currently, both GLD and SLV trade at roughly 3% discounts to the underlying prices of PHYSICAL gold and silver, having both gradually declined at the same rate since their respective launches in November 2004 and April 2006. However, I now fear the rate of erosion will accelerate, based on the following adverse change, buried deep in the GLD prospectus:
On the 11th day, of the 11th month, of the 11th year (November 11, 2011) the self-imposed cap on the rate of dilution for this fund expires. From this point onward, the fund will be diluted by any/all “expenses” incurred while administering the fund.
The PRIMARY risk to GLD and SLV is they don’t own the gold and silver they claim. In fact, I am 100% sure this shortcoming will be exposed in time, destroying all investors in these fraudulent funds. However, as we all know well, the Cartel has its tentacles deep into the nation’s government and regulatory infrastructure, and consequently could prolong the GLD and SLV frauds well into 2012, and potentially 2013.

Irrespective, I believe this tiny footnote will go largely unnoticed by the investment community, allowing the custodians to aggressively rape and pillage the funds indefinitely. Consequently, I wouldn’t be surprised to see GLD and SLV trade at 10% discounts to the underlying metals a year from now, and eventually the 60% discount USO has deteriorated to.

This is why you must own PHYSICAL gold and silver, the ONLY way to guarantee PROTECTION against the coming rampant, and likely hyperinflation.