There are several ways one can invest in precious metals. The first is to actually take physical possession of the metal. You buy bullion bars or coins. A second way is to invest in mining stocks. A third way is to invest in ETF’s like GLD or SLV that track the underlying metals. Each offers its own particular advanatages and disadvantages.
Buying the metal is the safest method because you have physical possession. It is also somewhat clumsy, involves storage problems and reduces your ability to get in or out of the market quickly. Mining stocks afford ease of in/out of the market, but expose one to major market moves and risks/events particular to the mining company itself. In up or down moves in the underlying metal, mining stocks often move multiples of the metal itself. ETFs offer the advantages of quick in/out
trades and high correlation to metals prices. However, they also expose you to what might be termed “Madoff” risk. While these ETFs purport to have 100% metal backing, it is unlikely, if not impossible, for that to be the case.
I use all three methods. I do have concerns about the potential for a “Madoff” problem with the ETFs so I always have stops in place below where I think the actual price of the metal can go. Thus, if I believe gold or silver itself might be in a trading range that includes a bottom of, say 10% off of current prices, I use a stop at 15% or 20% below the current ETF price. While that type of loss is not comfortable, nor is it a guarantee that one will even get out at that price, it provides some downside protection in the event that Jim Willie’s analysis below is correct. Remember, a stop gets triggered at a specific price, but a trade does not necessarily execute at that price. In panic selling, your sale might occur much lower than your stop. While I have no idea how probable Willie’s analysis might be, it is something that ETF investors should consider s a possibility. Remember, even the impossible has a 20% probability, especially in the uncharted waters we now fish.
THE COMPLETED PICTURE OF E.T.F. GOLD FRAUD
Fraudulent games have expanded in the gold market. In the last few months, much publicity has come (except to mainstream media) of how the COMEX can legally use Street Tracks GLD shares from their Exchange Traded Fund to satisfy short futures contracts in need of a buyer. Instead of rolling over the short contract, they ‘close it out’ by placing a GLD share in offset. So the corrupt pyramid of short gold futures contracts has been co-mingled with GLD shares from the ETFund. Challenges will soon come. The COMEX players and controllers do not locate and purchase gold bullion in order to satisfy the short contracts. They essentially infect the GLD shares instead. So would the real gold depository of the Street Tracks GLD fund please stand up???
In the last couple weeks, the London CME officials have had a terrible time avoiding a default. Some large players want the gold from their long futures contracts, in gold bullion from physical delivery. The Bank of England and one other unidentified central bank from the European Union have tried desperately to supply the delivery demand. In the process, they have provided and handed over more than a little ancient substandard gold bars. The London CME officials even offered a 25% dividend bonus if the gold contracts were satisfied in cash, rather than gold delivery in physical form. This entire incident centered on very high volume for gold also, not a trifling amount. Sounds like gold is worth $1300 per ounce to me!
This story grows worse, and again involves the Street Tracks GLD fund. Likely accounting fraud accompanies other efforts to confiscate their GLD backing of deposits held in gold.
The counter-parties in deep trouble are JPMorgan and Deutsche Bank, each heavily short gold and unable to produce it in the face of delivery demands. Central banks are probably aiding the plunder of private gold accounts. All integrity is at risk of being lost. Simultaneous irregularities have taken place during the LBMA ‘gold delivery incidents’ and official Gold Bar Lists maintained by the Street Tracks GLD exchange traded fund. Evidence points to the GLD gold bullion inventory taken to satisfy the London demand for gold delivery. Independent audits have begun in earnest by large private interests (mostly Arabs). Word came today the JPMorgan is accepting gold bullion in order to establish margin foundation for commodity futures trading accounts. They are indeed desperate, since a margin failure for clients would produce to JPM the gold.
So one might conclude that GLD shares are corrupted by virtue of satisfying the COMEX gold futures short contracts. So one might conclude that GLD deposits of gold as backing for the fund are corrupted by virtue of selling their gold bullion to the Gold Cartel in satisfaction of futures contract delivery demands. That seems to undermine the entire GLD fund, and to expose it as an Exchange Traded FRAUD. Fraud in physical gold deposit management is not the sole province of the Untied States and the Untied Kingdom. An Asian Depository has found ‘Good Delivery’ gold bricks to be gutted and filled with tungsten, another heavy metal. See Rob Kirby’s article entitled “Central Banking: A Blight on Humanity” and also “Blight on Humanity Addendum”.What great financial forensic analysis work!
In time the GLD might be exposed as having little or no gold, and certainty inadequate amounts to back their fund for legitimacy. In time, my forecast is that the GLD fund will eventually sell at a 25% discount to the gold spot price, due to suspicion of fraud in its gold deposit management. Later, my forecast is that the GLD fund will eventually sell at a 50% discount when the investor lawsuits pile up and formal challenges are lodged. The weapon to pry open the vaults will be discovery and ordered independent audits with teeth. The final chapter of the GLD in my view will be its liquidation, with extreme discounts paid to angry investors. Their laziness and stupidity will be worthy of a footnote in history. The managers of the GLD fund and that for the SLV silver fund, are both main members in the Gold Cartel. JPMorgan is custodian to the GLD fund. Barclays manages the SLV fund. Those who believe the tactics and activity behind the curtains are different are indescribably naïve. They too deserve a meat cleaver outing with Sir Darwin on personal wealth.
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