http://www.financialsense.com/fsu/editorials/willie/2008/0416.html

THE TRAP OF EXCHANGE TRADED FUNDS

The Exchange Traded Fund concept is simple. The application is not, especially when criminal motive is executed, protected by USGovt regulators and Wall Street bankers. Any ETFund managed by a US firm or London firm should be regarded as fraudulent unless proven otherwise. To me, it is beyond disbelief, moving toward shock, that the gold community has not attacked the StreetTracks GLD fun for its fraudulent operations. They fail to comply with their own prospectus. They fail to comply with disclosure. They have successfully diverted plentiful physical demand into a fund managed by JPMorgan. Gold believers have been duped. Every day, one can read of some respected analysts who endorse this ETFund vehicle, despite its fraud. Where is the thought process? If the mafia opens up a neighborhood savings & loan after city-wide thefts, then one should harbor suspicion. The Barclays ETFund for silver, named SLV, is another fraud. Jim Turk of GoldMoney has revealed its highly questionable behavior. Both GLD and SLV have probably been using their gold and silver bullion to short gold and silver for a few years. These vehicles keep down the price of gold & silver, or at least neutralize money invested in them in terms of the metal prices. The precious metals community has been hoodwinked, still happening sadly. The gold community does a great job in researching and scrutinizing the track record, competence, and integrity of management when examining a stock for a mining firm, but not for ETFunds like GLD and SLV. Very strange and inconsistent usage of gray matter in my opinion. The Hat Trick Letter provides a special report on this controversial topic in February, with past coverage in the April 2007 report last year.

GOLDMAN SACHS & THEIR 2008 GOLD CALL

In November 2007, when gold was between 710 and 730, Goldman Sachs released a research paper that gold would endure the 2008 year marked by the gold price being flat or down. The report brought laughter to my desk. My immediate thought was that GSax had put a big long position on gold, expecting a big price upward move. In fact, in the previous few months, GSax had covered their entire short gold position on the Tokyo Commodity Exchange (TOCOM). That is about as bullish a change as possible. Yet the US press announced the GSax negative gold opinion without much minimal research. Gold promptly shot over 800 in early January, and then jetted over 1000. It is consolidating in the lower 900 levels lately. How was that GSax call after all? Not only lousy, but motivated to deceive in my opinion. GSux has a long history of such intentionally deceptive but useful calls. They are not a non-profit firm. They are never held liable for lies. They are agents for the Dept of Treasury. They are accused of front running many USGovt sanctioned market rescues ordered by the Working Group for Financial Markets (aka the Plunge Protection Team). They are above the law.

IMF & SWISS GOLD SALES

In summer 2007, the Swiss National Bank announced they would sell 250 tonnes of gold bullion. The gold community shrieked. That much supply hitting the market would surely send the gold price into a plummet. Not so! The Swiss did not sell that much. In fact, it is unclear they have that much gold to sell at all. The mere announcement was actually bullish for gold, a sign of central bank desperation. Why talk about selling if they could actually sell? In the last couple months, a similar situation has arisen. The Intl Monetary Fund has announced another huge gold bullion sale. They are under budget strain, in need to raise cash to maintain operations. The gold community shrieked! That much supply hitting the market would surely send the gold price into a plummet. Not so! The IMF was doing the European Central Bank’s bidding. Since member ECB banks have run low on available gold bullion to dump on the market, the IMF ran the story. Again, this is desperation. Since the Swiss made their announcement on gold sales, the gold price has risen over 30%. These groups see a $1500 gold price coming, and a global gold bull market gaining momentum, acceptance, and publicity. They are running scared.