Wednesday, August 17, 2016

Do the investment banks really have a lot of metal?

September 27, 2012 by · Leave a Comment 


2:10p ET Wednesday, September 26, 2012

Dear Friend of GATA and Gold (and Silver):

A fascinating little controversy has developed in our camp.

On Monday GATA’s great friend David Schectman of the Miles Franklin coin and bullion dealership in Minnesota related in his blog the account of a bullion trader friend, Trader David R, who says that major investment banks are making a risk-free trade out of gold by obtaining free money from the Federal Reserve, buying real metal, selling futures against the metal, and collecting the contango. That is, the big dealers would not be naked short, or at least not as naked short as long suspected.

As Schectman did not identify his friend and the story thus rested on an anonymous source, it was less than authoritative. But it was plausible and there aren’t too many people in the gold business more trustworthy than Schectman, and he wasn’t attesting to the veracity of his source’s account but rather just passing it along because it was so relevant. Schectman’s commentary was headlined “The Cartel and Hedgies Are Short Paper but Long Physical Gold” and it’s posted at the Miles Franklin Internet site here:


Anyone following GATA closely might start questioning the trader’s story by noting the disproportionate short position in silver futures of JPMorganChase. But then could Morgan be the front in silver for other investment houses?

GATA’s great friend Bix Weir of the Road to Roota letters quickly put together the arguments against Trader David R’s story. Those arguments include the Morgan short position. Weir’s commentary is headlined “Are JPM’s Comex Silver Positions Only a Hedge Against Physical in the Warehouse?” and it’s posted here:


It’s all a lot to think about and keep in mind.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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