Remember my post of a couple days ago when I stated a fact and a rumor ?
Well the fact has more creditability
now that the rumor has come to be.
Bill Murphy, Chairman of GATA gata.org
said at his Le Metropole Cafe that evidence assembled
by the Gold Anti Trust Action Committee and the members
of the GATA delegation that visited Congress last week
results into the following prediction:
A Nuclear Derivative Bomb is Going To Hit The Gold Market!
That rumor about GATA delegation member Reg Howe
to have a mega bombshell that he will soon offer,
well...here it is.
THE GOLDEN SEXTANT
This site takes its name from its proprietor's
1992 essay of the same name. The Golden Sextant
won the first Bank Lips AG International Currency Prize.
The subtitle of this site is MPEG,
standing here for Money, Politics, Economics and Gold.
It offers commentary by the proprietor on these topics
and occasionally on other subjects.
But its raison d'ˆtre is to carry on the fight for sound,
constitutional money.
Current MPEG Commentary
5/20/2000 - Deutsche Bank: Sabotaging the Washington Agreement?
5/15/2000 - The Fed: Up to its Earmarks in Gold Price Manipulation?
Comments about this site may be addressed to the proprietor:
row@ix.netcom.com
Copyright 1999, 2000 - Reginald H. Howe
All rights reserved. Any republication without permission prohibited.
goldensextant.com
MPEG COMMENTARY - Page 12
May 20, 2000. Deutsche Bank: Sabotaging the Washington Agreement?
In a prior commentary, I suggested that the Swiss gold sales.....
...are likely aimed at covering gold loans
made by European central banks.....
...the quid pro quo for the Swiss is effective
inclusion within the Euro Area even though
Switzerland is not a formal member.
Suspecting that Swiss gold sales might also
be intended to cover gold loans to Swiss banks,
especially from the Bundesbank.....
... made an online search for further information
on the gold derivatives of both the Swiss and the
German banks. WOW!
UBS, of course, has been a leading bullion bank.....
... the gold derivatives position of Deutsche Bank
is just plain stunning in the speed and magnitude
of its growth, from almost nothing in 1996 to a
total notional value of over US$50 billion,
or nearly 5000 tonnes, at the end of 1999.
Even more amazing are the lengthening maturities
and accelerating growth in these derivatives
during the last part of 1999, making it appear
that Deutsche Bank is allied with Morgan
in the same cabal to control the gold price.
Information on the.....
All these derivatives reports.....
The following table.....
Several important points emerge from this table.....
Deutsche Bank acquired Banker's Trust.....
This table portrays a very disturbing picture.
Deutsche Bank, the largest German bank,
which had precious metals derivatives
at the end of 1996 with a total notional value
under US$5 billion, by the end of 1999 had grown this business
to a total notional value in excess of $50 billion,
or by more than 10 times in three years. What is more,
a huge amount of this growth came in 1999,
especially in the last half, as can be seen by.....
Nor can the 1999 growth in Deutsche Bank's
precious metals derivatives be ascribed in any
major way to its acquistion of Banker's Trust.
Its.....
The 1999 figures for Dresdner Bank make it appear.....
The growth profile of Deutsche Bank's
precious metals derivatives in 1999
closely matches that of Morgan Guaranty Trust,
described in my prior commentary on Morgan.
See also John Hathaway's article,
JP Morgan To The Rescue,
tocqueville.com
My Morgan commentary contains several paragraphs
devoted to explaining the meaning of notional value
in the context of gold derivatives and the risks implicit
in large notional totals, particularly in a gold market
that appears far out of equilibrium.
Because this subject is a complicated one,
I am planning to address it further in a future commentary.
However, the reports of the European banks contain.....
Deutsche Bank's replacement values
are even more difficult to fathom.....
Again, as with the hedge books of mining companies,
it is almost impossible to reach sound conclusions
without access to the underlying data. However,
three considerations suggest that the high notional values
for banks like Deutsche Bank and Morgan
are more than insignificant fluff.
First, other large bullion banks did not.....
Second, replacement values appear principally.....
Finally, and perhaps most importantly, these figures.....
Under commodity contracts.....
Here again, a large increase in notional values.....
The notional amount, which is generally used as.....
The press release itself goes on to say: "Transactions.....
Talking in tonnes in round figures, the BIS report
shows a notional increase in gold derivatives
of 4000 tonnes in the last half of 1999.
According to the OCC figures, Morgan's gold derivatives
increased by almost 1900 tonnes in the same period.
There are no mid-1999 figures for Deutsche Bank,
but with a year-over-year.....
... and it is not unreasonable to attribute
virtually the entire increase in the last half of the year
to these four banks, principally Morgan and Deutsche Bank.
The only major gold fund manager that.....
...So too, the amazing emergence of Deutsche Bank
from almost no gold derivatives business in 1996
to a book with a notional value approaching 5000 tonnes,
larger by far than the book of any of the three principal U.S.
commercial banks in this business, does not pass the smell test.
Indeed, it is very hard to see any reason for the rapid creation
of this huge position in gold derivatives other than to try
to manipulate and control gold prices.
With gold.....
... Bill Murphy of GATA reported on Deutsche Bank
the same evening in his Midas column at Le Metropole Cafe:
"[T]heir bullion desk is calling their clients saying that
the gold market is stopping at $290."
[Emphasis in original, copy at gata.org
.] The British gold sales were announced the next day, May 7, 1999.
Why would Deutsche Bank participate in a cabal
to cap the gold price, and far worse,
continue to do so after the Washington Agreement?
The Bundesbank is not only a signatory to this agreement,
but also is rumored to have played a leading role in its adoption.
For the Bundesbank to permit Deutsche Bank to act in this manner,
with Dresdner Bank doing the same thing but on a smaller scale,
suggests that long term monetary policy in the EA,
particularly as it relates to gold, is in utter disarray,
and that monetary cooperation between France and Germany
is far more mirage than real.
Indeed, the implications of the gold derivatives activities
of these two big German banks in 1999 are so mind-boggling
that further analysis must await another commentary.
Their actions threaten not merely to sabotage
the Washington Agreement, but also,
and much more seriously, to jeopardize the euro itself.
Those who believe in sound money look to the Bundesbank
as a light in the darkness. For it to conspire against gold
is as unthinkable as the act of the great baseball player
that brought forth this plea from one of his young fans:
"Say it ain't so, Joe. Say it ain't so."
goldensextant.com
[End.]
Copyright 1999, 2000 - Reginald H. Howe
All rights reserved.
Any republication without permission prohibited. |
