The Grand LBMA Exposé: A Collective-Mind Analysis

This writer will present the entire situation via a chronicle of all the news publications about the subject, providing dates sources and authors - where possible. Nearly all available information was researched from Internet sources. Most comments are verbatim from respective authors. Occasionally, this writer added comments of clarification and/or conclusions where the research leaves off.

Internet Commentary #57 -

Posted on the Internet October 20, 1997 by "Nick/Canberra"

G'day all. Have just reviewed the days postings. They range from erudite to asinine. I shall comment on the former and hope the latter have crawled back into their holes.

ANOTHER says "The battle is between CB's trying to keep gold in the 300's and the "others" buying it up. In effect the governments are selling gold in an effort to "KEEP IT" being used as "REAL MONEY" in oil deals! Some people know this, that is why they arn't trading it..they are buying it."

The only reason I can think of for a nation to want to cheapen an asset they have lots of (gold) is to protect the price of something far more important to them (oil). Otherwise it makes no sense. There may be something to ANOTHER'S assertions that gold is being "used" to contain the price of oil and therefore the status quo. IMHO the imbalance of any "contained" market will only cause an even bigger correction once the breaking point is reached. As an analogy consider the stresses that build up on a major fault (such as San Andreas) before an earthquake. The greater the movement of the two plates without relief in the form of an earthquake -- the greater the eventual earthquake. We are now under a considerable degree of stress in the markets--we have been too long without much more than minor tremors. The big quake is getting nearer.

Internet Commentary #58 -

Posted on the Internet October 20, 1997 by "JTF"

@ Dollars, Oil and Gold again!!

Vronsky: I like your fictitious "Covert Cost of Gold" posting. If there were such a meeting with the oil producers, and the western world, a mutual agreement that benefits both sides might well have been made. This clearly states what each side might want. Part of the Middle Eastern concern could very well have been fear of a repeat to the 1987 crash, and the loss of much of their dollar investments. There are still some unclear items for our LBMA Sherlock to investigate:

How could only 1/4 of the world's oil producers (in volume) control the oil supply that effectively? Were non-middle eastern oil producers unable (unaware?) to benefit from the low gold prices? Another scenario (no pun intended) is that the Western world (since 1970's oil crisis) encouraged development of non-middle eastern oil sources, and pushed up the price of the dollar (with gold "sales", as well as real gold sales) so that the price of oil would remain at the $20/barrel or so price -- to keep the biggest inflationary threat to the western world at bay. The oil producers would benefit from the strong dollar,and would be less likely to sell it for gold. This would be an overriding goal of the powers that be (Central Banks), as they would remember the 70's oil crisis very well, regardless of the needs of the oil producing states. In both scenarios, proffessionals at the LBMA and elsewhere got wise, and pushed the price of gold down even more so they (ie Big Trader, etal) could buy the gold at a fire sale, thus beating the CB's at their own game. One wonders also that if Alan Greenspan is serious about a returning to the gold standard, the machinery for this mught well have been tested in either of these above scenarios. Your story is more colorful than mine, however.

Internet Commentary #59 -

Posted on the Internet October 21, 1997 by "jakljaf"

Anyone can post anything here alot of it dubious. However, the gigantic volume at the LBMA gives me pause when reading Another's posts. People do NOT engage in transactions, which have costs, for no reason.

So why is there the LBMA vol? Another has an intesting idea.

Internet Commentary #60 -

Posted on the Internet October 21, 1997 by "tolernant1"

From the latest Onion peelings, "Gold is the only money the world has ever known." Sounds like a simple thought but it isn't.

"Money is whatever people say it is" Not True! Currency is whatever a government says it is "True!"

There are nine more words in the quote, I stopped it where I did for this exercise.

Gold is the only money the world has ever known.

I agree, it is simple. End of story.

"Currency is whatever a government says it is" True!

Not true, I disagree! Not in the Union of States known as the United States! In our constitution, (Article 1, Sec 8), we gave Congress authority "to coin money".

End of story, everything else that has been done is a direct alteration of the Constitution. Plain and simple.

There was never a submitted proposal to amend the Consitution wherein the people agreed to "paper" money instead of gold and silver.

Please excuse the strident tone. I have alot of respect for the opinion peelers and the others discussing the LBMA dealings.

But, we the people never agreed to paper and we never agreed to give up the only real money the world has ever known, gold and silver.

"Currency is whatever a government says it is" The only reason this statement can be made is due to the fact that we the people have not demanded our Constitutional rights be enforced.

The quote goes something like, "the only way evil can succeed is if good men do nothing."

Internet Commentary #61 -

Posted on the Internet October 21, 1997 by "ZARDOZ"

Gold/Oil/SHEIK Abu Bekr/LBMA

...The recent article "Covert Gold Cost of Oil" by Sheik Abu Bekr raises some interesting points about gold and oil.

First, if the article is correct that the Saudis and other Arab nations have been receiving gold bullion as payment (as well as military hardware) for oil and for favours rendered in keeping the price of gold from rising (in spite of projection production peaks as early as 1999) then where can we look for evidence of gold showing up in the official statistics for the Middle East. Does the World Gold Council statistics provide such evidence that shows an increasing or constant flow of gold into the Middle-East coffers since 1987? Evidence might resolve on of the most nagging questions: where is the gold being sold by CBs going? Perhaps we have found the missing piece of the puzzle.

Second, if true, the US would have a particular interest in coordinating the funnelling of gold bullion into the Middle East in order to constrain the price of oil from rising to $40/barrel as it should be given the demand/supply situation in crude oil and maximization of Middle Eastern utilization capacities. The US wants to maintain the illusion that oil is not becoming increasingly scarce in order to avoid price inflation at home thus exploding the market bubble.....they want to avoid a 1973-74 crisis at all cost. Stability in oil prices may have come through past transactions of US treasuries to the Middle East in exchange for "price stability favours" but the Arabs increasingly have requested the real store of value: bullion. Thus the Americans may be actually orchestrating the gold sales of other CBs in the interests of "global oil price stability" objectives convincing the Australians and lesser players to sell their gold for the short term objective of containing a price rise in oil that the Saudis are under increasing pressure at home (Islamic pressures) to let go (as the Sheik suggests) .. Note that "officially" the major gold holders, the US, Switzerland, Germany and France (and most certainly England) have hung on to their CB supplies while other lesser players have been "convinced" to sell under the ruse that "gold no longer plays the hedge or security roll it once did."

Third, the LBMA is most certainly a critical player brokering the exchange of gold for oil trading (the Red Baron's plethora of LBMA exposes points to this reality). Recent revelations of daily volumes of 30 million ounces of gold trading daily at the LBMA in London (twice South Africa's annual gold production) may point to the increasing pressure on appeasing the Saudis (and other Arab nations) with gold to keep oil prices in check. The Rothschilds and other merchant banking players with an interest in gold (probably the Morgan Stanley group as well) are also involved in these daily deals. Indeed, a line is most certainly drawn between Washington/New York, London, South Africa and the Middle East (not necessarily in that order).

Fourth, based on superb analysis by Deutsche Morgan Grenfell on the relative purchasing power of the US dollar in terms of gold is worth analyzing in the context of the gold to oil price ratio. If the purchasing power of the U.S. dollar in terms of gold bullion has declined to a ratio of less than 0.100 in 1997 compared to gold's purchasing power of 2.000 then this suggests that the US dollar is grossly overvalued in terms of scarce resource (gold), that gold is grossly undervalued as may be oil.

Fifth, the ultimate irony is that the laws of demand and supply on scarce commodities like oil and gold have been "nakedized" or "nullified" by an illusion that has elevated an infinitely plentiful fiat currency ( the US dollar ) to mythical proportions. It is in this kind of world in which we transact in the so-called "market."

Internet Commentary #62 -

Posted on the Internet October 21, 1997 by "JTF"

@Oil,gold and US dollars

Zardoz: Saw your 16:52 post today. Please take a look at my post 10/20/97 23:31. My take on all of the LBMA and Middle East oil/gold business is that the overriding force behind what may (underline may) be happening is a desire of the "powers that be" to keep world oil prices constant, until new sources of oil have been developed. This includes the Rothschilds,etc, who would want stability. Please note that I have no proof for anything on this post -- but I'm hoping that we can at least unravel some of the dynamics for all of our benefit.

Consider the commotion during the 1970's oil crisis. If oil prices were allowed to rise rapidly now as they did in the 70's, we would have a world-wide recession (at the least). Since oil is priced in dollars, a good way to keep the status quo is to strengthen the dollar when oil prices go up. Given the world-wide situation with the dollar being the defacto world's currency, the world's central banks might very well be unanimous on the need to keep the price of oil (in dollars) constant. In the past, a country that wanted to support its currency sold gold. Now with derivatives, and the LBMA, new methods are available. I think the basic idea - though no one at Kitco has shown exactly how - was that the Central Banks temporarily "sold" gold in some manner, pushing up the dollar, thus reducing the price of oil. The side benefit of this was that the price of gold went down, but the Central Banks did not have to report gold sales. Now with gold cheaper, and the dollar stronger, oil producers, (or anyone, not just Middle East producers) could feel comfortable holding dollars, or buy cheap gold. When news of this manipulation got out, others stepped in and pushed the price of gold down even more, before the new oil suplies were ready, and started to buy up all the available non-Central Bank gold, forcing the Central banks to sell real gold to maintain the status quo.

All of this is may be linked to the current Central Bank gold sales, ostensibly for fixing balance sheets for entry into the ECU/EMU. What better way to keep the gold market under control, than to have the Central Banks sell gold? It is not how much they sell, but the mere psychological fact that they "do not consider it worth keeping". If you look at historical cycles of Central Bank gold sales, you will see that this sort of thing has happened several times. Thus what I am saying is that we really do not have a conspiracy, but rather that the interests of the Central Banks and the Middle East oil producers have coincided, and that a "wild card" was introduced when others started to buy up all the cheap gold. I think we are approaching the end of the current "cheap gold" phase of the cycle between "hard" and "paper" assets.

I hope this post is helpful -- the US dollar is strong for the same reason we have a stock market bull -- faith. I have not seen the Deutsche Morgan Grenfell study of the purchasing power of the dollar, and am very interested in seeing it. My analysis is also that the dollar is overvalued, just based on a careful review of the US CPI for the last 100 years. My very conservative estimate is that gold should be approximately $600/oz. This value might be much higher if one includes all of the dollars that are currently outside the USA, used as reserves to support other currencies, and the recent rapid growth of M3.

Internet Commentary #63 -

Posted on the Internet October 21, 1997 by "HighRise"

Oil sold @$20 Gold bought @$323?

Japan CB sold Gold last week. Why would they sell Gold when they have so little, unless it is to maintain the price and get something that they also have so little of-OIL This is worth a repost.

Date: Tue Oct 21 1997 08:27 vronsky (THE COVERT GOLD COST OF OIL by Sheik Abu Bekr al-Rashid)

This study gives material support to "ANOTHERs" hypothesis that there is a definite relationship between stable oil prices and gold's dwindling value in past years - the LBMA mystery continues, albeit another onion-layer of subterfuge peeled back: https://www.gold-eagle.com/editorials/gold_cost_oil.html

Internet Commentary #64-

Posted on the Internet October 21, 1997 by "Qester"

It should be pointed out that the price of oil as with all commodities will be valued at a price equal to or less than a competing alternative . More specifically the oil price will always be capped by the price to produce synfuel. Today we have the ability to replace oil with synfuel manufactured from our 400 year coal reserves at a price equivalent to $40 to $45 per barrel If "Another" is correct then our leaders have reached the level of total incompetence. The US should have (and it still can) put its resources toward developing our synfuel capacity. The benefits for our society would be no military presence in the middle east and a more value for our dollar. Why do we elect those amongst us who have the least ability to truthfully and creatively problem solve our needs?

Internet Commentary #65-

Posted on the Internet October 21, 1997 by "GOLDEN CHEESEHEAD"

@GETTING CLOSE TO THE TRUTH

HERR JTF! Must say your 19:04 on oil, gold and the US dollar is as good an explanation of ANOTHER'S spin as we are likely to get! I fail to see any real major flaws in your reasoning! I believe you're getting VERY CLOSE to the truth about the crucial relationship between these THREE IMPORTANT COMMODITIES to the stability of the world trading system! It's posts like yours that keep me coming back for more! A tip of the Golden Cheesehat to you!

Internet Commentary #66-

Posted on the Internet October 21, 1997 by "Jack"

Going back to the late 80's

There were many stories about OPEC wanting means other than the US $ to pay for its oil. Talk concerned the D Mark in particular. ANOTHER makes sense to me. Who really wants a paper promise connected to a depleting "real" resource like oil?

Resource rich countries like Canada and Austrialia should take note and protect their depleting resources against this paper pollution.

Is it possible that the strong currency weak currency charade (the temporary shifting of economic power bases) that has been going on for years is tied to the X value in the gold for oil equation that ANOTHER refers to.

 

THE RED BARON

(November 3, 1997)

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