Posted on 12/18/2002 9:53:28 AM PST by LSUfan
I'd guess that a few people on Wall Street are going to be given their walking papers or suddenly "retire" to spend more time with the family.
Richard W.
They drove the price to $50/oz. and caused major disruptions to the market.
Here's a hint: the Feds didn't shut them down, other traders did.
They missed a margin call.
I'm not fond of anti-trust laws either but they exist and Blanchard may or may not have a case.
The only thing that the Hunt brothers example shows is that conpiracies happen.
Am I a Goldbug... hardly. I just like the fact that the Goldbugs make me a nice profit when the market is flat.
Look up TGLDX and tell me what you see. I look at the market and dont worry to much about the conspiracy bunk.
I think that pro-gold people tend to see plots against them. If they doubt me, stories like this have been around since there was wire-media and trading. I dont care what they think.
My father told me to be careful about Gold and I agree with him, I have made enormous profits and when they turn sour I will sell. When gold dips beyond 5%, I am OUT OF THERE. What does that leave me with?
70% is what it leaves me with! Do I think that has to do with the intrinsic value of gold? No! I invest in what THEY think the intrinsic value of gold is. Then I sell.
As far is the positions on "Long" and "Short" prices go, you are right. These people DONT know what they are talking about. Thats Capitalism folks, and when it doesn't go your way, TOUGH SH*T!
Well, I don't know either but if the POG holds, I'm going to be feeling much better about all those mining shares I'm holding.
Richard W.
In July, 2001, Blanchard’s CEO wrote the World Gold Council a letter which included the following excerpt:
Over a year ago, we presented you with the problem: ‘Gold is no longer an investment, but rather a speculation on the timing and the occurrence of uncertain events that are solely in the control of other parties. That being the case, our clients should avoid gold like the plague until such time as the free market laws of supply and demand are allowed to dictate the price.’
Blanchard’s suit has been filed (under Section 1 of the Sherman Act) against Barrick, J.P. Morgan (who, it is alleged, illegally abetted Barrick by permitting Barrick to defer repayment of borrowed gold, and also waiving the margin requirement), and the World Gold Council itself.
The Barrick/Morgan/WGC (turn a blind eye) alliance has virtually provided a blank check for Barrick – a company which professes to be the most successful gold mining company in the world, but which, in reality, makes the bulk of its profits from the manipulation of the price of that which it produces. And those profits are made entirely at the expense of legitimate retail gold investors.
According to the Blanchard letter:
The same type of accounting maze that hid Enron’s debts has made it possible for Barrick to manipulate the price of gold without the checks and balances that come from public scrutiny. Barrick’s short sales of gold are made through the use of privately negotiated derivative contracts that are not reported or traded on a regulated exchange. Barrick treats those short sales as exceptions to the normal rules governing derivative contracts and neither includes them on its balance sheet nor reports changes in their fair market value in its current earnings …. We found that, as a percentage of Barrick’s total assets, its off-balance sheet assets make Enron look like a champion of full disclosure. Barrick’s SEC filings show that it has $5.2 billion of assets on its balance sheet. Off-balance sheet, it has $5.5 billion in short sales of gold, and mineral reserves that are four times the size of those short sales.
When the price of gold rises, Barrick conveniently has contracts in place that allow it to add physical supply, forcing the price back down. And, thanks to agreements with Morgan, Barrick also has the ability to increase its short sales to approximately 55 million ounces of gold (more than eighty-five percent of worldwide annual gold production).
It would appear that Barrick/Morgan are in a win/win situation of their own making. And those of us who have been purchasing gold (in any form) for the past fifteen years have been footing the bill for their manipulation game.
If Blanchard’s suit is successful in forcing Barrick to unwind the (20+ million ounce) short position it has used to manipulate the gold market, there is no telling what the price of gold will do. As is always the case, the suit will be resolved neither quickly nor easily. Yet just the fact that the suit has been filed (and will be receiving significant publicity) should put a crimp in Barrick’s/Morgan’s style. They will now be forced to conduct their hedging in a fishbowl, making covert manipulation much more difficult.
Then again, where behind-the-scenes global financial manipulators are concerned, when does the little guy ever receive justice? I suppose there's always a first time ....
That doesn't sound like "cornering the market."
They missed a margin call.
And how did that happen?
Apparently, they knew that the price would not go up significantly.
Up until now I have pretty much been a bullion investor where precious metals are concerned. But this morning I (uncharacteristically for me) invested in a speculative gold stock (MNG – Miramar Mining, on the AMEX) for three reasons:
(1) The American economy is not as strong as the administration and the mainstream media would have us believe, and it’s just a matter of time before the truth is known. It times of severe economic downturn, gold has almost always provided a financial haven.
(2) The Blanchard vs. Barrick/Morgan/World Gold Council lawsuit is being called ‘opportunistic’ by some. But, theories on Blanchard’s motives aside, and no matter the legal result, it cannot help but improve the future outlook for gold, and put at least a crimp in the ability to manipulate its price.
(3) At the risk of appearing ghoulish, the impending (most likely within the next month or so) war with Iraq (as well as the ongoing threat that North Korea poses) bodes will for gold investment, too.
I have been following several gold-related stocks for quite a while now (ASL, AU, GFI, GSS, NEM among them), and decided that today was the day to take the plunge. (May have been a little too premature, since gold may retrace a bit before taking off again, but I’m still feeling a little more secure tonight. :)
Tell me about it. I'm living it! Thanks God my wife still has a job.
I have a little cash waiting for investment in my SD-IRA. I'll have to check out that Miramar company.
Sometimes short squeezes don't happen all at once, but it is happening.
Ummm...excuse me?....If you want to look for someone who manipulates the price of gold...you need look no further than the Fed's...On the last run up they dumped tons of physical through back channels and made available more physical to short with...All the while the Japanese where buying contracts like they were going out of style and letting them mature to delivery...pissing off the Feds even more
These two might be up to shenanigans but compared to the world market..relatively inconsequential...
As to derivitives...they are king....You would need a 2 Ton truck to capture any reasonable profit on a gold move...with contracts you can leverage your position a hundred fold and you don't need to dig a basement vault.. When I participate in gold it is through Contracts...and I have been long for 2.5 years now...I think we will see 450 at some point in the not to distant future...
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