http://www.youtube.com/watch?

v=zPkTItOXuN0
 "I only know of two men who really
understand the true value of gold: an
obscure clerk in the basement vault of the
Banque de Paris and one of the directors of
the Bank of England.”

"Unfortunately, they disagree."

Nathan Mayer Rothschild (16 September 1777 – 28 July 1836)

Former owner and operator of England’s Royal Mint Refinery,
and the primary gold agent to the Bank of England in the early 1800’s.
 Lower
Higher
Lower
Lower
Higher
Higher
Higher
 negative
increase
"Interest is the difference in the
valuation of present goods and
future goods; it is the discount in the
valuation of future goods as
against that of present goods.”

Ludwig von Mises

Human Action: A Treatise on Economics (1949)
 “By a continuing process of inflation,
bankers can confiscate, secretly and
unobserved, an important part of the
wealth of their fellow citizens. There is
no subtler, no surer means of
overturning the existing basis of society
than to debauch the currency.”
John Maynard Keynes
From his book "The Economic Consequences Of The Peace" (1920)
"In the absence of the gold standard, there is
no way to protect savings from confiscation
through inflation. This is the shabby secret of
the welfare statists' tirades against gold.
Deficit spending is simply a scheme for the
confiscation of wealth. Gold stands in the
way of this insidious process. It stands as a
protector of propertyrights.”
Allan Greenspan
Quote form his paper “Gold and economic freedom”
Published in ‘The Objectivist’ (1966)
“The intrinsic value of gold (…) has dominated
the international monetary system until the late
sixties. One might argue it was an irrational
anchor, but it certainly was a stable one. The
systemic change occurred not because old fashioned
views were exchanged for new ones, but because
the United States of America saw the role of the
dollar being threatened by gold.”

Jelle Zijlstra
President of the Dutch Central Bank
between 1967 and 1981
http://www.kengerbino.com/articles/goldminingstocks.html
http://www.pensions.gold.org/us/supply_demand/supply
 Sell gold: Creates
oversupply so initial
spot price drops

Bank of
England

Get cash in return

(less than initial
spotprice)
4000

3500 Identifiable
demand for
3000 gold (tonnes)
2500
Gold mining
2000 production
(tonnes)
1500

1000 Official total

central bank
500 gold sales
0
(tonnes)
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Data Source: World Gold Council
& GFMS Gold Survey 2009
And western central banks have sold a lot
of their gold according to official numbers
Gold reserves of: Declined from 1980 – 2009 by:

Canada 99,5%
Australia 68%
Austria 57%
Belgium 79%
The Netherlands 55%
Portugal 45%
Norway 100%
The United Kingdom 47%
South Africa 67%
Argentina 60%
Mexico 92%
European Central Bank 33% (since 1999)
Switzerland 60%
United States 1% Data Source: Official IMF numbers

…except for the US that seems to be

 1. Lease gold in 2000: at
lease-rate of 1% a year 2. Sell gold

Bullion
Central bank
Bank 5% interest
a year

4. Cash 3. Cash
6. Return leased gold in 2010
The Problem:
and pay yearly lease-rates
5. Bonds + 6% Gold price rose
over 10% a year
interest a year

Bondmarket
Central
Bank
Sources: Dutch central Bank http://www.jaarverslag2008dnb.nl/downloads/Jaarrekening.pdf
http://www.imf.org/external/np/sta/bop/pdf/resteg11.pdf
 Federal Kuwait Central
reserve Bank

Kuwaiti Gold Transaction reversal to FED Gold

be completed in 10 years

Source Kuwaiti gold story: http://www.gold-eagle.com/gold_digest_99/vronsky102399.html

 Kuwaiti Gold
Federal Central Bank
reserve of Kuwait
FED Gold-plated
tungsten

Kuwaiti Gold Transaction reversal to FED Gold-plated

be completed in 10 years tungsten
 Spotprice at
December and
1. December 20th January 20th 1. December 20th
2 tonnes gold at $ 1.000,- / ounce 2 tonnes gold at
$ 950,- / ounce $ 950,- / ounce

Federal Deutsche
reserve Bank

2. January 20th 2. December 20th

2 tonnes gold at 2 tonnes gold at $
$ 950,- / ounce 950,- / ounce
Spotprice at
December and
January 20th
drops $ 35,-
Page 37: http://web.archive.org/web/20010603004128/http://www.bundesbank.de/ezb/de/publications/pdf/statintreserves.pdf
 1. Spotprice at 9.00
$ 1.000,- / ounce
1. Bid at 9:00 1. Bid at 9:00
$ 980,- / ounce $ 980,- / ounce

Federal Deutsche
reserve Bank

1. Ask at 9:00 1. Ask at 9:00

2 tonnes of gold 2 tonnes of gold

2. Spotprice at 9.01
Artificially lowered
to $ 990,- / ounce
See article: http://seekingalpha.com/article/172797-the-global-oil-scam-50-times-bigger-than-madoff
 Problem: Normal commodity hedging Central Bank
does not involve the forward delivery
of the physical commodity itself!. 2.
3.
Gold
I.O.U.
Gold
1. I.O.U. Gold
in 2011
Mining Bullion Bank
Company
6. $ 950 for
2011 gold 4.
5. Gold
$ 1.000
This forward delivery suppresses the
price. As long as there are hedges and
forward deliveries of physical gold the
price of gold is distorted to the downside
Background information: http://www.silverbearcafe.com/private/parallel.html
Allocated gold

Owner of unique
gold bar

Unallocated gold
 Time 1: 1,00 tonne physical gold
Vault
Time 4: 0,99 tonne physical gold

ETF issuer

1. Sale of ETF’s claiming 4. Deliver ETF claimed gold

1 tonne of gold
3. Return ETF’s
2. $ claiming 0,01 tonne gold

ETF ETF

ETF ETF

ETF
 Time 1: 1 tonne physical gold
Vault Time 4: 0 tonne physical gold and
still 1 tonne physical gold short
ETF issuer

4. Deliver:
1. Sale of ETF’s claiming
• 1 tonne own gold
10 tonnes of gold
• 1 tonne leased
3. Return ETF’s central bank gold or
2. $ claiming 2 tonnes gold settle in cash with
premium
ETF ETF

ETF ETF

ETF
100 Ounces

Hand over 300 Ounces of gold in exchange for I.O.U’s please

 1. Buy 10 ETF’s for $ 1000 2. Buy 10 ETF’s for $ 1000
Broker
Alice (A) (holds ETF’s Charlie (C)
for A and C)
1. Claim to 10 ETF’s 2. Claim to 10 ETF’s

Broker receives $ 2000 for ETF’s worth $ 2000 in gold. So $ 2000 gold is bought on market

1. Buy 10 ETF’s for $ 1000 2. Sell short A’s ETF’s for $ 1000
Broker
Alice (A) (holds ETF’s Charlie (C)
for A and C)
1. Claim to 10 ETF’s 2. Liability to return 10 shares

Broker receives $ 2000 for ETF’s worth $ 1000 in gold. So $ 1000 gold is bought on market
 Issuer of ETF’s

1. Selling 1000 ETF’s 1. Hand over

(I.O.U.’s to gold) $ 1.000 per ETF

Goldman Sachs

Demand 2. Short-selling Fail to

3. Return I.O.U.’s
for 1100 I.O.U.’s to 1100 deliver
to 1100 ETF’s at
ETF’s ETF’s at $ 1.000 100
instead of $ 950 per I.O.U.
per I.O.U ETF’s
I.O.U.’s
Lowest selling price Spot price ETF: $ 1.005 Highest selling price
Trading Range

Range in which buyers and

sellers find each other normally

Range in which High

Frequency Traders fill in
HFT can offset spot price gold to lower level
sell orders to offset price
of gold to lower level

HF Traders begin
Sell orders “slow scanning trading rang Cancel $ 997
traders” are be sending “Immediate order and
or cancel” orders to place buy order
submitted “slow
buy ETF’s at $ 1.000 at $ 998
Flash traders”
orders
At $ 999: OK At $ 998: OK At $ 997: Not OK see orders
start
 March 6th, 1968 (London Gold Pool Collapsed on March 17th 1968)
Cable from someone named Deming at the U.S. Embassy in Paris to the State Department in Washington

________

___________

Source: http://www.zerohedge.com/article/declassified-state-dept-data-highlights-global-high-level-arrangement-remain-masters-gold
 March 6th, 1968 (London Gold Pool Collapsed on March 17th 1968)
Cable from someone named Deming at the U.S. Embassy in Paris to the State Department in Washington

__________

Source: http://www.zerohedge.com/article/declassified-state-dept-data-highlights-global-high-level-arrangement-remain-masters-gold
 February 12th, 1973 (in retrospect)

Commenting on the soaring gold price in the years immediately following

the end of the gold standard in 1971 in his memoirs Volcker wrote as
follows reflecting on the events of February 12th, 1973:

“That day the U.S. announced that the dollar would be devalued by
10 percent. By switching the yen to a floating exchange rate, the
Japanese currency appreciated, and a sufficient realignment in
exchange rates was realized. Joint intervention in gold sales to
prevent a steep rise in the price of gold, however, was not
undertaken. That was a mistake.”

Paul Volcker
Chairman of the Federal Reserve from August 1979 to August 1987
Current chairman of the Economic Recovery Advisory Board
Quotation derived from Volcker’s Memoirs
Published in The Nikkei Weekly in Japan on November 15, 2004
www.gata.org/files/VolckerMemoirs.doc
 June 3rd, 1975

Arthur F. Burns
Chairman of the Federal Reserve from 1970 to 1978
Excerpt from the June 3rd declassified Memorandum for President G. Ford
(CC: Henry Kissinger and Alan Greenspan)
http://www.zerohedge.com/article/smoking-gun-fed-controlling-gold
______________________________________________________________________

______

______________________________________________________________________
 May 18th, 1993

Alan Greenspan as Chairman of the Federal Reserve

Source:

Page 42 of the Minutes of the Federal Open Market Committee meeting of May 18, 1993
http://www.federalreserve.gov/monetarypolicy/files/FOMC19930518meeting.pdf
 July 7th, 1993
Transcript of the Federal Reserve's Open Market Committee’s meeting on July 6-7 1993

The quotes above are from Wayne Angell

Angell served as the Governor of the Federal Reserve Board from 1986 to 1994
http://www.federalreserve.gov/FOMC/transcripts/1993/930706Meeting.PDF
 January 31st, 1995
See page 69 of the Federal Open Market committee's January 31st - February 1st 1995 minutes
http://www.federalreserve.gov/monetarypolicy/files/FOMC19950201meeting.pdf

J. Virgil Mattingly (photo right), The former general counsel of the

U.S. Federal Reserve Board, acknowledges to the committee that the
U.S. Treasury Department's Exchange Stabilization Fund (ESF) had
undertaken gold swaps.
 July 24th, 1998
Alan Greenspan as Chairman of the Federal Reserve
‘The regulation of OTC derivatives’: Testimony of Chairman Alan Greenspan before
the Committee on Banking and Financial Services, U.S. House of Representatives

He later elaborated on this comment in a letter to Senator Joseph Lieberman:

“This observation simply describes the limited capacity of private parties to influence
the gold market by restricting the supply of gold, given the observed willingness of
some foreign reserves – not the Federal Reserve – to lease gold in response to
price increases."
 October 7th, 1998

"The Fed has precise control over the

price of gold and therefore over
commodities such as crude oil. No inflation,
therefore no need to raise rates."

Wayne Angell
Governor of the Federal Reserve Board from 1986 to 1994
As stated on CNN’s Moneyline on October 7th 1998
 June 11th, 1999
In the June 11th 1999 Information Memorandum of the Bank of England the terms and condition
were set for the auction of 125 tonnes of gold from the Echange Equalisation Account (central
bank of England) during 5 auctions in 1999/2000

Brown’s Bottom: The gold not only went to the LOWEST bidder, but there
were 5 auctions and it was publicly announced the gold went for sale! Not the
best strategy to choose trying to maximize profits from gold sales…

Source: http://www.bankofengland.co.uk/markets/forex/goldinfmem.pdf (See page 9)

See: Max Keiser’s - "Brown's Bottom" (Documentary): http://www.youtube.com/watch?v=EzVhzoAqMhU
 26 September 1999
‘The Washington Agreement on Gold’
Signed of 26 September 1999 in Washington DC during the
IMF annual meeting and renewed in 2004 and 2009

This agreement is a proclamation by central banks that

they were working together to control the gold price
(although not to suppress it, but prevent it from falling too
much as a result of their on the record sales).

________
 Central bank

Before WAG: Return leased Gold

Lease gold
After WAG: Return money instead of gold

Bullion Banks

Before WAG: Retrieve leased gold, thereby

Short-selling creating extra demand and rise of price
leased gold After WAG: Don’t bother buying back the
leased gold. Just hand over some money
 4th Quarter 1999
In paragraph 55 of the lawsuit filed in December 2001 by Reginald H. (Howe vs. Bank for
International Settlements), it was alleged that “According to reliable reports received by the
plaintiff", Sir Edward A.J. George, Governor of the Bank of England and a director of the BIS,
made the following comment to Nicholas J. Morrell, Chief Executive of Lonmin PLC, in the
aftermath of the Washington Agreement:

“We looked into the abyss if the gold price rose further. A further rise would
have taken down one or several trading houses, which might have taken down
all the rest in their wake. Therefore at any price, at any cost, the
central banks had to quell the gold price, manage it. It was
very difficult to get the gold price under control but we have
now succeeded. The US Fed was very active in getting the
gold price down. So was the UK.”

Sir Edward A.J. George

Governor of the Bank of England between 1993 and 2003
 November 2000
Canadian Imperial Bank of Commerce ("CIBC"), which apparently has
assumed overall responsibility from Goldman for managing Ashanti's hedge
book, is advising Ashanti regarding sale of a 50% interest in its Geita gold
project in Tanzaniato to AngloGold. This transaction, which became
unconditional on November 30, 2000 is expected to close by December 15,
required the approval of Ashanti's bullion banks and its shareholders,
including Lonmin and the Government of Ghana. According to reliable
reports received by the plaintiff, representatives of CIBC held discussions with
Fed officials while this transaction was pending. In the course of these
discussions, Mr. Greenspan's desire to hold down gold prices
was expressed. Ashanti's financial problems presented a major risk not
only to its survival but also to the balance sheets of its bullion banks.

Paragraph 60 of the Complaint of Howe v. Bank for International Settlements

United States District Court for Massachusetts, No. CV-00-12485-RCL
www.goldensextant.com/Complaint.html#anchor3130
"Will the gold rally ever begin? Report issued May 2002
The following arguments emphatically suggest that it will more than rally: (…)

6. Increasing Evidence of Unsustainable Gold Price Manipulation

a. Aggressive gold lending, which from an economic perspective is indefensible, has filled the
supply/demand gap.
b. NY Fed gold has been mobilized when the gold price is rising.
c. Timing of Exchange Stabilization Fund gains/losses corresponds to gold price movements.
d. Audited reports of U.S. gold reserves show unexplained variances.
e. Minutes of Fed meetings confirm officially denied gold swaps.
f. Rules on gold swaps revised but subsequently denied. However, individual central banks have
repudiated the denial.
g. U.S. gold reserves have recently been re-designated twice, initially to "custodial gold" and
latterly to "deep storage gold."
h. Statistical analysis of unusual gold price movements since 1994 indicate high probability of
price suppression.
i. NY gold price movements versus London trading defy odds.
j. Timing of huge increases in bullion bank gold derivatives is consistent with gold price declines.
k. Rapid decline in U.S. Treasury holdings of gold-backed SDR certificates is not explained.

One or two of these factors could be viewed as random, but the full body of evidence is
overwhelming.”
“Report on Gold”
RBC Global Investment Management Inc.
A division of the Royal Bank of Canada
http://www.freerepublic.com/focus/news/705903/posts
 February 28th, 2003
Excerpts from Barrick Gold’s (largest goldmining company in the world at that time) motion to dismiss
Blanchard & Co.'s anti-trust lawsuit against Barrick and its bullion banker, JPMorganChase, for rigging the
gold market. The memorandum is adressed to the U.S. District Court in New Orleans.

Barrick argued that due to the fact that central bank’s interests were involved in this
lawsuit the central bank was a necessary party that should be involved in the lawsuit. But
since the central bank could not be dragged to court on this matter, Barrick (as agent of the
central bank) should have immunity from the lawsuit as well.

Source-document: http://www.gata.org/files/BarrickConfessionMotionToDismiss.pdf
 February 28th, 2003
Excerpts from Barrick Gold’s (largest goldmining company in the world at that time) motion to dismiss
Blanchard & Co.'s anti-trust lawsuit against Barrick and its bullion banker, JPMorganChase, for rigging the
gold market. The memorandum is adressed to the U.S. District Court in New Orleans.

_______________

Barrick’s motion to dismiss was settled out of court and shortly thereafter Barrick
announced their hedging operations were terminated.
Source-document: http://www.gata.org/files/BarrickConfessionMotionToDismiss.pdf
 June 3rd, 2004

"Many have heard of the group of economists who came

together in the society known as the Gold Anti-Trust Action
Committee… They believe that with the assistance of a number
of major financial institutions…some senior officials have been
manipulating the market since 1994… As a result, the price
dropped below USD300 an ounce at a time when it should, if it
had kept up with inflation, have reached USD740-760. I prefer
not to comment on this information but dare assume that the
specific facts included in the lawsuits might have given ground to
suspicion that the real forces acting on the gold market are far
from those of classic textbook that explain to students how prices
are born in a free market."
Hon. Oleg V. Mozhaiskov
Deputy Chairman of the Bank of Russia,
Perspectives on Gold: Central Bank Viewpoint
Presented at the London Bullion Market Association Bullion Market Forum
Baltschug Kempinsky Hotel Moscow on June 3rd, 2004
 June 27th, 2005
According to White one of the five main purposes of
central bank cooperation he sees is:

“The provision of international credits and joint

efforts to influence asset prices (especially gold and
foreign exchange) in circumstances where this might be
thought useful.”

William R. White
Economic Adviser and Head of the Monetary and Economic Department BIS
From his written speech “Past and Future of Central Bank Cooperation”
Delivered on the Fourth Annual BIS Conference Basel, Switzerland 27-06-2005
http://www.gata.org/node/4279
Excerpt from first page of sector report by:

Paul Mylchreest
Investment Analyst Cheuvreux
Part of Crédit Agricole Group
(The largest bank in France)
www.gata.org/files/CheuvreuxGoldReport.pdf
 October 5th, 2006

Oct. 5 (Bloomberg) -- Bundesbank President Axel Weber commented on

the central bank's plans for its gold reserves. Weber, who didn't comment
on monetary policy, was speaking to reporters in Paris.

“We are not envisaging gold sales for the third year” of the
current agreement with other central banks, Weber said. “We
have been asked to negotiate with other central banks about
potential swap deals involving gold.” He refused to discuss
which central banks may be interested.

Axel A. Weber
President of the Deutsche Bundesbank since April 2004
Simon Kennedy reported on October 5th 2006 on Bloomberg
Source: www.blanchardonline.com/pdfs/Gold_Market_Lending.pdf
Excerpt from:
GOLD: Riding the "Re-Flationary Rescue"
Investment Demand Supplements Seasonally Strong Fabrication
21 September 2007

John H Hill & Graham Wark

Citigroup Global Markets Equity Research
www.gata.org/files/CitigroupGoldReport092107.pdf
 May 14th, 2007
The US Treasury Department mention ‘gold swapped’ is included in the balance sheet’s number

Source: http://www.treas.gov/press/releases/20075141738291821.htm
 June, 2008
The Bank of England’s official annual report on Reserves of Foreign Currency and Gold
The United Kingdom’s official holdings of international reserves comprise gold, foreign currency assets,
International Monetary Fund (IMF) Special Drawing Rights (SDRs). These reserves are held in a
government account administered by Her Majesty’s Treasury (HMT), the Exchange Equalisation Account
(EEA). The Bank of England acts as HMT’s Agent in the day-to-day management of the EEA.

Apparently, the Bank of England counts swapped gold

still as a part of it’s own gold deposits.
Source: http://www.bankofengland.co.uk/markets/forex/reserves/offreserves.pdf
 February 24th, 2009

Paul Craig Roberts

Excerpt from: Doomed by the Myths of Free Trade - How the Economy was Lost
http://www.counterpunch.org/roberts02242009.html
 September 17th, 2009
Federal Reserve’s response to the Freedom of Information Act request (on gold-related
FED-documents only) filed by GATA

So the Federal Reserve apparently has data on gold

swap arrangements with foreign banks. Otherwise it
should have stated that it didn’t have information of
the sort it could disclose.
Source-document: http://www.gata.org/files/GATAFedResponse-09-17-2009.pdf
So what is the official statement on the
ESF’s involvement in the gold market?

“Although unnecessary at this juncture, the

Secretary specifically denies that the Treasury
or the ESF since 1978 has traded in gold or
gold derivatives for the purpose of influencing
the price of gold or the exchange value of the
dollar. In fact, the ESF has not held any gold
since 1978.”
Memorandum of Secretary of the Treasury
in support of Motion to Dismiss Howe v. BIS
Filed March 15, 2001, page 3 footnote 4
See also: http://www.treas.gov/education/faq/international/goldsilver.html#q2
Official documents prove this statement not to be true:
The ESF is definitely involved in the gold price suppression scheme

Incl.
ESF
Source: http://www.federalreserve.gov/Releases/bulletin/1000pg51.pdf

Notice a difference of
$ 41 million or 1
million ounces of gold
(31 tons of gold)

Excl.
Source: http://www.federalreserve.gov/boarddocs/RptCongress/annual99/ann99.pdf p.334
ESF
 The data on the allocation of gold derivatives
points out that JP Morgan, HSBC and Citibank
have the tools for suppressing the gold market

If one trader held 100% of one side of a market it would clearly

be manipulative, why shouldn’t it be of any concern when one
player holds 78% of the short side of the market in gold?
 And market data on short positions indicates that
they use these tools to suppress the price of gold!

Courtesy of Ted Butler: http://news.silverseek.com/TedButler/1245173905.php

As of January 16th 2010 the net Short position of gold by US bullion banks was
28.3 million ounces (802 metric tonnes). By short selling gold derivatives bullion
banks can divert money from buying physical gold. Removing physical gold
from the market by buying is the key reason for the price of gold to advance
 US Treasury Secretary
& US President

Exchange Stabilization Fund (ESF)

Foreign central
Federal Reserve Bank of New York
Bank Allies

‘The Wall Street Axis’

 London PM fix is gold’s
international main
AM FIX PM FIX reference price for the day
10:30 GMT 15:00 GMT
Washington Agreement
Random examples of sharp price drops from March, April and June 2009
 Few London COMEX Few
No Sharp No
sell- AM Fix THE DROP sell-
Attacks Pricedrops Attacks
offs Attack ZONE offs

Based on the work of

Eric de Carbonnel
AM FIX PM FIX www.marketskeptics.com
10:30 GMT 15:00 GMT
AM FIX

PM FIX
Dow Jones Lowes (DJL)
Gold Low following DJL
 Source:
World Gold Council 2009
 1. First reason to be skeptical about GLD
The increases and decreases of GLD holdings do not
account for increases or decreases in the price of gold
Date Spotprice GLD Holdings

31-12-2008 $ 869 780.2 Tonnes So adding 62% of the world’s total

gold production leads to only
0.1 % increase of the gold price?
06-04-2009 $ 870 1127.4 Tonnes
Although the GLD holdings
16-12-2009 $ 1121 1116.4 Tonnes decreased slightly the gold price
increased with 28.9%

Demand for physical gold drives the price of gold. So according to

these figures it seems very unlikely that GLD gold derivatives are
100% backed by the gold they hold claims to.
Sources: http://www.fgmr.com/fractional-reserve-aspects-of-gold-etfs.html
http://www.spdrgoldshares.com/sites/us/value/historical_archive
 But there is no reason to doubt that large Wall Street ETF gold
custodians have all the gold ETF-buyers hold claims to, right?

Lawsuit document: http://www.gardencitygroup.com/cases/pdf/SLB/SLBNotice.pdf

 1. Buy 10 shares Broker
5. Sell short 10
for $ 1.000 6. +$ 1.000 shares for $ 1.000
that should
have been
Alice used to buy Charlie
gold
7. Liability
1. Claim to 2. Buy 10
to return
10 shares Shares for
$ 1.000
10 shares
4. Issue 6. Claim 1
6. Although owning
a legal claim to 1 10 shares ounce of gold
ounce of gold ETF Gold in exchange
broker defaults on Shares issuer for 10 shares
liability to deliver
shares to claim 3. Add 1 ounce of physical gold to vault:
physical gold Vault holds 1 ounce of gold (0.1 ounce per share)
Source: http://www.shortsqueeze.com
 ________________

Source prospectus: http://www.spdrgoldshares.com/media/GLD/file/SPDRGoldTrustProspectus.pdf

Source prospectus: http://www.spdrgoldshares.com/media/GLD/file/SPDRGoldTrustProspectus.pdf
 In this example:
1. Buy 100 1 ETF = Backed by
ETF’s and 2. Sell
short 100 1 ounce of gold
let HSBC
hold them ETF’s
HSBC
ETF Buyer Custodian Market
for GLD Gold
1. I.O.U. 2. I.O.U.
100 ETF’s 100 ETF’s

3. Potential Vault 3. Potential

claim to 100 100 Ounces claim to 100
ounces of Gold ounces

Claimed to be 3. Auditors only ask themselves: Does HSBC have the 100 ounces
Audited in
prospectus of gold backing up the 100 ETF’s HSBC owes to ETF Buyers?
http://www.bullionbullscanada.com/index.php?option=com_content&view=article&id=6409:even-gold-experts-fooled-by-bullion-etfs&catid=48:gold-commentary&Itemid=131
 Trader

NEW
Future Physical gold
“Physical
contract Delivery Exchange of
gold
Futures for
commodity”:
Physicals
according to COMEX Warehouse (Registers exchanges) (EFP)
COMEX rules register

------
a gold ETF with form at
will do to Future Physical gold + Warehouse
deliver contract Delivery notice

---------------------------

Source: Adrian Douglas - The Alchemists http://www.gata.org/node/7586

 In the COMEX report (July 8th 2009) the EFP
transactions are reported under "Other Volume.“

The “Other Volume” holds contracts in worth of

to 954,000 ounces of gold, while the much more
visible delivery notices are worth only 1,700
ounces of gold. These numbers indicate that the
vast majority of contracts traded on the COMEX
are not delivered via a COMEX registered
Warehouse (and receive physical gold in exchange
for futures contracts).

The COMEX report doesn’t state how many of the

EFP transaction reported under “ Other Volume”
are settled with the COMEX-approved gold
equivalent ETF’s.

Adrian Douglas (member of the board of GATA)

guesses that a lot of EFP transaction are settled
with ETF’s.

The COMEX Warehouse could easily prove this

guess wrong though by just publishing the
numbers. Unfortunately it keeps these to itself.
Source: http://www.cmegroup.com/trading/energy-metals/files/cmxopint070809.pdf p.4
 6. Sixth reason to be skeptical about gold ETF’s
On average 6 times as much ounces of paper gold are traded on
the COMEX than there is physical gold stored at the COMEX

Ounces of
physical gold
(left scale)

Paper ounces
of gold
(right scale)

During the Clinton administration (green oval) there even was a 4

year period in which COMEX short sellers stored only 3% of the
gold required to back their potential contract obligations
Source: http://www.gold-eagle.com/editorials_08/lundeen011610.html
"All that glisters is not gold”

Shakespeare
The original Shakespeare edition of
The Merchant of Venice (1596)
 How much gold is in existence?

According to the World Gold Council at the

end of 2008 almost 163,000 tonnes (5,749
million ounces) of gold existed above ground.

All this gold fits in one single cube of

20 meters (66 feet) to each side
Source: http://www.lbma.org.uk/stats/clearing
All the gold mined and recycled in a year represents
less than two days of spot trade in London
Using 2008 Numbers In Million In Metric
Ounces Tonnes
Average daily net gold traded in London OTC 22.3 693
Conservative estimate of gross volume traded in 89.2 2774
London OTC (4 times net trade)

Conservative estimate of gross volume traded on 62.4 1942

spot in London (70%)
World’s total gross volume of gold traded (London 68.6 2134
accounts only for 91% of the world’s OTC trades)

The amount of all the gold mined worldwide in 2008 (2,414

tonnes) and all of the scrap gold recycled in 2008 (1,212 tonnes)
combined only amount to less than 15 tonnes of gold supply per
working day, or less than 0.8% of daily spot gold turnover
Based on the work of Paul Mylchreest: http://www.gata.org/files/ThunderRoadReport-10-15-2009.pdf
 14
12
10
8 Daily turnover as
6 a percentage of
market Cap /
4 M4/ LGD Bars
2
0
London Shanghai Shanghai Pound Gold
Stock average Maximum Sterling
Exchange

The daily turnover of LGD gold bars seems to be

way out of line, even compared with liquid markets!
Source and references: http://www.gata.org/files/ThunderRoadReport-10-15-2009.pdf
Each ounce of gold held in unallocated gold accounts by
the London OTC Market should at least have 4 owners
Total issued GLD shares / Amount of GLD Shares / Ratio
Gold inventory held by the Gold traded daily on the
London OTC Market London OTC Market

325 million GLD shares 11.9 million GLD shares 30 / 1

64,000 Tonnes 2,134 Tonnes 30 / 1

When GLD ratio applied Conservatively estimated GLD ratio
Sourcedata: http://www.gata.org/node/7911

The gold inventory held be the London OTC market

should be about 64,000 tonnes. But this can’t be,
because the market only holds 15,000 tonnes of gold
inventory in London Good Delivery gold bars. So 49,000
tonnes of gold must have been sold that don’t exist!
 Different calculation method
Gold Stock Money Stock Price of gold Year

140,000 Tonnes $ 4,000,000,000,000 $ 400 1995

Increase: Increase: Increase:

1,16 X 3,75 X 2,50 X

163,000 Tonnes $ 15,000,000,000,000 $ 1000 2009

In order for the gold to be priced at $ 1000 an ounce in 2009

(when there are 15 trillion dollars in money stock), using the
situation in 1995 as a reference point, there should be (3,75 / 2,50
X 140,000 =) 210,000 tonnes of gold available for trading in 2009.

But in 2009 there were only 163,000 tonnes of physical gold on

the face of the earth, so around 47,000 (210,000 – 163,000) tonnes
of gold must be created as paper claims to the physical metal.
“More gold has been mined
from the thoughts of men
than has been from the earth”

Napoleon Hill
American author (1883 – 1970)
“Truth, like gold, is to be
obtained not by its growth, but
by washing away from it all
that is not gold.”

Leo Nikolaevich Tolstoy

Russian writer and philosopher (1828 – 1910)