Best Financial Markets Analysis Article The Office of the Comptroller of the Currency just released its Q3/08 Quarterly Derivatives Fact Sheet today. Here is one of the highlights:

Take a look at J.P. Morgan's gold derivatives [futures] position, paying particular attention to how the < 1 yr. position changed from the end of Q2/08 to the end of Q3/08:

source: Office of the Comptroller of The Currency pg. 30

source: Office of the Comptroller of the Currency pg. 31

And here's what J.P. Morgan's 15 billion “addition” to their < 1 yr. gold derivatives book did to the price of gold as illustrated using GLD as a proxy for the POG:

That such a blatantly egregious act can be committed by the chief agent of the Federal Reserve, with what appears to be the complicity of regulators is a heinous pox on humanity.

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Comments

Theramus
30 Dec 08, 21:08

Please explain what has happened here in lay terms

Please explain what has happened here in lay terms ?

Nadeem_Walayat
31 Dec 08, 01:34

Gold Manipulation

The Fed is using JP as a proxy to keep the gold price down to prevent hyperinflationary concerns.

I.e. the $15 billion surge in JP's gold derivatives position implies JP shorted gold futures to drive the price lower, it is a continuation of central bank actions of selling physical gold to supress the gold price, as it is a credible alternative currency to fiat currencies.

Albert
01 Jan 09, 09:34

The fed is the market...

I'm willing to bet if gold took off it would have been tough to push treasury yields down so the FED can sell long term bonds at insane rates (and a strong dollar, which they can then use to stimulate the economy/pay off debt. At this point they dollar will begin to fall, and people who bought the long bonds will sell them because they are going to realize that getting paid back 2% of devalued paper. Treasuries will sell off, gold/commodities will skyrocket.

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