Tyler Durden @ ZeroHedge is a complete fucking dumbass... no seriously
Posted on | Sunday, March 28, 2010 | No Comments
Former Goldman Commodities Research Analyst Confirms LMBA OTC
Gold Market Is "Paper Gold" Ponzi
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Tyler Durden on 03/28/2010 12:47 -0500
When we put up a link to last week's CFTC hearing webcast little did we know that it would end up being the veritable (physical) gold mine (no pun intended) of information about what really transpires in the commodities market. First, we obtained direct evidence from Andrew Maguire (who may or may not have been the target of an attempt at "bodily harm" as reported yesterday) of extensive manipulation in the silver market. Today, Adrian Douglas, director of GATA, adds to the mountain of evidence that the commodities market, and the CFTC, stand behind what is potentially the biggest market manipulation scheme in the history of capital markets (we are assuming for the time being that all allegations of the Fed manipulating the broader equity and credit markets are completely baseless). Using the testimony of a clueless Jeffrey Christian, formerly a staffer at the Commodities Research Group in the Goldman Sachs Investment Research Department and now head and founder of the CPM Group, Douglas confirms that the "LBMA trades over 100 times the amount of gold it actually has to back the trades."
Christian, who describes himself as "one of the world’s foremost authorities on the markets for precious metals" yet, in the words of Gary Gensler, said "that the bullion banks had large shorts to hedge themselves selling elsewhere- how do you short something to cover a sale, I didn’t quite follow that?" and proves that current and former Goldman bankers are some of the most arrogant people alive, assuming that everyone else is an idiot and will buy whatever explanation is presented just because the CV says Goldman Sachs.
Children, when bullion banks are selling, its because someone(s) in physical is BUYING which drives the price up. Remember how when demand increases so does price from high school econ? Therefore banks (market makers) are inherently long which is why the sell short the futures. All the shit they have in inventory is APPRECIATING IN VALUE bc physical supply is dropping while they sell it to the buyers who are bid price up as supply drops. To cover the inevitable drop in price from the increase in physical inventory when retail sells ,(adds supply which results in lower prices, and banks HAVE to buy it back at lower prices), they short the futures!
The former GS guy is not arrogant, nor is he clueless as you claim, nor is he asuming everyone is an idiot as you also claim. You're just completely fucking retarded, Tyler. In fact, here's how clueless you are. You actually posted what I just said above in the video (for the illiterate) that you posted. Not only did this baffle your mind 1x while watching the video, you couldn't grasp the concept of supply and demand while seeing it in print for a second time.
J. CHRISTIAN: well, actually let’s go back to a concrete example of Mr. Organ when he was talking about August of 2008 when there was an explosion in the short positions in gold and silver held by the bullion banks on the futures market and he seemed to imply that that was somehow driving the price down. If you understand how those bullion banks run their books the reason they had an explosion in their short positions was because they were selling bullion hand over fist in the forward market, in the physical market, and in the OTC options market. Everyone was buying gold everywhere in the world so the bullion banks who stand as market makers were selling or making commitments to sell them material and so they had to hedge themselves and they were using the futures market to do that. So if you place position limits on the futures market they will have to find some other mechanism to hedge themselves …and they will. And someone else will provide that market…
Eco 101 strikes again.
Oh But wait he mispoke!???! OH SHIT!
CHAIRMAN GENSLER: I would like to follow up on Commissioner Dunn’s question for Mr. Christian, if I might, because I didn’t quite follow your answer on the bullion banks. You said that the bullion banks had large shorts to hedge themselves selling elsewhere, and I didn’t understand; I might just not have followed it and you’re closer to the metals markets than me on this, but how do you short something to cover a sale, I didn’t quite follow that?
J. CHRISTIAN: Well, actually I misspoke. Basically what you were seeing in August of 2008 was the liquidation of leveraged precious metals positions from a number of places and the bullion banks were coming back to buy it, and they were hedging those positions by going short on the COMEX and that is really what it was.
[Even on a second attempt Mr. Christian invents the most ridiculous poppycock to explain away the blatant manipulation of the precious metals in 2008. If, in his own words, investors were buying gold hand over fist everywhere in the world why would leveraged long holders dump all their long holdings? They would have ordinarily been making a fortune. The bank participation report of August 2008 shows that 2 or 3 bullion banks sold short the equivalent of 25% of world annual silver production in 4 weeks and the equivalent of 10% of world annual gold production. There was simultaneously a decrease in their long positions, which were almost non-existent anyway, which is incoherent with a notion the bullion banks were mopping up dumped leveraged investments. For an intelligent and coherent explanation of what happened in August 2008 read my CFTC written testimony here]
So now we have banks (any bank doesnt matter), going long physical and once again selling short futures to hedge in the face of a number of places selling? OH THE HORROR!!!
Here's the best part:
If, in his own words, investors were buying gold hand over fist everywhere in the world why would leveraged long holders dump all their long holdings?
Because you sell high and buy back low dumbass. Business 101.
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