AGW hits Snowstorm

I'm not the only one to notice, but there's a message here...

A World Lit Only by ...

I've been out of touch for a bit as I've pursued employment and tried to raise venture capital for a high-tech business (not to mention the death of a very close friend pulled me down), but reading an acquaintance's defense of self-interest in another forum, I was inspired to make make my own statement:

The self-interested individual pursues values as the only means of sustaining, furthering and enriching his life, with all that implies. The self-sacrificial person necessarily pursues a course that rejects all values related to life on this Earth. That is the nature and contradiction of sacrifice: the "value" of renouncing values.

The self-sacrificial person upholds the absurd notion of what I'd call the "leaky bucket" ethics--that the bigger the hole and the more you lose the more you gain. (Not unlike Keynesian economics and deficit financing by the government.) It's so absurd that they have to place their reward in the Twilight Zones of Heaven or Social Approval, because no one can act without a personal reward of some kind. The true self-sacrificer is borderline psychotic (psychosis: out of touch with reality): he needs the delusion of a chimera.

The self-interested individual wants to live, here and now. He simply wants his reward in reality and he'll fight to the death, if necessary, to preserve his right to his reward. He'll fight for everyone and everything he holds dear, because to betray or lose those things would make his life--and by implication, all life--impossible and meaningless. Only self-interested individuals who passionately pursue their own happiness can create or preserve values, create or preserve happiness on Earth.

Happiness on Earth is not created by "do-gooders" who sacrifice to "help" others. It is simply what you have when every individual is happily pursuing their own self-interest and achieving their own values. The self-sacrificer thinks happiness can be caused by short-circuiting the means to happiness and taking away the preconditions for it. The truly selfish individual blows no fuses: he electrifies his life with values (to pursue this metaphor) and the effect is to light the world.

Postscript: After writing this, I coincidentally received a note with these relevant quotes from Ayn Rand:

"Do not confuse altruism with kindness, good will or respect for the rights of others. These are not primaries, but consequences, which, in fact, altruism makes impossible. The irreducible primary of altruism, the basic absolute, is self-sacrifice—which means; self-immolation, self-abnegation, self-denial, self-destruction—which means: the self as a standard of evil, the selfless as a standard of the good.

"Do not hide behind such superficialities as whether you should or should not give a dime to a beggar. That is not the issue. The issue is whether you do or do not have the right to exist without giving him that dime. The issue is whether you must keep buying your life, dime by dime, from any beggar who might choose to approach you. The issue is whether the need of others is the first mortgage on your life and the moral purpose of your existence. The issue is whether man is to be regarded as a sacrificial animal. Any man of self-esteem will answer: “No.” Altruism says: 'Yes.'”

Which then reminded me of Galt's Speech in Atlas Shrugged:

"'Sacrifice' does not mean the rejection of the worthless, but of the precious. 'Sacrifice' does not mean the rejection of evil for the sake of the good, but of the good for the sake of evil. 'Sacrifice' is the surrender of that which you value in favor of that which you don't.

"If you exchange a penny for a dollar, it is not a sacrifice; if you exchange a dollar for a penny, it is. If you achieve the career you wanted, after years of struggle, it is not a sacrifice; if you then renounce it for the sake of a rival, it is. If you own a bottle of milk and give it to your starving child, it is not a sacrifice; if you give it to your neighbor's child and let your own die, it is.

"If you give money to help a friend, it is not a sacrifice; if you give it to a worthless stranger, it is. If you give your friend a sum you can afford, it is not a sacrifice [...] If you give him money at the cost of disaster to yourself--that is the virtue of sacrifice in full.

"Whoever is now within reach of my voice, whoever is man the victim, not man the killer, I am speaking at the deathbed of your mind, at the brink of that darkness in which you're drowning. If there still remains within you the power to struggle to hold on to those fading sparks which had been your self--use it now: the word that has destroyed you is 'sacrifice.' Use the last of your strength to understand its meaning. You're still alive. You have a chance."

Gold and Economic Freedom

A friend recently remarked to me,

I am also not convinced that if there is a total meltdown like these guys predict that precious metals are going to be all that precious anymore. They become themselves a fiat currency, since gold is useless. It's merely a social convention that it's valued (along with being fungible and limited), and that can break down pretty easily. It's easier to believe people will be forced to barter in immediate necessities (e.g. food/water/guns/ammo).

I had to respond to the suggestion that precious metals might not be precious, even in some horrendous economic conditions. I agree, in a way it's a curious thing that people value gold and silver as much as they do, but it's also remarkable that they have valued them so much for so many thousands of years, in economies (Incas, for instance) that were so immeasurably worse than ours. Why this is so is interesting in itself. Some of it was discussed in Greenspan's essay "Gold and Economic Freedom" in "Capitalism, the Unknown Ideal". (I hate referring to Greenspan, but the points in the article are still valid, even if he betrayed his own ideals and everyone else much later.) So I answered:

Gold is far from useless -- many properties of gold make it valuable, even in a primitive society, but even more so in an advanced one:

• malleability and ductility (it's easy to form into complex shapes, and easy to subdivide into very small quantities),
• non-reactive, non-corrosive, and low immiscibility (if that's the right word) with many other elements, so it stays pure,
• non-toxic (safe to handle),
• doesn't oxidize easily (it won't corrode like iron or even silver does, so it retains its form in jewelry, coins and bullion over long periods of time),
• very high density (it has one of the highest atomic numbers to occur naturally and very small quantities can represent large stores of value in other things),
• high electrical conductivity (useful for engineering, but also for verifying the purity of gold),
• easily electroplated (it can be deposited in atomically thin layers), not to mention
• a highly desirable appearance that is created and maintained because of these properties.

Then throw in the historical and mythological value of gold to people -- it occurs throughout history. Subjective, perhaps, but not to be dismissed.

Then consider that someone can't just make gold in their basement -- alchemysts notwithstanding. (Only 161,000 tonnes of gold have been mined in human history -- a cube 67 feet on a side; compare that to all the iron ever produced!)

And last, all these properties make it extremely easy for someone to objectively determine if they are receiving pure gold and not some fake dubloons. It's impossible to devalue gold with fakes, and this offers tremendous protection against being defrauded. Putting aside reports of gold depositories storing fake bullion that no one can get access to to verify, it's extremely hard to make undetectable "slugs" or bullion filled with some heavier metal filling (a combination of two isotopes of tungsten have damn near the density of gold). Combined with a heavy gold plating, it might have a net density and exterior appearance of gold, but you can detect the fake. I looked into it at length a few months ago, not cause I wanted to go into that line of work, but to prove it couldn't be done. I found several completely reliable means of detecting pure gold. For one, electrical conductivity. There's simply no way to fake it, and the equipment to do so can be made in your garage. Magnetic properties exist, also.

Applications today abound in engineering (gold has long been used in many high-performance microchips), dentistry, etc., but even today most gold usage is in jewelry. I did some research awhile ago into gold pricing to figure out why the price wasn't moving very much and found that almost 60% of gold consumption was jewelry (see http://www.research.gold.org/supply_demand/ for instance), and most of the remainder was electronics and bullion, with relatively little into coins. That's one reason the high demand for coins today hasn't driven up the price of gold more than it has.

Back to the main point. As Greenspan discussed (and remember, Ayn Rand edited all those essays -- nothing got written without her agreement with the content), gold is invaluable even in a pre-industrial society as a form of money because it simply is incredibly difficult to conduct transactions on a barter basis alone.

Take an industrial example of barter, though. Imagine you're a big farmer with a lot of wheat and what you need desperately is gasoline to power your tractors, but the guy selling the gasoline has plenty of wheat already, and he doesn't want to expend the effort to find buyers of wheat, nor build facilities to store your wheat, nor bear the risk of having the wheat go moldy on him till he finds a buyer. (Maybe it's right after the wheat harvest and everyone and their cousin is selling wheat, but fall rains are a possibility.) But suppose you have some hard money -- great: for the guy selling gasoline, that's fungible and it saves him a lot of work and eliminates the risk of your transaction. But suppose the government is promoting paper currency while running xerox machines night and day. That paper may be rapidly diminishing in value (as today). The guy selling the gas has to make an estimate of the rate of decline in value of the paper money, including a generous margin of error in his own estimate. He ups the price of his gas to include the extra risk and the time value of money, till he can spend it himself.

But suppose you, the seller of wheat come to this guy with hard gold -- a form of currency that the government *can't* dilute and devalue. Your stature goes up with the gasoline seller, immensely. (Assuming he won't get thrown into prison because the government has made possesion of gold a capital offense.) You've suddenly eliminated the risk and time factors from his transactions. You get a big discount on your gasoline. Likewise, when you want to sell your wheat to the local grainery, how do you view the transaction if the grainery pays you in gold or in government fiat? I bet you offer a much better price for gold, especially if the economy sucks.

But what if the grainery offered you copper instead (maybe they're getting paid in copper wire stolen from the power lines around the country)? Copper is running around $3/lb today (http://www.metalprices.com/FreeSite/metals/cu/cu.asp). Gold, in contrast, is about $1100/troy ounce (14.6 troy ounce/lb), or $16,000 per pound. On top of that, gold is over twice as dense as copper (19.3g/cc vs 8.92 g/cc), so you can carry home almost twice the value of gold from your harvest ($35k/lb). Or twice the value back into town to pay for other farm supplies (like gasoline).

When you consider all these factors, it's just very, very unlikely (I would say impossible, barring the wiping out of 99.99% of the human race to scattered tribes of 20 people or less per tribe) for gold to lose its value, and for humans to rise to any higher level, they will need an objective form of currency which gold provides better than any other substance.

Gold Price Manipulation?

Here's something I wrote about 10 months ago that is relevant to my last post. I dug up information in relation to the question of "is the price of gold being manipulated?" While I don't claim to have a good answer to my speculation about gold swap/trades being a possible mechanism for price suppression (I've had a half-dozen people respond, about 50-50 pro-con), this data at least appears to support the assertion that demand is way up relative to supply:

http://www.research.gold.org/supply_demand/ Identifiable gold demand

Note that the table shows that gold bar hoarding is only 9% of total demand. True or not, that would greatly diminish the upward price pressure on gold from panicked investors. On the other hand, note that I don't have figures for Q4 2008 or Q1 2009 -- the panic has surely accelerated since the election and the "stimulus bill" (even among supporters of that bill).

If you grant that gold production is declining, the link says:

"The biggest contributor to the increase in total identifiable demand in Q3 was identifiable investment, up 137.5 tonnes (56%) relative to year-earlier levels. Jewellery demand rose 45.5 tonnes or 8%, while industrial and dental demand declined 11%."

In other words, even after significant declines in industrial consumption of gold, demand is way up. Interestingly, you'll note that they say "bar hoarding" is only about 9% of total demand -- but up 69% from a year ago. What *isn't* given is coin hoarding. Right now, all accounts suggest that something approaching 100% of coins are being hoarded... and coin minting is up 60%.

A related report from the same guys says (see http://www.gold.org/assets/file/pr_archive/pdf/GDT_Q1_2008_pr.pdf):

" With financial markets still reeling from the global credit squeeze amid growing inflationary pressures, dollar demand for gold reached US $20.9bn in the first quarter of 2008, a 20% increase over the same period in 2007 and more than double the level of four years earlier. However, tonnage demand for gold at 701 tonnes was down 16% on the same period last year and represents the lowest quarterly figure for five years, according to Gold Demand Trends, which is released today by World Gold Council (WGC)."

This is from May 2008, but I still find it absolutely bizarre, if I even understand what they are saying. Jewellry accounts for about 60% of world gold demand, and they say

"Jewellery demand declined 21% year-on-year to 445.4 tonnes, the lowest quarterly level since the early 1990s"?

Perhaps it's the general economic decline. They do say (again, this was May 2008),

"Industrial and dental demand declined by 5% on year earlier levels to 110.3 tonnes, primarily in response to the deteriorating US economy, and a slowing in demand for consumer electronics."

From the charts below, industrial and dental demand for gold is about 20% of world demand, so a 5% drop represents about a 1% drop in overall world gold demand, year on year.

They also say

"The supply of gold was 6% higher in Q1 2008 than a year earlier, primarily driven by increased scrap supply which in turn was a reaction to the rising gold price. Mine output remained constrained, little changed from Q1 2007 levels at 593 tonnes, while net official sector (central banks) sales were 8% higher than in Q1 2007."

These guys are a little more optimistic about gold production than other reports, which suggest an actual decline in mine production. But again -- this report was May, 2008.

Here's a possible partial explanation for the price of gold not skyrocketing: Maybe it's already priced out for today's events. From this link:

"While it has already come far from its humble beginnings in the $250s in April 2001, [gold's price] has a long way to run yet."

In other words, gold is 4 times more expensive today than 8 years ago. Now, one of the most interesting (and significant) things about price mechanisms is that they anticipate events. Let me hypothesize, then, and ask: did smart investors start anticipating world events from 2001 forward to bid the price of gold up? In other words, is the explanation for the lack in more dramatic upward movement in the price of gold today simply because the price of gold has already anticipated today's events?

I think that is part of the explanation, though not all of it. The same applies to stocks when a glowing earnings report causes a decline in the stock price, simply because the earnings half a point below expectations -- the stock declined because it was priced at the market's expectation of all future earnings, and when the most recent earnings report comes in a little lower than that projection, the cumulative future earnings decline in the new projection, so the value of the company declines. (That is, I'm arguing on the basis of my theory that the value of a company is the sum of all future net earnings, discounted for risk, uncertainty, and the time value of money.)

But anticipated gold price projections can't be the full explanation for the relatively stable price of gold today. The dramatic increase in demand today should still be driving prices up at a faster rate than they are, I think. I go back to my comment that a 5% increase in the demand/supply ratio of oil can double the price of oil.

So the question here remains to be proved: is the rate of increase in the price of gold in line with the increased demand, or is there government manipulation holding the rate lower?

Look at the price over the last 34 years, unadjusted for inflation:

You might not think the price of gold is being suppressed, but now here it is adjusted for inflation:

Wait till the coming increase in inflation (maybe hyper) steps in about 12 - 24 months from now. That curve will rocket upward.

This article http://www.zealllc.com/2008/goldfund2.htm makes the point

"...global gold production is actually falling despite the relatively high gold prices. Annual gold mined today, which is 70% of the world’s supply, is running over 4% lower than when this bull began in 2001! "

They provide a chart in another link (http://www.zealllc.com/2008/goldprod2.htm):

When you consider that the economy is far worse today that it was in 1980, and the panic among investors is unequaled since 1929, and gold production is declining as well, you simply have to suspect Something is Rotten in Denmark.

As an experienced gold mining investor on my list remarks (http://www.larrymylesreports.com/Case_For_Gold.htm):

"In mid-December a reader forwarded me a timely article exposing the plight of Swiss gold refiners and their ‘difficulty in keeping up with demand for gold bullion leading to long delivery times as investors were becoming wary of other stores of wealth.’ ...'I have been in the gold business for 30 years and I have never experienced anything like this,” said Bernhard Schnellmann, director for precious metal services at Argor-Heraeus, one of the world’s three largest refineries. He went on to say, “Even though production has increased dramatically since the middle of the year…..we simply cannot cope with the demand.' ...In the case of coins, the delivery date has gone from a couple of days at the beginning of the year, to six to eight weeks! And remember, the Swiss refineries are working day and night, seven days a week. ...Something has to give - especially when global production is estimated at approximately 2,500 tonnes annually…and global demand is closer to 4,000 tonnes. And those are 2007 figures and do not take into consideration the dramatic rush to bullion."

I've heard and read of numerous reports of long delivery times, which are consonant with a much higher price of gold than we are seeing -- certainly much higher than $950/oz in today's world.

Total identifiable demand (World Gold Council): 1133 tonnes (Q3 2008). Up 18% from Q3 2007.

Let's take the premise that Q3 numbers, being before the election and before the meltdown, are grossly understated. I'm going to arbitrarily put the present Q1 2009 non-industrial bullion and coin demand at 100% higher than than Q1 2008 (bar hoarding / coins from table at top): 400 tonnes. I suspect this considerably understates the actual private demand at this moment in time. This represents an increase in world wide demand of 200 tonnes, year-on-year. Out of a total demand of 1133 tonnes, that's a 17.6% increase in the supply/demand ratio.

If you take a cue from the oil market, and say that each 5% increase in supply/demand doubles the price, I'd expect that 17.6% increase to be reflected in a 2^(17.6/5) = 11.5: increase in price -- say, $10,000/oz.

NOTE that I don't include national gold reserves in this calculation -- they are "out of the market" and don't represent a supply on the market, per se, except to the extent governments choose to throw them in. It's a government-run cartel, not unlike the diamond cartel which keeps diamond prices higher than they would otherwise be.

But let's see what total national reserves of gold are. From Wikipedia: "11,065 tonnes as of December 2007" (http://en.wikipedia.org/wiki/Official_gold_reserves). So the current private demand of 400 tons (I speculate from extrapolation) is a miniscule fraction of national reserves:

I abridged the full table. But what you can see is that the U.S. reserves (73.5% of the world) are by far the largest, and an increase in private demand of 200 tons for Q1 2009 (as I speculate) can easily be handled by the Treasury simpling selling bullion onto the market. They aren't going to run out. Of course, to keep it up for an entire year would take 800 tons -- not chump change.

It appears that at present I don't have to go to more exotic gold-swap theories to explain how central governments can suppress the price of gold, and the day to revisit that discussion may yet be coming, but about then governments will begin nationalizing gold. So ... buy small quantities to avoid reporting requirements, and find a secure hiding place. (NOT a safe deposit box.)

Tungsten Plugged Gold?

A month ago a friend sent me a gold investment article (at bottom) regarding the risk of buying gold ETF's backed by fake gold bars and a conspiracy theory involving the U.S. government, so I did a little investigating. I concluded that, while it is possible to fake the density of gold with gold-plating on tungsten bars, it wasn't possible to fake gold bars for even moderately sophisticated testing using other criteria. Since this dovetails with my last two posts on gold, I thought it might be of general interest so I'm posting here. I replied as follows:

----- begin reply -----
I see from google (searching "gold tungsten plugged bars fraud") that this story also was on kitco, but do you really think the U.S. Government was involved (even indirectly) in making plugged gold bars to suppress the price of gold? You didn't express an opinion.

Did they really do it? That's the $1123/oz question. I couldn't find anything on snopes. It would be a fraud the likes of which I've never heard, and the consequences would be, well, earth shaking. It seems rather unlikely, but I've gotten so suspicious of the government that I could almost believe it.

I looked up the density of gold and tungsten to verify the claim of equal density. It's hard to get an exact definition for a given temperature and isotopic composition, and web values are vague, but for best information I could quickly find, gold comes is 19.32 gm/cc at 293Kelvin and Tungsten comes is 19.3 gm/cc @ 293Kelvin (http://www.chemicalelements.com/elements/w.html).

The half-lives of gold isotopes are relatively short -- seconds to days, so it's not possible to have any appreciable mass fraction in any isotope but Au-197. Tungsten, however has stable isotopes of W-180, W-182, 183, 184, and W-186. The given values of tungsten density do not, as I say, indicate the mass fraction for each isotope, but W-184 is the most common isotope (31% of mined tungsten). That means, a bar of pure W-186 could be 1.1% more dense (or 19.5gm/cc) than a bar of W-184. So it's entirely feasible to mix 10% W-186 with 90% W-184 to get exactly the same density of tungsten as gold.

W-184 constitutes about 31% of known tungsten, and W-186 is 29% (http://en.wikipedia.org/wiki/Isotopes_of_tungsten). Even if we assume this is the fraction going into the density of 19.3gm/cc, it is still possible to skew the mass fraction of W-186 upward to give the same density of gold.

That said, there are tests other than density to detect a tungsten bar plated with gold. (eg, http://reactor-core.org/~djw/myblog/archives/2008/10/24/T12_14_56/) Nuclear resonance imaging would NOT help (gold plating shields the measurements), but magnetic fields reportedly have unique eddy-current signatures. I didn't investigate further here. It's possible. Eddy currents excited by an oscillating magnetic field will cause a material to heat up in proportion to the resistivity of the material. Some cook top ranges use this effect, and might be employed to analyze a gold bar. You could probably put a gold bar in a caloric bomb surrounded by a 60Hz field from a transformer, and measure the temperature rise over some minutes. A tungsten plugged bar should give higher temperature for the same heating time.

DC electrical resistance measurements could detect a plugged bar, if you contacted it carefully at both ends. (You'd probably needs a hydraulic press.) The resistivity of gold is 2.271 micro-ohm-cm at 300K. The resistivity of tungsten is 5.65 micro-ohm-cm. A bar plugged 50% with tungsten should have a resistivity about 3.971 micro-ohm-cm, about 74% higher. But you have to measure the resistance of an entire gold bar, which will be VERY low.

A 400 oz gold bar has dimensions of 20cm x 8cm x 4.5cm. The resistance end-to-end is 1.26167 micro-ohms. Applying a voltage of 10 microvolts across it would generate a current of 7.926 amps. A W-plugged gold bar would have a current of about 4.56amps. This would be a very noisy measurement, but if you filter the signal, it could be accurately measured with a cheap multimeter. The effect of contact resistance at both ends of the bar, however are significant. What it will do is reduce both currents and narrow the difference in dc current. That's why I say it's important to get a very good electrical contact which is very low resistance (less than the bar itself, preferably) and consistent from bar to bar measurements. But not impossible.

However, a dead sure test would be to measure the heat capacity of a gold bar, the amount of heat needed to raise the temperature of a material by 1 degree kelvin. Gold has a heat capacity of 0.129 joules / gm-K, and tungsten has a heat capacity of 0.134 J/gm-K. That's a difference of 3.88% which should be easily measurable -- unless someone was REALLY clever and used two or more elements to plug the gold to match both heat capacity and density. Not impossible in principle, but it would require research to ascertain if practical. But it would be difficult if not impossible to match heat capacity, density AND electrical resistivity, because gold is the third lowest resistance material, behind only copper and silver. But Cu and Ag are so much less dense than gold, I'm not sure you could compensate the higher resistivity of tungsten without lowering the density of the gold bar too much.

I could also imagine a sound test -- strike a gold bar with an exact force and duration with a computer controlled metal hammer, and measure the sound generated, then run that through a spectrum analyzer. A quick check shows tungsten has a velocity of sound of 5174 m/s and gold has a velocity of 1740m/s. That's a huge difference. You could hear that difference. For sure by dropping a tungsten plugged gold coin on the floor.

Another test is thermal conductivity. Gold is 320W/m-K and Tungsten is 174W/m-K. That would be just as hard to conceal, though the measurement would be awkward.

What I conclude is that plugged gold bars are easy to detect (and one reason gold is such an ideal monetary standard), but you do have to use the right techniques. I wonder what methods are used by the mints? I could see them getting defrauded by using only a density test, and once they take possession, even if they discover the fraud, they probably wouldn't want to reveal it.

It makes me wonder how silver bars / coins could be faked?

You know, in this day and age, there could be a market for low-cost gold testing machines, but of course, the thieves could fake those, too.

---- end reply to friend ----


-------- Posted Thursday, 12 November 2009 | Digg This ArticleDigg It! ---------
Source: GoldSeek.com
http://news.goldseek.com/GoldSeek/

Gold Finger - A New Take On Operation Grand Slam With A Tungsten Twist
By: Rob Kirby

I’ve already reported on irregular physical gold settlements which occurred inLondon, England back in the first week of October, 2009. Specifically, these settlements involved the intermediation of at least one Central Bank [The Bank of England] to resolve allocated settlements on behalf of J.P. Morgan and Deutsche Bank – who DID NOT have the gold bullion that they had sold short and were contracted to deliver. At the same time I reported on two other unusual occurrences:

1) Irregularities in the publication of the gold ETF - GLD’s bar list from Sept. 25 – Oct.14 where the length of the bar list went from 1,381 pages to under 200 pages and then back up to 800 or so pages.

2) Reports of 400 oz. “good delivery” bricks of gold found gutted and filled with tungsten within the confines of LBMA approved vaults in Hong Kong.

Why Tungsten?

If anyone were contemplating creating “fake” gold bars, tungsten [at roughly $10 per pound] would be the metal of choice since it has the exact same density as gold making a fake bar salted with tungsten indistinguishable from a solid gold bar by simply weighing it.

Unfortunately, there are now more sordid details to report. When the news of tungsten “salted” gold bars in Hong Kong first surfaced, many people who I am acquainted with automatically assumed that these bars were manufactured in China – because China is generally viewed as “the knock-off capital of the world”. Here’s what I now understand really happened:

• The amount of “salted tungsten” gold bars in question was allegedly between 5,600 and 5,700 – 400 oz – good delivery bars (roughly 60 metric tonnes). This was apparently all highly orchestrated by an extremely well financed criminal operation.
• Within mere hours of this scam being identified – Chinese officials had many of the perpetrators in custody. And here’s what the Chinese allegedly uncovered:
• Roughly 15 years ago – during the Clinton Administration [think Robert Rubin, Sir Alan Greenspan and Lawrence Summers] – between 1.3 and 1.5 million 400 oz tungsten blanks were allegedly manufactured by a very high-end, sophisticated refiner in the USA (more than 16 Thousand metric tonnes).
• Subsequently, 640,000 of these tungsten blanks received their gold plating and WERE shipped to Ft. Knox and remain there to this day. I know folks who have copies of the original shipping docs with dates and exact weights of “tungsten” bars shipped to Ft. Knox.
• The balance of this 1.3 million – 1.5 million 400 oz tungsten cache was also plated and then allegedly “sold” into the international market.

Apparently, the global market is literally “stuffed full of 400 oz salted bars”. Makes one wonder if the Indians were smart enough to assay their 200 tonne haul from the IMF?

A Slow Motion Train Wreck, Years in the Making

An obscure news item originally published in the N.Y. Post (written by Jennifer Anderson) in late Jan. 04 has always ‘stuck in my craw’:

DA investigating NYMEX executive - Manhattan, New York, district attorney's office, Stuart Smith - Melting Pot - Brief Article – Feb. 2, 2004

A top executive at the New York Mercantile Exchange is being investigated by the Manhattan district attorney. Sources close to the exchange said that Stuart Smith, senior vice president of operations at the exchange, was served with a search warrant by the district attorney's office last week. Details of the investigation have not been disclosed, but a NYMEX spokeswoman said it was unrelated to any of the exchange's markets. She declined to comment further other than to say that charges had not been brought. A spokeswoman for the Manhattan district attorney's office also declined comment.

The offices of the Senior Vice President of Operations - NYMEX – is exactly where you would go to find the records [serial number and smelter of origin] for EVERY GOLD BAR ever PHYSICALLY settled on the exchange. They are required to keep these records. These precise records would show the lineage of all the physical gold settled on the exchange and hence "prove" that the amount of gold in question could not have possibly come from the U.S. mining operations – because the amounts in question coming from U.S. smelters would undoubtedly be vastly bigger than domestic mine production.

We never have found out what happened to poor ole Stuart Smith – after his offices were "raided" – he took administrative leave from the NYMEX and he has never been heard from since. Amazingly (or perhaps not), there never was any follow up on in the media on the original story as well as ZERO developments ever stemming from D.A. Morgenthau’s office who executed the search warrant.

Are we to believe that NYMEX offices were raided, the Sr. V.P. of operations then takes leave - all for nothing? These revelations should provide a “new filter” through which Rothschild exiting the gold market back in 2004 begins to make a little more sense:

“LONDON, April 14, 2004 (Reuters) - NM Rothschild & Sons Ltd., the London-based unit of investment bank Rothschild (ROT.UL), will withdraw from trading commodities, including gold, in London as it reviews its operations, it said on Wednesday.”

Interestingly, GATA’s Bill Murphy speculated about this back in 2004;

“Why is Rothschild leaving the gold business at this time my colleagues and I conjectured today? Just a guess on my part, but suspect:”

*SOMETHING IS AMISS. THEY KNOW A BIG GOLD SCANDAL IS COMING AND THEY WANT NO PART OF IT. …”

“ROTHSCHILD WANTS OUT BEFORE THE PROVERBIAL "S" HITS THE FAN.” BILL MURPHY, LEMETROPOLE, 4-18-2004

Coincidentally (or perhaps, not?), GLD Began Trading 11/12/2004

In light of what has occurred – regarding the Gold ETF, GLD – after reviewing their prospectus yet again, it becomes pretty clear that GLD was established to purposefully deflect investment dollars away from legitimate gold pursuits and to create a stealth, cesspool / catch-all, slush-fund and a likely destination for many of these “salted tungsten bars” where they would never see the light of day – hidden behind the following legalese “shield” from the law:

Excerpt from the GLD prospectus on page 11:

http://www.spdrgoldshares.com/media/GLD/file/SPDRGoldTrustProspectus.pdf

Gold bars allocated to the Trust in connection with the creation of a Basket may not meet the London Good Delivery Standards and, if a Basket is issued against such gold, the Trust may suffer a loss. Neither the Trustee nor the Custodian independently confirms the fineness of the gold bars allocated to the Trust in connection with the creation of a Basket. The gold bars allocated to the Trust by the Custodian may be different from the reported fineness or weight required by the LBMA’s standards for gold bars delivered in settlement of a gold trade, or the London Good Delivery Standards, the standards required by the Trust. If the Trustee nevertheless issues a Basket against such gold, and if the Custodian fails to satisfy its obligation to credit the Trust the amount of any deficiency, the Trust may suffer a loss.

The Fed Has Already Been Caught Lying

Liberty Coin’s Patrick Heller http://www.libertycoinservice.com/ recently wrote,

Earlier this year, the Gold Anti-Trust Action Committee (GATA), filed a second Freedom of Information Act (FOIA) request with the Federal Reserve System for documents from 1990 to date having to do with gold swaps, gold swapped, or proposed gold swaps.

On Aug. 5, The Federal Reserve responded to this FOIA request by adding two more documents to those disclosed to GATA in April 2008 from the earlier FOIA request. These documents totaled 173 pages, many parts of which were redacted (covered up to omit sections of text). The Fed's response also noted that there were 137 pages of documents not disclosed that were alleged to be exempt from disclosure.

GATA appealed this determination on Aug. 20. The appeal asked for more information to substantiate the legitimacy of the claimed exemptions from disclosure and an explanation on why some documents, such as one posted on the Federal Reserve Web site that discusses gold swaps, were not included in the Aug. 5 document release.

In a Sept. 17, 2009, letter on Federal Reserve System letterhead, Federal Reserve governor Kevin M. Warsh completely denied GATA's appeal. The entire text of this letter can be examined at http://www.libertycoinservice.com/ http://www.gata.org/files/GATAFedResponse-09-17-2009.pdf

The first paragraph on the third page is the most revealing. Warsh wrote,

"In connection with your appeal, I have confirmed that the information withheld under exemption 4 consists of confidential commercial or financial information relating to the operations of the Federal Reserve Banks that was obtained within the meaning of exemption 4. This includes information relating to swap arrangements with foreign banks on behalf of the Federal Reserve System and is not the type of information that is customarily disclosed to the public. This information was properly withheld from you."

This paragraph will likely be one of the most important news stories of the year.

Though not stated in plain English, this paragraph is an admission that the Fed has in the past and may now be engaged in trading gold swaps. Warsh's letter contradicts previous Fed statements to GATA denying that it ever engaged in gold swaps during the time period between Jan. 1, 1990 and the present.

[Perhaps most importantly], this was GATA's second FOIA request to the Federal Reserve on the issue of gold swaps. The 173 pages of documents received for the 2009 FOIA request all pre-dated the 2007 FOIA request, which means they should have been released in the response to the earlier FOIA request. This establishes a likelihood that the Federal Reserve has failed to adequately search or disclose relevant documents. Further, the Fed response admitted that it had copies of relevant records that originally appeared on the Treasury Department Web site, but failed to include them in its response.

Now that Federal Reserve governor Warsh has admitted that the Fed has lied in the past about the Fed’s involvement with gold. It should now be very clear to everyone why the Fed is lying and the true nature of what they are hiding / withholding.

On Doing God’s Work

An important footnote to consider is the intertwined-ness of the U.S. Federal Reserve and the U.S. Treasury (can anyone really tell them apart?] as well as this duopoly’s two principal agents – J.P. Morgan-Chase and Goldman Sachs. When one truly grasps the nature of these highly conflicted relationships it gives a fuller meaning to words recently uttered by Goldman head, Lloyd Blankfein, who claimed, “I’m doing god’s work.”

Does this really mean that Mr. Blankfein believes that the Federal Reserve is god? You can judge for yourself. While the Fed prints money like no one else could - except god almighty himself (or Gideon Gono http://www.reuters.com/article/latestCrisis/idUSL2176351, perhaps?) – I really doubt that was the intent back in 1864, when the U.S. adopted “In God We Trust http://www.reuters.com/article/latestCrisis/idUSL2176351 http://en.wikipedia.org/wiki/In_God_We_Trust ” as their official motto.

And that’s my two cents worth for today.

Got (real) physical gold yet?

Rob Kirby

More for subscribers. Subscribe here http://www.kirbyanalytics.com/amform.htm.

Deja Vu

Reading the NY Times story copied at bottom, I had something flash before my eyes...

At Least 4 Dead as Americans Fight Police in Streets

By Philbert I.M. WORTHLESS
Published: July 4, 2017
GNN
Washington D.C, N.A.P. — American Capitol police opened fire on protesters in Washington on Sunday, killing at least four people, including a nephew of the opposition leader, John Locke, as vast crowds of demonstrators flooded the streets of cities across the North American Protectorate's middle province and fiercely fought security forces, according to witnesses and opposition Web sites.

Government News Network Worldwide Photo Agency

An American Tea Party Protester ran as police burned his motorbike during an anti-government demonstration in Washington on Sunday.

The protests, taking place on July Fourth, were the bloodiest — and among the largest — since the uprisings that followed North America’s disputed governor's election last November, with hundreds of thousands of people thronging in Washington alone, witnesses said. There were reports of hundreds of injured people and numerous arrests.

In Washington, thick crowds of Tea Party protesters marched down a central avenue in mid-morning, defying official warnings of a harsh crackdown on protests as they chanted, “Death to the dictator!” They refused to retreat even as police fired tear gas, charged them with batons and discharged warning shots.

The police then were forced to open fire directly into the crowd, opposition Web sites said, citing witnesses. At least four people were killed, the Web sites reported, and photographs circulated of a man with a bloodied head being carried from the scene.

One of the dead was Tom Jefferson, Mr. Locke's 35-year-old nephew, the Government News web-site reported. He was shot in the heart at midday near the site of the former Washington Monument, the report said.

Protesters successfully pushed the police back in some areas, hurling rocks and capturing several police cars, which they set on fire. Videos posted to the Internet showed scenes of mayhem, with dumpsters burning and groups of protesters attacking loyal Amerikorp militia volunteers amid a din of screams.

Protests and clashes also broke out in the cities of New York, Chicago, Dallas, St. Louis, Denver, Miami, Baton Rouge, Tucson and St. Paul, opposition Web sites said, but government sources assured GNN that these reports were false and malicious propaganda of a weakening protest movement.

The protesters deliberately blended their reactionary message with the day’s former patriotic meaning, alternating anti-government slogans with cries of mourning for their "Founders", whose alleged struggle for freedom used to be commemorated on the former national holiday.

“This is the month of blood, Obama will fall! Mmm, Mmm, Mmmm!” the protesters shouted, referring to North America's governor and supreme leader, Ayatollah Barack Hussein Obama, who ordered an end to the national holiday after the United States joined the new Federation of World Socialist States in 2015.

The day’s clashes showed an opposition movement that some says is becoming bolder and more direct in its challenge to the North American Protectorate's legitimate ruling authorities. Yet as protesters continued to attempt to reclaim American symbols from their decadent past, the government has successfully cast its opponents as religious zealots.

On Saturday in Philadelphia, protesters gathered outside the prayer hall once known as "Independence Hall", and prevented former vice-president and the Reverend Al Gore from delivering his talk on "Cap and Trade: A Model for Personal Sacrifice and Redemption" before being driven away by stone-throwers. Protesters chanted, “The family of George are with us,” an obscure reference to George Washington, the leader of America's 1776 revolution.

Some protesters claim Washington's descendents are behind the opposition movement, further reason, authorities say, for the clamp-down against them, and the Federal Secret Service asserts that their program of eradication, which is modeled on the Chinese crackdown against the former Falun Gong, has been successful, despite the fall of the Chinese government and their withdrawal from the Federation.

Candlelight vigils for the Jefferson Memorial were also being held not only by older and more traditional residents who revered him for reasons of an outdated notion of patriotism, but by younger activists and students who have dominated protests in recent months and suffered the heaviest casualties to superior government forces.

Sunday marked the 240th year since the original colonists revolted against a more refined world opinion, and still represents an important day in the pantheon of bourgeous American rituals. The protests may have received a boost with the razing last week of the Washington Monument, which His Highness, Ayatollah Obama, had ruled a decadent symbol of an imperialist past that was corrupting the minds of the Protectorate's youth.

http://www.nytimes.com/2009/12/28/world/middleeast/28iran.html?_r=1&hp

At Least 4 Dead as Iranians Fight Police in Streets

By ROBERT F. WORTH
Published: December 27, 2009

BEIRUT, Lebanon — Iranian police opened fire on protesters in Tehran on Sunday, killing at least four people, including a nephew of the opposition leader Mir Hussein Moussavi, as vast crowds of demonstrators flooded the streets of cities across Iran and fiercely fought security forces, according to witnesses and opposition Web sites.

European Pressphoto Agency

An Iranian ran as protesters burned police motorbikes during an anti-government demonstration in Tehran on Sunday.

The protests, taking place on the holiday marking the death of Shiite Islam’s holiest martyr, were the bloodiest — and among the largest — since the uprisings that followed Iran’s disputed presidential election last June, with hundreds of thousands of people thronging Tehran alone, witnesses said. There were reports of hundreds of injured people and numerous arrests.

In Tehran, thick crowds marched down a central avenue in mid-morning, defying official warnings of a harsh crackdown on protests as they chanted, “Death to the dictator!” They refused to retreat even as police fired tear gas, charged them with batons and discharged warning shots.

The police then opened fire directly into the crowd, opposition Web sites said, citing witnesses. At least four people were killed, the Web sites reported, and photographs circulated of a man with a bloodied head being carried from the scene.

One of the dead was Ali Moussavi, Mr. Moussavi’s 35-year-old nephew, the Parleman News Web site reported. He was shot near the heart at midday in Tehran’s Enghelab Square, the report said.

Protesters successfully pushed the police back in some areas, hurling rocks and capturing several police cars, which they set on fire. Videos posted to the Internet showed scenes of mayhem, with dumpsters burning and groups of protesters attacking Basij militia volunteers amid a din of screams.

Protests and clashes also broke out in the cities of Isfahan, Mashad, Shiraz, Arak, and Najafabad, opposition Web sites said.

The protesters deliberately blended their opposition message with the day’s religious meaning, alternating anti-government slogans with ancient cries of mourning for the prophet Mohammed’s grandson, Hussein, the 7th-century saint whose death in battle is commemorated on the Ashura holiday.

“This is the month of blood, Yazid will fall!” the protesters shouted, equating Iran’s supreme leader, Ayatollah Ali Khamenei, with Yazid, the ruler who ordered Hussein’s killing.

The day’s clashes showed an opposition movement that is becoming bolder and more direct in its challenge to Iran’s ruling authorities. Yet the protesters continued to reclaim Islamic symbols from the government, which has cast its opponents as anti-religious rioters. On Saturday, when protesters gathered outside a prayer hall where the reformist former president Muhammad Khatami was speaking, they chanted, “The family of the Imam are with us,” a reference to Ayatollah Ruhollah Khomeini, the leader of Iran’s 1979 revolution. Ayatollah Khomeini’s grandson, Hassan, is widely said to support the opposition movement.

The protests may also have received a boost from the death last week of Grand Ayatollah Ali Hossein Montazeri, a patriarch of Iran’s Islamic revolution who became a fierce critic of the country’s rulers, especially in recent months. His memorials have brought out not only the young activists and students who have dominated protests in recent months, but older and more traditional residents who revered him for reasons of faith as well as politics. Sunday was the seventh day since his death, an important marker in Shiite mourning rituals.

Amendment 29

In response to someone sending me a proposed Constitutional amendment "28" to require Congress to be subject to the same laws as everyone else (they aren't -- they are exempting themselves from the Health Care Bill), I had a lively exchange with some friends about my proposal for an Amendment 29:

Any member of Congress, or the Executive Branch, or the Judiciary, who approves or administers or enforces laws later found to be unconstitutional by the Supreme Court shall be immediately removed from office, permanently barred from any future office, and held liable for all damages suffered by the citizens of the United States as a consequence thereof, and be subject to both civil and criminal penalties.

The "lively" part was some strong objections, primarily on grounds of impracticability without philosophical change.

There's pro's and con's to the idea, for sure. As I told another friend, I agree completely that we mustn't ever have a constitutional convention at this juncture in time. The potential for abuse would be immense. You could count on pure, unfettered totalitarianism to emerge. A single amendment doesn't require a convention, but I'd also agree there is the potential for other bad amendments being introduced once someone starts the process, and that's a legitimate danger.

I'd also agree that the chances of getting an "Amendment 29" passed are zilch. I threw it out there as a purely hypothetical idea, and one I was really thinking of in some better future. As an engineer, I can't help observing that stronger feedback mechanisms would be essential even in a purely rational world. Quite honestly, it's crazy to create any system--electronic, mechanical or governmental--without appropriate feedback mechanisms, and the ones in the Constitution, better though they may have been than any other in historical terms, are pretty weak. Politicians today, with acquiescence of the courts, run roughshod over any checks and balances and principles of objective law.

I'd also agree that right now it's almost too late to implement an "Amendment 29" -- the courts, for one are so corrupted that you might not get so much mileage out of it, and it could genuinely harm your own cause if your side gets booted -- but can you imagine how much different the health care debate would have gone if every one of the Democrats and Obama himself were potentially going to be booted out of office (permanently!) if their bill was ruled unconstitutional?

What I would say in defense of the "Amendment 29" idea is that it is purely a limit on power. A brake that grants no extra authority but creates consequences for abuse of authority. For instance, you may criticize the idea on the grounds that we first require the philosophy of the country to change for the better, but consider that it has been pretty seriously flawed for the last 100 years -- if we measure from the enactment of trust-busting laws. If an "Amendment 29" had been in place all that time, I don't think we'd be anywhere in near the mess we're in now. For instance, the buffoons who created the Federal Reserve would have been booted out of office when it was first ruled unconstitutional.

Not just Teddy, but Franklin Roosevelt, too, as when he attempted to pack the Supreme Court. And many others. Legislators would have been much more inclined to seek serious legal opinions on the constitutionality of new legislation before voting for it. They would actually read bills they vote for, to be sure they wouldn't lose their jobs. What a concept. (And omnibus bills would diminish to insignificance if legislators were responsible for the entire contents of a bill.)

There are other reasons to potentially criticize the idea, but I think this would have bought us a lot of time -- I'd guess at least 50 years even in today's horrendous philosophical climate -- to achieve the deeper philosophical revolution of ideas we need in this country to cure its ills. An "Amendment 29" would not have been a panacea any more than an emergency brake on a car is a substitute for good design and good maintenance and a sober driver. But engineers tend to think in terms of self-regulating processes and designs that are less likely to fail, or at least, designs which give you more time to limp to the philosophical Philling Station for intellectual fuel, or to get a flat fixed. It's in that spirit that I suggested it.