Time to Drop the Incredulity Over Fraud in the Gold and Silver Markets
April 16, 2010
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Over the past several weeks, a flood of new evidence has surfaced which supports the long-held claims of gold and silver investors like myself that the world's major bullion banks have been operating a shell game using paper instruments to generate illusory supply well beyond the sum of physical backing, and that these banks then use that fake supply to establish massive concentrated short positions on the major exchanges to limit the upward scope of price movements in gold and silver... and to knock those prices down decisively at every opportunity.
One of the most common reactions I observe when people are first presented this growing corpus of evidence is a sense of automated incredulity that the banks could not be so brazenly embroiled in such a grandiose fraud against the world's non-aligned and unsuspecting investors. This is but one of countless knee-jerk responses that unfortunately prevents many from ever taking the time to review the evidence on the merits, and therefore it acts as a barrier between investors and the truth about the very structure of our equity and currency markets. There are plenty of other knee-jerk responses that erect similar barriers to rational consideration of these topics, including a pronounced cultural prejudice against anything resembling a "conspiracy theory", but for today I wish to focus upon the barrier built by unfounded trust in our largest and most powerful banking institutions.
Today, we learned that the SEC has finally slapped Goldman Sachs with a lawsuit alleging fraud in GS' issuance of mortgage-backed securities that were selected by John Paulson precisely for their attractiveness for generating a large short position against those same securities. This is just the latest in a string of fantastical revelations concerning fraud among our largest banks, incluing the infamous repo 105 that Lehman (and how many others?) employed to defraud shareholders by disguising debt and risk. We have also learned that Goldman Sachs helped Greece to mask the extend of its indebtedness, to the detriment of an entire continent's fiscal security. What are these institutions not capable of, I ask you? We'll leave alone for the monent the degree to which Goldman Sachs alumni have pervaded every level of our Treasury department and various government agencies. Suffice to say, the conundrum of the fox guarding the henhouse is prevalent in our financial and political systems.
Despite everything we now know about fraud and malfeasance pervading the entirety of our financial system -- the ludicrous complicity of our ratings agencies, the fabulous insufficiency of our monoline insurers, the brazen indifference of our banks to the safety and welfare of the people, the embarrassing failure of government oversight, the existence of giant ponzi schemes with fancy corporate facades, the sweetheart fed-brokered deals for JP Morgan at the height of the crisis, the $739 billion bailout proposal from Bank of America that preceded the TARP by more than half a year, the continuing failure to value banks' toxic assets at anything approaching market value (thereby continuing to deceive investors into a state of unwarranted complacency), the uncontested ability of banks to engage multi-billion-dollar supercomputers to conduct trades that can out-compete any unassisted human, etc., etc., etc. -- depite all of these things we now know to be true ... still I must face dogged incredulity when presenting evidence of fraud and malfeasance by the banks in relation to their obvious suppression of gold and silver prices and the persistent maintenance of concentrated short positions by key institutions on the world's major exchanges.
I am calling for an end, at the very least, to that instinct of incredulity. I am not asking for anyone to permit baseless speculation to outflank the need for verifiable evidence ... I am merely asking that people conquer their own incredulity to a sufficient degree to permit an objective study of the available evidence. Over the past decade, vast collections of evidence have been compiled by numerous sources outlining both the structure and the dynamics of manipulation and fraud within the precious metals market. Think this topic doesn't concern you because you're not invested in precious metals? Think again ... this is the very means by which interest rates can be kept artificially low, thereby disguising the true nature of inflation via devaluation of our currency. The stakes could not be higher, the implications could not be more far-reaching ... I believe this to be the largest and ultimately the most dangerous case of fraud in financial history. I can accept many reasons why individuals may come to a different conclusion, but that knee-jerk response that banks could not be capable of such a grandiose and widespread scheme to deceive and defraud simply does not hold water within a rational discussion given the documented events of the past few years (let alone the deeper well of history beneath it).
So, what will your reason be for failing to objectively review the available evidence?
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