something old & something new - a quick Gata History of events
The follows is a BomBardMint blast of gata info,
for those anti-gata its a non read if you got this far
in this post. For strong gata folks it should be read
because it contains about 5% new information. For anyone
new to this thread and gata, then eventhought its a long
post here of stuff, it all the hard core goodies.
No questions please, as they will upset anti-gata folks.
"The absurdity, not to mention danger, of allowing
the cluster concept to insulate the derivatives
businesses of commercial banks from competition
analysis is underscored by their off balance
sheet interest rate derivatives. Table 8 of the
OCC derivatives report for December 31, 2000,
shows Chase with $ 10.7 trillion in notional value,
Morgan with $ 5.5 trillion, and all others combined with
$ 9.4 trillion of interest rate derivatives.
The LTCM affair suggests that concentrating $ 16.1
trillion or 63% of these derivatives in one bank
is to play Russian roulette with the U.S.
financial system (Complaint, para. 53).
So, too, is the manipulation of gold prices
alleged in the complaint. That J. P. Morgan Chase,
traditionally the Fed's bank (CO 16), is deeply
implicated in both is unlikely to prove coincidental."
The Defendants filings may be read at Adam Hamilton's
wonderful web site at: zealllc.com
Also posted at The Matisse Table are two charts by Mike Bolser:
1. Gold Derivatives in Billions of Dollars
2. Interest Rate Derivatives in Trillions of Dollars
A picture worth a thousand words, this case two thousand words.
The Gold Derivative Chart reveals that according
to the Office of the Controller of the Currency,
the gold derivatives on the books of Morgan and
Chase exploded after the Washington Agreement
in September of 1999 - while the gold derivatives
at all the other banks remained steady.
The Interest Rate Derivative Chart reveals that
the interest rate derivatives began to expand
dramatically on the books of Morgan and Chase
around mid-1995, just about the time that GATA
and Reg Howe have fingered The Gold Cartel
for rigging the gold price. In recent years,
the interest rate derivatives at Morgan and Chase
have exploded and now stand at a staggering 16 trillion dollars,
while they have gone up only slightly at all other banks combined.
As Reg Howe put in his response to the Court,
someone is playing Russian Roulette with the U.S.
financial system. Frightening is too calm a word
to describe what Mike Bolser's charts shout out to you.
To take it a bit further, it might be best to review
the note that Mike Bolser sent me on May 31:
Hi Bill:
As we have discussed, I am interested in the broader
motivation behind those parties manipulating the gold markets
and have started a work in progress to that end.
GoldGate's Real Motive?
Michael Bolser
Summary
We restate our findings on preemptive selling
as validation of gold market intervention.
In addition, we restate our discovery that in
August 2000 1700 tonnes of US Treasury gold
bullion reserve underwent a change in ownership
consistent with a sale to a foreign entity.
However, the motives attributed to those parties
responsible for this gold manipulation have been
historically weak. We have been troubled by the
enormous risks taken by those responsible for
free market manipulation and have been seeking
clues to justify such risks. In this essay we
explore the possibility that gold price suppression
may have been part of a much larger scheme which
depended in part upon a controlled price of gold.
We suggest that a manipulated gold price was a
prerequisite for the assumption of the $16
Trillion in Interest Rate Derivatives currently
held by JPMorgan Chase. We draw attention to these
disproportionate derivative positions and remind
readers that the associated risks attached to
these interest rate derivatives depend in part
of inflationary expectations.
Our preliminary data is shown in the attached
chart describing the Interest Rate Derivative
Positions held by JPMorgan Chase and the next
largest US banks compared to the rest of the US
banking system which hold these derivatives.
As you can see JPMorgan Chase has taken a $16
Trillion dollar position in Interest Rate
Derivatives. Please note as well the Q3 1999
sharp increase by Chase (at that time). This
increase coincided with a long period of gold
price quiescence...a prerequisite for successful
derivatives strategies. At the end of the quarter
the WA upset that quiescence bringing unwanted
volatility to Chase and it's huge position.
Recall from Nicholas Dunbar's book "Inventing
Money", the LTCM disaster was hastened by
volatility, indeed it played the key role.
In this boutique hedge fund's case it was Italian
bonds, Russian bond defaults, Caribbean counter
party defaults and currency turmoil that triggered
their demise. It is clear that volatility and
leveraged derivatives are a dangerous mix.
There is a long history linking inflationary
pressures, sharply rising interest rates and
gold price volatility. Such a climate of interest
rate volatility is incompatible with the large
risks we now see in JPMorgan's Interest Rate
Derivative position as reported by the Office
of the Comptroller of the Currency...
occ.treas.gov
We note that JPMorgan Chase was the principle
seller during today's key last day before COMEX
first notice day on the June gold contract. Perhaps
they were mindful of the threat to their Interest
Rate Derivative book by a potential COMEX default?
We continue to be troubled by reports of stock
market futures intervention presumably designed
to eliminate volatility.
Michael Bolser
More than a number of you out there are perplexed
by the continued strength in the dollar.
GATA has long maintained that one of the motives
for the manipulation of the gold price was to
facilitate Robert Rubin's strong dollar policy.
It more than appears that the build up of gold
and interest rate derivatives at JP Morgan Chase
are somehow linked to this policy.
The ramifications of all of this are mind-boggling
and an American disgrace because it has put the
U.S. financial system at serious risk.
When GATA visited with the Speaker of the House,
Dennis Hastert, on May 10, 2000, we explained that
the GATA delegation was like a group of cancer
doctors that found a malignant cancer. The cancer
was treatable with chemotherapy types of treatment,
but the side effects would be very painful. However,
we stated that to do nothing and go into denial would
eventually prove to be fatal.
The Gold Cartel, including Robert Rubin, have made
a disastrous miscalculation about gold
demand and the amount of central bank gold that
would be required to continue their scheme far
into the future. The chickens are now coming home
to roost. The physical gold market is seizing up.
The Gold Cartel is running out of supply. A gold
syndicate of buyers is taking them on for they know
that only an explosion in the gold price can offer
any kind of long term solution to this growing
financial nightmare.
The price of gold must be allowed to rise, to rise
sharply and fast because the problem is growing
by 100 tonnes to 160 tonnes per month - as gold
demand far exceeds mine and scrap supply.
Will there be financial trauma.
Yes, no doubt about it.
But, it will be survivable if something is done soon.
There is one other type of solution. The Gold
Cartel can admit what they have done. They can
admit their lies to the American and world public.
They can apologize for lying to Senators and
Congressmen in just about every state in the
Union. They can claim that they did what they
did in the best interests of the average American.
Then, they can announce that half of America's
gold supply (4,000 tonnes) is being sent to the
bullion banks in the cartel to keep them from
going belly up.
That is just an example of what could be done to
try and solve the problem. The problem with these
types of solutions is that they could set off
financial nuclear bombs in other markets.
That is why it is so important to understand
what Mike Bolser has uncovered.
Any solutions such as the one above will surely
send the dollar into a tailspin. Foreign investors
will want OUT. That will likely set off the
interest rate derivative time bomb at JP Morgan
Chase. Then who knows what could happen.
Now, we come to the importance of Frank Veneroso's
supply/demand work at The Dos Passos Table entitled:
Facts, Evidence and Logical Inference
A Presentation On Gold Supply/Demand,
Gold Derivatives and Gold Loans
By
Frank A. J. Veneroso
In this brilliant work, Frank explains thoroughly
why the central bank gold loans are 10,000 tonnes
to 16,000 tonnes. Let us use the mid range of
13,000 tonnes. If the US were to sell 4,000
tonnes of our gold to try and solve the problem,
it still would leave another 9,000 tonnes
outstanding - almost double the 5,000 tonnes that
bullion dealer apologists would like you to believe.
Mine supply is only 2500 tonnes per year.
Once the gold problem becomes known by the citizens
of the world and financial institutions of the
world, most everyone is going to want to own
some gold. Gold demand will soar. Many of the
bullion/central banks that have the 9,000 tonnes
out on loan are going to want their gold bank
and will be petrified of force majeure gold defaults.
It is not hard to visualize a daisy chain of financial collapses.
The share price of JP Morgan Chase has been acting
lousy lately and the firm has received a few
downgrades by bank analysts. It is a stock to watch.
GATA cannot solve the problem. We can only inform
governments and the peoples of the world about
what is really going on in the gold market and
present all our evidence which overwhelmingly
proves that we are correct.
One thing for sure.....
BILL MURPHY
CHAIRMAN
GOLD ANTI-TRUST ACTION COMMITTEE
gata.org
All the best,
Bill Murphy
Le Patron
LeMetropoleCafe.com |
