Information Clearing House

I was the first to point out that the Federal Reserve was rigging all markets, not merely bond prices and interest rates, and that the Fed is rigging the bullion market in order to protect the US dollar’s exchange value, which is threatened by the Fed’s quantitative easing. With the Fed adding to the supply of dollars faster than the demand for dollars is increasing, the price or exchange value of the dollar is set up to fall.

A fall in the dollar’s exchange rate would push up import prices and, thereby, domestic inflation, and the Fed would lose control over interest rates. The bond market would collapse and with it the values of debt-related derivatives on the “banks too big too fail” balance sheets. The financial system would be in turmoil, and panic would reign.

Rapidly rising bullion prices were an indication of loss of confidence in the dollar and were signalling a drop in the dollar’s exchange rate. The Fed used naked shorts in the paper gold market to offset the price effect of a rising demand for bullion possession. Short sales that drive down the price trigger stop-loss orders that automatically lead to individual sales of bullion holdings once their loss limits are reached.

According to Andrew Maguire, on Friday, April 12, the Fed’s agents hit the market with 500 tons of naked shorts. Normally, a short is when an investor thinks the price of a stock or commodity is going to fall. He wants to sell the item in advance of the fall, pocket the money, and then buy the item back after it falls in price, thus making money on the short sale. If he doesn’t have the item, he borrows it from someone who does, putting up cash collateral equal to the current market price. Then he sells the item, waits for it to fall in price, buys it back at the lower price and returns it to the owner who returns his collateral. If enough shorts are sold, the result can be to drive down the market price.

Bull Market Thinking

I had the opportunity this afternoon to connect with Peter Schiff, CEO and Chief Global Strategist of Euro Pacific Capital. It was a fascinating conversation, which took place while gold was absolutely collapsing.

During the interview, Peter explained that today’s sell-off, triggered by a Goldman Sachs sell recommendation was based on the “false idea” of European Central Bank gold sales hitting the market. Instead he explained, gold is preparing its move “from weak hands to strong hands”, before heading to new all-time highs. 

When asked his thoughts on the complete panic in the market this afternoon, Peter commented that,”Gold had [previously] sold-off on false anticipation of [economic] recovery bringing an early end to QE. But when Goldman Sachs came out with the sell recommendation…sentiment was already negative…so I think there’s a lot of stops being hit [right now]…[However], the lower prices will create an opportunity for buyers…wanting to accumulate large positions without moving the market. The only way to do that, is to have a lot of selling...Goldman Sachs certainly could have done a lot of favors for people interested in accumulating gold, because now you’ve got the selling that makes [it] possible.”

With respect to Cyprus’ selling of its gold reserves, Peter said that,“The European community is trying to force Cyprus to sell-off its gold…and now you have the anticipation that other highly-indebted European nations like Greece, Spain, Portugal, and Italy, that [all] have lots of gold, [will have to do the same]. Portugal has I think 90% of it’s reserves in gold—that’s about the highest in the world…[So] these countries [being] forced to sell their gold has really [spooked] the market, and people are selling in anticipation of this avalanche of selling by European central banks…[but] that’s a false idea…The reality is none of that gold is going to be sold into the ‘market’…[because]the ‘buyers’ will be other central banks.”

According to Peter those ‘other’ central banks, will be the “strong-hand” central banks of emerging economies. The indebted Western countries he indicated, “[Are] going to be forced to liquidate…[and] what’s going to happen, is that broke countries are going to be selling off their gold to ‘rich’ [BRIC] countries.”

He further noted that, “Moving gold from weak hands to strong hands is very positive for the gold market…[and] when people realize where the gold ends up, [they're] going to scramble to buy back what they’ve sold.”

As a concluding remark on the gold price, Peter indicated that, “We have to get through this sell-off and [then] I think we’re headed [to] new highs. I’m surprised at the degree to which we’ve already sold-off, but I don’t think that changes the fundamentals…the bigger the sell-off is, the bigger the [subsequent] rally is going to be.”

KingWorldnews

Whistleblower Andrew Maguire told King World News that more than a stunning 500 tons of paper gold has been sold in today’s takedown in the gold market.  Maguire also spoke to KWN about the staggering Chinese physical gold purchases.  Below is what Maguire had to say in this remarkable and exclusive interview.
 
Eric King:  “How much paper gold was sold to take this market down, and how much tonnage have the Chinese and others been taking out of the physical market?”

Maguire:  “Just since the cross (today) of $1,550 into the (London) fix and the breach of $1,500, we are now looking at in excess of 500 tons of paper gold that’s been sold....

Eric King:  “So all of that is today?”

Maguire:  “Yes.”

Eric King:  “So when you look at the tonnage being taken out by the central banks in the last couple of weeks, including today, what kind of tonnage are we talking about on the physical side?”

Maguire:  “Deliveries in Shanghai alone in March were 283 tons.  In the eight trading days of April, we have seen another 117 tons (of gold) delivered.  Today was another 20 tons delivered.  So what we are looking at here is over 400 tons (of gold) in less than a month and a half.

Eric, consider that the basis of all of the mainstream media shills coming out and saying, ‘We’re in a bearish market because GLD, the ETF, has dumped around 200 tons since the beginning of the year.  But what we are talking about here is China having purchased and taken delivery of over 400 tons in less than a month and a half.  And since the beginning of the year (that figure) is substantially higher.  It’s probably in the 800 ton range (for the Shanghai Exchange).

So it just amazes me how people concentrate on what’s happening in one paper market.  What we are seeing today is actually a very positive development.  I think we’ve reached a point of capitulation.  I cannot see how the central bank buying cannot overwhelm all of these short sales, despite the leverage.”

There could not possibly be any clouds on the horizon with the Dow and the S&P 500 setting all-time highs, while the German DAX is marching relentlessly towards 8,000 and the Japanese Nikkei is soaring. But just then, a deeply connected representative of the world’s real economy spoils the rosy scenario.

“The world is lacking an economic locomotive,” said Peter Löscher, CEO of Siemens, one of Germany’s crown jewels, a self-described “global powerhouse in electronics and electrical engineering” with 370,000 employees spread over 190 countries, and €78.3 billion ($101 billion) in revenues. A gauge of the world economy. So the company had had some issues.

“I came to Siemens when the company was in its greatest crisis,” Löscher told the Handelsblatt in an interview. In 2007, he’d become the first CEO in the 165-year history of the company to be hired from the outside. At the time, Siemens was at the center of the largest corruption and bribery scandal ever in Germany. Its offices had been raided in 2006. In 2007, it was fined by the European Commission for being part of a bid-rigging and price-fixing cartel of international power systems suppliers. Two former executives were convicted in a German court on bribery charges. Other settlements followed. By the end of 2008, the cost of those fines and settlements was approaching €3 billion.