A "New Dynamic" in the Gold Market


"CFTC hearing revealed there is 100x more paper-gold outstanding than physical gold."

Now that the downward pressure put on gold and silver prices by the gold cartel for option expiry and quarter-end window dressing is behind us, it is no surprise that precious metals have jumped higher. Physical demand—which is always the major driver of the gold price in the long-run—remains strong, as evidenced by high premiums pretty much everywhere.

The big news now beginning to influence the market is the stunning revelation by GATA at a CFTC hearing last week about the London whistle-blower who had explained to the CFTC how JP Morgan Chase has been manipulating/capping precious metal prices. In a shocking parallel to the inaction by the SEC after receiving warnings from Harry Markopolos about the Madoff ponzi, the CFTC has apparently been sitting on this information.

The whistle-blower, Andrew Maguire, is an experienced precious metal trader in London. In this riveting interview on King World News with GATA's director, Maguire describes a "new dynamic" impacting gold. Specifically, there is a huge short position in the market. But there is even more.

The CFTC hearing confirmed what GATA has been saying all along, that the gold market is being manipulated. To achieve this manipulation, the gold cartel has accumulated a huge short position. Importantly, the hearing confirmed that the gold cartel's huge short positions are 'naked,' meaning that these positions are not hedged. More to the point, the CFTC hearing revealed that there is 100-times more paper-gold outstanding than physical gold.

The market is now starting to absorb the significance of what GATA has uncovered over the years and summarized succinctly in its prophetic announcement in The Wall Street Journal more than two years ago—seven weeks before the collapse of Bear Stearns and the start of the present financial crisis:
"The objective of this manipulation is to conceal the mismanagement of the U.S. dollar so that it might retain its function as the world's reserve currency. But to suppress the price of gold is to disable the barometer of the international financial system so that all markets may be more easily manipulated. This manipulation has been a primary cause of the catastrophic excesses in the world."

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