Friday, August 22, 2014
   
Text Size

Search our Site or Google

Even Gold Experts Fooled by Bullion-ETF's

Articles & Blogs - Gold Commentary

User Rating: / 302
PoorBest 

Given the amount of time I spend on my own writing (and the research that entails), I don't spend as much time reading what other commentators are saying about the precious metals sector as I used to. However, I was doing a little poking around when an article by Adam Hamilton caught my eye: GLD Conspiracy Theories.


Having considerable respect for the work of Mr. Hamilton, I decided it was certainly worth my time to see what he had to say on this issue – given that I have been extremely vocal in expressing my concerns over the legitimacy of these bullion-buying vehicles. I admit to being frankly shocked.


Mr. Hamilton went on a long tirade, looking to belittle those who doubt these funds at every opportunity, during which time he constructed no less than eleven sub-arguments – which he supposedly rebutted. And after going to the time and effort to construct and rebut those eleven “arguments” he never mentioned the bullion-banks once.


I simply have neither the time or desire to respond to all of Mr. Hamilton's specific “counter-arguments”. I encourage those who want to know everything said about this to go straight to the source (in the link above). I submit, however, that the vast majority of these arguments are what are known as “straw men”.


This is a commonly used technique in faulty arguments. Someone wishing to establish his own position attempts to do so through “rebutting” the arguments of those with opposing views. However, instead of choosing the strongest arguments of his opponents, he chooses the weakest ones – or simply invents his own “arguments” to rebut. This is what Hamilton has done here.


Those familiar with my own writing know that I have written several commentaries challenging the legitimacy of bullion-ETF's without ever using any of the supposed “arguments” from Mr. Hamilton's commentary. I'm not saying that no one is using any of those arguments, however several of the eleven sub-arguments are certainly topics I have never seen discussed before.


Let me try to incorporate some of what he has said into my own analysis, and I'll let readers decide for themselves if his views on this subject detract from my own analysis. Mr. Hamilton points out that GLD was founded by the World Gold Council, which, itself is “an industry association funded by the world's leading gold miners”.


I will briefly point out that Jim Sinclair (and others) are convinced that several of these “leading gold miners” were involved in gold-hedging and gold-derivative agreements which directly served the interests of the anti-gold cabal – by providing them with countless tons of gold to dump onto the market which had not even been dug out of the ground. However, I will go no further down this line of reasoning since it is not necessary to discredit those running GLD in order to cast doubt on the fund, itself.


Since Mr. Hamilton never talked about the bullion-banks, he also never mentioned the huge “custodian agreements” which GLD has entered into with the bullion-banks – the same bullion-banks who are the largest “shorts” in the history of commodities. Since Mr. Hamilton never thought to ask this question, I'll ask it myself: why didn't the gold miners who founded GLD simply choose to hold and store their own bullion?


There are only a very limited number of possibilities here, so I will try to cover the bases. The most obvious explanation strongly supports my own position: the bullion banks offered to supply GLD with infinite amounts of bullion for a minimal cost – and essentially no profit to themselves. As I have pointed out on other occasions, it is difficult for me to decide which aspect of this premise is the most ludicrous: that the largest shorts in history would create a trading vehicle to help longs enter the market, or that bankers would do anything for virtually no profit for themselves.


We know that the bullion-banks are performing this huge service virtually free of charge, since if they were taking a large profit for themselves out of this arrangement there could be no possible advantage to using these bullion-banks – since GLD could hold/store bullion more cheaply, itself, if the banks were gouging it on the custodian agreements.


What other possible reason could the gold miners who founded GLD have for choosing the bullion-bank shorts as “custodians” for their gold? Is it because these banks represented the safest storage option for GLD unit-holders? Hardly. These same bankers have a long history of bullion fraud. The most recent example of this was when Morgan Stanley recently paid millions in damages for simply pretending to buy bullion – on behalf of its own clients (see “Morgan Stanley pays damages for Precious Metals Fraud”).


Is Mr. Hamilton really naïve enough to believe that bankers who would cheat their own clients would not do the same to small, gold and silver investors – who are not their own clients? The whole reason these bankers (mostly U.S. bankers) are caught in one fraud-scheme after another is that they know they never have to worry about criminal prosecution for their misdeeds and the fines levied against them are always less than the profits they make on those schemes.


Thus, since GLD did not choose to use the bullion-banks as custodians for safety, then unless they offered to buy and store GLD's “bullion” far cheaper than anyone else, what other reason could GLD have for using the bullion-banks? The only other suggestion I can come up with is that the gold miners who founded GLD have had such a long and cosy relationship with these bullion-banks that they simply never considered any other arrangement.


Whether the bullion-banks are being used because they offered subsidized rates for storage, or because they are such good friends with the miners involved, Mr. Hamilton's assurances about the founders of GLD do nothing to address my own concerns.


One relevant issue that Mr. Hamilton does raise is the issue of audits. He proclaims himself to be an accountant, notes that GLD is “audited” - and considers the case closed. In fact, I had another accountant take exactly this stance in criticizing my position on bullion-ETF's. I point out to Mr. Hamilton the same thing I pointed out to this other accountant: the bullion-banks have two, enormous gold (and silver) obligations – the massive custodian agreements and the equally massive, in-house short positions.


Only ½ of these holdings are ever audited: the GLD holdings, while the only backing these bullion-banks have ever demonstrated for their short positions is the tiny portion of that amount they have to post as collateral for their position. The two holdings have never been simultaneously audited. Half an audit is obviously no better than no audit at all.


All that has ever been established is that the bullion banks have enough bullion to cover either their short positions or the custodian agreements. If these bankers had to choose between defaulting on their own short positions – which would permanently discredit them in commodity markets, or defaulting on their custodian agreements (and pay a small fine), which course of action would these bankers be most likely to take?


This brings me to what is clearly the most bizarre part of Mr. Hamilton's defense of GLD. Among my most powerful arguments against the bullion-ETF's is that they perfectly serve the interests of the bullion-banks. These funds have soaked up tens of billions of investor dollars in the precious metals sector. Had these funds never existed, while some of that money may never have entered the sector, obviously most of it would have been used to buy real bullion, or have been invested in the commodity-producers – the miners.


I remind readers that these same bankers who were leveraging their own paper by 30:1 would certainly never hesitate to leverage their bullion a mere 2:1. If the bullion-banks were merely pretending to hold bullion for these funds, then instantly these “bullion-ETF's” become the bankers' biggest weapon in suppressing the prices of gold and silver, through diluting the money entering this sector nearly by half.


This entire argument completely escapes Adam Hamilton, indeed, he actually attempts to argue the exact opposite point. He strongly asserts that if GLD was found to be all “paper” or simply mostly paper that this would be damaging to the positions of “longs” who were holding real bullion.


I find this argument completely unfathomable and without merit. GLD is now (supposedly) one of the largest holdings of gold on the planet. If this supposed stockpile of gold was found to be non-existent, then the value of the real bullion held by investors does not go down, it goes up. This is simple supply/demand dynamics.


If GLD is fraudulent, then this immediately means that gold stockpiles (i.e. “supply”) are much smaller than believed. This shifts the demand curve to the left, meaning higher gold prices at every level of demand. While Mr. Hamilton is an accountant, he is clearly not an economist.


I began reading his article anxious to see if I had overlooked anything in my own analysis of this issue, and fully prepared to amend my views if a genuine gold-bug like Adam Hamilton had come up with any factors I had not previously considered.


Instead, I remain more convinced than ever of the illegitimate nature of most bullion-ETF's (as I always acknowledge, there are smaller funds which do buy and hold their own bullion). While Mr. Hamilton only briefly mentioned silver, I cannot engage in a discussion of the legitimacy of bullion-ETF's without reminding readers of a previous discovery: that all the silver “held” by SLV (and others) is for sale – as part of official inventories.


Obviously, the founders of SLV (and the bullion-banks lurking in the shadows) cannot claim to be “holding” over 400 million ounces of silver for their unit-holders, while slapping a “for sale” sticker on every bar – meaning that anyone with enough money could buy every ounce of silver “held” by SLV today (see “Your ETF-Silver is For Sale”). Some “custodian agreement”!


For investors who want a position in precious metals, buy real gold or silver, or buy into a safe bullion-ETF. Do not buy GLD or SLV unless you trust bankers. And do not rely upon Adam Hamilton for reassurances in this regard. For whatever reason, he has demonstrated an enormous “blind spot” on this issue.


There are many legitimate reasons to doubt the validity of large, bullion-ETF's – and as of today none of those concerns have yet to be addressed.

Trackback(0)
Comments (1)Add Comment
JsJ
...
written by JsJ, December 17, 2009
I agree that I have found his writing good in the past. I also think that he is mistaken, and not actually part of the (as yet unproven) deception going on with the GLD and SLV funds.

I wouldn't mind trading GLD, and I own it in my "fantasy portfolio", but I don't and most likely won't own any shares of GLD or SLV for anything remotely resembling a "long haul".

Write comment
You must be logged in to post a comment. Please register if you do not have an account yet.

busy

Latest Commentary

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12

Latest Comments

Disclaimer:

BullionBullsCanada.com is not a registered investment advisor - Stock information is for educational purposes ONLY. Bullion Bulls Canada does not make "buy" or "sell" recommendations for any company. Rather, we seek to find and identify Canadian companies who we see as having good growth potential. It is up to individual investors to do their own "due diligence" or to consult with their financial advisor - to determine whether any particular company is a suitable investment for themselves.

Login Form

where purchase diclofenac lipothin tablets uses vasotec missed dose cardura tablets from buy premarin 10 mg cialas phenergan vs. compazine for nausea comment acheter une alliance dans fable 3 cytoxan oral tablets buy tegretol xr buy unisom astrailia synthroid 100mg cheap buy seroquel paypal online pharmacy no prescription needed prograf buy minocin online in usa acyclovir 800 mg uses low price endep uk buy furosemide pills in the australia buy generic kamagra with bonus can family doctors prescribe viagra fml forte limited india tadalafil overnight delivery top 10 online myambutol sites accutane generic vs brand name benicar hct missed dose purchase erection packs 2 online no prescription colchicine tablets usp where to buy trandate drugs online exelon energy employment resources for albendazole lanoxin from usa pharmacy betnovate n discontinued online indocin india patient reviews on lamisil 500 mg caplets valacyclovir hydrochloride buying fertomid for dogs generic quibron-t uk paypal resources for viagra professional shallaki online usa canadian prescription drugs cialis buy colchicine with canadian online buy zestoretic 50 acheter keppra will generic viagra available usa buy terramycin pills in the canada trusted online pharmacy list buy maxaman uk buying ponstel discover scotland citylink code accutane sale mylan-amantadine for dogs atorlip-10 max dose cheap diclofenac india rx4 com pharmacy what is the dose of doxycycline for malaria cost comparison paxil cr perscription buyers of calan canada cabgolin without a script how to use solu medrol cialis vs. levitra side effects low altace high blood pressure hypertension pristiq vs lexapro weight gain what is the shelf life for levitra precose from usa pharmacy hydromorphone dosage advair diskus online pharmacies with out prescription valacyclovir drug interactions buy maxalt online overnight can u get high from trazodone aid what is lisinopril 5mg used for aciphex for sale usa elavil online sales craigslist newcastle upon tyne celebrex discount code hospital medical viagra can metformin cause weight gain in pcos dostinex without a prescription from mexico extendaquin uk brand name orlistat online cheap retino a cream uses finasteride pregnancy warnings ciprofloxacin side effects fatigue aricept discounts aldactone drug in fr pharmacy schott suprax ???? buying plendil what is trental tablets buy cheap cialis link online citalopram 20 mg robaxin cost without insurance generic geriforte us without a script buy albendazole lotrisone cream uses what is the recommended dosage for zithromax prandin billig kaufen buy zovirax uk serophene online in us omnicef tablets purchase on line sildenafil 100mg tablets blueberry benzac ac precio mexico buy allopurinol in usa avapro common side effects how long does it take for cardizem to start working ipharmacy iphone motilium not generic pharmacy buy drugs zyprexa probalan no prescription compare prices lasix coupon code avalide medication irbesartan cheap aciclovir 300mg tablets beconase aq shelf life buy alesse 20 online what is flomax used for in men periactin without a prescription from canada diovan visa lortab 5 side effects valacyclovir hcl pregnancy kamagra store online cheap buy generic femcare lipothin new zealand american standard celerity sink himalaya cystone india diclofenac potassium australia accutane settlement 2010 buy methotrexate 200 how much is advair diskus without insurance take clomiphene 50 mg medication get alesse information elocom mas'c' cena prednisolone for dogs no perscription discount canadian pharmacy brafix western drug tinidazole generic evista usa erexin-v drugstore.com side effects of minocycline 100mg aspirin allopurinol interactions non persciption requip como comprar lotrisone oxytrol lawsuit canada how to order cialis jelly online viagra prescription online uk buy atorlip-10 uk proventil tablets 2mg discount code for benicar buy chloramphenicol from india buy cheap keflex using pay pal feldene for sale usa eurax india tadalafil 20 side effects antabuse best online non prescription pharmacy medrol 4mg dose pack instructions discount saw palmetto mg online forum buy cheap beconase aq uk buy vasodilan mg rosuvastatin generic equivalent the morning after pill free amoxicillin capsules 500mg ingredients is mail order haridra safe blood pressure medication list names ordering viagra super active levitra prescription is atorlip-10 legal in uk buy female viagra in uk buy unisom sleepgels diphenhydramine buy actos online usa pioglitazone the online drugstore roxithromycin levitra 10 mg orodispersible buy strattera usa how to get phenergan drug coming off citalopram weight gain ditropan online shipping xeloda without rx micardis pharmacy prices list glaucoma medication alphagan canadian health buy hydrochlorothiazide in uk amitriptyline indications usage furosemide mail order india topamax shortage 2012 vytorin price comparison order diovan 40mg diclofenac ec tablets 50 mg sambazon acai powder reviews albendazole 400 mg chewable retino ac gel buy abilify 2mg prescription drugs what does dramamine make you feel like is liv 52 a prescription drug side effects of danazol in women can order levitra plus online himcolin gel reviews azithromycin dosage for adults pneumonia haldol druppels worldwide pharmacy cardura how much is nymphomax tablets generic from tadacip where can i buy sinemet orlistat 100mg prec,o low abilify dosage promethazine with codeine for sale ceftin without script himplasia online uk aciclovir ordering online pharmacy flagyl er suppliers overseas buy alesse uk drugs inderal doctors online amitriptyline for men sale in uk ciplox tz tablets used malegra fxt ordering no prescription accutane dosage information acne zanaflex on line purchase atacand side effects buy casodex uk actonel generic for apcalis sx tadalafil buy sinequan 20 cytotec abortion pill take actos weight gain diabetes buy generic viagra super active with bonus seroquel 40 mg dose generic myambutol us acivir eye ointment buy fluoxetine online no prescription uk vermox discount pharmacy infestations lithium max dose combivent pharmacies in unmonitored clomid cycle what is prednisolone used for in dogs motilium canada online no prescription does elavil make you gain weight brand viagra no prescription us based aleve order online vitamin shoppe coupon 20 off 2012 buy no prescription paypal cialis soft where to buy dulcolax balance alternatives to coumadin blood thinner where do i buy albenza lipitor tablets 80 mg get hard pills bactroban pharmacy online pharmacy mexico suhagra what is detrol la cholestoplex prices where can i get diabecon azithromycin 250 mg one course of treatment search consultancy aberdeen where can i order requip over the counter allopurinol without list purchase accutane pills lipitor over counter prescription capoten sublingual vademecum order viagra plus online in usa is bupropion licensed in the uk premarin generic drug advair diskus generic 100 50 mcg non generic olanzapine genuine prazosin best price how much does aspirin cost at the hospital buy digoxin online at canada pharmacy soma no prescription overnight delivery generic pills for lotrisone skelaxin overnight shipping cheap where to get viagra jelly legal buy nexium online canada buy diovan astrailia sildenafil citrate brand names india what is augmentin duo used for cheap cialis for sale quiero comprar lozol buy luvox pills in the india taking alli and gaining weight buy glucophage online reviews generic sinemet cr sinequan where to purchase finpecia order by phone comprare vermox tofranil tablets for sale pharmacies alphagan eye drops how to get aricept in australia how long does it take for testosterone cream to work in men cheap genuine altace online viagra super active paypal micardis pharmacy discount canadian pharmacy nitrofurantoin what is lithium used for today what is asacol made of starlix without prescription buy cyproheptadine no prescription cephalexin capsules 250 mg diovan pills dose alli coupon printable 2013 where to purchase propranolol cystone usa cvs prices canadian pharmacy aspirin with codeine price of zithromax without insurance what is nymphomax tablets evista refill pack what is the cost of a gram of lithium conseguir viagra sin receta argentina triamterene prescription online pharmacy no prescription needed carafate finpecia overnight delivery nymphomax generic name withdrawal symptoms from trazodone meds canadian buy glucotrol xl view topic can you overdose on motrin pm best price benzac olanzapine costco what is a good substitute for benadryl topamax no prescription canada how long does trandate take to work toprol xl 100mg price can you order advair diskus brand name fluticasone salmeterol non prescription kamagra chewable pharmacy toradol drug shortage keflex pregnancy where purchase artane what is the use of confido can you buy depo provera online where can i buy alligator meat in texas generic zoloft buy canada avalide generic 2013 drugs fluoxetine buy russia mobic shortage 2012 cipla pharmaceuticals pune requip online uk celexa 100 what is cipro antibiotic good for generic uk paypal liposafe cheapest tenormin in the uk pil aslene unisom for sale tadacip ingredients citalopram bupropion combination zithromax medication interactions lipitor refill pack does viagra work psychological erectile dysfunction best drugstore makeup remover 2011 getting glucotrol xl in australia what are the side effects of mobic buy triamterene hong kong can order fluoxetine online compare prices finax buy tramadol online canada pharmacy buy viagra sublingual hong kong where to buy anafranil online usa flonase buy on line sims 3 custom content download levitra plus on line purchase university of florida pharmacy technician online course clonidine dosage for children buy finasteride online no prescription rogaine 5 to buy from europe furosemide pharmacy coupons online pharmacy ventolin inhaler best place to buy yasmin in mexico best cialis online pharmacy generic methotrexate cost can i get pregnant while taking keppra metformin hcl 500 mg tablets side effects levlen generic name canadian pharmacy albendazole allegra versace weight diovan dose can you buy flagyl safe place order sarafem best medication for anxiety all the time does antivert cause weight gain sumycin pharmacy order how to order prograf online relafen over counter uk hong kong buy online astelin generic cardura e10+structure kytril without prescription yasmin 20 mg can i order famvir no prescription in the usa can buy over counter clonidine online cheap lipitor 100 mg costco pharmacy noroxin price valtrex cost australia clomid 50 mg tablet price does zanaflex work better than flexeril buy keftab pills online where to buy levlen online usa is mentat ds syrup a prescription drug what is haldol decanoate used for kamagra 100 mg oral jelly side effects brand sale cialis online tadalafil esomeprazole dosage instructions serophene legal us shatavari side effects uk lasuna cheap price max dose of asacol hd top 10 online keflex sites 1/2 mg propecia over the counter digoxin olanzapine price australia buy bupropion 100 mg generic skelaxin usa pharmacy purchase lithium orotate pravachol generic where to buy cheap generic viagra jelly atorlip 20 tablets indian pharmacy uroxatral desyrel coupon code macquarie discount pharmacy canberra opening hours orlistat 120 recommended starting dose of synthroid ephedraxin from canadian pharmacy buy ditropan 10 what works better than cialis indian pharmacy council 2010 in manipal nizoral shortage over deltasone canada prescription buy remeron pills online canadian pharmacy online levaquin finpecia mastercard buy generic propecia canada buy crestor online no prescription wholesale prices where to get keppra flonase generic dosage azithromycin dose for gonorrhea and chlamydia effexor venlafaxine reviews ky ginseng prices 2012 can you buy urispas buy ayurvedic medicines online india is albuterol available over the counter motrin generic cheap costs best pharmacy to order celebrex quiero comprar diclofenac zovirax tablets for purchase sale pilex zithromax sale uk abilifyincanadasearch buy luvox in singapore buy orlistat 120 mg online can you order naprosyn valsartan to losartan dose conversion pharmacy rx one coupon code buying pain meds from india diclofenac pharmacies in drugstore coupon matchups pharmaceutical press jobs costco pharmacy trental price where prednisolone is manufactured pilex for sale philippines buy lisinopril online us no prescription discount canadian pharmacy acticin strattera online india will cymbalta cause weight gain fml forte online cheap retin-a 0,025 mg buy cheap nitroglycerin sale uk para que se usa el medicamento antivert uk version of emsam online generic finpecia penciclovir acyclovir and famciclovir over the counter can you split actos pills valtrex price cvs buy atarax online reviews que es y para que sirve la sertralina non prescription gasex buy online doxycycline generic purchase nolvadex d canadian meds online no prescription albuterol inhaler for bronchitis buy minipress online with mastercard serophene visa the online drugstore viagra jelly novolog mix 70/30 metformin generic cheap costs lopid for sale philippines vigrande review ethionamide online uk republic ireland pharmacy board what is inderal prescribed for xenical over the counter u.s prilosec otc price cvs tretinoin gel without prescription chelsea drugstore st john hours innopran xl sale non generic clomid where to buy citalopram hydrobromide celexa generic buspar pictures donde venden cialis generico mexico prilosec suppositories buy stay hard after cuming diclofenac sodium side effects depression buy viagra jelly 50 cytoxan side effects uk buy proscar online without low price suhagra uk xenical generico en mexico maxalt cost per tablet augmentin shortage 2012 acheter livre scolaire pas cher celebrex pills used dramamine interaction with other medications where to get mircette can you buy dipyridamole online maxalt 40mg viagra gold viagra over the counter usaa solu medrol generic name forzest cost elimite cost without insurance olanzapine shortage i pill arjuna website kamagra soft side effects long term use what is the generic name for nolvadex ponstel shoppers drug mart best price for real differin depakote weight gain cause rocaltrol prescription only buspar ordering online pharmacy cheap diflucan over the counter non generic xeloda pour-on ivermectin for chickens health express pharmacy tallaght pfizer coupon buy zyvox