Ranting Andy: Offtake Agreements and Physical Demand

RANTING ANDY – This weekend’s RANT is going to be a bit shorter than in recent weeks, but just as powerful, I believe.

To start, I want to reiterate that the four RANTS put out over the past two weeks, “Cartel Secrets Revealed, Parts I and II” and the 2010 and 2011 COMEX gold manipulation pictorials, in my view, represent the most comprehensive, conclusive mosaic of evidence EVER compiled regarding the topic of gold price manipulation, which is saying a lot.  Only the admissions of government rigging by “esteemed officials” are more damning, such as these beauties:

Alan Greenspan, Chairman of Federal Reserve (1998):  In a 1998 testimonial to the House Banking Committee, former Fed governor Alan Greenspan said: “Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise.”

Eddie George, Bank of England Governor (2000):  After the price of gold rallied strongly post the Washington Agreement, Bank of England governor Eddie George said on record: “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 US Fed was very active in getting the gold price down. So was the U.K.”

After reading the four RANTS (or simply perusing the pictures), there can be no OBJECTIVE person left on earth that does not realize the PAPER gold and silver markets are 100% rigged EVERY SINGLE DAY.  The only differences between the failed London Gold Pool and the current Gold Cartel are that:

1)      the former, also led by the U.S. government (surprised?), was overt, while the latter is covert

2)      the former was an official government operation, while the latter is executed by the government but MASTERMINDED by Wall Street bankers, particularly JP Morgan and Goldman Sachs

3)      the former involved the actual dishoarding of physical gold (although I’d like to know why OFFICIAL U.S. gold reserves were never reduced during this period), while the latter is all about naked shorting of PAPER gold and the creation of DERIVATIVES that have nothing to do with the supply and demand of REAL, PHYSICAL gold.

Every single day last week, the forecasts of my reports were proven to be EXACTLY correct re: the 12:00 PM EST “cap of last resort”, not to mention the typical caps and/or attacks at the usual times of 3:00 AM EST (pre-LBMA opening), 8:20 AM EST (COMEX opening), and 10:00 AM EST (London Fix).  I worked very hard during the week to get those reports circulated globally, and thank all of you that helped to do the same (such as GATA, for instance).  However, I am still shocked that some of the most prominent names in financial corruption reporting, particularly ZeroHedge and Max Keiser, ignored this very important work.  If anyone reading this RANT has a relationship with either of those two websites, please lobby to have the reports posted, and let ZH and MK know that I do not require credit.  All I want is for such work to spread around the globe ASAP, so as to end the fraud sooner rather than later, as well as to empower investors to buy PHYSICAL gold and silver in the face of imminent, catastrophic hyperinflation.

Separately, I want to make a final comment on the topic of investing in PHYSICAL gold and silver.  I have been saying in recent RANTS that investors CANNOT LOSE investing in REAL, PHYSICAL bullion, and I stand by that comment.  The Cartel still has the power to illegally attack the price of PAPER gold and silver, and obviously PM shares as well, per the GOVERNMENT COMPUTER ALGORITHMS that have so clearly been introduced into the sector to naked short miners since roughly 11/09/10, or “D-Day” as I recently termed it. 

When such operations occur, particularly premeditated destruction such as the May 1st SUNDAY NIGHT PAPER SILVER MASSACRE, PM investors can lose great sums of money in paper investments such as GLD, SLV, and even large PM mining shares.  That money will never return, so even when gold and silver reach new record levels (which they always do), many investors will not be on board due to earlier sales based on either fear or margin calls.  That is what the Cartel is attempting to do, i.e. get as many PM bulls out of the market while simultaneously stealing their money.  This actions collectively kill sentiment, enabling their paper game to continue on another day.

But owning PHYSICAL gold and silver is another story, as when PAPER gold and silver prices decline, holders of bullion LOSE NOTHING!  Yes, the “quoted price” may drop, but if you own unencumbered coins or bars (without debt attached), you WILL NOT sell on these declines, EVER.  Just the process of selling bullion is a deterrent, let alone the mental concept of selling REAL MONEY in order to receive WORTHLESS SCRIP.  Buying bullion brings the good guys one step closer to taking out the bad guys, and holding bullion tends to mentally prepare you to BUY MORE ON DIPS, the opposite of what 99% of investors have done historically. 

So when I say the government will NEVER be able to engender a major decline in PHYSICAL gold and silver prices, I am partly saying I don’t believe they have the ability to engineer a 2008 scenario again (a global “deflation scare”), but equally important, I am saying that PHYSICAL OWNERSHIP is IMMUNE to such paper smashes, as PHYSICAL OWNERS that believe in REAL MONEY will NEVER sell until gold is properly revalued via a new gold standard.  Such owners think of wealth in terms of OUNCES, not DOLLARS, and have nothing to fear from paper smashes, unlike those that own PAPER gold instruments and mining shares.  As we speak, the U.S. government is desperately trying to create a 2008-type scenario (i.e. falling stocks, commodities, interest rates, and economic data) to build the political ammunition to enable the commencement of QE3 (which will occur with or without public support and with or without public disclosure, by the way).  Remember, the decisive Fed meeting is scheduled for June 22nd, just 10 days away, and so the attacks on Precious Metals will likely only intensify this week.

Finally, I wanted to comment on the topic of OFFTAKE AGREEMENTS, or the official contracts signed between mining companies and traders, smelters, or end users.  Such agreements govern the sale of run-of-mine ore or intermediate concentrates from mines, which typically involve pricing based on the PAPER spot price, often with contractual additions such as caps, floors, ranges, and escalators.  Nearly every offtake agreement on earth is based on the spot price of the underlying metal. 

In the gold and silver market, I think we all know by now that the tail wags the dog regarding the manner that spot prices are traded.  In other words, if the Cartel decides to attack the PAPER gold price at the open of the COMEX by pulling all bids or NAKED SHORTING thousands of unbacked futures contracts (such as they did on Friday, see below chart), the SPOT price drops in sympathy instantaneously, in many ways making it not much different than a futures price.

Look at that rigging, would you?  After spending yet another night in the $1,540s, somehow gold fell $7 in essentially ONE MINUTE at the EXACT open of the COMEX at 8:20 AM EST, followed moments later by a second decline of roughly $7 in ONE MINUTE.  Not only is it unlikely that ANYONE ON EARTH sold any physical gold of size during that roughly five minute period, but, more importantly, they wouldn’t even have time to CONSIDER making such a decision.  Meanwhile, by the end of the day (or the hour, for that matter), every gold miner on earth had lost money due to the OFFTAKE AGREEMENTS that require them to sell product at this fraudulent price, hurting a long chain of people from the executives to the laborers to the stakeholders (and even foreign governments that receive less tax revenue). 

We all know that gold mining executives have been famous for their indifference to manipulation, and in some cases their actual cooperation with it, such as by supporting corrupt organizations such as the World Gold Council and Jeff Christian’s CPM Group.  But even if they are in the business of enriching themselves at the expense of their stakeholders (which I’m not saying they are), they still have an obligation to cut the best deals possible with metal buyers, and in the case of gold and silver, in particular, which are near record highs and thus in heavy demand, I find it hard to believe that mining companies do not have the leverage to successfully carry out such negotiations.

The SPREAD between REAL, PHYSICAL gold and silver prices and FRAUDULENT, PAPER prices has never been wider (15%-20% in the case of silver, for example), and I anticipate this spread widening further in the coming months and years as the Cartel is gradually (and potentially not so gradually, overwhelmed).  In fact, in November 2010 (just before Cartel “D-Day” on November 9th) and late April 2011 (just before the SUNDAY NIGHT PAPER SILVER MASSACRE), premiums soared even higher, which of course is what caused those two aforementioned crimes to be committed.  And if you think there won’t be other such PHYSICAL buying panics in the near future, I have a bridge to sell you in Brooklyn.

One never knows what events will trigger major market moves, but in the case of gold and silver we can be sure those events are coming imminently.  Perhaps it will be a major mining company, such as Goldcorp or Pan American Silver, renegotiating its offtake agreements to base them on a price more associated with REAL, PHYSICAL prices rather than FRAUDULENT, PAPER prices, and if you are a shareholder of these or other major mining companies, I strongly suggest that you express your frustration at the lack of REAL offtake pricing!

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2 Responses to Ranting Andy: Offtake Agreements and Physical Demand

  1. ben roberts says:

    Thanks Andy, This is a great article and we need more like it. I am spreading the word on this article so that more people become informed by your timely and cogent information.

  2. Ken says:

    Andy, I’m sure you can post a comment on ZH with a link to your rant to get it read by more people. Have you tried sending and email to ZH to have your article in the featured post area?
    Great reading your rants, as always.
    Ken

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