Jp Morgan Trading Desk Reaction

[General Congreve]

As some of you probably know, JP Morgan (along with HSBC) hold the biggest short positions against gold, something that they consistently do despite its continual rise and therefore has consistently lost them a lot of money.

Well, here's an artists rendering of the JPM's trading desks reaction to Bernanke's announcement yesterday that US inflation was too low (signalling more QE on the way):

http://j.mp/bX7Blm

1.20 and 3.35 mins, probably very close to the reality!

Edited September 22, 2010 by General Congreve

[MinceBalls]

Got gold will ramp.

[Bobajobbob]

Can you explain why they hold this position and how you know?

[MinceBalls]

Can you explain why they hold this position and how you know?

They are probably long too

[General Congreve]

Got gold will ramp.

I think you'll find Bernanke, the BoE, the ECB and the BoJ are handling the ramping job very nicely, without me getting involved.

Edited September 22, 2010 by General Congreve

[General Congreve]

Can you explain why they hold this position and how you know?

I've read it quite widely on various financial sites, but here is a fairly robust explanation from gold-eagle.com:

JP Morgan is a leading member of a cartel holding huge net short positions in gold derivatives and who therefore have a vested interest in holding down the gold price and, in collusion with central banks, who are fighting to defend the fiat money system, dump gold on the market whenever it looks like it will break through a key chart point. In fact, the Office of the Comptroller of the Currency lists JP Morgan Chase as the largest holder of gold derivatives. The reason that they got themselves into this position is historical. They were involved in forward selling gold, which they regarded as a non-performing asset, throughout the 90's to extract value before the price fell further. Elaborate schemes were hatched to free up the value locked up in this "dead asset", which they regarded as mouldering uselessly in underground vaults while other assets were soaring. From what I have heard there has also been some very convoluted and strange accounting employed to tap the value of the yellow metal. The end result of all this scheming would appear to be huge net short positions in gold / gold derivatives built up by banks such as JP Morgan and also plundered bank vaults. Furthermore, a vicious circle has developed in recent times, due to the developing bull market in gold, which is forcing banks to dump their dwindling supplies of bullion on the market at critical points in an attempt to save themselves from being buried by their huge short positions, even though they know they are selling a rising asset. Of course, if JP Morgan is net short gold derivatives in a big way and gold goes up a lot, they are going to be facing a rather large bill, to put it mildly.

Edited September 22, 2010 by General Congreve

[General Congreve]

Not much of a response, well I hope it at least gave you a few laughs.

I would caution that whilst affordable housing is the priority for most on here including myself, I know it's unlikely I'd be buying very much with devaluing cash sitting in a savings account by the time we've had our house price correction, as inflation-eaten savings will seriously offset any decline in prices, hence why I'm seriously in gold.

Just to put you in the picture on gold if you don't follow it:

£700/ounce - Jan '10

£827/ounce - today

How's your STR fund doing in the bank? You can buy coins and small bars very easily, it's not all huge bullion bars like in the movies!

[lets get it right]

As some of you probably know, JP Morgan (along with HSBC) hold the biggest short positions against gold, something that they consistently do despite its continual rise and therefore has consistently lost them a lot of money.

Well, here's an artists rendering of the JPM's trading desks reaction to Bernanke's announcement yesterday that US inflation was too low (signalling more QE on the way):

http://j.mp/bX7Blm

1.20 and 3.35 mins, probably very close to the reality!

If these blokes are so smart, how come they're short gold when it keeps going up. I thought they knew about these things.

[General Congreve]

If these blokes are so smart, how come they're short gold when it keeps going up. I thought they knew about these things.

See my earlier post, but in short they have to sell short to try to keep the price down as they're so far short with gold derivatives that they'll be wiped out. However, they're p1ssing in the wind, gold is going against them big time. It's only a matter of time.

[johnny5thumbs]

If these blokes are so smart, how come they're short gold when it keeps going up. I thought they knew about these things.

You can go both long and short on a metal at the same time, trading on the fluctuations. JPM are bound to be holding positions on both sides.

Plus, on a darker note, the city and some of the media have always been great at tipping shares / metals / commodities shortly before unloading their own personal holdings. A good rumour or headline is always good for a a last percent or two onto the price.

Edited September 22, 2010 by johnny5thumbs

[Dr Doom]

There was some talk on the Keiser Report a few days ago about a dirty dozen of arab billionaires,

intent on busting the LBMA by withdrawing massive amounts of physical gold.

On a slightly random gold tangent, I was recently flying back from Asia and saw some HSBC marketing

on the walkway from the plane which said something like "there is enough gold under the ocean to

give 100,000 euro to everybody on the planet" alongside is a picture of a deepsea diver finding

some gold in the deep sea, no further explanation.

Anybody know wtf that could be about ? (especially strange considering they are one of the two

banking powerhouses accused of holding these massive manipulative short positions).

[GinAndPlatonic]

Dr Doom..........Nothing to do with this thread but do you know your link to BBC resistance isnt working.

[Stay Beautiful]

There was some talk on the Keiser Report a few days ago about a dirty dozen of arab billionaires,

intent on busting the LBMA by withdrawing massive amounts of physical gold.

On a slightly random gold tangent, I was recently flying back from Asia and saw some HSBC marketing

on the walkway from the plane which said something like "there is enough gold under the ocean to

give 100,000 euro to everybody on the planet" alongside is a picture of a deepsea diver finding

some gold in the deep sea, no further explanation.

Anybody know wtf that could be about ? (especially strange considering they are one of the two

banking powerhouses accused of holding these massive manipulative short positions).

i too have read this about gold in huge amounts in the oceans, getting it onto dry land though, not feasable.

[Errol]

If these blokes are so smart, how come they're short gold when it keeps going up. I thought they knew about these things.

They are working with the Government and central banks to try and keep the price down (with varying degrees of success).

[200p]

Imagine you want to control the population.

The easiest way is through the money. First, monopolise the traditional archaic natural money, i.e gold, silver, and lock it away.

Now, issue your own money, paper, digital whatever. Not every gram of gold can be hoarded of course, or the public would cotton on.

But the public do cotton on, as they try to seek stores of value, tech stocks, houses etc. They will eventually stumble across gold - this price must be suppressed, or the money illusion vanishes, ergo control vanishes.

['Bart']

£700/ounce - Jan '10

£827/ounce - today

I bought a few coins at £700 an ounce. Seemed a bit dear at the time and I wondered if it was a good idea.

I prefer to see gold as insurance, but it's nice to have a bit of insurance that accumulates in value.

['Bart']

i too have read this about gold in huge amounts in the oceans, getting it onto dry land though, not feasable.

Makes sense. Given the amount of land area that is covered by oceans, there must be all sorts of goodies down there but it's getting the stuff up.

Oil and gas can at least be pumped through pipes, but I don't think there's any equivalent "easy" method for coal, gold, copper etc.

[goldfever]

Can you explain why they hold this position and how you know?

JPM and some of the other large commercials and CBs act as agents for the US and other governments and attempt to surpress the price of the PMs, as a rising PM price acts as a barometer of financial mismanagement and makes bonds and gilts appear less attractive . You can find the info at Harvey Organ blog. The combined commercials now own almost 300k short contracts in silver the equivalent of 11 years global production. Thats silver they claim to have but don't as global silver reserves are close to depleted.

Someone that goes short the market does so to make money, these commercials have massive underwater short comex futures positions costing them about 25mill for every 10cent increase in silver spot price. and yet they continue to add short positions(you can find the numbers in the weekly COT report) on a daily basis. Why? its not to make money thats for sure. its to attempt to supress the price. The evidence is overwhelming you just need to know where to look for it.

Edited September 23, 2010 by goldfever

[Dr Doom]

JPM and some of the other large commercials and CBs act as agents for the US and other governments and attempt to surpress the price of the PMs, as a rising PM price acts as a barometer of financial mismanagement and makes bonds and gilts appear less attractive . You can find the info at Harvey Organ blog. The combined commercials now own almost 300k short contracts in silver the equivalent of 11 years global production. Thats silver they claim to have but don't as global silver reserves are close to depleted.

Someone that goes short the market does so to make money, these commercials have massive underwater short comex futures positions costing them about 25mill for every 10cent increase in silver spot price. and yet they continue to add short positions(you can find the numbers in the weekly COT report) on a daily basis. Why? its not to make money thats for sure. its to attempt to supress the price. The evidence is overwhelming you just need to know where to look for it.

There's no suppression of the gold price. $1300 is the equilibrium market value.

Why would anybody want to keep the gold price low ?

[Quiet Guy]

There's no suppression of the gold price. $1300 is the equilibrium market value.

Why would anybody want to keep the gold price low ?

I've never worried about this question. If it's wrong then it's wrong. If it's right then thanks for the cheap gold fellas! Since you ask, however, I'll point you to this often quoted alleged statement by Eddie George:

"55. The fifth wave of preemptive selling in excess of two standard deviations occurred in response to this rally as the Fed, the Bank of England and the BIS struggled to halt and reverse it. According to reliable reports received by the plaintiff, this effort was later described by Edward A. J. George, Governor of the Bank of England and a director of the BIS, to Nicholas J. Morrell, Chief Executive of Lonmin Plc:

We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded. The U.S. Fed was very active in getting the gold price down. So was the U.K."

http://www.goldensextant.com/Complaint.html#anchor3130

(search for 'abyss')

[The Matador]

There's no suppression of the gold price

Former Federal Reserve chairman Alan Greenspan says otherwise.

http://www.federalreserve.gov/boarddocs/testimony/1998/19980724.htm

Why would anybody want to keep the gold price low ?

For years prior to 2000, gold leasing fueled what was called the gold carry trade. Investment houses leased gold from central banks, paying the central banks a tiny annual interest rate, usually well below 1 percent of the value of the gold leased, and then sold the gold into the market and invested the proceeds in government bonds, earning perhaps 5 percent annually. The huge difference in interest rates meant a virtually free stream of income for the investment houses, income paid by central banks as interest on the government bonds purchased by the investment houses, secure as long as the investment houses could be protected against sudden rises in the price of gold.

Gold-leasing governments liked this scheme because it supported government bond prices and government currencies and kept interest rates down — below where a free market would have set them. The results were the worldwide, credit-fueled boom, a vast misallocation of capital into unprofitable, unsustainable enterprises, and the worldwide bust now under way.

When the price of gold reached bottom in 1999 and turned up, threatening the investment houses that had sold leased gold even as Western central bank gold reserves began to decline markedly, the Western European central banks, under the supervision of the U.S. government, announced the Central Bank Gold Agreement:

http://www.reserveasset.gold.org/central_bank_agreements/cbga1/

The U.S. government was not formally a signatory to the agreement, but it was announced in Washington and has been called the Washington Agreement. So it is fairly surmised that the U.S. government helped organize the agreement and had a big interest in it — the continuing support of the U.S. dollar and U.S. government bonds through gold price suppression. Gold price suppression was the essence of the “strong dollar policy.” The Washington Agreement was a plan of dishoarding and sale of the gold reserves of the Western European central banks. While the agreement’s participants said they meant to support the gold price by limiting and co-ordinating their gold dishoarding, in fact they were arranging cash settlement of their gold loans, allowing the investment houses that were short gold to close their positions in cash rather than in gold itself. The investment houses were allowed to settle in cash because if they had been required to settle in gold, they would have had to go into the open market to get it and the gold price would have shot up very high, bankrupting the investment houses and greatly diminishing the value of all government currencies and bonds.

That is, central banks do not want their leased gold back. That is what you are missing.

Ever since the Washington Agreement in 1999 the Western central banks have been managing their controlled retreat with the gold price, letting gold rise a fairly steady 15-20 percent per year on average, stretching out their dishoarding as far as they can while trying to maintain some gold on hand for emergency intervention in the currency markets.

Barrick Gold, the biggest hedger (short) among the gold miners, confirmed all this when it announced some years ago that most of its gold loans had 15-year terms and were what the company called “evergreen” — always allowed to be rolled over year after year so that the gold never had to be repaid as long as Barrick paid the tiny amount of cash interest due on it every year.

Barrick is short more than 9 million ounces of gold and until a few years ago was short much more than that. Who would lend so much gold indefinitely and for a mere pittance in interest? Only a central bank that meant to suppress gold as part of a scheme to keep government currencies and government bonds up and interest rates down.

That is, gold is only the tail on the dog here. But it’s a very strong tail.

You can find more detail about the gold price suppression scheme here:

http://www.gata.org/node/6519

One more thing. I should have added that in defending against Blanchard & Co.’s gold price-fixing lawsuit in U.S. District Court in New Orleans in 2003, Barrick went so far as to claim to be the agent of the central banks when it leased and sold gold and to share their sovereign immunity against lawsuit:

http://www.gata.org/files/BarrickConfessionMotionToDismiss.pdf

-Chris Powell, Secretary/Treasurer

Gold Anti-Trust Action Committee Inc.

[goldfever]

Those that have studied the gold and silver markets; fundamentals drivers supply demand history etc often very quickly come to the realisation that the price of gold and silver is artificially surpressed. you simply need to know where to look. The mechanics of supression has been mostly studied by goldbugs but more recently articles discussing supression have appeared in FT Nytimes etc where GATA has been quoted. The CFTC is proposing position limits on future contracts trading due to start in Jan next year beacuase of the increasing outcry. I can't reference all the articles and sites that explore these issues one must study it oneself. GATA is a good place to start as is Goldsilver. 24hgold.goldseek. Harvey Organ, Casey research and many others.