Wednesday, August 18, 2010

Gold, silver ETFs are price-suppression schemes, Hinde Capital report finds

Dear Friend of GATA and Gold (and Silver):

Hinde Capital in London today published a wonderful warning against investing in the gold exchange-traded fund GLD and the silver exchange-traded fund SLV, echoing and elaborating on the concerns raised about those ETFs by the report published in May by Solari Investment Advisory Services LLC, the firm founded by GATA Board of Directors member Catherine Austin Fitts. (The Solari report, "GLD and SLV: Disclosure in the Precious Metals Puzzle Palace," can be found at the Solari Internet site here:

The Hinde Capital report, "Precious Metal ETFs Alchemy: GLD -- the New CDO [Collateralized Debt Obligation] in Disguise?," asserts of the gold and silver ETFs:

"-- ETFs should not be owned by serious professional investors.

"-- ETFs offer none of the benefits of physical bullion ownership.

"-- ETFs are no cheaper than owning physical allocated bullion stored and insured in secure vaults.

"-- ETFs are not as secure as owning physical allocated bullion either via a bullion fund or an allocated bullion account.

"-- ETFs provide no returns above the bullion price, only the likelihood of tracking at a discount or potentially failing to track the bullion price at all.

"-- ETFs do not provide 24-hour liquidity, unlike the bullion market itself.

"-- It is evident that gold with multiple owners has entered into unallocated and more importantly allocated accounts. We see it as highly likely that encumbered or leased gold could thus be in ETF products."

The Hinde Capital report also notes the likely conflict of interest of the precious metal ETF custodians, HSBC and JPMorganChase, which are also the big shorts in the gold and silver market.

In essence, the Hinde Capital report concludes that the gold and silver ETFs are part of the fractional-reserve gold and silver banking schemes to suppress precious metals prices. "Every time you purchase a paper gold derivative," the Hinde Capital report concludes, "you are aiding the suppression of the gold price. Why? The proliferation of paper gold products creates the illusion of more supply than there is physical bullion, at the prevailing price."

You can find the report at the Hinde Capital Internet site here:

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