Gold Swaps

Follows is a discussion of gold swaps. Over the past week or so, the S&P 500 has been forming a topping chart pattern and today has seen simultaneous down moves in both the S&P and the gold price. Gold price suppression theorists will cite this day in their argument that there are artificial forces working on the gold price. Apparently a down move in the indexes back in 2008 during the financial crisis correlated similarly with today’s gold action.  

Inquiries made by the Gold Anti-Trust Action Committee toward the Federal Reserve and the Bank of International Settlements regarding the derivative trading of Gold Swaps conducted from underlying U.S. gold inventories have not been absolutely transparent. On the one hand, the Federal Reserve has responded with “in connection with your appeal, I have confirmed that the information withheld under exemption 4 consists of confidential commercial or financial information relating to the operations of the Federal Reserve Banks that was obtained within the meaning of exemption 4. This includes information relating to swap arrangements with foreign banks on behalf of the Federal Reserve System and is not the type of information that is customarily disclosed to the public. This information was properly withheld from you.  (letter dated Sept 17, 2009 from the Federal Reserve is associating with Freedom of Information). On the other hand, they have recently made a simple assertion that gold swaps are not executed with U.S. inventoried gold reserves.   

Bill Murphy of Lemetropole has been beating the drum of gold price suppression since 1999. Although not a subscriber to this site over at Lemetropole, I have had the privilege of witnessing his fervour in person at conventions here in Calgary over the years. In fact, he was instrumental in a presentation showcased by the Gold Anti Trust Action Committee to congress some ten years ago regarding evidence of surreptitious trading patterns associated with the gold price.

 Through my own education of derivative markets, I came to learn of short selling and naked options.  Gold swaps fit right in to this category of financial instruments. Chartered accountants certainly didn’t Know much about them during the 2008 financial crisis having failed to ensure disclosure during audits. What if the U.S. government has over extended itself in its interest in gold swaps when inventories don’t support the trades? Then what?  

Jim Rickards has recently been leading the charge to help the public understand surreptitious gold trading through his most recent book “The New Case for Gold”.     

Canadian Trade Talks

Should Canadian farmers be selling wheat and barley to Saudi Arabia when Saudi Arabia has historically oppressed women and still does to this day? Does a country conducting international trade compromise its values if profiting from a country from which values conflict? Should politicians in high office frustrated by diplomatic overtures abroad turn to twitter to voice grievance? Should a Canadian confident in his /her position that we have a weak Prime Minister contend that all policy initiatives by the federal government will commensurately be weak? Is it fair to impact the livelihood of commercial operators because of international political grievance?

The above questions arise in the context of a spat between Saudi Arabia and Canada over this past week. It’s frankly unsettling to witness such weakness. My position is that Canada has been compromising its values over time with respect to trade and shouldn’t be surprised that a peculiar twitter remark should be received with outrage from an internet platform limiting in its communicative power from a nation bereft of bestowing respect upon women. What’s even more surprising is that Ms. Freedland seems like an intelligent woman who should have known better. She should have know that the incarceration of women’s rights advocate is a sensitive matter and that a frustrating social media appeal could actually undermine diplomatic efforts to liberate the woman.

Our country, Canada, has some soul searching to do with respect to trade policy in the context its values and protectionist sentiment arising from the U.S. New alliances are forming and Canada has a place at the tables but must affirm its position with clarity complemented with trade deals rooted in the fabric of cooperation with partners of whom it can look dead straight in the eye.     

Being In The Know

We often think we’re in the know when we really aren’t. We come to know because of what we’ve been told but who has been doing the telling and why? In spite of the profligacy of information on the internet, we are deservedly suspect. The question becomes “what do we do and where do we turn?” if information has relevance in designing our lives. 

Conspiracy theorists appeal toward our insecurity of knowledge. Through their inflammatory portrayal and oftentimes sharpness in intellect, they can even dislodge us from sound judgment. We can only harbour outlook through experience, education, reason, and observation. However; what we lack is information deliberately kept from the public domain.

From the period 2004 to 2007 I took the time to digest insights from speakers adept in the field of Austrian Economics. Having studied basic economics through my financial education, I have been rather fascinated about the contrast in the Keynesian model versus this Austrian model and whether there would be any implication to me directly in the context of these models duelling alongside future economic events.

This brings me to Jim Willie of his Golden Jackass website. Jim is a no nonsense fellow with a P.H.D. in statistics. Jim showcases himself as an economist without the credentials of an economist. He has an interest in world affairs as they relate to our monetary system and speaks with an inflammatory style typical of someone imbued of conspiracy yet logical and charismatically intelligent. His stories mostly correlate to postulations. One wonders about the worthiness of his sources but his ability to incite in my estimation supersedes any laxity inherent to his research. 

He was one gentleman that struck me the deepest during this period of my economic inquisition. This weekend with the Dow Jones Industrial Average approaching a double topping chart formation, I wonder if elements key to Jim’s world view will trigger the next market correction.

During the past two weeks, I have immersed myself in learning specific market trading mechanics pertinent toward portfolio protection. I’m happy to share. Simply subscribe.