Close X Cookies are necessary for the proper functioning of By continuing your navigation on our website, you are accepting the use of cookies.
To learn more about cookies ...

PMs and the LME Warehouse Scam

IMG Auteur
Published : July 02nd, 2011
466 words - Reading time : 1 - 1 minutes
( 0 vote, 0/5 )
Print article
  Article Comments Comment this article Rating All Articles  
Our Newsletter...





Gata and ZeroHedge have picked up on this Wall Street Journal article on bankster owned warehouses restricting deliveries out to the minimum amount allowed by the LME. The scam is summarised by the Financial Times: buyers "must keep on paying rent on the metal even after you have asked for it to be delivered, giving warehouse companies a guaranteed income stream".

But with no restrictions on how quickly metal can come in (and the bankster warehouses have been bidding for metal to be delivered into their warehouses from producers) it "has had the effect of driving the cost of metal in the physical market in the US to the highest level in more than a decade relative to LME prices". The FT notes however that this creates the risk that "the LME contract risks becoming entirely detached from the physical market."

Apart from the storage fee scam, an increasing price is good for the banksters because it makes it easier to sell commodities as an alternative investment class to institutional investors (see FT on Goldman Sachs).

Problem is, with lots of metal coming in but restrictions on it going out and you end up with increasing stockpiles. That doesn't help the story that commodity prices will rise. Solution: take the metal "off warrant" which, as FT Alphaville points out, just transfers it into a "non-LME storage facilities or simply being classified private non-LME registered stock in the very same warehouses. Kept out of sight, so to speak."

The scam here is that (FT Alphaville again) "the industry still reads cancelled warrants as an indicator of physical demand" which is positive for prices, however "many of the 'cancelled' warrants are ... not transforming into real deliveries, they’re just being stacked elsewhere in the same warehouse. In which case the demand they insinuate is potentially not real at all."

Precious metals are not subject to the warehouse outward restrictions scam and the spot market is much bigger than futures anyway, from a physical point of view. However, the "off warrant" scam can be played, particularly on fools like ZeroHedge who get all excited about COMEX eligible and registered trends while ignoring (ignorant of?) the "stock" sitting in ETFs and, more importantly, the dark pool that is bullion bank vaults. And don't fall for the "its fractional" false flag. Yeah unallocated is fractional, but what is missed is that if the amount of fractional is giga-enormous, then even at 10:1 or even AIGish 40:1, the amount of physical metal being held in the system is still enormous.

Which is why I am very interested in this ETF bar list project and am doing what I can to help, as this I believe holds the potential to reveal just how big that dark pool of stock really is.

Bron Suchecki




<< Previous article
Rate : Average :0 (0 vote)
>> Next article
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
Latest Comments
06 OctS W.
Good Call. I am saying the same on nearly all his articles. To wit, he has been and remains totally wrong about the PM's for years.
05 Octovertheedge1
"To wit, the “sixth sigma” similarity of Tuesday, Wednesday and Thursday’s silver and “Dow Jones Propaganda Average” charts." When you tro...
Not Enough Gold To Pay All Holde...
03 OctDirk
Have a look at this
Another Case of Market Manipulat...
02 OctDirk
I have studied manipulation by central banks and cannot find any strong evidence that there is manipulation.
Gold and Silver Update
29 Sepjustatrader
Hi Florian, good analysis. But don't you think have a stop at 1120 would be detrimental to the longer term upside bias? It is a great level of supp...
Congress and the Fed Refuse to L...
29 Sepsonora691
Great idea!! Audit the Fed, and while we're at it, let's get someone to audit the gold vaults in Fort Knox and at the Federal Reserve's gold storag...
In Defense of Gold
29 Sepsonora69-1
In 1933, President Roosevelt outlawed the ownership or possession of monetary gold by any US individual, partnership, association or corp...
29 Sepsonora69
In 1933, President Roosevelt outlawed the ownership or possession of monetary gold by any US individual, partnership, association or corp...
Most commented articlesFavoritesMore...
World PM Newsflow
Mining Company News
Azimut Expl.(Gems-Pl-Ag)AZM.V
Azimut acquires Duquet Property, Nunavik
CA$ 0.13+30.00%Trend Power :
Corporate news
Section H Drilling 135 m South of Heberto Gold Discovery Hits Gold-Bearing Heberto Style Zones
CA$ 0.08-11.11%Trend Power :
Corporate news
Teryl Res.(Ag-Au-Gems)TRC.V
CA$ 0.02+0.00%Trend Power :
Corporate news
Northern Superior Resources(Gems-Ur)SUP.V
Northern Superior Reports Additional New Showing, Grizzly Property, West-Central Quebec
CA$ 0.03+0.00%Trend Power :
Corporate news
Integra Gold(Gems-Ag-Au)ICG.V
Integra Gold Announces Discovery of New Gold Bearing Zones at Lamaque South and Discloses Significant Drilling Results from No. 6 Vein including 22.64 g/t over 2.59 meters*
CA$ 0.30+3.51%Trend Power :
Corporate news
Teck Announces Silver Streaming Agreement with Franco-Nevada
US$ 6.74+13.28%Trend Power :
Corporate news
6:02 am Teck Resources enters long-term streaming agreement with Franco-Nevada Corporation (FNV) linked to production at the Antamina mine; FNV to make a $610
US$ 6.74+13.28%Trend Power :
Exploration and drilling
Vale do Rio(Coal-Cu-Fe)RIO
Rio Tinto’s Aluminum Production: Is There an Upside?
US$ 38.06+7.45%Trend Power :
Corporate news
Gold Road ResourcesGOR.AX
2015 Annual Report
AU$ 0.44+0.00%Trend Power :
Corporate news
2015 Sustainability Report
AU$ 6.10+1.84%Trend Power :
Corporate news
Comments closed