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When
researching the precious metals, often times things
are seldom as they appear on the surface. GATA Secretary and Treasurer – Chris
Powell – has said that the true picture of a
nations’ gold holdings are, “more closely guarded than their
nuclear secrets”.
This has been more-or-less proven true based on the
Federal Reserve’s reaction to GATA’s 2009 FOIA request for
information concerning GOLD SWAPS. The Fed is ON RECORD admitting
they’ve done gold swaps – which, by definition, necessarily
utilize sovereign American gold stocks.
To date, the Federal Reserve has stonewalled
GATA’s FOIA request citing their ‘privileged status’
and reluctance to divulge ‘trade secrets’.
GATA has maintained that the Federal Reserve / U.S.
Treasury in conjunction with other Central Banks have for years been
suppressing the price of gold [and silver too] – in efforts to mitigate
and to cover up their own debasement of fiat currencies.
Historically, when Central Banks or governments
print more and more fiat money, precious metals prices RISE. The money printing is not only
inflationary but when done to excess it can undermine confidence in faith
based fiat currency regimes.
Precious metal has no counterparty risk and cannot be printed –
which is why it “is” and always will be money. Remember folks, gold is money, as
evidenced by EVERY Central Bank in the world listing gold bullion on their
balance sheet as an official reserve asset.
GATA has identified and documented that Central
Banks utilize precious metals derivatives, and in particular swaps, as a
primary method by with Central Banks rig metal prices.
In the presence of EXTREME money printing,
it’s understandable why Central Banks and governments would want to
suppress the price of gold [and silver] and be less than transparent about
their nefarious activity in this regard. Knowledge and detail regarding
these activities could undermine a nations’ currency, their credit
rating and thus their ability to service their sovereign debt.
The following data set is taken from the June, 2010
Bank for International Settlements [BIS], Semiannual OTC Derivatives Report and
it is compared to other data from the U.S. Office of the Comptroller of the
Currency’s, June, 2010 Quarterly Report on Bank
Derivatives Activities.
Relative comparison along with analysis within the
data sets sheds new light on the scope of the precious metals price
management scheme. Additional analysis is presented regarding the number and
identities of other possible [or likely] players. It also illustrates how paper
derivatives have become tools to determine/rig price instead of the
intended and stated purpose of price discovery of the underlying
physical asset.
 
source: http://www.bis.org/statistics/otcder/dt21c22a.pdf
Question: There are a total of 417 Billion
notional in Gold derivatives outstanding – AND THE GOLD / SILVER Price
RATIO is 49:1 – then WHY are outstanding notional silver derivatives
127 Billion???? These BIS
numbers suggest that the proper gold / silver ratio should be roughly 3.3:1
or silver priced TODAY at 1,400 / 3.3 = 424.00 per ounce.
Now, let’s take a peek at what the U.S. Office
of the Comptroller of the Currency tells us about “other precious
metals” held by U.S. Commercial Banks:
source: U.S. OCC
OCC data tells us that J.P. Morgan and HSBC
constitute 13.5 billion worth of the BIS’s reported total of 127
billion of derivatives in “other precious metals”. That’s about ONE TENTH of the
total. WHAT ABOUT THE OTHER 90 % ??????
Note: Even if we compare the OCC totals for
silver versus gold derivatives from the table above – OCC data is
supportive of a “proper” gold / silver ratio of 131.6 / 13.6 = 9.7 This
implies a silver price of 1,400 / 9.7 = 144.00 per ounce of silver.
Coincidentally, or perhaps not, COMEX open interest
in gold futures is roughly 600K contracts @ 100 oz. per contract that is
roughly 60 million oz of gold open interest. COMEX open interest in silver futures
happens to be about 135k contracts @ 5,000 oz per contract which is roughly
650 million oz of silver open interest [note that silver open interest is not
quite 11 times the open interest of gold]. So, again I ask,
why is the gold / silver ratio at 48: 1?????
***For
those who are not aware, silver naturally occurs in the earth’s crust
approximately 7 – 10 times more frequently than gold.
Now, let’s take a look at ALL Derivatives of U.S. Commercial
Banks as reported by the OCC:
source: U.S. OCC
Take note and remember that the breakout provided
– above - by the OCC was for Commercial Banks ONLY.
Finally, let’s now look at the ONLY OCC data table depicting
ALL Derivatives held by U.S. Bank Holding Companies:
source: U.S.
OCC
Conclusions:
- The BIS tells us that total global
outstanding “other precious metals” derivatives are 127
billion.
- General market wisdom [gleaned from OCC
Commercial Bank data] suggest that J.P. Morgan and HSBC are the two
dominant players in silver [other precious metals]
- Yet, the U.S. OCC tells us that J.P.
Morgan and HSBC combined – make up 13.577 billion of the 127
billion BIS total [roughly 10 %].
- The U.S. OCC tells us that Morgan Stanley
and B of A and Goldman have an additional combined 70 TRILLION in
derivatives – at the Bank Holding Company level – but they
give us NO HINT as to what portion of these totals consist of precious
metals activity. We are left to assume that this is because the OCC is
only mandated to regulate Commercial Banks – while Bank Holding
Companies fall under the purview of the Federal Reserve.
- Unless J.P. Morgan and HSBC are LYING to
regulators as to the extent of their silver market activity –
there are other MASSIVE players in the silver price suppression game. Who ever these ‘players’ are –
metaphorically, they MUST BE BLEEDING FROM EVERY ORIFICE with
silver’s parabolic run up in price over the past few months.
- Most likely among American entities are
MORGAN STANLEY, B of A and Goldman Sachs – since together they are
operating a 70 Trillion derivative “BLACK BOX” about which
we know LITTLE to NOTHING as it pertains to precious metals.
- Any way you slice it – precious
metals data reporting on the part of American regulators is
atrocious. Simple MATHEMATICS
tells us a gold / silver ratio at 48:1 is EXTREMELY contrived and REEKS
of manipulation on the part of the Federal Reserve and the Banks they
are charged with regulating.
Got
any physical Gold and/or Silver yet?
Hat’s off to both Alex Jones and Max
Keiser. Together, they’ve drawn attention to the ongoing paper manipulation
of the price of silver. Maybe more importantly, they’ve likely
knocked the lid off of Pandora’s Box – exposing the enormity of
ALL paper frauds being committed by the Federal Reserve and Wall
Street’s house of horrors.
Rob Kirby
KirbyAnalytics.com
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