Posted on 08/16/2011 2:06:33 PM PDT by Nachum
The real reason JP Morgan recently decided to open and operate a Comex gold vault is now in full view. A close friend of mine in the NYC hedge fund community informed me today that hedge funds are now buying gold from JP Morgan, who turns around and "safekeeps" it for them for 15 basis points (that's .15%) on the market value of the gold being stored. My friend referred to this as "allocated" gold. On the surface it looks like the smart money "gold rush" is on.
But, in the wisdom of Shakespeare via Macbeth: "nothing is but what is not." The "what is not" part of the above business transaction is the full, 100% allocation of the gold being purchased. In other words, just as those of us who understand how the game is being played - and have pointed this out explicitly with proof from the GLD prospectus and other examples - JP Morgan is employing the traditional Wall Street/banking business model of fractional gold ownership. This is not new, as Morgan Stanley was successfully prosecuted for this same scheme several years ago when the firm was exposed for selling physical silver to high net worth clients - and "safekeeping" it for a fee, only it couldn't deliver the actual silver when a few of them demanded delivery. Please use google to find the case if you are curious about the details. Only those of us intimately involved in the precious metals market at the time even bothered to care about this case.
(Excerpt) Read more at beforeitsnews.com ...
What’s old is new again?
Did anybody go to prison?
What does Soros know that we don't???
Someone should chart the GLD (ETF price changes closely mimics the price of gold) vs the GDX (ETF of gold mining stocks) for the past year and 2 years. You will find a huge gap has opened in the past few months, where the miners are vastly undervalued compared to what happened to the price of gold.
Now that the Fed has said it will not raise interest rates till at least 2013 (creating a certain negative net interest rate environment where inflation is greater than nominal interest rates), buying gold miners (especially ones who are expecting increased production) seems like a no-brainer, at least until the reversion to the mean closes the gap between GDX and GLD.
He knows that what he sold was PAPER - a giant fractional ponzi scheme that has been used as a tool to suppress the market value of precious metals. And, then he bought stock in the companies that actually produce physical gold.
If you don’t got it, you don’t get it...
“Did anybody go to prison?”
Don’t know, but seriously doubt it.
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