http://www.zerohedge.com/news/2014-05-14/beginning-end-precious-metals-manipulation-london-silver-fix-officially-dead
Submitted by Tyler Durden on 05/14/2014 14:56 -0400
http://www.zerohedge.com/news/2014-05-14/rothschild-koch-industries-meet-people-who-fix-price-gold
Submitted by Tyler Durden on 05/14/2014 17:12 -0400
Steve is the Managing Director of Scotiabank, London with overall responsibility for sales, trading and distribution of Scotiabank’s European precious metals business. Additionally he is the Global Head of ScotiaMocatta's base metals business, CEO of Scotia Capital Europe Ltd and a board member of Scotiabank Europe Plc. Prior to his arrival in London in 1998, Steve worked in Toronto covering a portfolio of North American mining companies, particularly credit products including debt, project finance and metal derivative transactions. Steve has an MBA from the Ivey School of Business and a Bachelor of Commerce degree from Queen's University.
The capping of gold and silver at these levels continues.
This being an inactive month for the metals, the CME offers even less insight as to what is going on in the real world than it normally does.
The LBMA has decided to give up the silver fix, for a lack of interest in a thoroughly corrupted system of price discovery. Principled resignation is more of a British tradition; the Yanks will hang on, stubbornly to their lies, until the bitter end. So I don't expect to see any reforms on the CME until it is forced into a de facto default and a conversion to pure paper.
I do not expect to see a real hyperinflation, or a 'proper bankruptcy' in the US. On this the MMT crowd is most likely correct, at least technically, although all things are possible since the issue is one of human choice, and these jokers are certainly all too human in the worst sense. If your debt is in dollars, and you can pay it in dollars, and you cant print dollars at will, the internal logic is sound. But certainly circular and self-referential, and quite likely divergent from practicality.
There will likely be some sort of default on the debt, or a significant change in the system. But technically it will not be a bankruptcy. Again, more likely a serious bout of stagflation supported by increasing levels of fraud and force.
When the use of force starts to breaks down, if in fact it does, we will either see a managed devaluation, a consolidation, or a change in management. We are in a long running Ponzi scheme of a fiat currency that must continue to keep expanding, or begin to collapse.
There is a method in the madness of Washington, and their insatiable desire for more. But is has little or nothing to do with the public welfare or the health of the republic. This is the 'me generation' and their watchword is greed.
We may see Britain falter first. Or a greater portion of Europe. Self-love is throwing your own people and then your friends under the bus first, when your schemes begin to fall apart, because they are closest to hand.
We come in peace.
Have a pleasant evening.
The Beginning Of The End Of Precious Metals Manipulation: The London Silver Fix Is Officially Dead
Following a crackdown on precious metal manipulation by various European regulators (mostly Germany's BaFin, recall "Precious Metals Manipulation Worse Than Libor Scandal, German Regulator Says"), which led to the shocking outcome that Deutsche Bank would pull out of the London gold and silver fixing committees, the London Silver Market Fixing company ended up with a most curious outcome: it would have just two members: HSBC and Bank of Nova Scotia. And, as an even more shocking result, overnight the London Silver Fix announced that after August 14, 2014 it will no longer exist - the first of many victories for all those who have fought for fair and unmanipulated precious metal markets.
From the press release:
The London Silver Market Fixing Limited (the 'Company') announces that it will cease to administer the London Silver Fixing with effect from close of business on 14 August 2014. Until then, Deutsche Bank AG, HSBC Bank USA N.A. and The Bank of Nova Scotia will remain members of the Company and the Company will administer the London Silver Fixing and continue to liaise with the FCA and other stakeholders.
The period to 14 August 2014 will provide an opportunity for market-led adjustment with consultation between clients and market participants.
The London Bullion Market Association has expressed its willingness to assist with discussions among market participants with a view to exploring whether the market wishes to develop an alternative to the London Silver Fixing.
Q&A
1. What will happen after 14 August 2014? Will the Silver Fixing cease to exist?
With effect from the close of business on 14 August 2014, the Company will cease to administer a Silver Fixing, and a daily Silver Fixing Price will no longer be published by the Company.
2. What will happen in the period up to that date??
The Company intends to continue to administer the daily Silver Fixing and publish Silver Fixing Prices throughout that period.
3. Why a three month notice period?
Although members of the Company may resign on seven clear days' notice, the members have confirmed that they stand ready to continue the Company's operations until (and including) 14 August 2014.
4. What happens after 14 August 2014 for market participants with contracts referencing the Silver Fix?
The Company is not in a position to comment on such matters, but market participants can speak to their contractual counterparties.
5. What does this mean for the gold, and platinum and palladium fixing companies?
This decision relates only to the London Silver Fixing administered by the Company. The Company is not in a position to comment on other fixings
* * *
This huge loss for precious metalmanipulators fixers was amusingly "explained" by the FT's John Dizard as follows: "The field may be more level, but there are not enough players left for a game." Mocking those who prefer unmanipulated markets, he said:
... once that satisfying self-righteous feeling passes, the dwellers on BaFin Island might want to consider whether they have helped create a level playing field without enough players for the game. So far, it would appear the significant beneficiaries of BaFin’s persuasion have been the less-than-systemically important dealers in international silver markets. While there will still be four participants in the London gold fix, the similarly structured 12pm London silver fix will now have only two participants, which common sense tells us means no real market at all.
Actually, it will mean no manipulated market by a handful of participants. It will also mean that going forward a much more transparent pricing mechanism will have to be adopted: once which relies on, gasp, the entire market, not just legacy firms that operated for decades out of Rothschild's wood-panelled London basement.
Of course, for Gizard, there is no manipulation:
Deutsche Bank will have withdrawn from participating in the ritual of setting a standard price for physical gold. While no wrongdoing by any of the gold-fixing participants has been proven legally, or even, I believe, convincingly demonstrated in econometric modelling,Deutsche apparently came under intense social pressure from its home regulator to withdraw.
Correct, because banks withdraw from lucrative operations due to "social pressure", not because they know full well some legal arm is about to crush an existing arrangement with elements of criminality. While we are delighted that Mr. Gizard will disagree, we are confident that after August 14 the price discovery model, while certainly not free from manipulation, most certainly originating from the BIS' Basel Offices, will be a far better one.
One can only hope that in the future all vestiges of gold and silver manipulation will eventually disappear resulting in what may be the first real price discovery of precious metals, absent central and commercial bank manipulation.
It is the same FT that we go to for some additional color on today's stunning outcome:
It was born in the late 19th century when a handful of London bullion dealers agreed to meet daily under a cloud of cigar smoke to set the price for the “devil’s metal”. But now, after 117 years of operation, the London silver fix – the global benchmark for the metal – is on its deathbed.The three banks that run the auction announced on Wednesday that silver prices would be “fixed” for the final time at noon on August 14. The move follows increased scrutiny by European and US regulators into precious metals price-setting following the Libor scandal and probe into possible forex market abuse.Deutsche Bank last month resigned its seats on the silver and gold fixes, after failing to find buyers. That left just two members on the silver fix, HSBC and Bank of Nova Scotia.Market participants said the benchmark process, which occurs via teleconference and allows miners, financial institutions and jewellers to trade silver and value their stocks and contracts, could not function properly with fewer than three members.The UK’s Financial Conduct Authority asked Deutsche Bank to stay on for an extra three months to allow for the benchmark to be wound down smoothly.“Deutsche Bank has postponed its resignation from the London Silver Market Fixing from 29 April 2014 to 14 August 2014, at which point the benchmark will terminate,” the bank said in a statement on Wednesday.
In other words, the FCA - undoubtedly in conjunction with the Bank of England - pushed hard to keep the existing manipulation structure in place for three months, effectively against the will of the German regulator, and of Deutsche Bank itself which wanted to get out as soon as possible.
As for what happens after August 14, when the London Silver fix is officially gone, we can't wait to find out.
In the meantime, we are confident the existing members of the mirror fix, that of gold, will be scurrying under rocks to avoid all public exposure. We plan to spoil their plans later today when we profile just who they all are.
Finally, a reminder of what the once proud tradition of gold price fixing looked like back in the day.
http://www.zerohedge.com/news/2014-05-14/rothschild-koch-industries-meet-people-who-fix-price-gold
From Rothschild To Koch Industries: Meet The People Who "Fix" The Price Of Gold
Earlier today many were stunned when the historic, 117-year old, London Silver Fix announced that in three months it would no longer exist. However, silver is only one half of the world's two best known precious metals. Which is why we decided to take a long, hard look at that other fix: gold.
The reason for this particular inquiry is because in the aftermath of the rapid and dramatic departure of the world's largest bank by outstanding notional derivatives, and Europe's biggest bank by any metric, Deutsche Bank, from the precious metal fix, something felt out of place: almost as if the participants of the "fixing" process which for so many years took place in the office of none other than Rothschild on St. Swithin's Lane in London, were suddenly scrambling to disappear without a trace.
In conducting our research we hope to not only memorialize just who are these particular individuals who "fix" gold using nothing but publicly available information of course - because after all it is not as if they have anything to hide or fear - but to connect some of the very peculiar dots behind the scenes of what to some, is the original, and most manipulated market in history - that of gold.
* * *
First, as has been reported previously, when Deutsche departs, this will leave only four gold fix members, namely, Barclays, HSBC, Société Générale (SocGen) and Scotiabank, and since only two silver fixing entities remained, HSBC and Scotiabank, the traditional silver price discovery mechanism was shuttered. The Fixings are conducted twice daily at 10:30 am and 3 pm London time and are used widely by all participants in the precious metals industry for benchmarking prices and valuations and also as trading price reference points.
The gold and silver fixings are organised through UK limited liability companies of which the member investment bank traders are directors.Before the resignation of Deutsche Bank, there were five directors and five alternate directors of "The London Gold Market Fixing Limited" and three directors and three alternate directors of "The London Silver Market Fixing Limited."
Earlier this year on 16th January, German financial regulator BaFin stated that possible manipulation of currency and precious metals markets could be more serious than the manipulation that has already been proven in the Libor rigging scandal. On the very next day, January 17th, Deutsche Bank announced that it was withdrawing from both the gold and silver fixings in what it called "a scaling back of its commodities business."
Needless to say, in aftermath of the termination of the silver fix, and now that there are significant regulatory and litigation spotlights on the Fixings, and one major member exiting, some are wondering: will the demise of the Silver Fixing undermine the rationale for retaining the Gold Fixing? And what will replace it.
* * *
We don't have the answer. What we do know is that using public records such as the British Companies House database and other public databases, one can find not only all the available information on the London Gold Market Fixing Limited company before it too disappears into thin air, but to get a sense of the kind of people it employs.
****
So let's start with everyone favorite French bank: SocGen, where we meet young master Vincent Domien, born June 13, 1980, and director since January 25, 2010. His Goldfixing phone contact info is +44 207 762 5374, and he can be reached at:vincent.domien@sgcib.com. HisLinkedIn profile has extensive details on what it takes to become a gold fixer.
Sadly, the other director from SocGen,Xavier Lannegrace, born 1964 and director since December 19, 2013, has no LinkedIn profile, so we had to go to other primary sources. As it turns out Mr. Lannegrace keeps a low profile but does have occasional media appearances, such as this one inRisk.net from 2011
Instead of increasing margin calls to protect against credit risk as many banks did at this time, SG CIB began providing some unmargined lines to mining firms, even taking over margined positions that miners had with other lenders and making them unmargined.
"To avoid a cash constraint we can provide some unmargined lines - transforming risk on the price into risk of performance. But in that case what we really need to see is the miner performing, producing the material, and delivering the material," explains Xavier Lannegrace, managing director of base metals, precious metals and agriculture at SG CIB in Paris.
And also from Risk, from the year before:
“The Meteor system has been able to handle a massive increase in both flow and new transactions, which leaves us in a very strong position on the operational side. We looked at all our operational risk reporting, counterparty risk exposures and risk limits, and Meteor told us we are solid. So we can keep on developing a stronger commodities desk, moving into agricultural commodities and developing new indexes because we know commodities are going to be the hot spot with investors in 2010,” says Xavier Lannegrace, global head of commodities marketing and sales in Paris.* * *“You can go to bed at night having left an order with Société Générale knowing that order is going to be watched and looked after, so there is no problem when you come into the office the next morning. The service is first class.”
And from yet another year prior:
As well as the sharp drop in metals prices last year, the collapse of Lehman on September 15 sent reverberations around the metals markets. The investment bank was not a big player in the metals markets, but the collapse of the broker-dealer caused counterparty credit risk to become the number one issue for market credit risk, we have seen investors and corporates diversify their hedges amongst several banks. Those who normally traded with one, two, or three banks are now trading with five or six different banking counterparties,” says Xavier Lannegrace, global head of commodities marketing at Société Générale Corporate and Investment Banking (SG CIB) in Paris.
* * *
Moving to the bank that redefined the term "money laundering", HSBC we meet David Rose, contact phone +44 207 992 8041 and contact email:david.b.rose@hsbcgroup.com, who has the following rather sparse LinkedIn profile:
And his alternate director, Peter Drabwell, self-described on LinkedIn as "a precious metals sales and trader"
* * *
We then proceed to the current Chairman of the Gold Fixing group, Simon Weeks, born 1962, who hails from Canada's Scotiabank, aka ScotiaMocatta. He is one of the veteran directors, appointed in February 1995. Those who so wish can reach Simon at +44 207 826 5930 and his contact email is simon.weeks@scotiabank.com. Alas, there is not much in his LinkedIn profile:
* * *
And the alternate from ScotiaMocatta:Steven Lowe
Steve is the Managing Director of Scotiabank, London with overall responsibility for sales, trading and distribution of Scotiabank’s European precious metals business. Additionally he is the Global Head of ScotiaMocatta's base metals business, CEO of Scotia Capital Europe Ltd and a board member of Scotiabank Europe Plc. Prior to his arrival in London in 1998, Steve worked in Toronto covering a portfolio of North American mining companies, particularly credit products including debt, project finance and metal derivative transactions. Steve has an MBA from the Ivey School of Business and a Bachelor of Commerce degree from Queen's University.
He has been a member of the LBMA Management Committee for numerous years and has acted as Vice Chair of the committee for two years. He also sits on the LBMA PAC committee.
* * *
Next we get to most British notorious bank, Barclays, we find director Mr. Martyn Whitehead, contact phone: +44 20 7773 8106, contact email:martyn.whitehead@barcap.com, whoseLinkedIn profile describes him as "Global Head of Mining & Metal Sales at Barclays Capital", and who previously worked for 6 years at Rothschild.
* * *
Also from Barclays, there is Jonathan Spall, who also has quite an extensive LinkedIn profile.
Alas, Mr. Spall won't be at Barclays, or the fix, for long. As Bloomberg reported in January 2014
Barclays Plc cut commodities jobs in London and New York as part of reductions in fixed income, currencies and commodities, according to two people familiar with the matter. Bharath Manium, a managing director in commodities structuring, Paul Jackman, a managing director in the commodities index business, Jonathan Spall, product manager for metals in London, and Sudakshina Unnikrishnan, an analyst in London, are leaving, according to the people who asked not to be identified because the move hasn’t been made public.
In fact as was reported by London Gold Market Fixing Ltd, Mr. Spall is no longer with the company since April 9, 2014.
* * *
Which leaves us with the two most interesting and curious individuals: the "fixers" from Deutsche Bank, which as was reported previously, is no longer a member of the gold fix company courtesy of BaFin's accelerated procedure to reign in the German bank.
What follows next is an intricate timeline journey into the gold fixing rabbit hole, where we find some very suspicious and unreported issues about Deutsche Bank's departure from the Gold and Silver Fixings, namely Matthew Keen's sudden resignation and departure in January after BaFin's statements, followed by the resignation of Kevin Rodgers. Why did Keen resign? Secondly, Deutsche quietly stopped contributing to GOFO as early as February or March.
1. On Friday January 17th, Deutsche announces that its quitting the gold and silver fixings. On Monday 20th January, Matthew Keen, Deutsche's head of precious metals, resigns from the London gold and silver fixings companies and is replaced by Kevin Rodgers, Deutsche's global head of FX. Matt Keen then departs fully from Deutsche Bank in January, and starts a new job for Jefferies in April.
Deutsche Bank then announces on 28th April that Kevin Rodgers is resigning from Deutsche Bank, the day before it announces that it can't sell its two seats on the gold and silver panels and that it is resigning.The resignation of Matthew Keen has not been reported anywhere it seems.
2. Sometime in March at the latest, Deutsche Bank quits being an LBMA forward market maker, and stops contributing to GOFO rates and forward curve data. This also appears to not have been reported previously.
The following timeline illustrates some important information that has not been discussed:
November 27th 2013: German regulator BaFin announces that it is reviewing how banks participate in the gold and silver price setting
December 12th 2013: The Financial Times states that BaFin has already been interviewing Deutsche Bank on this for several months and has demanded various documens from Deutsche.
FINANCIAL TIMES: "BaFin has grilled Deutsche Bank staff during several on-site inspections in the past few months"
Wednesday January 15th 2014:Reuters reveals that Deutsche has suspended New York based FX traders and that Fed and
OCC visited Citigroup offices in Canary Wharf, London
Thursday January 16th 2014: BaFin's president Elke König says in a speech in Frankfurt that currency and precious metals price manipulation is "worse than Libor".
Friday 17th January 2014: Deutsche Bank announces that it is withdrawing from the gold and silver price fixings
Monday 20th January 2014: Matthew Keen, Director (precious metals) at Deutsche Bank resigns as a director of the gold and silver fixing companies and Kevin Rodgers, Global Head of Foreign Exchange at Deutsche Bank is appointed as Deutsche Director in both of these companies (why an FX trader is appointed to trade commodities is not quite clear).
On the same day, Matthew Keen also resigns as the Deutsche director representative of London Precious Metals Clearing Limited (LPMCL) and is replaced by Raj Kumar, Deutsche'sEuropean COO, Commodities.
Curiously, Matt Keen did not operate out of either London or Frankfurt, but instead relocated from London to Dubai with Deutsche in 2012. Is that the farthest one could get away from US and European regulators one wonders?
Sometime in February or March - Deutsche stops contributing to GOFO
LBMA rolled out a new web site in ealr April. This was mentioned in the LBMA's Alchemist, Issue 73, published March 31st. The wayback machine has an imprint from the new site on April 9th. In the GOFO contributor list, Deutsche is not listed
Deutsche disappeared from GOFO before 9th April - new web site
Deutsche was still listed as a GOFO contributor on the old LBMA web site, latest imprint is February
Sometime in February or March - Deutsche ceases to be a market maker for forwards
Deutsche not a forward market maker now
April 25th 2014: Reuters reports that sources say Deutsche canot sell gold and silver seats due to US lawsuits
Just what was Deutsche worried buyers would find during the due diligence?
April 28th 2014: Deutsche Bank announces that Kevin Rodgers, Global Head of FX is quitting the bank in June
WALL STREET JOURNAL: "Deutsche Bank Head of Forex to Retire - Kevin Rodgers to Leave Industry in June; Departure Not Linked to Global Investigation"
Burying the evidence, and firing the bodies?
April 29th 2014: Deutsche resigns seats on gold and silver fixes, can't sell them, gives 2 weeks notice, last day 13th May
Saturday May 10th 2014: FT's John Dizard comments that "Precious metals market people tell me that even in advance of Deutsche's formal departure from both the gold and silver fix, the bank had reduced its participation in putting up bids or offers at the silver fix very substantially."
FINANCIAL TIMES: "No silver lining for gold-fix regulation"
May 13th 2014 - Deutsche's last day on gold and silver panels
... However....
A source familiar with the situation told Reuters that Deutsche Bank had postponed its resignation, responding to a specific request from Britain's Financial Conduct Authority (FCA)."The other banks may have indicated to the regulator that they were looking to withdraw as well and so to make this an orderly affair Deutsche was asked to postpone the date of resignation," the source said.
In other words, just as the Silver Fix is no more, so the Gold Fix will almost certainly be nothing but a memory in a few short months now that the spotlight is shining on its members. But why the sudden scramble to depart and not just by Deutsche but by all other members? (... that was rhetorical)
Other questions also remain unanswered.
Looking at Mr. Keen's LinkedIn profilewe find that before Deutsche, Keen worked as Head of Precious Metals at none other than the infamous Koch Industries. Here he "Built a global precious metal business around Precious Metal and PGM inventory management for the oil refining and speciality chemical processing industries."
Wait, so the Deutsche trader who is most suspect of rigging the Fix, and who quit first (and hence, best), learned his craft at Koch Industries? It almost makes one wonder just what kind of gold and silver trading the Koch brothers engage in.
* * *
But perhaps the most curious and surprising finding here is what Bloomberg reported back in November, when it wrote one of the first articles exposing the "Fix" to the mainstream (if not so much the "tinfoil blog" vertical which was well aware of all of this years ago). To wit:
London Gold Market Fixing Ltd., a company controlled by the five banks that administers the benchmark,has no permanent employees. A call from Bloomberg News was referred to Douglas Beadle, 68, a former Rothschild banker, who acts as a consultant to the company from his home in Caterham, a small commuter town 45 minutes south of London by train. Beadle declined to comment on the benchmark-setting process.
"No permanent employees": extremely convenient when one has to pick up and simply disappear without a trace...
Jesse's Cafe Americain......
14 MAY 2014
Gold Daily and Silver Weekly Charts - O Brave New World
Oh, wonder! How many goodly creatures are there here!
How beauteous mankind is! O brave new world,
That has such people in ’t!
William Shakespeare, The Tempest
The capping of gold and silver at these levels continues.
This being an inactive month for the metals, the CME offers even less insight as to what is going on in the real world than it normally does.
The LBMA has decided to give up the silver fix, for a lack of interest in a thoroughly corrupted system of price discovery. Principled resignation is more of a British tradition; the Yanks will hang on, stubbornly to their lies, until the bitter end. So I don't expect to see any reforms on the CME until it is forced into a de facto default and a conversion to pure paper.
I do not expect to see a real hyperinflation, or a 'proper bankruptcy' in the US. On this the MMT crowd is most likely correct, at least technically, although all things are possible since the issue is one of human choice, and these jokers are certainly all too human in the worst sense. If your debt is in dollars, and you can pay it in dollars, and you cant print dollars at will, the internal logic is sound. But certainly circular and self-referential, and quite likely divergent from practicality.
There will likely be some sort of default on the debt, or a significant change in the system. But technically it will not be a bankruptcy. Again, more likely a serious bout of stagflation supported by increasing levels of fraud and force.
When the use of force starts to breaks down, if in fact it does, we will either see a managed devaluation, a consolidation, or a change in management. We are in a long running Ponzi scheme of a fiat currency that must continue to keep expanding, or begin to collapse.
There is a method in the madness of Washington, and their insatiable desire for more. But is has little or nothing to do with the public welfare or the health of the republic. This is the 'me generation' and their watchword is greed.
We may see Britain falter first. Or a greater portion of Europe. Self-love is throwing your own people and then your friends under the bus first, when your schemes begin to fall apart, because they are closest to hand.
We come in peace.
Have a pleasant evening.
GATA......
Western gold heading East must be from central banks, Eric Sprott says
Submitted by cpowell on Tue, 2014-05-13 01:24. Section: Daily Dispatches
9:24p ET Monday, May 12, 2014
Dear Friend of GATA and Gold:
Too much gold is being refined in the West for it not to be coming out of central bank vaults to feed Asia's huge demand for the monetary metal, Sprott Asset Management CEO Eric Sprott tells Sprott Money News in an eight-minute audio interview here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Gold Anti-Trust Action Committee Inc.
Russia can retaliate against attacks in markets, Embry tells KWN
Submitted by cpowell on Mon, 2014-05-12 18:10. Section: Daily Dispatches
2p ET Monday, May 12, 2014
Dear Friend of GATA and Gold:
The West can't do anything in Ukraine itself, Sprott Asset Management's John Embry tells King World News today, and so is attacking Russia in the markets, but Russia has the capacity to strike back hard:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Gold Anti-Trust Action Committee Inc.
Turd Ferguson.....
From Turdville With Love; An open letter to the good people of Switzerland
I hate to be the bearer of bad news, Switzerland, but what you suspected all along is actually true. Your gold is gone. All of it. Leased and sold away by your central bankers and politicians.
As recently as 1996, the Swiss Franc was considered "good as gold". Why was this the case? Since the early 20th century, the Swiss Franc had offered a reserve backing of gold. This uniquely sound currency had given the country of Switzerland considerable financial power and independence, yet, at the urging of their politicians and central bankers, the Swiss willingly forfeited this enviable position.
The demise of the Franc and Swiss sovereignty began in 1992 when the Swiss made the fateful decision to join the International Monetary Fund (IMF). The IMF's Articles of Agreement (Article IV, Sec 2b) clearly state that no member country can have a currency linked to gold and, as such, Switzerland immediately set out on a course to de-link the Franc from gold. Just four short years later, the Swiss National Bank (SNB) and the Swiss government had formed a plan to eliminate the Franc's gold backing and, in March of 1997, a revision of the Nationalbank Act was passed and all links of gold to the Franc were removed. Further, since the Swiss constitution mandated sound money, it had to be amended, too. Thus, in a hastily organized vote, a new Swiss constitution was approved in May of 2000. (http://www.efd.admin.ch/dokumentation/medieninformationen/archiv/00382/index.html?lang=en) This served to finally and permanently sever the Franc's gold backing and initiated the Swiss into the world of global fiat currency.
The SNB has spent the 14 years since leasing and re-leasing the country's gold reserves. In 1999, the SNB reported gold reserves of 2,590 metric tonnes. The most current "audit" of SNB reserves showed just 1,040 metric tonnes of gold remaining on the balance sheet and I believe that none of this is actual, physical gold. Instead, what the SNB holds are paper claims and promissory notes. The remaining 1,040 tonnes has been sold and re-sold into the marketplace by greedy bullion banks, intent upon suppressing price through the leverage of paper metal futures contracts and rehypothecation. In other words, the "gold" that the SNB claims to hold/own on behalf of the Swiss people is gone. This makes the Swiss people just another bagholder, certain to be left in line wanting with all of the other holders of unallocated accounts when the fractional reserve bullion banking system inevitably collapses.
Furthermore, I've come to the conclusion that it was this last bit of Swiss gold that was utilized to suppress and manipulate price away from the alltime highs of September 2011. What makes me think this? Let's start with a history lesson...
Again, the Swiss officially forfeited their birthright of national independence and sovereignty when they joined the IMF in 1992. Then, by formally de-linking the Franc from gold in 2000, they accepted full membership into the clique of fiat currencies. Regardless, and perhaps just by tradition, the Swiss Franc was still considered a "safe haven" currency as late as 2011. But that's when things got out of hand.
You recall 2011, don't you? Under the weight of $600B worth of QE2, the U.S. Dollar Index was collapsing. From a high near 90 in mid-2010, it had fallen to near 73 by the spring of 2011. Shortly thereafter, the U.S. fiscal situation began to wobble as "Debt Ceiling" negotiations took place in Washington and the U.S. credit rating was downgraded by Standard & Poor's. The ensuing political rancor drove gold from $1500 to $1900 in eight weeks. Also catching a bid in this "safe haven" trade was the Swiss Franc and, in the summer of 2011, it also rallied over 20%.
"We can't have this!", screamed the Swiss Keynesians. "Something must be done or our export-driven economy will suffer", they warned. So what happened next? The SNB went ALL IN.
In the wee hours of Tuesday, September 6, 2011, the SNB announced a permanent and horrific change to the Swiss currency. Henceforth, the Franc would be linked/pegged to the Euro. No more safe haven bid. No more national sovereignty. Going forward, the Swiss were all in. Their fortunes had been officially tied to the fortunes of the European Union, for better or for worse. At this point, there was no further reason to hold any gold in reserve. Why would the Swiss need it? Their currency was now officially fiat and it's value was permanently pegged to another fiat, the Euro. What purpose would gold serve going forward? As the Keynesians say, it had become "a barbarous relic".
Left as the sole remaining "safe haven", one would have expected a huge rally in gold on 9/6/11, likely moving price up and through $2000/ounce from the weekend close near $1920. Instead, with the same counter-intuitive move to which we've all grown accustomed in the time since, gold was raided and price was smashed. Here are some flashback c&ps for you. First two charts from 9/6/11 and 9/7/11 showing the unusual price action:
And, as you might imagine, I was actively chronicling these events on this site. Here's a sample from Wednesday, Sept 7:
"I think it's quite clear now why gold responded yesterday in the opposite direction from what you would have expected. With central banks actively managing a debasement of their currencies, we are now seeing them also attempt to actively manage a debasement of gold, too. Be careful. Be very careful.
We all wondered yesterday why gold would plunge on the SNB news. Now we know. In an attempt to mitigate the "negative" effect on francs priced in gold, the SNB sold a massive amount of gold futures at the same time. How do we know this, because it appears that the same thing earlier today.
Yes, that's 7,000 contracts (700,000 ounces) (nearly 22 metric tons!) dumped on the Globex while London and NY are closed! This should also raise your deja vu spidey senses regarding silver in May. The $ drop in silver was greater because the silver market is considerably smaller. However, it's the same strategy. Maximize the downward impact and collateral damage by executing the attack at a time of minimal liquidity. This all wreaks of malicious manipulation. If you are trading, be prepared for anything."
And there you have it. Speculated upon at the time and again here in this post: The SNB is the culprit. It was the remaining SNB gold that was leased and dumped onto the market in late 2011, shoving price back from the record highs and smashing gold for nearly $400 in a little over three weeks. What was left of the Swiss gold was then leased to bullion banks throughout 2012 and the first half of 2013. Physical demand only increased, however, and that remaining Swiss gold has now been delivered to China and points East. Yes, the SNB still shows this leased gold on their balances sheet as an asset. Most every other western Central Bank utilizes the same accounting gimmick. Instead, it should be listed as a liability as the actual, physical underlying is no longer there. It is...gone for good.
Sensing this, a movement has begun in Switzerland to reclaim their sovereignty and birthright. The Swiss People's Party (SVP), which was the only major party voting against the new Constitution back in 2000, began an initiative last year to re-enforce a gold backing to the Franc. After collecting more than the requisite 100,000 signatures, a national referendum on the issue is planned. First, however, a vote was held last week in Swiss parliament. This procedural vote is basically a "recommendation" from Parliament, designed to impact the eventual, national vote. Here's how Bloomberg described it in an article dated May 5:
SWITZERLAND (BLOOMBERG) - >
Swiss parliamentarians urged rejection of a popular initiative that would curtail the Swiss National Bank’s independence by requiring it to hold a fixed portion of its assets in gold.
Members of the Swiss parliament’s lower house voted 129 to 20 with 25 abstentions today against the plan, which demands that at least 20 percent of the central bank’s assets be in gold. It would also disallow the sale of any such holdings and require all SNB gold be held in Switzerland.
No date for a national vote has yet been set. The government in November also recommended the initiative be opposed, saying it would impinge upon the SNB’s ability to conduct monetary policy. Parliament and the multi-party government issue recommendations on all national referendums as a matter of procedure.
Of course! How could anyone, in their right mind, be in favor of this:
- Demanding that at least 20% of your central bank assets be in gold
- Disallowing any sale of said gold
- Require repatriation of all foreign-held gold
Don't you silly peasants know what's good for you? By making these demands, you "impinge on your central bank's ability to conduct monetary policy" and "curtail the SNB's independence"!
Then, check this out, also from the same Bloomberg story. Last year, even Thomas Jordan, the head of the SNB, got in on the act:
"SNB President Thomas Jordan took the extraordinary step of commenting on politics last year when he urged rejection of the initiative, saying it would crimp the Zurich-based institution’s independence and force it into “large-scale” purchases to meet the required 20 percent threshold."
Hmmm. "Large-scale purchases", just to get back to the 20% threshold? Well, that's interesting, now isn't it? And what about this repatriation requirement? Why should that be a big deal? The SNB currently provides this list of its gold storage:
- 70% (728 mts) of the gold is already held in Switzerland
- 20% (208 mts) is held at The Bank of England
- and 10% (104 mts) is held at The Bank of Canada
I can't speak for the 104 metric tonnes held in Canada but the Swiss people should be very nervous about the gold the SNB allegedly stores in London (http://www.tfmetalsreport.com/podcast/5678/empty-vaults-london). Also, the SNB has been reticent to discuss where in Switzerland their gold is stored. Could this be because the "gold" is stored with the Bank of International Settlements for easy distribution and leasing? And where is the BIS? It's in Basel, of course. And where is Basel? It's in Switzerland!! How about that??
Look, I'll cut the chase here to save some time. Here's the "open letter":
To the good people of Switzerland:
You have been scammed and sold down the river. Your politicians and bankers, in a pathetic attempt to consolidate power and curry favor with the EU, have given away your independence and your historic sovereignty. You should be angry.
The initiative you have taken and the referendum you have planned are all well and good. I applaud you for taking these steps within the context of Swiss law and tradition. However, you must understand what is truly at stake and if you don't take more powerful and forceful acts soon, the likelihood of you ever regaining your birthright as an independent, sovereign nation is slim.
The next steps you undertake must include these:
- Demand an immediate and full, independent audit of the SNB gold reserves.This is your gold, not the SNB's, and you should be allowed a full accounting.
- All Swiss gold that is held domestically must be held in Swiss-owned bank vaults, not at the BIS.
- Demand an immediate repatriation of all foreign-held gold. Do not accept excuses regarding "logistics". Give the BoE and the BoC no more than 90 days to return your gold.
- Immediately de-peg the Franc from the Euro and divest yourself of all accumulated Euro holdings. Ignore the Keynesian shills who would have you believe that a strong currency is bad for economic growth.
- Use the process of divesting yourself of the Euro to accumulate and rebuild your gold reserves. Then, use these reserves to once again partially back your currency.
The world is rapidly changing and tomorrow will not be like yesterday. The current global financial system, based upon promises, debt and unlimited fiat currency will one day soon by replaced by a system that returns the world to a sound money platform. The monetary powers of the 21st Century will come to the forefront by virtue of their accumulated reserves of sound money, not by their addiction toeasy money.
You, Switzerland, still have time to act and prepare but you must move quickly. The possibility exists for you to reverse course and demand change but time is short. The end of the great Keynesian experiment is upon us. Reclaim your gold and your sovereignty now or be forever consigned to the trash heap of fiat currency history.
Faithfully submitted with all sincerity,
TF
Silver Doctors......
Mainstream economists appear to be almost obsessed with the idea that strength in the Dow will produce waterfall-sized selling in the GLD SPDR fund.
Good morning Fred, I wonder if my new kitten will be as fierce as super cat? He sure likes to attack me :)Terrible mine accident, I wonder if government corruption played a part, my guess would be yes.
ReplyDeleteHave a great day
That cat acted like a might lion , right ? I have seen cats take on dogs before but nothing like the situation - the cat at the minimum saved the child from very serious injuries ......
DeleteNor sure if corruption played a role but the heavy handed response to protests was just super stupid and arrogant ! After a few months of relative quiet , Erdogan is back on the hot seat ......
Enjoy your Thursday !