Jesse, New Twists In MF Global Scandal, 21 November 2012
"The [gold] exchange is a fractional reserve exchange, and they think that price will solve everything."
Kyle Bass
"If JP Morgan leases gold from the US Treasury it does not mean that they back up a truck in Fort Knox and drive the gold away. There is no need for that. It is just a paper transaction. The gold can sit in Fort Knox. JP Morgan can take a hypothecatable title. Now once JP Morgan has the gold what they do is they sell it at times 100 to gold investors [100:1 leverage] who think they have gold but what they really have is what is called unallocated gold.
Unallocated gold is a euphemism for no gold. If I call up JP Morgan and I say, 'You know I wanna buy a million dollars worth of gold,' they will say, 'Fine. Here is our contract. Send us the million dollars.' I sign the contract. I send the million dollars. They send me a confirmation and it says I own a million dollars worth of gold subject to the contract.
Well, read the fine print in the contract. What it says is your gold is unallocated which means that they do not claim to have any specific bar with a serial number or your name on it. In reality they have taken the same bar of gold and sold it to a hundred different investors.
Now that is fine if we are happy with the paper contract, but if all 100 of us show up at JP Morgan and they have only got one bar of gold, the first person may get the gold. The other 99 people, they are going get their contracts terminated. They are going to get a check for the value of gold at the close of business yesterday, but they are not going to get today's price movement or tomorrow's price movement when super spiking going up to $2,000, $3,000, $4,000 an ounce. That is when you want your gold for the price protection when everything else is falling apart. That is when you are going to discover that you do not have gold."
Jim Rickards, The New Case for Gold, Seeking Alpha, April 3, 2016
Seems like we had another precious metals option expiration on the Comex.
I was warning that this was the quarterly expiration for an active contract month, and the wiseguys in their shamelessness certainly did not disappoint.
Gold and silver were sold hard, going out near the lows of the day.
The Dollar was marginally higher. This was not a dollar cross trade.
VIX rose sharply.
Stocks were sold, driven by the usual bipolar interest rate wash and rinse memes.
There are also concerns that the self-centered brats in the Congressional Freedom Caucus,enabled by the clueless and spineless are going to keep acting out until they finally break something important.
The lesser of two evils is still evil. And nothing will improve until we demand something better.
The low in the VIX and the nonsensical utterances of the spokesmodels and the Wall Street pigmen auxiliary last week seemed to indicate a major wash and rinse was in the works. The rationales for a further rally in the equity markets and a stealth economic recovery were laughable.
Remember when we used to pass the time arguing about whether deflation was inevitable (it is not) or if the precious metals and other markets are manipulated? (they are) Or whether Elliott waves and other charting gimmicks were prescient? (they were not)
Now we seem to have become resigned to life in an empire of fruitless anger and lawlessness. The occasional hit on the outrage button makes many feel like they are alive. Cynicism and selfishness reigns, and the love in their hearts has grown cold.
What is your responsibility? It is to walk with the Lord, and be His hands and feet in the world, no matter what else the foolish and the headstrong and the unrighteous around you may be doing.
It is never between you and them. It is always between you and your God. This is what it is all about.
My eyesight is slowly but steadily improving. It requires determination and patience.
And so it may be, with the cure of one's soul. Everyone carries this burden.
Have a pleasant evening.
