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A fascinating little controversy has developed in
our camp.
On Monday GATA's great friend David Schectman of the Miles Franklin coin and bullion
dealership in Minnesota related in his blog the account of a bullion trader
friend, Trader David R, who says that major investment banks are making a
risk-free trade out of gold by obtaining free money from the Federal Reserve,
buying real metal, selling futures against the metal, and collecting the contango. That is, the big dealers would not be naked
short, or at least not as naked short as long suspected.
As Schectman did not
identify his friend and the story thus rested on an anonymous source, it was
less than authoritative. But it was plausible and there aren't too many
people in the gold business more trustworthy than Schectman,
and he wasn't attesting to the veracity of his source's account but rather
just passing it along because it was so relevant. Schectman's
commentary was headlined "The Cartel and Hedgies
Are Short Paper but Long Physical Gold" and it's posted at the Miles
Franklin Internet site here:
http://blog.milesfranklin.com/the-cartel-and-hedgies-are-short-paper-but...
Anyone following GATA closely might start
questioning the trader's story by noting the disproportionate short position
in silver futures of JPMorganChase. But then could
Morgan be the front in silver for other investment houses?
GATA's great friend Bix
Weir of the Road to Roota letters quickly put
together the arguments against Trader David R's story. Those arguments
include the Morgan short position. Weir's commentary is headlined "Are
JPM's Comex Silver Positions Only a Hedge Against
Physical in the Warehouse?" and it's posted here:
http://www.roadtoroota.com/public/1013.cfm
It's all a lot to think about and keep in mind.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
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GATA here:
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Resource Investment Conference
Thursday-Friday, September 27-28, 2012
Toronto Sheraton Centre Hotel
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Orleans Investment Conference
Wednesday-Saturday, October 24-27, 2012
Hilton New Orleans Riverside Hotel
New Orleans, Louisiana
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