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How exchange-traded fund GLD lets you pretend to own gold

Section: Daily Dispatches

9:21p ET Wednesday, August 31, 2011

Dear Friend of GATA and Gold:

Doug Hornig of Casey Research yesterday did a pretty good job of confirming the old doubts about the major gold exchange-traded fund, the SPDR Gold Trust's GLD, whose operations long have been questioned by GATA, most expertly by our consultant, GoldMoney founder and Free Gold Money Report publisher James Turk:

And by our former board member, Catherine Austin Fitts, and her lawyer, Carolyn Betts:

Having recently had extensive conversations with the trust's officials, Hornig writes:

"Beyond the basics, we don't know much. You will not be allowed to see the vault, whether or not you are a GLD shareholder and no matter how many shares you own. In fact, a high trust official in New York told me that even he isn't allowed inside there. ...

"Now theoretically it is true that you can convert your GLD shares to physical gold and take delivery of it. But practically, you can't. For one thing, you have to be approved to do so (generally meaning you're either a broker or a market maker), and then you have to redeem a minimum of 100,000 shares. And even if you meet those qualifications, buried in the firm's prospectus -- a very tough read, by the way, but you can get a copy at their website if you want to try your luck -- is a provision stating that they have the option of redeeming such shares in cash equivalent rather than bullion."

... Dispatch continues below ...


Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit,
Extending the Mineralization of the Southwest Vein on the Property

Company Press Release, October 27, 2010

VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include:

-- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres.

-- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres.

-- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre.

Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface.

"The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest."

For the company's full press release, please visit:

If GLD's gold was just sitting around doing nothing but backing the shares issued against it, why the need for the escape clause of cash settlement?

Thus it becomes even easier to imagine that the fabled gnomes of Zurich have nothing on the gnomes of GLD, as they scurry about an HSBC gold vault somewhere, a vault secret even from GLD's supposed managers, plugging GLD-designated gold bars (there are supposed to be nearly 1,300 tonnes of them) into the ever-growing number of holes in the Western fractional reserve gold banking system, a system in which, as CPM Group Managing Director Jeff Christian told the U.S. Commodity Futures Trading Commission at a hearing in Washington a year and a half ago, dozens of claims may be sold to any particular gold bar. Christian had candidly explained this fractional-reserve system in detail in an essay published 10 years earlier:

This is the primary mechanism of the Western financial system's gold price suppression scheme, the creation of so much imaginary gold, and its acceptance by deluded investors, as to prevent gold from signalling inflation and indeed from even keeping up with official measures of inflation, which themselves are horribly suppressed.

Hornig's conclusion about GLD is terribly polite and subtle: "None of this is to disparage GLD. For ordinary investors, the ETF represents a way to (indirectly) participate in gold 'ownership' without the hassle of actually taking physical delivery and finding a suitable place to vault your metal. Plus, there are no storage fees, bid/ask spreads, threats of theft, or dealer markups to worry about."

Yes, there are no hassles at all in pretending to own gold. And why should you have to pay anything for pretending when someone else thinks he owns your gold? Let him pay.

Hornig's report on GLD is headlined "Tracking Gold" and follows a preface by Casey Research Senior Analyst Vedran Vuk. You can find it at the Casey Research Internet site here:

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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Lewis E. Lehrman on How to Solve the U.S. Debt Problem

Lewis E. Lehrman, chairman of the Lehrman Institute, sponsor of The Gold Standard Now project, advises that to reduce the $1 1/2 trillion U.S. deficit, the Republican Party must initiate an investment program.

Working Americans are not saving, which enables the banks to lead the country into a cycle of debt, leverage, boom, panic, and bust.

Lehrman says: "Eliminating the budget deficit of a trillion and a half dollars cannot be done overnight. The proposal by U.S. Rep. Paul Ryan was very dramatic -- one Republican called it radical -- but it was not happily received. The solution, of course, is to design an American program for prosperity, because you can solve these entitlement problems with a growing economy. We need a tremendous program of investment, and investment comes from savings. When you pay savers, middle-income professionals, and working people 0 percent at the bank, you are not going to encourage them to save. Then we are left with a bank cycle of debt, leverage, boom, panic, and bust."

To read more and to sign up for The Gold Standard Now's free, noncommercial, weekly report, "Prosperity through Gold," please visit: