Pieces of paper that say you own gold.

Michael Snyder: People are realizing that LBMA system has little gold

Submitted by cpowell on 08:07AM ET Sunday, May 9, 2010. Section: Daily Dispatches

11a ET Sunday, May 9, 2010
Dear Friend of GATA and Gold:

Michael Snyder, editor of The Economic Collapse blog, writes this week:

"Anyone who follows the gold market knows that big financial institutions regularly work to suppress the price of gold. In fact, one industry insider recently decided to be a whistleblower and came forward with 'smoking gun' evidence of price manipulation in the precious metals markets, but the CFTC didn't do a thing about it.

"Fortunately, the overwhelming demand for gold is now pushing the price up despite efforts to suppress it.

"In addition, once it becomes apparent that most of the "gold" that is traded in the world is not backed by the actual metal itself, the price of gold will go even higher.

"For years, almost everyone has assumed that the London Bullion Market Association (LBMA), the world's largest gold market, had actual gold to back up the massive 'gold deposits' at the major LBMA banks.

"But that is just not the case.

"People are now starting to realize that there is very little actual gold in the LBMA system.

"When most people think they are buying 'gold,' what they are actually buying are just pieces of paper that say they own gold.

"Egon von Greyerz of Matterhorn Asset Management in Switzerland recently elaborated on this point. He says that 'a lot of people who have studied it closely are convinced that there is a major shortage in physical gold at LBMA. LBMA trades around 700 tons net of gold daily. That is 25 percent of world annual production and around $6 trillion annually. To back that amount of trading on a 100-percent reserve ratio basis, it would need several years' production of physical gold, which they definitively haven't got.'"

Snyder's commentary is headlined "Has Gold Become a New Reserve Currency?" and you can find it at the Economic Collapse Blog here:

http://theeconomiccollapseblog.com/archives/has-gold-become-a-new-reserv...

ALSO: Manipulation of Precious-metals Market Under Fire

http://leconomistamascherato.blogspot.com/2010/05/manipulation-of-precious-metals-market.html

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