The imminent end game COMEX /LBMA /Petro dollar hegemony

(courtesy Nicholas Biezanek, Harvey Organ, harvey organ blog)

I will start with a very relevant quote copied from Jim Willie’s May 2018 Hat Trick Letter.

"Many observers do not understand that machines with their complex algorithms use the COMEX contract as a USDollar trading hedge. They do not have to deliver gold. The Fed sees this as a service to enhance the fiat currencies in a hidden support function. It is all part of the sociopath control over a failing system that cannot reform itself."

’.

The relevance of the above quote has recently been enhanced by the suppression of same day reporting of the two LBMA gold fixes; what we sight now in the West is 100% a COMEX/GLOBEX paper future contract and all transactions involving the eventual delivery of physical gold are totally opaque (opaque is indeed too generous a description, since opaqueness implies some minuscule degree of impaired visibility).Perhaps this iniquitous status quo is about to change .This week the algos, as usual, are working flat out to give the impression that the Italian fiasco means absolutely nothing at all from the perspective of disturbing gold’s extremely limited role in the economic order as dictated by the central planners. Let us examine some recent and evolving events that portend momentous change as paper gold machinations will begin to be overwhelmed by the forthcoming demand for physical delivery of gold. This new daily occurrence of Exchange for Physical contracts inexplicably novated over to the Comex is so egregious as to manifestly portend that the end game is nigh. (A possible explanation is postulated in the body of this paper).

RECENT LBMA VAULT DATA

The LBMA publishes 3 months in arrears the total loco London gold vault holdings. The data as at 28th February 2018 was therefore only released on the morning of 1st June 2018. Why is there a delay of more than 90 days? Even if horse riders are still used to deliver the data returns, loco London implies a very constricted geographic area, so the data should be released within 48 hours if the true intention is to provide meaningful information. The LBMA releases this data under the headline war cry of a move to total transparency, but I believe that this data is complete disinformation, even if accurate. If Deutsche Bank was merely to release the asset side of its balance sheet, how useful would that be in the absence of particulars of all the corresponding liabilities, both on and off balance sheet? The same is true of data in respect of LBMA vault gold. Since all the claims on this gold may be multiples of the physical gold available to meet such claims, then failure to disclose that fact results in merely the dissemination of propaganda, designed to give a false and misleading sense of ‘all is well’. For what it is worth, the table below summarizes loco London vault gold as at 28th February 2018 (the first month of this new LBMA ‘transparency’ was first evidenced in July 2016 and that data is included to assist with contextualization of the figures):

Data from: https://www.lbma.org.uk/london- precious-metals-physical-holdings-statistics
             
LBMA data is available per month from July 2016 onwards LBMA total loco London gold holdings BOE total vault holdings (included in LBMA data) Residual gold held with all other LBMA custodians Residual gold held with all other LBMA custodians in tonnes GLD holdings with various custodians and sub custodians Non BOE float, excluding GLD custodial gold, avalable for allocated gold holders etc.
 

A

B

A-B

A-B

C

A-B-C

 

000

000

000

     
  Troy ozs. Troy ozs. Troy ozs.

Tonnes

Tonnes

Tonnes

July 2016

234,144

158,939

75,205

2,339.14

958.09

1,381.05

Dec 2017

251,622

171,086

80,536

2,504.95

837.05

1,667.90

Jan 2018

251,678

170,979

80,699

2,510.02

841.35

1,668.67

Feb 2018

251,356

169,590

81,766

2,543.21

831.03

1,712.

 

The total of EFP contracts for the two months of Jan. and Feb. 2018 was 1,303 tonnes and yet the total of loco London gold holdings has been very constant (as evidenced by the above table). We can draw one very firm conclusion from this data; WHATEVER EFP CONTRACTS (refer below) REPRESENT, ABSOLUTELY NO VAULT GOLD IS LEAVING LOCO LONDON AS A CONSEQUENCE.

THE EXCHANGE FOR PHYSICAL (EFP) FRAUD

Another recent material development (but again shrouded in uber opaqueness) is the metronomic daily ‘transfer’ of Comex positions over to the LBMA under the umbrella term of Exchange for Physical contracts .EFPs were hitherto a seldom used crisis mitigation mechanism, but now every day is apparently a crisis .By this miraculous novation, the Comex open interest is maintained circa 500,000 contracts, but neither the CFTC nor the LBMA are explaining the particulars of the mechanics of these EFPs (perhaps no one outside the Cartel even comprehends the magnitude of the chicanery involved here, but the mandate of credible regulators is not to merely ‘turn a blind eye’ or condone that which they do not understand or indeed that which defies comprehension).Harvey Organ headlines in red a daily warning that these EFPs most probably constitute a massive conspiracy to defraud.

Data from Harvey Organ

Tonnes

Total EFPs in 2018

 
January

653.22

February

649.45

March

741.89

April

713.84

May

693.80

Total YTD EFPs 2018 (excluding any 2017 data)

3,452.20

 

Contracts

Comex Equivalent Contracts of above YTD EFPs (A)

1,109,882

Reported Comex Open Interest at 31st May 2018 (B)

459,911

Adjusted true Comex Open Interest but for dilution by EFP manipulative fraud.(A+B)

1,569,793

Total 2016 annual gold production, excluding China and Russia (tonnes)

2,399

Adjusted true Comex Open Position as % of 2016 Annual Gold Production

204

By extrapolation from the above data, it is evident that by the end of this year, in just twelve months of such transfers, the projected volume of these EFPs will easily exceed 8,000 tonnes , and the total vault gold in loco London not held by BoE and GLD is only 1,712 tonnes. No one seems at all agitated. Here is a possible explanation. Dr. Mark Skidmore and Catherine Austin Fitts have recently brought data to light data that indicates at least $21 trillion (a ‘t’ not a ‘b’) has miraculously vapourized from various USA government coffers. The Exchange Stabilization Fund certainly has the mechanisms to handle clandestinely funds of this magnitude and no one has the authorization to delve into ESF operations or ask any questions. Maybe the ESF is funding the serial purchase/warehousing of Comex contracts to prevent undue expansion of the Comex open interest position. Instead of utilizing the term ESF transfers, someone used the three letters EFP (after all what is the harm of substituting a ‘p’ for an ‘f’ in the grand scheme of events) , and , but for Harvey Organ’s enquiring mind, no one would be any wiser. I am sure that the above postulation is also applicable to the position with silver. If this is indeed the case, then these ‘ESF’ transfers under the guise of ‘EFP’ transfers can continue for an indefinite period. I don’t see what other explanation makes any sense, and hence the COMEX, LBMA, CFTC and all other regulators are relatively relaxed-for the time being at any rate. If I am wrong, I am inclined to say ‘so what’. The ESF would be a relatively benign counter party since it would be disinclined to crash the Comex. If it is any other counter party (and there is a very short list of one? potential candidate given such massive volumes), then ‘watch out below’, because the preservation of the COMEX, one of the most corrupt institutions on the planet, will not be in this entity’s interests for much longer. Only the physical gold market can restore integrity and overwhelm this chicanery. Hurricane storm clouds are looming, which will obliterate the hegemony of paper gold and finally emancipate the precious metals. History may not be kind to the perpetrators of this gargantuan but easily discernible fraud. Indeed the immortal words of Tacitus come to mind; “those, whom the Gods wish to destroy, they first make mad’ .Mankind prospects, mines, refines and hoards 170,000 tonnes of gold over thousands of years and attributes great inherent value to this true form of money but all this legacy is then nullified by a group of corrupt bankers devising a system in which (by virtue of 9 tonnes of ‘disclaimed’ registered gold) the COT and OI will determine its value-this is a true madness. Modern man finds it far easier to attribute value to ‘digital air’, but ironically, in doing so, he has devised this block chain technology that will enable the tracking of the ownership of each and every ounce of gold (kinesis money is referenced later in this paper and others will follow).

 

THE PETROYUAN CONTRACT

On 26th March 2018, after many years of preparation and delays, the first rival to the complete dominance of the petro dollar began operations on the Shanghai Energy Exchange. Although twelve individual monthly forward contracts are quoted, almost all trading action is currently centered on the inaugural and front month contract, the SC1809, with the last SC1809 delivery date on 7th September 2018.Settlement is only effected by delivery of oil. No trader on this exchange is at all interested in USDollars or they would have traded in such in the first place. By its recent uber aggressive, paranoid conduct, the American Administration has indirectly promoted this petro yuan trading facility as if its success was a strategic imperative and certainly Iran, Russia ,Venezuela, Turkey and Syria amongst others will almost certainly now be utilizing the Shanghai Energy Exchange. The trading volumes are recorded below:( this data is for the sc1809 contract only, but this is where all the current trading action is concentrated-It is important to observe note 3 on the monthly data tab which states that all turnover is recorded in Yuan 10,000 units if you visit the site):

Monthly Data on SC1809 contract; last day for delivery on 7th Set,2018 Monthly Turnover (Yuan)
April 2018

533,735,069,200

May 2018

1,764,654,402,200

Total contract YTD

2,298,389,471,400

Whilst the emergence of the petroyuan is never mentioned in Main Stream Media, the figures in the above table above are from inception and achieved in just two months. On 28th May 2018, the value of turnover on the SC1809 contract was Yuan114 billion in a single day. June 2018 has started with Yuan131 billion turnover on the first of the month. These numbers in trillions of yen have to be extremely material in terms of the current global economic order, but the full impact and significance may only be revealed in the coming months; after all, the inaugural SC1809 contract only finally settles in the first week of September 2018 and, whilst the ‘expectations of instant gratification’ in respect of just about any trading development is the norm these days, the petro dollar has dominated and been embedded in the world order into which most people alive today were born. The consequences of trillions of yen being diverted to Shanghai away from trading activity in the petrodollar will have gargantuan consequences, but maybe not today or even tomorrow.

 

PROBABLE FUTURE DEVELOPMENTS IN THE PHYSICAL GOLD MARKET

I have followed carefully over the last decade the output of about a dozen very knowledgeable commentators on the gold/silver market. I do not believe that an orderly rise in the price of gold to (say) $1,450 per ounce is more probable than a ‘reset’. The charts of the gold price depict the current status quo whereby any imminent and potentially favourable chart development action has been obliterated in nano seconds by the algos dumping billions of dollars of naked short paper contracts That is how it has been for decades and so that is regarded as the norm, the natural order of the universe and observers genuflect to data such as the COT and OI report, because that is what determines the direction of tomorrow’s corrupted paper gold price.. Why would the price of gold be allowed to increase even modestly? Naked short paper gold contracts can be supplied with absolutely no limitation on volume and with total impunity in respect of regulatory intervention. Yes, the open interest on the Comex would explode far beyond the current benchmark of about 500,000 contracts but inordinate increases above this threshold are now being managed on a daily basis by the volume of EFP/ESF transfers (which certainly have nothing to do with physical gold delivery, as proven above).Perhaps this OI benchmark of 500,000 contracts is some kind of threshold agreed with the CFTC to prevent the regulator(s) from manifestly advertising its criminal dereliction of duty in exercising its mandate, although the daily postings of James McShirley in Midas obviate any possible exculpation of the CFTC’s blatant nonperformance against the manifest evidence of manipulation as a predictable and serial way of life. The first week of September 2018 could be an interesting time, with the final settlement date of the inaugural Shanghai petro yuan SC1809 contract coinciding with the reported live inauguration date of the kinesis.money gold backed block chain currency. These petro yuan contracts will thereafter mature serially ever thirty days or so (The SC1810 finally settles on 28thSeptember and the SC1811 finally settles on 7th November 2018 and so on and so on.). The theory is that most of these yuan floating around in Shanghai will eventually seek out a home on the Shanghai gold exchange, where all settlements are effected by the transfer of physical gold only.  

 

Various retail exchanges have available for sale gossamer amounts of bullion coin and this has created a Potemkin type veneer to assist in prolonging the charade that the COMEX/LBMA paper gold price is a true market price. Large wholesale gold/silver purchases (if they occur at all and backwardation indicates extreme tightness) are secretive OTC contracts, hidden from view, with no mechanism at all for public price dissemination. The prognosis is that the demand for large quantities of .9999 finesse gold bars, re-refined to identify any tungsten contamination, (.995 finesse gold bars bearing the baggage of legacy allocated markings are totally unloved) will be occurring in volumes that may at last overwhelm the manipulation of the Western planners. A substantial portion of the existing universal gold hoardings of about 170,000 tonnes will have to be enticed onto the market, but true price discovery will be needed to ascertain the price level for demand/supply equilibrium whereby depreciating fiat currencies are exchanged for the one and only true form of money. The situation could become completely disorderly if the Shanghai Gold Exchange price for physical gold starts to depict a price differential that makes arbitrage with the corrupted LBMA/COMEX paper price attractive. Remember that in the West, the criminal system of fractional reserving means that, at best, there are upwards of 500 (maybe a 1,000) claims on each ounce of physical gold held. Not only will there be these new sources of demand for large quantities of physical gold in the near future but also the situation will be exacerbated by the unravelling of the massive fraud in respect of the re hypothecation (i.e. blatant theft) of most (all?) allocated custodial gold. (The concept of unallocated gold as a credible and robust investment vehicle always was an aberration). In order to capitalize on emerging opportunities for price arbitration, the demand for .9999 finesse gold bars for delivery to Shanghai will gain momentum, but for how long will the telephones be answered at the LBMA etc.? Attempts at any form of novation of paper contracts will encounter derision. Astronomic numbers for the price of an ounce of physical gold are promulgated by some commentators, but no counter party will part with escalating amounts of fiat currency unless both ownership and possession of the related physical gold is assured. The USA is currently seeking to dictate even more aggressively to just about every country on the planet (including now even its (erstwhile?) allies) whilst never being more exposed to the vulnerability embodied by the unbacked and hated fiat US$. The enemies of the USA can easily ‘weaponize” this vulnerability at will. Refer below to comments re USA gold reserves.

COMMENTS ON CENTRAL BANK REPORTED GOLD RESERVES.

As a concluding topic, let us examine the conventional list of the top seven disclosed gold hoardings. There could be a further problem here-‘the gold is gone’; the two countries best prepared for the reset, China and Russia, are the subject of perpetual diplomatic/economic attack by the USA, although the most recent indications are that war with Iran is now the preferred option to distract from the forthcoming reset. It should also be noted that in the last decade, Turkey has increased its reported gold reserves to 565 tonnes.

Location

Tonnes

Comments

USA 8,133? Unaudited since 1953 in respect of a credible audit process-probably dishoarded long ago-the US probably also has a massive deficit in respect of physical gold allegedly held in (‘deep’?) storage for other central banks. Total secrecy is a fundamental and obsessive cornerstone of US gold related policy. Refer GATA’s large advert in WSJ of 31st Jan 2008 entitled “Anybody Seen our Gold?
Germany 3,374 No Comment-some reserves still held externally and are therefore vulnerable/impaired?
IMF 2,814? No-Definitely NIL These purported gold reserves are merely quota allocations from the reserves of the IMF’s founding nations in the ‘forties’ and as such have been double counted since inception and are non-existent. This fact was publicly acknowledged in documents seventy years ago, but is now hushed up, like all inconvenient truths.
Italy 2,452? Italy’s gold reserves were almost certainly impaired at the time of the LTCM crisis. By the Banca d’Italia’s own admission, half of its gold is stored at the Fed as well as additional deposits with BIS, SNB and BoE. It is difficult to place full (indeed any) credibility on stories emanating from Italy.
France 2,436? Of the Banque de France, Milling-Stanley (formerly of the world gold council) said in 2012 ‘it has recently become more active in this space [mobilizing gold into the market], acting primarily as an interface between the Bank for International Settlements in Basel [BIS] and commercial banks requiring dollar liquidity. These commercial banks are primarily located in Europe, especially in France”.’ Mobilization into the market’ almost certainly means the gold is now swapped/leased/loaned. Has the BIS’s demand for gold possibly diminished since 2012 or has every ounce of physical been now commandeered to prolong gold suppression?
China +?1,842 China and all its universe of parastatals and sovereign wealth funds etc. has true gold reserves of many multiples of this reported figure in preparation for the reset. No gold mined in China is ever exported.
Russia +?1,828 The gold reserves stored under the Kremlin are many multiples of the reported figure. Russia is even better prepared for the reset than China. No gold mined in Russia is ever exported.

CONCLUDING COMMENTS

History is being enacted right now. Here is the matrix of historic and unfolding events. The current insanity of this Alice in Wonderland make belief world inspired by the central bank wizards making things up as they go along has been put on notice by the East in its planning for a future millennium, not just the next quarter up to 30th June 2018.China also is facing a galaxy of huge problems but the enormity of all the constructive initiatives embodied in the revival of the historic Silk Road trading bloc is creating a value adding legacy for generations to come, and this brand of forward thinking planners want this new dispensation and economic dawn to be based on sound money.
 

1944: Bretton Woods Conference The allies agreed on a currency framework whereby the USDollar was the only currency that retained convertibility into gold and thus became ‘the global reserve currency’
1971: Nixon ‘temporarily’ cancels the convertibility of the USDollar into gold bullion. The USDollar consequently became vulnerable to rejection.
1973: Kissinger concluded the petro dollar framework with Saudi Arabia, assuring copious global demand for the USDollar. USDollar hegemony is assured for future decades and hence the USA is thereby enabled to indulge in the creation of infinite trillions in unbacked fiat currency, abandon all forms of fiscal discipline and budgetary restraint, invest unproductively in massive weaponry, engage in perpetual warfare and dictate to the rest of world in microscopic detail as to the manner in which the will of the USA must be fulfilled at all times.
2018: China forges ahead with the One Belt One Road trading/economic framework for the East (and beyond-eventually more than half of the world’s population will be encompassed) and develops mechanisms for rivalling the USA monopolistic global trading and financial infrastructure. The petroyuan trading platform is inaugurated. The USA budget deficit continues to increase annually by two trillion USD and all central banks continue to create fiat currency at will under the banner of quantitative easing. Consequent Inflation and unsustainable asset price bubbles are observed by those ‘with eyes to see’. The constituency of ‘ heretics’ who refuse to genuflect to this new era of central bank indoctrination continues to grow and independent minds even ask “what can possibly go wrong?“ Italy joins Greece in rebellion against austerity and is punished by losing the negative yield on its two year bond. Spain, however retains a negative yield. Pension funds keep very silent but one executive was heard to whisper that negative bond yields ‘suck’. The prognosis is that the petroyuan contract is a precursor to the eventual return to sound money as these petroyuan are converted into gold and gold once again enters the financial system (work in progress). The demise of the petrodollar renders the USDollar exposed to the discipline of market forces; the emancipated East does not like the insanity of what it is observing and dictates a more sane and stable monetary framework (work in progress).Physical gold regains its natural hegemony (a status that it never really lost in China, India and Russia) . The ‘neo cons’ and disciples of American exceptionalism meekly accept this new world order with humility and contrition and express a fervent desire to make substantial reparations for the misery and devastation caused by the 50 year brutal imposition of Pax Americana as USA enters the extended family of the third world???!!! (or is war inevitable?)

 

 

 

 

 

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