FOOLS GOLD

RE:www.gata.org Adrian Douglas : The exposlosive dynamics of the gold and silver markets 10/10/09

". . .Gold is a unique substance. It is about the only thing on the planet that is bought and stored and never consumed. Almost all the gold ever mined still exists above ground. The purpose of gold is to act as a store of wealth. This singularity of gold makes it susceptible to a scam that was first perpetrated by goldsmiths in the 16th century. The goldsmiths realized that customers would buy gold and leave it for safekeeping in their vault. This meant that they could show the same gold bar to many customers and sell it many times over. This was the early form of fractional reserve banking, where banks retainly sone a fraction of the money on deposit, gambling that no more than 10 percent of the money will ever be called upon to be paid out.

This scam is at the center of modern gold market manipulation. Paper substitutes for gold are sold, instead of real gold, through derivatives, futures, pooled accounts, exchange-traded funds, gold certificates, etc. I estimate that each ounce of gold has been effectively sold 20 times over or more. To maintain this Ponzi scheme, some real gold is required, because some investors or jewelers demand to take possession of real gold. For the scam to be sustained there must always be plentiful physical gold for those who want it.

This physical supply has been met from mine supply and central bank leasing and selling.

The market is in effect a giant inverted pyramid with a huge paper gold market being supported above a small amount of physical gold at the tip of the inverted pyramid. The scam can continue until there are indications of a shortage of physical gold. If the 20 or so so claimants of each ounce of real gold demand their gold, there is the potential for a squeeze such as never been seen before."

As in bank runs, where depositors en-mass demand their funds, the bullion banks risk exposure to the fraud they have been perpetrating for years, when

gold depositors demand their gold.

Comes now the gold ETF[Exchange Traded Fund], where a fund possesses gold

bullion and sells shares in this bullion, which is traded on the stock exchanges.

What a great idea that permits smaller investors to own gold that is as liquid

as the stock exchanges. But the scam artists above are way ahead of us--they can use these paper shares as a substitute for real gold, because they are the custodians of the gold supposedly in the possession of the ETF. Another multiplier of gold stocks.

As the financial crises continues to unfold, gold is becoming more valuable[actually, currency is being inflated or becoming less valuable] and

the demand for physical gold becomes more acute, pressure is mounting on these fraudsters to produce real gold. Unexpected consequences!

With Love and Kindness,

THE HATMAN