8,000$ Gold? – (& Where did Fort Knox gold go?)

Gold that beautiful amazing metal,

1400 hundreds years go you could buy a lamb for slaughter for,,,,

about the same amount of gold as today,,,amazing

But,

What is the true worth of gold????? Where did the famous Fort Knox gold go? (And so many other “National” secured vaults full of gold) Did it go to those who really owned the country, by way of the fraudulent debt based paper money issued by the Federal Reserve Bank (private bankers) using fractional banking methods (like huge ponzi scheme), and did it go to those insiders, in the loop, like the Brent Woods institutions (WB & IMF), etc, to increase by systematic design their own private and corporate wealth, through interest payments, and usury by deception, at the expense of the general public and the working classes of lower and middle incomes. The last thirty years we have see the huge transfer of wealth from the middle working class to the super rich, by design of law concerning finance, business and labor, by monopoly and consolidation, by globalization,  by financialization of commodities, by tax breaks for the rich (and relative increase for middle classes),  by corporate welfare, by “structural adjustments” and by so many other schemes.

Just research the issues.

Don’t believe everything they say, but seek to confirm and verify by study.

Truth is the most precious thing, for it sets you free, and leads to salvation, if you will tread that path.

>

FYI

In my doctorate thesis in the 1990′s I had researched and wrote about how usury-interest based debt, the major aspect of the modern economic system with its fraudulent “National Bank” fractional banking system of “creating” and printing so called “money” and perpetuating the system by mortgages and personal and commercial  lending, etc,  essentially by debt bondage, and those usury-interest based “financial instruments” like bonds, junk bonds, etc,  [latter adding along the way the role of  Brent Woods institutions IMF WB etc], was leading the global economic system into massive financial collapse, all for the benefit of a super rich elite class  of bankers and government collaborators  (read fascism by definition), at the expense of the poor, working poor, and the middle class. Indeed it was a monumental claim, but backed by solid research and numerous economic and financial indicators. I clearly predicted (by many of these indicators) that the massive deception and fraud built into the interest-usury based debt system, the backbone of this global economic and financial system, is all a HUGE Anglo-USA financial asset bubble of debt instruments, and that, by all definitions, mathematics, logic and historical reality, the system will eventually collapse since it was not sustainable, like house  of cards, and line of dominoes, and a huge ponzi scheme.   The boom-bust debt and commercial cycle had to end in huge collapse when the inherent contradictions and inevitable unsustainable reaches the tipping point. This has been prophetically foretold by the Prophet Muhammad, peace and blessings be upon him and his family and followers, in many texts of scriptures of Islam, but we will here indicate one like when he said:

مَا أَحَدٌ أَكْثَرَ مِنْ الرِّبَا إِلَّا كَانَ عَاقِبَةُ أَمْرِهِ إِلَى قِلَّةٍ

There is no one that does a lot of “Riba” (usury and interest transactions, fraudulent borrowing and debt schemes etc) except that their final affair will be ruin and utter loss (i.e. including total collapse. bankruptcy, insolvency, etc). Reported by Ibn Majah (6/53) and authenticated by the scholars of Hadeeth sciences scholars (Historical Prophetic Narrations) like Sheikh al-Albani. This Muslim Ummah’s has a special trial, and one of the many forms of the trial of these times is in wealth, and following  behind this fraudulent globalinterest based debt structures, and in this also the Prophet Muhammad prophesized  in a specific warning, may the peace and blessing of Allah be upon him:

إِنَّ لِكُلِّ أُمَّةٍ فِتْنَةً وَفِتْنَةُ أُمَّتِي الْمَالُ

“For every Ummah (nation and community) there is a trial, and the trial of my Ummah is wealth.” [Reported by Tirmidhi, and authenticated by Sheikh al-Albani] Now it is really happening, with all the ugly global consequences. See some interesting news items below, for further investigation, reflection and repentance: a return to truth and justice. In the book This Time Is Different Eight Centuries of Financial Folly authors Carmen M. Reinhart and Kenneth Rogoff, meticulously looked at Eight Centuries of Financial Data, and proved conclusively that debt fueled expansions, based on usury (interest based) loans almost always end in financial ruin. As one review astutely observed: “… The common theme is that excessive debt accumulation by government, banks, corporations, or consumers often brings great risk. It makes government look like it is providing greater growth than it is, inflates housing and stock prices beyond sustainable levels, and makes banks seem more stable and profitable than they really are. Large-scale debt buildups make an economy vulnerable to crises of confidence … What did the authors learn from their data digging? Severe financial crises share three characteristics: 1) Declines in real housing prices … 2) The unemployment rate rises … 3) Government debt tends to explode … the biggest driver of this debt explosion is the collapse in tax revenues…” Sounds familiar? It should, because that’s the exact description of today’s debt crisis. Of course we know that it has its roots in the greed of the elite Bankers and Corporate leaders in collusion with the government, and that they have engineered the economy since WWII as a Brentwood’s (IMF –WB) Anglo-American petro-dollar driven economy, sustained by the great Ponzi scheme called the Federal Reserve System, and other factors. Now the roosters are coming home to roost.  As they say what goes around comes around. Just as the racism of imperial Europe came back to haunt Europe with the racism of “Aryanism” and the Nazis which imploded upon Europe with devastating results, the “Washington Consensus” and “Bilderberg ” and  “Davos” elites have set debt traps all over the third world for decades, which the elites of those counties have happily gotten themselves entrapped into by their own greed at the treacherous expense of their counties’ sovereignty and real local development for the working masses of citizens.  But now this debt trap is returning upon these elites of WC and B and D with the Greek Debt fiasco of the European Union, and with the Debt Crisis of the USA, all with devastating results upon the working masses and poor, so much devastation of the middle and working classes that the whole system is unsustainable. Is there a reason that this 30 year periods is the largest historical transfer of wealth from the middle classes and workers to the super rich, as documents and proven by many studies, starting roughly with Reagan and Thatcher trickle down thesis’s (help to make richer richer and it will trickle down to the others) and culminating in Bush tax breaks for the rich, and so many other aspects of this systemic fraud and theft made legal by the plutocracy (rule of rich) some people call democracy.         Sort of like the environment disaster: eventually there is a tipping point of pollution, over which, when tipped, the self cleaning mechanisms of the natural system begin to fail, and massive chemical changes begin to take place, and the system is eventually devastated from within. Who are the massive polluters in the system?  Sort of like the massive fish decline and who to blame: the fisherman on subsistence levels, or the corporate fishing fleets with gigantic fleets of ships and huge nets and tracking systems overfishing some species, for simple greed and disregard for the consequences on us all.     

See also > HERE

Hmm,,, and of course you are aware of the realities of the petro dollar cycle, and that many Muslims are seeking a Islamic Dinar (possibly Gold) alternative, and that one of the reasons for the proactive violent attack against Sadam Hussain in Iraq was his stated intention to avoid the dollar in transactions for oil and trade, and that Libya’s Qadyhafi also stated his intention to alternate to a Gold Dinar,  (of course these two were brutal tyrants, mainly secular and erratic,  and  whom the Muslims fought for decades) , and it should be know that Russian and China have chosen to trade with each other without dollar currency (so they say), and so much other relevant news, to be explored in preliminary manner, and below are just some tidbits and pieces of the grand puzzle ,,,,

<><><>

 

some say it could reach up to 20,000 dollars an ounce  in the coming correction, and search that one also,,, but that’s for later … got to check some new information out so I can post some more useful information … merely for study of course … no action (ahem) … since that might (gasp) mean some change in directions in life (and death) and salvation.

BTW,

$20,000 Gold?

27OCT
3 Votes

 

 

Mike Maloney is the author of the world’s best selling book on precious metals investing. Since 2003 he’s advocated gold and silver as the ultimate means of protecting wealth from the games played by our governments and banking sector. In the video presentation (below) he lays down his ‘most likely’ scenario for the global economy over the next decade, including short term deflation, followed by big or even hyperinflation. He defines inflation/deflation, the difference between currency and money, price vs value, ‘Wealth Cycles’, gold and silver accounting for the expansion of fiat currency, gold and silver supply and demand, the differences between the today’s bull market and that of the 1970s, The Debt Collapse, and more.

No one can know for a fact, how high (or low) the price of gold will be at some time in the future.  Mr. Maloney’s prediction of $20,000 gold may or may not take place.   Nevertheless, Mr. Maloney makes a very common sense, easily understood presentation of fundamentals about gold and silver and presents a very rational basis for his predictions.   Gold might not be going to $20,000 an ounce.  Maybe it’s only going to $5,000 . . . or maybe it’s going to $30,000/ounce.  But Mr. Maloney’s presentation makes a powerful argument that gold is inevitably going significantly higher and can be expected to rise by at least 100% and could rise by 1,000%.   His presentation is a primer for anyone trying to understand our modern monetary system and the rationale for investing in precious metals.  Although this presentation is about a year old, it’s a great presentation.

video    01:29:27

http://www.youtube.com/watch?feature=player_embedded&v=tj2s6vzErqY#!

 

<><><>

Above is a representation of 100 million dollars stacked in 100$ bills

Above is a representation of one trillion dollars stacked in 100$ bills

(see the little man on the right) 

Above a real picture of 207 million dollars horded What is true wealth?

<><><>

<>

Gold bars are seen in Fort Knox, Ky., in this 1979 photo. (AP Photo)

<>

Some other images

<>

<>

<>

HERE IS A PHOTOGRAPH OF THE INTERIOR OF THE VAULT ROOM AT THE FEDERAL RESERVE BANK OF NEW YORK. THE VAULT ROOM SERVES AS THE INTERNATIONAL DEPOSITORY FOR THE INTERNATIONAL MONITARY FUND. IT IS BUILT UPON THE BEDROCK OF MANHATTAN ISLAND EIGHTY FEET BELOW STREET LEVEL (FIFTY FEET BELOW OCEAN LEVEL). THIS AMOUNT OF GOLD REPRESENTS 30% OF ALL MONITARY GOLD ON EARTH AND 5% OF ALL GOLD MINED IN HISTORY. THAT IS A LOT OF GOLD. WHY IS IT HERE IF IT IS NOT MONEY?

 <>

Some News

>

Nigel Farage – Where is Europe’s Gold?

With world markets still in turmoil and gold and silver reasserting themselves once again, today King World News interviewed former LBMA commodities broker and trader and current MEP Nigel Farage to get his take on the situation.  When asked if there is a chance Europe is headed into a depression, Farage responded, “Well I think there is and of course it was banking collapses back in 1931 that really led to things being bad.  Now we’ve lumbered ourselves with a European social market model for our labor forces, which leaves us hopelessly uncompetitive with the Far East.  Countries like Italy, I mean their industrial production, their foreign and direct investment has collapsed in the last five years.  You ask yourself, ‘If the banks go bust, what on earth is going to be left in some of these countries?’”

Nigel Farage continues:

“I’m beginning to feel there is a certain inevitability (to a depression) now.  The crisis that has been created by all of these mistakes is now bigger than governments themselves.  If we get the kind of banking collapses that I now believe are possible, we could be heading into something that we haven’t seen in over 70 years.  A Great Depression is not impossible.

It’s just a real mess and there is total confusion, fear, total paralysis actually and know one knows what’s really going on.  Six weeks ago the British Prime Minister, David Cameron, said, ‘We have six weeks to save the European economy and possibly the global economy too.’

The deadline was the Cannes Summit, which has come and gone last weekend.  You could tell from the European leaders leaving that Summit, their faces like thunder, that nothing had been agreed.

(President) Obama’s face was an absolute picture at the press conference when he described his own incomprehension at actually who was in charge in Europe.  And of course he’s absolutely right because we have a European Commission, headed up by Mr. Barroso, we have a European Council, headed up by Herman van Rumpoy and we have a Eurozone Group….

Continue reading the Nigel Farage interview below…

“I mean who is actually in charge of this?  This incredible bureaucratic structure of unelected people and the buck doesn’t stop with anybody.  So we now face the real doom scenario for the euro that if the Italian government can’t finance its debts, where on earth are two or three trillion euros going to come from to bail out Italy?

So it looks to me, and I’ve been saying this for some time on your program, that I always felt this thing would fail.  But I think we are very much nearer to the failure being really huge and possibly very dramatic indeed.”

When asked about leaders in countries inside of Europe beginning to question their various central banks because they are worried about the whereabouts of their gold, Farage responded, “Huge ruse as you say.  Big suspicion in Germany as to where the gold is.  The Greeks, of course, have demanded that the Germans give back their gold that they believe was taken from them in World War II.

And of course the British government, where Gordon Brown famously sold most of our gold reserves at $284 an ounce.  So gold is not just a big play in the financial markets, it’s a big play in the whole debate in the architecture of the current Eurozone woes.”

When asked if he believed European central banks had leased out most of their gold, Farage responded, “I just don’t know the answer to that question.  But if I look at just how poorly the central banks had performed over the last decade or so, frankly nothing would surprise me.  There seems to be almost no limit to the stupidity of these people.”

The incredible KWN interview with Nigel Farage is available now and you can listen to it by CLICKING HERE.

© 2011 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

>

>

By Anthony Mirhaydari, MSN Money

Updated: 4/21/2011 6:35 PM ET

>

Monday, April 18, 2011

Gold and Silver Surge as Standard and Poor’s Downgrades U.S. Outlook to Negative

Dees Illustration

Activist PostGold is approaching $1,500 an ounce this morning as it hits a new record, while silver surpasses $43, as fiscal pressures weigh on U.S. markets.  The Dow has fallen almost 200 points in early trading. S&P maintained the AAA rating of the United States, but cited the continued unresolved budget deficits as the reason for its statement that there is a one-in-three chance that it would lower its rating on the U.S. within two years “Because the U.S. has, relative to its ‘AAA’ peers, what we consider to be very large budget deficits and rising government indebtedness and the path to addressing these is not clear to us, we have revised our outlook on the long-term rating to negative from stable,” the agency said in a statement.

This announcement will put further pressure on the dollar, and will most likely give weight to discussions held by George Soros and crew at Bretton Woods II about managing the global economy in the face of a U.S. dollar collapse.
Sources for this story:
Related Articles:

>

Richard Russell – The Great Gold Tsunami Lies Ahead

With gold and silver continuing on their historic run, the Godfather of newsletter writers Richard Russell had this to say in his latest commentary, “Gold — The desperate battle to keep gold below 1500 continues. I watched the erratic action of gold near yesterday’s close. I’m fascinated to see whether June gold can close above 1500 or whether the anti-gold contingent can manage to knock gold down (again) below 1500. The action is now so blatant that it literally screams of manipulation. At its high yesterday, June gold sold at 1506.50. At yesterday’s close, June gold was trading at 1498.10. It’s almost embarrassing to watch the action. What we’re seeing is the anti-gold crowd and the manipulators vs. the great primary trend of gold.”
April 22, 2011
&lt;/frame&gt;
KWN Blog</p><br /><br />
<p>Archives” usemap=”#map9″ /><br />
<map id= ../../../Archive.html ../../../Archive.html ../../../Archive.html ../../../Archive.html ../../../Archive.html ../../../Archive.html ../../../Archive.html

shapeimage_22_link_0shapeimage_22_link_1shapeimage_22_link_2shapeimage_22_link_3shapeimage_22_link_4shapeimage_22_link_5

To go to KWN “RSS Subscription” page CLICK HERE
../../../KWN_DailyWeb.html ../../../KWN_DailyWeb.html

shapeimage_23_link_0

Russell continues: “I’ve tried to emphasize this, but the key here is PURCHASING POWER. When the dollar price of a loaf of bread rises from $1.90 to $2.10 that means something to the average American. But when the Dollar Index drops from 75 to 73.97 the average American doesn’t understand it and isn’t the least bit interested. Why the battle to keep gold below 1500? Markets tend to stop at big even numbers. Many of us old timers remember the battle of “Dow one thousand.” We remember how the Dow fought month after month to close decisively above 1,000. Then, once above 1,000 the Dow was on its way to 2,000, 3,000, 4,000 and finally 5,000. From there the Dow battled to move above 5,000 — on its way to 10,000. The battle about gold closing above 1500 is that once above 1500, technically gold will be on its way to 2,000. And from there 5,000 will be the target. So 1500 is a psychological barrier that, from the bull’s standpoint, must be bettered. But from the anti-gold crowd’s standpoint, gold must be held (on a closing basis) below 1500. The answer: As I see it, the primary trend of gold remains bullish. In due time, gold will gather the strength to close above 1500. The gold-bears will be defeated. It’s only a matter of time. The Coming Gold Tsunami — We’re moving nearer and nearer to the edge of the hurricane. I can feel it in my bones. Every newspaper now carries an ad for gold. Is there a gold bubble? Are you kidding me? Here’s an ad that somebody paid for suggesting that people should turn in their gold (!!) for Federal Reserve Notes. They’re not telling you to buy gold during one of the greatest bull markets in history — hardly, they’re asking you to throw parties in which the object is to get ignorant people to SELL their gold. I can feel them caressing my face — the early breezes. They are blowing gently and hinting of the forthcoming gold hurricane that will sweep across the US and the planet with all the force and power that was seen when gold was first discovered at Sutter’s Creek during the California gold rush of 1849. The gold rush of the 2000s is in the wings. The old phrase is ringing in my ears again (I haven’t heard it since the late ’70s), “There’s no fever like gold fever.” If the temperature of full gold fever is a hot 106, we’re only at 99 now, but I can feel it, I can tell you that the temperature is rising. The panic to buy gold will override everything else. It will be one of the greatest financial phenomena that most of today’s investors will ever see. It will blot out everything else like a cloud blotting out the sun. After the calm, comes the storm. We’ve been watching ten years of gold climbing amid an atmosphere of calm. The great gold tsunami lies ahead. It will be historic.” Many years ago when I used to write, Richard Russell would publish my work quite a bit.  One time when he published a piece I had written he referred to me as Eric “The King.”  That may have been flattering at the time but in reality there is only one “King” of financial writers and it is Richard Russell. In the twilight of his career this old timer once again pulled a rabbit out of his hat by nailing this secular bull market in gold in the early stages.  He’s kept his subscribers long while many others have been bucked off of this golden bull.  I guess maybe Russell learned a thing or two over more than half a century of writing about the markets.  Russell is correct, when this gold bull finally crescendos it will be one for the history books. To subscribe to Richard Russell’s Dow Theory Letters CLICK HERE. Eric King KingWorldNews.com To return to BLOG click here.>

Ron Paul: Dollar Collapse Will Bring Down U.S. Empire

125 Responses By RonPaul.com on February 8, 2011 Ron Paul exposes the Fed’s destructive monetary policy and talks about Wednesday’s hearing entitled “Can Monetary Policy Really Create Jobs?” (Tune in to CNBC at 10 am EST to watch the hearing) Date: 02/08/2011

Transcript

Larry Kudlow: At the top of this half hour, we have an exclusive interview with the House Monetary Chairman, Ron Paul, he’s a Republican from Texas, on the eve of his first sub-committee hearing. Can he put an end to the economic damage from Ben Bernanke’s inflationary policies? Now, today, Richmond Fed President Jeffrey Lacker, said the economy is growing at 4%, and therefore, Mr. Lacker says, it’s time to review and re-evaluate QE2. And he was joined by Dallas Fed President Richard Fisher, who had a similar point of view. Meanwhile, House Budget Chair Paul Ryan blasted Bernanke today, saying the Fed’s missing inflation and ought to raise interest rates. Here’s what he said on CNBC this morning.

Paul Ryan: My fear is they’re going to try to mop up all this excess money after the cow is out of the barn, after the inflation expectations have been formed. Credibility and perception is everything when it comes to monetary policy, and my fear is sound money is secondary toward short term employment growth.

Larry Kudlow: Alright, let’s bring in our very special guest for an exclusive interview. We have Congressman Ron Paul, Republican from Texas, who now chairs the House Financial Services sub-committee which oversees the Fed. Mr. Paul, as always, thank you for coming back on the show, sir. Ron Paul: Thank you. Larry Kudlow: Alright, let me just ask you. You heard what Paul Ryan said, you know what the two Fed guys, Lacker and Fisher, said today. Is the thrust of your hearing tomorrow going to be to try to jawbone QE2 down? Do you yourself think it’s time to stop QE2? Where would you like to go in tomorrow’s hearing? Ron Paul: Well, tomorrow is to bring to light the relationship of monetary policy and unemployment. But I’m sure the subject about QE2 will come up and the mandate to maintain high employment. But I was never for QE2, I’m not for the Fed, I’m not for fixing interest rates. So Paul Ryan said a lot of what I agree with, but he said the Fed should raise interest rates. Well, I want the Fed to butt out and I want the market to set interest rates. That would raise interest rates, you know, they’re artificially low, and that’s where the real problem comes from. So I’m for less interference in the marketplace, I know you speak highly of the free market, but I like the free market in money as well, I like interest rates to give us the right signal so we know what to do: whether we should save, borrow, spend, invest, or whatever. But when you interfere with the interest rates – which is the job of the Fed, that’s all they do, is interfere with monetary policy by interfering with the interest rates – and I think that’s the source of so much of our trouble. Larry Kudlow: So having said all that, the thrust of your hearing tomorrow is not really at QE2; you say that will come in, but you’re really looking at relationships between inflation and unemployment. Ron Paul: The relationship of monetary policy and unemployment, because unemployment is the big deal. One Fed member today said that “the growth is there at 4%, we better turn the machine off.” And yet the unemployment rate is disastrous for those who are unemployed. We have so much unemployment and it’s so undercounted. You know, the free market economists report that there is probably 22% of unemployment. So that’s where the depression is, they can pump some numbers and Wall Street does a little bit better and there’s a little bit of growth. I mean, they should, they pumped in $4 trillion, they should have had a lot of jobs. But, you know, a few jobs are coming back. But how much did it cost us? And We haven’t even see the after effects, and that of course, is the price inflation that will come. And I think we’re certainly seeing signs of that in the commodities and, of course, I think the bond market’s getting pretty risky. The bond prices have been in a bubble, and it’s been going on for 30 years, and I think we’re moving into another 30 year period where you’re going to see a reversal of interest rates and we’re going to see a crashing of the bonds like it did 30 years ago, and it lasted for a long, long time. Larry Kudlow: With all that in mind, is the Fed policy a failure? Ron Paul: Oh, absolutely. I mean, they brought to the bubble, and they give us the recession and the corrections. But you know, they’ve gotten away with this for a good while. They’ve been running the show, we’ve had a total fiat currency since 1971. And they’ve gotten all the credit for the boom times when the business cycle is doing well. But then a recession would come and they would tinker with the interest rates and they would lower interest rates and they would get all the credit for getting us out of it. But you know, that runs out of steam. Eventually the bubble gets too big, it bursts for other reasons, and the malinvestment is so great, and the debt is so out of this world, that they can’t bring it about. And that’s where we are today, and this is why they’re giving a lot more attention to the Fed, and rightfully so. And I encourage that because I put them at the seat of responsibility. They’ve been involved, they don’t deserve credit for the good times, they deserve the blame for the inflation when we have it, and they deserve a lot of the blame for the unemployment. They’re other factors involved in unemployment, like taxes and regulations and things like that. But, when you have a recession, you have to expect unemployment. Larry Kudlow: Mr. Paul, how much damage to the incipient economic recovery – it’s slow based, nobody is happy with it, it’s not creating jobs despite what the Fed says. How much damage will the Fed’s QE2 and their bond buying and their money creating – how much damage, how much harm will the Fed do to what’s left of this recovery? Ron Paul: I think it’s almost unimaginable. I think it can be so devastating, it could bring a strong worldwide run on the dollar. And that would be devastating because we do have the reserve currency of the world. So I think we’re in uncharted territories. These recessions off and on for the past 30, 40 years, they’re going to be minimal compared to the conditions that have been created by the world fiat system, principally run by our Federal Reserve. So it’s not a domestic affair, it’s not a U.S. affair, this is a worldwide affair. And I think that we’re in for very, very devastating changes. I think we will see changes in our economy and our country almost equivalent to the change that occurred with the Soviet system. I think it will bring down our empire, we’re going to have to reassess things, we won’t be able to afford our welfare state, and we won’t be able to afford taking care of the world, too. And we’re essentially expected to do that. If there’s a bankruptcy in Greece or some other country, we’re expected to go rescue them. The states; they expect the Fed to rescue them. And we’re supposed to be there to rescue everything. And when we say, “We’re going to rescue them”, it’s always the dollar. All the weight is put on the dollar. It is the Congress that’s spending money, but it depends on the Fed to monetize that to keep interest rates low so they don’t turn off our so-called recovery. Larry Kudlow: But Ben Bernanke said that he’s 100% certain that his policy would succeed. Now, some people believe his policies will not only not succeed, but they’re going to actually drive up the unemployment rate and drive down the economy. Is that your point of view? You disagree with Bernanke 100% succeeding? Ron Paul: Yeah, and I sort of hope I’m wrong and that maybe he could be right just because I don’t like to see the pain and the suffering coming. But if he accomplishes that, he’s repealed so many economic laws, it will be absolutely baffling. And one time when Greenspan was before the committee and we were discussing a similar set of events like this, I said, “If you can do that, you’ve literally repealed economic laws. If you can make this fiat system work as if it’s the marketplace working, giving us the right information”. No, he can’t do it, it’s delusional to think that one person could know what the money supply should be and what interest rates should be and you can do total central economic planning through monetary policy. It’s positively baffling that we as a country who brag about the free enterprise system, have accepted the fact that one individual basically can control the economy through that one issue. Because when you control the money you control every single transaction because money is one-half of every transaction. So you’re interfering with everything. And this is why we have gotten to this point. We have deceived the people in Congress and the people, we make all these promises, and now nobody can turn the switch off. We can’t turn off the switch because we’re addicted to it and we need a lot of people to go into rehab in order to get our addictions under control. Larry Kudlow: So, to protect the economy, to protect people in the economy, to protect their purchasing power, at the end of the day, would it just be better to re-link the dollar to gold? Ron Paul: Well, in some sort, of course, the shifting of gears is not easy. We did it one time after the Civil War period when we had the Resumption Act of 1875 and we were off the gold standard for 15 years. But the conditions were different, we didn’t have a welfare state, we weren’t running the world, and people believed in the government when they told them what they would do. Today you can’t have a Resumption Act, but you could legalize competition. Now they put you in jail if you want to opt out of the system. You know, if you opt out of medical care, you can be in trouble there. But if you opt out of the monetary system, say I want to use such-and-such as my currency because it’s gold and silver, you can get into big trouble. You need to legalize competition. You’re familiar with Hayek, Hayek advised competing currencies. So I don’t think I know the perfect answer, but I know what history shows and I know what the market probably would pick. But I’d like to just get the monopoly power away from this cartel that pretends that they know how to run the entire economy. Larry Kudlow: Just a last one, Congressman. Why isn’t a representative of the Fed coming to your hearing? I take it Bernanke is testifying before the House Budget Committee, but that’s not until Thursday, if I’m not mistaken. Why aren’t they showing up for your hearing? Ron Paul: Well, one thing is I knew Bernanke won’t come, he will not come to my sub-committees because they say the Federal Reserve Board Chairman and Secretary of Treasury always go to the full committee. And he will come to the full committee at the beginning of March, and that will be sort of under my sub-committee, but it’s presented to the full committee. I didn’t specifically invite somebody from the Fed because I wanted to lay the groundwork because we have two Austrian economists and one Keynesian. The Keynesian will present the view on why you need to spend more money and run up debt and print more money. And I have two individuals that are going to set the stage and say, “That is precisely the wrong thing to do”. We set that as a stage for future hearings. Larry Kudlow: Alright, I hear you, sir. Thank you ever so much, Congressman Ron Paul. Good luck in the hearings tomorrow. Ron Paul: Thanks a lot.

>

Here is our gold, Stolen by the FED

Submitted by HotRodHawkinson Thu, 09/25/2008 – 10:08

in
0 votes

“Just a few blocks away from all the turmoil and panic of the stock market sits the world’s largest stockpile of gold. There are roughly 540,000 gold bars belonging to 48 foreign countries and 12 international organizations in the Federal Reserve’s subterranean gold vault. Nearly $200 billion worth of gold rests on bedrock five stories underground, 30 feet below the city’s subway system, inside the Federal Reserve Bank of New York’s vault. ” WTF? The worlds largest gold stockpile is valued at merely $200 Billion? Even worse, supposedly it belongs foreign countries held by the federal reserve!!! What the hell happened to the gold at Fort Knox? This article leasd me to believe that Fort Knox has LESS THAN $200 Billion in reserves…. And they want to spend $700 Billion on the bailout???? *special thanks to celeste for providing the link to this article. http://abcnews.go.com/Business/story?id=5835433&page=1

>

Welcome to the World’s Largest Gold Vault

Just a Few Blocks From the Bustle of Wall Street Sits $200 Billion in Gold

64 comments
Reporter’s Notebook By SCOTT MAYEROWITZ ABC NEWS Business Unit
Sept. 19, 2008
Font Size:

Share:

EmailTwitterFacebook

FarkTechnoratiGoogleLiveMy SpaceNewsvineRedditDeliciousMixx
Yahoo

NEW YORK — Gold. It’s one of the oldest and most prized possessions we have. Egyptian pharaohs were buried with it, the Romans traded it and gold is even mentioned as a gift in the Bible.

gold

Courtesy Federal Reserve
There are roughly 540,000 gold bars belonging to 48 foreign countries and 12 international organizations in the Federal Reserve’s subterranean gold vault.

As stocks plummet and many realize they don’t understand how their money is invested, some on Wall Street are turning to gold as a haven. Who can blame them? Gold is something you can see, hold and fully understand. In the last two days, the price of gold shot up $110 to $892.70 an ounce. Just a few blocks away from all the turmoil and panic of the stock market sits the world’s largest stockpile of gold. Deep under the streets of Manhattan sits more gold than “James Bond” villain Goldfinger could ever imagine. And I recently got a private tour inside the little-known vault. Nearly $200 billion worth of gold rests on bedrock five stories underground, 30 feet below the city’s subway system, inside the Federal Reserve Bank of New York’s vault. That’s more than can be found in Fort Knox. Very little of it belongs to the U.S. government. There are roughly 540,000 gold bars belonging to 48 foreign central banks and 12 international organizations such as The International Monetary Fund or The Bank for International Settlement. The United States has about 5 percent of its gold stored there. Fed officials were very tight-lipped about who owns what gold. Accounts are just identified by number, not name. The Fed stores the gold for free but depositors pay $1.75 for each bar that is moved. This vault contains about 25 percent of the world’s gold reserves. That’s more gold that the entire annual economy of the United Arab Emirates — home to Dubai and Abu Dhabi. The majority of gold came to the Fed after World War II as countries sought a safe place to keep their wealth. New York’s rise as one of the world’s financial capitals also makes it convenient for countries that want to sell their holdings.

Welcome to the World’s Largest Gold Vault

Just a Few Blocks From the Bustle of Wall Street Sits $200 Billion in Gold

Font Size:

Share:

EmailTwitterFacebook

FarkTechnoratiGoogleLiveMy SpaceNewsvineRedditDeliciousMixx
Yahoo
gold

Courtesy Federal Reserve
There is only one way in or out of the gold vault is through a narrow, 10-foot passageway cut into a 90-ton steel cylinder that sits within a giant steel-and-concrete frame.

An Urban Fortress

From the distance, the Fed’s New York building looks half like any other office tower in the financial district and half like a medieval fortress. Windows on the bottom three floors are covered by large, imposing iron bars. Up high is a circular tower. You almost expect to see a knight standing sentry. Instead, armed guards from the Fed’s security force circle the surrounding blocks with large, imposing automatic weapons. Once inside the building — there was a thorough security check — I was told that taking pictures is strictly prohibited. A sign in the lobby warns: “All cameras must be checked. If pictures are taken, the film will be confiscated.” The Fed even forced me to leave a reporter’s notebook and briefcase outside the vault. What was I going to do, sneak off with a bar or two? Maybe draw a map and then come back late at night and rob the place? But forget all the guns, cameras and thick walls. The real security is the vault. The gold vault — about half the size of a football field — was built and lowered into New York’s bedrock in 1921 before the building was completed in 1924. Solid rock surrounds it on all sides. There is only one way in or out — through a narrow, 10-foot passageway cut into a 90-ton steel cylinder that sits within a giant steel-and-concrete frame. The cylinder can actually be lowered three-eighths of an inch to create an airtight and watertight seal. Large bolts then get inserted into the cylinder, locking it into place. Timers prevent it from being opened again until the next business day. Sounds like the most modern and sophisticated system, right? Not really. This low-tech system actually dates back to the vault’s creation and works through power and computer outages. The Federal Reserve’s armed guards even have their own firing range on site to practice. Nobody has ever tried to rob the vault, although the third “Die Hard” movie was based around a massive robbery of it. Besides all the security, robbing the place would be a logistical nightmare. Each bar weighs 28 pounds, but because of the density of the bars, they feel closer to 45 pounds. Workers must wear special metal covers over their shoes in case a bar falls on their feet. In one corner of the vault, the concrete floor is dented where some gold bars were once dropped. When some workers passed by me, moving a couple million dollars’ worth of bars, I made sure to stand back. I like my toes. Not everything at the vault is super secret. In fact, 180 tourists a day are led through the vault on free guided tours. You have to listen to a speech about monetary policy but then you get to see the gold. But book far in advance, the tours are almost always at capacity. And unfortunately, you don’t get to take a little bit of gold home with you.

<>

<><><>

About Fort Knox Gold

Doc 100.0.5.2……….10 of 37… About Fort Knox Gold:       http://www.fgmr.com/right2know.htm In the 1970’s a very courageous gentleman named Edward Durrell claimed that substantially all of the US Gold Reserve being stored at Ft. Knox was gone. Only 1,000 tonnes or so of the 8,500 tonnes supposedly being stored there remained. The rest had been secretly taken from Ft. Knox and shipped to London in 1967 and early 1968 for sale by President Johnson in an ill-fated attempt to keep the price of Gold at $35 per ounce. http://hardtruth.topcities.com/nelsonrockefellerandfortknoxscandel.htm First, about Fort Knox. You know, the Fort Knox Gold Scandal is just like the Watergate Scandal in one respect: There is a desperate cover-up going on right now just as happened with Watergate. The Fort Knox Gold Scandal cover-up really passed the point of no return last September when the United States Treasury perpetrated the Fort Knox gold inspection hoax in an attempt to discredit my charges that there’s no gold in Fort Knox because it had all been illegally removed. Since that time the Government has been getting in deeper and deeper and deeper, involving more and more people in all sorts of maneuvers to try to keep the lid on. For example, when the Congressmen and newsmen visited Fort Knox last September, news stories promised everybody that the visit would be followed up by an audit of the Fort Knox gold by the General Accounting Office, but what they actually did was just a very superficial exercise just to make the record look good, and the group of 15 men that did it had only two (2) General Accounting Office representatives on it. All the rest were from the Treasury itself–in other words, the fox went into the henhouse to count our chickens for us. http://www.skolnicksreport.com/hoodwink.html It may come as a shock to some, but the U.S. has very little so-called “U.S. government” gold bullion in Fort Knox. A brave outspoken journalist, Tom Valentine, in the 1970s, exposed as a fraud that there was world-trade-quality gold at Fort Knox. All they have left are poor quality, orangish-looking, melted down coin metal from the seizure in 1934, of gold coins from America’s common people. [The American aristocracy, warned in advance, shipped THEIR gold out of the U.S.] The U.S. governmentt gold is gone. Why? Because it was shipped, under the supervision of a ply-able U.S. General, to the private central octopus called the Bank of England, in 1968, to stem a run on that bank which had somehow lost all their own gold.] http://www.freedomdomain.com/News/nnorfed.html The organization chaired by Alan Greenspan is a coalition of  private international banks, that does not answer to the United States Government. And there is  no precious metal warehoused in Fort Knox or elsewhere that backs the money that they issue. http://www.anomalous-images.com/text/NAZNWO08.TXT Large shipment of gold leaves Fort Knox, public doesn’t know that their national gold ‘reserves’ are being secretly depleted by one-world national socialist agents working in U.S. government. Gold at Fort Knox replaced with gold-plated lead bars, making it the biggest heist in history.  Rockefellers involved.  James MacDonald becomes critical of Air Force and the CIA. http://hardtruth.topcities.com/treason_new_world_order.htm Throughout the 20th century this movement toward a one world government has been marching on. This is not new or recent. In his book Critical Path Buckminster Fuller gives a very impressive sweep of the 20th century, about the large corporations and their agents and the lawyers who basically control the country far more than the people understand. He talked about how all the gold was removed from Fort Knox by the 1960’s. Where did it go? It went to the banks. They own the country. Fuller called the CIA, “capitalism’s invisible army.” We have a Constitution and our Bill of Rights (the first 10 amendments) that makes us free.  Right?  Then visit: http://www.trimonline.org http://www.getusout.org http://www.thenewameri can.com   http://www.givemeliberty.org http://www.jbs.org Http://www.getawarrant.com Then take a look at these sites:       http://www.dixierising.com http://www.dixienet.org http://www.palmetto.org http://www.southerncaucus.org http://www.spofga.org http://www.southern-style.com http://www.nca.mybravenet.com {    Only Notes 1 & 2 are duplicates of previous messages text.  All text preceding these notes is new.    } NOTE # 1: This is the TENTH doc in a string of about 37 regarding the Income Tax, How it was illegally forced upon us, the collusion of various nation banks, including The Bank of England, the Banks of Europe, the Banks of the USA that make up the Non-Government organization known as the Fed and the bankers themselves dedicated to making this a Socialist Nation. As David Rockefeller reportedly said in 1973 when he and others formed the Trilateral Commission, “We will have this a Socialist Nation by the end of the year 2000.”  Well, with the help of our past Communist President, he damned well nearly did it.  If Comrade Gore had been elected, it would be now! The last doc in this series is a plan that was presented to President Bush when he visited Florida recently.  It was put directly into his hands.  He has not acted upon it. We The People must initiate a campaign of letters, faxes, e-mails, and phone calls to him and others in our otherwise corrupt government letting them know of our displeasure.  For God and Country, Chet. NOTE # 2:  [  Should you wish to be removed from my mailing list, please send a message with the word remove in the subject line.  If you got this from a mail list, such as xxxxxx@xxxxxgroups.com or something like that, then it is up to the moderator or owner of the list to remove my access based upon complaints of my material, abuse, or removal of your access if you request it. ]         Should you wish a copy of a numbered message (this is the 10th one)   that you may have missed, please e-mail me off net for a copy of it and I will be very happy to provide it. Chet. You may forward this to every member of Congress by using a Mail Blaster application available on the Internet as follows: Step 1.  Access your web browser.   Step 2.  Type in the search block: http://www.mailblasterdot.com Step 3.  Click on   Send Batch E-Mail which is on the left end of the screen. Step 4.  Type in your E-mail Address.   Step 5.  Click on Subject: Type in the subject of your document. Step 6.  Click on Message: Now here you can type in your message or you can paste a previously copied file here.  You can also edit your message after you finish with the message and before sending it. Step 7.  Then click on   select a file.  Here you may click on: demhouse.txt (Socialist Democrat House Members) or, democsen.txt (Socialist Democrats Senate Members) or, newsorg.txt (Many of the “anchor” news folks have their email address here for you to use) or, rephouse.txt (Republican House of Representatives Members) or, repubsen.txt (Republican Senate Members) or, senators.txt (All Senators). Step 8.  After selecting the group to receive your message then click on send batch. It will go to everyone listed in the batch. Remember: Nothing beats a letter AND a phone call. A Forwarded by: Chester L McWhorter Sr, c/o 504 N. Brighton Rd, Lecanto, Occupied Florida. 34461. Ph: 352-344-9073. Fax: Same. E-mail: robertthebruce@naturecoast.net 10 of 37………100.0.5.2   End. Quote:  We are on the verge of a global transformation.  All we [ the CFR ] need is the right major crisis and the nation[s] will accept the New World Order.  End Quote.  David Rockefeller: Founder and Honorary Chairman, Council of the Americas; Chairman, Americas Society; Founder, Forum of the Americas; Chairman, Emeritus, Council on Foreign Relations [CFR]; Founder and Honorary Chairman, Trilateral Commission [TC]; Chairman, The Bilderbergs.  [ How does the 11 Sept 2001 attack upon our country figure into this?  CLMsr ] Part 11

<><><>

Davos Debt & Denial

In an age of illusion, the guise of truth is often heresy By Darryl Schoon February 15, 2009 “Financial Sense” — -The gathering of the world’s economic elites in Davos, Switzerland is a reflection of the reigning power dynamic of the modern world. Officially titled, the World Economic Forum, Davos is sponsored by the world’s most powerful and wealthy corporations and presents itself as a “not-for-profit” entity. However, if you believe the annual gathering in Davos is not-for-profit, you probably also believe that JFK died of natural causes while sightseeing in Dallas. Those who attend Davos—the Davo’tees of Mammon—are the winners in the game of capitalism, a game based on debt controlled by bankers through their issuance of credit. Investment bankers by virtue of their privileged position at the spigots of credit haveover the years garnered for themselves a disproportionate slice of the world’s wealth. The best description of their wealth is from a banker himself, Sir Josiah Stamp, at the time in1927 the 2nd richest man in England and former head of The Bank of England: Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create money. The fact that in 2008 bankers became victims in the game they created has profound implications for capitalism itself. Capitalism, which began in 1694 with the issuance of debt-based money from The Bank of England, has now over three hundred years later reached its last and final stage. Capitalism is not ending because those enslaved by bankers revolted. Capitalism is ending because the bankers’ insatiable greed destroyed the mechanism by which bankers indebt others. The sad truth is that those enslaved by debt still wish to remain the slaves of bankers and pay the cost of [their] own slavery [and] let them [the bankers] continue to create money. Although debtors fervently hope the bankers’ system of debt will continue, they will not have a say in the matter. Neither will the bankers. Davos will never again be the same. DAVOS & THE LAST GASP OF CAPITALISM The World Economic Forum in Davos was founded in 1971, the same year in which all currencies became fiat, sic not backed by gold or silver. Perhaps this is coincidence. Perhaps not. Nonetheless, Davos will be always associated with the end of capitalism where the charade of the banker’s paper money was revealed to be what it was, a confidence game where in the end everyone would lose everything—including the bankers. The charade/con-game actually began in 1694 when the Bank of England was granted the right to issue England’s coinage in the form of paper money. This paper money was declared to be as good as gold or silver coins. Of course, it wasn’t; but in the beginning it was much better than it was to be later. Previous to 1694 the bankers were known as goldsmiths who profited by charging interest on the loaning of gold and silver coins. After 1694, the goldsmiths, now called bankers, profited by charging interest on the loaning of paper money, and thus the true alchemy of modern finance was born. The substitution of paper “money” for gold and the charging of interest on such “money” is the secret of the banker’s wealth. It is also the secret of capitalism as it is the process whereby bankers’ indebt others (businesses, consumers, governments, etc.) through the loaning of paper “money” created by central banks resulting in paper IOUs, IOUs which are then resold as investments to savers, savers being all who need to protect the value of their paper “money” from eroding because of the constant inflation of the paper money supply by bankers. That such a system has lasted over three hundred years is extraordinary; but it was not until the 20th century when the linkage between paper money and gold began to fail that the problems inherent in paper money systems became more apparent. England, the major recipient and beneficiary of the banker’s paper money for the previous two hundred years, had been very careful to maintain the fiction that paper money was as good as gold or silver. But in the next century, the 20th, the US the surrogate successor to England, was to be far less considerate of the considerable and questionable “gift” bequeathed to it by England’s bankers. In 1933, the US government by executive order confiscated the gold of all Americans thus ending the belief that paper money was interchangeable with gold and silver and was therefore a trustworthy medium of exchange. This confiscation of gold by the US was to be later repeated on an international level. But instead of only forcing Americans to abandon gold as it had in 1933, in 1971 the US would force the entire world to do so. CONFIDENCE IN PAPER MONEY BECOMES A CON By the end of WWII, the US had accumulated the largest amount of monetary gold reserves in history; and under the 1944 Bretton-Woods Agreement, the US dollar was to be convertible upon demand to gold and all currencies were to be tied to the US dollar. Thus, through the gold-convertible US dollar, the international monetary system was stable and anchored to gold. But by 1971, the US had overspent its entire hoard of gold. In 1958 alone, US gold reserves fell by 10 %. The reason is between 1949 and 1971 US overseas military expenditures and US overseas corporate expansion had left far more dollars in the hands of foreign nations than the US had gold to exchange. In their book, The Commanding Heights (1997 ed., pp. 60-64), Daniel Yergin and Joseph Stanislaw explain what happened next: But the growing U.S. balance-of-payments deficit meant that foreign governments were accumulating large amounts of dollars — in aggregate volume far exceeding the U.S. government’s stock of gold. These governments, or their central banks, could show up at any time at the “gold window” of the U.S. Treasury and insist on trading in their dollars for gold, which would precipitate a run. The issue was not theoretical. In the second week of August 1971, the British ambassador turned up at the Treasury Department to request that $3 billion be converted into gold. …The gold window was to be closed. Arthur Burns argued vociferously against it, warning, “Pravda would write that this was a sign of the collapse of capitalism.” Burns was overruled. The gold window would be closed. But this would accentuate the need to fight inflation; for shutting the gold window would weaken the dollar against other currencies, thus adding to inflation by driving up the price of imported goods. Going off the gold standard and giving up fixed exchange rates constituted a momentous step in the history of international economics. The previous sentence bears repeating; Going off the gold standard and giving up fixed exchange rates constituted a momentous step in the history of international economics. Yergin and Stanislaw were right. It was to be a momentous—and ultimately fatal step—for as a result of the US default on its international gold obligations, all currencies in the world instantly became fiat. The security that gold and silver afforded the use of paper money would be no more—and when a con game is being run, nothing, absolutely nothing is more important than confidence. The last and most critical piece in the banker’s carefully constructed charade was eliminated by the US when it overspent it entire gold reserves leaving the international monetary system bereft of any intrinsic value. Only monetary momentum and residual confidence has allowed paper-based capitalist economies to function since the last vestige of gold was removed in 1971. Now, the postponed but inevitable destructive consequences of 1971 are about to make the demolition of the World Trade Center Twin Towers and Building 7 look like a spring day in Paris. A collapse of world economies caused by the default on trillions of dollars of paper debts and obligations has never before happened. Soon, it will. The consequences will be as devastating as they will be widespread as personal savings will be wiped out. Personal savings entrusted to banks have been invested in the same paper IOUs, sic bonds, owned by pension funds, investment funds, and insurance companies all over the world. Savers forced by the constant depreciation of paper money have given their savings to banks, pension funds, insurance companies and investment funds in the hopes of salvaging the value of those savings. But those hopes will prove to be false as the escalating financial collapse reveals such investments, e.g. corporate, government and consumer IOUs, to be increasingly worthless. Governments that allowed this crisis to occur will then be forced to indemnify such losses in order to maintain civil and social order. But, when done, the indemnification of trillions of dollars of lost savings will cause what remains of the international monetary system to collapse. Paper “money” is but a paper tiger and when exposed to the twin disasters of economic deflation and central bank hyperinflation, fiat “money” will ultimately revert to its intrinsic value—zero. PANDORA’S BOX AND THE RISE AND FALL OF DAVOS Economies built on credit and debt are by nature unstable. Caught between cycles of expansion and contraction, they are also vulnerable to the vagaries of man and the dictates of nature, i.e. war, famine, greed, drought, etc. When the backing of gold was finally removed from paper money, it was the final straw that was to bring down the bankers’ house of cards. But before the house of cards collapsed, capitalism was to erupt in one last display of shameless glory. The 25 years between 1982 and 2007 was the longest expansion in capitalism’s history. It was, however, to be its last; for the expansion was built on misallocated and historically excessive amounts of credit—and Davos occupied center stage in the display of this excessive “achievement”. It is natural that at the end of the banker’s system, bankers would have garnered the largest share of the spoils and so it was, at least for a short while. The greatest spectacle of Davos was in 2007, the momentary triumph of bankers standing atop the world of global commerce whose profits and productivity they had increasingly purloined as their own. The triumph of the bankers, however, was to be as short as it was spectacular. The era of billion dollar bonuses paid to bankers was to occur at the apogee of their triumph, a triumph that was to be as short as it was lucrative, for soon after, both banks and the capital markets would collapse. DAVOS THEN AND NOW In January 2008 when I wrote Davos, Debt & Systemic Failure, the August credit contraction was but six months old. But that year, the escalating effects of the credit contraction were to sweep through Wall Street, the City, and the world’s financial centers with the same destructive ferocity as the recent wildfires in Melbourne, Australia. In the previous year, 2007, it had appeared the endless liquidity provided by central banks would ensure endless profits for investment bankers. How wrong they were. But, at the time, they didn’t know it. Soon, they would. This is an excerpt from my 2008 article Davos, Debt & Systemic Failure which explains why it would be only a matter of time before the foundations of capital markets would fail: Davos, Debt & Systemic Failure When West Meets East The preferred diet of most Davos attendees is a fusion inspired composition of individual, government, and corporate debt combined with a free-market frisee of lax regulatory oversight held together by a roux of central bank credit that dissolves instantly when paired with matching counter-party risk. The January 2008 gathering in Davos, Switzerland at the World Economic Forum is similar to the 1957 meeting in Palermo, Sicily of American and Sicilian Cosa Nostra crime families who met to discuss mutual problems and opportunities. The notable difference being that those in the Cosa Nostra live outside the law; while those at the World Economic Forum in Davos make them. Those in Davos, however, share with the Cosa Nostra a common problem—the success of both depends on inherently unstable systems. The Cosa Nostra model is based on violence and greed which is both its strength and weakness. Capitalism, the source of wealth for those in Davos, is based on greed and leveraged debt, a combination as powerful and effective as the system of the Cosa Nostra—and just as unstable. WHEN SYSTEMS FAIL Unstable systems can function for years without serious problems. But over time, unstable systems will always break down. We are witness to such a systemic failure today. Global credit markets are slowing and contracting. The capitalist system responsible for economic expansion and wealth is in disarray. Debt, in capitalist systems, is a wondrous device. That is, until it can’t be paid back. Under capitalism, credit fuels expansion but it does so at a cost. As capitalism expands, credit becomes debt and the greater the expansion, the greater the debt. EXPANSION BEGETS DEMISE Capitalism’s fatal flaw is apparent only in its later stages. As capitalism matures, its inherent systemic instability manifests. The very expansion of capitalism sets in motion its demise. The Achilles heel of capitalism is its perpetual need to expand. Only perpetual capital expansion can create sufficient capital flows to service and retire previously created debts, the amounts of which are always increasing because of the accruing compound interest being charged. While any slowdown is cause for worry, a contraction bodes far worse. FEAR IN DAVOS WHAT A DIFFERENCE A YEAR MAKES One year ago, the mood at Davos was one of quiet, almost smug, confidence. The on-going economic expansion appeared to be endless, the profits of investment bankers skimmed off the top of productive enterprise was greater than ever. Private equity, the investment banker’s equivalent of flipping real estate, was the hottest game in town. It is no longer. Today in Davos, the scent of Armani is now mixed with the acrid smell of anxiety produced by falling markets and uncertain futures. Concern has replaced confidence. The major phernome in Davos today is fear. Davos will not be the same next year. If you’re planning on going, be sure to take some air freshener. That was then. Now, the major phernome in Davos is panic. Wall Street institutions such as Bear Stearns and Lehman Bros. have vanished into thin air (appropriately Davos is the highest city in Europe) and the financial sector, formerly the king of predators, is struggling to survive. Air freshener will be no more effective at Davos than central bank credit will be successful at reversing now deflating economies. CENTRAL BANKS AND SYSTEMIC COLLAPSE Central banks are now engaged in a life and death struggle, a struggle which they cannot win. When the US removed gold from the fictional foundation of central bank fiat currencies, the death warrant of fiat currencies was signed. The execution itself would be only a matter of time. The central bank struggle to maintain the fiction that paper money is as good as gold is as doomed as the hope that more central bank credit will solve the problem that too much central bank credit created. The last and only remaining hope of central banks is to prolong the value of paper money by the use of smoke and mirrors in order to hide their declining value. The strategy is to remove as much evidence of that decline as possible. There is perhaps no better description of the central banks strategy than the following excerpt from Peter Warburton’s April 2001 essay, The Debasement Of World Currency–It Is Inflation But Not As We Know It: Central banks are engaged in a desperate battle on two fronts What we see at present is a battle between the central banks and the collapse of the financial system fought on two fronts. On one front, the central banks preside over the creation of additional liquidity for the financial system in order to hold back the tide of debt defaults that would otherwise occur. On the other, they incite investment banks and other willing parties to bet against a rise in the prices of gold, oil, base metals, soft commodities or anything else that might be deemed an indicator of inherent value. Their objective is to deprive the independent observer of any reliable benchmark against which to measure the eroding value, not only of the US dollar, but of all fiat currencies. Equally, their actions seek to deny the investor the opportunity to hedge against the fragility of the financial system by switching into a freely traded market for non-financial assets. [Note: Warburton’s explanation of central bank strategy is important, to wit: “Their objective is to deprive the independent observer of any reliable benchmark against which to measure the eroding value, not only of the US dollar, but of all fiat currencies. Equally, their actions seek to deny the investor the opportunity to hedge against the fragility of the financial system by switching into a freely traded market for non-financial assets.”] It is important to recognize that the central banks have found the battle on the second front much easier to fight than the first. Last November, I estimated the size of the gross stock of global debt instruments at $90 trillion for mid-2000. How much capital would it take to control the combined gold, oil and commodity markets? Probably, no more than $200 billion, using derivatives. Moreover, it is not necessary for the central banks to fight the battle themselves, although central bank gold sales and gold leasing have certainly contributed to the cause. Most of the world’s large investment banks have over-traded their capital so flagrantly that if the central banks were to lose the fight on the first front, then their stock would be worthless. Because their fate is intertwined with that of the central banks, investment banks are willing participants in the battle against rising gold, oil and commodity prices. [Note: Here, Warburton has given us the motive underlying the investment bank role in keeping commodity prices low. This especially pertains to gold as gold is the traditional measure of monetary distress.] Central banks, and particularly the US Federal Reserve, are deploying their heavy artillery in the battle against a systemic collapse. This has been their primary concern for at least seven years [since 1994]. Their immediate objectives are to prevent the private sector bond market from closing its doors to new or refinancing borrowers and to forestall a technical break in the Dow Jones Industrials. Keeping the bond markets open is absolutely vital at a time when corporate profitability is on the ropes. Keeping the equity index on an even keel is essential to protect the wealth of the household sector and to maintain the expectation of future gains. For as long as these objectives can be achieved, the value of the US dollar can also be stabilized in relation to other currencies, despite the extraordinary imbalances in external trade. Again, in this instance, Warburton’s last sentence bears repeating: “For as long as these objectives can be achieved, the value of the US dollar can also be stabilized in relation to other currencies, despite the extraordinary imbalances in external trade.” Warburton wrote the above in April 2001 and the relevance of Warburton’s commentary is even greater today than it was then. Then, the two central bank objectives were: (1) making sure bond investors continue to finance the private sector bond market, and (2) making sure a technical break in the Dow Jones did not occur. Now, both have happened despite the best efforts of central banks. The 2007 credit contraction froze the corporate bond markets where the private sector obtains most of its financing and the second objective, to keep the Dow from breaking down, was violated in October and September of 2008. Systemic collapse as predicted by Warburton is now in the process of occurring. Where does this leave the central bankers?  In my opinion, they had better start looking for jobs. As long as people believe bankers can solve their problems, they will continue to be employed. But when people finally understand the role bankers played in the current crisis, they and their cohorts in government may very well be indicted for their unconscionable plundering at the public trough and, also now for the added insult of destroying the trough when done plundering. When this era has ended, it is not known what bankers will do as bankers are notoriously bad businessmen. Bankers achieve their considerable success not by entrepreneurial talent but by their unique proximity to credit and their ability to leverage that proximity into excessive profit. Stripped of this advantage, bankers would be forced to earn a living on a level playing field—an ability which has never before been tested. THE ASCENT OF GOLD Professor Antal Fekete stated when the price of gold begins to move rapidly upwards towards its final highs, it will be a time of tragedy; for when gold explodes upwards, the economies built around paper money and paper assets will collapse. The human suffering then and afterwards will be immense. The smoke and mirror attempts of central bank to postpone the inevitable day of reckoning have failed. The smoke is now clearing from the central banks’ purposive obfuscation of economic truths and their mirrors which previously reflected pure fiction are now broken and muddied. It is now only a matter of time before people realize what has occurred in the absence of their understanding. The considerable bill is now due and owing for all debts incurred at the bankers’ window. It will be paid. Already, gold and silver coins have disappeared from the supplies of retail dealers as the public increasingly seeks to protect the declining value of what they have saved. Soon, the same will be true for the 1,000 ounce gold bullion bars being purchased by the very wealthy. The day people realize that paper money is worthless is the day economic activity as we know it will come to a halt. What happens next has happened before. Barter begins the movement of goods and services until a trustworthy medium of exchange arises to take the place of the bankers’ debased paper. Currency collapse is a reoccurring story. Because we denied its reality does not mean it would not happen. Denial is very powerful but, in the end, it changes nothing except the ability to effectively respond. Our wish that gold achieve its rightful price level in today’s accelerating crisis is tempered by our realization that when that day is reached, the human carnage and suffering will be without precedence. It is best, then, to buy gold and silver whenever possible and to wait patiently for things to unfold as they will. And they shall. ECONOMIC TRUTHS In his wonderful and final and most readable book (at least for me), Grunch of Giants, (Design Science Press, 1983) Buckminster Fuller writes about the history of power and money in a way that explains our present economic system. Bucky’s word “Grunch” is an acronym for gross (GR) universal (UN) cash heist (CH) and the word Giant is a reference to modern corporations and those who control them. On page 18, Bucky recounts a conversation with one of the “giants”, a friend of his who was a scion of the JP Morgan family. He said to me, “Bucky, I am very fond of you, so I am sorry to have to tell you that you will never be a success. You go around explaining in simple terms that which people have not been comprehending, when the first law of success is, “never make things simple when you can make them complicated.” The roots of modern economics are intertwined with institutional deceit on a massive scale because the material rewards are so great. Therefore, the attempt to ascertain the truth about money is not an easy task; and it is not made easier by those who benefit by its deceit. This is why the discussion of ideas antithetical to those in positions of power are now found only at the edges of society. Writers and readers alike must search for truth in books not easily found, such as Buckminster Fuller’s Grunch of Giants (out of print, still available at http://www.bfi.org, Peter Warburton’s Debt & Delusion—Central Bank Follies That Threaten Economic Disaster (reissued and currently available in a deluxe edition from WorldMetaView Press) and Bernard Lietaer’s The Future of Money (published in 1999 by Random House and never made available in the US, currently out of print). Those in power maintain their power because those without power do not understand the power dynamics operant in the world in which they live. Thus, the economic control over the many for the benefit of the few has continued irrespective of the form the economy takes. We are at the end of an extraordinary epoch, the end of the age of credit. In 1981, Bucky Fuller predicted the collapse of the present power structures in tandem with an unprecedented crisis that would transform humanity. That time, the collapse of the world power structures, has now arrived. Transformation comes next; and when the crisis finally passes—and it will—tomorrow will be a far better day. Awareness, community, faith and a bit of gold and silver will be invaluable in the days to come On March 27-29, I will be in Szombathely, Hungary to listen to Professor Fekete discuss current economic issues only as he can do. I will also be speaking. For information, contact GSUL@t-online.hu. Copyright © 2009 Darryl Schoon http://www.informationclearinghouse.info/article22000.htm

Click on “comments

<><><>

Rep. Paul Calls for Gold Audit, Questions Whether Fort Knox Is Empty

Published September 01, 2010 | FoxNews.com

Gold bars are seen in Fort Knox, Ky., in this 1979 photo. (AP Photo)

There’s gold in them thar hills. Or is there? Texas Rep. Ron Paul, suggesting America’s reserves may not be as robust as officials claim, is calling for an independent audit of the U.S. gold held at Fort Knox and other facilities. The Republican congressman known for his fierce opposition to virtually everything the Federal Reserve does says the public deserves to know what’s behind the fortified walls of America’s gold vaults — particularly in case gold is ever reintroduced as a basis for U.S. currency. “It’d be nice for the American people to know whether or not the gold is there,” Paul told Fox Business Network. And if it is all there, he said, the public should know whether any of it has been obligated. A spokeswoman told FoxNews.com the congressman wants to introduce the bill in September when Congress returns from recess.

Fort Knox claims billions of dollars worth of gold are stored away in its secret vault. The Fort Knox facility, a hyper-secure fortress in Kentucky that is part of quintessential American lore, is encased in 750 tons of reinforced steel, as well as thousands of cubic feet of concrete and granite. No visitors are allowed. Though Paul no doubt wants a more thorough inspection, the U.S. Mint is subjected to regular audits, including at Fort Knox. The Mint claims gold is removed in “very small quantities” for this purpose alone, and that no other gold has been transferred in or out of the facility for a long time. The latest audit, conducted by KPMG, did not appear to detail U.S. gold holdings — dealing more with gold and silver sales, coin circulation, workplace environment and other issues — but did state that gold and silver continue to be held at Fort Knox. Scrutinizing U.S. monetary policy, though, is nothing new for Paul. Last year, he pushed on Capitol Hill a bill to audit the Federal Reserve, an effort that ended with a Fed audit provision tucked inside the financial regulation package. Paul, in an interview last week with industry publication Kitco News, first outlined his next campaign. He said there is “reason to be suspicious” about U.S. gold holdings and suggested officials were manipulating the price of gold to prop up the perceived value of paper money. Paul said “it is a possibility” that neither Fort Knox nor the New York Federal Reserve vaults have any gold. He also said he will call for the U.S. government to legalize the use of gold and silver as “legal tender” alongside the U.S. dollar. Let them compete, he says. “If people get tired of using the paper standard, they can deal in gold or silver,” he told Kitco News. Representatives from the Treasury Department and U.S. Mint did not respond to requests for comment on Paul’s proposal. Gold and silver investment has drawn renewed attention amid concerns about the stability of the U.S. dollar. The United States moved away from the gold standard

in the early 1970s, but Paul said it’s good to know what the United States holds just in case. He warned the U.S. government is setting the stage for a depression by trying to print, spend and regulate its way out of the last recession. “Who knows, someday we might want to have a gold standard again and quit all this printing-press money, so it would be nice to know how much we have,” Paul said in the interview with Fox Business Network

<><><>

Golfinger — Rome steals U.S. Gold Reserves!! First downloaded on July 4, 2001. Last updated on August 15, 2002.


Day of Infamy, August 15, 1971. August 15, 1971, is a day that will live in infamy. That was the day that Standard Oil controlled President Richard Nixon assassinated the DOLLAR. He took the dollar off the gold standard and paved the way for the ruin of the country. In pagan Rome, August 15 was the big day for the devotees of Venus or the Queen of Heaven otherwise known as the Egyptian Isis or Hathor the cow goddess.  Roman pagans believed that Venus was taken up alive into heaven and crowned Queen of heaven. Papal Rome substituted Mary (the humble mother of Jesus) for Venus and continued to observe their pagan holiday. Now they call it the Assumption of the Blessed Virgin Mary!! Venus or the mother goddess was called Isis or Hathor in Egypt and Diana of the Ephesians in Asia Minor. August 15, 1534 was also the day that Ignatius LIEola founded the deadly Jesuit order. By choosing this day to divorce our dollar from the gold standard, Nixon was telling Rome’s slaves that this was a covert assault by the Roman legions against Protestant America!! Rome steals U.S. lands!! After this date, foreign holders of U.S. currency could not redeem their dollars in gold . . . so the vast lands of the Western U.S. were promised as collateral instead of gold. Judas Iscariot was a perfect type of the papacy at the end of the world….Judas betrayed his Lord for 2 things: MONEY and LAND.


In the year 1959 a book was written by British author Ian Fleming entitled Goldfinger. The book was about a plot by an arch-villain named Auric Goldfinger to cause financial chaos by destroying all  the U.S. gold bullion stored at Fort Knox, Kentucky. The plot was foiled by secret agent James Bond known as agent 007. The book was made into a Hollywood movie in 1964 and starred Scottish actor Sean Connery as James Bond. Of course everybody knows that Fort Knox is like the United States of America — impregnable from the outside. So if anybody wants to penetrate that fortress and steal the gold the thief has to come from within!! U.S. Gold Bullion Depository, Fort Knox, Kentucky. By 1950, the U.S. Government owned almost half of all the world’s gold supply and the dollar was as good as gold. Now it is ALL gone . . . shipped off to Swiss and German Banks and credited to the account of the Vatican Bank!! During World War II, Fort Knox was modified to allow easy access to the MAIN STORAGE VAULT. Beginning in 1961, gold began to flow out and was taken to the Federal Reserve Vaults in New York City. <><><>

Could The Gold Price Collapse?

FNArena News – February 26 2009 By Greg Peel What pushes the gold price? Let’s break it down. The first, simple, equation to consider is that of demand and supply. We’ll look at demand first. Gold is an unusual beast in that it is both a commodity and a currency. On the commodity side, there is some industrial usage of gold but the bulk of “commodity” demand is derived from the jewellery market. Indeed, so proportionately minimal is gold’s use in industry that we’ll completely ignore it within the equation. Thus we can say that gold is never consumed or destroyed. Even when a piece of jewellery or some other trinket is melted down, no gold is lost out of the sum total. This makes gold virtually unique. I make the English grammar mistake of qualifying the word “unique” here because gold has a poorer (but still loved) cousin in the form of silver. Silver also shares a commodity/currency dichotomy but given silver is used in a wide range of industrial applications it tends to split the difference. And if you consider that even the “commodity” definition of gold jewellery is questionable, given the wife might appreciate the aesthetic but the husband sees an investment (sorry to be chauvinist here but I need to make a point), realistically it’s hard to consider gold as in any way a commodity at all. Hence while silver enjoys industrial as well as investment demand, demand for gold is almost entirely an investment consideration. This is still the case when one considers one of the greatest sources of gold jewellery demand is middle class India. Indian tradition determines that gold is given as a gift to mark a wedding, and gold it must be – not just something else pretty. Every ancient culture appreciates the investment value of gold. Nevertheless, market observers tend to separate demand into the two categories of “jewellery” and “investment”. Jewellery demand consumes, on average, about 75% of the world’s net gold production each year. (I say net to account for “scrap” – jewellery that has been pawned, melted down and reworked.) The other 25% is consumed by those who buy gold for its investment value alone. Within that 25%, one might break down the source of investment demand, being simplistic here, into two types of fear – the fear of crisis and the fear of inflation. If you have a suitcase full of cash you could invest that money into, say, a risk asset such as stocks – or put it in the bank, or put the suitcase in the cupboard. If there is a financial crisis, you will lose your money in stock. If it is a really bad financial crisis, your bank might go under with your money. In the case of crisis, perhaps the cupboard is the best bet. You’re not going to earn any interest or make a capital gain, but at least you’ll still have the money you started with. Unless, of course, inflation is a problem. If prevailing inflation is high, the purchasing power of your cash becomes less and less. A loaf of bread that costs a dollar today could cost two dollars in ten year’s time, so after ten years you have effectively lost half your money. What you really need, then, is somewhere to safely “store” not your money, but your “wealth”. You want to at least have the same wealth value as when you started. Enter gold. Gold pays no interest, but in times of crisis it is a popular move to get out of stocks, other risk assets, and bank deposits and get into gold because there your money will be safe. Your “wealth” will be “stored”. You can decide at a later date to move back out of gold and into stocks etc when they’re cheaper. In times of high inflation, your gold store can be converted back into cash and your one dollar from the beginning will get you two dollars today with which to buy that loaf of bread. To confirm this supposition, consider that gold traded at its highest price in history in March last year, a time when (a) the global financial crisis was really starting to heat up and (b) emerging market demand for oil and other commodities was pushing inflation higher and higher. Breaking down gold as an investment, one can buy gold coins, gold bullion, exchange-traded funds (ETF) and similar instruments, and gold futures. The first two mean simply buying gold, although coins also carry a numismatic value. An ETF means buying a charge over an amount of gold stored on your behalf. A futures contract means buying gold as a paper IOU. Of the choices, a futures contract offers built in leverage. Earlier this week you could have bought a 100 ounce Comex contract for a US$4,000 deposit, whereas the equivalent in physical gold would have cost you more like US$97,000. If gold rallies then both investments will provide the same return. The only catch with futures is that if the gold price falls, you have to start topping up your deposit (a dreaded “margin call”). There is an additional consideration in that if you buy a futures contract, your only other cost is a broker’s commission on the US$4,000. If you buy physical gold, you must either pay for it to be stored, or have it sent to you in armoured truck where you then must try and safely store it. Oh, and insure it. (You can, of course, also “buy” gold by buying shares in goldminers, but such shares are never a simple one-for-one bet on the gold price. Goldminers have all sorts of other problems). Note that gold futures contracts allow you to choose to have gold delivered to you at expiry, but this usually only happens to only 2% of contracts. The other 98% are closed out for cash before expiry. That effectively means the amount of gold traded each month can be levered up 50 times. And that’s on top of the leverage to cash a futures contract already provides. As gold futures can be just as easily sold short as well as bought, such leverage also exists on the supply side. Which brings us to the supply side. Supply includes old gold and new gold. Old gold is all the gold that ever existed, which is held as jewellery, as personal or corporate investment, or by central banks. The US Federal Reserve is the biggest holder of gold, followed by the IMF and then the legacy central banks of Europe. Sale of European central bank gold is limited to 500 tonnes per year. New gold is that which is dug out of the ground every year, but that volume has been dwindling year-on-year for decades. The amount of physical gold traded across the globe each year is tiny compared with that of consumable commodities such as oil. Very, very tiny in fact. Most gold is traded as Comex futures. As noted, on average only 2% of gold contracts are held for delivery. This statistic means that Comex need only hold a limited amount of physical gold in its own vault to cover potential delivery requests. Were everyone who holds a long gold contract in the middle of the trading month – when open positions are highest – to hold for delivery, there would not be enough gold in the Comex vault to satisfy the demand. There would not be enough gold in Fort Knox. There would not be enough gold in the world. There would probably not be enough gold in the world several times over. Demand and supply of gold as an investment, therefore, is very much levered up by the “paper” gold market. So there we have a (simple) consideration of gold’s demand/supply equation. We know that recently the gold price has again been trying to push to new highs, suggesting demand is currently winning the battle against supply. Why is this the case? Under our simple breakdown, gold demand is coming from either the jewellery market or the investment market or both. However, I can tell you now that demand is not currently coming from the jewellery market. One reason is that we are not currently in an Indian “wedding season” and won’t be again until about September. Jewellery demand also comes from China and the Middle East, with a similar middle class bent (rich people, wherever in the world, will always buy gold jewellery so we take them as a given). But the real reason there is little jewellery demand at present is because middle class jewellery demand is highly “price elastic”. A commodity is “price elastic” if price makes a big difference. Bread and milk are relatively “price inelastic” because you’re going to buy them anyway even if the price ticks up. But when the price of gold ticks up, there is a point at which the jewellery buyer just has to say “too much”. Gold’s long rally from around US$250/oz a decade ago to US$1000/oz has been driven by financial market considerations, and by jewellery demand. Coming back to India specifically, we note that the Indian economy has boomed in that time. This means more money in the pockets of the middle class and that means a higher price tolerance for gold. Every wedding season (of which there are two each year) Indians buy up gold until the price is too high. If in one year gold has rallied from US$500 to US$700 then Indian demand might dry up at US$600. What usually follows is a drift back in price for a while, until the next season. By the next season everyone is just that bit richer again, and this time will pay US$600/oz. Gold then runs to US$800/oz. Next year the Indians will pay US$700. And so has this price ratcheting effect being going on for a decade. Two steps forward and one step back. When gold hit US$1000 last year, the Indian buyers were left behind at around US$800. The last push to the summit involved a near vertical ascent. Consider the chart: Note how jewellery demand ebbs and flows as the gold price rises. Note also that demand in 2007 was the same as that in 1998 at a much lower price. That chart has the gold price in Indian rupees, but as one can see from the next chart the exchange rate into US dollars makes little difference to the trend. India will pay more and more for its gold as long as its economy keeps growing. And therein lies the problem – the Indian economy has slowed considerably. All economies have either slowed or receded. Even if the gold price were to fall back from US$1000 to US$800 now, we can’t be guaranteed of a return to historical jewellery demand this time. The game has changed. Jewellery demand has acted like an ever-rising safety net for the gold price in the face of financial market volatility. That safety net may well be a long, long way down this time. But if there is no jewellery demand at present, that means investment demand is not only making up for the loss, but exceeding it. Gold has again tested its highs. There is no surprise this might be the case, as gold investment demand is driven by fear – fear of crisis, and fear of inflation. When gold hit US$1030 last year both fears were firmly in place. The stock market was tanking, Bear Stearns was going under, and oil was on its way to US$147/bbl, pushing inflation into double digits in many countries. Jewellery demand didn’t matter. Now – with the previous USD gold graph in mind, consider this next graph of the gold price from 1920-2002: What stands out? Is it the sudden, almighty spike in 1980? Does it not look like the ECG of someone who was just brought back from the dead? The reason the gold price seems to flatline until 1970 is firstly due to the scale. The fluctuations up to that point don’t register much, although one can notice a decided blip in the Great Depression and a fair bit of activity around the end of World War II. But the real reason for the sudden and dramatic change in gold price was that in 1970 the US dollar became the world’s reserve currency. Prior to that point, the Gold Standard (all currencies were pegged to gold) was in place, but for a few brief departures such as wartime and the Great Depression. Beyond that point, Americans were basically free to borrow money at will. In the 1970s, inflation exploded. Inflation had already begun rising in the sixties as the baby boomers fired up the consumer society, and everyone had to have a car, washing machine and television. But the seventies brought the oil shocks, when OPEC cut off supply. The price of oil, and everything, went through the roof. Double digit inflation caused a rush into gold, notwithstanding the general fear of a disgruntled Middle East. The peak came in 1980 when the Shah of Iran (a US ally) was deposed by the Ayatollah (anything but). By 1980 there was simply a gold bubble, and that had to burst. Gold fell back from US$800 to US$400 rather quickly, but this was still a long way up from the US$50 of 1970. Inflation remained at high levels right through to the new boom of the eighties. The next peak was reached in 1987 when the stock market crashed. Okay – let’s just ignore 1987-2001 for a minute and consider the period 2001 to today, for which we need to go back to the earlier chart. The gold price starts a steady rise again, but this time there is very little inflation involved. This time it is fear driving the gold price – from 9/11 to the fear that the US current account deficit is getting way too big (which in turn has sent the US dollar into a gradual decline). The surge in 2006 is a demand surge based on the introduction of gold ETFs. Suddenly everyone had ready access to the physical gold market. The surge in 2007 is the credit crisis – rather fear-inducing – and the kick in 2008 is added inflation, when oil began to surge. Fear and inflation – the two drivers of gold. Now let’s go back to that lost period of 1987 to 2001. Why did gold fall steadily in this period? Economic recessions are usually demand-side driven – demand falls so prices fall, meaning low inflation. The seventies was an exception. The seventies saw a deep recession but it was supply-side driven – demand could not meet the high price of oil when supply was cut off. Hence the seventies was a rare case of recession and high inflation. High inflation lingered into the eighties boom, but when the boom turned to bust and the nineties began with recession, we were back to a typical demand-side recession again. Inflation fell, and so gold fell. The fall in inflation in the nineties was dramatic – from double digits down to what central banks now call a “comfort zone” of 2-3%. So bad was the recession in Japan that inflation actually turned into deflation. Consider now that across the globe, prices are falling. Inflation peaked in mid-2008 and we have experienced disinflation ever since. With the world heading into deep recession, we are now looking at deflation. In times of deflation the price of gold tends to fall. The nineties is living proof. But if we have been disinflating since mid last year, why is gold testing the highs? Well – because of the other fear – the fear of crisis. That fear has rarely been as great as it is now. But there is another fear as well – the fear that the US is going to print too much money to rescue its economy. The printing of money causes inflation. It can cause hyperinflation. The quick-witted might at this point like to say: “Hang on a minute. What about the crises of the nineties? The Asian Currency crisis and the fall of hedge fund LTCM (which at the time threatened to bring down the whole financial system just like Lehman Bros did last year). Why didn’t gold rally strongly on fear these times.? The answer to that one is that gold was heavily sold by central banks in order to support the US dollar. The UK sold half of all its gold in 1999 – gold’s low point. So much gold was sold by European banks acting in isolation that they eventually got together and set their own sales quota (the aforementioned 500 tonnes). And the world’s biggest holder of gold – the US – sold and sold and sold gold it didn’t even have. Remember how I said that the Comex futures market allows for gold to be sold short? Well the US government has been selling gold short for decades in order to keep the reserve currency supported. It would do so by leasing gold to investment banks, who would then sell short. If the gold price still managed to rise and the banks took a loss, they would be reimbursed by the government in cash. Such an activity has now been admitted to by ex-government employees, the most recently being Paul Craig Roberts, assistant secretary of the Treasury in the Reagan administration.* Reagan took office in the early eighties. Check out the gold price. So if you are a holder of gold, looking forward to the gold price breaking through US$1000 on its way to US$2000 (as so many people seem to suggest will happen), you will not be thrilled to consider that (a) jewellery demand has gone, (b) deflation is setting in, and (c) the US government can manipulate the gold price. If you’re still having problems with the last one, consider that when President Roosevelt abandoned the Gold Standard in 1933 in order to do something – anything – to end the Great Depression, he also confiscated the gold of all Americans. That’s why you can barely see a price hike on the graph. After World War II, the Gold Standard was reinstated. But the above arguments are not new. Prices have been deflating since mid last year. Jewellery demand disappeared months ago. Even if the US government is selling, we are still testing the highs again. Why? Because the US government is also printing money faster than you can blink. And that has the market very worried. Monetarist theory suggests you can print money all you like in periods of price deflation, because the inflationary effect of printing money only cancels out the price deflation. The US Federal Reserve is of the belief the US economy will stop receding by late 2009, and President Obama has as good as vowed to print whatever money it takes to make sure that is the case. If they are right, and get it spot on, then good luck to them. If they are wrong, and no amount of money printing avoids recession becoming depression, then the resulting lingering deflation could well send the gold price tumbling. If they are right, and fear abates, then the resulting flight back into risk assets would send the gold price tumbling. This does not sound good. But if they are right, and the US economy recovers, what if the US government has printed way too much money? If fear abates, investors will also abandon the US dollar (they will sell US Treasuries and buy risk assets again). Gold will soar. The market for US Treasury bonds and bills is a vital part of the equation. As long as these are being bought, the US dollar remains supported. Fear has driven investors into not only gold, but into the debt of the world’s largest economy as well. It is ironic that an economy in so much strife should be considered a safe haven, but it is all because of relativities. The economies of other nations are currently in a much worse position. If fear abates, investors will begin to leave US Treasuries and the US dollar will no longer be supported. If the world begins to think the Americans are printing way too much money (as compared to the governments of other major economies, which are currently doing the same thing), it will abandon US Treasuries. If the US dollar collapses, gold will soar. The aforementioned former assistant Treasury secretary had this to say: “The Bush and Obama plans total 1.6 trillion dollars [of taxpayer money, not including printed money sterilised by bond issues], every one of which will have to be borrowed, and no one knows from where. This huge sum will compromise the value of the US dollar, its role as reserve currency, the ability of the US government to service its debt, and the price level. These staggering costs are pointless and are to no avail, as not one step has been taken that would alleviate the crisis. “How long can the US government protect the dollar’s value by leasing its gold to bullion dealers who sell it, thereby holding down the gold price? Given the incompetence in Washington and on Wall Street, our best hope is that the rest of the world is even less competent and even in deeper trouble. In this event, the US dollar might survive as the least valueless of the world’s fiat currencies.” And therein lies the crux. Whose economy is in the biggest trouble, and who’s going to end up printing the most? Gold’s journey from here will depend on just how long the US can reasonable hold on to the reserve currency status of the dollar, before the world yields to gold’s former role. And much of the world is currently indicating that it prefers gold. This is not apparent in the US dollar, for the US dollar remains strong. But it is apparent in the world’s current demand for physical gold – not as jewellery – but as gold coins and bars, and ETFs. ETF volumes have reached record volumes. Retail gold dealers began to run out of coins and bars around September last year when Lehman Bros, and the stock market, collapsed and fear peaked. Mints across the globe could not keep up with the demand. There was a brief respite, but in 2009 that demand is back stronger than ever. From the US to South Africa, from Austria to New Zealand, the demand for physical gold is soaring. In 2007, just under 200,000 ounces of gold were sold in the US in the form of American Eagle coins. An equivalent volume was sold in the first half of 2008. An equivalent volume was sold in the first seven weeks of 2009. Across the world, dealers are selling gold in a day what they used to sell in a month. Dealers open on Monday and are sold out by Tuesday. Buyers have to wait for the next Monday to get in again, unless the Mint has run out, again. Remember that the vast proportion of gold is traded as Comex futures. But so great is demand for physical gold at the retail level buyers are paying a 5% premium over the Comex price. And Comex futures are only an IOU. In times of financial crisis, investors prefer the real thing. The number of contracts being held for delivery has now blown out to 4.5% from 2%. In the case of silver, it’s 7.3%. These numbers are still relatively small, but remember that Comex only holds an amount of metal which would reasonably cover deliveries, not what would cover all contracts if they were all called for delivery. That much gold does not exist. The effect of this supply-side shortage is that price-push of retail demand is not showing through into the market yet. If jewellery demand is not with us, investment demand surely is – despite a stronger US dollar. Which way is this going to break? *http://www.counterpunch.org/roberts02242009.html <><><>

Did the Fed Sell the Rest of the U.S. Gold Supply in 2009?

0diggsdigg

—       |

photo

Contributed by Concerned Citizen (Publisher) 04 جمادى الأولى, 1431 02:40 View: Publisher’s biography | More stories

This story has been viewed
2 times in the past hour
4 times in the past 24 hours
974 times since it was published

1 person on this page right now

A recent Federal Reserve report document could raise suspicions about the status of the U.S. gold supply, supposedly the largest in the world at just over 8000 tonnes.  At an average price of $900 per ounce, the $190 billion accounting entry in the Fed report would equal about 6,500 tonnes of gold.  This is a vast amount of gold — more than any other country has (Germany is #2 in official gold reserves with 3,400 tonnes). On Page 24, line 14 of the March 11, 2010 Federal Reserve Statistical Release, the figure for the third quarter  on the line titled “Gold and SDRs” (U.S. net sales) shows a total for the third quarter of $190.9 billion (snip from table below). In case you are wondering what a Special Drawing Right is, this is right off the IMF website: The SDR was created by the IMF in 1969 to support the Bretton Woods fixed exchange rate system. A country participating in this system needed official reserves—government or central bank holdings of gold and widely accepted foreign currencies—that could be used to purchase the domestic currency in foreign exchange markets, as required to maintain its exchange rate. But the international supply of two key reserve assets—gold and the U.S. dollar—proved inadequate for supporting the expansion of world trade and financial development that was taking place. Therefore, the international community decided to create a new international reserve asset under the auspices of the IMF. However, only a few years later, the Bretton Woods system collapsed and the major currencies shifted to a floating exchange rate regime. In addition, the growth in international capital markets facilitated borrowing by creditworthy governments. Both of these developments lessened the need for SDRs. The SDR is neither a currency, nor a claim on the IMF. Rather, it is a potential claim on the freely usable currencies of IMF members. Holders of SDRs can obtain these currencies in exchange for their SDRs in two ways: first, through the arrangement of voluntary exchanges between members; and second, by the IMF designating members with strong external positions to purchase SDRs from members with weak external positions. In addition to its role as a supplementary reserve asset, the SDR, serves as the unit of account of the IMF and some other international organizations. As it says, it is a potential claim on the freely usable currencies of IMF members.  So why is this under the category of “Gold and SDRs”? And what has become of the other gold?  According to other government reports, it may have been shipped out of the country, right under everybody’s noses. Rob Kirby has pointed out that in 2007/8, about 5000 tonnes of gold was shipped out of the U.S., according to the USGS, even though the actual gold production of the United States was just over 200 tonnes per year.  This amount could possibly be as a result of the repatriation of foreign gold stocks held in the U.S. by the Federal Reserve, but the fact remains that a large amount of gold is fleeing the country.  Here’s a shot of one of the USGS reports The reports are starting to add up and now from this Federal Reserve report, it looks like there’s going to be some ‘splaining to do.  If this were a business, we’d be doing a top to bottom audit of the Federal Reserve to find out where our money has gone, because it doesn’t look like it’s still sitting at Fort Knox.  It’s either in China (as part of the cost to keep them from selling all their Treasuries), or taken away to Europe by its new owners who conned the fools in the government out of the people’s gold.   Either way, heads are going to roll.

Want to share YOUR story with our dynamic and rapidly growing audience? Click here to become a Contributor.

+3 rating (3 up, 0 down) | UpDown
Now It's News
Nobody has posted any links yet to mainstream media sources covering this story.

Post a link:

Comments

Posted by Peter K on 05 جمادى الأولى, 1431 07:50 Report SPAM
The gold and SDRs that you point to were actually acquisitions by US government of non-gold SDRs from the IMF (for accounting purposes, the US allotment of SDRs is counted on the Fed’s balance sheet). This was a result of the IMF increasing its SDRs dramatically last year. The exports of gold are interesting though! One does wonder how much of this is government gold and how much is simply fleeing the country before controls are enacted.

http://beforeitsnews.com/story/33/904/Did_the_Fed_Sell_the_Rest_of_the_U.S._Gold_Supply_in_2009.html

<><><>

GREENSPAN HOODWINKS

STOCK AND COMMODITY MARKETS

by Sherman H. Skolnick 4/6/01 Federal Reserve Commissar Alan Greenspan and his newsfaker wife are reportedly busy deceiving the stock and commodity suckers. Acting together with the Chief of the New York District Federal Reserve Bank, Greenspan is manipulating the markets at a time of suspected meltdown. To fool those who fancy up their position by calling themselves “investors”, the Fed boss has been spending billions and billions of dollars from the PRIVATE central bank masquerading as a “U.S. government” entity. And how are markets massaged? One way, is to support, temporarily, the Dow Jone 30 Industrials, a psychological barometer often with little meaning except to know-nothings unaware of the tremendous leveraging of the Dow figures. Acting like a Soviet-style dictator, Greenspan is referred to by savvy folks as REDSPAN. If the 30 Industrials really go down hard, to some that would be a sign of collapsing financials. So, Redspan not only doctors up the 30 Industrials in that index, but has extended his hocus-pocus to Nasdaq, which since April, 2000, has been the killing ground for the phantasies of would-be get-rich-quick types. One major stock that for a while declined has been General Electric. NBC Network is owned by G.E. and Redspan’s spouse, Andrea Mitchell, has been an NBC Network correspondent. Do we understand that “Mrs. Redspan” knows more about the rotten schemes of her husband and his conspiratorial bank gang than mere “pillow talk”? Some NBC honchos have been speculating, unlawfully and unfairly, using insider data reportedly made available to them through Andrea Mitchell. Not just NBC types but other network and White House correspondents have for years been spending part of their time on the phone to their stock and/or commodity brokers, some in Chicago, Frankfort, Singapore, Geneva, and elsewhere. The exchange regulators are willfully blind to these crimes committed by top-level news whores, men and women both. Of course, poorly informed sorts have entirely too much confidence in the U.S. Securities and Exchange Commission, S.E.C., and the Commodity Futures Trading Commission, CFTC. Both of the supposed regulatory agencies are highly politicized and corrupt, afraid to dare finger network bigshots. [The S.E.C. Enforcement Division boss in Chicago, in the past when I visited him, was so afraid of talking to me, he would leave his office and talk to me only in the hallway. I considered him a master crook after seeing how he dealt with my complaints about matters like herein. He dared let slip once that he traveled around on the private airplane of a key figure in Bank of Credit and Commerce International, BCCI. The S.E.C. honcho saw nothing wrong with socializing with a bigtime bank and espionage criminal.] During the Clinton Administration, the White House with the apparent connivance of White House Senior Advisor and reputed “bagman”, Rahm Emanuel, sought to blackmail White House and Network correspondents. To persuade the press pundits to steer clear of Clinton’s treason aiding the Red Chinese with U.S. industrial, financial, and MILITARY secrets. Packages with no return address shown, were received by various loudmouths. The apparently authentic records in the packages tended to show reportedly that news big dealers and their relatives got rich with insider stock and commodity market details. The records included the federal tax returns of network correspondents and their relatives, together with reports and little-known court records of nasty divorces, child custody battles and related dirt, psychiatrists reports on treatments of network biggies. Included were lists of married correspondents and their mistresses and gigolos. [Rev. Jesse Jackson's wife, apparently to blackmail reporters, likewise reportedly keeps track of such mistresses and gigolos.] After all, White House correspondents were quite aware that Clinton, as President, used to meet from time to time with Wang Jun, head of the Red Chinese Secret Police. Supposed “independent” counsel Kenneth W. Starr was perceived by naive folks as running after Bill and Hillary Clinton. Not so, other than much less important matters, such as the sex goings on of Monica Lewinsky. Starr spent the bulk of his time in PRIVATE law practice. His PRIVATE law client was Wang Jun. Further, Starr reportedly was the UNREGISTERED foreign lobbyist for the Red Chinese government. The Clinton Justice Department could have nailed and jailed Starr any time they wanted to. Starr’s conflicts of interest and brazen criminality were not that secret, certainly not to knowledgeaqble sorts. Starr benefitted the espionage agencies, for whom he acted as their “stooge”, by covering up the murder of Clinton White House Deputy Counsel Vincent W. Foster, Jr., an espionage operative before his short White House service, with the super-secret National Security Agency, N.S.A. [For related details, visit our website story "Greenspan Aids and Bribes Bush" Part 4.] And why did Commissar and gulag boss Redspan use as his surrogate the Chief of the New York District Federal Reserve Bank? For one thing, that District Bank and the U.S. Treasury, Sub-Treasury Division in New York city, have stored, many floors below ground level, the huge horde of gold bullion belonging to foreign countries at whose orders the gold is shifted from one gold cage to another. It may come as a shock to some, but the U.S. has very little so-called “U.S. government” gold bullion in Fort Knox. A brave outspoken journalist, Tom Valentine, in the 1970s, exposed as a fraud that there was world-trade-quality gold at Fort Knox. All they have left are poor quality, orangish-looking, melted down coin metal from the seizure in 1934, of gold coins from America’s common people. [The American aristocracy, warned in advance, shipped THEIR gold out of the U.S.] The U.S. governmentt gold is gone. Why? Because it was shipped, under the supervision of a plyable U.S. general, to the private central octopus called the Bank of England, in 1968, to stem a run on that bank which had somehow lost all their own gold.] What are some of the situations covered up by Commissar Redspan with his slim-jim wife, a fast-running news bandit? (1) The Federal Reserve, without actual lawful authority to do so, has been reportedly seizing the below-ground depository of PRIVATE gold housed in the sub-basements of the First National Bank of Chicago, traditionally one of the Rockefeller banks, to confuse people now is called Bank One. Some who owned such private gold are wondering where they can go to complain about it reportedly not being there anymore in the sub-basements which have a separate method of quietly trucking it out. Where did the gold go? Japan and Saudi have a semi-secret arrangement with the U.S. Treasury and Federal Reserve in that THEIR purchases of U.S. Treasury securities are backed by gold on demand. This provision, of course, is not available to ordinary Americans who purchase U.S. Treasury Bills, Notes, and Bonds. Bigshot currency speculators have led attacks on certain foreign currencies, to try to force such weak-willed nations to disgorge their gold hordes in support of their paper money. This done, at a time when Redspan, the Rockefellers, and what we call the BUNK OF ENGLAND have been violating price-fixing criminal statutes by artificially forcing down the price of gold to below the cost of production of the world’s most efficient mines. (2) Bank One has reportedly been involved in using their facilities to manipulate the gold markets and that of foreign currencies and soybeans, for among other reasons, to aid the Red Chinese who have obtained an armlock on the Chicago Board of Trade and the Chicago Mercantile Exchange. This domination of the markets has been done reportedly with the connivance of Rahm Emanuel, who after leaving the Clinton White House, became a managing director of Wasserstein Perella & Co., which reportedly specializes in laundering the illicit proceeds of the Red China dope and gun smuggling trade, and the buying and selling of clandestine nuclear weapons and their detonators. [Visit our website series on the Red Chinese Secret Police IN THE UNITED STATES, including about the Rockefeller Hospitals and their buying and selling of human body parts harvested from Red Chinese dissidents condemned to death as the human organs are needed in Chicago by wealthy sick people.] Bank One, and their predecessor First National Bank of Chicago, Rockefeller institutions, have been reportedly implicated as well in using their records and facilities to enable certain corrupt commodity and currency swindlers to ply their trade. The authorities, while knowing about the banks and their apparent doctoring up of records, have taken no action as would seem to be warranted. The Rockefeller bank in Chicago, First National Bank of Chicago, as we have previously stated, loaned billions of dollars to the Red Chinese on the promise of repayment in gold. Instead of gold, the Chinese were allowed to flood the U.S. with high purity dope, called “China White” from Southwest China, using suburban airports ringing Chicago as the intake point. Cynics call the Rockefeller Bank in Chicago, Bank Zero. (3) Redspan has been using large sums from the Fed to try to doctor up the markets, to temporarily only, fool know-nothings not to retrieve their funds from the thousands and thousands of Mutual Funds that have sprung up like so many locusts devouring the money of the common people of America. Formerly called in the 1920s and 1930s as “investment trusts”, such pools of funds went to hell quicker than the stock market in the 1930s. Why? Because like the latter day money dumps, called mutual funds since after World War 2, investment trusts had a provision whereby they became frozen up if there were too many redemptions. How many of those “investing” in mutual funds read the prospectus where the freeze-up provisions are mentioned? At least with direct stock purchases you supposedly can sell it anytime. Not so with mutual funds, like their earlier relative, investment trusts. Read about investment trusts following the 1929 debacle, in “The Great Crash 1929″ by Kenneth Galbraith. (4) To divert attention from the growing number of apparent looming bankruptcies, Redspan has been temporarily pumping up the markets. Among those believed to be bankrupt or about to file for bankruptcy, is Lucent Technolgies, Inc., a spin-off former unit of AT&T. A top financial record official of Lucent has reportedly disappeared and may have been murdered, amid unconfirmed reports that billions of dollars have disappeared if not actually having been embezzled. And that Lucent reportedly has cooked books, not accurately showing their true condition. Another sizeable firm, amazon.com, according to some financial records experts, is actually bankrupt but is being presented by the Rockefeller banks as alive when amazon is actually dead. Smiling idiot wiseguy, Jeffrey Bezos, a publicity hypester and pretended buffoon con-man, is accused by some of reportedly covering up, through falsified records, the massive siphoning off of amazon’s funds with the reputed connivance of the Rockefeller banks. If you checked over the years auditors and accountants, you would find that several major firms have quietly had to pay out huge damages when sued or confronted for having whitewashed frauds of various firms. An open secret among the glib pundits of the oil-soaked monopoly press, is that Redspan’s bedmate, Andrea Mitchell, is the one that conveys the marching orders, like a Moscow witch, to the pressfakers, what they can say or not say about money, banks, and financial matters. Others darkly refer to her as Madame Redspan, or Field Marshall Mitchell, riding on the General Electric horse, cracking the censorship whip on the news outlets of the venal and corrupt Establishment Press. More coming.Stay tuned.


Since 1958, Mr.Skolnick has been a court reformer. Since 1963, founder/chairman, Citizen’s Committee to Clean Up the Courts, disclosing certain instances of judicial and other bribery and political murders. Since 1991 a regular panelist, and since 1995, moderator/producer, of one-hour,weekly public access Cable TV Show, “Broadsides”, Cablecast on Channel 21, 9 p.m. each Monday in Chicago. For a heavy packet of printed stories, send $5.00 [U.S. funds] and a stamped, self-addressed business sized envelope [4-1/4 x 9-1/2 #10 size] WITH THREE STAMPS ON IT, to Citizen’s Committee to Clean Up the Courts, Sherman H. Skolnick, Chairman, 9800 South Oglesby Ave., Chicago IL 60617-4870. Office, 7 days, 8 a.m. to midnight, (773) 375-5741 [PLEASE, no "just routine calls]. Before sending FAX, call. Back to the top Home Page<><><>

You really have to hand it to the banksters. As was painstakingly detailed in the book Creature from Jekyll Island, the banking elite devised a brilliant plan in November of 1910 on Jekyll Island in which to take over control of the United States, steal the wealth from the taxpayers and the resources from the country. It was at this meeting that the Federal Reserve was conceived by the banking cartel, as they devised a plan to protect its member banks from competition and convince Congress and the American public that this cartel was an agency of the United States government. The creation of the Federal Reserve will undoubtedly go down as one of the biggest tragedies in American history. After all, the government handed over the right to print the nation’s currency AND charge interest to a private, for-profit corporation with foreign stockholders. The Federal Reserve was given the right to simply print massive sums of money out of thin air and then charge the American taxpayer interest on that money. In essence what they did was place the American people into indentured servitude by forcing the people to pay usury on worthless fiat currency (paper money created out of nothing), not to fund the government, but to enrich the bankers and fund wars in which America should never be involved. It has led to the massive unsustainable debt situation and the dollar losing 96% of its purchasing power since 1913. Stop and reflect on that last statistic for a moment. If you held $100 since 1913, it would only be able to buy you $4 worth of goods and services today! Or put another way, it would take $20 in today’s money to match what just $1 would have bought you in 1913. The rest of the value has been absorbed by the banking cartel and government. How on earth we still allow this institution to exist and operate in privacy is beyond comprehension. Furthermore, It is absolutely unconstitutional, as Article 1, Section 8 of the Constitution clearly states that only Congress shall have the power to issue money. This view was confirmed in Lewis v. United States, 680 F.2d 1239 (1982), in which the Supreme Court ruled:

The Federal Reserve Banks are “independent, privately owned and locally controlled corporations”, and there is not sufficient “federal government control over ‘detailed physical performance’ and ‘day to day operation’” of the Federal Reserve Bank for it to be considered a federal agency.

As the United States debt-to-GDP ratio approaches 100%, the interest owed on the debt has become one of the largest annual budget items. The total U.S. debt according to http://www.usdebtclock.org/ has reached $56 Trillion or $180,000 for every U.S. citizen. This figure does not even include unfunded liabilities such as Social Security and Medicare, off-balance-sheet liabilities such as Fannie and Freddie and other liabilities that put the true total debt well over $100 Trillion. But let’s just use the $56 Trillion number for now. The Federal Reserve conveniently stopped printing the total money supply statistic (M3) back in 2006. But since that date, a number of statisticians have extrapolated the number and come up with estimates that are widely believed to be in the ballpark. Using these numbers, the total amount of U.S. money outstanding is approximately $14 Trillion. If you divide 14 Trillion by the U.S. population of 310 million people, there is approximately $45,000 for every US person. So, if the debt per citizen is $180,000 ($56 Trillion / 310 million people) and there is only $45,000 per citizen in existence, how can the debt ever be paid off? Even if we use the more conservative estimate of debt which is total public and private debt, we get $29.5 Trillion, which is more than DOUBLE the amount of dollars in existence. The answer is that the debt CAN NOT be paid off. In fact, this is specifically how the banksters designed the system, so that everyone would eventually be in debt and servitude to them. Think about just how maniacal that is for a moment. But it gets worse… You see, the government has already pledged all of America’s gold, which is surely no longer at Fort Knox as they haven’t allowed an audit in over 50 years. Even if the gold is still there, it now only represents a fraction of the annual deficit, let alone the total debt. Furthermore, the government will eventually have to pledge what is left of America’s public land, buildings and natural resources, privatizing everything from the Grand Canyon to Manhattan to Yosemite National Park. On the individual level, since there will never be enough money for everyone to pay back their home mortgages, this means the banks will end up foreclosing on a huge portion of the real estate and housing that hard-working Americans own, a process which has already begun. So not only will the banking elite end up with all of the money, they will also end up with all of the land and resources of the once great United States of America. Sound alarmist? Consider this visionary quote from one of our nation’s greatest leaders:

“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered…I believe that banking institutions are more dangerous to our liberties than standing armies… The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” -Thomas Jefferson

It is absolutely ridiculous that we have become so apathetic and brainwashed to be allowing this to happen right under our noses. This charade is going to end badly, either by default or hyperinflation and most likely with a high level of social unrest. Either way, the banksters have created a fiat money system that is absolutely destructive to this country, our freedoms and our way of life. If you are outraged, there are fortunately some things that you can do.

  1. Move your money out of the big banks and into local community banks or non-profit credit unions. Because of fractional reserve banking, every dollar that you remove deprives the banks of $9 or more used for risky derivatives gambling where its heads they win, tails you lose.
  2. Support a full audit of the Federal Reserve, sign the petition and write or call your local congressman. Voter action has already led to a partial one-time audit that recently passed the Senate, which is a good first step. But we need periodic full audits of exactly what the Fed is doing with taxpayer funds. The more the awareness is raised about the Fed, the better chance we will have of eliminating this institution one day and returning the right to print money to the Congress, INTEREST FREE!
  3. Get out of debt and live within your means. We’ve had it good for a very long time and have been able to live beyond our means due to the dollar’s status as world reserve currency and easy credit. Those days are coming to an end, so you should do everything within your means to get our of debt while interest rates are still low. They will need to shoot dramatically higher one day, and you don’t want to have an adjustable rate loan of any type when they do. Establish your freedom from the banks and deprive them of their revenue (interest on your debt).
  4. Invest in precious metals. The government’s most likely response to the debt issue and slowing economy is going to be to print money on a scale the world has never seen before. This will undoubtedly lead to hyperinflation, destruction of the U.S. dollar and skyrocketing prices for gold and silver, real money. In addition, the banks and their government bed buddies hate gold because it is out of their control. They can’t print gold or silver out of thin air and it is a threat to their fiat currency system and their very power structure. You should consider owning physical gold and silver and if you are enjoying the leveraged gains provided by mining stocks, make sure to occasionally convert those paper profits into more physical metal stored outside of the banking system.
  5. Lastly, continue to learn and share this information with as many people as possible. We can take our country back and end debt enslavement, but we have to move beyond the two-party system and stop bickering over marginal issues. Both parties are completely corrupt and in the pockets of the banksters and megacorporations. None of this will change until we eliminate the Fed and eliminate money from our political system. The mainstream media is not going to tell everyone this, because they are owned and funded by the banksters and elites. The information must spread via the Internet at a grassroots level.

Jason Hamlin Gold Stock Bull<><><>

By Mike Hewitt “No legal tender law is ever needed to make men take good money; its only use is to make them take bad money.” (Stephen T. Byington) The U.S. dollar has changed from being a paper certificate for a tangible asset to a fiat currency – a paper note declared legal tender. By looking at the history of American paper money one can clearly see the distinction. The following image shows two one-dollar bills from different years (click to enlarge). DollarCompare_small At a glance, the two bills appear similar, but look closely. The wording on the first bill, a 1957 Silver Certificate, reads: THIS CERTIFIES THAT THERE IS ON DEPOSIT IN THE TREASURY OF THE UNITED STATES OF AMERICA ONE DOLLAR IN SILVER PAYABLE TO THE BEARER ON DEMAND This statement is completely missing on the second bill, a 2003 Federal Reserve Note. The U.S. dollar is defined by the 1792 Coinage Act as being equivalent to 371.25 grains of pure silver. One troy ounce is equal to 480 troy grains. The market value for this amount of silver today is US$13.6125. So while they both read as being ONE DOLLAR, the second bill represents a devaluation of 93% in real terms from the 1957 bill! These Silver Certificates began to disappear from circulation during the 1940s and 1950s because they were immediately shredded once redeemed for silver due to a diminishing store of silver bullion in the treasury vaults. Silver Certificates were officially abolished by Congress on June 4, 1963 and all redemption in silver ceased on June 24, 1968. Up until the late-1920s, higher denominations of issued U.S. currency were gold certificates. 50DollarGoldCertificate The bearer could redeem their dollars for “twenty-five and eight-tenths grains of gold nine-tenths fine,” as per the Gold Standard Act of 1900. Constitutional Legality There is some question as to the constitutional legality of the Federal Reserve Notes we use today. “No state shall…make anything but gold and silver coin a tender in payment of debts.” (U.S. Constitution, Article I, Section 10) The justification is done through a loophole whereby it is the Federal Reserve that produces the currency, not the individual States.1 The changing of the dollar from being a silver certificate to a Federal Reserve Note has enabled the production of additional money, that is, in the words of former Federal Reserve Chairman Alan Greenspan, without limit.2 Inflating the money supply causes a transfer of wealth from existing holders of money to the first recipients of the newly created money through the process of devaluation. It is, in essence, a form of theft. “…the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.” (Governor Ben S. Bernanke, Deflation: Making Sure “It” Doesn’t Happen Here) What we today regard as U.S. legal tender notes are not legitimate dollar bills. There is no longer any paper currency or fixed concept of value known as a “dollar bill”. We carry and transact business with Federal Reserve Notes, and they merely represent the concept of a dollar bill. Notes 1 The Federal Reserve was established through the Federal Reserve Act signed into law by President Woodrow Wilson a few hours after being passed by the Senate two days before Christmas on December 23, 1913. 2 “And in the case of a central bank of a fiat currency regime, such reserves can be created without limit.” Taken from a speech given by Alan Greenspan before the World Bank Conference on April 29, 1999. About The Author mike_hewittMike Hewitt is the editor of DollarDaze.org, a website pertaining to commentary on the instability of the global fiat monetary system and investment strategies on mining companies. His website also provides a no-cost market data feed service with up-to-date quotes on currency exchange rates, commodity prices and major indices. Mike can be emailed at mikehewitt@hotmail.com. Original Article Source:  http://dollardaze.org/blog/?post_id=00748<><><>

Forward: If there are only a few articles you ever read on the gold standard, this should be one of them. The reason is that it is complete. It covers the moral case for the gold standard as well as its practicality. Although beginning with the basics it incorporates some of the more intricate aspects of it’s virtues. There is no call in this article to re-establish the gold standard today. Whether the gold standard is ever re-established is not the point. The point, is that like freedom, it is the ideal. And like freedom, while achieving it may be a distant goal, moving toward it is always the direction we should be moving. *********** At one time the case for the gold standard was practically self-evi­dent — undisputed by most econo­mists and appreciated by both lay­men and professionals. Today, however, the case for gold is bur­ied under decades of propaganda, misconceptions, and myths. It has been only recently that the case for the gold standard has begun to surface from under the Policy Makers’ anti-gold debris. Conse­quently, gold is once again gain­ing the attention and interest it so rightly deserves. Today’s free-market advocates of the gold standard differ from past advocates. For example, free-market advocates do not exclude silver or other commodities from their concept of a gold standard. Indeed, they do not even insist that gold must be money. The case for the gold standard is actually the case for market-originated commodity money, and the case against government-regulated fiat money. It is simply an extension of the case for free markets which respect the rights of man, and the case against controlled markets which violate the rights of man. To be concerned with the gold standard is to be concerned with a free economy, regulated by the values and choices of men, rather than a controlled economy in which the values and choices of men are regulated by government. This concern for man’s freedom to express values and exercise choices is derived from the deeper concern for justice and for man’s right to property. The man con­cerned with justice does not aim to force others to use gold as money. Rather, he insists that gov­ernment has no right to prevent him and other men from using gold as money if they choose. The man concerned with property rights does not urge government to legislate pro-gold policies in order to arbitrarily increase the value, popularity, or status of gold. Rather, he insists that gov­ernment stop inflating, since this arbitrarily decreases the value of his money claims to property. Antagonists of the gold stand­ard claim that it is impractical. But the gold standard is, in fact, the most practical monetary sys­tem yet conceived by man. How­ever, the gold standard’s primary virtue does not lie in its practi­cality: it lies in its morality. Those concerned about such things as freedom, justice, the preserva­tion of property rights and pur­chasing power, would do well to consider the moral case for the gold standard, for, once under­stood, it is the individual’s best defense against government con­fiscation of property through in­flation. The fact that prevents govern­ment from indulging in inflation­ary schemes under the gold stand­ard can be best summed up in a phrase: governments can’t print gold. But to understand the impli­cations of this statement, and the virtues of having gold as money, it is first necessary to understand what money is — and what money is not. What Money Is . . . A man on a desert island has no need for money. He produces the goods he needs to survive, and consumes all he produces. Simi­larly, a primitive society has no need for money. The kinds of goods produced are extremely lim­ited, and if individuals desire to exchange their goods with one another, they can do so through direct exchange, i.e., barter. But under a division of labor economy where men specialize in produc­tion and where there is a variety of goods produced, desired, and traded, there is a very definite need for money. For how else could Mr. Jones in Florida sell his oranges to men throughout the world and then buy Mr. Smith’s best-selling novel, unless there ex­isted some medium of exchange acceptable to all parties. Money originates from men’s desire for indirect exchange. And more, since indirect exchange usu­ally occurs between strangers like Smith and Jones, money must be an object which is mutually val­ued. Thus, money is that commod­ity which serves as a medium of exchange by virtue of its high degree of marketability. The task of discovering which commodity will be most valued by and most acceptable to men as a medium of exchange can only be accomplished through a market process; for it is only through the market that men’s values and choices are properly reflected. The verdict of the market has re­flected three general requirements for any lasting medium of ex­change: that money should be gen­erally acceptable to most men; that it should be practical to use; and that it should be relatively stable in value. If these require­ments are satisfied, the result is a money of trust. Trust is the lifeblood of money, and money is the lifeblood of any economy based on the indirect ex­change of goods and services. A money of trust serves to facili­tate exchange among men, and in doing so, breeds a healthy and growing economy. But if men should ever begin to mistrust money, the market will immedi­ately reflect this loss of confidence. Then money will begin to lose stability, lose its acceptability, and will soon become impractical to use in exchange. Mistrusted money is the anti­thesis of the lifeblood of an econ­omy. It’s a kind of “bad blood” circulating between men through­out the economy, breeding con­fusion and suspicion. The fact that men’s mistrust of money will result in monetary crises and col­lapse, underscores the need for a money that never contradicts men’s values, a money that at all times properly reflects men’s val­ues, i.e., a money based on, and constantly exposed to, individual choices — which means a free­-market-originated commodity money. When one considers the com­plex process that must take place before men can discover which commodity money constantly re­flects their changing values and choices, one can understand why it is only through a free market process that money can properly evolve as a medium of trust. And one may also understand why no man, group of men, or govern­ment, has the right to dictate what money or its value should be. This decision must be a market decision if it is to be a lasting decision. Throughout history, almost every conceivable commodity has been used as a medium of ex­change. Through the years of eco­nomic development and through trial and error, those commodi­ties least suited to serve as money were eliminated, while those com­modities best suited survived as forms of money. After centuries of exchange between men, the commodity that emerged as the most valued, the most practical, the most trusted money among men, was gold. What gives rise to men’s trust in gold? First, men value gold as money because men value gold as a commodity. Gold at any time can be converted to its commodity role if its monetary role should ever be questioned. Second, since gold is relatively scarce and precious to men, it has stability of value. Therefore, it can be trusted to serve as a relatively stable medium of exchange. And since most in­dividuals desire to save part of what they produce in some mon­etary form, gold’s stability of value provides them with a relia­ble monetary method of accumu­lating and storing wealth. What else gives rise to men’s trust in gold? Gold is easily mar­ketable, which means it is accept­able to men in exchanges of all kinds. Gold is also trusted because it is practical: it’s durable, so it won’t perish or rot; it’s small in bulk, so it is easily transportable. It’s a metal, which means it can be used in different forms, such as bars or coins; and, since gold does not evaporate, it will lose neither quantity nor quality if or when men should decide to melt their coins into bullion or melt their bullion for use in production. There is one more thing that gives rise to men’s trust in gold: the knowledge that gold cannot be counterfeited; the conviction that the money supply cannot be arti­ficially and arbitrarily increased by those who would aim to con­fiscate wealth rather than produce it; the knowledge that money (the claim to production and effort) will itself represent production and effort. In short, men’s trust in gold carries the conviction that the monetary system freely adopted by men is based, not on whim and decree, but on integrity and productivity. These are some of the reasons why men have trusted gold as a medium of exchange through his­tory — and why today’s Policy Makers damn its existence. … And What Money Is Not Money is not paper. Paper notes evolve from the desire for a con­venient substitute for commodity money. The paper notes that cir­culate as money today were once money substitutes (receipts for gold), defined by and convertible into a specific amount of gold. Paper notes did not and cannot become a money of trust without first representing a commodity of trust. Consider the reaction of free men — men who, understanding and respecting the meaning of property rights, are suddenly and for the first time offered in place of gold, non-convertible paper notes. These notes would be mean­ingless to such men. No man who had just come from harvesting a field of wheat would even consider trading his wheat for scrap paper. There are only two ways in which men will accept paper notes without commodity convertibility : if they are forced to do so, or if they are conned into doing so. Americans are now legally forced to accept government’s non-con­vertible paper notes — but only because they have been conned into believing that commodity money is “old-fashioned” and “im­practical” and that paper notes are indicative of a “modern and sophisticated economy.” Nothing could be further from the truth. Non-convertible paper “money” is fiat money that derives its value, not from its value as a commodity, not from its value as a useful medium of exchange ac­cording to the requirements of a medium of exchange, but from the decree of government. Fiat money is a throwback to the days of kings and the mentality of dic­tators. It is not a money evolved from the values and choices of free men in free markets, but a money created through the coer­cion of government. Is commodity money old-fash­ioned and impractical, as today’s Policy Makers contend it is? Con­sider the following facts: Over the last several decades, the ex­change ratios (the prices) of vari­ous commodities have not varied much in value relative to each other. For example, the value of eggs to milk or milk to bread would be at approximately the same ratios today as they were years ago. Why Prices Rise But if it is true that the ex­change ratios of commodities are relatively the same today as they were in the past, why then have prices (the exchange ratios of dollars to goods) soared over the years? The reason is that the val­ue of the paper money, with which government forces everyone to deal, has fallen yearly relative to all commodities. Clearly, if a com­modity (theoretically, almost any commodity) had been used as a medium of exchange over the past decades instead of government’s fiat money, prices would have re­mained relatively stable. It is im­portant to realize that it is not commodities that are rising in value, but fiat money that is fall­ing in value. Since 1933, when the U.S. sev­ered the dollar-commodity rela­tionship by abandoning what was left of the gold standard, the value of the dollar has depreciated by over ninety per cent in relation to other commodities. This could nev­er occur under a commodity stand­ard — only under a government imposed fiat standard. Had the U.S. returned to a dollar based on and convertible into gold instead of severing the dollar-gold rela­tionship, the supply of dollars over the years would have been limited to, or checked by, the sup­ply of gold. Therefore, the value of the dollar today would have been equal to the value of gold in relation to other commodities. Instead, the U.S. decided to print dollars whenever “needed” and to pretend that the dollar was “as good as gold” by legally fixing its value. The pretense couldn’t last, and today the dollar is worth a mere fraction of its val­ue in terms of gold in 1933. Paper notes that are not repre­sentative of and convertible into a commodity are not money and have never satisfied the require­ments of money for long. They are notes of circulating debt which men are forced to accept, so that governments can continuously pur­sue their policies of inflation. The Nature of Inflation Inflation is the fraudulent in­crease in the supply of money sub­stitutes and credit. It is a policy which allows government to arti­ficially create and spend more money than it is able to collect in taxes or borrow from its citizens. Government is the cause of infla­tion — the effect is higher prices. Consider each dollar as a claim to some tangible good. If the claims are increased, the value of each claim goes down because there are more dollars seeking goods. This bids prices up. But inflation is not simply ris­ing prices. In fact, inflation may exist even when prices remain the same or decrease. How is this pos­sible? If the production of goods and services increases more than the artificial increase in paper claims, prices will drop — but not by as much as they would have, had there been no artificial in­crease in paper claims. Thus, in real terms, the value of paper claims is effectively reduced even though in relative terms the value of these claims may increase. Historically, and in relatively free market economies, there are only two ways in which a general across-the-board increase in prices can occur: through a dramatic in­crease in commodity money (such as new gold discoveries) or through a fraudulent increase of money substitutes by banks and governments. The former type of general price increase rarely oc­curs and is perfectly natural. The latter is both unnatural and im­moral. In the case of new gold produc­tion, those who have produced the new commodity money will have earned the right to exchange their product for the products of others. All other non-money producers may have to pay higher prices for goods, as the supply of gold in­creases, but the higher prices are compensated for by having more money to spend. Who receives the “new” money will depend on indi­vidual productivity — and this is as it should be, for it is the jus­tice of the market that the acqui­sition and distribution of wealth is based upon productivity rather than decree. But, given a fiat standard where government sanctions and spon­sors an artificial increase in paper money or credit, the increase in purchasing power for some men can only be obtained at the ex­pense of other men. Given a fiat standard, income distribution is the result of chance, caprice, or government favors and loans. When government doles out its fiat money, these notes dilute the value of all other outstanding money claims. Those who receive the fiat money first, benefit from spending their money before prices rise. But as the fiat money is spent, prices are higher for all other consumers. Thus, the difference between a real increase in the money supply (i.e., commodity money) and an artificial increase (i.e., in paper claims) is the dif­ference between production and theft. Clearly, inflation is a moral is­sue. However prices respond, it is immoral that some man, agency, or government is legally permit­ted to obtain wealth at the invol­untary expense of other men. The major challenge in the sphere of monetary relations today is how to abolish the coercive power of government to control the supply and regulate the value of money, and how to return this function to the market where it properly belongs. The Fiat Standard at Work Under a fiat standard, govern­ment gains control of the banking system and thus, indirectly, of the nation’s money supply. It can arti­ficially and arbitrarily create mon­ey and furnish credit. Government paper notes are not based on or convertible into gold, or any other tangible commodity; man’s pro­duction and labor are not the sole claim to other men’s production and labor : the supply and value of money are determined by govern­ment. Under the American version of the fiat standard, the banking sys­tem and the nation’s money sup­ply are controlled and regulated for the most part by a twelve-man Board of Governors which is em­powered to make policy decisions for the majority of the nation’s banks. Thus, America’s banking system is not a free and private banking system — it is a quasi-governmental banking system, known as the Federal Reserve System. It should be clear that the Fed­eral Reserve System’s power to create claims against individuals’ property is immoral. But neither the Federal Reserve System nor the fiat standard is ever defended on moral grounds; they are de­fended on practical grounds. Once inspected, however, these grounds turn out to be about as solid as quicksand. The primary justifica­tion given for a fiat standard is that credit can be extended far more rapidly and extensively. This, it is claimed, is the fiat standard’s major virtue. It is, in fact, a major vice. The greatest economic threat under a fiat standard is that the Federal Reserve System will sup­ply heavy doses of money and credit to the loan market in an attempt to reduce interest rates and “stimulate” the economy. This attempt, while temporarily stimu­lating economic activity, leads to malinvestment, as businessmen falsely anticipate greater profits. A “boom” results, but since the “boom” is artificially created, the prosperity is temporary and, for the most part, illusory. Govern­ment has not furnished more goods; it has not increased the nation’s prosperity; it has simply increased the money supply —which leads men to believe they are richer. The fact is, however, they only have more paper claims to goods. This cannot enrich any­one; it can only lead to future in­flation, i.e., a reduction of the value of real claims to wealth. The Illusion of Prosperity Thus, increases of money and credit provide only an illusion of prosperity, for with increased money and credit come increased costs for producer goods and in­creased wage costs. Higher wages then lead to over-consumption, as consumers, too, are enticed by the illusion of prosperity. But over­consumption results in higher prices which reduce the consum­er’s standard of living. Since the “boom” was inflation-inspired, producers and consumers are not better off — they are worse off. Mal-investment and over-consump­tion are mistakes — errors in judg­ment — caused by government’s at­tempt to con its citizens into be­lieving that profit opportunities are better than they really are. When the credit expansion that stimulated the “boom” ends, the mistakes that were made cannot be perpetuated. These mistakes must be liquidated: consumers buy less and begin paying off their un­realistic accumulation of debts. Producers liquidate inventories. Interest rates rise, and unemploy­ment increases as the economy struggles to readjust. The severity of the readjustment depends on the degree and length of govern­ment’s prior credit expansion and the policies implemented to cope with the adverse effects. Given continual injections of money and credit in the inane attempt to con­tinue the “boom” and prevent a necessary recession, hyperinfla­tion will result. Hyperinflation must lead to monetary chaos as well as economic disaster, i.e., to depression. A major depression is not a necessary result of the fiat standard, but inflation and the “boom-bust cycle” are. The whole purpose of fiat mon­ey is to allow government to spend more money than it can raise in direct taxes from its citizens. As a result, the American fiat stand­ard has worked more often as a means of redistributing wealth than a means of stimulating the economy. Government, instead of furnishing money to the loan mar­ket in the attempt to continuously reduce interest rates, has created money to finance the “welfare” state. When government’s fiat money enters the economy in the form of checks for expenditures, rather than through the loan mar­ket, the sequence of events and the effects are a little different. Men usually hold their money as savings, but as prices continue to rise over the years of govern­ment deficit spending, men realize that the pieces of paper they hold are continuously and progressively depreciating in value — that in­flation is becoming a way of life. Once men begin to lose confidence in government’s fiat money, it’s only a matter of time before the years of simple inflation burst in­to hyperinflation and monetary collapse. Thus, whether government tries to stimulate the economy or to finance programs that it cannot afford, the fiat standard is self-de­feating and counter-productive. The consequences of America’s fiat standard have been mild by historical standards: the Great Depression of the ’30’s, an end­less series of booms and busts since then, and a depreciation of the dollar by about 92 percent. So much for the “practicality” of the fiat standard! The Meaning of the Gold Standard In a free society, no man, group of men, or government has the “right” to infringe upon the rights of others. This means that within a free society, the initia­tion of force is banned. All goals must be attained through persua­sion and voluntary cooperation, and no goal may be achieved at the expense of any man — not for the “good” of another man, not for the “good” of the state, and not for the “good” of society. A system of voluntary exchange is a system of laissez-faire capitalism. Under capitalism, man’s rights are supreme. They are defended by government — not violated by government. A gold standard is an integral part of a free society; a fiat stand­ard is an integral part of a con­trolled society. A gold standard cannot exist without the consent of individuals; a fiat standard cannot exist without the initiated force of government. A gold stand­ard is based on voluntary exchange, the recognition of men’s values, and respect for private property; a fiat standard is based on compulsory “exchange,” the de­nial of men’s values, and the insidi­ous confiscation of private prop­erty. Wealth is production, and gold is the equivalent of wealth pro­duced. Because neither wealth nor gold can be created out of nothing, neither wealth nor gold are pos­sible without men of intelligence, men of ability, and men of produc­tivity. Fiat is force and is the equivalent of wealth confiscated. Both fiat and force are the tools of the envious and the cowardly. Where a gold standard is welcomed by the best of men, the fiat stand­ard is welcomed by the worst of men. Where the gold standard de­mands the earned, the fiat stand­ard grants the unearned. Where a gold standard evolves from indi­vidual choice, a fiat standard evolves from government edict. Where a gold standard necessi­tates only that men be left free to act, to choose, and to trade, a fiat standard invites government to control, to regulate, and to dic­tate men’s choices, actions, and the terms of trade. Gold limits the government’s power to spend more money than it receives in taxes, and in doing so, gold limits the government’s arbitrary power over the economy; gold checks artificial money and credit expansion; it prevents arti­ficial “booms” which lead to very real “busts”; gold protects individuals from economically un­sound government programs; and it protects citizens from the in­flationary confiscation of private property. Not only is the gold standard the most practical mone­tary system yet discovered, it is a standard consistent with freedom — yet it is the gold standard that today’s Policy Makers either ig­nore or denounce. Paul Nathan October, 2009 **** Paul Nathan has written in the field of economics since 1968. In the seventies he wrote several articles on gold for a national, international magazine. Since then he has become a full time investor and has resumed his witting, focusing on gold and current events. <><><>

The Coming COMEX Default

Submitted by joeshwingdingon Tue, 06/09/2009 – 22:01
The shear amount of information uncovered is staggering. Hopefully it will keep your interest. Let me warm up here with a couple of interesting quotes.

“Gold was not selected arbitrarily by governments to be the monetary standard. Gold had developed for many centuries on the free market as the best money; as the commodity providing the most stable and desirable monetary medium.” Murray N. Rothbard

Why Gold and Why Now?

“If you don’t trust gold, do you trust the logic of taking a beautiful pine tree, worth about $4,000 – $5,000, cutting it up, turning it into pulp and then paper, putting some ink on it and then calling it one billion dollars?” Kenneth J. Gerbino

Ever wonder why banks and governments like a paper currency system? Why they fully embraced the Keynesian theory of deficit spending?

“Deficit spending is simply a scheme for the ‘hidden’ confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights.” Alan Greenspan

That one is a classic considering the source. gold_bars The contrivance of paper currency keeps a death grip on the wage slaves by secretly confiscating their wealth through a hidden taxation system that is difficult to detect. Gold or gold standard did not allow this to happen because it is impossible to inflate gold. For most of the 19th century the US experienced a slight deflation due to the industrial revolution and greater technological advances. Let me say up front the gold standard is not coming back. So why then am I writing this? GOLD stands as a sentinel over the world’s currencies. It keeps a check on governments and exposes their manipulations. The bankers fear it so they must control it. First Paulson and now Geithner have repeated the mantra of a “strong dollar policy”. In fact when our Treasury Secretary uttered these words last week in China he was nearly laughed off the stage. But … What does it mean to have a strong dollar policy? In government new speak it means something else must look weak … that something is gold. Remember the words of former Fed Chairman Paul Volker from the 1970’s, “the one mistake that I made was in not capping the gold price.” Alan Greenspan’s comment before Congress in July of 1998, “Central banks stand ready to lease gold in increasing quantities should the price rise. In April of this year an event took place that almost went unnoticed by many. ECB bailed out Deutsche Bank

[..]March 30, 2009 came and passed, and so many people stood for delivery, refusing to part with their long gold futures positions. On Tuesday, March 31st, Deutsche Bank (DB) amazed everyone even more, by delivering a massive 850,000 ounces, or 8500 contracts worth of the yellow metal. By the close of business, even after this massive delivery, about 15,050 April contracts, or 1.5 million ounces, still remained to be delivered. Most of these, of course, are unlikely to be the obligations of Deutsche Bank. But, the fact that this particular bank turned out to be one of the biggest short sellers of gold, is a surprise. Most people presumed that the big COMEX gold short sellers are HSBC (HBC) and/or JP Morgan Chase (JPM). That may be true. However, it is abundantly clear that they are not the only game in town. Mysteriously, on the very same day that gold was due to be delivered to COMEX long buyers, at almost the very same moment that Deutsche Bank was giving notice of its deliveries, the ECB happened to have “sold” 35.5 tons, or a total of 1,141,351 ounces of gold, on March 31, 2009. Convenient, isn’t it? Deutsche Bank had to deliver 850,000 ounces of physical gold on that day, and miraculously, the gold appeared out of nowhere.

The buyer of such an enormous amount of gold was not named but the timing was convenient that the ECB probably saved the bank and COMEX from a huge problem. The size and timing of the delivery of Deutsche Bank’s COMEX obligation is suspicious, to say the least, when taken in conjunction with the size and timing of the ECB’s gold sale. When it comes to commodities there exists a rule going back to the 19th century known as the 90% rule. Simply stated, a seller must posses 90% of said commodity in order to sell futures. The Deutsche Bank entering into short contracts while not possessing the physical metal would be in violation of these rules. Since then the German Central Bank and Dubai have requested that their gold, held abroad, be returned from the U.S. and U.K. respectively. Rob Kirby has uncovered probably the most revealing information about the US gold hoard. Or at least what is left of it. The Mineral Industry Surveys is published by the United States Geological Survey (USGS) in which it provides a macro look at import/exports of US precious metals (gold). Keep in mind the USGovt reports gold holdings of 8,100 metric tonnes of gold. Yet in 2007 the US exported over 2000 tonnes of gold. Photobucket In 2008 nearly 3000 tonnes of gold were exported. 2008AuRob Kirby points out

U.S. mine production of gold is roughly 228 metric tonnes. This figure of 2,920 metric tonnes is equal to 36 % of all alleged sovereign U.S. gold stocks or more than 14 times annual U.S. gold mine production. So, I was left wondering, “just what is/are ‘gold compounds’?I contacted the USGS and queried a qualified individual [who had working knowledge of this data stream] about the definition of “Gold Compounds”. I was told that, according to the U.S. Census Bureau – who supplies not only the definition but the actual reported numbers, gold compounds were typified by industrial type products containing low percentages/amounts of actual gold content – like gold paint. I then reasoned with the USGS person, if such were the case, why would U.S. exports have increased in 2008 to nearly 3,000 metric tonnes [when the Global Economy was slowing and the U.S. Dollar was strong] from 2007, when U.S. exports totaled approximately 2,000 metric tonnes [when the U.S. Dollar was weaker and the Global Economy was booming]? I noted that this was counter-intuitive and made no fundamental economic sense:

Kirby went on to question the USGS about whether gross weight or gross value was assigned to “Gold Compounds” and was told it was gross value the US Census Bureau attached to the exports.

I responded rhetorically, “being an issue of gross value – then let me guess that the U.S. Census Bureau is assigning an astronomically high value to these goods. Such a high value would be COMPLETELY INCONSISTENT with what the U.S. Census Bureau claims these items are- namely, industrial goods. The values being reported would be more in line with these goods being gold bullion or equivalents”. The individual from the USGS confirmed my reasoning when he responded, “that would be CORRECT”.

What Kirby is talking about is the US Treasurys’ official reporting of the value of the US gold hoard…. now known as “Deep Storage Gold”. USTreasury_Au At $42.22 a troy ounce they would have completely wiped out the entire US gold holdings in the first year. 5000 metric tonnes = 160 753 733 troy ounces [$128 billion+ at today’s prices] Exported from the US in the last two years. Notice that in 2007 gold had a huge run up in price. A price that the central banking powers had to extinguish. five_year_AuThe US Gold reserves confiscated in 1933 was made up of gold melt. The US Gov’t did not waste time separating the metals so most of the gold held is 90% bars. What has been confirmed is the US has been exporting gold melt or “gold compound” for the last two years.

Over the course of 2007 / 2008 – more than 5,000 metric tonnes of “Gold Compounds” have been exported from the United States of America representing more than 62 % of reported sovereign U.S. gold reserves or about 24 times annual U.S. mine production.

Industry funded trade groups like the World Gold Council and GFMS Metals Consultancy, have not reported any of these movements in monetary metals. These facts shine light on their credibility and exposes them as being part of the misinformation stream coming from various governments and central banks around the world. Organizations like GATAhave sought to expose the manipulation and suppression schemes of the worlds central banks for years. Their research has done much to expose the truth.

The Reserve Bank of Australia confessed to the gold price suppression scheme in its annual report for 2003. “Foreign currency reserve assets and gold,” the RBA’s report said, “are held primarily to support intervention in the foreign exchange market.” The head of the monetary and economic department of the Bank for International Settlements, William S. White, in a speech to a BIS conference in Basel, Switzerland, in June 2005: “There are five main purposes of central bank cooperation, White announced, and one of them is “the provision of international credits and joint efforts to influence asset prices (especially gold and foreign exchange) in circumstances where this might be thought useful.” Nearly two years ago, the US Treasury quietly made a subtle change to its weekly reports of the US International Reserve Position, which includes the US Gold Reserve. In stating the US Gold Reserve is 261.499 million ounces, the gold is now reported ‘including gold deposits and, if appropriate, gold swapped.’ This description provides clear evidence that the US Gold Reserve is in play. Gold has been removed from US Treasury vaults and placed on deposit, presumably in the couple of bullion banks the Treasury has selected to assist with its gold price-capping efforts.

The U.S. government has not had a genuine audit of its gold holdings in decades. In recent years, it has changed the description of gold holdings in reports so that now it is only described as “custodial gold” rather than gold reserves. Cross posted at the Economic Populist

Comments

“There is no Gold in Fort Knox”

Submitted by Robert Oak on Tue, 06/09/2009 – 23:57.
I’m not a Gold bug and when I first saw your post I thought it was CT, i.e. “there is no Gold in Fort Knox” stuff, but taking a second look, your citations are credible. That Greenspan quote is pretty amusing.

Eisenhower Administration

Submitted by joeshwingding on Wed, 06/10/2009 – 06:05.
Was the last time an independent audit was done to Fort Knox. I don’t know if its there or not…. in 50 years how could anyone? … it is the most guarded secret of the FED & Treasury. They talk it down constantly, calling it a barborous relic yet central banks of the world still list it as an asset on their books. The question is … do they still hold as much as they say they do? They operated leasing programs in which the gold does not come back, they count leased gold as a holding, talk about double booking.

Sir Alan Stanford

Submitted by Johnny Venom on Wed, 06/10/2009 – 02:08.
Not sure if anyone has been following the Standford Case, essentially another possible Madoff scheme. Tonight CNBC played one of their investigative reporting pieces specifically about this guy and Stanford Financial. Anyways, there’s a part in there that reminded me about the first half of this article. In it, Sir Alan Stanford was looking to build up his real estate assets. He borrowed money from other investors (unwittingly) to literally buy a small island that was part of the island nation of Antigua (he has dual citizenship there, though originally from Texas). He had purchased the tiny island, which was to be converted into a private resort for high net worth customers (with a membership fee of $15 million), for tens of millions of dollars. When it was time to do the books, he ordered his bean counters to put the value of the island into the billions (this while the deal for the island was going through just weeks prior). So right there, out of thin air, an asset’s value was ballooned without the market. ——————————————– www.venomopolis.com

cooking the books

Submitted by Robert Oak on Wed, 06/10/2009 – 13:36.
otherwise known as accounting magic tricks. When we get into this realm of asset evaluation and accounting methods, etc. it’s one dense forest and for the layperson they cannot see the trees to save their souls, much less experts. Some of the more common methods to create Ponzi schemes, asset inflation, profits when there are losses, etc. Maybe a “cookbook” of recipes on how the methods operate. A cookbook on cooking the books.

You can’t inflate gold–close but no cigar

Submitted by seebert on Wed, 06/10/2009 – 09:42.
You can inflate gold. It’s just *really hard to*. The majority of the gold in our economic system is probably only 1-2% of the gold on the planet earth; 19th and early 20th century mining systems were horridly inefficient and during that boom time of American gold production (1849-1954) many mines ended up shutting down because they were unprofitable- inflation had pushed the price of gold too low to mine. With Gold now back up to ~$1000/oz, some of those old mines in my state have discovered a whole new business model- gold mining tourism, in which the vacation might cost you $500, but you’ll earn $1500 over that for a week’s work. ————————————- Maximum jobs, not maximum profits.

————————————- Maximum jobs, not maximum profits.

Gold discoveries

Submitted by joeshwingding on Wed, 06/10/2009 – 09:51.
if large enough could push the price down for a short period. This happened with the Comstock silver boom. However your assessment of gold price is wrong. Gold price was artificially fixed until at just over $20 oz. until 1933. After the FDR gold confiscation he revauled gold (devalued the currency) to a fixed $35 oz. The price remained there until 1971. If finding gold is that profitable why am I not reading about new gold millionaires coming out of Oregon?

DEQ

Submitted by seebert on Wed, 06/10/2009 – 11:50.
“If finding gold is that profitable why am I not reading about new gold millionaires coming out of Oregon?” It’s profitable, *BUT* thanks to 40 years of land-use laws and environmental sensitivity, it’s no longer legal or politically correct to do this large scale. The Sumpter Dredge will never run again. Your question led me to find out that Cracker Creek Mine has suddenly closed- sometime in the last couple of days their website, which previously offered Highbankers at $120/4 hours rental, has been taken down. Looks like they might be a victim of a government decision to limit public access to the entire region. The veins in Oregon are not new, and while one person panning could get that kind of profit (2 oz of flakes for a week’s work in the rivers isn’t that out of line, especially not in the the coastal mountains, it is limited now to just panning on known government owned lands. Mechanical dredgers are banned in those areas completely, even highbankers are banned there. You ain’t going to see a millionaire from those regions. At most, you might see an unemployed person camping and earning $120,000/year with *very* hard labor. And that would even get cut into with the harsh weather we get yearly- many weeks you’d get nothing. “However your assessment of gold price is wrong. Gold price was artificially fixed until at just over $20 oz. until 1933. After the FDR gold confiscation he revauled gold (devalued the currency) to a fixed $35 oz. The price remained there until 1971.” Thanks for the correction. Pre-1971, then, the reason these mines closed was because inefficient mining methods meant production cost was far higher than either of those fixed prices. Post-1971 (the era of CONSERVative Republican Governor Tom McCall, who started the environmentalist land use laws in Oregon) we haven’t seen a return to large scale production because of the damage it does. I’m still thinking about taking a weekend or two to go gold panning, as time allows- and if I end up unemployed again, a weekly trip to Shady Cove Campgroundmay be in order, as it’s my closest proven vein where panning is allowed. ————————————- Maximum jobs, not maximum profits.

————————————- Maximum jobs, not maximum profits.

Report Back

Submitted by joeshwingding on Wed, 06/10/2009 – 12:27.

I’m still thinking about taking a weekend or two to go gold panning, as time allows- and if I end up unemployed again, a weekly trip to Shady Cove Campground may be in order, as it’s my closest proven vein where panning is allowed.

Please report back should you go panning. I would like to hear what your efforts gain.

This reminds me of an Atlantic article.

Submitted by Johnny Venom on Wed, 06/10/2009 – 23:55.
If anyone has a chance, please take a gander at this article from the Atlantic magazine.  It’s basically how deBeers sold America diamonds.  But what’s interesting is the part about when the Soviets got into the act and how deBeers had reacted. Here you had the emergence of a rival source of diamonds, smaller than the ones coming out of Africa, but in much larger quantities.  The famed diamond monopoly rushed to make a deal with the Kremlin, thinking they could get things under control.  Problem was, deBeers underestimated the supply that could come out of Siberia. Its a really interesting piece.  You see how they had to essentially put into conflict everything they said about regular sized diamonds to push the smaller gems.  This campaign would also have some unintended consequences.  Your talk about price drops and supply reminded me of that article. ——————————————– www.venomopolis.com

Peak Gold

Submitted by midtowng on Wed, 06/10/2009 – 12:36.
Despite the fact that the price of gold has increased nearly 4 fold since 2001, gold production has slowly fallen . peak gold click image to enlarge [edit: RO, format your links and images ya all! the tools are here, use 'em, pls]

http://www.economicpopulist.org/content/coming-comex-default

<><><>
Fort Knox Gold Scandal — Chapter 19 by Bill Still, From my 1995 book, “On The Horns of the Beast”
I have been writing on the Fort Knox Gold Scandal since 1980. In fact, the Fort Knox missing gold story was what got me interested in monetary reform and led to “The MoneyMasters.”Here is the first time I published the story in a book, published in 1995, entitled, “On the Horns of the Beast: The Federal Reserve and the New World Order.” (no longer in print)

(Has the Fort Knox Gold been moved ?) The non-existent “good-delivery” gold reserves in Fort Knox is a huge story that has yet to come to fruition, but one day it will. That day will be when the U.S. is forced onto a gold standard, then suddenly discovers that it owns no good-delivery gold. That which was shown to the press on Sept. 23, 1974 was reportedly too orange in color to be pure gold. This was undoubtedly the remaining “coin melt” from FDR’s calling in of gold coins. Coin melt is typically 90% or less. The orange color indicates a high copper content. The bottom line is there is probably ZERO “good-delivery” gold (.995) in Fort Knox. Just as with other issues in this day, U.S. Treasury could completely embarrass us critics any day of the week by throwing the doors open to the press and showing mountains of good-delivery gold being assayed. An annual physical audit of U.S. gold reserves is required by law. However, the last time one was done was 1957. Unfortunately, the photos and illustrations did not paste in. Perhaps someone could help me with this technical problem. OOPS. Did you know there is a character limit for insertions of 66,000 characters. For Chapter 20. See: http://z6.invisionfree.com/Bill_Still_Refo…hp?showtopic=29CHAPTER 19 – DRAINING FORT KNOX The world was now divided in twain — communist command economies on the one hand, versus monopoly capitalists on the other, set to fight it out in one perpetual and highly profitable arms race. It was finally time for the central bankers to embark in earnest on their three-step plan to enslave the economic systems of the entire world and finally bring about their global government, or New World Order. The phases of this plan were: • Step One: centralize world gold (1962-1992). • Step Two: create a massive – though gradual — global depression. • Step Three: offer the starving billions a solution — a global currency based on gold, which central bankers have conveniently monopolized. Today, we are poised on the verge of Step Two, a massive, though gradual worldwide economic collapse. One interesting indicator might be that President Clinton recently proposed the repeal of the Glass-Seigel Act of 1933. This bill was passed after the Crash of ’29, to prevent banks from owning investment houses or vice-versa. If Mr. Clinton is successful, this will surely drive the speculative stock market wild, a development which can only end in a crash of titanic proportions — a crash which would certainly drag the rest of the world down, too. Let me hasten to say that there may be many other ways to achieve this collapse. The recent Mexican peso crisis is but a mere symptom of international financial instability. The situation there will get worse yet. That’s certain. For those who do not believe that events around us are being orchestrated, consider the wealth of evidence that shows how very effective the world’s central bankers have been at implementing the first step of their plan — centralizing world gold in Fort Knox, then moving it abroad into the hands of private speculators. The Biggest Gold Treasure In History Most Americans think that Fort Knox is still packed with an immense quantity of gold bullion — the treasure of the United States. They’re wrong. It is true that at the end of World War II, Fort Knox contained the largest gold hoard in the history of the world, King Solomon included. Total U.S. gold reserves exceeded 26,000 Metric tons — 701.8 million ounces — a mammoth 69.9% of the world’s supply. But today, the General Accounting Office admits that only 24 million ounces of pure gold — 909 tons — remain in the U.S. Reserve. That’s less than 3.5% of U.S. holdings in 1949. But that’s not the worst of it. There may be even less, and what is left may be of very low purity. We don’t know for certain, because despite Federal law that requires an annual audit of U.S. gold reserves, the Treasury has consistently refused to conduct one. The truth is that an independent audit of U.S. gold reserves has not been done since President Eisenhower ordered the last one in 1953! How could this have happened? Where is our gold? Who took it? The Eisenhower Years Only hours after Republican Dwight Eisenhower was sworn in as President in January of 1953, he ordered an audit of the nation’s gold reserves. After 20 years of governing by Democrats, many Americans wanted to be certain that those responsible for overseeing America’s gold reserves had taken proper care of it. Despite the passage of nearly 40 years, it is still not clear exactly how much of the nation’s gold supply was audited in 1953. The Treasury’s current estimate is that only 5% was audited. However, the former commanding general of Fort Knox, Lt. General John L. Ryan, Jr., claims that a full 100% physical inventory was performed. The entire audit took only seven days, and was completed on January 27, 1953. Eleven weeks later, an April 12, 1953 press release from the Treasury Department stated that: “Approximately 9,000 bars… were weighed on special balance scales of high sensitivity … and again the results were in exact agreement with the records. “As a final step of the verification process the Fort Knox Special Settlement Committee had test assays made of 26 gold bars selected at random…. The results of the assays indicated that all gold tested was of a fineness equal to that appearing in the mint records and stamped on the particular bars tested. Gold samples used for the test assays were obtained by drilling from both the top and the bottom of representative gold bars.” Despite critics at the time worrying that this was merely a representative audit, not a complete one, it was the last time any form of reliable audit was done. The Gold Drain Begins As we mentioned earlier, on April 5, 1933, Roosevelt ordered all Americans to sell their gold coins to the government for only $20.67 per ounce. Less than a year later, on January 31, 1934, he raised the price of gold to $35 per ounce. Since the world market price for gold was still about $20 per ounce, foreign investors flocked to sell the U.S. their gold at the inflated price and gold literally flowed to the U.S. Since then, every world currency has been defined against the dollar, and the dollar has been defined as worth 1/35th ounce of gold. But as the Federal Reserve continued to inflate the currency by printing more and more dollars, gold’s actual value rose far beyond the $35/ounce price the U.S. government charged foreign buyers to purchase it. When gold became scarcer around the world, its price began to rise. As monetary historian Christopher Weber put it: “For 40 years, despite a massive inflation of paper dollars created out of thin air by the Federal Reserve, the U.S. government stubbornly insisted that an ounce of gold was worth $35.” 464 For example, in 1949, the U.S. gold supply stood at 701,800,000 ounces of what the government calls “fine troy ounces.” As we’ll show in the next chapter, the government has a rather flexible definition of “fine.” Actually, we now know that approximately 239,500,000 ounces of this 1949 supply was comprised of the melted gold coins surrendered by American citizens, known as “coin gold.” But the government conveniently lumped all gold together at that time to make it look like it was worth more than it really was. This deception has fooled a lot of well-intentioned Americans trying to get to the bottom of what happened to America’s gold. For example, Congressman William E. Dannemeyer wrote in the forward of Christopher Weber’s book, Good As Gold: How We Lost Our Gold Reserves And Destroyed the Dollar: “The author chronicles the stupidity, if not the malfeasance, of government leaders and bureaucrats in allowing the depletion of U.S. gold reserves from a high of 701.8 million ounces in 1949 to 291.6 million ounces in 1971 — a loss of 58.6% (it currently hovers around 262 million ounces).” The average person would say, “Gee, why didn’t they take it all? It couldn’t have been much of a conspiracy?” Well, they did get it all — or at least the vast majority of it! What Dannemeyer didn’t realize when the book was published in 1988, was that of the 291.6 million ounces he quotes, 239.5 million of these ounces is coin gold of dubious purity. This coin gold is probably all that is left in Fort Knox today. The last time any private citizens saw any of the Fort Knox gold was 1974 and they reported it looked unusually orange in color, not golden. This would be typical of the high copper content of coin gold. So, America actually had only 52.1 million ounces of pure gold left in 1971, and 22.5 million ounces today. Of the 701.8 million ounces in 1949, only 462.3 million ounces were pure gold. Today, that has been reduced (by the government’s own admission) to only 22.5 million ounces, or 4.86% of the 1949 total. In other words, 95% of the pure gold is gone! What’s even more outrageous about all this is that the government has steadfastly refused to allow a reliable, independent audit of U.S. gold reserves. In any case, let’s pretend — just like the government has done for many years — that we had 701,800,000 ounces of good-delivery gold of .999 purity or better, which is the only form acceptable in international trade. If you multiply that times the government price for gold, $35/oz., you get a figure of $24.5 billion. That’s what our gold was worth in 1949 (according to the government). In that year, we had $25.05 billion worth of Federal Reserve notes in circulation. So the books looked like they were balanced … almost, anyway. We had one dollar in gold for every paper dollar in circulation. Never mind that American citizens had five times that amount in savings and checking account balances. Let’s maintain the fiction that in 1949, a paper dollar was backed by one dollar’s worth of gold in the U.S. gold reserve. But let’s see how that changed. Here is a graph of the amount of currency compared to the value of U.S. gold holdings as the years went by. As the amount of gold declined, the number of paper dollars was steadily increasing. In other words, after 1949, the dollar was no longer as good as gold. By 1961, we had nearly twice as many dollars as we had gold to back them. Compounding this inflation was the fact that by 1961, American citizens had 7.5 times as much in savings and checking accounts as there was in currency. Anyone could see that the gold-backed dollar was dead — an economic fiction. The only question is, why was this fiction sustained for another ten years — until 1971? Throughout the Eisenhower administration, from 1953 to 1961, the price of gold was kept artificially low at $35 per ounce. During this time, 155,600,000 ounces of gold was sold to foreign investors — over 1/3 of the total in U.S. reserves. Remember, it was still illegal for Americans to buy U.S. gold. Violators of this federal law faced a $10,000 fine and ten years in jail. Doesn’t it seem crazy to you that Americans could be thrown in jail just for trying to buy back their gold from the U.S. Treasury? This question begs for a common-sense answer. The answer is that big American investors would certainly have bought up all the gold at such a cheap price — $35/oz. No, the government intended U.S. gold to be sold to foreigners, only! Most law-abiding Americans wouldn’t risk tarnishing their good names with a prison sentence just to buy some gold. But some did. Through a legal loophole, Americans could buy U.S. gold if they kept it abroad. Eventually, Eisenhower closed this loophole too, not by means of a law passed by Congress, but by executive order.466 After that, no U.S. citizens could legally buy U.S. gold, even if they kept it offshore. But, that didn’t stop some Americans from doing it anyway. Financial expert Christopher Weber told of one such incident: “In the early 1960s, I myself heard about an elderly friend of my family who was heiress to a large fortune. She was convinced both that the U.S. was making a mistake in selling off its gold and that Communists and international bankers… were getting our gold. So she decided to buy up as much gold as she could herself to prevent at least some of it from falling into the ‘wrong hands.’ This was easy for her, as she spent part of the year in Switzerland anyway. Not only was she never caught, she lived to see her holdings soar in value twenty-fold when gold reached $800 per ounce in 1980, and used her gains to support the causes she believed in.” Kennedy and the London Gold Pool When President Kennedy took office in 1961, gold was flying out of the U.S. In one year, 1958, a record 65 million ounces — 2,708 tons — went to overseas speculators. In 1959, another 30.7 million ounces were sold, and in 1960, another 48.7 million ounces left the country. In the last three years of the Eisenhower Administration, over 6,000 tons was sold — 35% of all the good-delivery gold that remained in the U.S. Treasury — all for 1/10 the price it would soar to a decade later. The gold stampede was on. So great was the buying pressure, that despite three years of unprecedented gold sales, the market price of gold was as much as 10% higher than the artificially-set $35/oz. price charged foreigners by the U.S. government.468 Instead of doubling the price, which would have stemmed the flow of America’s gold overseas, what did Kennedy do? Two weeks after taking office, he announced that he would dump even more gold on the market to try to bring the world gold price back down to $35/oz.! Although Kennedy’s “solution” slowed the flow somewhat while he was alive, it only accelerated the flow after he was gone. The dollar should have been cut loose from gold right then and there. But no, the world’s gold that had first been consolidated in Fort Knox, was now going to be moved to London come hell or high water, just as the head of the Federal Reserve and the head of the Bank of England had planned nearly 40 years earlier. Kennedy’s plan — in the best of lights — was only seen by the central bankers as a minor delay. In a February 6, 1961 message to Congress concerning the gold outflow, Kennedy tried to reassure foreigners that the dollar was still “as good as gold.” “The loss of gold is naturally important to us… (the) growth in foreign dollar holdings (has) placed upon the United States a special responsibility — that of maintaining the dollar as the principal reserve currency of the free world. This required that the dollar be considered by many countries to be as good as gold…. “Those who hope for speculative reasons for an increase in the price of gold will find their hopes in vain.” As Weber commented: “The reality was that, due to price inflation, someday the dollar would have to be devalued, that is, the official gold price increased. By defending an indefensibly high dollar value, by dumping gold, Kennedy set the scene for the policy that would rob the U.S. of almost half her official gold from 1961 to 1972 ….” But even Weber didn’t understand how bad the situation really was when he wrote about it in 1988. In reality, 95% of U.S. good-delivery gold was eventually lost. Kennedy reiterated the Eisenhower policy that no American could own gold even if they kept it offshore: “The recent Executive Order forbidding the holding of gold abroad by Americans will be maintained…. It will help prevent speculation in the gold market. I am directing the Secretary of the Treasury to keep me advised on steps being taken for effective enforcement. I place everyone on notice that those few American citizens who are tempted to speculate against the dollar will not profit in this manner.” Weber explained that: “This law was unenforceable. Private Americans acting through Swiss bank accounts, for instance, could and certainly did continue to buy gold, almost certainly some of it from Fort Knox.” Of course, the effect of this was that only the very wealthiest Americans could hope to buy and hold gold this way. So, the end result of Roosevelt’s confiscation of privately held gold was that it was taken from the lower and middle classes and consolidated in the hands of the richest people in the U.S. and abroad. Kennedy’s speech on gold did have an effect on world markets. Gold’s price dropped from $41/oz back to $35/oz. Also, the world’s central banks pledged to stop buying gold and start selling their own gold reserves to maintain that price. In October 1961, this agreement became institutionalized with the formation of the London Gold Pool. The U.S. agreed to put up half the gold and seven other nations (France, Belgium, Italy, Germany, Holland, Switzerland and the U.K.) would put up the other half. The gold was physically removed from their central banks and sent to guess where? The Bank of England in London. The Total Kennedy Drain How did that affect the drain from Fort Knox? It slowed the flow somewhat, but the U.S. was still bleeding gold at a deadly rate. In 1961, gold sales were cut in half to 24.5 million ounces. In 1962, another 24.5 million ounces flowed overseas. Then a real crackdown brought the gold drain down to only 13.2 million ounces in 1963, the last year of Kennedy’s life. Total gold sales during the 34 months of the Kennedy administration; 63.1 million ounces, 2,629 tons — an additional 23.4% of what remained. Not exactly an enviable record. During the next three years of the Johnson administration, the slide continued at almost exactly the same rate, with an additional 67.5 million ounces being sold through 1966. Then in the last two years of his administration, 1967 and 1968, an additional 66.9 million ounces went out the door. All told, in the eleven years between 1958 and 1969, 338.3 million ounces (14,096 tons) of good-delivery gold — 81.8% of U.S. holdings — was sold at $35/ounce to foreign speculators. At the start of 1969, U.S. good-delivery gold reserves stood at only 71.7 million ounces, less than 3,000 tons. Since then, it has dropped still further to only 24.4 million ounces, a mere 1,017 tons. Remember, we started out with 29,242 tons! Today, organized crime syndicates have far more good-delivery gold than the U.S. Treasury. They have attempted to sell as much as a 2,000-ton block of gold on the black market, as we will show later. To the average American, in 1961, there was nothing wrong with the idea of strengthening the dollar. The concept sounded good. That’s why those who were aware of the formation of the London Gold Pool, didn’t bat an eye. In short, no one complained. To most people, it all seemed too complicated for the average person to understand. What few Americans realized was that the dollar was being “defended” by a policy so disastrous it could arguably be called treasonous. The vast American hoard of gold bullion from Fort Knox, was about to be shipped to London to be sold for $35 per ounce to anonymous European speculators — some of them, as we’ll see in the next chapter, fronting for major American corporations. Did these speculators know in advance that once the gold was depleted, the price of the metal would skyrocket? It is logical to assume that they did, of course. American government officials must have known this as well. Vast fortunes were about to be made from American gold. Once the gold reserves of Fort Knox were depleted, the price would soar to over $800/oz., before settling at around $400. One economics expert saw the danger of our nation’s vanishing gold supply and spoke out during this period. That man was monetary scientist John Exter. In a May 1962 address he warned solemnly: “Our monetary laws, as presently established, make it easy for our enemies to drain off — directly or indirectly — billions [of dollars worth] of our gold and to use it not only to bulwark their own economies, but mainly to undermine our free way of living and to harm us in every possible way…. “As things stand now, speculators, including Americans, who are prohibited by law to acquire our own gold, are purchasing and hoarding substantial quantities of gold in world markets, such as in London….” The Kennedy “Warning” Could it be that just ten days before his death, President Kennedy suddenly saw the light? It has long been rumored that in the Fall of 1963, Kennedy signed Executive Order 11110, authorizing the U.S. Treasury to resume the printing of U.S. Notes — debt-free money, just like Lincoln’s greenbacks. And then, on November 12, 1963, just ten days before his assassination, he is rumored to have made this statement in a speech at Columbia University: “The high office of the President has been used to foment a plot to destroy America’s freedom and before I leave office, I must inform the citizens of their plight.” This rumor is so persistent and widespread that no work on the Fed could be considered complete without mentioning it. However, as it turns out, Executive Order 11110 mentions only transfer of the authority to issue more silver certificates from the President to the Secretary of Treasury. Besides, Kennedy was an internationalist. Issuing U.S. Notes would be the worst thing any President could do against the moneychangers. In addition, no one has been able to verify the existence of the Columbia speech. G. Edward Griffin contacted the Columbia University to provide a transcript, but none was available. In fact, he was told that Kennedy had never spoken there. According to the Head Librarian at the Kennedy Library in Boston, Ronald E. Whealan: “Ten days prior to the assassination [Kennedy] was at the White House meeting with … the ambassador to the U.S. from Portugal.” It will be left to future researchers to determine whether this speech was ever made or not. 1968-1971: The Final Collapse: Nixon Closes the Gold Window In 1966, the Bank of France broke away from the pack and started purchasing Fort Knox gold again at $35/oz. In fact, during that year alone, they purchased 17.2 million ounces of gold, at a cost of $601 million. This brought their holdings up to 150 million ounces. Since the U.S. had been purchasing gold from Canada that year, the total loss to the U.S. gold supply was only 16.3 million ounces. But the next year, 1967, the U.S. lost 33.4 million ounces. From the last graph, you can see that the U.S. was getting dangerously close to running out of good-delivery gold. What could they do? They could go to Fort Knox and re-melt the coin gold bars and remove the copper, but that might raise questions and draw attention to what was really going on. Besides, there was a considerable body of legal opinion that Roosevelt’s coin-gold seizures were unconstitutional. No one knows whether or not the coin gold was melded down, since no reliable audit has been performed at least since 1953! In theory, Federal Reserve notes still required a 25% backing in gold bullion. Even by the government’s most optimistic estimates, the U.S. was running up against that wall as well. As Christopher Weber put it: “By early 1968 the U.S. faced a choice: Either eliminate the legal requirement that there be a 25% gold ‘cover’ for the domestic money supply, or soon have no more gold left to ‘defend’ the dollar. “The decision came as no surprise: The 25% requirement was repealed, with almost no debate, in March 1968.” President Johnson then announced that all U.S. gold would be disposable for “international purposes.” If we had only known then what he meant by “international purposes” — namely to make international bankers and others in their inner circle very, very rich. Once 95% of the .999 fine gold had been removed from Fort Knox and sent abroad, President Nixon closed the gold window in 1971 by signing public law 93-110 repealing the Gold Reserve Act of 1934. Gold prices soared. Americans were finally free to buy and own the magic and forbidden metal once again. Americans had been forced to sell their gold to the government for $20.66 per ounce, then spend 37 years watching the government sell it for $35 per ounce to foreigners. Now that most of it was gone, Americans were allowed to purchase back their gold at the going rate of $150 per ounce. What a deal! What a country! What a scam! By April 1978, gold’s price had risen to $226.37 per ounce. By mid-January 1980 gold was sold at a record high of $880. Since then the price of gold has slowly declined to around $400 per ounce. World Gold Drained But it doesn’t stop with Fort Knox. Apparently gold not only flowed out of the U.S., but from the central banking houses of almost every nation since 1965. Virtually every nation has been dumping gold. Here are the top nine holders of gold bullion in the world today. Notice the International Monetary Fund (IMF), an affiliate of the United Nations, is the largest known holder of gold bullion today (all holdings in short tons = 2,000 lbs = 24,000 troy ounces). World Gold Holdings – 1995 Entity 1965 holdings477 1991 holdings478 Net gain/loss % change IMF 2,225 3,539 +1,314 +59.1 Germany 5,403 (1968) 3,256 -2,147 -39.7 Switzerland 3,621 2,849 -772 -21.3 France 6,236 (1966) 2,801 -3,435 -55.1 Italy 2,862 2,281 -581 -20.3 Netherlands 2,090 1,504 -586 -28.0 U.S.A. 8,438 1,017* -7,421 -87.9 Japan 390 754 +364 +93.3 U.K. 2,696 588 -2,108 -78.2 Totals 33,961 18,589 15,372 -45.3 *This report lists U.S. holdings at 8,961 tons, but this includes “coin gold” still held in Fort Knox, which in 1975 was stated to be 9,983 tons. Today, the U.S. government still claims only 1,017 tons of good-delivery gold to be in store. In truth is that until a reliable audit is performed, American gold holdings are unknown. In other words, the only winners were the International Monetary Fund (IMF) and Japan. The big losers were the U.S., Great Britain, France and Germany. During the 26 years from 1965 to 1991, in these selected countries alone, 17,049 short tons of gold bullion moved into private hands. If the American drain of the previous 15 years were added in, that would come to a staggering 27,882 tons. The total amount of government-owned gold in the world, as estimated by the Federal Reserve Bulletin in 1973 was only 49,024 tons! In other words, in only 25 years, over half the world’s gold moved either into private hands or into the Soviet Union where reserves were kept secret. But the vast majority of this gold changed hands in just seven years, between 1965 and 1971 (see Appendix I). Then, the price of gold began to skyrocket. The International Monetary Fund Just what is the IMF, anyway? In 1944, the World Bank and the International Monetary Fund (IMF) were created at the post-WWII Bretton Woods Conference. The stated purposes of the IMF were to stabilize currency exchange rates, and to assist member nations with temporary balance-of-payments difficulties. In fact, the IMF was the long-dreamed international Federal Reserve System, designed to centralize the monetary power of the entire world in a single entity. Interestingly, the author of much of the Bretton Woods agreements was none other than the British socialist economist John Maynard Keynes. There were 143 member nations in the IMF in the early 1980s. Most of the Communist countries, including the Soviet Union, did not join; and, of the Western nations, Switzerland has never chosen to participate. Member governments contribute to the operating funds of the IMF according to the volume of the size of their economies. Part of the contribution is in gold, the remainder in the nation’s own currency. A nation may borrow funds against the gold portion of its contribution if it encounters financial difficulties due to an unfavorable balance-of-payments situation. This is why IMF gold reserves swelled during the 1965-72 period. Keynes knew he had to move carefully to not alarm the major nations as he lured them into the central bankers’ trap. Although he hated the idea of gold-backed currencies because it gave nations a degree of financial independence, he knew the only way he could convince them to join was to use gold backing for the IMF initially. As Keynes explained it: “I felt that the leading central banks would never voluntarily relinquish the then existing forms of the gold standard; and I did not desire a catastrophe sufficiently violent to shake them off involuntarily. The only practical hope lay, therefore, in a gradual evolution in the forms of a managed world currency, taking the existing gold standard as a starting point.” What an astounding admission! Here we have the architect of our present-day international monetary system admitting that he used gold backing for the IMF as merely a ruse to convince nations to join up, but then planned to remove them later on so their economies could be “managed” by experts like himself! According to a report by the IMF, total world gold stands at 118,295 tons. Of that, 78,864 tons of gold is now in private hands.480 In other words, 66.7% of the world’s gold is held in private hands today. With gold so powerfully consolidated outside of national treasuries, a gold-based currency would be a recipe for private ownership of a national economy by a small clique of the world’s wealthiest people. The European ECU Notice from the preceding table that after 1973, the largest known holders of gold bullion were the Europeans. Not counting whatever is still in Fort Knox in the way of coin gold, the U.S. is only the seventh-largest holder of gold today. There is speculation that this hoard of European gold bullion will be used to back the new European currency, the ECU, which will be in usage in the last half of the 1990s. It has been suggested that gold backing for the ECU was the only way Germany — the largest owner of gold today — could be convinced to go along with the new European central bank and its plan for a universal European currency. It is also believed that it was for her opposition to ECU that Margaret Thatcher lost her job as British Prime Minister, to be replaced by the former Chancellor of the Exchequer, (the British version of America’s Secretary of the Treasury) John Major. Should gold backing for the ECU come about, it would instantly become the strongest currency in the world, being the only major currency backed by gold. But keep in mind; though a gold-backed ECU would be strong, twice as much gold is in the hands of private speculators. Missing Soviet Gold No one knows how much gold bullion was in the possession of the Soviet Union before its fragmentation in August 1991. But the general belief in American intelligence circles was that the Soviet Union had amassed the biggest stockpile of any nation at that time. The Soviet Union had the second-highest production rate of gold in the world — about 375 short tons a year, second only to South Africa — that produces about 937 tons/year. Incidentally, total American production is about 46 tons, while Canada produces nearly 72 tons/year. It is suspected that the Soviets were heavy buyers of Fort Knox gold at the $35/oz. price, and from the dismal record of American aid to our supposed enemies, the Soviet communists, this may well have been true. In any case, shortly after the Yeltsin coup in August, 1991, I heard through friends in the intelligence community who knew of my interest in the disposition of Fort Knox gold that all the Soviet’s gold suddenly disappeared. This was later confirmed by Claire Sterling in her highly-respected book on the Russian mafia, Thieves’ World. Sterling reports that on January 28, 1991, a Russian mafia leader named Roberto Coppola, telephoned an associate in the Italian Mafia, identified in court documents only as “G” and made him an incredible offer. [Coppola] informs him that the Russian embassy is selling two thousand tons of gold, and there would be a 1% profit. He asks G. if he has the possibility of buying any. G says yes, and they agree to phone each other the next morning.” Author Sterling is astounded. “Two thousand tons of gold was worth $22 billion — more than the entire package of international aid for the Soviet Union proposed at a G-7 summit that autumn. Such quantities could hardly have hit the meticulously regulated world market without causing total disruption. Nor was so much likely to have been amassed abroad, still less sold, all at once. Nevertheless, a ‘package’ worth $12 billion was said to have moved out of the U.S.S.R. by the spring of 1991, ‘bypassing normal export channels,’ reported the Manchester Guardian.” At a subsequent September meeting of the G-7 in Bangkok after the Yeltsin coup in August, Soviet economist Grigori Yavlinski told leaders that his country’s gold reserves were down to 240 tons. As Sterling put it: “In November, Western analysts were shocked to learn that all the reserves of the Soviet Central Bank were missing. ‘Not a gram of gold remains; the vaults are empty,’ said Gosbank director Viktor Geraschenko. As Sterling commented: “The mystery of the missing gold still haunts investigators in and out of Russia; none of it has ever been recovered.” Private Swiss banking contacts have confirmed to this author that much of the Soviet gold was flown out of the country just before the Yeltsin takeover and now resides in the Swiss gold vaults under Kloten Airport near Zurich. Kloten airport comes up again in Thieves’ World. Claire Sterling reprints a cable from Leo E. Wanta head of an American firm, New Republic/USA Financial Group, Ltd., announcing the sale of 2,000 metric tons (2,200 short tons) of gold bullion. Mr. Wanta, according to Sterling, is well known to the U.S. Secret Service “where files on him are a yard long.” He was convicted in Switzerland of money laundering and has subsequently been involved in a variety of Russian ruble scams. Whether or not this is the same block of gold is unknown. The cable indicates that the gold was stored at Kloten, and was being offered at 3% less than the London fix, indicating the owners wanted few questions asked about its origin. 1,000 Tons of Gold For Sale On the Black Market Other large blocks of gold of dubious origin are out for sale. In July of 1979, a mysterious figure, said to have one foot in the intelligence community and the other in the underworld, John Philip Nichols, offered a remarkably huge lot of .999 gold bullion to a group of unnamed investors at a substantially reduced price, in other words on the black market. Here is a copy of one page of his telegram (see next page): Interestingly, Nichols refers to himself as “Ali-JVF Goldfinger 007.” Ian Fleming, the author of the popular James Bond novel, Goldfinger, was head of the British counterintelligence service, MI-5. It is widely believed in the intelligence community that he wrote much of his fiction as a forewarning, as many authors of fiction do. If the removal of all the “good delivery” gold from Fort Knox can be viewed as a deliberate raid on the U.S. Treasury, then such an operation might well have been years in the planning — namely 40 years — certainly time enough for Fleming to get wind of it and try to reveal it fictionally. Regardless of that, obviously, John Philip Nichols was serving as the sales agent for several different persons, offering several different lots of illicitly acquired gold. How can we be sure it was illicitly acquired? Because it was being offered for sale at $3 below the London fix. Danny Casolaro It is interesting to note that after Washington, D.C. crime reporter Danny Casolaro was found dead under suspicious circumstances in a West Virginia motel room on August 10, 1991, it was discovered that the last area of investigation he was involved in was the gold shipment mentioned in the above telegram. Investigative reporter Don Devereux of Phoenix, Arizona said he was contacted by Casolaro several times in the last two weeks of his life and Casolaro was apparently very interested in the “5-ounce wafers” of gold mentioned on page 2 of the Nichols telegram (not shown). These wafers may be what are known in Asia as “tolo bars,” a typically Asian form of gold bullion. Devereux had been investigating a smuggling operation by Phoenix, Arizona organized crime bosses designed to import stolen gold from Asia. Devereux had barely survived an assassination attempt during his investigation. Another individual, unrelated to the investigation was gunned down execution-style in the parking lot where Devereux usually parked his vehicle, in a car nearly identical to Devereux’s. Casolaro’s death was ruled a suicide and his body quickly embalmed before any autopsy could be performed, or even before any notification of next-of-kin, in violation of State law. His family still believes he was murdered because he knew too much. What’s Going On? It appears that someone out there likes gold — a lot. I’ve run across numerous other reports of national gold stockpiles mysteriously depleted or missing. Sometimes “suicides” of key officials are involved. Frequently these involve victims leaping from atop tall buildings to their deaths. Unfortunately, what I’ve described above is all I’ve been able to substantiate well enough to include and footnote. Perhaps the publication of this book will bring new information to light. It’s clear that gold is being consolidated generally in Europe, particularly in London, Frankfurt, Paris and Zurich, but other reputable sources claim the same thing is happening in the Netherlands as well. In any case, the suspicion is that a gold-backed European currency could soon make a debut, and if so, it would quickly replace the importance of the dollar and deal a severe blow to the U.S. economy. Probably America’s best strategy would be to withdraw the power to create money from the Federal Reserve, put it back into the hands of Congress where it belongs, then print debt free money in proper proportion to the needs of the national economic health. This would instantly put America’s economy on a firm financial foundation and thereby begin to attract gold back into the nation’s treasury. This book does not recommend a gold-based currency, but a rather a currency based upon a flexible strategy with as much gold in reserve as possible.

<><><>
THE HISTORY OF MONEY PART 3 WORLD WAR I (1914-1918)

The Germans borrowed money from the German Rothschilds bank, the British from the British Rothschilds bank, and the French from the French Rothschilds. American super banker J.P. Morgan was amongst other things also a sales agent for war materials. Six months into the war his spending of $10 million a day made him the largest consumer on the planet. The Rockefeller’s and the head of president Willson’s War Industries Board, Bernard Baruch each made some 200 million dollars while families contributed their sons to the bloody front lines, but profit was not the only motive for involvement. Russia had spoiled the money changers plan to split America in two, and remained the last major country not to have its own central bank. However, three years after the start of the war the entire Russian Royal Family was killed and Communism began. You might find it strange to learn that the Russian Revolution was also fuelled with British money. Capitalist businessmen financing Communism? Author Gary Allen gives his explanation: “If one understands that socialism is not a share-the-wealth programme, but is in reality a method to consolidate and control the wealth, then the seeming paradox of super-rich men promoting socialism becomes no paradox at all. Instead, it becomes logical, even the perfect tool of power-seeking megalomaniacs. Communism or more accurately, socialism, is not a movement of the downtrodden masses, but of the economic elite.” Gary Allen, Author W.Cleon Skousen wrote in his book ‘The Naked Capitalist’. “Power from any source tends to create an appetite for additional power… It was almost inevitable that the super-rich would one day aspire to control not only their own wealth, but the wealth of the whole world. To achieve this, they were perfectly willing to feed the ambitions of the power-hungry political conspirators who were committed to the overthrow of all existing governments and the establishments of a central world-wide dictatorship.” W.Cleon Skousen Extreme revolutionary groups were controlled by being financed when they complied and cut off, with money sometimes being given to their opposition, when they didn’t. If you find this hard to believe, listen to what the so called dictator of the new Soviet Union had to say. “The state does not function as we desired. The car does not obey. A man is at the wheel and seems to lead it, but the car does not drive in the desired direction. It moves as another force wishes.” Vladimir Lenin 1 Rep. Louis T. McFadden, chairman of the House Banking and Currency Committee throughout the 1920-30s explained it this way. “The course of Russian history has, indeed, been greatly affected by the operations of international bankers… The Soviet Government has been given United States Treasury funds by the Federal Reserve Board… acting through the Chase Bank. … England has drawn money from us through the Federal Reserve Banks and has re-lent it at high rates of interest to the Soviet Government… The Dnieperstory Dam was built with funds unlawfully taken from the United States Treasury by the corrupt and dishonest Federal Reserve Board and the Federal Reserve Banks.” Rep. Louis T.McFadden (D-PA) 2 Even when Communism collapsed in the Soviet Union, Boris Yeltsin revealed that most of the foreign aid was ending up, we quote. “straight back into the coffers of western banks in debt service.” 1. Wurmbrand, “Marx and Satan,” p. 49 2.United States Congressional Record, June 15, 1934 WORLD DOMINATION With Russia down the money changers now had control of every major national economy. Like a steam roller moving and a wolf gathering its pack, there was only one thing left to do and that was to go global. The first attempt was the proposal at the Paris Peace Conference after WWI to set up the League of Nations. Old habits die hard, and even what they called ‘the war to end all wars’ was not enough to convince nations to dissolve their boundaries. The League died. If politicians really were being controlled, you would think at least one would break ranks and cry out against it. Many did. One was no less than former New York City Mayor John Haylan “These international bankers and Rockefeller-Standard Oil interests control the majority of the newspapers and magazines in this country. They use the columns of these papers to club into submission or drive out of office public officials who refuse to do the bidding of the powerful corrupt cliques which compose the invisible government…. The warning of Theodore Roosevelt has much timeliness today, for the real menace of our republic is this invisible government which like a giant octopus sprawls its slimy length over City, State, and nation… It seizes in its long and powerful tentacles our executive officers, our legislative bodies, our schools, our courts, our newspapers, and every agency created for the public protection… To depart from mere generalisations, let me say that at the head of this octopus are the Rockefeller-Standard Oil interest and a small group of powerful banking houses generally referred to as the international bankers. The little coterie of powerful international bankers virtually run the United States government for their own selfish purposes. They practically control both parties, write political platforms, make catspaws of party leaders, use the leading men of private organisations, and resort to every device to place in nomination for high public office only such candidates as will be amenable to the dictates of corrupt big business… These international bankers and Rockefeller-Standard Oil interests control the majority of newspapers and magazines in this country.” John Hylan, Mayor of New York 1927, 1 These warnings fell on deaf ears, drowned out by the music and excitement of the roaring 20’s. People don’t tend to complain much in times of prosperity, so the money changers used this boom time they had created to defuse any complaints about their growing control. 1. (Former New York City Mayor John Haylan speaking in Chicago and quoted in the March 27, 1927, New York Times) DEPRESSION IN 1929 Stack in front of you the biographies of all the Wall Street giants, J.P. Morgan, Joe F. Kennedy, J.D Rockefeller, Bernard Baruch, and you’ll find they all marvel at how they got out of the stock market and put their assets in gold just before the crash. Non mention a secret directive, since revealed, sent by the father of the Federal Reserve, Paul Warburg, warning of the coming collapse and depression. With control of the press and the education system, few Americans are aware that the Fed caused the depression. It is however a well known fact among leading top economists. “The Federal Reserve definitely caused the Great depression by contracting the amount of currency in circulation by one-third from 1929 to 1933.” Milton Friedman, Nobel Prize winning economist “It was not accidental. It was a carefully contrived occurrence… The international bankers sought to bring about a condition of despair here so that they might emerge as rulers of us all.” Rep. Louis T.McFadden (D-PA) “I think it can hardly be disputed that the statesmen and financiers of Europe are ready to take almost any means to re-acquire rapidly the gold stock which Europe lost to America as the result of World War I.” Rep. Louis T.McFadden (D-PA) 40 billion dollars somehow vanished in the crash. It didn’t really vanish, it simply shifted into the hands of the money changers. This is how Joe Kennedy went from having 4 million dollars in 1929 to having over 100 million in 1935. During this time the Fed caused a 33% reduction of the money supply, causing deeper depression. HOW THE FED CREATES MONEY We’ve been talking about how the privately owned Federal Reserve can produce money from thin air. Here’s how it’s done. 1. The purchase of bonds is approved by the Federal Open Market Committee. 2. The Fed buys the bonds which it pays for with electronic credits made to the sellers bank. These credits are based on nothing. 3. The receiving banks then use these credits as reserves from which they can loan out ten times the amount. To reduce the amount of money in the economy they simply reverse the process. The Fed sells bonds to the public and money is drawn from the purchasers bank to pay for them. Each million withdrawn lowers the banks ability to loan by 10 million. The Federal bank in this way has overall control of the US money supply, as each country’s central bank does in the same way. The bankers, through the magic of fractional reserve banking have been delegated the right to create 90% of the money supply. This control makes a mockery of any elected government. It places so called leaders behind a toy steering wheel, like the plastic ones, set up to amuse small children. Or as Rep.Charles Lindbergh father of famous aviator Lucky Lindy puts it when commenting on the Federal Reserve Act: “This act establishes the most gigantic trust on earth. When the President signs this bill, the invisible government by the Monetary Power will be legalised. The people may not know it immediately, but the day of reckoning is only a few years removed… The worst legislative crime of the ages is perpetrated by this banking bill.” Rep. Charles Lindbergh (R-MN) Or as Woodrow Wilson put it: “We have come to be one of the worst ruled, one of the most completely controlled governments in the civilised world – no longer a government of free opinion, no longer a government by… a vote of the majority, but a government by the opinion and duress of a small group of dominant men. Some of the biggest men in the United States, in the field of commerce and manufacture, are afraid of something. They know that there is a power somewhere so organised, so subtle, so watchful, so interlocked, so complete, so pervasive, that they had better not speak above their breath when they speak in condemnation of it.” Woodrow Wilson In order to clearly establish that this is not a conspiracy theory, but is actually how things are controlled, we further quote Charles Lindbergh. From the house of representatives, Lindbergh was well placed to see exactly what was happening back then and continues to happen today. “To cause high prices all the federal reserve board will do will be to lower the re-discount rate…, producing an expansion of credit and a rising stock market; then when… business men are adjusted to these conditions, it can check… prosperity in mid-career by arbitrarily raising the rate of interest. It can cause the pendulum of a rising and falling market to swing gently back and forth by slight changes in the discount rate, or cause violent fluctuations by greater rate variation, and in either case it will possess inside information as to financial conditions and advance knowledge of the coming change, either up or down. This is the strangest, most dangerous advantage ever placed in the hands of a special privilege class by any Government that ever existed. The system is private, conducted for the sole purpose of obtaining the greatest possible profits from the use of other people’s money. They know in advance when to create panics to their advantage. They also know when to stop panic. Inflation and deflation work equally well for them when they control finance…” Rep. Charles Lindbergh (R-MN) ADOLF’S BANKERS Most all will be aware of Hitler’s rise to power. What they probably don’t know is that he was almost completely financed by money drawn from the privately owned American Federal Reserve. “After WWI, Germany fell into the hands of the international bankers. Those bankers bought her and they now own her, lock, stock, and barrel. They have purchased her industries, they have mortgages on her soil, they control her production, they control all her public utilities. The international German bankers have subsidised the present Government of Germany and they have also supplied every dollar of the money Adolph Hitler has used in his lavish campaign to build up threat to the government of Bruening. When Bruening fails to obey the orders of the German International Bankers, Hitler is brought forth to scare the Germans into submission… Through the Federal Reserve Board over $30 billion of American money has been pumped into Germany. You have all heard of the spending that has taken place in Germany… Modernistic dwellings, her great planetariums, her gymnasiums, her swimming pools, her fine public highways, her perfect factories. All this was done on our money. All this was given to Germany through the Federal Reserve Board. The Federal Reserve Board has pumped so many billions of dollars into Germany that they dare not name the total.” Congressman Louis T.McFadden (D-PA) who served twelve years as Chairman of the Committee on Banking and Currency. FORT KNOX In 1933 new President Franklin D. Roosevelt signed a bill forcing all the American people, to hand over all their gold at base rate. With the exception of rare coins. He disowned himself from the bill claiming to not have read it and his secretary of the treasury claimed this was “what the experts wanted”. Bought at bargain basement price with money produced from nothing by the Federal Reserve, the gold was melted down and stacked in the newly built bullion depository called Fort Knox. Once collected in 1935 the price of gold was raised from $20.66 up to $35 per ounce, but only non American gold qualified to be sold. This meant those who had avoided the crash by investing in gold they had shipped to London could now nearly double their money while the rest of America starved. But that’s not all folks. By the end of WWII Fort Knox did hold 70% of the world’s gold, but over the years it was sold off to the European money changers while a public audit of Fort Knox reserves was repeatedly denied. Rumours spread about missing gold. “Allegations of missing gold from our Fort Knox vaults are being widely discussed in European circles. But what is puzzling is that the Administration is not hastening to demonstrate conclusively that there is no cause for concern over our gold treasure – if indeed it is in a position to do so.” Edith Roosevelt Finally in 1981 President Ronald Reagan was convinced to have a look into Fort Knox with a view to re-introducing the Gold Standard. He appointed a group called The Gold Commission. They found that the US Treasury owned no gold at all. All the Fort Knox gold remaining is now being held as collateral by the Federal Reserve against the national debt. Using credits made from nothing. The Fed had robbed the largest treasure of gold on earth. WORLD WAR II (1939-1945) World War II saw the US debt increased by 598%, while Japan’s debt went up by 1,348%, with France up by 583% and Canada up by 417%. When you hear this, what is your first impression? Do you automatically think this is bad or this is good? Most of us feel a well programmed sense of desperation when we hear figures like this, but remember, to the money changers, this is music to their ears. With the hot war over, the cold war began, the arms race causing more and more borrowing. Now the money changers could really concentrate on global domination. Step one, the European Monetary Union and NAFTA. Step two, centralise the global economy via the World Bank, the IMF and GATT (now the WTO). THE WORLD CENTRAL BANK (1948 – Present) In Washington, the headquarters of both the World Bank and the IMF (International Monetary Fund) face each other on the same street. What are these organisations, and who controls them? To find out we need to look back to just after WWI. At this point the money changers were attempting to consolidate the central banks under the guise of peacemaking. To stop future wars they put forward the formation of a world central bank named the Bank of International Settlements, a world court called the World Court in the Hague, and a world executive for legislation called the League of Nations. In his 1966 book entitled Tragedy and Hope, president Clinton’s mentor Carroll Quigley writes about this. “The powers of financial capitalism had [a] far-reaching [plan], nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations. Each central bank… Sought to dominate its government by its ability to control treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world.” Carroll Quigley, Professor, Georgetown University They got 2 out of 3. The league of nations failed largely owing to the suspicions of the people and while opposition concentrated on this, the other two proposals snuck their way through. It would take another war to wear the public resistance down. Wall street invested heavily to rebuild Germany, as the Chase bank had propped up the Russian revolution. Now the Chase merged with the Warburg’s Manhattan Bank to form the Chase Manhattan which would later merge with the Chemical Bank to become the largest bank on Wall Street. In 1944 the US approved its full participation in the IMF and the World Bank. By 1945 the second League of Nations was approved under the new name ‘The United Nations’. The war had dissolved all opposition. The methods used in the National Banking Act of 1864 and the Federal Reserve Act of 1913 were now simply used on a Global scale. The Federal Reserve Act allowing the creation of Federal Reserve notes is mirrored by the IMF’s authority to produce money called Special Drawing Rights (SDR’s). It is estimated the IMF has produced $30 billion dollars worth of SDR’s so far. In the United States SDR’s are already accepted as legal money, and all other member nations are being pressured to follow suit. With SDR’s being partially backed by gold, a world gold standard is sneaking its way in through the back door, which comes with no objection from the money changers who now hold two-thirds of the worlds gold and can use this to structure the worlds economy to their further advantage. We have gone from the goldsmith’s fraud being reproduced on a national scale through the Bank of England and the Federal Reserve, to a Global level with the IMF and the World Bank. Unless we together stop giving these exchange units their power by our collective faith in them, the future will probably see the Intergalactic Bank and the Federation of Planets Reserve set up in much the same way. This radical transfer of power has taken place with absolutely no mandate from the people. Nations borrow Special Drawing Right from the International Monetary Fund in order to pay interest on their mounting debts. With these SDR’s produced at no cost, the IMF charges more interest. This contrary to bold claims does not alleviate poverty or further any development. It just creates a steady flow of wealth from borrowing nations to the money changers who now control the IMF and the World Bank. The permanent debt of Third World Countries is constantly being increased to provide temporary relief from the poverty being caused by previous borrowing. These repayments already exceed the amount of new loans. By 1992 Africa’s debt had reached $290 billion dollars, which is two and a half times greater than it was in 1980. A noble attempt to repay it has caused increased infant mortality and unemployment, plus deteriorating schools, and general health and welfare problems. As world resources continue to be sucked into this insatiable black hole of greed, if allowed to continue the entire world will face a simular fate. As one prominent Brazilian politician, Luis Ignacio Silva,ðput it. “Without being radical or overly bold, I will tell you that the Third World War has already started – a silent war, not for that reason any the less sinister. This war is tearing down Brazil, Latin America and practically all the Third World. Instead of soldiers dying there are children, instead of millions of wounded there are millions of unemployed; instead of destruction of bridges there is the tearing down of factories, schools, hospitals, and entire economies . . . It is a war by the United States against the Latin American continent and the Third World. It is a war over the foreign debt, one which has as its main weapon interest, a weapon more deadly than the atom bomb, more shattering than a laser beam . .”1 If a group or organisation had used its hard earned money to help these developing nations, then we might sympathise that there should be a real effort to repay these loans. But the money used was created from fractional reserve banking. The money loaned to the Third World came from the 90% the banks allow themselves to loan on the 10% they actually held. It didn’t exist, it was created from nothing, and now people are suffering and dying in an effort to pay it back. This has gone beyond clever financing, it’s whole sale murder and it’s time we stopped it. We can! If you haven’t already, read XAT3 to see how. 1. Luis Ignacio Silva, at the Havana Debt Conference in August 1985, quoted by Susan George, A Fate Worse Than Death p 238

<><><>

Part 8 – The Fort Knox Gold Heist.

Thursday, 19 February 2009 15:19 administrator
E-mail Print

I think it can hardly be disputed that the statesman and financiers of Europe are ready to take almost any means to require rapidly the gold stock which Europe lost to America as the result of World War 1” -Rep. Louis T. McFadden (D-PA) Between 1929 and 1933 the Fed reduced the money supply by 33%. Most people have never heard that the Fed was the cause of the great depression however this is well known amongst top economists. Milton Freedman the Nobel Prize winning economist said the same thing in 1996 in a radio interview. “The Federal Reserve definitely caused the Great depression by contracting the amount of currency in circulation by one-third from 1929 to 1933” -Milton Friedman, Nobel Prize winning economist Most of the money lost by Americans didn’t just vanish it was redistributed to the hands of those who had got out just before the crash and purchased gold which is always a safe place to put your money just before a depression. America’s money also went oversees to Germany, as president Hoover was trying to rescue banks and prop up businesses millions of Americans were starving, the great depression deepened and millions of dollars was spent rebuilding Germany from damage sustained from World War 1. Eight years before Hitler would invade Poland, representative Louis McFadden warned that America is paying for the rise of Hitler to power. “After WW1, Germany fell into the hands of the German international bankers. Those bankers bought her and they now own her lock stock and barrel. They have purchased her industries, they have mortgages on her soil, they control her production, they control all her public utilities. The international bankers have subsidised the present government of Germany and they have also supplied every dollar of the money Adolph Hitler has used in his lavish campaign to build up a threat to the government of Bruening. When Bruening fails to obey the orders of the German international Bankers, Hitler is brought forth to scare the Germans into submission… Through the Federal Reserve Board… Over $30 billions of American money… has been pumped into Germany… You have all heard of the spending that has taken place in Germany… Modernistic dwellings, her great planetariums, her gymnasiums, her swimming pools, her fine public highways, her perfect factories. All this was done on our money. All this was given to Germany through the Federal Reserve Board. The Federal Reserve Board… has pumped so much money onto Germany that they dare not name the total.” -Rep. Louis T. McFadden (D-PA) Franklin D. Roosevelt was swept in office during the 1932 Presidential Election. Once Roosevelt was in office, sweeping emergency banking measures were immediately announced which did nothing but increase the feds power over the money supply. Then and only then did the Fed finally begin to loosen the purse strings and feed new money out to the starving people. At first Roosevelt railed against the money changers as being the cause of the depression “Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men… The money changers have fled from their high seats in the temple of our civilization.” -Franklin d. Roosevelt, march 4, 1933 Two days later Franklin declared a bank holiday and closed all banks, later that year Roosevelt outlawed ownership of privately owned gold bullion and gold coins with the exception of rare coins. Most of the gold that in the hands of the average Americans was in the form of gold coins. The new decree was in effect a confiscation, those who didn’t comply risked as much as 10yrs in prison and a $10,000 fine the equivalent of well over $100,000 today. Out in small town America some people did not trust Roosevelt’s order many where torn between keeping the hard earned wealth and obeying the government. Those who did turn in their gold got paid the official price $20.66 per oz. So unpopular was the confiscation order that no one anywhere in government would take credit for authoring it. No congressman claimed it at the signing in ceremony Roosevelt made it clear to all present that was not the author of it and publically stated had not even read it. Even his secretary of the treasury had said he had never read it either, saying “it’s what the experts wanted”. Roosevelt has convinced the nation to give up their gold buying saying that pooling the nation’s resources was necessary to get America out of the Depression. With great fanfare he ordered a new bullion depository built to hold the mountain of gold the US government was illegally confiscating by 1936 the US bullion depository at Fort Knox was completed and in January 1937 gold began to flow into it, the rip off the ages was about to proceed. In 1935 once the gold had all been turned in the official price of gold was suddenly raised £35 per oz. The catch was that only foreigners could sell the gold at the new higher price the money changers heeded Walberg’s note and gotten out of the stock market just before the crash and bought gold at $20.66 per oz then shipped it to London, could now bring it back and sell it to the government nearly doubling their money, while the average American starved. All the gold supply from across the land, supposedly for the peoples benefit, had been safely pooled and deposited into Fort Knox. The stage was now set for a real big war, one which would pile up debt far beyond that of WW1. All countries involved in WW2 greatly multiplied their debt. Americas debt went from 43 billion in 1940 to 257 billion in 1950, an increase of 598% in that same period Japanese debt swelled up by 1,348%, French debt went up 583% and Canadian debt soared 417%. After the war the world was now divided into two economic camps, communist command economies on one hand vs monopoly capitalist economies on the other, set to fight it out in one perpetual and highly profitable arms race. It was finally time for the Central Bankers to embark in earnest on their 3 step plan to centralise the economic systems of the entire world and finally bring about their global government or new world order. The phases of this plan where: 1) Central bank domination of national economies worldwide 2) Centralise regional economics.. Through organisation such as the European Monetary Union and regional trade unions like NAFTA 3) Centralise the world economy through a world central bank a world money and ending national independence through abolition of all tariffs by treaties like GAT. Step 1 was completed long ago, step 2 and 3 are far advanced nearing competition. What about gold? Amongst central banks the largest holder known is the IMF it and Central Banks now control 2/3 of the worlds gold supply, giving them the ability to manipulate the gold market. The money Changers golden rule is “He who has the gold makes the rules” Let’s look at what happened to all the gold in fort Knox. Most people believe that the gold is still in Fort Knox. At the end of WW2 fort Knox contained over 700 million ounces of gold, 70% of all the worlds gold, how much remains no one knows despite the fact that federal law requires an annual physical audit of the fort Knox gold the treasury has consistently refused to conduct one. The reliable audit of whatever remains in fort Knox has not been conducted since president Eisenhower ordered one in 1953. Where did America’s gold in fort Knox go? Over the years it was sold off to European money changers at the $35 per oz price. Remember this was in a time when it was illegal for any Americans to buy gold from fort Knox. By 1971 all the pure gold had secretly been removed from Fort Knox drained back to London. Once the gold was gone from fort Knox President Nixon closed the gold window by repealing Roosevelt’s gold reserve act of 1934, finally making it legal once again for Americans to buy gold. Naturally gold prices immediately began to soar, 9 years later $880 an Oz 25 times what the gold in fort Knox was sold for. The gold belonged to the American people not the Federal Reserve and their foreign owners. When president Ronald Reagan took office in 1981 his conservative friends urged him to study the feasibility of returning to a Gold Standard as the only way to curb government spending. President Reagan commissioned a group of men called the gold commission to study the situation and report back to congress. What they reported back to congress in 1982 was the following shocking revelation concerning gold the US treasury owned no gold at all. All the gold from fort Knox was now owned by the Federal Reserve a group of private bankers as collateral against national debt. The truth is that never before has so much money been stolen from the American people and put into the hands of a small group of private investors, the money changers.

Last Updated ( Monday, 23 February 2009 16:26 )

<><><>

Three United States Gold Scenarios, Fort Knox, Fort Hocks or Fort Shocks

Commodities / Gold & Silver 2009 Jul 23, 2009 – 03:38 PMBy: Stewart_Dougherty Commodities Diamond Rated - Best Financial Markets Analysis ArticleFor 72 years, the building at the intersection of Bullion Boulevard and Gold Vault Road in Fort Knox, Kentucky has symbolized the financial strength of the United States of America. The United States Bullion Depository, better known as Fort Knox, is said to contain 147.3 million troy ounces of gold, over half the nation’s total reported gold bullion holdings of 261.5 million troy ounces. The remaining 114 million ounces are said to be stored at the Denver and Philadelphia Mints, the West Point Bullion Depository, and the San Francisco Assay Office. Assuming a price of $1,000 / ounce, the nation’s gold is worth $261.5 billion. If the metal is actually there, it represents the largest sovereign stockpile of gold bullion in the world. However, the gold holdings of the U.S. have not been audited in more than 50 years. One reason given for the lack of an audit is that it would be “too expensive” to conduct one. An audit would cost a few million dollars, at most, so using cost as a reason for not performing it strains belief when placed in the context of the country’s Fiscal Year 2009 deficit of $2,000,000,000,000.00+, and federal debt of $11,600,000,000,000.00+. It is curious that one of the few places within the government where costs appear to be of concern relates to an audit of the one, true monetary asset possessed by the American people. Even the Treasury Department’s clandestine $50 billion Exchange Stabilization Fund (ESF), which is only one-fifth the value of America’s reported gold holdings, undergoes an annual audit. For fiscal year 2008, this audit was conducted by KPMG, a well-known, independent CPA firm. KPMG’s 2008 ESF audit uncovered “significant deficiencies,” “material weaknesses,” a “weak control environment,” and “several control deficiencies.” If a Treasury organization subject to annual audits could fail its recent exam as broadly as that, what are we to assume about the safety and security of the people’s gold supply, which, like the national money geyser, the Federal Reserve Bank is never audited? And if the ESF is audited each year, what legitimate rationale can there be for not auditing the nation’s gold supply? Something isn’t adding up. In such a situation, inferential analysis can provide value, which you will see as this article progresses. The financial events of the past year demonstrate beyond any reasonable doubt that the United States government is now of Wall Street, by Wall Street and for Wall Street, in general, and of, by and for Goldman Sachs, in particular. This inversion of power and privilege was partly brought about by an explosion in government debt. The government relies on Wall Street to roll over existing and sell new debt issues. Debt is now hitting the market like a tidal wave, given the country’s record-shattering deficits and costly Wall Street bailouts. If the paper cannot be sold at expected interest rates, then the debt-addicted system will go into seizure. The radical empowerment and enrichment of Wall Street has transformed our democracy into an aristocracy, making the debt dealers the nation’s new royalty, the government its feudal barons, and the citizens mere serfs who endlessly sweat and toil in fields of debt weeds that grow so fast they can never, ever be harvested. Predictably, in such an aristocracy, an iron curtain of secrecy and non-transparency has descended across the land, separating Wall Street and government on one side, and the people on the other. While the people are deluged with generally useless government data that numbs their minds (as an example, a recent search of the Federal Reserve web site for “United States government 2008 financial statement” produced an unmanageable avalanche of 520,817 entries), simple, truly important information, such as audited gold reserve statistics, accurate monetary aggregates like M3, the names of taxpayer-funded TARP, TALF and other bailout recipients, and audited Federal Reserve Bank financials, is kept a state secret, using the hackneyed excuse that “it’s for the people’s good.” Autocracies have always tried to convince the masses that ignorance is freedom, and that knowledge is enslavement. The colossal conflict of interest that has developed between government -Wall Street axis, which hides behind the iron curtain of secrecy, and the citizens who stand in front of it now requires the people to-second guess everything they are told, for their own protection. The financial interests of a government controlled by avaricious, bonus-focused financiers are directly opposed to those of the people, since government revenues come directly from the people. What the government gains, the people lose, in the zero sum game of government finance. Which brings us to a more detailed examination of the people’s gold. For the past 28.5 years, from 1980 through June, 2009, the United States government’s gold holdings have been reported as being essentially constant, at around 262 million ounces. Gold hit a nominal price high of $850.00 per ounce in January, 1980, when a severe recession was developing. (Compared to today, 1980 looks like the bubbliest part of the Roaring 1920s.) Inflation-adjusted (using government CPI figures, which are hotly debated), that price would now exceed $2,400 per ounce, whereas the current market price is only $950.00 per ounce. As GATA (www.gata.org) has demonstrated beyond any doubt, U.S. Treasury and Federal Reserve officials actively monitor and seek to suppress the gold price, because a rising price can signal fiscal, economic and/or fiat currency distress, things that are bad for markets and embarrassing for governments. (GATA’s work in this area has been nothing short of heroic, and is well worth examining in detail.) For gold to be selling today at only 40% of its 1980 inflation-adjusted price, in the midst of the worst financial crisis in the nation’s history, is curious. While the United States gold supply is said to be constant, the holdings of many other nations, with the general exception of export-rich Asian countries, has declined, oftentimes radically. According to the World Gold Council, Canada’s gold reserves are down 99.5% from 1980 to today; Australia’s are down 68%; Austria’s are down 57%; Belgium’s are down 79%; The Netherlands’ are down 55%; Portugal’s are down 45%; Spain’s are down 38%; Norway’s are down 100%; Sweden’s are down 30%; the United Kingdom’s are down 47%; South Africa’s are down 67%; Argentina’s are down 60%; Mexico’s are down 92%; Brazil’s are down 41%; and the European Central Bank’s are down 33% (since 1999, its first reporting year). Even Switzerland, a country with a long-term affinity for gold, has slashed its reserves by 60%. Official world gold holdings (held by all nations plus international financial organizations such as the BIS, the IMF and the ECB) are down 17%, despite large gold reserve increases by countries such as China, Taiwan, India and Russia that moderated the larger percentage declines in the many nations noted above. However, the United States’ gold holdings are said to be down a mere 1% during this 28.5 year period, even though the country’s debt has surged from $712 billion to $11.6 trillion and its unfunded contingent liabilities have exploded to more than $90,000,000,000,000.00. So while other countries with far less debt and far better balance sheets slashed their gold holdings to raise money for various government purposes, the United States, with its surging debt and staggering deficits did not. Inconsistencies like this are worth exploring; sometimes they represent golden opportunities. If the United States were a corporation or an individual, it would be considered completely non-credit worthy given its disastrous finances. The U.S.A. would not qualify for an Exxon credit card, let alone for the trillions of dollars it is borrowing in the global bond market. One way those in financial distress can obtain credit is to post bona fide collateral. Some consider a country’s future tax receipts to be a form of collateral, but in the case of the United States, this is not so, because according to the Congressional Budget Office, the country will run multi-hundred billion dollar annual deficits for the next 70 years and beyond. So according to the CBO, the nation’s future tax revenues are already spent. Hypothetically, the nation could sell its national parks, or its mineral and/or energy rights, but this would be a radical, last ditch solution that has not even been publicly debated. For all practical purposes, the country’s only true collateral is the gold in Fort Knox and related depositories. Those who are lending the United States money, by buying its Treasuries and other debt instruments, must be competent capitalists. If they have billions to lend, they obviously know how to earn and manage money. These lenders simply cannot be oblivious to America’s financial situation, and must certainly understand the concept of collateral. As of July 17, 2009, the nation’s top few bullion banks were short 19.5 million ounces of gold on the futures exchanges. This highly concentrated short position was reportedly held by 4 or fewer major money-center banks. At a gold price that day of roughly $940.00 / ounce, the dollar value of this short position was $1,833,000,000.00, or $1.83 billion. A mere $10.00 / ounce decline in the price of gold would give the banks a profit of $195,000,000.00. A price increase of the same amount would produce a loss of $195,000,000.00, in other words, serious money in either direction. Given the financial crisis and the myriad problems affecting the banks, such as toxic derivatives and non-performing loans, why they would risk $1.8 billion on naked gold shorts in the world’s most volatile financial casino, the commodities and precious metals futures market, is difficult to understand, unless they know things or have other advantages that the rest of the marketplace does not. In inferential analysis, we look at what might appear to be unrelated facts to see if, in reality, there might be connecting strands among them. These connections help explain situations that otherwise defy logic. Even though isolated facts might be mute and uninteresting, they often tell an important story when combined. Sometimes, conjoined facts sing like canaries. We believe events in the gold market are trying to tell a tale, and we posit three general scenarios relating to the nation’s gold reserves: Fort Knox, Fort Hocks and Fort Shocks. FORT KNOX. In this scenario, the citizens of the United States own the exact amount of gold that is reported by the Treasury Department and the Federal Reserve: 261.5 million ounces. The gold supply is owned free and clear by the United States and its citizens. It is not swapped, hypothecated, pledged, exchanged, leased, sold, claimed, conditionally offered or in any other way compromised with respect to ownership. A full audit of the gold would prove that it exists strictly in bullion form (with no “paper bullion” or third party warehouse receipts) in the stated depositories. Based on recent fiscal, financial, monetary and economic developments, we view this scenario as possible, but extremely unlikely. FORT HOCKS:In this scenario, an audit will show that a significant portion of the citizens’ gold has been mobilized by the Treasury and / or the Federal Reserve; in other words, that it has been hocked at the global financial system’s pawn shop. There are many possible means by which this could have happened; we list only a few.

  1. The gold backstops favored bullion banks’ trading activities: In this scenario, the government has contracted with a small number of favored bullion banks to have them manipulate the gold price so it remains within federal targets. They would achieve this by large-scale shorting and related market-intervention techniques. This helps explain why a small number of major NYC money center banks are currently short 19.5 million ounces of gold, which would otherwise be a reckless, irresponsible gamble with shareholder assets, and a possible violation of the banks’ fiduciary duty, particularly in the current financial crisis. The banks have been guaranteed that if an exogenous event increases the gold price, their short positions will be “backstopped” by U.S. gold reserves. In other words, if a major bank failure, terrorist event, natural catastrophe, war or other major domestic or international event drives the gold price higher, exposing the banks to trading losses on their shorts, then the government will supply them with the bullion needed to close out their positions and cancel their losses. This is entirely consistent with the recent bailouts, where the government has purchased the banks’ toxic assets with taxpayer money, sterilizing their losses at citizen expense.

This scenario creates a money machine for the bullion banks. They can short gold with a government guarantee against losses, and can cover at lower prices, after they have driven the longs out of their positions. Operating like this, they can profit on up and down price moves, since they will create them. As noted above, the profits generated from these types of “bear raids” and subsequent “bull covers” can be enormous. ($195,000,000.00 for every $10.00 price decline given the bullion banks’ current short position.) The banks can launch these raids repeatedly at virtually no risk, since dumping large amounts of gold onto the futures market creates predictable price declines. However, if the government needs to backstop the banks (due to trades gone wrong that are backstopped and insured), then the gold must come from the United States’ gold reserve. There have been hundreds of $10.00 and dozens of $50 – 100.00+ price declines during the current bull market, indicating that the bullion banks have potentially made tens of billions of dollars’ worth of profits, given that they have consistently been short the gold market during these price episodes. If they have not been profiting from these short positions, why would they have continued to hold them for years, and continue to hold them today?  One further point: since futures represent a zero-sum game, where every profit means an identical loss for another party, any bank gains have come at the direct expense of other investors who have been losing in a rigged, corrupt casino that is riddled with fraud. 2. Leasing for profit: In this scenario, the government has leased all or a portion of the nation’s gold to earn interest on its value, or simply to mobilize the gold as a way for bullion banks to keep the price within targets. However, in this case there is no government “backstop” or guarantee if the bullion banks’ shorts go bad; the banks are responsible for their own trades. In this case, the government assumes counterparty risk, because if the bullion banks’ naked shorting operations produce losses, then the banks may be unable to return the borrowed gold to the government. This is a Las Vegas gamble on the part of the bullion banks and the government. However, if the government is willing to lend large quantities of gold to the bullion banks, this will give the banks enormous leverage in the marketplace, and the ability to drive down the price of gold, thereby generating significant profits at the longs’ expense. The banks are fully exposed to the risk that exogenous events could increase the price of gold, creating losses on their short positions. However, if the gold price does increase, the banks might be able to “double down” by borrowing additional bullion from the government, in an ongoing effort to crush the price. With potentially tens of millions ounces at their disposal from the United States, plus additional gold possibly available from other central banks, producers and operators of the new Exchange Traded Funds, the shorts could cause serious price damage, though they would have to take risks to win. As in scenario #1 above, the profits from such trading operations are potentially huge. Leasing has existed in the market for years, with gold supplied by central banks and miners. Much of this hedging activity has been curtailed with respect to miners, but due to the culture of secrecy and non-transparency at central banks, their exact activities are an unreported state secret and a mystery. Recent government rhetoric about transparency has clearly been disingenuous. 3. The government is actively trading gold. In this scenario, the government is trading gold on the futures exchanges, for profit and to control the price, either directly (under a secret trading name) or indirectly (using proxies), and either on-shore or offshore. This activity could be conducted by the Working Group on Financial Markets or some other government-funded financial entity. Any trading losses could be settled by delivering to the exchange(s) gold from the United States’ official reserve. FORT SHOCKS: In this general scenario, and audit would reveal that America’s gold is gone, either in whole, or in part. It might have been sold outright, pledged to counterparties, or otherwise distributed. The belief that there are millions of ounces of gold in Ft. Knox would therefore be a great American delusion. America’s gold could have been sold or exchanged in several ways. Here are a few:

  1. Foreign purchasers of U.S. Treasury and/or Agency debt simultaneously demanded the right to purchase U.S. gold, to offset currency and other risks associated with the debt. In this scenario, China, Japan and/or other governments demanded and won the right to purchase “x” ounces of United States gold for every “y” dollars of United States debt. This would compensate the debt purchasers for likely dollar devaluation given current fiscal deficits and fast-growing national indebtedness. This would also provide debt purchasers with some insurance against default, since default would most likely result in a rising gold price. Since the U.S. economy is now completely debt-based, maintaining an orderly debt market is the nation’s top fiscal and financial priority. Selling national gold to keep the debt market functioning smoothly would be considered by authorities a small price to pay.
  2. Backstopping guarantees were invoked. In this scenario, recent rallies in the gold market caught the bullion banks short, and enabled them to receive gold from the government as part of the backstopping guarantees they negotiated. This gold was used by the banks to settle their short positions and cover losses. This gold would be sold into the open market, and never returned to the official U.S. reserve.
  3. Government sold gold to raise cash. Over the 50 year non-audit period, government needed money and did not want to issue additional debt at the time. Therefore, it sold gold into the market to raise funds, just as numerous other central banks have done in recent years.
  4. Gold leases with a “cash settlement” option. In this case, the government leased gold to third parties, such as bullion banks, with a “cash settlement” option, as opposed to demanding that the gold be returned at the termination of the leases. For whatever reasons, the bullion banks exercised the cash settlement option, and did not return the borrowed gold. In this scenario, the gold would never be returned to the official U.S. reserve.
  5. A portion of the gold supply has been stolen, or has otherwise disappeared. The Royal Mint of Canada announced in June, 2009 that 17,500 ounces of Mint gold had been lost or stolen. This disappearance was confirmed during an audit of the Mint by Deloitte & Touche, CPAs, under the direction of the Auditor General of Canada. (If Canada audits its gold, why doesn’t the United States?) Regarding security, the Mint’s web site states: “The rigour of our production standards is equalled by the stringency of our security protocols. The refinery is a restricted environment controlled by security personnel supported by state-of-the-art surveillance technology.” If it could happen there, could it not happen here, particularly over a period of 50 years? This is exactly why you conduct audits.
  6. All or a portion of the gold simply cannot be accounted for. In this scenario, the paper trail for the nation’s gold fails, with errors, gaps and inconsistencies, and no one even begins to know how to re-create it. If gold is missing, no one knows when it went so or how to find it, since there are so many years (50) to account for. This would be similar to the $50+ billion in cash that is missing in Iraq. That money was stolen recently, and even so, no one can account for or find it.

Implications. If the Fort Knox scenario prevails, it is a non-event. Since there is no change in the nation’s gold supply, the status quo is maintained. If the Fort Hocks scenario prevails, then the government has orchestrated a market manipulation scandal that is equivalent in nature to Enron, Worldcom, Madoff and all the other frauds in the sordid panoply, but that dwarfs them in dollar value and sheer, outright dishonesty. The revelation that a first world government had deliberately engineered such a market manipulation, resulting in tens of billions of losses to honest investors, while simultaneously producing epic, illicit profits for favored inside traders would be a shock to all markets and investors. An insider trading scandal of such alarming, unprecedented proportions would constitute an inexcusable abuse of power, and represent fraud and corruption on a third world scale. It would not just damage the reputations of America’s monetary institutions, it would destroy them. If the Fort Shocks scenario prevails, it would have severe implications for the dollar, because it would demonstrate that the United States’ financials are deliberately distorted for monetary and political reasons. Even though the dollar amount of this scandal ($262 billion) would be miniscule in comparison with the government’s 2009 deficit ($2 trillion), debt ($11.6 trillion) and combined debt and unfunded contingent liabilities ($90 trillion), it might serve as a tipping point, where faith in America’s finances and confidence in its government are lost. If America’s gold reserve position is a lie, then what else has been distorted, and where, if anywhere, is the truth? Keep in mind that the fiscal year, 2009 deficit is currently running at $5,479,000,000.00 per DAY. So even if the Fort Knox scenario prevails and the 261.5 million ounces of citizen gold are safe and accounted for, their dollar value is completely destroyed by only 47 days’ worth of deficits. America’s gold cannot protect it from the national wealth wipeout that intensifies each and every day. The United States could put these concerns to rest simply by auditing the gold and publicly reporting the findings. And yet, despite repeated attempts by such organizations as GATA to get them to do that, they refuse. Why? Is it because Treasury and Federal Reserve officials know that the results would be explosive, and similar to what has been outlined in the Fort Hocks and Fort Shocks scenarios above? If it becomes known that the United States has surreptitiously hocked or sold its citizens’ gold, the price per ounce would most likely explode. Conceivably, gold would have its first $500 up day as people threw in the towel on other forms of “money” they could no longer understand or trust.

While inferential analysis is not used to prove a hypothesis (there are other forms of analysis that can offer proofs, when the facts exist to create them), it can be extremely useful in pointing to the truth when important facts about a situation are not available or revealed. Even though this report does not prove the hypothesis that the United States’ gold position is compromised, perhaps radically, the risk/reward dynamics of this situation are so interesting that we believe it is worth paying attention to the opportunity they provide.

By Stewart Dougherty trident888@cs.com Stewart Dougherty is a specialist in inferential analysis, the practice of identifying patterns and trends from specific, contemporary events, and then extrapolating their likely effects upon the future. Inferential analysis can be highly predictive. Dougherty was educated at Tufts University (B.A.) and Harvard Business School (M.B.A., and an academic Fellow). He can be reached at: trident888@cs.com. He is not affiliated with or compensated by those he references or recommends. The reader has permission to share or post this article as desired, as long as the content remains unchanged and the author is acknowledged. © 2009 Copyright Stewart Dougherty – All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors. © 2005-2010 http://www.MarketOracle.co.uk – The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

<><><>
Gld ETF Warning, Tungsten Filled Fake Gold Bars Nov 12, 2009 – 12:22 PM By: “Gold Finger – A New Take On Operation Grand Slam With A Tungsten Twist” I’ve already reported on irregular physical gold settlements which occurred in London, 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/…Prospectus.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 http://www.marketoracle.co.uk/Article14996.html


Last edited by Tango3; 11-14-2009 at 01:08 AM.

Read more: http://www.survivalmonkey.com/forum/financial-cents/13687-goldplated-tungsten-bars-fort-knox.html#ixzz10HiR17LZ

<><><>

IMF Plotting Gold-Backed SDRs?

Friday, May 14, 2010 – by  Staff ReportD. Strauss-Kahn

The IMF has urged the planet’s governments to reduce their dependence on the dollar – which weakens the international monetary system already strained by the crisis – by placing other currencies, like the euro or the yen, in their foreign exchange reserves. “A number of measures can be taken to strengthen international monetary systems,” in particular better surveillance of capital flows, stronger financial safety nets and greater use of special drawing rights, said Dominique Strauss-Kahn (left), head of the International Monetary Fund, after a central bankers’ conference in Zurich, on 11 May. These measures include “wider use of alternative reserve assets, for example in the euro, yen or yuan,” which could act as “a safety valve,” explained Strauss-Kahn. Another option to lessen dependence on the dollar would be greater use of special drawing rights (SDR), considered more stable. Special drawing rights are an international reserve instrument created by the IMF in 1969 to complement members’ existing official reserves. The conference was dominated by the Greek crisis and the euro’s difficulties. “I have no doubt that the programme put in place to help Greece will enable the country to solve its problems,” insisted Strauss-Kahn. – Europolitics Dominant Social Theme: There are lots of options when it comes to international finance – and at least two may be emphasized. Free-Market Analysis: International currencies are much in the news these days (see other article, this issue) and in this article we will contemplate two rhetorical goalposts that the power elite could use to move the world further on down the field toward a single Western international currency administered by one huge private central bank. (Is that their goal – the ultimate dominant social theme? We think it might be). The first goalpost (or pole) consists of a series of regional currencies (the euro, the gulfo, the amero, etc.) The second could be arranged via the IMF – which has already begun circulating this solution in one form – SDRs, for special drawing rights. If the power elite wants to end up with one currency, it may indeed have in mind something resembling SDRs, according to savvy financial observers. How could the IMF manipulate these two distinct currency models – assuming of course that its centralizing memes (such as the EU) remain stable? By setting up regional currencies and by floating the SDR as well, one has created both the building blocks for a potential crisis and the potential solution (a one-world currency). This conceptual strategy is known formally as the Hegelian Dialectic, and it is a tool that the power elite uses as part of its larger promotional efforts. In fact, this might explain why the elites are so determined to salvage the euro. Without the euro, and the EU, the elite would be stripped, down the road, of the possibility of creating another phony crisis (disorder), which could result in salvation (order) in the form of the SDR (or something similar). Do you think this far-fetched, dear reader? For the longest time, we have generally considered the idea that the IMF could foist SDRs on the world to be something of a longshot. But the EU financial crisis (and the sovereign crisis in general) has caused us to take another look. We think in the above suggestion we have discerned a glimmer of what the elite might be contemplating in the future for SDRs, and how they may eventually be positioned. Now for the part about gold. As we think the elite has muffed the whole EU/central bank/currency thing pretty badly of late, it is fairly possible that one fall-back the elite is contemplating is a new gold standard of some sort. However, since the elite emphatically doesn’t want to return to a world of nation states, the powers-that-be would have to find a more globalized play on gold. Gold-backed SDRs might fit the bill. The idea of a gold-backed SDR has already been floated amongst the powers-that-be, notably by George Soros at the ill-fated Copenhagen climate change talks (or so Google informs us), and more recently by such financial writers as CommodityOnline’s Paul Nathan. Here’s an excerpt from Nathan’s recent article entitled “The Ugly Face of Deflation:” Many Germans say kick Greece out of the EU for violating their promise to maintain fiscal discipline. Others say Germany itself should drop out of the EU since it is the German people that are being targeted to bail out all the other “PIGS” in the EU. If either one of these alternatives are exercised, we can expect the IMF to be looked to, to save Europe. And it is the American taxpayer that finances the IMF in large amounts. … The greatest threat from this crisis is an IMF bailout. However, is not higher taxes that is the real threat, it is the potential of new issuances of SDR’s that will breed inflation longer term. Gold may be “mobilized” to back the creation of huge new issuances of SDR’s in an attempt to restructure all world debt to buy time. As long as it is assumed that new debt can be created to “cure” the problem of old debt, the world will be digging a deeper and deeper hole for themselves to climb out of. Just as issuing more debt to cure the problem of too much debt is absurd, so is issuing more paper reserves in the form of SDR’s to solve the lack of confidence in paper money. Euro leaders have pledged to support the Euro currency by setting up a huge new fund to buy Euros if it falls. One again, the same principle: create paper to save paper. Policy makers just don’t get it! But some do… For the first time there is actually talk of gold as the new reserve currency. Returning to a gold standard is being debated in some circles. My thoughts on the subject can be found easily by clicking my name at the top of this page under “more articles”. The following is from “Are The Fiat And Gold Standards Converging?”: “I am not suggesting that we are returning to the gold standard. But I am suggesting we are moving toward it. Gold has been mobilized. It is moving into the hands of investors and savers all over the world. It is being rediscovered by central banks as a currency of last resort. Gold reserves are being increased by surplus nations. And paper currency is being sold for gold everywhere. Gold as a reserve asset among governments, and a preferred asset among individuals, investors, and institutions, is once again in vogue.” This is pretty interesting stuff (well, to us, anyway). We’ve always wondered why individual countries like Switzerland, Ireland, Greece and Iceland didn’t issue gold-backed currencies. In the case of the PIGS, gold-backed currencies would likely prove most helpful. Instead of providing bail-out money, the IMF might purchase gold on behalf of PIGS and thus help these countries recreate more solvent national currencies. Of course to even suggest this possibility is to participate in a fairly absurd discussion. The IMF is about as likely to help individual European countries subvert the euro via gold as it is to encourage debtor countries not to honor banking their debts. The IMF is a creature of the power elite, and it will always remain so, in our opinion. But none of this militates against the idea of the IMF backing its OWN currency (SDRs) with gold. You can see, dear reader, that once we began to contemplate the elite’s desperate zeal to keep the euro afloat along with the idea of a gold-backed SDR, the whole thing just kinda clicked. “It’s a dialectic at play,” we thought (all of us together). “The elite always needs two goalposts to move the ball down the field, and one goalpost would be SDRs and the other would be ever-consolidating regional currencies.” Well, we didn’t think this exactly, but something like it. All this, of course, is speculation (though ironically in the past SDRs have been referred to as “paper gold,” even though they are as yet unbacked by the yellow metal). And there would certainly be those, especially in the hard money community that would maintain the elite would never voluntarily relink ANY fiat currency to an underlying asset. (They might also point out the IMF has been selling gold of late.) But if the elite grows desperate enough to salvage their memes … well, who knows? Conclusion: As we often note (in today’s other article, for instance) the power elite is having a good deal of trouble hanging on to what it has. The Internet has seemingly thrown a spanner into their plans, as it is hard to promote those who are increasingly wary of your fear-based manipulations and not, therefore, as suggestible as they would be otherwise. Nonetheless, there must be some reason why the elite continues to move along on two tracks when it comes to a more globalized currency. Is the dialectic (with or without gold) being concocted even now? What would the alternative blogosphere have to say about such a money manipulation? What would the Germans think … and the rest of Europe … or Americans facing a consolidated, intercontinental currency other than the dollar? … In the 21st century – it would seem – there are as many questions as answers.
<><><>

On the Edge with Jim Willie

About dubious “gold swaps”

http://www.youtube.com/watch?v=IDuZmmz3dqg&feature=related http://www.youtube.com/watch?v=5OLyLifIkts&feature=related http://www.youtube.com/watch?v=MaWi5heq5mw&feature=related<><><>

It’s admitted to the CFTC: London gold market is a Ponzi scheme

Submitted by cpowell on Sun, 2010-03-28 05:19. Section: By Adrian Douglas Sunday, March 28, 2010 The bombshell GATA dropped at the public hearing held by the U.S. Commodity Futures Trading Commission on futures trading in metals was stunning. Video of GATA Chairman Bill Murphy revealing a whistleblower source who warned the CFTC’s Enforcement Division about market manipulation by JPMorganChase and witnessed JPM traders bragging of their exploits can be viewed here: http://www.youtube.com/watch?v=9wIMpe9SjfQ http://www.youtube.com/watch?v=e9bU0r6JP4s Murphy explained that even though the Enforcement Division received detailed information about it in December 2009, the manipulation continues unabated, as can be seen by the way gold was taken down last week to rob holders of April gold call options in the strike range of $1,100-$1,150 as the hammering made the options expire worthless. GATA believes that this new evidence will prove to be a “smoking gun,” a watershed event in liberating the gold market from price suppression. As dramatic as this revelation was at the CFTC hearing, there was another bombshell at the hearing. This was the testimony I was able to deliver at the hearing while assisting Harvey Organ with his testimony. I was able to show that the London Bullion Market Association (LBMA) over-the-counter gold market is nothing but a massive “paper gold” Ponzi scheme. What was then astonishing is that the bullion bank apologist, Jeffrey Christian of CPM Group, who has always been staunchly against GATA, endorsed my comments as being “exactly right” and went on to confirm that the LBMA trades more than 100 times the gold it has to back the trades. There were lots of almost as equally explosive admissions at the hearing, so I have made a transcript of the relevant section of the webcast. I have posted the two short video clips here and here which are what have been transcribed. http://www.youtube.com/watch?v=9wIMpe9SjfQ http://www.youtube.com/watch?v=e9bU0r6JP4s The transcript is given below with some notes added by me. * * * COMMISSIONER SCOTT O’MALIA: Both Mr. Organ and Mr. Epstein in the second panel raised the concerns that short positions exceed the physical supply. The second panel kind of argued that that wasn’t a concern. Are you concerned that the shorts will not be able to deliver if called upon? JEFFREY CHRISTIAN: No. I am not at all concerned. For one thing, it has been persistently that way for decades. Another thing is that there are any number of mechanisms allowing for cash settlements and problems, and a third thing is, as many people who are actually knowledgeable about the silver market and the gold market have testified today, that almost all of those short positions are in fact hedges — the short futures positions are hedges, offsetting long positions in the OTC market. So I don’t really see a concern there. [NOTE: It is interesting that Christian is not concerned about the ability of the shorts to deliver because they can cash-settle. He clearly has no understanding that when someone wants to buy precious metals, giving him cash instead is a failure to deliver, a default. But Christian is not concerned. He says that the short position is actually hedged by a long position on the OTC, but we will see later in this testimony how he describes the "OTC physical market" and we will see that the long position is not bullion but is in fact an unbacked (or only partially backed) IOU for bullion.] COMMISSIONER O’MALIA: Mr. Organ, would you like to respond? HARVEY ORGAN: I do see a risk on this, and I think it is a risk that we have to be very, very careful of. As countries like China, South Korea, and Russia start demanding and taking physical delivery of their gold and moving it offshore to their shores and putting pressure on the Comex, we will probably come to a point in time where we will have a failure to deliver. ADRIAN DOUGLAS: Mr. Chairman, could I make a comment? CHAIRMAN GARY GENSLER: No. Who are you? ADRIAN DOUGLAS: I would … CHAIRMAN GENSLER: No. I said no. DOUGLAS: Oh, you said no? CHAIRMAN GENSLER: I don’t know, who is this? DOUGLAS: I am Adrian Douglas. I am assisting Harvey. CHAIRMAN GENSLER: All right, Sir. Yes. DOUGLAS: I would just like to make a comment. We are talking about the futures market hedging the physical market. But if we look at the physical market, the LBMA, it trades 20 million ounces of gold per day on a net basis, which is $22 billion. That’s $5.4 trillion per year. That is half the size of the U.S. economy. If you take the gross amount, it is about 1 1/2 times the U.S. economy. That is not trading 100-percent-backed metal; it’s trading on a fractional-reserve basis. And you can tell that from the LBMA’s Website, because they trade in “unallocated” accounts. And if you look at their definition of an “unallocated account,” they say that you are an “unsecured creditor.” Well, if it’s “unallocated” and you buy 100 tonnes of gold even if you don’t have the serial numbers, you should still have 100 tonnes of gold, so how can you be an unsecured creditor? Well, that’s because it’s fractional-reserve accounting, and you can’t trade that much gold — it doesn’t exist in the world. So the people who are hedging these positions on the LBMA, it’s essentially paper hedging paper. Bart Chilton uses the expression “stop the Ponzimonium” and this is a Ponzi scheme. Because gold is a unique commodity and people have mentioned this, it is left in the vaults and it is not consumed. So this means that most people trust the bullion banks to hold their gold and they trade it on a ledger entry. So one of the issues we have got to address here is the size of the LBMA and the OTC markets because of the positions which are supposedly backing these positions which are hedges, but it is essentially paper backing paper. [8 seconds of silence] CHAIRMAN GENSLER: Oh. I guess I get time. Errr. … Umm. I don’t have any other questions. Commissioner Dunn. COMMISSIONER MICHAEL DUNN: I appreciate the difficulty of trying to do this by remote, but at the end of your testimony you start talking about bonafide hedge exemptions for commercial traders and must be part of position limits and not to grant hedge exemptions to swap dealers would be devastating for liquidity of exchanges and the price discovery capacity, and we got into who determines what is legitimate. But could you amplify on that a bit and what you see as a danger there? CHRISTIAN: Yes, I can amplify on it. But amplifying on it a bit is more difficult because it is a very big subject. The first thing is that precious metals, copper, other metals, energy — these are all traded internationally and are fungible commodities, by and large. There are a lot of strange things that have been misspoken about the difference between the wholesale and the retail market and we don’t really have the time to go over those, I think. But the fact of the matter is. … [The lights go off.] CHRISTIAN: Oh, excuse me. I am in a building with motion-sensitive lighting and it doesn’t recognize what I do as human activity. CHAIRMAN GENSLER: Those were your words, not anybody’s here. CHRISTIAN: No, they were my wife’s! If you start putting position limits on bonafide hedgers, for example, the bullion banks — and the previous fellow was talking about hedges of paper on paper and that is exactly right. Precious metals are financial assets like currencies, T-bills, and T-bonds; they trade in the multiples of a hundred times the underlying physical and so people buying them are voting and giving an economic view of the world or a view of the economic world, and so when you start saying to a bank I have a number of people. … [NOTE: This is mind-blowing. Christian openly admits that the LBMA OTC market is not trading in physical gold or silver but in paper promises. But gold is not intended to be a "financial asset" like T-bills and currencies. That is the whole point of owning it. Actual physical bullion is a tangible asset with intrinsic value that doesn't have counterparty risk. Christian believes that the purpose of trading paper promises in gold is for investors to "vote" on their view of the economic world. He confirms that the LBMA trades hundreds of times the real underlying physical gold. This is even a higher estimate than I have made. The LBMA is, as I asserted before the commission, a giant Ponzi scheme.] CHRISTIAN: Well, actually let’s go back to a concrete example of Mr. Organ when he was talking about August of 2008 when there was an explosion in the short positions in gold and silver held by the bullion banks on the futures market and he seemed to imply that that was somehow driving the price down. If you understand how those bullion banks run their books, the reason they had an explosion in their short positions was because they were selling bullion hand over fist in the forward market, in the physical market, and in the OTC options market. Everyone was buying gold everywhere in the world, so the bullion banks who stand as market makers were selling or making commitments to sell them material and so they had to hedge themselves and they were using the futures market to do that. So if you place position limits on the futures market, they will have to find some other mechanism to hedge themselves — and they will. And someone else will provide that market. COMMISSIONER DUNN: Jeffrey, I am going to cut you off because I want to ask another question of Mr. Organ. [NOTE: It is hard to imagine more inane drivel than this. Christian conjures up the image of bullion bankers selling bullion like crazy to the public, which is in a feeding frenzy, and the bullion bankers are "hedging themselves" by selling gold short on the Comex!? Did he get that idea from a blonde? A little while later Chairman Gensler also realized that this was the biggest baloney ever concocted as a cover for massive gold market manipulation by JPMorgan Chase and HSBC in 2008 and so he poses a follow-up question.] CHAIRMAN GENSLER: I would like to follow up on Commissioner Dunn’s question for Mr. Christian, if I might, because I didn’t quite follow your answer on the bullion banks. You said that the bullion banks had large shorts to hedge themselves selling elsewhere, and I didn’t understand. I might just not have followed it and you’re closer to the metals markets than me on this, but how do you short something to cover a sale? I didn’t quite follow that? CHRISTIAN: Well, actually I misspoke. Basically what you were seeing in August of 2008 was the liquidation of leveraged precious metals positions from a number of places and the bullion banks were coming back to buy it, and they were hedging those positions by going short on the Comex and that is really what it was. [NOTE: Even on a second attempt Christian invents the most ridiculous poppycock to explain away the blatant manipulation of the precious metals in 2008. If, in his own words, investors were buying gold hand over fist everywhere in the world, why would leveraged long holders dump all their long holdings? They ordinarily would have been making a fortune. The bank participation report of August 2008 shows that two or three bullion banks sold short the equivalent of 25 percent of world annual silver production in four weeks and the equivalent of 10 percent of annual world gold production. There was simultaneously a decrease in their long positions, which were almost non-existent anyway, which is incoherent with a notion that the bullion banks were mopping up dumped leveraged investments. For an intelligent and coherent explanation of what happened in August 2008 read my CFTC written testimony here:] https://marketforceanalysis.com/index_assets/CFTC%20HEARING%20ON%20METAL… CHAIRMAN GENSLER: So I am glad I asked because I really didn’t follow that. But if I think of the earlier charts of the positions of the bullion banks that Mr. Sherrod had, these concentrated shorts have been, well, you know, reasonably consistent. They are not exactly the same on every day, but his charts showed a similarity across a couple of years. So what are bullion banks — I mean, I am just trying to understand — what are bullion banks hedging on the other side? We heard from other panels, but you seem to be familiar. Is it warehouse receipts? What is it? CHRISTIAN: Well, it’s a tremendous number of things. You were at Goldman shortly after me and we had an MIS system that kicked out a daily gold book. CHAIRMAN GENSLER: That’s really remarkable because we don’t seem to have a lot of similar views, but, you know, a lot of people were at Goldman Sachs. CHRISTIAN: Well, I didn’t like the trends at Goldman, so I left in 1986. But honestly, and bad jokes aside, if you look at a bullion bank’s book — its gold book, for example — you will see an enormous number of things. There will be gold forward purchases from mining companies. There will be forward purchases from refineries. There will be gold that has been leased out to electronics manufacturers, component manufacturers, and countless manufacturers and jewelers. As gold flows through the beneficiation process — and again, these are all long, complex issues that are hard to reduce — but, you know, a lot of producers will sell their gold the moment it leaves their possession at the mine. It might be in concentrate form or it might be in dore form. It then goes to a smelter or a refinery. The bullion bank buys that and it agrees a price at the time it is buying it but it won’t be allowed to sell that metal until the refinery outturn, which is maybe two weeks but it could be six months. So they will go into the market and short the market in order to cover the commitment they have made to buy at that price and then when they get the metal in the physical market, then they can either sell that metal in the physical market and unwind the hedge in the futures market or the forward market or do something else. There are all sorts of other derivative contracts that investment banks and bullion banks will sell to investors, to other banks, pension funds, to insurance companies, and each of those will often have a long exposure in gold, which will be hedged with an offsetting short position. [NOTE: There he goes again with that blonde idea that when you sell gold to someone, you hedge that with a short position.] So if you look at a bullion bank’s gold book or silver book, you would find a large range of topics. One of the things that the people who criticize the bullion banks and talk about this undue large position don’t understand what is the nature of the long positions of the physical market and we don’t help it. The CFTC, when it did its most recent report on silver, used the term that we use, “the physical market.” We use that term as did the CFTC in that report to talk about the OTC market — in other words, forwards, OTC options, physical metal, and everything else. People say, and you heard it today, there is not that much physical metal out there, and there isn’t. But in the “physical market,” as the market uses that term, there is much more metal than that. There is a hundred times what there is. If I look at the large short positions on the Comex, my question is: Where are the other shorts being hedged? Because the short position that I believe the bullion banks use to hedge their physicals is larger than their short position on the Comex, and the answer is that they hedge it in the OTC market in London. CHAIRMAN GENSLER: I thank you for that detailed discussion * * * This is a stunning revelation. Christian confirms that the “physical market” is not in fact a physical market at all. It is a loose description of all the paper trading and ledger entries and some physical metal movements that occur each day on behalf of people who believe they own bullion in LBMA vaults but in fact don’t. They are told they have “unallocated gold” or “unallocated silver,” but that does not mean the LBMA has physical metal set aside for those customers and has just not given specific bar numbers to the customers. No, it is the most cynical and corrupt definition of “unallocated” — the customer has NO bullion allocated to him. NONE! The LBMA defines the owners of “unallocated accounts” quite clearly as “unsecured creditors.” That means they have NO collateral. NONE. Can it be any clearer? It is a giant Ponzi scheme. Christian confirms what many analysts and GATA have been alleging — that there is not much REAL physical metal — but testifies that there is actually 100 times the REAL physical metal being sold based on the much more “loose” definition of what “physical” means to the bullion banks. The last sentence of his statement is mind-blowing. He says the “physical” positions of the bullion banks are so huge that they are much bigger than the Comex short position. He says the “physicals” are hedged on the OTC market in London! Did you get that? Let me walk you through it. The bullion banks are selling what is supposed to be vault gold, but it is just a ledger entry if the customer never asks for delivery. The bullion banks must balance their exposure with a ledger deposit entry. This has to be some paper promise of gold from a third party, or some derivative, or even some real gold bullion. If all the ledger entries balance out, then the bullion bank has no net exposure in exactly the same way the futures market works with a short offsetting a long. A futures market can never default if no one asks for delivery, as only paper contracts are traded. The loosely defined “physical” London market is an identical scheme. As long as everyone is prepared to buy and sell “ledger entries” for imaginary gold in the vault, no one will ever discover the fraud. The LBMA does buy and sell some real physical metal as well. But we now know from Christian’s testimony that this is one one-hundredth the size of the paper gold trading. The LBMA says on its Internet site that it trades 20 million ounces of gold each day on a net basis. We can calculate that the net trade of REAL physical gold should be about 200,000 ounces each day. That is 6.25 tonnes per day or 1,625 tonnes per year. This is very much in line with the size of total global mining output of approximately 2,200 tonnes per year. So the giant Ponzi trading of gold ledger entries can be sustained only if there is never a liquidity crisis in the REAL physical market. If someone asks for gold and there isn’t any, the default would trigger the biggest bank run and default in history. This is, of course, why the central banks lease their gold or sell it outright to the bullion banks when the bullion banks are squeezed by high demand for REAL physical gold that cannot be met from their own stocks. Almost every day we hear of a new financial fraud. The gold and silver market fraud is likely to be bigger than all of them. Investors in droves who have purchased gold in good faith in “unallocated accounts” are going to demand delivery of their metal. Then they will discover that there is only one ounce for every 100 ounces claimed. They will find out they are “unsecured creditors.” GATA has long advocated the ownership of real physical bullion. The bombshells dropped at the CFTC’s public hearing have served only to reinforce that view. We believe that we have made significant new inroads into exposing the fraud and the suppression of precious metals prices and it is documented in the CFTC’s own hearing. —– Adrian Douglas is publisher of the Market Force Analysis letter (www.MarketForceAnalysis.com) and a member of GATA’s Board of Directors. * * * Support GATA by purchasing a colorful GATA T-shirt: http://gata.org/tshirts http://www.gata.org/node/8478

Save to

<><><>

Fractional Gold And Silver Accounts

Commodities / Gold and Silver 2010 Jun 29, 2010 – 04:06 AMBy: Darryl_R_Schoon Commodities Best Financial Markets Analysis ArticleDeceit becomes fraud only when you can’t deliver Many of those interested in Austrian economics have been waiting for what Austrian economist Ludwig von Mises called the crack up boom. My advice: Don’t wait. The crack-up boom may already have happened. Get ready for what’s next. From Ludwig von Mises, Human Action, 1949: The credit expansion boom is built on the sands of banknotes and deposits. It must collapse. If the credit expansion is not stopped in time, the boom turns into the crack-up boom [bold, mine]; the flight into real values begins, and the whole monetary system founders. Continuous inflation (credit expansion) must finally end in the crack-up boom and the complete breakdown of the currency system.The period from 1982-2000/2008 was capitalism’s longest sustained expansion. It was an expansion, however, driven by ever–increasing amounts of credit emanating from Wall Street and central banks. Capitalism’s longest and greatest expansion was, in fact, a credit bubble in disguise. The historic and extraordinary credit expansion boom faltered in March 2000 when the US dot.com bubble collapsed. More cheap credit from Greenspan’s Fed then reflated the bubble, driving markets to new highs only to again collapse in 2008, a cataclysmic rendering resulting in global losses exceeding $10 trillion. The explosive growth of credit from 1982 to 2008 was credit-based capitalism’s final blow-off, the late-stage credit expansion predicted by von Mises in 1949; the resultant and parabolic rise in equities from 1997-2000 a sign that von Mises’ crack-up boom was underway. That the crack-up boom has already happened is further evidenced by von Mises’ flight into real values which began in 2001, a consequence of the crack up boom. The flight into real values started after the dot.com bubble collapsed and investors began moving to the safety of gold (the price of gold has since quintupled); and, when markets collapsed again in 2008, the flight to real values, i.e. gold, accelerated. The Financial Times reported in September 2008: Investors in gold are demanding “unprecedented” amounts of bullion bars and coins and moving them into their own vaults as fears about the health of the global financial system deepen..Industry executives and bankers at the London Bullion Market Association annual meeting said the extent of the move into physical gold was unseen and driven by the very rich. Regarding the consequences of the crack up boom, von Mises wrote: …As in every case of the understanding of future developments, it is possible that the speculators may err, that the inflationary or deflationary movement will be stopped or slowed down, and that prices will differ from what they expected. Speculative uncertainties caused by previously latent but now unleashed inflationary and deflationary forces are now clearly evident. A deflationary collapse in demand is again in motion which monetary authorities may attempt to offset by a hyperinflationary deluge of printed money. The belief that the trillions borrowed and spent in 2009 reversed the 2008 economic collapse is belied by the fact that demand is again falling. Much to central bankers’ collective dismay, the global economy is contracting. The ECRI leading indicator produced by the Economic Cycle Research Institute plummeted yet again last week to -6.9, pointing to contraction in the US by the end of the year. It is dropping faster that at any time in the post-War era…The latest data from the CPB Netherlands Bureau shows that world trade slid 1.7pc in May, with the biggest fall in Asia. The Baltic Dry Index measuring freight rates on bulk goods has dropped 40pc in a month. http://www.telegraph.co.uk/.. Faced with a potential deflationary collapse, RBS credit chief Andrew Roberts is predicting that central banks will attempt to prevent this possibility by a massive round of money printing: The next shock and awe will be in the form of large scale QME (Quantitative Monetary Easing). Sufficient, i.e. excessive, money printing is Milton Friedman’s ineffectual solution to reversing monetary contractions. Printing more money leads, in fact, to von Mises’ predicted end-game. Von Mises crack up boom ends in the complete breakdown of the currency system, a progression that Friedman’s flawed theory has accelerated. GOLD & THE COMPLETE BREAKDOWN OF THE CURRENCY SYSTEM Predictions are circulating that the euro, only ten years old, may not survive the current crisis. The euro, however, like all fiat currencies was doomed from its beginning. No fiat currency has ever lasted as the advantages of fiat currencies are only temporary. In the long run, there are none. In the not too distant future, paper currencies, e.g. the US dollar, the pound, the euro, the yuan, et. al. will go the way of all fiat money, into history’s dustbin, surviving only as monetary artifacts, evidence once again of man’s continual attempts to substitute fiat paper money with no intrinsic value for that which does. Ralph T. Foster’s book, FIAT PAPER MONEY, The History and Evolution of our Currency, is a compendium of humanity’s repeated attempts to achieve and maintain the impossible. Since the invention of ink and paper in the East and now in the West, Foster’s book chronicles man’s constant attempts to pass off paper coupons as money, see http://home.pacbell.net/tfdf/. FIAT PAPER MONEY is a disquieting read. It is a collection of facts that leaves an impression difficult to forget. Therein lies the value of the book. My interview with Ralph T. Foster about FIAT PAPER MONEY can be viewed on Youtube at http://www.youtube.com/watch?v=LKUpcCQ4Nwo. Von Mises’ complete breakdown of the currency system leaves gold and silver among the few safe havens remaining. Erste Bank’s excellent report, In Gold We Trust (June 2010) by analyst Ronald Stoferle, is perhaps the best summary to date of the reasons for gold’s 10 year rise—a rise that Stoferle predicts will continue. Note: Stoferle adds an Austrian economic perspective to his analysis of gold’s future prospects, see http://c1.libsyn.com/.. THE SAFETY OF GOLD VERSUS THE ALLEGED SAFETY OF BULLION BANKS On June 25, 2010, an article in the Wall Street Journal noted: Individual investors are increasingly demanding to take possession of their gold holdings, rather than just owning shares in a mining company or a gold-related fund. What the Wall Street Journal failed to report is the possibility that many gold investors may not, in fact, actually have the gold or silver they purchased and believe to be safely stored in a bank vault. Gold and silver investors are discovering that banks possess only a small fraction of the gold and silver allegedly bought by banks for customers. Banks, unknown to their customers, use a fractional reserve system for their accounting of gold and silver inventories. Only a small percentage of gold and silver bought by customers is actually held and stored by banks. Banks for years have been charging their customers for precious metal purchases without actually buying the metals, booking the precious metal “purchases” as bank liabilities, not as the custodial accounts customers assumed, see http://www.reuters.com/.. The following interview with investors who believed their bank was storing silver on their account is revealing as it is disturbing. Although charged by the bank for the purchase of silver bullion in addition to storage and insurance fees, the bank did not actually have the silver as the investors discovered, see http://www.kingworldnews.com/.. Their discovery is no different than the facts uncovered when Morgan Stanley was successfully sued in a class action suit  brought by Selwyn Silberblatt in 2007, on behalf of himself and others who bought precious metals — gold, silver, platinum and palladium in bullion bar or coins — from Morgan Stanley DW Inc. and its predecessors and paid fees for their storage. The suit covered investors who did so between Feb. 19, 1986, and Jan. 10, 2007, see http://www.reuters.com/.. Question: Do you know where your gold or silver is? Fool me once, shame on you. Fool me twice, shame on me. You’ve been warned. Buy gold, buy silver, have faith. By Darryl Robert Schoon www.survivethecrisis.com www.drschoon.com blog www.posdev.net About Darryl Robert Schoon In college, I majored in political science with a focus on East Asia (B.A. University of California at Davis, 1966). My in-depth study of economics did not occur until much later. In the 1990s, I became curious about the Great Depression and in the course of my study, I realized that most of my preconceptions about money and the economy were just that – preconceptions. I, like most others, did not really understand the nature of money and the economy. Now, I have some insights and answers about these critical matters. In October 2005, Marshall Thurber, a close friend from law school convened The Positive Deviant Network (the PDN), a group of individuals whom Marshall believed to be “out-of-the-box” thinkers and I was asked to join. The PDN became a major catalyst in my writings on economic issues. When I discovered others in the PDN shared my concerns about the US economy, I began writing down my thoughts. In March 2007 I presented my findings to the Positive Deviant Network in the form of an in-depth 148- page analysis, How to Survive the Crisis and Prosper In The Process. The reception to my presentation, though controversial, generated a significant amount of interest; and in May 2007, “How To Survive The Crisis And Prosper In The Process” was made available at www.survivethecrisis.com and I began writing articles on economic issues. The interest in the book and my writings has been gratifying. During its first two months, http://www.survivethecrisis.com was accessed by over 10,000 viewers from 93 countries. Clearly, we had struck a chord and www.drschoon.com , has been created to address this interest.

Darryl R Schoon Archive

© 2005-2010 http://www.MarketOracle.co.uk – The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

<><><>

Exposing The London Bullion Market Association

Tyler Durden's picture

Submitted by Tyler Durdenon 03/01/2010 18:11 -0500

Following up on the earlier post in which German TV station ProSieben has disclosed proof of the existence of tungsten “gold” bars in circulation within the bank community, we share with you the following highly informative presentation by Adrian Douglas of Market Force Analysis titled “LBMA OTC Market – “Alchemists” Turn Paper Into Gold.” For anyone who has even a passing interest into what, as the author characterizes, could possibly be “the next Madoff scandal, except multiplied by 100″, we recommend reading this paper.

Market Force Analysis titled

“LBMA OTC Market –

“Alchemists” Turn Paper Into Gold.”

https://marketforceanalysis.com/index_assets/LBMA%20-%20Alchemists%20Turn%20Paper%20into%20Gold.pdf

<><><>

LBMA, LPMCL and the use of fractional banking techniques and derivatives in the gold market.

Submitted by Cheeky Bastardon 05/23/2010 04:59 -0500

During last weeks jobless claims analysis; Joe Kernen decided to throw in couple of his “highly sophisticated” thoughts regarding gold, gold market, structure of GLD SPDR ETF, and the utilization properties of gold. With stupidity oozing out of him, this is what Kernen had to say about gold [make sure not to miss the comparison of buying gold with the practice of sacrificing animals]: I do not want to spoil such “highly sophisticated” “thoughts” with truth, but I just cant restrain myself. It is well known that most of physical gold is being stored in the vaults of LBMA member banks. The institution which says so is the LPMCL (London Precious Metals Clearing Limited) which is, surprise surprise, owned by those same banks which are members of LBMA. It has been said numerous times in the past, and most recently by GATA board member Adrian Douglas, what is the true structure of gold market and that the contracts being traded are not contracts based on physical gold, but at best primary miner-LBMA forwards [rarely futures], and most often bars with multiple CUSIPs assigned to them. Basically most of the daily volume and value being traded on the gold market compromises of derivatives and second derivatives [second derivative being either put or call on a forward contract or futures contract on a forward]. It is also worth mentioning GOFO rates which are rates that LBMA charges on gold loans. Notice the surge in GOFO coinciding with gold market interest going from net long to net short: What is even more believable when we are talking about the manipulation in the gold market is that the same treatment which is being applied to physical bullion [assigning multiple CUSIPs to same gold bars [by LPMCL]] is also applied towards primary miner-LBMA forward contracts. If we use a conservative estimate of minimal reserves and say it is 10% that would mean that one primary miner-LBMA forward for 1000 ounces, can create, out of thin air, 100 000 ounces of new gold, without any physical gold actually being mined or traded in the market.Think about what 100 000 ounces of new gold hitting the market would do to its price. Something like this maybe [actually i dont believe such a large quantity ever hit the market in just one infusion]: Here is the BIS statistics on OTC Gold derivatives: Adrian Douglas; GATA board member writes the following:

By Adrian Douglas Monday, January 18, 2010 Here are some Trivial Pursuit questions for you: 1) What is the biggest market in the world for a physical commodity? 2) Is the gold market one of the smallest markets in the world for a physical commodity? I would guess that you answered: 1) Crude oil. 2) Yes. Gold is one of the smallest commodity markets in the world. If those were your answers, you are wrong. What everybody believes to be the “tiny gold market” is in fact the world’s biggest physically traded commodity market. Let’s have a look at some facts. The London Bullion Market Association (LBMA) “over-the-counter” (OTC) gold market trades approximately 90 percent of the world’s physical gold trade. The amount of gold sold each day is given at the LBMA’s Internet site here: http://www.lbma.org.uk/stats/clearing The LBMA reports the net gold traded, which is termed “ounces transferred.” This is not the gross trading volume. For example, if an investor were to sell 1 million ounces in the day and then buy 1.1 million ounces, the trade would be counted as 0.1 million ounces, the net difference between the purchase and the sale and the amount of gold “transferred” to the investor’s account. Therefore the numbers are the amount of gold that changes ownership each day. The value of the daily trading for November 2009 is given as $22 billion. From looking at the data you might think that the trade amounts are for the entire month. But they are actually average daily figures for the month. This is clear from another page of the LBMA Internet site, which states: “Gold ounces transferred rose from a daily average of 20.6 million in September to 20.8 million, an increase of 1.2%. There was a 4.7% increase in the average price to $1,043.16, resulting in a 6.0% rise in value to a daily average of $21.8 billion. The number of transfers dropped by 0.8% to a daily average of 1,908.” The world consumes 82 million barrels of crude oil each day. At $77 per barrel the physical trade of crude oil is worth $6.3 billion each day. This means that the amount of gold that changes ownership each day is, in dollar terms, 3.5 times the dollar value of crude oil that is consumed each day. In a GATA dispatch in October 2009 the market analyst Paul Mylchreest estimated that the gross volume of gold traded on the LBMA each day was about 2,100 metric tonnes: http://www.gata.org/files/ThunderRoadReport-10-15-2009.pdf That equates to $77 billion each day at 1,150 per ounce. The NYMEX WTI crude oil contract trades 400,000 contracts each day, which is 400 million barrels. At $77 per barrel, the gross value traded is $30.8 billion, which is only 40 percent of the value of the gross trade in gold. There is a myth among even knowledgeable gold investors and analysts that the gold market is tiny, but in reality it is the biggest physically traded commodity market in the world. The perception of gold being a tiny market comes from the tiny annual production of gold. Global gold production is only 2,200 metric tonnes per year, which is equivalent to the gross trade in gold on the LBMA in just one day. In a previous article I analyzed the LBMA market numbers and deduced that it was impossible for the LBMA to have enough gold in its vaults to trade such large daily volumes. The inescapable inference is that the LBMA is operating a fractional reserve system and has sold much more gold than it has or could ever have. The amount of gold that has been sold is estimated to be around 65,000 metric tonnes, while the maximum amount of London Good Delivery bars that exist in the world is around 15,000 metric tonnes. So even if the LBMA possesses the world’s entire stock of LGD bars there are 50,000 metric tonnes of obligations that cannot be met if the owners ask for delivery. To put that quantity of gold into perspective, it is equal to all the gold reserves that remain to be mined in the earth. Gold is unique among all commodities because its very nature and function enable such a fraud to be perpetrated. Gold has very few uses that consume gold. Its main function is to store wealth, and gold can perform that function while in your house, in your vault, or even on the other side of the world in someone else’s vault. When it is acting as a store of wealth in someone else’s vault, you have to trust that someone else that there is any gold at all in his vault. Many wealthy individuals, institutions, and sovereign states buy gold through the LBMA in unallocated accounts and leave the gold they supposedly own in the custody of the LBMA. That people are buying and selling gold without ever taking delivery means that there is the opportunity for the bullion houses to sell gold that doesn’t exist. The bullion houses probably don’t view this as illegal or dishonest, because they will operate a fractional reserve type of system just as the banks do with fiat currency and will make sure that they have enough gold on hand for what would be the maximum estimated volume of gold that could be called for delivery at any one time. For this fraud to continue without being exposed, no requested delivery of gold by an LBMA customer must ever be defaulted upon or else a massive “run on the bank” would be triggered. When the bullion banks get into trouble and don’t have enough gold on hand to meet delivery demands, central banks lease or sell them gold to cover the shortfall. The central banks are willing to aid and abet the crime because the selling of “paper gold” has the same suppressive effect on the gold price as selling real gold. Suppressing the gold price accommodates the central banks in masking their promiscuous fiat currency creation. In this way the traditional inflation “canary in the coal mine” is muted. This is the basis of the “strong dollar policy” that allows interest rates to be lower than they should be, and in turn it lowers the price of commodities and imports as it artificially enhances the dollar’s buying power. Further, the central banks are able to earn a lease rate on their gold hoards. If commission fees are 3 percent, then the annual commission earned by the LBMA is approximately $585 billion on only $500 billion of assets. A 100 percent return on investment is certainly a handsome profit. The much-heralded public auction by the Bank of England of half of its gold stock was open only to members of the LBMA. From the thesis presented here it can be seen that the suppression of the gold price suits the central banks and that running a fractional reserve gold inventory is extremely lucrative for the LBMA, especially when it is backstopped by the central banks. Mobilizing central bank gold to maintain liquidity in the market is essential. Maintaining secrecy of such gold activities is equally essential. Over the last 10 years GATA has amassed a large amount of evidence that more than half of central bank gold has been sold, leased, or swapped into the market. This is what lies at the core of the federal Freedom of Information Act lawsuit GATA has filed against the Federal Reserve. The Fed is denying access to hundreds of pages of documents pertaining to the U.S. gold reserves because they are deemed to be exempt from disclosure as “trade secrets.” GATA believes that the Fed is trying to cover up its involvement in the suppression of the gold price as part of the implementation of the “strong dollar policy,” which necessarily involved mobilizing or encumbering the U.S. gold reserve in some way. GATA intends to find the truth. Investors in precious metals should take delivery of their bullion. No matter what the outcome of GATA’s lawsuit, the fraud will be exposed by customers of the LBMA asking for their gold. When it becomes clear that there isn’t enough gold to meet demanded delivery, the gold price must rise in accordance with the new market reality of a much smaller supply than previously was apparent. If you don’t take delivery of your bullion, you might discover that investments you thought you had in gold are just promissory notes.

There you go ladies and gentleman; the undeniable truth about the suppression of gold price using the same methods and instruments that are being used when it comes to banking, currency and OTC derivatives market. I will follow this with a more detailed expose on LBMA, LPMCL, GLD SPDR ETF, derivatives and structure of the market. Since this topic abounds with vast pool of information; each of the aforementioned structures will be introduced separately in the upcoming posts about the world of Gold. Trade safely and always demand delivery. http://www.zerohedge.com/article/lbma-lmpcl-and-use-fractional-banking-techniques-and-derivatives-gold-market<><><>

Fractional Reserve Gold: The Ultimate Ponzi Scheme

Postby Gnosty» 16 Feb 2009, 16:02 FRACTIONAL RESERVE GOLD by Michael Edward The current world financial implosion facing us today is no accident. It was meticulously (maliciously) planned and executed. The master plan to re-distribute all wealth from the middle classes to the “shadow powers” has been carried out with precision, especially since the advent of digital trade and banking. Just as the private Federal Reserve System created fractional reserve banking with Federal Reserve Notes (a/k/a fiat FRN$), a paper gold Ponzi scheme was created with physical gold as its basis. What this means is that some physical gold has been fractionalized from 5-10 fold – and recently even more – into fiat paper gold. Hence, the reality of Fractional Reserve Gold. For the past 30 years, and especially within the past 7 years, paper gold derivatives and gold contract lend-lease instruments have flooded the world markets at full face value, but are backed by only a small percentage of actual physical gold. In fact, rampant printing press fractional reserve banking of paper FRN$’s could never have been accomplished without the use of fractional reserve gold. Since 1974, the world has been led to believe there was no more gold backing any modern trade exchange currency, especially the FRN$. As sheep led astray, people have been convinced that the “faith and credit” of the U.S. government and its taxpayer Federal citizens are what has backed the FRN$. That has always been an absolute lie and that’s why the people of the world have become “sheeple” being blindly led to financial slaughter. Their economic slaughterhouse is working 24/7 to fleece the sheeple before they realize the truth. Just because President Nixon shut down the U.S. gold exchange window for international central banks does not mean physical gold was no longer the value behind what soon became “Petro-Dollars”. After all, many nations refused to sell their oil for completely non-gold exchangeable FRN$ in the 1970’s. Do Americans remember those petrol-gas lines and alternate day rationing? There was really never a shortage of crude oil; there just wasn’t an acceptable exchange currency to pay for it. In the past few decades, gold has still been the backing to give value to whatever means of exchange currency is being used and accepted for world trade. Since the FRN$ is the world reserve currency, gold has been (fraudulently) used to give it a value. That’s how the “shadow powers” planned it all along. But in order for them to retain and amass hoards of pure physical gold “off the books” without leveraging but just a small amount of it, they had to create a Fractional Reserve Gold system in parallel with their Fractional Reserve FRN$. (More about why they’ve been privately amassing all these tonnes of gold later on). In a very broad way, the word “lease” has been used to inform the public of central bank gold reserve “activities”. This lend-lease of certain (not all) national central bank gold is where the Fractional Reserve Gold scheme began. It was first based on leasing out promised reserves of physical gold not yet removed from the ground. That is why many central banks show gold reserves on their ledgers that have not actually been mined yet. In the interim, they leased this “grounded” gold since it didn’t deplete the physical gold in their vaults. They got a FRN$ return on contract paper gold leases without ever having to produce the physical gold. But that’s not where the paper gold Ponzi scheme ends. Many “third world” central banks have been relieved of their physical gold reserves in payment for FRN$ loans with private banks controlled and owned by the “shadow powers”… Uruguay, Mexico, Argentina and Chile to name a few. These same private banks have issued – off the books or over the counter (OTC) – paper gold derivatives throughout the world based on the full face value of this physical gold. But the problem lies in that those who purchased these paper gold derivatives are (usually un-knowingly) holding a small fraction of physical gold that backs the derivative. For example, if a paper gold derivative has a face amount of 400 troy ounces of gold, the physical gold backing that face value is far less… perhaps as little as 4 troy ounces. If a paper gold contract holder “cashes in” or sells that contract before maturity, he gets FRN$ for the full face amount or for whatever agreed amount stated within the derivative. However, if he demands physical gold delivery upon maturity, then the originator of the contract has to come up with the full face amount in gold… or default. Now, just imagine the many thousands of these fractional gold derivatives in circulation right now. Of those officially known and accounted for – which is a small percentage of the total – JP Morgan Chase holds about 80% of them. Following just the COMEX delivery reports for the past few months, JP Morgan rarely accepts physical gold delivery. Instead, they re-new the derivative contracts or cash them in. Perhaps now you can see why the TARP bailout of digital FRN$ was so vital a need. Since JP Morgan is a “dealer” for the Federal Reserve System, they are buying up and re-circulating fractional paper gold derivatives in order to stop them from being placed into physical gold delivery. Is it any wonder the Federal Reserve System refuses to disclose where all the bailout FRN$’s have gone? Is it any wonder the “FED” has never been formally audited? The final stage of the deliberate collapse of the fiat paper FRN$ world currency is when the fractional reserve gold derivative contracts are turned in, en mass, for physical delivery. JP Morgan and other “dealer” banks of the “shadow powers” can’t buy them all up with TARP created FRN$ if enough of those who hold them begin demanding physical gold delivery. When that day arrives and it’s revealed there isn’t enough physical gold to cover but a small fraction of the gold demanded, the FRN$ will collapse… on purpose. Why would the “shadow powers” want to disintegrate their own fiat paper system? Because the next “world” exchange trade currency that replaces the FRN$ will need to be backed by physical gold. This will be (and already has been) mandated by most nations so that the present Ponzi scheme won’t be able to easily repeat itself. Besides the physical gold the “shadow powers” have demanded for payment of their fiat paper loans, they have purchased and hoarded many tonnes of physical gold with their profits from fractional FRN$ banking and fractional reserve gold paper derivatives. It’s all gone according to plan since 1913. At this near final stage, all they’re really doing is waiting for it to implode at the sacrifice of the entire middle class of world citizenry. When it does, they’ll be holding the gold that backs the next world exchange currency. They have destroyed many of the gold reserves held by central banks within the past few months. If any physical gold reserves were still left within those central bank vaults, they have lately had to sell some of it to keep their national currencies and economies from collapsing. And who do you think has (covertly) purchased that physical gold with fiat FRN$ at bargain paper gold COMEX based prices? The “shadow powers” are very cunning. They enjoy making the world bleed gold. However, these shadow elites don’t have a majority of the world’s physical gold in their own vaults yet. If they allow the fiat FRN$ or paper gold fractional systems to implode too quickly, they won’t be able to buy up the remainder of the needed physical gold. That’s another reason why TARP and the latest Obama funding scam have been forced on American taxpayers. If, and only if, certain nations with enough remaining physical gold join together and either create a new gold-backed currency or pooled their physical gold reserves to back an existing currency, the “shadow powers” will not have carte blanche to continue their final plans. Rumours of the EURO being backed by pooled national gold reserves may or may not become a reality. Perhaps the “shadow powers” are planning on doing this themselves by making an alliance with just a few gold enriched European nations. However it evolves, there will be a new world trade currency backed by gold in one form or another. No single nation has enough physical gold reserves to do it alone. The infamous U.S.A. Fort Knox gold reserves have been stolen, leveraged and fractionalized, so this prohibits any political or governmental solutions of restoring a gold-backed Constitutional American Dollar. Physical gold is not a commodity, but paper gold is. It’s fractional reserve paper gold that’s traded on the COMEX along side of copper. The true price of physical gold isn’t listed on any exchange system. How clever of the shadow elites to make everyone believe that physical gold is worth the same as their fiat paper gold! Again, this was well planned and is no mistake. It keeps the “perceived” FRN$ price of physical gold low so that it can be purchased in exchange for worthless paper with multi-coloured inks printed on them. This is what the “shadow powers” are doing right now. At the same time, it temporarily opens a door for sovereign people of the world to do the same. Got gold? He who owns physical gold makes the rules. He who owns paper gold sleeps with fools.

Is your gold really there?

Postby Gnosty» 20 Oct 2009, 11:49

Continuing doubts are being expressed that all the gold claimed to be held by Central Banks and others may not be there, or title is being held by several parties as the statistics just don’t appear to add up.LONDON – Monday , 19 Oct 2009 Mineweb – posted by Lawrence Williams http://www.mineweb.co.za/mineweb/view/mineweb/en/page33?oid=90927&sn=DetailIt doesn’t just seem to be GATA which nowadays is questioning whether the volume of gold held in ETFs and in official reserves is really there – or perhaps there is more than one title to what is actually in the world’s gold vaults? Would a run on gold bullion thus create panic among the Bankers?Banking has run for centuries with the banks themselves only keeping on hand a fraction of the money owed to depositors with the balances loaned out and not always immediately available, if indeed it is even there at all, so when there is a run – like that on Britain’s Northern Rock last year – the bank concerned can find it tough to keep its head above water. Northern Rock, in the event, needed to be bailed out by the U.K. government.There are plenty of theories that the gold markets also operate on a similar principle – or perhaps worse. Not only may the banks not hold the amounts of physical gold they say they do, say the doubters, having loaned much of this to third parties, but there are now analysts and observers expressing doubts over the actual title to the gold that is still seen to be in the vaults, feeling that perhaps some of it has been sold several times over. Central Banks, for example, seem to hate being questioned over gold loans preferring to duck the question and keep any such arrangements under wraps, although most will admit to gold swaps and loans being made – but little or no detail.It may be no coincidence that the recent surge in the gold price which burst it through the $1,000 barrier followed shortly after Hong Kong demanded repatriation of its gold held in London banks and reports suggest that Germany is also looking for its foreign-held physical gold to be returned from overseas repositories. Has this created shortages of physical gold which holders are now trying to cover?The latest commentator to express doubts is Paul Mylchreest in his Thunder Road Report. Mylchreest has calculated that, using GFMS figures, that data on the volume of gold traded on the London market (about 90% of gold traded worldwide), if put in its proper context, does not tally with his estimate of the amount of gold that is held in the form of bars which conform to “London Good Delivery” standard. He has thus come up with two alternative possible reasons for the anomaly:Alternative 1:On average there is more than one ownership claim on each gold bar conforming to London Good Delivery (LGD) standard on the “pool” of gold which acts as liquidity for the massive OTC gold trade based in London. Essentially, the market operates on a fractional reserve basis, but if a sufficient number of market participants become concerned about this and there is a stampede to take delivery of physical bullion, there is a risk of market failure. Such a process could be delayed by central banks lending gold to the market, although this would likely be obvious by a spike in gold lease rates, or by a much higher gold price in order to encourage holders to sell bullion. In this scenario, the gold price could SOAR at any time and the gold market, which is subject to little regulation, is basically an accident waiting to happen; “Or:Alternative 2:

“There is FAR more gold bullion held in private hands than is acknowledged by current industry estimates. It is the large amount of additional gold on top of known gold stocks which provides sufficient liquidity to support the high volumes traded through London. The most likely source for this gold dates back to the Japanese conquest of Asia from 1894-1945 when Japan is alleged to have looted the gold and valuables of 12 nations – it is best known as the story of Yamashita’s Gold. If true, my[Mylchreest's] analysis shows that particularly heavy volumes of this gold may have been laundered into the London market during 1986-90 and the mid/late 1990s. In this scenario, the continued evolution of the gold bull market could be more protracted, if supplies of this gold continue to enter the market periodically.”
Under either scenario, Mylchreest remains positive on the future of the gold price with the proviso that if the Yamashita’s Gold theory proves to be in any way correct there could be occasional pullbacks in price as further amounts of clandestine gold are released onto the markets.[Yamashita's gold is a fascinating story and does appear to have some historic backing, but volumes, and who may control it, are shrouded in mystery]Subsequent to our commencing this article, Adrian Douglas – a member of GATA’s Board of Directors and publisher of the Market Force Analysis letter – has also commented on Mylchreest’s analysis. He has largely concentrated on Alternative 1 and concludes that the global gold market is in a precarious position. He reckons that the panic at the end of September, which drove the price rapidly up through the $1,000 psychological barrier, suggests that liquidity is very tight, in which case only a small percentage of investors asking for their gold to be delivered or placed in an allocated account could blow up the gold market and expose what he describes as a ‘scam’ and one that has been repeated time and time again throughout history. “Why should this time be any different?” he asks.The big problem, though, with much of this kind of analysis is that the analysts and observers are working with a mixture of real and assumed figures. It thus tends to rely on statistics being manipulated, perhaps subconsciously, to support pre-conceived theories. It does not mean necessarily that the conclusions are incorrect, but they could be. Whether they are or not there are some major anomalies in the gold marketplace out there that deserve better explanation from Central and bullion holding banks. Impartial audits of global gold holdings may well be necessary to clear up these matters once and for all – although should such an audit, or series of audits, conclude that the gold is indeed there, will those who have set their hearts, and investment strategies, on the premise that it isn’t, believe the auditors? Conspiracy theories will likely continue to abound.But what should the investor do?Given the state of the global economy, and the printing of money on a never-before seen scale, there does seem logic in maintaining a decent percentage of one’s portfolio in gold (or perhaps in the more volatile silver). If the price continues upwards, as many feel it will, gold stocks may be the best bet in that added leverage may boost returns. Bullion, or coins like the Krugerrand, or the Maple Leaf represent possibly a safer answer and would also act as an insurance policy against the severe double dip economic scenario – although in such a case a decline in price could be on the cards, but not as sharp a one as would likely be seen in stock prices in general in a revisiting of what happened only a year ago. Mylchreest is prepared to concede that the main ETFs may hold the gold they say they do – although others express doubts – but all the same, perhaps physical gold is a safer bet although the safe storage costs of holding this in largish quantities may make it relatively expensive to do so.There is obviously some good support coming in for the gold price at or around current levels. Bouts of profit taking have been matched by support in the $1,040s and this could suggest that the price is going through yet another consolidation phase before moving up another step. The dollar may still seem weak, but there are signs again that some gold strength may actually be there without the dollar declining further. There are doubters out there who feel the current price scenario represents a ‘bubble’ which could burst at any time, but gold tends to do better in times of economic uncertainty in its ‘safe haven’ role and given that we do not appear to be out of the economic woods yet there may yet be some traction in the gold price.

<><><>

Will fraud lift gold prices to $10,000/ounce?

Postby Gnosty » 06 Apr 2010, 12:06 By Geena Paul NEW YORK (Commodity Online): After the sub-prime catastrophe in banking and realty sector, which led to the global recession in 2008-09, it is the turn of bullion markets now. ‘FRAUD’, that is the one word which comes to any investor’s mind when s/he reads about the Commodity Futures Trading Commission (CFTC) hearing on manipulations in bullion market by gold cartels. So, the small and clean investors have been short-changed by big cartels during the past many years, especially during the recent boom time in bullion markets. Otherwise, how will you explain the biggest boom in paper gold (Exchange Traded Funds, ETFs) in the recent past with hardly any gold available in the market. In fact, there is no gold left in this world if all the Gold ETFs ask for physical delivery. And, if that happens only god knows what will be the gold prices in the coming months — $10000 per ounce? Maybe, even more. Because, price of a commodity which is not available at all can go up to any level due to the sheer fact that it is not there in the market. Now read about the Commodity Futures Trading Commission (CFTC) hearing last week about a London whistle-blower who had explained to the CFTC how JP Morgan Chase has been manipulating/capping precious metal prices. In a shocking parallel to the inaction by the US Securities and Exchange Commission (SEC) after receiving warnings from Harry Markopolos about the Madoff ponzi, the CFTC has apparently been sitting on the information on gold cartels. Did you visit the websites of GATA and CFTC this week? If you do, you can see a lot of articles and responses from investors who have been keenly watching the developments in bullion market. The whistle-blower in this biggest gold fraud was Andrew Maguire, an experienced precious metal trader in London. In an riveting interview (which is available on the internet all over the world) with GATA director, Adrian Douglas, Maguire describes a new dynamic impacting gold. The fact is that, there is a huge short position in the market. The CFTC hearing confirmed what GATA has been saying all along, that the gold market is being manipulated. And, how? The gold cartel has accumulated a huge short position and the huge short positions are ‘naked’, which means these positions are not hedged. There is 100-times more paper-gold outstanding than physical gold. You must be saying Oh, My God! Then wait, there is more to it. Sub-prime crisis was peanuts before this scam. The bullion market is now slowly taking in the impact of these revelations. The result is, there will be no gold in the market. Because, if people ask for physical delivery of gold for their ETFs, who will give all the gold. THERE IS NO GOLD! And the price of gold can be $5,000 per ounce, $10,000 or may be even more. Who can predict the value of a commodity which is not there is the market? To add fuel to fire The Wall Street Journal wrote: “The objective of this manipulation is to conceal the mismanagement of the US dollar so that it might retain its function as the world’s reserve currency. But to suppress the price of gold is to disable the barometer of the international financial system so that all markets may be more easily manipulated. This manipulation has been a primary cause of the catastrophic excesses in the markets that now threaten the whole world.” So, the gold cartel now has a big target. It is inevitable that the big traders and hedge funds will push the naked shorts to the wall by asking for physical metal. If there is a squeeze on the naked shorts, the sky is the limit for precious metal prices. There have been reports that over the past 10 years, the gold cartel has staged a controlled retreat. It has been fighting the advancing gold price with propaganda, paper short sales and the occasional dis-hoarding of physical metal from central bank vaults and more recently, the IMF. This retreat is about to turn into a rout, which means the upside potential for the precious metals is huge. The CFTC hearing came about in part because of long-term complaints from organizations such as the Gold Anti-Trust Action Committee and individual analysts such as Ted Butler, Reg Howe, James Turk, Frank Veneroso and Adrian Douglas that the gold and silver commodity markets have been subject to blatant extensive price suppression manipulation by the US government and its trading partners. In November 2009, Andrew Maguire, a former Goldman Sachs silver trader in that firm’s London office, had contacted the CFTC Enforcement Division to report the illegal manipulation of the silver market by traders at JPMorgan Chase. He described how the JPMorgan Chase silver traders bragged openly about their actions, including how they gave a signal to the market in advance so that other traders could make a profit during the price suppressions. Maguire had a series of emails with Eliud Ramirez of the CFTC enforcement division explaining how the manipulations were tied to the Bureau of Labor Statistics monthly release of non-farm payroll figures and other recurring events. In effect, the commissioners were told that almost all of the trading activities on the London exchange were merely settled by paper for paper, not for physical metals as the exchange supposedly requires. Further, the commissioners were told that it was impossible for the London exchange to ever deliver all the gold and silver owed to the owners of contracts. After the hearing, GATA publicly released copies of Maguire’s e-mails with the CFTC. Link to GATA: http://www.gata.org/ Link to CFTC: http://www.cftc.gov/ Source: http://www.commodityonline.com/news/Wil … 7-3-1.html<><><>

Former Goldman Commodities Research Analyst Confirms LMBA OTC Gold Market Is “Paper Gold” Ponzi

Tyler Durden's picture

Submitted by Tyler Durdenon 03/28/2010 12:47 -0500

When we put up a link to last week’s CFTC hearing webcast little did we know that it would end up being the veritable (physical) gold mine (no pun intended) of information about what really transpires in the commodities market. First, we obtained direct evidence from Andrew Maguire (who may or may not have been the target of an attempt at “bodily harm” as reported yesterday) of extensive manipulation in the silver market. Today, Adrian Douglas, director of GATA, adds to the mountain of evidence that the commodities market, and the CFTC, stand behind what is potentially the biggest market manipulation scheme in the history of capital markets (we are assuming for the time being that all allegations of the Fed manipulating the broader equity and credit markets are completely baseless). Using the testimony of a clueless Jeffrey Christian, formerly a staffer at the Commodities Research Group in the Goldman Sachs Investment Research Department and now head and founder of the CPM Group, Douglas confirms that the “LBMA trades over 100 times the amount of gold it actually has to back the trades.” Christian, who describes himself as “one of the world’s foremost authorities on the markets for precious metals” yet, in the words of Gary Gensler, said “that the bullion banks had large shorts to hedge themselves selling elsewhere- how do you short something to cover a sale, I didn’t quite follow that?” and proves that current and former Goldman bankers are some of the most arrogant people alive, assuming that everyone else is an idiot and will buy whatever explanation is presented just because the CV says Goldman Sachs. Yet Christian confirms that the gold market is basically a ponzi: “in the “physical market” as the market uses that term, there is much more metal than that…there is a hundred times what there is.” And there you have it: as Douglas eloquently summarizes: “the giant Ponzi trading of gold ledger entries can be sustained only if there is never a liquidity crisis in the REAL physical market. If someone asks for gold and there isn’t any the default would trigger the biggest “bank run” and default in history. This is, of course, why the Central Banks lease their gold or sell it outright to the bullion banks when they are squeezed by high demand for REAL physical gold that can not be met from their own stocks” and concludes “Almost every day we hear of a new financial fraud that has been exposed. The gold and silver market fraud is likely to be bigger than all of them. Investors in their droves, who have purchased gold in good faith in “unallocated accounts”, are going to demand delivery of their metal. They will then discover that there is only one ounce for every one hundred ounces claimed. They will find out they are “unsecured creditors”. For those of you who missed the CFTC hearing, here are two of the must-watch clips. In the first one, Adrian Douglas introduces the underlying concerns about the Ponzi nature of the LBMA hedging situation, in which a wholesale rush to “physical delivery” would result in a one hundred fold dilution of gold holdings, and a 99% result of unsecured creditor claims (good luck collecting on that particular bankruptcy). We also meet Jeffrey Christian, formerly of Goldman and currently of CPM, in which not only does the “expert” state that a bullion bank short is hedged by further shorting, but confirms Douglas’ and GATA’s previous claims that the “physical” market, as defined, is a joke, as the OTC market treats gold purely as a financial asset, essentially conforming to the precepts of fractional reserve banking. As Douglas notes “He confirms that the LBMA trades hundreds of times the real underlying physical. This is even a higher estimate than I have previously made! It is, as I asserted before the Commission, a giant Ponzi Scheme.” Here is running commentary from Douglas based on a transcript of this part of the hearing:

S. O’MALIA: Both Mr. Organ and Mr. Epstein in the second panel, raised the concerns that short positions exceed the physical supply. The second panel kind of argued that that wasn’t a concern. Are you concerned that the shorts will not be able to deliver if called upon? J. CHRISTIAN: No. I am not at all concerned. For one thing it has been persistently that way for decades. Another thing is that there are any number of mechanisms allowing for cash settlements and problems and a third thing is as many people who are actually knowledgeable about the silver market and the gold market have testified today that almost all of those short positions are in fact hedges, the short futures positions are hedges, offsetting long positions in the OTC market. So I don’t really see a concern there. [Note: It is interesting that Mr. Christian is not concerned about the ability of the shorts to deliver because they can cash settle! He clearly has no understanding that when someone wants to buy precious metals giving them cash  instead is a failure to deliver. It is a default! But he is not concerned! He says that the short position is actually hedged by a long position on the OTC but we will see later in this testimony how he describes the “OTC Physical Market” and we will see that the long position is not bullion but is in fact an unbacked (or only partially backed) I.O.U. bullion.] S. O’MALIA: Mr Organ would you like to respond? H. Organ: I do see a risk on this, and I think it is a risk that we have to be very, very careful of. As countries like China, South Korea and Russia start demanding and taking physical delivery of their gold and moving it offshore to their shores and putting pressure on the Comex, and we will probably come to a point in time where we will have a failure to deliver. A DOUGLAS: Mr. Chairman, could I make a comment? CHAIRMAN GENSLER: No! Who are you? A DOUGLAS: I would… CHAIRMAN GENSLER: No! I said “No!” A DOUGLAS: Oh! You said “No”? CHAIRMAN GENSLER: I don’t know who is this? A DOUGLAS: I am Adrian Douglas; I am assisting Harvey. CHAIRMAN GENSLER: Alright, Sir. Yes. A DOUGLAS: I would just like to make a comment. We are talking about the futures market hedging the physical market. But if we look at the physical market,the LBMA, it trades 20 million ozs of gold per day on a net basis which is 22 billion dollars. That’s 5.4 Trillion dollars per year. That is half the size of the US economy. If you take the gross amount it is about one and a half times the US economy; that is not trading 100% backed metal; it’s trading on a fractional reserve basis. And you can tell that from the LBMA’s website because they trade in “unallocated” accounts. And if you look at their definition of an “unallocated account” they say that you are an “unsecured creditor”. Well, if it’s “unallocated” and you buy one hundred tonnes of gold even if you don’t have the serial numbers you should still have one hundred tonnes of gold, so how can you be an unsecured creditor? Well, that’s because its fractional reserve  accounting, and you can’t trade that much gold, it doesn’t exist in the world. So the people who are hedging these positions on the LBMA, it’s essentially paper hedging paper. Bart Chilton uses the expression “Stop the Ponzimonium” and this is a Ponzi Scheme. Because gold is a unique commodity and people have mentioned this, it is left in the vaults and it is not consumed. So this means that most people trust the bullion banks to hold their gold and they trade it on a ledger entry. So one of the issues we have got to address here is the size of the LBMA and the OTC markets because of the positions which are supposedly backing these positions which are hedges, but it is essentially paper backing paper. [8 seconds of silence] CHAIRMAN GENSLER: Oh! I guess I get time. Errr…Umm. I don’t have any other questions. Commissioner Dunn. M. DUNN: I appreciate the difficulty of trying to do this by remote but at the end of your testimony you start talking about bona fide hedge exemptions for commercial traders and must be part of position limits and not to grant hedge exemptions to swap dealers would be devastating for liquidity of exchanges and the price discovery capacity, and we got into who determines what is legitimate, but could you amplify on that a bit and what you see as a danger there? J. CHRISTIAN: Yes I can amplify on it; but amplify on it a bit is more difficult because it is a very big subject. The first thing is that precious metals, copper, other metals, energy these are all traded internationally and are fungible commodities by and large. There are a lot of strange things that have been misspoken about the difference between the wholesale and the retail market and we don’t really have the time to go over those, I think. But the fact of the   latter is… [The lights go off] J. CHRISTIAN: Oh excuse me. I am in a building with motion sensitive lighting and it doesn’t recognize what I do as human activity. CHAIRMAN GENSLER: Those were your words not anybody’s here. J. CHRISTIAN: No, they were my wife’s! If you start putting position limits on bona fide hedgers for example, the bullion banks, and the previous fellow was talking about hedges of paper on paper and that is exactly right. Precious metals are financial assets like currencies, T-Bills and T-bonds they trade in the multiples of a hundred times the underlying physical and so people buying them are voting and giving an economic view of the world or a view of the economic world and so when you start saying to a bank I have a number of people… [ Note: This is mind blowing. He openly admits that the LBMA OTC market is not trading in physical gold or silver; it is trading in paper promises. Gold is not intended to be a “financial asset” like T-Bills and currencies. That is the whole point of owning it. Actual physical bullion is a tangible asset with intrinsic value that doesn’t have counterparty risk. He believes the purpose of trading paper promises in gold is for investors to “vote” on their view of the economic world! He confirms that the LBMA trades hundreds of times the real underlying physical. This is even a higher estimate than I have previously made! It is, as I asserted before the Commission, a giant Ponzi Scheme.] J. CHRISTIAN: well, actually let’s go back to a concrete example of Mr. Organ when he was talking about August of 2008 when there was an explosion in the short positions in gold and silver held by the bullion banks on the futures market and he seemed to imply that that was somehow driving the price down. If you understand how those bullion banks run their books the reason they had an explosion in their short positions was because they were selling bullion hand over fist in the forward market, in the physical market, and in the OTC options market. Everyone was buying gold everywhere in the world so the bullion banks who stand as market makers were selling or making commitments to sell them material and so they had to hedge themselves and they were using the futures market to do that. So if you place position limits on the futures market they will have to find some other mechanism to hedge themselves …and they will. And someone else will provide that market… M. DUNN: Jeffery, I am going to cut you off because I want to ask another question of Mr. Organ. [It is hard to imagine more inane drivel than this. He conjures up the image of bullion bankers selling bullion like crazy to the general public who are in a feeding frenzy and the bullion bankers are “hedging themselves” by selling gold short on the COMEX!!! Did he get that idea from a blonde? A little while later Chairman Gensler also realized that this was the biggest baloney ever concocted as a cover for massive gold market manipulation by JPMorgan and HSBC in 2008 and so poses a follow up question]……

And here is the second must watch clip:

CHAIRMAN GENSLER: I would like to follow up on Commissioner Dunn’s question for Mr. Christian, if I might, because I didn’t quite follow your answer on the bullion banks. You said that the bullion banks had large shorts to hedge themselves selling elsewhere, and I didn’t understand; I might just not have followed it and you’re closer to the metals markets than me on this, but how do you short something to cover a sale, I didn’t quite follow that? J. CHRISTIAN: Well, actually I misspoke. Basically what you were seeing in August of 2008 was the liquidation of leveraged precious metals positions from a number of places and the bullion banks were coming back to buy it, and they were hedging those positions by going short on the COMEX and that is really what it was. [Even on a second attempt Mr. Christian invents the most ridiculous poppycock to explain away the blatant manipulation of the precious metals in 2008. If, in his own words, investors were buying gold hand over fist everywhere in the world why would leveraged long holders dump all their long holdings? They would have ordinarily been making a fortune. The bank participation report of August 2008 shows that 2 or 3 bullion banks sold short the equivalent of 25% of world annual silver production in 4 weeks and the equivalent of 10% of world annual gold production. There was simultaneously a decrease in their long positions, which were almost non-existent anyway, which is incoherent with a notion the bullion banks were mopping up dumped leveraged investments. For an intelligent and coherent explanation of what happened in August 2008 read my CFTC written testimony here] CHAIRMAN GENSLER: So I am glad I asked because I really didn’t follow that. But if I think of the earlier charts of the positions of the bullion banks that Mr. Sherrod had these concentrated shorts have been, well you know, reasonably consistent, they are not exactly the same on every day, but his charts showed a similarity across a couple of years. So what are bullion banks, I mean I am just trying to understand, what are bullion banks hedging on the other side, we heard from other panels, but you seem to be familiar, is it warehouse receipts, what is it? J. CHRISTIAN: Well it’s a tremendous number of things. You were at Goldman shortly after me and we had an MIS system that kicked out a daily gold book. CHAIRMAN GENSLER: That’s really remarkable because we don’t seem to have a lot of similar views, but you know, a lot of people were at Goldman Sachs. J. CHRISTIAN: Well I didn’t like the trends at Goldman so I left in 1986. But honestly, and bad jokes aside, if you look at a bullion bank’s book, its gold book for example, you will see an enormous number of things; there will be gold forward purchases from mining companies, there will be forward purchases from refineries, there will be gold that has been leased out to electronics manufacturers, component manufacturers, and countless manufacturers and jewelers. As gold flows through the beneficiation process and again these are all long complex issues that are hard to reduce, but you know, a lot of producers will sell their gold the moment it leaves their possession at the mine. It might be in concentrate form or it might be in dore form. It then goes to a smelter or a refinery. The bullion bank buys that and it agrees a price at the time it is buying it but it won’t be allowed to sell that metal until the refinery outturn which maybe two weeks but it could be six months. So they will go into the market and short the market in order to cover the commitment they have made to buy at that price and then when they get the metal in the physical market then they can either sell that metal in the physical market and unwind the hedge in the futures market or the forward market or do something else. There are all sorts of other derivative contracts that investment banks and bullion banks will sell to investors, to other banks, pension funds, to insurance companies and each of those will often have a long exposure in gold which will be  hedged with an offsetting short position [note: There he goes again with that blonde idea that when you sell gold to someone you hedge that with a short position!]. So if you look at a bullion bank’s gold book or silver book you would find a large range of topics. One of the things that the people who criticize the bullion banks and talk about this undue large position don’t understand what is the nature of the long positions of the physical market and we don’t help it; the CFTC when it did its most recent report on silver used the term that we use “the physical market”. We use that term as did the CFTC in that report to talk about the OTC market in other words forwards, OTC options, physical metal and everything else. People say, and you heard it today, there is not that much physical metal out there, and there isn’t. But in the “physical market” as the market uses that term, there is much more metal than that…there is a hundred times what there is. If I look at the large short positions on the COMEX my question is where are the other shorts being hedged? because the short position, that I believe the bullion banks use to hedge their physicals, is larger than their short position on the COMEX and the answer is that they hedge it in the OTC market in London. CHAIRMAN GENSLER: I thank you for that detailed discussion END

The CFTC position limits hearing was supposed to usher in a new era of transparency and honesty into the dealings of the gold market. In a very ironic way, it did just that. Here is Douglas’ must read conclusion – and a warning for anyone who believes that following a wholesale run on commodities, investors will be able to have access to what is contractually theirs.

This is a stunning revelation. Mr. Christian confirms that the “physical market” is not in fact a physical market at all. It is a loose description of all the paper trading and ledger entries and some physical metal movements that occur each day  on behalf of people who believe they own bullion in LBMA vaults but in fact they don’t. They are told they have “unallocated gold” or “unallocated silver” but that does not mean the LBMA has physical metal set aside for those customers and has just not given specific bar numbers to the customers. No, it is the most cynical and corrupt definition of “unallocated”…the customer has NO bullion allocated to him. NONE! The LBMA defines the owners of “unallocated accounts” quite clearly as “unsecured creditors”. That means they have NO collateral. NONE. Can it be any clearer? It is a giant Ponzi scheme. Mr. Christian confirms what many analysts and GATA have been alleging that there is not much REAL physical metal, but testifies that there is actually one hundred times the REAL Physical metal being sold based on the much more “loose” definition of what “physical” means to the bullion banks. The last sentence of his statement is mind-blowing. He says the “physical” positions of the bullion banks are so huge that they are much bigger than the COMEX short position. He says the “physicals” are hedged on the OTC market in London! Did you get that? Let me walk you through it. The bullion banks are selling what is supposed to be vault gold but it is just a ledger entry if the customer never asks for delivery. They must balance their exposure with a ledger deposit entry. This has to be some paper promise of gold from a third party, or some derivative, or even some real gold bullion. If all the ledger entries balance out then the bullion bank has no net exposure in exactly the same way the futures market works with a short offsetting a long. A futures market can never default if no one asks for delivery as only paper contracts are traded. The loosely defined “physical” London market is an identical scheme. As long as everyone is prepared to buy and sell “ledger entries” for imaginary gold in the vault no one will ever discover the fraud. The LBMA does, however, buy and sell some real physical metal as well. But we now know form Mr. Christian’s testimony that this is one one-hundredth the size of the paper gold trading. The LBMA states on its website that it trades 20 million ozs of gold each day on a net basis. We can calculate the net trade of REAL physical gold should be about 200,000 ozs each day; that is 6.25 tonnes per day or 1625 tonnes per year. This is very much in line with the size of total global mining output of approximately 2200 tonnes per year. So the giant Ponzi trading of gold ledger entries can be sustained only if there is never a liquidity crisis in the REAL physical market. If someone asks for gold and there isn’t any the default would trigger the biggest “bank run” and default in history. This is, of course, why the Central Banks lease their gold or sell it outright to the bullion banks when they are squeezed by high demand for REAL physical gold that can not be met from their own stocks. Almost every day we hear of a new financial fraud that has been exposed. The gold and silver market fraud is likely to be bigger than all of them. Investors in their droves, who have purchased gold in good faith in “unallocated accounts”, are going to demand delivery of their metal. They will then discover that there is only one ounce for every one hundred ounces claimed. They will find out they are “unsecured creditors”. GATA has long advocated the ownership of real physical bullion. The “bombshells” dropped in the CFTC Public Hearing have only served to reinforce that view. We believe we have made significant new inroads into exposing the fraud, and the suppression of precious metals prices and it is documented in the CFTC’s own hearing. March 27, 2010 Adrian Douglas Director of GATA Proprietor of Market Force Analysis www.MarketForceAnalysis.com info@marketforceanalysis.com

h/t MarketForceAnalysis<><><>

Bottom in for the Dollar? Gold To Become World Reserve Currency?

October 27, 2009 – Posted by mosesman | Economics | , , , ,

Current And Former IMF Heads Call For New Global Currency!

  • This engineered economic collapse is to drive the world towards a new financial order–> a global currency. The western Illuminati cabal is trying pretty hard to foist this on the world. They want to maintain their stranglehold on the banking/financial and fiat currency hegemony. The Illuminati banksters are engaging their endgame plan for world fascist police state —> ’666′ . They are in for a fight from Russia and its allies, including China. Unfortunately, I see war as inevitable. Whoever controls the money rules the world! Infowars reports:The head of the International Monetary Fund has once again called for a new global currency to replace the Dollar, adding that the momentum to instigate such a system is fading. Dominique Strauss-Kahn told a forum on Tuesday that he wishes to see an emboldened IMF pave the way for the emergence of a global currency based on the monetary body’s special drawing right (SDR).“That probably has to be a basket,” Strauss-Kahn said of the eventual replacement for the dollar. “In a globalized world there is no domestic solution,” he added. The IMF head said that the world can no longer rely on a currency issued by a single country to ensure global financial stability. Strauss-Kahn also said that China should re-value its currency in order to straighten out global economic distortions and imbalances.Strauss-Kahn said that since the G20 summit in March, where agreements were made to reform the global monetary system, political willingness to carry out such an overhaul has waned. Former IMF chief, Michel Camdessus, added that “time is of the essence” for global monetary reform. Camdessus said that he backs a shift of power to big emerging economies to act as a corollary of a strengthened role for the SDR.“This favourable window of opportunity is there. It will not stay open forever,” Camdessus told the forum. The IMF first touted the possibility of a new global currency in March. The issue was then debated at the G20 Summit in London just days later. A clause in Point 19 of the communiqué issued by the G20 leaders led to analysts describing the dawn of a “revolution in the global financial order.” “We have agreed to support a general SDR allocation which will inject $250bn (£170bn) into the world economy and increase global liquidity,” The clause stated.SDRs are Special Drawing Rights, a synthetic paper currency issued by the International Monetary Fund that had lain dormant for half a century. “In effect, the G20 leaders have activated the IMF’s power to create money and begin global ‘quantitative easing’. In doing so, they are putting a de facto world currency into play. It is outside the control of any sovereign body. Conspiracy theorists will love it.” Ambrose Evans-Pritchard of the London Telegraph wroteat the time. “The world is a step closer to a global currency, backed by a global central bank, running monetary policy for all humanity.” he added.The same conclusion was drawn by the Washington Post’s Anthony Faiola, who described how the IMF is on course to be transformed into “a veritable United Nations for the global economy.” The move has also been endorsed separately by the World Bank and the UN.
<><><>

Bill Murphy of GATA Reveals Whistle-Blower in Gold Price Suppression Bill Murphy, Chairman of the Gold Anti-Trust Action Committee delivers his testimony about a whistle-blower in the gold price suppression scheme to the Commodity Futures Trading Commission on 3/25/10.

One obvious thing is that the elite of the world buys gold en masse. And at the same time we are told that ownership of gold is overrated.

London metals trader Andrew Maguire, who warned an investigator for the U.S. Commodity Futures Trading Commission in advance about a gold and silver market manipulation to be undertaken by traders for JPMorgan Chase in February and whose whistleblowing was publicized by GATA at Thursday’s CFTC hearing on metals futures trading – http://www.gata.org/node/8466 – was injured along with his wife the next day when their car was struck by a hit-and-run driver in the London area.

( more here ) There is more: Former Goldman Commodities Research Analyst Confirms LMBA OTC Gold Market Is “Paper Gold” Ponzi

When we put up a link to last week’s CFTC hearing webcast little did we know that it would end up being the veritable (physical) gold mine (no pun intended) of information about what really transpires in the commodities market. First, we obtained direct evidence from Andrew Maguire (who may or may not have been the target of an attempt at “bodily harm” as reported yesterday) of extensive manipulation in the silver market. Today, Adrian Douglas, director of GATA, adds to the mountain of evidence that the commodities market, and the CFTC, stand behind what is potentially the biggest market manipulation scheme in the history of capital markets (we are assuming for the time being that all allegations of the Fed manipulating the broader equity and credit markets are completely baseless). Using the testimony of a clueless Jeffrey Christian, formerly a staffer at the Commodities Research Group in the Goldman Sachs Investment Research Department and now head and founder of the CPM Group, Douglas confirms that the “LBMA trades over 100 times the amount of gold it actually has to back the trades.” Christian, who describes himself as “one of the world’s foremost authorities on the markets for precious metals” yet, in the words of Gary Gensler, said “that the bullion banks had large shorts to hedge themselves selling elsewhere- how do you short something to cover a sale, I didn’t quite follow that?” and proves that current and former Goldman bankers are some of the most arrogant people alive, assuming that everyone else is an idiot and will buy whatever explanation is presented just because the CV says Goldman Sachs. Yet Christian confirms that the gold market is basically a ponzi: “in the “physical market” as the market uses that term, there is much more metal than that…there is a hundred times what there is.” And there you have it: as Douglas eloquently summarizes: “the giant Ponzi trading of gold ledger entries can be sustained only if there is never a liquidity crisis in the REAL physical market. If someone asks for gold and there isn’t any the default would trigger the biggest “bank run” and default in history. This is, of course, why the Central Banks lease their gold or sell it outright to the bullion banks when they are squeezed by high demand for REAL physical gold that can not be met from their own stocks” and concludes “Almost every day we hear of a new financial fraud that has been exposed. The gold and silver market fraud is likely to be bigger than all of them. Investors in their droves, who have purchased gold in good faith in “unallocated accounts”, are going to demand delivery of their metal. They will then discover that there is only one ounce for every one hundred ounces claimed. They will find out they are “unsecured creditors”. For those of you who missed the CFTC hearing, here are two of the must-watch clips. In the first one, Adrian Douglas introduces the underlying concerns about the Ponzi nature of the LBMA hedging situation, in which a wholesale rush to “physical delivery” would result in a one hundred fold dilution of gold holdings, and a 99% result of unsecured creditor claims (good luck collecting on that particular bankruptcy). We also meet Jeffrey Christian, formerly of Goldman and currently of CPM, in which not only does the “expert” state that a bullion bank short is hedged by further shorting, but confirms Douglas’ and GATA’s previous claims that the “physical” market, as defined, is a joke, as the OTC market treats gold purely as a financial asset, essentially conforming to the precepts of fractional reserve banking. As Douglas notes “He confirms that the LBMA trades hundreds of times the real underlying physical. This is even a higher estimate than I have previously made! It is, as I asserted before the Commission, a giant Ponzi Scheme.”

Big thanks to Bernard for posting this.

<><><>

<><><>

<><>

<>

/////|||0|||\\\\\

<>

<><>

<><><>

<><><>
BANK FRAUD AND Mysterious WTC building no 7 collapse
Click for full sized image [WTC 7] contained offices of the FBI, Department of Defense, IRS (which contained prodigious amounts of corporate tax fraud, including Enron’s), US Secret Service, Securities & Exchange Commission (with more stock fraud records), and Citibank’s Salomon Smith Barney, the Mayor’s Office of Emergency Management and many other financial institutions. [Online Journal]

The SEC has not quantified the number of active cases in which substantial files were destroyed [by the collapse of WTC 7]. Reuters news service and the Los Angeles Times published reports estimating them at 3,000 to 4,000. They include the agency’s major inquiry into the manner in which investment banks divvied up hot shares of initial public offerings during the high-tech boom. …”Ongoing investigations at the New York SEC will be dramatically affected because so much of their work is paper-intensive,” said Max Berger of New York’s Bernstein Litowitz Berger & Grossmann. “This is a disaster for these cases.” [New York Lawyer]

Citigroup says some information that the committee is seeking [about WorldCom] was destroyed in the Sept. 11 terror attack on the World Trade Center. Salomon had offices in 7 World Trade Center, one of the buildings that collapsed in the aftermath of the attack. The bank says that back-up tapes of corporate emails from September 1998 through December 2000 were stored at the building and destroyed in the attack. [TheStreet]Inside [WTC 7 was] the US Secret Service’s largest field office with more than 200 employees. …”All the evidence that we stored at 7 World Trade, in all our cases, went down with the building,” according to US Secret Service Special Agent David Curran. [TechTV]

<><><>

7 World Trade Center

The History

7, World Trade Center Built: 1985 Destroyed: 11 September 2001 47 Floors Height: 174 m Architect: Emery Roth & Sons 7 WTC was built in 1985 as an addition to the World Trade Center, located across Vesey Street from the main compound. http://www.wirednewyork.com/wtc/7wtc/default.htm Engineers Suspect Diesel Fuel in Collapse of 7 World Trade Center Cantor/Seinuk Engineers, P.C., Engineer. Silverstein Properties, Inc., Current Owner. http://www.skyscraper.org/exhibitions/bb/jumbos/j_22.htm The Owners Larry A. Silverstein was appointed a director of Westfield America in May 1997. Since 1979, Mr. Silverstein has been President of Silverstein Properties, Inc., a Manhattan-based real estate investment and development firm which owns interests in and operates over 10 million square feet of office space. Mr. Silverstein is a member of the New York Bar, and a Governor of the Real Estate Board of New York, having served as its Chairman. He is a trustee of New York University and is the founder and Chairman Emeritus of the New York University Real Estate Institute. He is Chairman of the Realty Foundation, Vice Chairman of the South Street Seaport Museum, and a board member of the Museum of Jewish Heritage. BLACKSTONE ACQUIRES DEBT ON 7 WORLD TRADE CENTER New York, NY October 17, 2000: Blackstone Real Estate Advisors, the global real estate investment and management arm of The Blackstone Group, L.P., announced today that it has purchased, from Teachers Insurance and Annuity Association, the participating mortgage secured by 7 World Trade Center, a commercial office complex controlled by real estate developer Larry Silverstein” http://www.blackstone.com/news/press_releases%5C7_world_trade_oct_2000.pdf Factsheet on Teachers Insurance and Annuity Associaion (TIAA) (note: Joseph W. Luik is probably the guy who brokered the deal for TIAA) “But before the building can rise further than the substation, major financing issues have to be resolved by Larry Silverstein, who controls the long-term lease on 7 World Trade Center as well as the World Trade Center complex. The good news for Mr. Silverstein is that the company that insured 7 World Trade, Industrial Risk Insurers, has indicated that it will make a full payment under its $861 million policy. But it’s not clear whether Mr. Silverstein can use those proceeds to start building without first reaching an agreement with the mortgage holder on 7 World Trade Center, Blackstone Real Estate Advisors.” http://homes.wsj.com/columnists_com/bricks/20020710-bricks.html “Bank of America reportedly holds the loan on 7 World Trade Center.” http://www.mbaa.org/reft/stories/0136wtc.htm “Fitch placed classes of Banc of America LL, Inc. Series 2001-7WTC on Rating Watch Negative due to the increased likelihood that the building will be rebuilt in the near future, using insurance proceeds. The transaction is secured by the beneficial ownership interest in a trust that owns a loan secured by certificates owned by Blackstone Real Estate Partners III LP through related entities representing ownership interest in another trust secured by four mortgages originally totaling approximately $449.4 million on a leasehold interest in 7 World Trade Center. It now appears, due to the urgency to rebuild the ConEd substation, that 7 WTC will be rebuilt in the near future and that, in effect, the bondholders may take on the increased risks of construction lending. It is still possible that bondholders will be repaid prior to construction, because the existing mortgages have a relatively high interest rate and less expensive financing alternatives may be available. Due to political forces surrounding the continued viability of lower Manhattan, Fitch believes that the city will use its best efforts to aid Silverstein in attracting high quality tenants to the building. However, Fitch believes that the cash flow that existed prior to the destruction of 7 WTC will not be replicated, particularly due to the projected substantial reduction in building size.” http://www.mortgagedaily.com/RatingsC041002.html “According to BestWire, Employers Reinsurance Corp’s Industrial Risk Insurers has agreed to pay a claim for 7 World Trade Center, but a final price has yet to be settled. Some of the insurance proceeds will be used to pay off bondholders who bought part of the building’s US$383 million mortgage. Larry Silverstein, the building’s developer and leaseholder of the WTC twin towers, has said the claim for 7 World Trade Center will be US$861 million” Aon Risk Bulletin, July 2002

The collapse

FEMA/ Congressional report: World Trade Center Building Performance Study Chapter on WTC 7: http://www.house.gov/science/hot/wtc/wtc-report/WTC_ch5.pdf http://www.house.gov/science/hot/wtc/wtcreport.htm NIST Investigation: http://www.nist.gov/public_affairs/releases/n02-14.htm American Society of Civil Engineers “This effort is also being conducted for WTC 7, which is of considerable interest to the team.” Testimony to Congress: http://www.house.gov/science/full02/mar06/corley.htm Abolhassan Astaneh-Asl of University of California: “I investigated the structural remains of the World Trade Center towers and building 7 and I have collected data on quality of construction, failure modes, as well as fire and impact damage. I have also identified and saved some key elements of the World Trade Center that appear to have been impacted by the planes or have been exposed to intense fire. We plan to finish our studies by September and we will turn over all information, all the data involved, published or unpublished, to NIST.” (source) NY TIMES 12/20/2001 City Had Been Warned of Fuel Tank at 7 World Trade Center “Fire Department officials warned the city and the Port Authority of New York and New Jersey in 1998 and 1999 that a giant diesel fuel tank for the mayor’s $13 million command bunker in 7 World Trade Center, a 47-story high-rise that burned and collapsed on Sept. 11, posed a hazard and was not consistent with city fire codes. The 6,000-gallon tank was positioned about 15 feet above the ground floor and near several lobby elevators and was meant to fuel generators that would supply electricity to the 23rd-floor bunker in the event of a power failure. Although the city made some design changes to address the concerns – moving a fuel pipe that would have run from the tank up an elevator shaft, for example – it left the tank in place. But the Fire Department repeatedly warned that a tank in that position could spread fumes throughout the building if it leaked, or, if it caught fire, could produce what one Fire Department memorandum called “disaster.” http://www.ulster.net/~babs7/articles/robertlederman/guilianigang.htm “Tuesday’s terrorist attack on the World Trade Center (WTC) has had a significant impact on Con Edison’s energy infrastructure in lower Manhattan. The fire and subsequent collapse of 7 World Trade Center has permanently damaged two substations located adjacent to the building as well as major electric transmission cables. A third substation located near the South Street Seaport also lost service. Approximately 12,000 customers are currently without electric power.” http://9-11-01.powerquality.com/ar/power_wtc_disaster_causes/index.htm “A cleanup is underway to remove tens of thousands of gallons of oil that spilled from 7 World Trade Center when the 47-story office tower collapsed on Sept. 11, according to a published report. Citing an environmental impact report made public by the Empire State Development Corp., Newsday reported Thursday that 130,000 gallons of oil leaked from the Con Edison substation contained within the building. Additional oil leaked from two 6,000-gallon storage tanks owned by Salomon Smith Barney, and conduits beneath the building may have contained asbestos and feeder lines wrapped in a material containing toxins, the report said. Two 11,690-gallon diesel fuel tanks operated by Silverstein Properties were also inside the building, but were removed in March and April and showed no evidence of spillage, Newsday said. “ http://abclocal.go.com/wabc/news/WABC_060602_oil.html

The Tenants

Tenant List (provided by CoStar Group Inc)

Building: 7 World Trade Center
Tenant Square Feet Leased Floor Industry
Salomon Smith Barney 1,202,900 GRND,1-6,13,18-46 Financial Institutions
Internal Revenue Service Regional Council 90,430 24,25 Government
U.S. Secret Service 85,343 9,10 Government
American Express Bank International 106,117 7,8,13 Financial Institutions
Standard Chartered Bank 111,398 10,13,26,27 Financial Institutions
Provident Financial Management 9,000 7,13 Financial Institutions
ITT Hartford Insurance Group 122,590 19-21
First State Management Group, Inc 4,000 21 Insurance
Federal Home Loan Bank 47,490 22 Financial Institutions
NAIC Securities 22,500 19 Insurance
Securities & Exchange Commission 106,117 11,12,13 Financial Institutions
Mayor’s Office of Emergency Mgmt 45,815 23 Government

http://www.intellnet.org/resources/costar_wtc/7WorldTradeCenterTenants.xls Floor Plan “ Central Intelligence Agency’s clandestine New York station was destroyed in Sept 11 attack on World Trade Center, seriously disrupting US intelligence operations; station was in 7 World Trade Center, one of smaller office towers destroyed in aftermath of collapse of twin towers; all CIA employees at site were safely evacuated; agency immediately dispatched special team to scour rubble in search of secret documents and intelligence reports stored in station” http://query.nytimes.com/search/abstract?res=F00711F63C5D0C778CDDA80994D9404482 (the above article is reprinted in full here) (CNN has a smaller version of the story here)

Salomon Smith Barney

A Member of Citigroup

http://www.smithbarney.com/ (Citigroup: http://www.citigroup.com/ ) Factsheet on Salomon Smith Barney “We are shocked and deeply saddened by yesterday’s events that took place in New York City, Washington and Pittsburgh. Our thoughts and prayers are with the families affected by these horrific events. As you know by press reports, several securities firms had employees in the New York World Trade Center complex. We successfully evacuated all Salomon Smith Barney employees from 7 World Trade Center prior to its collapse at 5 p.m. Tuesday. We have implemented our Disaster Recovery Plan for our affected businesses, and we are currently fully operational. Many of our Branches will be staffed today to answer any questions you may have, and will be prepared to conduct business at such time that the major exchanges re-open. Please refer to this Web site for updated information.” (source) “Citigroup immediately had to relocate 2,500 employees who had been housed in 7 World Trade Center, a building that collapsed a few hours after the Twin Towers. Most of those employees were subsequently housed in existing bank offices throughout the New York metro area. But even after that, the bank finds itself with surplus space.” (source) “Robert Genalo, vice president of investments at Salomon Smith Barney in Melville, said a portion of his company’s administrative operations were housed in the World Trade Center’s Building 7” (source) “Citigroup, which owns Salomon Smith Barney, should show the best performance: a 6% gain for the year” (source) David Matvey:  Director, http://www.LegacyRus.com and Salomon Smith Barney At 7 World Trade Center (source) Salomon Brothers Inc. 7 World Financial Center, New York 10048, New York Tel: 2127477000 (source) IPO’s underwritten by Salomon Bros. http://www.hoovers.com/ipo/view/underwriter/0,2616,251,00.html “A program at the 12:30 p.m. luncheon (to be held at Salomon Brothers, 7 World Financial Center) will include remarks by Louis-Michel Morris, Conseiller Commercial, French Consulate; and a keynote address by Marie-Monique Steckel, president, France Telecom North America.” (Apr. 23, 1998) “The chairman of the House Financial Services Committee, frustrated by Citigroup’s unwillingness to turn over information about any WorldCom executives who may have gotten shares in initial public offerings, will try to pry the information out with a subpoena. Rep. Michael Oxley (R., Ohio) said Friday that a subpoena is necessary because Citigroup provided insufficient information about what, if any, special treatment its Salmon Smith Barney investing banking division may have given WorldCom executives. Salomon had been one of the now-bankrupt telecom’s principal investment bankers.” “But Citigroup says some information that the committee is seeking was destroyed in the Sept. 11 terror attack on the World Trade Center. Salomon had offices in 7 World Trade Center, one of the buildings that collapsed in the aftermath of the attack. The bank says that back-up tapes of corporate emails from September 1998 through December 2000 were stored at the building and destroyed in the attack.” (source)

Internal Revenue Service Regional Council

“The IRS had 110 employees‹including 75 lawyers‹on the 24th and 25th floors of 7 World Trade Center. With employees working at home or at the agency’s Midtown Manhattan offices, permanent facilities have yet to be located. New York IRS spokesman Kevin McKeon said that many paper files unique to the New York regional office were lost. But he said that targets of New York office investigations were not going to get a free pass. “There was no risk of lost files,” said IRS spokesman Tim Harms in Washington, D.C. “Our file work is in computers far away from there.”” http://www.nlj.com/special/wt-1001c.shtml “Mr. Bernard, 57, was an industry specialist for the Internal Revenue Service and was based in Boston. On Sept. 11, he was on his way to a meeting at the I.R.S. offices at 7 World Trade Center when the first plane hit the towers. He was struck by falling debris and died of his injuries on Dec. 11.” http://www.inmemoriamonline.net/Profiles/Folders/B_Folder/Bernard_David.html

U.S. Secret Service

“World Trade Center Building 7 stood in the shadow of the North Tower. Inside the 47-story building: the US Secret Service’s largest field office with more than 200 employees. On September 11 all of them escaped, but Building 7 was reduced to rubble. This week on “CyberCrime,” an exclusive look into the hours, weeks, and months following 9/11 and how the US Secret Service was able to recover thanks to the largest cybercrime team in the country — the New York Electronic Crimes Task Force (NYECTF). “All the evidence that we stored at 7 World Trade, in all our cases, went down with the building,” according to US Secret Service Special Agent David Curran — the number three guy in that office. “We lost our network, we lost all our computers, we lost all the equipment that we use as Secret Service Agents. Everything from machine guns to our shotguns to our electronic equipment that we use.” But despite their physical losses, nothing could shake the field office’s solid foundation. This week on “CyberCrime,” you’ll see how the members of the NYECTF came to the Secret Service’s rescue. Watch as more than 50 law enforcement agencies, 200 corporations, and 12 universities donate tens of thousands of dollars in equipment and hundreds of volunteer hours to enable the US Secret Service’s New York office become operational within just 48 hours of the attacks.” http://www.techtv.com/cybercrime/features/story/0,23008,3378780,00.html Watch the WTC Building 7 segment – “A lot of cases had to be closed as a result of losing that building.” – David Curran. Gerald Lynch of John Jay College helped post 9-11 & allowed the SS to use building to resume work. Special Agent Robert W Weaver of the New York Electronic Crimes Task Force – Statement to House Committee on Science, June 24th 2002 More info: http://www.sbq.com/sbq/wireless/sbq_wireless_disaster.pdf Weaver: “We lost Craig Miller, an employee that we still can’t find. His body has never been recovered. People here are still grief stricken.” (first quarter, 2002) Steve Carey – SS special agent in charge or recreating task force. “When 7 World Trade Center came down on Sept. 11, an agent on loan from Washington, special officer Craig Miller, perished, and the entire Secret Service office was buried in that building. Yet, despite the devastation, the New York Electronic Crime Task Force has stepped up its operations in credit card fraud and for Osama Bin Laden’s money” http://www.ectaskforce.org/City_Leads_Way.pdf “ One employee, Master Special Officer Craig Miller, died during the rescue efforts. Miller was temporarily assigned to New York in preparation for the United Nations General Assembly.” http://www.ustreas.gov/usss/press/pub1202.pdf “in selfless dedication to others, Master Special Officer Craig Miller was lost in the collapse of the World Trade Center.” http://www.house.gov/istook/rel-ss-customs.htm

American Express Bank International

“Like many companies directly impacted by the recent terrorist attacks, financial services giant American Express must manage the crisis on two main fronts, its employees and its customers. Its headquarters, located at 7 World Financial Center, is just a stone’s throw from the crumbling ruins of what was once the World Trade Center. The 5,000 employees that work at the site were all evacuated safely on the day of the attacks as debris rained down and smoke filled the air. Twelve others who were at work in the Twin Towers at a client office are missing.” (source)

Standard Chartered Bank

London Based Standars Chartered Bank had its NY base in WTC 7 New York Federal Reserve Bank Foreign Exchange Committee Member List Robert White Regional Treasurer Standard Chartered Bank 7 World Trade Center http://www.ny.frb.org/fxc/ar2000/FXAR0001.pdf “After several unsuccessful attempts to find a new home in Manhattan after its premises at 7 World Trade Center collapsed on 9/11, London-based Standard Chartered Bank has signed a lease for 94,000 square feet on the third floor at One Madison Avenue. The ten-year deal was negotiated by Insignia/ESG.” (source) Provident Financial Management ITT Hartford Insurance Group First State Management Group, Inc Federal Home Loan Bank “The Finance Board also marked the 70th anniversary of the FHLBank System by re-issuing a new charter to the FHLBank of New York. The Bank’s original 1932 charter was lost when its offices at 7 World Trade Center were destroyed in the September 11th terrorist attack.” http://www.fhlbny.com/news/Press_Release/pr_20020718.htm NAIC Securities

Securities & Exchange Commission

This office was the “Northeast Regional Office” of the SEC, which is one of only 11 national SEC regional offices. “Securities and Exchange Commission(SEC) 7 World Trade Center, 13th Floor New York, NY 10048 (212) 748-8000 “ http://www.state.nj.us/dobi/links.htm http://www.sec.gov/contact/addresses.htm ““Clearly what happened was a severe blow,” Wayne Carlin, the SEC’s Northeast regional director, told the Washington Post. “It will slow us down, and we will need some amount of time to recover.” The office, which enforces SEC regulations, lost files on about 300 pending investigations, including a major inquiry into the manner in which investment banks divvied up hot shares of initial public offerings during the high-tech boom. Mr. Carlin said there were no plans to drop any pending matters. “We lost a lot of stuff, though some of it is reconstructible,” he said. “Anybody who is under our investigation would be making a mistake if they thought they were in the clear.” The SEC will probably be able to get new copies of documents from the parties that turned them over initially, Mr. Carlin said. Barry Barbash, a partner with the New York and Washington, D.C. offices of Shearman & Sterling and former director of the division of investment management at the SEC, said that most of the securities firms have back-up systems. “It’s really the [SEC’s] internally generated notes and correspondence that will prove most problematic,” Mr. Barbash said. “ http://www.nylawyer.com/news/01/09/091401b.html meetings held: Senate Banking Committee

Senate Committee on Banking, Housing & Urban Affairs

Hearing on “The Competitive Market Supervision Act” 2:00 p.m., Monday, February 28, 2000 13th Floor Conference Room – Securities and Exchange Commission Offices 7 World Trade Center, New York, NY Witness’: The Honorable Arthur Levitt, Mr. J. Patrick Campbell, Mr. Keith Helsby, Mr. Hardwick Simmons, Mr. Leopold Korins, Mr. Robert Seijas http://banking.senate.gov/00_02hrg/022800/index.htm Hearing on the “Financial Marketplace of the Future” 9:30 a.m., Tuesday, February 29, 2000 13th Floor Conference Room – Securities and Exchange Commission Offices 7 World Trade Center, New York, NY Witness’: The Honorable Arthur Levitt, Mr. Philip Purcell, Mr. Charles Schwab, Mr. Henry M. Paulson, Mr. David Komansky, Mr. Allen Wheat, Mr. Richard Grasso, Mr. Frank Zarb http://banking.senate.gov/00_02hrg/022900/index.htm

Mayor’s Office of Emergency Mgmt

“In June 1999, Mayor Rudolph Giuliani built a $13 million emergency crisis centre on the 27th floor of 7 World Trade Center, a building just north of the towers that itself collapsed late Tuesday afternoon. Giuliani intended the centre to serve as a command central during city emergencies including blackouts, storms and terrorist attacks. Guiliani spent part of the New Year’s Eve 2000 celebration in the emergency centre.” http://www.chinadaily.com.cn/star/2001/0913/cn8-1.html “Simon and Teperman contend that the medical response to the World Trade Center attack was hindered by the fact that the city’s Office of Emergency Management (OEM) — which coordinates all aspects of a disaster response — was housed in 7 World Trade Center.” http://www.disasterrelief.org/Disasters/011115wtclessons/ “As Police Commissioner Howard Safir’s chief of staff, Sheirer forcefully opposed the construction of the OEM center known as “the bunker” on an upper floor of 7 World Trade Center. Then-OEM Director Jerry Hauer spearheaded the ill-conceived effort to build “the bunker” in the shadow of the twin towers. Sheirer’s opposition to locating the command center at that location unfortunately was vindicated when the 48-story office building at 7 World Trade collapsed nearly seven hours after terrorists crashed two commercial airliners into the twin towers.” http://www.politicsny.com/reports/february02/2-14-02-sheirer.shtml “On the morning of September 12, Richard Sheirer, director of the mayor’s Office of Emergency Management, was scheduled to conduct a biological-terrorism drill in a cavernous commercial warehouse on the Hudson. Known as tripod — short for “trial point of distribution” — the exercise was to test how quickly Sheirer’s staff could administer treatments at the kind of ad hoc medical centers that would be set up all over the city in the event of an actual attack. For an audience, Sheirer had lined up Mayor Rudy Giuliani, the police and fire commissioners, and representatives of the FBI and the Federal Emergency Management Agency (FEMA). He had hired over 1,000 Police Academy cadets and Fire Department trainees to play terrified civilians afflicted with various medical conditions, allergies, and panic attacks. He had even arranged for a shipment of 70,000 M&Ms to be delivered and divided by color into medical packets representing different prophylactics and vaccines. But the M&Ms never arrived. On the morning of September 11, Sheirer got to City Hall at 8 a.m. for a meeting about the Jackie Robinson-Pee Wee Reese memorial planned for Coney Island. “I was in heaven, sitting between Ralph Branca and Joe Black,” he remembers. “We were about to select the statue, and then we heard the pop.” At first he thought a transformer had exploded in an underground substation. Then he got a flash report from Watch Command in OEM headquarters. As his driver barreled down Broadway, Sheirer recalls, “my first move was to clear the streets so we could get emergency vehicles in and people out.” He radioed the police department and told them to shut down traffic below Canal Street and close every bridge and tunnel in the city. Down at the scene, he joined Fire Commissioner Tom Von Essen and his chiefs Pete Ganci and Bill Feehan — old friends from Sheirer’s 26 years with the New York Fire Department. They were establishing a command post at the base of the burning tower. Then the second airplane hit. “At that point there was no more doubt,” he says ruefully. “We were under attack.” He picked up one of the three cell phones strapped to his belt and started giving orders: to the Coast Guard to seal the harbor, and to the State Emergency Management Office to send backup search and rescue teams and get the Pentagon to freeze the city’s airspace. Then he lost his signal. As Sheirer helped move the Fire Department command post, he saw a cloud of smoke and debris engulf his own command center, on the twenty-third floor of 7 World Trade Center. His staff was inside sending alerts to representatives of nearly 100 organizations — everyone from Con Edison to the Department of Health. One of his deputies radioed him to report that the OEM would have to evacuate.” “ Of course, Sheirer’s deference also helps keep the limelight shining on hizzoner. Sheirer could easily step out from Giuliani’s shadow — he’s briefed President Bush, Tony Blair, and Henry Kissinger, among others — but he plans to retire when the mayor leaves office. “ http://www.newyorkmetro.com/nymetro/news/sept11/features/5270/

Equal Opportunity Employment Commission

New York District Office Not listed, but confirmed via: 7 World Trade Center, 18th Fl. New York, NY 10048 1-800-669-4000 212-748-8500 http://www.familialdysautonomia.org/resguide/chapter7.htm “Roxanne Zygmund of Bayonne, N.J., an employee of the Equal Opportunity Employment Commission, was working at her computer at 7 World Trade Center when she heard a loud boom. The 44-year-old mother knew something wasn’t right. “I ran down 18 flights,” she said about 10:45 a.m. while waiting on line at a nearby pay phone to call her family and let them know she was OK shortly after the two towers collapsed. “People were running and trampling. I was outside and I saw the next building get hit. I heard a big explosion and people were jumping out of the building. “I just want to get in touch with my kids,” she said, her blouse stained with coffee from the mad dash to get out of the building. Zygmund said several people trapped in 7 World Trade Center were waving white flags to get the attention of emergency workers. Several hours later, at 5:20 p.m., that burning, evacuated building also collapsed. “ http://www.thejournalnews.com/newsroom/091201/12wtcscene.html “The EEOC lost 1,500 workplace discrimination case files stuffed with handwritten notes and witness statements that were housed in 7 World Trade Center. All that remained was a database at the EEOC’s Washington headquarters containing the names and addresses of parties and a computer code indicating their complaints. The office’s 35 investigators wrote down whatever details they could remember about each of their 40 cases and asked complaining employees, employers, and courthouses for copies of files.” http://www.csmonitor.com/2002/0110/p18s1-wmcr.html ISO Dennis Dapolito Senior Consultant Insurance Services Office, Inc. 7 World Trade Center New York, NY 10048-1199

NYSE

“The NYSE’s communications and power systems were located below 7 World Trade Center, which sat in the shadow of the Twin Towers.” http://www.nationalreview.com/kudlow/kudlow031302.shtml And what meeting was Richard J Spanard set to attend? “Richard J. Spanard, Beta Tau ’93 (Slippery Rock University) is a U. S. Army captain and commander of an Explosive Ordnance Disposal company based in northern New Jersey. On the morning of September 11, he was enjoying breakfast at a deli 50 feet from the World Trade Center twin towers when the first plane hit. General hysteria inundated the deli. Spanard decided that he and the three soldiers with him should move to number 7 World Trade Center, where they had a scheduled meeting.” http://www.sigmataugamma.org/Read%20the%20latest%20news/SAGA/winter02.pdf “Richard J. Spanard, Beta Tau ’93 (Slippery Rock University), and his wife Bobbi Ann celebrated the birth of their first child, Jacob Tyler, on Aug. 18 at Wierzburg Army Hospital in Germany. Spanard is a first lieutenant in the U.S. Army.” http://www.sigmataugamma.org/Read%20the%20latest%20news/SAGA/winter97/Alumni.htm He heads the 754th ORDNANCE COMPANY http://www.monmouth.army.mil/754ord/index.htm Richard.Spanard@mail1.monmouth.amy.mil HEALTH RESOURCES Mesothelioma <img src=”http://pixel.quantserve.com/pixel/p-571RmQ-B866HQ.gif&#8221; style=”display: none” height=”1″ width=”1″ alt=”Quantcast”/>

<><><>
<><>
<>

Bill Murphy of GATA Reveals Whistle-Blower in Gold Price Suppression Bill Murphy, Chairman of the Gold Anti-Trust Action Committee delivers his testimony about a whistle-blower in the gold price suppression scheme to the Commodity Futures Trading Commission on 3/25/10.

One obvious thing is that the elite of the world buys gold en masse. And at the same time we are told that ownership of gold is overrated.

London metals trader Andrew Maguire, who warned an investigator for the U.S. Commodity Futures Trading Commission in advance about a gold and silver market manipulation to be undertaken by traders for JPMorgan Chase in February and whose whistleblowing was publicized by GATA at Thursday’s CFTC hearing on metals futures trading – http://www.gata.org/node/8466 – was injured along with his wife the next day when their car was struck by a hit-and-run driver in the London area.

( more here ) There is more: Former Goldman Commodities Research Analyst Confirms LMBA OTC Gold Market Is “Paper Gold” Ponzi

When we put up a link to last week’s CFTC hearing webcast little did we know that it would end up being the veritable (physical) gold mine (no pun intended) of information about what really transpires in the commodities market. First, we obtained direct evidence from Andrew Maguire (who may or may not have been the target of an attempt at “bodily harm” as reported yesterday) of extensive manipulation in the silver market. Today, Adrian Douglas, director of GATA, adds to the mountain of evidence that the commodities market, and the CFTC, stand behind what is potentially the biggest market manipulation scheme in the history of capital markets (we are assuming for the time being that all allegations of the Fed manipulating the broader equity and credit markets are completely baseless). Using the testimony of a clueless Jeffrey Christian, formerly a staffer at the Commodities Research Group in the Goldman Sachs Investment Research Department and now head and founder of the CPM Group, Douglas confirms that the “LBMA trades over 100 times the amount of gold it actually has to back the trades.” Christian, who describes himself as “one of the world’s foremost authorities on the markets for precious metals” yet, in the words of Gary Gensler, said “that the bullion banks had large shorts to hedge themselves selling elsewhere- how do you short something to cover a sale, I didn’t quite follow that?” and proves that current and former Goldman bankers are some of the most arrogant people alive, assuming that everyone else is an idiot and will buy whatever explanation is presented just because the CV says Goldman Sachs. Yet Christian confirms that the gold market is basically a ponzi: “in the “physical market” as the market uses that term, there is much more metal than that…there is a hundred times what there is.” And there you have it: as Douglas eloquently summarizes: “the giant Ponzi trading of gold ledger entries can be sustained only if there is never a liquidity crisis in the REAL physical market. If someone asks for gold and there isn’t any the default would trigger the biggest “bank run” and default in history. This is, of course, why the Central Banks lease their gold or sell it outright to the bullion banks when they are squeezed by high demand for REAL physical gold that can not be met from their own stocks” and concludes “Almost every day we hear of a new financial fraud that has been exposed. The gold and silver market fraud is likely to be bigger than all of them. Investors in their droves, who have purchased gold in good faith in “unallocated accounts”, are going to demand delivery of their metal. They will then discover that there is only one ounce for every one hundred ounces claimed. They will find out they are “unsecured creditors”. For those of you who missed the CFTC hearing, here are two of the must-watch clips. In the first one, Adrian Douglas introduces the underlying concerns about the Ponzi nature of the LBMA hedging situation, in which a wholesale rush to “physical delivery” would result in a one hundred fold dilution of gold holdings, and a 99% result of unsecured creditor claims (good luck collecting on that particular bankruptcy). We also meet Jeffrey Christian, formerly of Goldman and currently of CPM, in which not only does the “expert” state that a bullion bank short is hedged by further shorting, but confirms Douglas’ and GATA’s previous claims that the “physical” market, as defined, is a joke, as the OTC market treats gold purely as a financial asset, essentially conforming to the precepts of fractional reserve banking. As Douglas notes “He confirms that the LBMA trades hundreds of times the real underlying physical. This is even a higher estimate than I have previously made! It is, as I asserted before the Commission, a giant Ponzi Scheme.”

Big thanks to Bernard for posting this. >

Digging for Survival

The Gold Slaves of Mozambique

By Thilo Thielke in Manica, Mozambique

Thousands of fortune hunters are digging for gold in the mountains of Mozambique. Scores have come across the border from bitterly poor Zimbabwe. But for most, the dream of fabulous treasure ends up in endless toil, disease and death.

For reasons of data protection and privacy, your IP address will only be stored if you are a registered user of Facebook and you are currently logged in to the service. For more detailed information, please click on the “i” symbol.

Nightfall brings welcome cooler temperatures to the foothills of the Chimanimani Mountains in western Mozambique. But it also brings the malaria-carrying Anopheles mosquito from the nearby swamps. The mosquitoes come in thick swarms. The young men in the mining camps use fire in a vain attempt to protect themselves against the deadly insects. When their firewood is too damp they burn plastic, and soon campfires blaze throughout the camp, filling the air with endless plumes of acrid smoke. The soft, green hills surrounding the provincial capital Manica have been transformed into giant, squalid camps. Small settlements have sprung up along the Revue River, collections of huts made of plastic tarps, corrugated metal and bamboo. But many people simply sleep on the ground, wrapped in rags and covered with moth-eaten blankets. Their diet consists of roots, grass and insects. During the day, they crawl across the loamy ground, digging with their bare hands. A few have spades and pickaxes. Many begin work at four in the morning. Some just lose their minds here, others lose their lives. Last-Ditch Hope Thousands of desperate people have come to the region to seek their fortune, and their numbers swell by the day. They come across the mountains from neighboring Zimbabwe. They have heard that there is a treasure hidden in the muddy soil here: gold. The word “Chimanimani” has become synonymous with the last-ditch hope of striking it rich.

Alec Pot wipes the sweat from his brow. He is infected with malaria, is little more than skin and bones, and he shakes with fever. He used up the last of his money to buy medicine. Now he huddles under a mango tree, wrapped in his blanket. Pot came here from Zimbabwe a month ago with three friends. At home, they had heard that there was gold — a lot of gold — to be found in the Mozambican mountains. Strangers had told fantastic stories about fist-sized nuggets. The men had also heard that the Mozambicans are hospitable. A few weeks ago, Mozambique even waived the visa requirement for Zimbabweans. It was said that this was the country’s way of thanking neighboring Zimbabwe for giving refuge to Mozambican refugees in the 1980s. But the more likely reason is that Mozambique, which is still recovering from the consequences of a long civil war that ended in 1992, had no other way of coping with the influx of Zimbabweans. Zimbabwe is collapsing at record speed. Unemployment is above 80 percent, and inflation is close to 70,000 percent. More than three million Zimbabweans have fled the country, with up to two million of them believed to have taken refuge in South Africa. Most of Zimbabwe’s white farmers were driven out, and their crops are now rotting in the fields. Many people are starving. The bankrupt state is isolated internationally. Zimbabwe’s ruler doesn’t seem to care about this decline. The stubborn dictator, Robert Mugabe, resorts to brutal force to cling onto power and suppress his opposition. Pius Ncube, the former archbishop of Bulawayo and a prominent regime critic, recently appealed to the British to intervene and bring down the tyrant. As long as Mugabe remains in power, the exodus of Zimbabweans will continue. Alec Pot, 34, is one of those who no longer saw a future in Zimbabwe, formerly Rhodesia and once the breadbasket of southern Africa. He had worked for years in construction in his native city of Murehwa. But no one is building anything in Zimbabwe anymore. Pot has a wife and two young children. Since his father died of AIDS four years ago, he has also had to care for his mother and seven siblings. Pot, an unemployed man, was expected to feed twelve other people. “Slave Labor” At some point, when he realized that there was no way out of his predicament, he remembered the stories he had heard of an El Dorado across the border in Mozambique. He packed together a few belongings — a rusty shovel, an old blanket and a bucket — and set off over the mountains. Finding the gold fields was easy. More than 20,000 fortune hunters are already plowing their way through the red Mozambican earth. Three-quarters of them come from across the border. But instead of the hoped-for riches, Pot encountered a situation that he himself describes as “slave labor.” He and his three friends toil away, almost around the clock, digging with their bare hands, rusty shovels and primitive pick-axes. The gold is said to lie eight meters (26 feet) below the surface, but so far the claim that was allocated to the young men has failed to produce even a puff of gold dust. We must dig deeper, the men tell themselves, as they keep on burrowing into the earth. To return home would be tantamount to capitulation. Besides, they say, all we need is a little luck and we’ll be set for life! They plan to return home to their families the minute they make their first find, or so they say. There is a long tradition of digging for gold in Mozambique. The gold-mining industry goes back to the days before the Portuguese colonialists arrived. Neighboring South Africa struck it rich with the precious metal. Large international mining companies exploited Mozambique’s gold deposits for as long as the Portuguese were in power, but when they left the country in 1975, they left it in chaos. Mozambique initially became socialist and then slid into a civil war that would drag on for 16 years — with the active encouragement of apartheid South Africa. Gold production practically came to a standstill during this period. As peace returned to the country, so did the prospectors. Now that the price of gold has skyrocketed, a frenzied mood has descended on the region lining the Revue River. Despite this apparent chaos, a carefully devised system is in place in the mountains. The land belongs to Mozambicans who, until recently, grew bananas, corn and mango trees here, and have since signed long-term leases with the government. Since the gold rush began, the landowners have been subdividing their land into claims. In return for being allowed to dig to their hearts’ content, the claimholders must turn over a share of any gold they unearth to the landowners. Law of the Jungle Lawlessness and naked violence prevail along the Revue River. Troublemakers are driven out. Sometimes policemen or soldiers raid the camps, beating the inhabitants and demanding their share. Alec Pot’s partner, Widson Muchehuwa, is bent over with pain. He was recently roughed up during one of these raids. His tormentors screamed that he brought bad luck and should go back to Zimbabwe — otherwise, they said, they would kill him. The hunt for gold is, of course, illegal. In theory, the precious metal belongs to the Mozambican government. But the police and military are apparently unable to control the gold rush. “We cannot stop the search for gold with force,” Raimundo Diomba, the governor of Manica Province, says resignedly. “After all, these people have no other source of income, and they have to feed their families.” To complicate matters, members of the Shona tribe live on both sides of the border. They speak the same language and share family ties. All that separates them is a border that was once drawn arbitrarily by colonial powers. A lively business has developed around the gold fields. The prospectors sell whatever they find to Mozambican dealers for the equivalent of about $20 (€13) per gram. The dealers, in turn, collect $27 (€17) in Manica, only 15 kilometers (9 miles) away. The buyers in Manica are Lebanese, Israelis and Europeans — taciturn individuals who spend their evenings hanging about the city’s dimly lit hotel bars, where they do their business. They export the still slightly soiled gold to other countries, a practice that is also illegal. It eventually ends up in the major markets in London, New York and Zurich: shiny, refined and expensive. “Business is going very well,” says Armando Mouzinho, a dealer, “because the gold price is so high.” Mouzinho has thick bundles of cash stuck into his waistband. When gold prices rise in London, business booms in the foothills of the Chimanimani Mountains. Prostitutes and Gin Sylvia Madzikanda, a trader who came here from Zimbabwe three weeks ago, also benefits from the high gold price. She commutes back and forth between Manica and the prospectors’ camps, selling bread and corn. She also does a lively trade in a locally distilled rotgut called “Buffalo Dry Gin” and Mozambican beer. Prostitutes are brought in from Zimbabwe by the truckload every Thursday, because mining is prohibited on Fridays. Sylvia Madzikanda also cashes in on those days. It is a self-contained world with its own laws, a world that the state ignores for as long as possible. But the Mozambican authorities have mounting reservations about the illegal mining. Because the gold-bearing earth is washed in the rivers, causing them to silt up, drinking water is already becoming scarce in the region. The barren, pockmarked landscapes that have developed in the Chimanimani Mountains also pose problems. The prospectors sometimes dig shafts that are 10 to 20 meters (33 to 66 feet) deep and are connected by an elaborate tunnel system. Once a mine has been exploited it is simply left open. This leads to recurring mudslides during the rainy season, sometimes burying prospectors. Others freeze to death in the mountains, where temperatures can drop to below freezing at night. To add to these hardships, violence escalates almost every evening in the camps of the desperados. One camp has become so notorious for the regularity of its bloody quarrels that it has acquired the sinister nickname “Burundi.” No one knows how many lives this lunacy has claimed, but the death toll likely runs into the dozens. A Few Crumbs of Gold Dust It has been another unlucky day for Alec Pot and his three friends. They glance enviously at a neighboring pit, where a few mud-covered men rejoice over a few crumbs of gold dust. It probably amounts to about a gram, which they can turn into cash when the dealer shows up the next day. They will have to divide their $20 (€13) into five parts: the four miners each get their share as does the Mozambican owner, who occasionally stops by to make sure that no one walks off with anything without paying him his cut first. In the end, the men will have earned $4 apiece — a good day for the prospectors, who will now be able to afford a few bottles of gin and a prostitute on the weekend. Meanwhile, Alec Pot continues to go hungry. He hasn’t eaten any meat in months. His emaciated body is susceptible to disease. There is a rumor that cholera has broken out a few kilometers downriver. Pot doesn’t know what will happen next. At the moment, he doesn’t even have enough money for the trip home to the Zimbabwean capital Harare. Besides, how can he explain his failure to his family? “They expect me to bring something home,” says Pot, gazing over at the mountains that form the border with Zimbabwe. “They’re hungry.” Translated from the German by Christopher Sultan

Photo Gallery: The Desperate Hunt for Gold

03/20/2008
The prospectors sell whatever they find to Mozambican dealers for the...

Toby Selander
The prospectors sell whatever they find to Mozambican dealers for the equivalent of about $20 (€13) per gram. The dealers, in turn, collect $27 (€17) in Manica, only 15 kilometers (9 miles) away. The buyers in Manica export the still slightly soiled gold to other countries, a practice that is also illegal. It eventually ends up in the major markets in London, New York and Zurich: shiny, refined and expensive.

Photo Gallery: The Desperate Hunt for Gold

03/20/2008
Thousands of desperate people have come to the region to seek their fortune.

Toby Selander
Thousands of desperate people have come to the region to seek their fortune.

>

Gold

Gold miner in Ghana

The Real Price of Gold

By Brook Larmer
Photograph by Randy Olson
Like many of his Inca ancestors, Juan Apaza is possessed by gold. Descending into an icy tunnel 17,000 feet up in the Peruvian Andes, the 44-year-old miner stuffs a wad of coca leaves into his mouth to brace himself for the inevitable hunger and fatigue. For 30 days each month Apaza toils, without pay, deep inside this mine dug down under a glacier above the world’s highest town, La Rinconada. For 30 days he faces the dangers that have killed many of his fellow miners—explosives, toxic gases, tunnel collapses—to extract the gold that the world demands. Apaza does all this, without pay, so that he can make it to today, the 31st day, when he and his fellow miners are given a single shift, four hours or maybe a little more, to haul out and keep as much rock as their weary shoulders can bear. Under the ancient lottery system that still prevails in the high Andes, known as the cachorreo,this is what passes for a paycheck: a sack of rocks that may contain a small fortune in gold or, far more often, very little at all. Apaza is still waiting for a stroke of luck. “Maybe today will be the big one,” he says, flashing a smile that reveals a single gold tooth. To improve his odds, the miner has already made his “payment to the Earth”: a bottle of pisco, the local liquor, placed near the mouth of the mine; a few coca leaves slipped under a rock; and, several months back, a rooster sacrificed by a shaman on the sacred mountaintop. Now, heading into the tunnel, he mumbles a prayer in his native Quechua language to the deity who rules the mountain and all the gold within.

“She is our Sleeping Beauty,” says Apaza, nodding toward a sinuous curve in the snowfield high above the mine. “Without her blessing we would never find any gold. We might not make it out of here alive.” It isn’t El Dorado, exactly. But for more than 500 years the glittering seams trapped beneath the glacial ice here, three miles above sea level, have drawn people to this place in Peru. Among the first were the Inca, who saw the perpetually lustrous metal as the “sweat of the sun”; then the Spanish, whose lust for gold and silver spurred the conquest of the New World. But it is only now, as the price of gold soars—it has risen 235 percent in the past eight years—that 30,000 people have flocked to La Rinconada, turning a lonely prospectors’ camp into a squalid shantytown on top of the world. Fueled by luck and desperation, sinking in its own toxic waste and lawlessness, this no-man’s-land now teems with dreamers and schemers anxious to strike it rich, even if it means destroying their environment—and themselves—in the process. The scene may sound almost medieval, but La Rinconada is one of the frontiers of a thoroughly modern phenomenon: a 21st-century gold rush. No single element has tantalized and tormented the human imagination more than the shimmering metal known by the chemical symbol Au. For thousands of years the desire to possess gold has driven people to extremes, fueling wars and conquests, girding empires and currencies, leveling mountains and forests. Gold is not vital to human existence; it has, in fact, relatively few practical uses. Yet its chief virtues—its unusual density and malleability along with its imperishable shine—have made it one of the world’s most coveted commodities, a transcendent symbol of beauty, wealth, and immortality. From pharaohs (who insisted on being buried in what they called the “flesh of the gods”) to the forty-niners (whose mad rush for the mother lode built the American West) to the financiers (who, following Sir Isaac Newton’s advice, made it the bedrock of the global economy): Nearly every society through the ages has invested gold with an almost mythological power. Humankind’s feverish attachment to gold shouldn’t have survived the modern world. Few cultures still believe that gold can give eternal life, and every country in the world—the United States was last, in 1971—has done away with the gold standard, which John Maynard Keynes famously derided as “a barbarous relic.” But gold’s luster not only endures; fueled by global uncertainty, it grows stronger. The price of gold, which stood at $271 an ounce on September 10, 2001, hit $1,023 in March 2008, and it may surpass that threshold again. Aside from extravagance, gold is also reprising its role as a safe haven in perilous times. Gold’s recent surge, sparked in part by the terrorist attack on 9/11, has been amplified by the slide of the U.S. dollar and jitters over a looming global recession. In 2007 demand outstripped mine production by 59 percent. “Gold has always had this kind of magic,” says Peter L. Bernstein, author of The Power of Gold.“But it’s never been clear if we have gold—or gold has us.”

While investors flock to new gold-backed funds, jewelry still accounts for two-thirds of the demand, generating a record $53.5 billion in worldwide sales in 2007. In the U.S. an activist-driven “No Dirty Gold” campaign has persuaded many top jewelry retailers to stop selling gold from mines that cause severe social or environmental damage, but such concerns don’t ruffle the biggest consumer nations, namely India, where a gold obsession is woven into the culture, and China, which leaped past the U.S. in 2007 to become the world’s second largest buyer of gold jewelry. For all of its allure, gold’s human and environmental toll has never been so steep. Part of the challenge, as well as the fascination, is that there is so little of it. In all of history, only 161,000 tons of gold have been mined, barely enough to fill two Olympic-size swimming pools. More than half of that has been extracted in the past 50 years. Now the world’s richest deposits are fast being depleted, and new discoveries are rare. Gone are the hundred-mile-long gold reefs in South Africa or cherry-size nuggets in California. Most of the gold left to mine exists as traces buried in remote and fragile corners of the globe. It’s an invitation to destruction. But there is no shortage of miners, big and small, who are willing to accept. At one end of the spectrum are the armies of poor migrant workers converging on small-scale mines like La Rinconada. According to the United Nations Industrial Development Organization (UNIDO), there are between 10 million and 15 million so-called artisanal miners around the world, from Mongolia to Brazil. Employing crude methods that have hardly changed in centuries, they produce about 25 percent of the world’s gold and support a total of 100 million people. It’s a vital activity for these people—and deadly too. In the Democratic Republic of the Congo in the past decade, local armed groups fighting for control of gold mines and trading routes have routinely terrorized and tortured miners and used profits from gold to buy weapons and fund their activities. In the Indonesian province of East Kalimantan, the military, along with security forces of an Anglo-Australian gold company, forcibly evicted small-scale miners and burned their villages to make way for a large-scale mine. Thousands of protestors against expansion of a mine in Cajamarca, Peru, faced tear gas and police violence. The deadly effects of mercury are equally hazardous to small-scale miners. Most use mercury to separate gold from rock, spreading poison in both gas and liquid forms. UNIDO estimates that one-third of all mercury released by humans into the environment comes from artisanal gold mining. This turns places like La Rinconada into a sort of Shangri-la in reverse: The pursuit of a metal linked to immortality only serves to hasten the miners’ own mortality.

At the other end of the spectrum are vast, open-pit mines run by the world’s largest mining companies. Using armadas of supersize machines, these big-footprint mines produce three-quarters of the world’s gold. They can also bring jobs, technologies, and development to forgotten frontiers. Gold mining, however, generates more waste per ounce than any other metal, and the mines’ mind-bending disparities of scale show why: These gashes in the Earth are so massive they can be seen from space, yet the particles being mined in them are so microscopic that, in many cases, more than 200 could fit on the head of a pin. Even at showcase mines, such as Newmont Mining Corporation’s Batu Hijau operation in eastern Indonesia, where $600 million has been spent to mitigate the environmental impact, there is no avoiding the brutal calculus of gold mining. Extracting a single ounce of gold there—the amount in a typical wedding ring—requires the removal of more than 250 tons of rock and ore. As a girl growing up on the remote Indonesian island of Sumbawa, Nur Piah heard tales about vast quantities of gold buried beneath the moun­tain rain forests. They were legends—until geol­ogists from an American company, Newmont Mining Corporation, discovered a curious green rock near a dormant volcano eight miles from her home. The rock’s mossy tint meant it contained copper, an occasional companion to gold, and it wasn’t long before Newmont began setting up a mine named Batu Hijau, meaning “green rock.” Nur Piah, then 24, replied to a Newmont ad seeking “operators,” figuring her friendly manner would get her a job answering phones. When the daughter of a Muslim cleric arrived for training, though, her boss showed her a different operating booth—the cab of a Caterpillar 793 haul truck, one of the world’s largest trucks. Standing 21 feet tall and 43 feet long, the truck was bigger than her family home. Its wheels alone were double her height. “The truck terrified me,” Nur Piah recalls. Another shock soon followed when she saw the first cut of the mine itself. “They had peeled the skin off the Earth!” she says. “I thought, Whatever force can do that must be very powerful.” Ten years later, Nur Piah is part of that force herself. Pulling a pink head scarf close around her face, the mother of two smiles demurely as she revs the Caterpillar’s 2,337-horsepower engine and rumbles into the pit at Batu Hijau. Her truck is part of a 111-vehicle fleet that hauls close to a hundred million tons of rock out of the ground every year. The 1,800-foot volcano that stood here for millions of years? No hint of it remains. The space it once occupied has been turned into a mile-wide pit that reaches 345 feet below sea level. By the time the seam at Batu Hijau is exhausted in 20 years or so, the pit will bottom out at 1,500 feet below sea level. The environmental wreckage doesn’t concern Nur Piah anymore. “I only think about getting my salary,” she says.>>>> ….. http://ngm.nationalgeographic.com/2009/01/gold/larmer-text/5

>

The Great American Disaster: How Much Gold Remains In Fort Knox?

by Chris Weber

A Huge Mystery Remains To Be Solved Yesterday marked the 39th anniversary of the day when the US Government declared bankruptcy. Oh, they didn’t call it that at the time. But what happened on August 15, 1971 was that the US defaulted on its promise to pay gold for dollars. Before that day, gold was the legal linchpin of the world monetary system. Although every currency was defined in terms of the US dollar, the dollar itself was legally defined as 1/35th of a troy ounce of gold. Since then, there really has been no center to the international monetary system. The “reserve currency” continues to be the US dollar. But there is no official definition of what a dollar is. Like every other currency, its value changes every ten seconds as it is traded on the global currency markets. It is a promise to pay nothing. Its value has been devalued for years. On top of that, enormous effort has since been put into the global currency markets: buying, selling, manipulating…none of which has caused anything productive to the world economy. Oh, sure, currency investing has made some of us rich, but is it really the same kind of wealth that, say, Steve Jobs has created with Apple? After cutting that last tie to gold, there was no longer any discipline left to keep the value of the dollar steady. The US dollar of August, 1971 is as of 2009 worth just over 18 cents, according to the Inflation Calculator. Thus, in purchasing power, the dollar has lost over 80% in the past 39 years. Only foreigners were legally able to turn in their US dollars and get gold from the US Government from 1934 to 1971. August 15 of that year closed off that last power of convertibility. In 1934, gold was confiscated from US citizens, melted from coins into bars, and gathered over the next few years into a new storage facility at Ft Knox, Kentucky. After that, the official price of gold was raised from $20.67 to $35, a devaluation of the currency that was an attempt to inflate the economy out of depression. It didn’t work, but what it did do was to attract more gold in one place than had ever been seen.

At a time when deflation was depressing prices for all assets, the drastic rise in the official gold price made people all over the world want to sell their gold to the US Treasury. For many years, $35 an ounce was higher than the market price, so foreign sellers got a bargain. The peak amount of gold held in Fort Knox reached 701 million ounces of gold. This was in 1949. This amount equaled 69.9% of all the gold in the world; never before had so much gold been gathered in one place. But soon after that, gold began to leave Ft Knox and was shipped to the foreign persons and institutions who ponied up their $35 in Federal Reserve Notes for each troy ounce of gold they wanted. At some point in the 1950s, $35 became too cheap a price for gold. From then until 1972, at least 75% of official US gold left the nation in exchange for paper dollars which can be printed at will. However, I think the total amount of real gold which remains is even less. The exact amount that remains is now officially listed at 147.3 million ounces. From the peak, that is a decline of 79%. In 1988, 22 years ago, I wrote a book about Fort Knox, the gold there, and the documented history of official lies, evasions and incompetence of those who were entrusted with the gold. I say “documented history” because when writing the book, I was very careful to only include official documents and private correspondence from the US government, stretching from 1934 to 1987. Using their own responses to the questions of just how much gold is left, and what that gold’s quality is, for the first time this book put all these governmental attempts to answer the questions about their own gold policies in one place. What their responses revealed was shocking to me. Nothing since 1988 has happened to change my views. The Story Of A Great Man How I came to write this book is an interesting story. I was in the right place at the right time. A man named Edward Durell had been corresponding with the highest US governmental officials for years when he asked me to come to his Virginia farm and write a book based on all his work. He was nearly 90 years old, and had been a wealthy industrialist who had bankrolled the campaigns of many politicians for decades. He was dying (he would die weeks after the book came out) and wanted to see all his concerns made public before he did. It was his life’s work to restore transparency and honesty to the monetary system. (He had learned about me from Congressman Ron Paul. Five years before, in 1982, I had ghostwritten half of Paul’s book, The Case For Gold.)

When President Nixon closed the gold window exactly 39 years ago, Durell began hearing rumors that made him concerned about the amount and quality of the gold that remained in Fort Knox. While Durell was a lifelong Republican, he never trusted Nixon, and considered him a world-class liar. However, within days of Nixon’s resignation in August of 1974, Durell contacted his old friend (and longtime recipient of Durell’s money for his various past elected offices) William Saxbe. Saxbe wasn’t just anybody: he was then the United States Attorney General, the highest legal official of the executive branch of the government. With a new President, Gerald Ford, who Durell considered more honest, he asked Saxbe to mount a complete audit of the gold at Ft Knox. Saxbe moved quickly to try to placate Durell, and barely six weeks later, on September 23, 1974 Mary Brooks, the Director of the US Mint, led six Congressmen and one Senator on a tour of Ft Knox. It was the first time since Franklin Roosevelt visited on April 28, 1943 that anyone except Mint and Treasury officials had been allowed inside of Ft Knox. Too my knowledge, no outsider has been inside ever since. It was not an audit or inventory of the gold supply; but simply a tour. But there was more of a carnival atmosphere than anything else. While it seemed to placate the few elected representatives at the time, upon reflection several of them publicly pronounced themselves unsatisfied. I tell the story of this, and more, in the book. I don’t want to repeat it here. I’m trying to get the book put online, and by the time we go to print with this issue, I may be able to do this. Until then, there are copies of the book available at Amazon.com. It is called …Good As Gold?': How We Lost Our Gold Reserves and Destroyed The Dollar. (I wrote it as Christopher Weber.) The book was not a success. In fact, no other book I ever wrote made so little an impact. It came out to a world which didn’t care about the subject. It was not a “sensationalist” book, in the sense that we were not screaming that there was no gold left in Ft Knox. That approach would have gotten more press. Instead, the tack we took was to let the official government responses speak for themselves, while pointing out their poor quality and very unsatisfactory nature. We didn’t want to put out any allegation that would not stand up in a court of law: that’s how carefully the book was written. I’ve sometimes thought that the massive indifference which greeted the book hastened Mr. Durell’s death, and I’ve felt bad about that ever since. Durell was a great man who deserved better.

Part of the failure was my own fault. I did very little to promote the book. This is because I am not a good promoter of anything; I don’t like to be the center of attention and have always tried to avoid fame and the spotlight. While I’m happy to say that I’ve been successful in the avoidance of fame, in this case, I was the wrong person. With Durell dying, the burden of any promotion of the book fell to me, and I let him down. Maybe a great promoter could have gotten the public interested in the story of how America lost its gold, but by 1988, the bull market in gold had become a distant memory, so maybe nothing would have worked. Of course, the book didn’t have the best title; I’ve forgotten who came up with it (probably me). The “Good As Gold?” part was based on a speech given by President Kennedy days after he took office in January, 1961. As he put it, “the growth in foreign dollar holdings has placed upon the United States a special responsibility – that of maintaining the dollar as the principal reserve currency of the free world. This required that the dollar be considered by many countries to be as good as gold. It is our responsibility to sustain this confidence.” Sadly, the policies of JFK were just like those of every president from FDR to Obama. They all have treated the value of the dollar as something to be sacrificed in favor of other goals. The only reason why the US dollar is still the reserve currency of the world is that no other nation is in a position to have a currency to challenge the dollar. What has happened instead is that the dollar is no longer “as good as gold,” and that every currency has fallen in value in terms of gold. The One “Audit” Of Fort Knox The only audit that has ever been done of the gold inside Ft Knox was done days after Dwight Eisenhower became President in January of 1953. After 20 years of Democratic presidents, the American public wanted to be sure that the gold confiscated from them was still there. Thus, the new President ordered an audit within hours after taking office. The central problem was that it wasn’t much of an audit. To sum it up:

  1. Representatives of the audited group were allowed to make the rules governing the audit. No outside private experts were allowed.
  2. Those government bureaucrats involved were inexperienced in their tasks, by their own admission.
  3. The entire audit of the largest gold hoard ever concentrated in history lasted only seven days.
  4. Only a fraction of the gold was actually tested. Later, the officials put this fraction at just 5%.
  5. Based on that fraction, the official committee reported that, in their opinion, all the holdings would have matched their records if they’d all been tested.
  6. If the audit was accurate, the fact remains that almost 80% of it went overseas in the coming years. If the audit was not accurate, the amount of gold lost could have been even more.

This one and only audit reassured the America of 1953. But that America was still used to accepting official government statements at face value. In later years, after all the lies connected with Vietnam, Watergate, and so many things ever since, Americans today have lost much of their respect and belief in the words of their government. (In fact, few today even view it as “their” government.) An audit such as the one of 1953 would today satisfy almost nobody. The years after 1953 saw hundreds of millions of ounces of gold fly out of the US. It is absolutely certain that wealthy Americans, operating behind foreign institutions, were able to accumulate gold at what are clearly now bargain prices. But more important, America’s enemies were able to do the same: exchanging the paper dollars for gold at $35 an ounce. In the book, I tell the sad story of how Washington tried to suppress the price of gold during the 1960s with the London Gold Pool. Both the official and private responses regarding this are included. It is clear to me that the last bull market for gold lasted 20 years, from 1960 to 1980. However, the price of gold only rose during the 1970s. This is because the price was manipulated – suppressed – all during the 1960s. When the manipulation stopped, the price soared far and fast to make up for the time it had been held down artificially. From $35 in 1971 to $850 at the January 1980 peak, that’s a rise of 2,329% at a time when every other asset class was either doing nothing or plunging. After a period of moderation in inflation which began in 1980, gold went into a bear market. However, it reached a low of $256, much higher than the old low of $35. When the price began to rise in 2001, it hasn’t stopped. However, this has been a stealth rise, a bull market that has been ignored by most people. Even after 10 consecutive years of annual rise, very few people own it or are excited about it. I think there is still much, much more room for gold to rise. This bull market will take the price to a level much higher than most anyone today believes possible. There are people who today think gold’s price is being manipulated and held down. If they studied the history of the London Gold Pool, they’d have to realize that any supposed suppression going on today is child’s play compared to what went on as official policy in the 1960s. If gold’s price action since 2000 has been suppressed, I say bring on more of it! It’s making gold holders wealthy.

10 year gold price per ounce 10 year gold price history in US Dollars per ounce

We’re straying a bit from the main subject. The central part of what I learned is that, by official admission, only a small percent of the gold that is left in Fort Knox is “good delivery” gold. In fact, though this is just my opinion, I wonder if there was so little such good delivery gold left by August of 1971 that Nixon had to close the gold window. “Good delivery” gold is gold that is at least .995% pure. Pure gold is .9999 fine. However, gold is allowed to be .995 fine and still be acceptable to buyers, such as central banks and sophisticated investors. All of the gold that had left Ft Knox before the window closed 39 years ago today was “good delivery.”

The shocking admission Ft Knox holds very little good delivery gold was made to Mr. Durell by the chief official of the General Accounting Office (GAO). This happened a few months after the September 1974 tour. During that event, which lasted less than four hours, the visitors were shown only what the Treasury officials conducting the tour intended these elected (non-expert) representatives to see. Only one of the 13 compartments supposed to contain gold was actually opened to the visitors. As the cameras flashed, a few bars were weighed by the Congressmen. None of them were assayed. But even worse than this was the fact that these eyewitnesses were shown bars that were strangely orangish in hue. This is a sign that they are far from pure gold. This should come as little surprise, however. Remember that the gold confiscated from Americans had usually come in the form of gold coins. Pure gold coins are considered too soft and copper is usually added to strengthen them. US coins before 1933 contained about 10% copper and 90% gold. Thus, the bars made from melting them often contained the same proportion. Some of the new bars had the copper removed: these were good delivery bars that went out the gold window before 1971. But much of what was left, as seen in the one compartment opened in Ft Knox, were quite obviously of bad quality. They were the dregs of what had been the greatest accumulation of gold that had ever been seen. At the same time, the Treasury agreed to audit the gold. However, they only agreed to audit 20% of the gold. This was supposedly done over a 30-day period that began the day after the tour. The results of this “audit” were released in February of 1975. Mr. Durell was less than impressed with the whole thing: it was certainly not what he had wanted when he brought up the subject with Attorney General Saxbe the previous August. He felt, with justification, that he (along with everyone else) had been bamboozled. By February 1975 Saxbe was Ambassador to India, so Durell communicated his displeasure through his local Virginia congressman. As a result of this, the GAO sent four men to Durell’s Virginia farm to try to convince him of the validity of their accounting practices. In charge was Hyman Krieger, the GAO’s Washington regional manager.

The one concrete piece of information to emerge from this meeting was a bombshell. Krieger admitted that only a small part – 24.4 million ounces – of the official gold was of a quality of .995 or better. In other words, less than 10% of the 264 million ounce held by the Treasury could be considered good delivery gold. Krieger confirmed this in a letter to Durell of April 11, 1975:

“We analyzed, as agreed, the gold bar schedules for Fort Knox and found that fine gold in good delivery form (.995 or better) at Fort Knox totaled 24,411,140 ounces.”

This from the 701 million ounces that were the supposed peak. In fact, in the absence of a true and independent audit and assay, we really can’t be sure of how much is actually there. First the Treasury said that 264 million ounces of gold was there by the end of 1972, but later on the number was changed to 147.3 million ounces, and that’s the number it stands at today. What happened to change the 264 million to just 147? How much – exactly – remains in Fort Knox? Of that, how much – exactly – is good delivery quality? What is the quality of the rest? After an unsatisfactory 1976 attempt by the US Treasury to answer its critics, the curtain came down. The next President, Jimmy Carter, was even worse. His people were even less interested in candor than the Ford officials were. And Reagan? Although he made nice noises about a return to a gold standard, his officials met any attempt at an honest and transparent look inside Fort Knox with slippery evasions that contained more than a hint of ridicule and mockery. I don’t have the space to detail all these here, but they are in the book. It is all a most dispiriting story. If the US Treasury was really interested in erasing all the questions, they could have done so at any time by allowing a truly independent audit, with acknowledged experts. Instead, the history of their responses over the decades gives the impression that they have something to hide. They have done their part to cause the average American to distrust their government, regardless of which political party is in power. Occasionally, news leaks out that makes one wonder how bad things really are. The New York Assay Office had been the only part of the Treasury that had melted and refined gold starting with the 1934 confiscations. A few years ago, it was announced – in connection with another story – that over 5,000 ounces of gold had been stolen from this office. According to the Treasury official in charge, “The full truth [amount] may never be known because the records are so poor.” Two Treasury employees were ultimately charged with theft in this one case, but who knows how many other episodes have happened? No one is watching. Everyone knows that for every government scandal that is revealed, many more are covered up. Some are done by design, some by just plain incompetence.

After decades of mismanagement, it is clear that nearly all of the good-quality gold in Fort Knox is gone. If a real audit were ever done and made public, it would shock the nation. In an era where the world is finally rediscovering the value of gold, the only ways the US will ever get back anymore official gold will be either to buy it in the open market or to confiscate it from its citizenry again. The government may indeed try to confiscate gold from Americans again: I can’t put anything past them. But the Americans of today’s world are not like those of 1933. They are suspicious of their government, and would act more like Europeans have always done: they’d hide their gold from the government. The only way the 1933 confiscation worked was by voluntary participation. Americans considered their turning in of gold as a patriotic act. This would not be the case today. It is much more likely that America will continue to denigrate gold, just as it has for decades. Most officials; indeed, virtually all officials, don’t respect gold at all. In that, American officials are much like American investors. Future historians will be amazed at just how fast America declined starting in the late 20th century. As has happened so often in the past (although much more slowly) no great nation ever went off the gold standard and remained great. China Moves To Increase Domestic Gold Demand This is so very different from the actions of the Chinese. Slowly but surely over the last few years they have been turning toward gold. First the Chinese central bank has bought all of the production of the gold mined in China. It has so encouraged mining that the nation has become the largest producer of gold on the globe. However, until now, the decades-old policies of dictating to domestic commercial banks have stood in the way of gold accumulation by both banks and individual Chinese. This now is changing. On August 3, the government issued new rules which allow at least some banks to import or export gold for the first time in the history of post-1949 China. It is a safe bet that Chinese banks will not be exporting gold. In effect, they are being given the green light to buy gold on global markets and sell it to their customers, or just keep it themselves. Actual gold trading in China has been rather thin, what with the government taking up all of domestic production. This new policy seeks to widen the amount of gold available to Chinese. The rules not only cover domestic Chinese banks. Foreign banks in China are also now free to import and sell gold to Chinese. A few weeks ago I titled an issue: “Has China Put A Floor Under Gold?” The idea was that Chinese appetite for gold is now such that any price corrections are very small and don’t last very long. The price action of the past few days has shown that this is looking to be the case. After gold soared to a record high $1,261 in June, it backed off. This was only natural, after such a huge advance of over 80% in about 18 months. I wouldn’t have been surprised to see gold correct to lower than the low of $1,155 it briefly touched last month. Since then, gold has turned up again. It’s looking like the 6–7% correction we saw is all we’re going to get. Moreover, it lasted just a very few weeks. Look at a gold price chart over from the past several months and it is becoming clear that the correction from the record high is like nearly all the other corrections since this bull market started: very small. The action hasn’t given buyers who want a bargain time to get in. When I say “China” is putting a floor under gold, it is probably better to say “Asia” in general. The Chinese in Hong Kong and Singapore as well as the Indian communities in Asia are buying. Also, don’t forget the Vietnamese. All over Asia people are snapping up gold without waiting for a major correction. By so doing, they may be making sure that a major correction doesn’t happen. The best policy is not to try to time your purchases. Just accumulate to the point where you have enough, in percentage terms.

An Editorial I suppose you can sum up all this by stating some simple numbers. When Americans gave up their gold back in 1933, they were paid $20.67 for each ounce they surrendered. If they had simply lost one of those ounces behind the sofa, today they could exchange it for over $1,200. But if they had taken that $20.67 and misplaced it until today, that amount of money would only buy what a mere $1.32 would have bought them they day they turned in their gold. That’s how well the dollar has held its purchasing power since 1933. And that’s how well gold has held its. If gold is ever confiscated from Americans again, they’re going to have to make a choice. If they know their history, they will know that the last time the people’s gold was confiscated, the government treated that gold poorly. Let it slide through it’s fingers, let it be bought for much less than its true value and in exchange for it’s own pieces of worthless paper. Who knows how much was simply stolen by government employees acting on their own? But likely much more was lost in foolish schemes like when in the 1950s the CIA parachuted millions of dollars worth of gold bars into Poland to support what they thought was a powerful underground movement against the Soviets. In fact, the Soviets had wiped out that movement years before, turned its key people into double agents and played the CIA for suckers. As time passes, we are hearing more stories like this. The only Americans who ended up with American gold were the wealthy who were able to buy it offshore. Thus, we saw a transfer of wealth from middle class to wealthy long before people have recognized that trend today. In short, the US Government fouled up the entire episode in much the same way that it has ruined nearly everything else it has touched. Indeed, there is reason to think if Americans’ gold is ever confiscated again, it won’t be by the central government, because that government will have finally lost all legitimacy. Instead, we could see a pattern of local strongmen or warlords that have afflicted other nations in the past – even now-modern nations like Japan and in Europe – and still is seen in places like Afghanistan. Some of those warlords, like the “Northern warlords” of the Ahmed Shah Mossoud organization, have been supported by the Americans; others have been opposed. It would be the kind of tragic irony history loves if local warlords are ever seen on American territory: instead of the US conquering Afghanistan, in effect the US will have been conquered by Afghanistan. I think we are at the point that if honest money is ever to be seen, we will have to see also a complete separation of money and state. The State has had its chance to control money: It has made a mess of it.

August 17, 2010

Chris Weber [send him mail] writes the Weber Global Opportunities Report. He has been an investor since 1971.

Copyright © 2010 Chris Weber >

Will governments confiscate gold?

2011-APR-23

Could gold be confiscated by governments? As concerns mount that there is another financial crisis in the offing and the gold price rises, American investors worry increasingly about whether the US government will confiscate their gold. The precedent was set by President Franklin Delano Roosevelt, who in 1933 forced all of America’s gold owners to sell their bullion to the Federal government at the official price. However, the situation today is very different from that of 78 years ago. At that time, gold was the primary currency, the dollar being tied to it at $20.67 per ounce. But today, the Fed and European central banks strongly deny that gold has any monetary role at all, and argue instead that it’s just a hangover from the past: “that barbarous relic” as Keynes called it. Its confiscation would be an embarrassing admission that gold, after all, is money. Nevertheless, as paper currencies continue to lose credibility, the temptation for any government to seize its citizens’ gold to enhance official holdings must be growing. Americans today, however, are unlikely to meekly accept confiscation the way they did under Roosevelt. And nowadays, you may be American, but your gold is not necessarily held at an American bank: it is just as likely to be in London, Zurich or Hong Kong. The wording of a compulsory order is all-important. Confiscation requires the gold itself to be surrendered, which presumably would be the objective if a government is to add to official holdings. If gold ownership is merely banned, it is a different matter. A bullion bank holding gold in an unallocated account would almost certainly be unable to deliver physical gold if required to do so by the American government, but it would be able to close out the account for cash. And there is the thorny question of derivatives, which hardly existed in the 1930s. All futures and options trading would cease, and contracts for forward delivery would be cancelled, possibly with serious financial consequences. The international nature of gold would probably require all G10 or even G20 members to agree to similar actions against their own citizens. It seems unlikely that all governments would agree to this, unless they all had their backs hard against the wall. Switzerland, an associate member of the G10, would almost certainly face a referendum and be unable to comply. The G20 also includes China, India, Saudi Arabia and Russia. It is extremely unlikely that these countries will be prepared to confiscate their citizens’ gold to appease the Americans. Just the mention of these names alerts us to the dangers of a confiscatory move by the US. It would make the Chinese and Indian middle classes instantly wealthier than the average American, measured by gold ownership – an interesting thought when paper currencies are losing credibility. On balance, a repeat of the Roosevelt confiscation seems unlikely. But there is one thing we can be certain of, and that is that the risk of silver confiscation is more remote, so perhaps that is the safer metal to own.

>

Seeds of Their Own Destruction

by John Rubino on April 11, 2011

All those new dollars being created by an apparently-still-panicked Fed are pushing up asset prices across the board (with housing the only exception) and pushing the dollar down to near-record lows versus other currencies. The charts look eerily like a replay of 2007, which, of course, is exactly what policymakers want. Rising asset prices, according to the prevailing logic, will get us spending and borrowing again and return the economy to self-sustaining expansion. 2006 and 2007, for the people running this show, were the good old days. What they seem to be missing is that these trends contain the seeds of their own destruction, just as they did four years ago. Oil, for instance, is back above $100 a barrel, which translates into $4 a gallon gas, which amounts to a sizable tax increase on the consumers who are supposed to start spending again. CNBC just reported that gas sales have fallen for five straight weeks. Same thing for food. Ag commodity prices are through the roof, which is gradually translating into higher prices at grocery stores and restaurants. Consumers, as a result, will be eating out a lot less in the year ahead — and will still have fewer dollars to spend on other things. In the financial markets, precious metals are blowing away old records… For policymakers, gold and silver occupy a kind of shadow world. They’re not “real” money like dollars and euros, but for some inexplicable reason people still respect them. Central bankers worry that they’re being unreasonably blamed for their inability to keep their currencies stable versus these atavistic lumps of metal. As masters of their universe, they don’t like being contradicted by the rabble in the marketplace. And as managers of fictitious currencies they’re terrified of an “emperor’s new clothes” scenario in which everyone suddenly sees the con they’re running. So they’re watching gold in particular with rising anxiety. …and the dollar is approaching the low it hit just before the world fell apart in 2008. This too is a desired goal of US policy, because it makes US exports more attractive for the rest of the world. But of course it also makes imports more expensive, which raises the question of how much lower the dollar can go before headline writers put currency depreciation and rising food/energy prices together. A series of New York Times articles speculating about the end of dollar hegemony (and explaining the nature of money) is the Fed’s nightmare because it will get people to thinking about what exactly a paper currency is. Once that train leaves the station its inevitable destination is the conclusion that a fiat currency isn’t really anything. It’s just a consensual hallucination founded on our trust for the people managing it. Which in turn leads newly-awakened citizens to check out those YouTube videos of Bernanke and Greenspan getting pretty much everything wrong, documentaries like Inside Job, and the ongoing hearings of Ron Paul’s subcommittee, in which Fed and Treasury officials are revealed to be mumbling incompetents and frauds. As an understanding of the scam spreads, consumers and investors rush to convert their dollars into other currencies and hard assets and the game is over. A crisis of confidence sends the dollar into free-fall. This of course is to be avoided at all costs, which makes the dollar’s recent decline versus food, energy, and other currencies such a dilemma. It can’t keep falling indefinitely, so if it doesn’t stabilize on its own — i.e., if gold, oil and food don’t stop going up — action will have to be taken to stop it. With Europe and China now raising interest rates, how long will it be before the Fed is forced to follow suit and start sucking liquidity out of the system? And how long after that before everything that’s been going up in concert starts to fall together? >

Graphic: Size of the financial industry

DER SPIEGEL

Graphic: Size of the financial industry

> and corporate profits ….. hmm ….

Graphic: The US financial industry

DER SPIEGEL

Graphic: The US financial industry

08/22/2011 05:27 PM

Out of Control

The Destructive Power of the Financial Markets

Speculators are betting against the euro, banks are taking incalculable risks and the markets are in turmoil. Three years after the Lehman Brothers bankruptcy, the financial industry has become a threat to the global economy again. Governments missed the chance to regulate the industry, and another crash is just a matter of time. By SPIEGEL Staff.

The enemy looks friendly and unpretentious. With his scuffed shoes and thinning gray hair, John Taylor resembles an elderly sociology professor. Books line the dark, floor-to-ceiling wooden shelves in his office in Manhattan, alongside a bust of Theodore Roosevelt and an antique telescope. Taylor is the chairman and CEO of FX Concepts, a hedge fund that specializes in currency speculation. It’s the largest hedge fund of its kind worldwide, which is why Taylor is held partly responsible for the crash of the euro. Critics accuse Taylor and others like him of having exacerbated the government crisis in Greece and accelerated the collapse in Ireland. People like Taylor are “like a pack of wolves” that seeks to tear entire countries to pieces, said Swedish Finance Minister Anders Borg. For that reason, they should be fought “without mercy,” French President Nicolas Sarkozy raged. Andrew Cuomo, the former attorney general and current governor of New York, once likened short-sellers to “looters after a hurricane.” The German tabloid newspaper Bild sharply criticized Taylor on its website, writing: “This man is betting against the euro.” If that is what he is doing, he is certainly successful. While Greece is threatened with bankruptcy, Taylor is listed among the world’s 25 highest-paid hedge fund managers. A well-read man, Taylor likes to philosophize about the Congress of Vienna and the Treaties of Rome. But is this man really out to speculate the euro to death? And does he have Greece on his conscience? Taylor grimaces and sighs. He was expecting these questions. “The big problem is that in some cases these politicians are looking for the easy way out and want to blame somebody else and say speculators are taking Europe apart, taking the euro down and ruining the prosperity of our country,” he says, characterizing such charges against hedge fund managers as “nonsense.” “My capital isn’t the capital of the Rothschilds,” he says, insisting that he is working with the “capital of the people,” and that his goal is to protect and increase this capital. Taylor points out that no one from any of the German pension funds that invest their money with him has ever called him on the phone to tell him not to bet against the euro. Markets Control Politicians Taylor’s arguments echo those of everyone in the financial industry — the executives, the bankers and the big fund managers. They all insist that they are not responsible for the crisis in the euro zone and the turbulence in the financial markets, and that their actions are purely rational and in the interest of their investors. The truth is that the financial markets are controlling the politicians. If Sarkozy interrupts his vacation, the markets interpret his sudden return as a sign that the situation there is worse than they thought — and promptly set their sights on the country. And if there is an argument between Italian Prime Minister Silvio Berlusconi and Finance Minister Giulio Tremonti, then the markets target Italy, because they doubt that the Italian government is serious about introducing austerity measures. The markets take advantage of every weakness and every rumor to speculate against one country after the next. In doing so, they aggravate the crisis. Once a country has become the subject of rumors and speculation, other investors become nervous. Fearing further price declines, pension funds and insurance companies also start selling stocks and bonds. In the end, fear nurtures fear and a panic ensues. Stock markets are currently in turmoil. Even the most experienced equity traders cannot remember a time when prices fluctuated as widely from day to day — and often even within a single day — as they have in recent weeks. The German stock index, the DAX, fell by 5.8 percent last Thursday and lost another 2.2 percent the next day. There is no calm in sight for the global economy. Sharp declines on the stock market and crises have become an everyday reality. This raises the question of why the financial markets are so erratic. They have developed into a permanent threat to the global economy. But what can be done to avert this risk? It cannot be a coincidence that the number and scope of disruptions have increased with the expansion of the financial industry. The Asian financial crisis in the 1990s was followed by the bursting of the Internet bubble at the turn of the millennium. When Lehman Brothers went bankrupt in 2008, the financial world suddenly found itself on the brink of collapse. Now that the euro is at risk, and millions of people are afraid of their currency collapsing. A number of countries, including the United States, are groaning under debt burdens that run into the trillions. Incalculable Risk Naturally the financial industry — all those who trade in securities, currencies, money and the products derived from them, known as derivatives — is not responsible for all the crises in the global economy. Politicians also share some of the blame, for having accumulated too much debt and given the banks too much leeway. But without the destructive power of the banks, hedge funds and other investment companies, the world would not be where it is today — at the edge of an abyss. The financial industry grew rapidly, as did the sums of money with which its players speculated on the prices of stocks, commodities and government bonds. The products they developed to turn money into even more money became more and more complex. At the same time, the risks they were willing to accept became incalculable. The sector’s high salaries tend to attract the best and brightest university graduates. The members of this youthful elite don’t devise new products that make people’s lives better, nor do they found new companies that further progress. Instead, these young financial wizards invest a great deal of money and effort to develop sophisticated financial products, the sole purpose of which is to generate more profit for both their employers and, ultimately, for themselves — sometimes at the expense of other market players or even their customers. Many things that happen on Wall Street and in London’s financial district are “socially useless,” says Lord Adair Turner, chairman of Britain’s Financial Services Authority (FSA). The values that are created there are often not real or of any use to society, Turner adds. Paul Volcker, the former chairman of the US Federal Reserve, once remarked that the only truly useful financial innovation in the past 20 years is the cash machine. Once upon a time, the sole purpose of banks was to supply the economy with money. They were service providers, sources of energy for the economy, so to speak, but nothing more. But now the financial industry has largely disconnected itself from the manufacturing economy, transforming its role from subservient to dominant in the process. The potential upshot of this shift became evident less than three years ago. The banks had excessively foisted mortgages on Americans without paying much attention to their customers’ ability to repay these loans. They packaged the risks into new financial products and sold them on. But apparently very few people understood how these products actually worked. When the subprime bubble finally burst, it dragged down the entire financial industry with it. The major financial firms found themselves on the brink of bankruptcy and were forced to appeal to the government for help. Lost Opportunity The assistance was provided, but a historic opportunity was squandered in the process. None of the powerful banks was broken up, and only a few of the dangerous financial products were banned. With the central banks lending money at low rates, speculation could continue. The financial industry recovered quickly as a result, and now it is just as powerful as it was before the crisis — and just as dangerous, for both the economy and society as a whole. Even passionate advocates of the market economy are now questioning how an economic system that functioned so well for so long could spin dangerously out of control. In a hard-hitting opinion piece in the Daily Telegraph on July 30, British journalist Charles Moore sharply criticized the banks for keeping profits while passing on losses to taxpayers. “The banks only ‘come home’ when they have run out of our money,” he wrote. “Then our governments give them more.” Moore asks himself whether the left, with its criticism of the capitalist system, might actually be right. The prominent German journalist Frank Schirrmacher, expounding on Moore’s commentary in the Sunday edition of the conservative Frankfurter Allgemeine Zeitung, wrote that a decade of economic policies based on loosely regulated financial markets is proving to be the “most successful” way to make the left-wing critique of free-market capitalism, which had fallen out of favor, popular again. Western societies have seldom been more divided, and never have income disparities been as great as they are today. In no other industry can someone get rich as quickly as in the financial industry, where investment bankers divide up a large share of the profits among themselves and hedge-fund managers earn annual incomes in the millions — and sometimes even in the billions. At the same time, the markets are constantly demanding higher returns. Those who do not meet their expectations are punished with declines in the price of their stock and higher borrowing costs. Companies, forced to adjust to these requirements, keep wages down and their workforces at a minimum. These differences are especially glaring in London, Europe’s most important financial center. Bankers live in the lap of luxury in the city’s exclusive neighborhoods, while poor neighborhoods are home to people who have abandoned all hope. Many observers see this disparity and loss of hope as one of the causes of the recent unrest. ‘The Inability of Economists to Correctly Interpret the World’ And still, says Heiner Flassbeck, chief economist at the United Nations Conference on Trade and Development, “the time doesn’t seem ripe, and the crisis wasn’t severe enough, to grant — in defiance of the neoliberal zeitgeist — economic policy clear primacy over speculation-prone markets and to systematically restrict the financial industry to its function as a service provider to the real economy.”Flassbeck believes that the crises in the globalized economy have “a common root, namely the inability of economists to correctly interpret the world.” Because financial markets function in a completely different way from markets for goods, Flassbeck argues, they should never be left to their own devices. Of all people, it was an academic specializing in literary studies who managed to most accurately analyze the insanity of the financial markets and the impotence of economists. With his short 2010 book “Das Gespenst des Kapitals” (“The Specter of Capital”), Joseph Vogl wrote a closet bestseller that, despite being a tough read, attracted attention far beyond the arts section of newspapers — including among economists. His theory is that crises are not some kind of occupational hazard in the financial system. Instead, Vogl argues, it is the system itself that inevitably leads to new crises. Vogl is sitting in his office at Berlin’s Humboldt University, where he has a view of the Berlin Cathedral. He is dressed completely in black and is chain-smoking. Black-and-white photos on the wall depict his role models from Paris in the late 1960s: the philosophers Jean-Paul Sartre, Simone de Beauvoir and, holding a megaphone, Michel Foucault. Vogl was teaching at Princeton University when Lehman Brothers collapsed. He knew nothing about financial markets, and yet he was fascinated by the “confusing empiricism,” which had so little to do with theory. According to economic theory, the invisible hand of the market always leads to equilibrium, as Adam Smith wrote in his classic 1776 work “The Wealth of Nations,” which Vogl refers to as the “Bible of economists.” The same theory is still taught in universities today. Tendency Toward Excess But the theory also tells us that today’s excesses in the financial markets should never have occurred. This leads Vogl to conjecture that “by no means does the capitalist economy behave the way it’s supposed to.” While the theory tends to be based on the economics of a village market, completely different circumstances apply in the financial markets, where both goods and expectations are being traded, and where speculative transactions are used to hedge against other speculative transactions. Vogl describes the principle as follows: “Someone who doesn’t have a product, and neither expects to have it nor will have it, sells this product to someone who also neither expects nor wants to have it, and in reality does not receive it.” This type of market will always have a tendency toward excess — in either direction. Paul Woolley holds the same view, but from a different perspective. He is intimately familiar with the financial markets, after having made millions working in the London financial district. He spent four years with the deeply traditional Barings Bank, which was eventually destroyed by a minor English trader in Singapore. He later worked for the American fund manager GSO, which specializes in making very rich people even richer. In Woolley’s experience, the idea that financial markets are efficient is erroneous. “All players in the financial markets behave rationally from their own perspective, but the outcome of this process can be disastrous for mankind,” he says. Woolley, 71, still wears a pinstriped suit, tie and white shirt, but now he works in a small office stuffed to the gills with academic studies at the renowned London School of Economics. Woolley donated 4 million pounds (€3.5 million) to the elite university and funded its Paul Woolley Centre for the Study of Capital Market Dysfunctionality. His goal is to prove how dangerous the financial markets are. “It’s like a tumor that keeps growing,” he says. According to Woolley, there is no justification for the fact that this industry brings in more than 40 percent of all US corporate profits and pays the highest salaries in good years, while in bad years it is bailed out by taxpayers. ‘Destroying Society’ In recent months, Woolley has spoken before the investment committee of the International Monetary Fund (IMF) and to major US fund managers at Harvard Law School. He is able to present his academic theories in the language of the market. And the turmoil on the markets is now so great that people are listening to this revolutionary in a pinstriped suit. The former fund manager had his light-bulb moment when, in 2000, the dot-com bubble burst. Woolley had repeatedly told his clients, which included many of the world’s major asset managers, that small, money-losing tech stocks would not always be valued in the billions on the market. But his warnings fell on deaf ears, and GMO’s clients withdrew 40 percent of their money when the company stopped investing in technology securities. Woolley has observed the same phenomenon again and again. “The herd runs behind a trend until a crash occurs.” Society, he says, also pays a high price for this behavior. “The financial industry is doing a pretty good job of destroying society,” says Woolley. Many of his former colleagues, he adds, have a guilty conscience because “they can’t believe that the financial industry is still getting away with it.” He feels that bankers have a strong incentive to design products to be as complex and non-transparent as possible. These products enable them to earn returns upwards of 25 percent, because customers simply do not understand the extent to which they are being had. Structured mortgage-backed securities, the risks of which even their creators no longer understood in the end, as well as credit default swaps, which allow investors to bet on the bankruptcies of entire countries, are only the best-known examples. The more activity there is in the markets, the higher the fluctuations and the greater the potential profits. There is little that the traders at investment banks and hedge funds fear more than a boring market, one in which the economy is humming along nicely and the prices show little movement. The conditions that are reassuring to managers and employees in the real economy often lead to depression in the financial sector. Two weeks ago, the share price of Société Générale, a major French bank, fell by 14 percent, after the British newspaper Daily Mail had reported the previous day on alleged problems at the bank. Even though the bank promptly denied the veracity of the report, the rumor had been set in motion. Apparently no one cared whether or not it was true. It was later rumored that journalists at the British paper had taken a piece of summer fiction printed in the French newspaper Le Monde, about a breakup of the euro zone and troubles at Société Générale in 2012, to be the truth — which the Daily Mail promptly denied. Too Complex For Humans This story seems almost antiquated, because share prices are usually set by computers nowadays. When Deutsche Börse decided to move from Frankfurt to the nearby town of Eschborn, the town saw a rapid increase in the demand for air-conditioned basement space, where so-called high-frequency traders, as well as banks, set up their state-of-the-art supercomputers. These computers are programmed to independently buy or sell stocks at intervals down to the millisecond, which enables them to react to the latest trends in the market. Whoever has the fastest connection to the market stands the best chance of taking advantage of a critical millisecond and thus reacting to a price signal ahead of the competition. The computers are far more efficient than any human trader, because they can process hundreds of pieces of information per second. At the same time, such programs can also amplify — or even trigger — a crash. On May 6, 2010, prices on Wall Street plunged by almost 10 percent within a few minutes. To this day, no one knows exactly what caused the so-called Flash Crash. Because this sort of thing happens with growing frequency, the US Securities and Exchange Commission (SEC) has imposed a waiting period on computers in emergency situations. If the price of a stock has dropped by 10 percent within five minutes, trading is temporarily halted, allowing the human players to consider whether there is in fact a real reason for the sharp decline. Woolley believes that this regulation is insufficient. He is calling for a strict ban on high-frequency trading, which, in his view, has no social value whatsoever. Computers have long set the tone in foreign currency trading. The currency markets are now too complex for humans to manage alone. We realized that you couldn’t really manage this with the human thought process, it was too difficult, there were too many variables,” says New York hedge fund manager Taylor. Many of his roughly 60 employees are IT experts, mathematicians and engineers. They feed massive volumes of data into the computers, including figures on the gross domestic product of countries, interest rates, commodities prices and inflation rates. “The only thing the computers can’t handle are political developments, that is why we have me as Chief Investment Officer,” says Taylor, although he points out that the money ultimately follows the instructions that are spat out by the computers. But even Taylor isn’t entirely convinced of the myth of purely rational markets that obey nothing but the logic of numbers. For example, says Taylor, he is “sure” that legendary speculator George Soros is “plotting against the euro.” Although Soros denied such accusations in an interview with SPIEGEL last week, he also said: “Financial markets have a very safe way of predicting the future. They cause it.” The 81-year-old is one of the founders of the hedge fund industry. In the early 1990s, he suddenly became the quintessential unscrupulous speculator, one who takes advantage of even the tiniest weakness in the system without regard to the consequences. He borrowed 10 billion British pounds, then sold them on, triggering a wave of speculation that meant the Bank of England could no longer maintain the pound’s fixed exchange rates against the other currencies in the European Exchange Rate Mechanism (ERM). The pound had to be devalued and withdraw from the ERM. Soros was able to buy back the sum of money he had borrowed from the bank at a lower exchange rate. It was a bet that earned him more than $1 billion (€700 million). Rushing Like Lemmings Toward the Abyss Normally individual speculators like Soros and Taylor cannot move the market to such a significant degree on their own. But they can establish a trend that others then follow. Investors adhere to a herd mentality and, like lemmings, they are prepared to rush headlong toward an abyss, provided a few individuals are heading in that direction with sufficient determination.As a result of the crisis, some of these speculation funds have become even larger and more powerful, with a number of smaller competitors being forced out of the business. Customers tend to prefer investing their money with bigger players, believing this to be the safer choice. For example, the hedge fund headed by John Paulson, currently the world’s most successful speculator, has grown to roughly $30 billion in assets in the last two years. This enables Paulson to place bets of ever-increasing size. Paulson was largely unknown only a few years ago, until he bet a large sum of money on the collapse of the American mortgage market. Investment banks like Goldman Sachs created customized securities specially for Paulson that were based on subprime mortgages. They then sold the securities to investors who believed that their value was stable — and lost billions as a result. Paulson, on the other hand, profited. He earned close to $4 billion in 2007. Hedge funds often work hand-in-hand with investment banks, and banks often behave like hedge funds. The boundaries between the two kinds of institutions are fluid. Some critics already see Deutsche Bank, for example, as an enormous hedge fund rather than a normal bank. Deutsche Bank is the top global player in foreign currency trading, with a market share of 16 percent of the global trade in dollars, francs, yen and euros. This is a high-volume business that generates little in the way of profits. But the bank uses its knowledge of demand for the currencies to design complex and therefore lucrative hedging strategies for its customers, which also usually puts Deutsche Bank on the winning side of the equation. Italy Investigates Deutsche Bank Between April and June, Deutsche Bank’s investment banking profits declined by half, probably because it was simply too quiet in the market. During this time, Deutsche Bank reduced its holdings of government bonds from the ailing euro-zone countries of Portugal, Italy, Ireland, Greece and Spain by 70 percent. Because the bank is also the global leader in bond trading, its risk managers apparently heard the right signals. At the beginning of the year, Deutsche Bank still had €8 billion invested in Italian government bonds. Six months later — shortly before the crisis intensified dramatically — it only had €1 billion worth of Italian bonds. Italian politicians apparently did not see this as a coincidence, and the country’s financial regulator CONSOB is now investigating the matter. Deutsche Bank also managed to get out of Greek government bonds before the crash in that country. Now the bank is helping the Greeks restructure their government debt, in what is the ultimate capitulation of the state in the face of powerful investment banks. The traders at Deutsche Bank are apparently more clued into who holds Greece’s government bonds than the Greeks themselves. Investment banker Anshu Jain, the designated co-CEO of Deutsche Bank, is proud of the fact that he and his traders were responsible for 70 percent of the bank’s total profits in good years, and he remains optimistic for the future. As a consequence of the crisis, the bank is now required to maintain a larger capital reserve for its investment banking division. Nevertheless, Jain said at an analysts’ conference that he expects regulation will lead to a substantial concentration in the business. In the US at least, regulators have more or less prohibited banks from speculating on a large scale for their own accounts since the financial crisis. This so-called proprietary trading was potentially the biggest profit maker for banks, but it also came with the greatest amount of risk. Nevertheless, the business continues to thrive. The proprietary traders became free agents, sometimes with the banks’ investment capital. Now they work as hedge fund managers and, as a result, can now evade all supervision. Investment banks discovered the commodities markets some time ago, hiring traders to specifically focus on the once mundane business of trading in copper, wheat or pork bellies. Deutsche Bank expects a return on equity of 40 percent, which is higher than in any of its other divisions, for its growing trade in such products. Woolley, the former asset manager, is calling for a ban on such transactions. He argues that the financial markets are destroying the relationship between supply and demand, giving producers the wrong price signals and potentially triggering famines. ‘Market of All Markets’ Speculation has always existed in economic history, but never to such an extent as today. The deregulation of the markets and the rise of the financial industry began with the end of Bretton Woods. In 1944, a new system of fixed exchange rates was established at an international conference in the New Hampshire resort town, with the US government agreeing to exchange dollars for gold at any time. Some 40 years ago, on Aug. 15, 1971, then US President Richard Nixon ended the Bretton Woods monetary system. He needed more money that he could cover with gold to finance the Vietnam War. The global economy lost its anchor as a result. In 1972, foreign currency futures were established on the Chicago Board Options Exchange, making it possible for the first time to hedge against the risks associated with foreign currency transactions. This innovation paved the way for all manner of speculation. The financial market, as Berlin-based author Joseph Vogl writes, became “the market of all markets.” There were still many hurdles to be overcome, including legal regulations that prevented the market from unleashing its unrestrained forces. With generous donations to politicians and parties, as well as active lobbying by Wall Street executives, the financial industry was able to make its voice heard in Washington. Over time, the industry was able to rid itself of overly obstructive regulations. In fact, financial supervision was virtually eliminated. Politicians failed to control precisely that sector that is capable of unleashing more destructive force than almost any other industry. The kiss of death came in 1999, under then President Bill Clinton, when the Glass-Steagall Act was repealed. The law dictated a strict separation between commercial and investment banks. Eliminating this separation removed a major barrier and enabled institutions like Citigroup and Bank of America to grow into financial giants. Indeed, many banks became so large and powerful that they are now — to use the famous phrase — too big to fail, meaning that in a crisis they have to be bailed out to prevent their collapse. Many small banks and brokerage firms were swallowed up in the process. From then on, the biggest players set the tone. Wall Street to Washington The investment banks made a brilliant move in 2004. The European Union had threatened to limit the foreign transactions of major US investment banks if the United States did not tighten its own regulations. This prompted five investment bankers to travel to Washington to exert their influence on the SEC. They proposed that the SEC be given the power to take a closer look at their high-risk positions in the future, but only if, in return, the banks would be required to keep less of their own capital in reserve to offset the risks of their transactions. From then on, the banks were able to expand their business unchecked. The second part of the deal — the SEC’s supervision — was pursued far less energetically. The financial industry had managed to create a belief system which held that what’s good for Wall Street is good for society as a whole. As a result, the sector’s influence on the US economy continued to grow. Between 1973 and 1985, before deregulation began, profits in the US financial sector made up no more than 16 percent of the total profits of all US companies. This industry’s share of total profits increased to 30 percent in the 1990s, and in the last decade it even reached 41 percent. It was no surprise that the myth of efficient financial markets was accepted so uncritically in Washington, given the large number of political players who went there directly from Wall Street. One was the former Goldman Sachs CEO Henry Paulson, who became treasury secretary under then President George W. Bush in 2006. In 2008, he was called upon to manage the financial crisis, which he had played a hand in triggering in the first place. Simon Johnson, the former chief economist at the IMF, characterizes the direct involvement of financial players in the inner workings of the government as a “quiet coup.” The Nobel Prize-winning economist Joseph Stiglitz is also critical of the revolving door between Washington and Wall Street, saying that it leads to a shared worldview that, even despite the crisis, hinders effective reform of the financial system. Such an amalgamation of players is unthinkable in Germany, and yet even there was growing confidence in the power of free financial markets to increase prosperity. In 2004, the Social Democratic Party (SPD) and Green Party coalition government under then Chancellor Gerhard Schröder opened the German market to hedge funds and the expanded trade in speculative derivatives. Jörg Asmussen, who would later become a state secretary in the Finance Ministry, personally lobbied to permit trading in credit derivatives in Germany — the very securities that ultimately triggered the crisis. Then came the crash. Since then, the government has tried to rein in the forces it was partially responsible for unleashing. Asmussen was a member of a group of experts tasked to draft proposals for new regulations. German Chancellor Angela Merkel knows that there is more at stake than the stability of the economy and overcoming a temporary weakness. “This type of crisis cannot be allowed to repeat itself in the foreseeable future,” Merkel said, “otherwise it will be extremely difficult to guarantee political stability, and not only in Germany.” This, she added, is the real challenge, “that anyone who wants to do business in a stable country must be aware of.” Following the near-collapse of the markets, then-German President Horst Köhler characterized the financial markets as a “monster.” And there were plenty of good intentions when it came to taming this monster. “History cannot be allowed to repeat itself,” US President Barack Obama promised after the Lehman bankruptcy, while French President Sarkozy spoke of a historic opportunity to create a new world. Nothing More than Piecemeal Regulations In fact, the United States and Europe did attempt to constrain the monster that was the financial market. Governments can hardly be accused of not having made a serious effort in this direction, but the project they face is exceedingly difficult.Solo efforts by individual countries are pointless, because the industry is globally interconnected. On the other hand, internationally coordinated solutions are difficult. As a result, the regulations remain nothing more than piecemeal. For the financial industry, new regulations are often little more than a sportsmanlike challenge to search for new tricks with which to circumvent the rules. In their conflict with politicians and regulatory agencies, banks and hedge funds have a clear competitive advantage: They hire the brightest minds in the financial world and pay them millions. The public-sector regulators can hardly compete. Not surprisingly, politicians haven’t done much more than push around a lot of paper until now. The law with which President Obama intends to regulate the financial markets encompasses more than 800 pages. But the US government is only at the beginning of a long process, in which concrete regulations will be derived from the provisions of the new law. Both the Republicans and the banks’ lobbyists can exert their influence on this process to make sure that many of the new regulations are watered down. For instance, the law was intended to completely prohibit banks from engaging in proprietary trading, with which they speculate in the foreign currency, stock and commodities markets. But the legislation contains so many exceptions that business will continue to flourish, in some cases by simply outsourcing trading activities. The United States also wants to force hedge funds to disclose more information about their business. But even though the law doesn’t go into effect until next March, speculator Soros is already demonstrating how it can be circumvented. After buying out the outside investors in his hedge fund, he now intends to conduct business in the future as a so-called family-owned company. Funds that manage the assets of a family are not subject to the new disclosure rules. In Europe, the European Commission has developed a draft of new capital market rules, which includes 165 pages of guidelines and another 500 pages of regulations. Under the proposed rules, banks would be required to keep more capital resources in reserve to protect against risk, and they would only be allowed to borrow up to a certain ratio. These proposals make sense, but the financial industry is already two steps ahead. It has created a world in which the usual rules for exchanges and banks do not apply: the realm of the “shadow banks.” For bankers, this is by no means a world of illegal or semi-legal institutions, despite what the term implies. Hedge funds and private equity firms are known as shadow banks. In the United States, shadow banks have already incurred debts of more than $16 trillion, as compared with $13 trillion among commercial banks. Regulating ‘Shadow Banks’ Unlikely This poses a huge risk for the financial market. Jochen Sanio, head of Germany’s banking regulatory agency, believes it is highly likely that the next crisis will emanate from this largely unregulated realm of hedge funds and other financial players. Jens Weidmann, the president of the German central bank, the Bundesbank, also cautions against the dangers of shadow banks. But why are they not subject to the same rules as commercial banks? In this case, national egos are what stand in the way of comprehensive financial market reform. Britain, in particular, isn’t keen on keeping too close an eye on hedge funds, because the financial industry is one of the few remaining sectors in which the British are still competitive worldwide. An effective financial market reform would have to treat shadow banks the same way all other banks are treated. This would mean completely banning so-called short selling, which is essentially betting on falling prices. It would also have to improve licensing requirements on new financial instruments and ban some that already exist, because they are designed solely for speculative purposes. It would also involve establishing a number of other rules that would make doing business significantly more difficult for banks, hedge funds and private equity firms. All of these measures would rein in the financial market and put its importance for the economy into perspective. Banks would have to concentrate once again on the role they played prior to the great deregulation of the financial market, namely to organize payment transactions, manage the investments of private customers and companies and finance their business deals with loans. But that seems unlikely. There are too many contradictions and conflicts of interest between the countries involved and governments to allow such a massive change to occur. But the monster cannot be tamed with half-hearted reforms, which is why people who have been involved in the financial world for decades assume that it will strike again soon. When asked whether it is possible to make future crises unlikely, Hilmar Kopper, the former CEO of Deutsche Bank and current chairman of the supervisory board of HSH Nordbank, replies with a simple “no.” According to Kopper, more huge financial bubbles could happen in the future. “I’m frustrated,” says Kopper. “I don’t know how a government is supposed to regulate this.” DIETMAR HAWRANEK, ARMIN MAHLER, CHRISTOPH PAULY, MICHAELA SCHIESSL AND THOMAS SCHULZ Translated from the German by Christopher Sultan

RELATED SPIEGEL ONLINE LINKS:

© SPIEGEL ONLINE 2011 All Rights Reserved Reproduction only allowed with the permission of SPIEGELnet GmbH
>
Rocco Penn

Is there Really Just Gold in Fort Knox?

Posted By:  on September 6, 2011

0

Fort Knox Image

As you’ll see below, there’s an awful lot that goes into protecting our nation’s gold. Considering that it’s current value is around $270 billion, some speculate that there’s more than just gold inside. Some say there are…

  • Weapons and Defense Items: In case of nuclear or zombie attack (or both) there is no safer place in the world. Could there be secret weapons and a way to get the President and other important people down there in case DC is compromised?
  • Aliens: Whenever tinfoil hats come out, aliens have to be in the picture.
  • Lies: What if we already sold off all of our gold? The vault would be the perfect way to keep our economy from collapsing despite the lack of a gold standard.

Whatever you believe, one thing is certain: you’d have an easier time getting into the White House than you would getting into Fort Knox (and don’t try to get into the White House – it’s dangerous over there).

This infographic by CreditSesame breaks down the facts and speculations nicely. Click to enlarge.

Fort Knox

>

Is There Any Gold in Fort Knox?

Published 10/19/2011
Print This Article
Normal Text
Large Text
>

No Gold In Fort Knox!: In Case You Thought We Had Gold Reserves

Submitted by SteveMT on Mon, 02/09/2009 – 01:37

in

0votes

Is this common knowledge?
I just asked the question and here is the answer as well as another source. Is this a joke or the truth? We are up the creek if we have no gold reserves. Alternative hard currencies cannot be minted out of thin air! We need hard assets to mint a hard currency.
I need some answers from our PM gurus on the DP about this.
True or False?

How much gold is in Fort Knox?

Answer:

There is no gold at Fort Knox. When Ronald Regan was President he assigned a committee called the “Gold Committee” to investigate this matter. The results was staggering. There is no gold at Fort Knox. It is being held by the Federal Reserve Bank (which is privately owned by international bankers) as collateral for America’s debt. This explains why there has been no audits of Fort Knox. THE AMERICAN GOVERNMENT AND THE INTERNATIONAL BANKERS DO NOT WANT THE AMERICAN PUBLIC TO KNOW THIS. Do you know there was a time in American history when it was illegal to have gold coins? Did you know Americans were required to turn in their gold coins to the federal government for $20.00 an ounce? This gold was melted down and sold to foreign companies and countries for $35.00 an ounce while it was illegal for Americans to buy any gold from Fort Knox. This is and was the biggest robbery of monies ever from the American people.

http://wiki.answers.com/Q/How_much_gold_is_in_Fort_Knox&alre…

I was surprised to learn that the contents of Ft. Knox are actually an asset on the balance sheet of a privately owned corporation and banking entity. That’s right, the Fed owns the gold. The U.S. Treasury is holding the gold for the Fed, not necessarily for U.S. citizens. Both the Fed and the Treasury are on the line if the gold is gone. U.S. citizens will be the losers. The “faith and confidence” behind the global money we issue will.

http://www.investorsdailyedge.com/article.aspx?id=179

>
A new report prepared for Prime Minister Putin by the Federal Security Service (FSB) says that former International Monetary Fund (IMF) ChiefDominique Strauss-Kahn [photo with Putin top left] was charged and jailed in the US for sex crimes on May 14th after his discovery that all of the gold held in the United States Bullion Depository located at Fort Knox [photo 2nd left] was ‘missing and/or unaccounted’ for.According to this FSB secret report, Strauss-Kahn had become “increasingly concerned” earlier this month after the United States began “stalling” its pledged delivery to the IMF of 191.3 tons of gold agreed to under the Second Amendment of the Articles of Agreement signed by the Executive Board in April 1978 that were to be sold to fund what are called Special Drawing Rights (SDRs) as an alternative to what are called reserve currencies.This FSB report further states that upon Strauss-Kahn raising his concerns with American government officials close to President Obama he was ‘contacted’by ‘rogue elements’ within the Central Intelligence Agency (CIA) who provided him ‘firm evidence’ that all of the gold reported to be held by the US ‘was gone’.Upon Strauss-Kahn receiving the CIA evidence, this report continues, he made immediate arrangements to leave the US for Paris, but when contacted by agents working for France’s General Directorate for External Security (DGSE) that American authorities were seeking his capture he fled to New York City’s JFK airport following these agents directive not to take his cell-phone because US police could track his exact location.Once Strauss-Kahn was safely boarded on an Air France flight to Paris, however, this FSB report says he made a ‘fatal mistake’ by calling the hotel from a phone on the plane and asking them to forwarded the cell-phone he had been told to leave behind to his French residence, after which US agents were able to track and apprehend him.Within the past fortnight, this report continues, Strauss-Kahn reached out to his close friend and top Egyptian banker Mahmoud Abdel Salam Omar to retrieve from the US the evidence given to him by the CIA. Omar, however, and exactly like Strauss-Kahn before him, was charged yesterday by the US with a sex crime against a luxury hotel maid, a charge the FSB labels as ‘beyond belief’ due to Omar being 74-years-old and a devout Muslim.In an astounding move puzzling many in Moscow, Putin after reading this secret FSB report today ordered posted to the Kremlin’s official website a defense of Strauss-Khan becoming the first world leader to state that the former IMF chief was a victim of a US conspiracy. Putin further stated, “It’s hard for me to evaluate the hidden political motives but I cannot believe that it looks the way it was initially introduced. It doesn’t sit right in my head.”Interesting to note about all of these events is that one of the United States top Congressman, and 2012 Presidential candidate, Ron Paul [photo bottom left]has long stated his belief that the US government has lied about its gold reserves held at Fort Knox. So concerned had Congressman Paul become about the US government and the Federal Reserve hiding the truth about American gold reserves he put forward a bill in late 2010 to force an audit of them, but which was subsequently defeated by Obama regime forces.When directly asked by reporters if he believed there was no gold in Fort Knox or the Federal Reserve, Congressman Paul gave the incredible reply, “I think it is a possibility.”Also interesting to note is that barely 3 days after the arrest of Strauss-Kahn, Congressman Paul made a new call for the US to sell its gold reserves by stating, “Given the high price it is now, and the tremendous debt problem we now have, by all means, sell at the peak.”Bizarre reports emanating from the US for years, however, suggest there is no gold to sell, and as we can read as posted in 2009 on the ViewZone.Com news site:“In October of 2009 the Chinese received a shipment of gold bars. Gold is regularly exchanges between countries to pay debts and to settle the so-called balance of trade. Most gold is exchanged and stored in vaults under the supervision of a special organization based in London, the London Bullion Market Association (or LBMA). When the shipment was received, the Chinese government asked that special tests be performed to guarantee the purity and weight of the gold bars. In this test, four small holed are drilled into the gold bars and the metal is then analyzed.Officials were shocked to learn that the bars were fake. They contained cores of tungsten with only a outer coating of real gold. What’s more, these gold bars, containing serial numbers for tracking, originated in the US and had been stored in Fort Knox for years. There were reportedly between 5,600 to 5,700 bars, weighing 400 oz. each, in the shipment!”To the final fate of Strauss-Kahn it is not in our knowing, but new reports coming from the United States show his determination not to go down without a fight as he has hired what is described as a ‘crack team’ of former CIA spies, private investigators and media advisers to defend him.To the practical effects on the global economy should it be proved that the US, indeed, has been lying about its gold reserves, Russia’s Central Bank yesterday ordered the interest rate raised from 0.25 to 3.5 percent and Putin ordered the export ban on wheat and grain crops lifted by July 1st in a move designed to fill the Motherlands coffers with money that normally would have flowed to the US.

The American peoples ability to know the truth of these things, and as always, has been shouted out by their propaganda media organs leaving them in danger of not being prepared for the horrific economic collapse of their nation now believed will much sooner than later.

http://www.thetotalcollapse.com/russ…-gold-is-gone/

Wasn’t Assange also brought up on sex charges when they couldn’t nab him for anything else? Sounds like he found out something that someone higher up didn’t want to be found

>
I have been writing on the Fort Knox Gold Scandal since 1980. In fact, the Fort Knox missing gold story was what got me interested in monetary reform and led to “The MoneyMasters.”Here is the first time I published the story in a book, published in 1995, entitled, “On the Horns of the Beast: The Federal Reserve and the New World Order.” (no longer in print)
(Has the Fort Knox Gold been moved ?)The non-existent “good-delivery” gold reserves in Fort Knox is a huge story that has yet to come to fruition, but one day it will. That day will be when the U.S. is forced onto a gold standard, then suddenly discovers that it owns no good-delivery gold. That which was shown to the press on Sept. 23, 1974 was reportedly too orange in color to be pure gold. This was undoubtedly the remaining “coin melt” from FDR’s calling in of gold coins. Coin melt is typically 90% or less. The orange color indicates a high copper content.The bottom line is there is probably ZERO “good-delivery” gold (.995) in Fort Knox. Just as with other issues in this day, U.S. Treasury could completely embarrass us critics any day of the week by throwing the doors open to the press and showing mountains of good-delivery gold being assayed. An annual physical audit of U.S. gold reserves is required by law. However, the last time one was done was 1957.Unfortunately, the photos and illustrations did not paste in. Perhaps someone could help me with this technical problem.OOPS. Did you know there is a character limit for insertions of 66,000 characters. For Chapter 20. See:http://z6.invisionfree.com/Bill_Still_Refo…hp?showtopic=29CHAPTER 19 – DRAINING FORT KNOXThe world was now divided in twain — communist command economies on the one hand, versus monopoly capitalists on the other, set to fight it out in one perpetual and highly profitable arms race. It was finally time for the central bankers to embark in earnest on their three-step plan to enslave the economic systems of the entire world and finally bring about their global government, or New World Order. The phases of this plan were:
• Step One: centralize world gold (1962-1992).
• Step Two: create a massive – though gradual — global depression.
• Step Three: offer the starving billions a solution — a global currency based on gold, which central bankers have conveniently monopolized.Today, we are poised on the verge of Step Two, a massive, though gradual worldwide economic collapse. One interesting indicator might be that President Clinton recently proposed the repeal of the Glass-Seigel Act of 1933. This bill was passed after the Crash of ’29, to prevent banks from owning investment houses or vice-versa. If Mr. Clinton is successful, this will surely drive the speculative stock market wild, a development which can only end in a crash of titanic proportions — a crash which would certainly drag the rest of the world down, too.
Let me hasten to say that there may be many other ways to achieve this collapse. The recent Mexican peso crisis is but a mere symptom of international financial instability. The situation there will get worse yet. That’s certain.For those who do not believe that events around us are being orchestrated, consider the wealth of evidence that shows how very effective the world’s central bankers have been at implementing the first step of their plan — centralizing world gold in Fort Knox, then moving it abroad into the hands of private speculators.The Biggest Gold Treasure In HistoryMost Americans think that Fort Knox is still packed with an immense quantity of gold bullion — the treasure of the United States. They’re wrong. It is true that at the end of World War II, Fort Knox contained the largest gold hoard in the history of the world, King Solomon included. Total U.S. gold reserves exceeded 26,000 Metric tons — 701.8 million ounces — a mammoth 69.9% of the world’s supply.But today, the General Accounting Office admits that only 24 million ounces of pure gold — 909 tons — remain in the U.S. Reserve. That’s less than 3.5% of U.S. holdings in 1949. But that’s not the worst of it. There may be even less, and what is left may be of very low purity. We don’t know for certain, because despite Federal law that requires an annual audit of U.S. gold reserves, the Treasury has consistently refused to conduct one. The truth is that an independent audit of U.S. gold reserves has not been done since President Eisenhower ordered the last one in 1953!
How could this have happened? Where is our gold? Who took it?

The Eisenhower Years

Only hours after Republican Dwight Eisenhower was sworn in as President in January of 1953, he ordered an audit of the nation’s gold reserves. After 20 years of governing by Democrats, many Americans wanted to be certain that those responsible for overseeing America’s gold reserves had taken proper care of it.

Despite the passage of nearly 40 years, it is still not clear exactly how much of the nation’s gold supply was audited in 1953. The Treasury’s current estimate is that only 5% was audited. However, the former commanding general of Fort Knox, Lt. General John L. Ryan, Jr., claims that a full 100% physical inventory was performed.

The entire audit took only seven days, and was completed on January 27, 1953. Eleven weeks later, an April 12, 1953 press release from the Treasury Department stated that:
“Approximately 9,000 bars… were weighed on special balance scales of high sensitivity … and again the results were in exact agreement with the records.

“As a final step of the verification process the Fort Knox Special Settlement Committee had test assays made of 26 gold bars selected at random…. The results of the assays indicated that all gold tested was of a fineness equal to that appearing in the mint records and stamped on the particular bars tested. Gold samples used for the test assays were obtained by drilling from both the top and the bottom of representative gold bars.”

Despite critics at the time worrying that this was merely a representative audit, not a complete one, it was the last time any form of reliable audit was done.

The Gold Drain Begins

As we mentioned earlier, on April 5, 1933, Roosevelt ordered all Americans to sell their gold coins to the government for only $20.67 per ounce. Less than a year later, on January 31, 1934, he raised the price of gold to $35 per ounce. Since the world market price for gold was still about $20 per ounce, foreign investors flocked to sell the U.S. their gold at the inflated price and gold literally flowed to the U.S.

Since then, every world currency has been defined against the dollar, and the dollar has been defined as worth 1/35th ounce of gold. But as the Federal Reserve continued to inflate the currency by printing more and more dollars, gold’s actual value rose far beyond the $35/ounce price the U.S. government charged foreign buyers to purchase it. When gold became scarcer around the world, its price began to rise. As monetary historian Christopher Weber put it:

“For 40 years, despite a massive inflation of paper dollars created out of thin air by the Federal Reserve, the U.S. government stubbornly insisted that an ounce of gold was worth $35.” 464
For example, in 1949, the U.S. gold supply stood at 701,800,000 ounces of what the government calls “fine troy ounces.” As we’ll show in the next chapter, the government has a rather flexible definition of “fine.” Actually, we now know that approximately 239,500,000 ounces of this 1949 supply was comprised of the melted gold coins surrendered by American citizens, known as “coin gold.”
But the government conveniently lumped all gold together at that time to make it look like it was worth more than it really was.

This deception has fooled a lot of well-intentioned Americans trying to get to the bottom of what happened to America’s gold. For example, Congressman William E. Dannemeyer wrote in the forward of Christopher Weber’s book, Good As Gold: How We Lost Our Gold Reserves And Destroyed the Dollar:

“The author chronicles the stupidity, if not the malfeasance, of government leaders and bureaucrats in allowing the depletion of U.S. gold reserves from a high of 701.8 million ounces in 1949 to 291.6 million ounces in 1971 — a loss of 58.6% (it currently hovers around 262 million ounces).”

The average person would say, “Gee, why didn’t they take it all? It couldn’t have been much of a conspiracy?” Well, they did get it all — or at least the vast majority of it! What Dannemeyer didn’t realize when the book was published in 1988, was that of the 291.6 million ounces he quotes, 239.5 million of these ounces is coin gold of dubious purity. This coin gold is probably all that is left in Fort Knox today. The last time any private citizens saw any of the Fort Knox gold was 1974 and they reported it looked unusually orange in color, not golden. This would be typical of the high copper content of coin gold.

So, America actually had only 52.1 million ounces of pure gold left in 1971, and 22.5 million ounces today. Of the 701.8 million ounces in 1949, only 462.3 million ounces were pure gold. Today, that has been reduced (by the government’s own admission) to only 22.5 million ounces, or 4.86% of the 1949 total. In other words, 95% of the pure gold is gone!

What’s even more outrageous about all this is that the government has steadfastly refused to allow a reliable, independent audit of U.S. gold reserves.

In any case, let’s pretend — just like the government has done for many years — that we had 701,800,000 ounces of good-delivery gold of .999 purity or better, which is the only form acceptable in international trade. If you multiply that times the government price for gold, $35/oz., you get a figure of $24.5 billion. That’s what our gold was worth in 1949 (according to the government). In that year, we had $25.05 billion worth of Federal Reserve notes in circulation. So the books looked like they were balanced … almost, anyway. We had one dollar in gold for every paper dollar in circulation. Never mind that American citizens had five times that amount in savings and checking account balances. Let’s maintain the fiction that in 1949, a paper dollar was backed by one dollar’s worth of gold in the U.S. gold reserve. But let’s see how that changed. Here is a graph of the amount of currency compared to the value of U.S. gold holdings as the years went by.

As the amount of gold declined, the number of paper dollars was steadily increasing. In other words, after 1949, the dollar was no longer as good as gold. By 1961, we had nearly twice as many dollars as we had gold to back them. Compounding this inflation was the fact that by 1961, American citizens had 7.5 times as much in savings and checking accounts as there was in currency. Anyone could see that the gold-backed dollar was dead — an economic fiction. The only question is, why was this fiction sustained for another ten years — until 1971?

Throughout the Eisenhower administration, from 1953 to 1961, the price of gold was kept artificially low at $35 per ounce. During this time, 155,600,000 ounces of gold was sold to foreign investors — over 1/3 of the total in U.S. reserves. Remember, it was still illegal for Americans to buy U.S. gold. Violators of this federal law faced a $10,000 fine and ten years in jail. Doesn’t it seem crazy to you that Americans could be thrown in jail just for trying to buy back their gold from the U.S. Treasury? This question begs for a common-sense answer.

The answer is that big American investors would certainly have bought up all the gold at such a cheap price — $35/oz. No, the government intended U.S. gold to be sold to foreigners, only! Most law-abiding Americans wouldn’t risk tarnishing their good names with a prison sentence just to buy some gold. But some did. Through a legal loophole, Americans could buy U.S. gold if they kept it abroad.

Eventually, Eisenhower closed this loophole too, not by means of a law passed by Congress, but by executive order.466 After that, no U.S. citizens could legally buy U.S. gold, even if they kept it offshore. But, that didn’t stop some Americans from doing it anyway. Financial expert Christopher Weber told of one such incident:

“In the early 1960s, I myself heard about an elderly friend of my family who was heiress to a large fortune. She was convinced both that the U.S. was making a mistake in selling off its gold and that Communists and international bankers… were getting our gold. So she decided to buy up as much gold as she could herself to prevent at least some of it from falling into the ‘wrong hands.’ This was easy for her, as she spent part of the year in Switzerland anyway. Not only was she never caught, she lived to see her holdings soar in value twenty-fold when gold reached $800 per ounce in 1980, and used her gains to support the causes she believed in.”

Kennedy and the London Gold Pool

When President Kennedy took office in 1961, gold was flying out of the U.S. In one year, 1958, a record 65 million ounces — 2,708 tons — went to overseas speculators. In 1959, another 30.7 million ounces were sold, and in 1960, another 48.7 million ounces left the country. In the last three years of the Eisenhower Administration, over 6,000 tons was sold — 35% of all the good-delivery gold that remained in the U.S. Treasury — all for 1/10 the price it would soar to a decade later.

The gold stampede was on. So great was the buying pressure, that despite three years of unprecedented gold sales, the market price of gold was as much as 10% higher than the artificially-set $35/oz. price charged foreigners by the U.S. government.468 Instead of doubling the price, which would have stemmed the flow of America’s gold overseas, what did Kennedy do? Two weeks after taking office, he announced that he would dump even more gold on the market to try to bring the world gold price back down to $35/oz.!

Although Kennedy’s “solution” slowed the flow somewhat while he was alive, it only accelerated the flow after he was gone. The dollar should have been cut loose from gold right then and there. But no, the world’s gold that had first been consolidated in Fort Knox, was now going to be moved to London come hell or high water, just as the head of the Federal Reserve and the head of the Bank of England had planned nearly 40 years earlier. Kennedy’s plan — in the best of lights — was only seen by the central bankers as a minor delay.

In a February 6, 1961 message to Congress concerning the gold outflow, Kennedy tried to reassure foreigners that the dollar was still “as good as gold.”

“The loss of gold is naturally important to us… (the) growth in foreign dollar holdings (has) placed upon the United States a special responsibility — that of maintaining the dollar as the principal reserve currency of the free world. This required that the dollar be considered by many countries to be as good as gold….

“Those who hope for speculative reasons for an increase in the price of gold will find their hopes in vain.”

As Weber commented:

“The reality was that, due to price inflation, someday the dollar would have to be devalued, that is, the official gold price increased. By defending an indefensibly high dollar value, by dumping gold, Kennedy set the scene for the policy that would rob the U.S. of almost half her official gold from 1961 to 1972 ….”

But even Weber didn’t understand how bad the situation really was when he wrote about it in 1988. In reality, 95% of U.S. good-delivery gold was eventually lost.

Kennedy reiterated the Eisenhower policy that no American could own gold even if they kept it offshore:

“The recent Executive Order forbidding the holding of gold abroad by Americans will be maintained…. It will help prevent speculation in the gold market. I am directing the Secretary of the Treasury to keep me advised on steps being taken for effective enforcement. I place everyone on notice that those few American citizens who are tempted to speculate against the dollar will not profit in this manner.”

Weber explained that:

“This law was unenforceable. Private Americans acting through Swiss bank accounts, for instance, could and certainly did continue to buy gold, almost certainly some of it from Fort Knox.”

Of course, the effect of this was that only the very wealthiest Americans could hope to buy and hold gold this way. So, the end result of Roosevelt’s confiscation of privately held gold was that it was taken from the lower and middle classes and consolidated in the hands of the richest people in the U.S. and abroad.

Kennedy’s speech on gold did have an effect on world markets. Gold’s price dropped from $41/oz back to $35/oz. Also, the world’s central banks pledged to stop buying gold and start selling their own gold reserves to maintain that price. In October 1961, this agreement became institutionalized with the formation of the London Gold Pool. The U.S. agreed to put up half the gold and seven other nations (France, Belgium, Italy, Germany, Holland, Switzerland and the U.K.) would put up the other half. The gold was physically removed from their central banks and sent to guess where? The Bank of England in London.

The Total Kennedy Drain

How did that affect the drain from Fort Knox? It slowed the flow somewhat, but the U.S. was still bleeding gold at a deadly rate. In 1961, gold sales were cut in half to 24.5 million ounces. In 1962, another 24.5 million ounces flowed overseas. Then a real crackdown brought the gold drain down to only 13.2 million ounces in 1963, the last year of Kennedy’s life. Total gold sales during the 34 months of the Kennedy administration; 63.1 million ounces, 2,629 tons — an additional 23.4% of what remained. Not exactly an enviable record.

During the next three years of the Johnson administration, the slide continued at almost exactly the same rate, with an additional 67.5 million ounces being sold through 1966. Then in the last two years of his administration, 1967 and 1968, an additional 66.9 million ounces went out the door. All told, in the eleven years between 1958 and 1969, 338.3 million ounces (14,096 tons) of good-delivery gold — 81.8% of U.S. holdings — was sold at $35/ounce to foreign speculators. At the start of 1969, U.S. good-delivery gold reserves stood at only 71.7 million ounces, less than 3,000 tons. Since then, it has dropped still further to only 24.4 million ounces, a mere 1,017 tons. Remember, we started out with 29,242 tons! Today, organized crime syndicates have far more good-delivery gold than the U.S. Treasury. They have attempted to sell as much as a 2,000-ton block of gold on the black market, as we will show later.

To the average American, in 1961, there was nothing wrong with the idea of strengthening the dollar. The concept sounded good. That’s why those who were aware of the formation of the London Gold Pool, didn’t bat an eye. In short, no one complained. To most people, it all seemed too complicated for the average person to understand. What few Americans realized was that the dollar was being “defended” by a policy so disastrous it could arguably be called treasonous. The vast American hoard of gold bullion from Fort Knox, was about to be shipped to London to be sold for $35 per ounce to anonymous European speculators — some of them, as we’ll see in the next chapter, fronting for major American corporations.

Did these speculators know in advance that once the gold was depleted, the price of the metal would skyrocket? It is logical to assume that they did, of course. American government officials must have known this as well. Vast fortunes were about to be made from American gold. Once the gold reserves of Fort Knox were depleted, the price would soar to over $800/oz., before settling at around $400.

One economics expert saw the danger of our nation’s vanishing gold supply and spoke out during this period. That man was monetary scientist John Exter. In a May 1962 address he warned solemnly:

“Our monetary laws, as presently established, make it easy for our enemies to drain off — directly or indirectly — billions [of dollars worth] of our gold and to use it not only to bulwark their own economies, but mainly to undermine our free way of living and to harm us in every possible way….

“As things stand now, speculators, including Americans, who are prohibited by law to acquire our own gold, are purchasing and hoarding substantial quantities of gold in world markets, such as in London….”

The Kennedy “Warning”

Could it be that just ten days before his death, President Kennedy suddenly saw the light? It has long been rumored that in the Fall of 1963, Kennedy signed Executive Order 11110, authorizing the U.S. Treasury to resume the printing of U.S. Notes — debt-free money, just like Lincoln’s greenbacks. And then, on November 12, 1963, just ten days before his assassination, he is rumored to have made this statement in a speech at Columbia University:

“The high office of the President has been used to foment a plot to destroy America’s freedom and before I leave office, I must inform the citizens of their plight.”

This rumor is so persistent and widespread that no work on the Fed could be considered complete without mentioning it. However, as it turns out, Executive Order 11110 mentions only transfer of the authority to issue more silver certificates from the President to the Secretary of Treasury. Besides, Kennedy was an internationalist. Issuing U.S. Notes would be the worst thing any President could do against the moneychangers.

In addition, no one has been able to verify the existence of the Columbia speech. G. Edward Griffin contacted the Columbia University to provide a transcript, but none was available. In fact, he was told that Kennedy had never spoken there. According to the Head Librarian at the Kennedy Library in Boston, Ronald E. Whealan:

“Ten days prior to the assassination [Kennedy] was at the White House meeting with … the ambassador to the U.S. from Portugal.”

It will be left to future researchers to determine whether this speech was ever made or not.

1968-1971: The Final Collapse: Nixon Closes the Gold Window

In 1966, the Bank of France broke away from the pack and started purchasing Fort Knox gold again at $35/oz. In fact, during that year alone, they purchased 17.2 million ounces of gold, at a cost of $601 million. This brought their holdings up to 150 million ounces. Since the U.S. had been purchasing gold from Canada that year, the total loss to the U.S. gold supply was only 16.3 million ounces. But the next year, 1967, the U.S. lost 33.4 million ounces.

From the last graph, you can see that the U.S. was getting dangerously close to running out of good-delivery gold. What could they do? They could go to Fort Knox and re-melt the coin gold bars and remove the copper, but that might raise questions and draw attention to what was really going on. Besides, there was a considerable body of legal opinion that Roosevelt’s coin-gold seizures were unconstitutional. No one knows whether or not the coin gold was melded down, since no reliable audit has been performed at least since 1953!

In theory, Federal Reserve notes still required a 25% backing in gold bullion. Even by the government’s most optimistic estimates, the U.S. was running up against that wall as well. As Christopher Weber put it:

“By early 1968 the U.S. faced a choice: Either eliminate the legal requirement that there be a 25% gold ‘cover’ for the domestic money supply, or soon have no more gold left to ‘defend’ the dollar.

“The decision came as no surprise: The 25% requirement was repealed, with almost no debate, in March 1968.”

President Johnson then announced that all U.S. gold would be disposable for “international purposes.” If we had only known then what he meant by “international purposes” — namely to make international bankers and others in their inner circle very, very rich.

Once 95% of the .999 fine gold had been removed from Fort Knox and sent abroad, President Nixon closed the gold window in 1971 by signing public law 93-110 repealing the Gold Reserve Act of 1934. Gold prices soared. Americans were finally free to buy and own the magic and forbidden metal once again. Americans had been forced to sell their gold to the government for $20.66 per ounce, then spend 37 years watching the government sell it for $35 per ounce to foreigners. Now that most of it was gone, Americans were allowed to purchase back their gold at the going rate of $150 per ounce.

What a deal! What a country! What a scam!

By April 1978, gold’s price had risen to $226.37 per ounce. By mid-January 1980 gold was sold at a record high of $880. Since then the price of gold has slowly declined to around $400 per ounce.

World Gold Drained

But it doesn’t stop with Fort Knox. Apparently gold not only flowed out of the U.S., but from the central banking houses of almost every nation since 1965. Virtually every nation has been dumping gold. Here are the top nine holders of gold bullion in the world today. Notice the International Monetary Fund (IMF), an affiliate of the United Nations, is the largest known holder of gold bullion today (all holdings in short tons = 2,000 lbs = 24,000 troy ounces).

World Gold Holdings – 1995

Entity 1965 holdings477 1991 holdings478 Net gain/loss % change
IMF 2,225 3,539 +1,314 +59.1
Germany 5,403 (1968) 3,256 -2,147 -39.7
Switzerland 3,621 2,849 -772 -21.3
France 6,236 (1966) 2,801 -3,435 -55.1
Italy 2,862 2,281 -581 -20.3
Netherlands 2,090 1,504 -586 -28.0
U.S.A. 8,438 1,017* -7,421 -87.9
Japan 390 754 +364 +93.3
U.K. 2,696 588 -2,108 -78.2
Totals 33,961 18,589 15,372 -45.3
*This report lists U.S. holdings at 8,961 tons, but this includes “coin gold” still held in Fort Knox, which in 1975 was stated to be 9,983 tons. Today, the U.S. government still claims only 1,017 tons of good-delivery gold to be in store. In truth is that until a reliable audit is performed, American gold holdings are unknown.

In other words, the only winners were the International Monetary Fund (IMF) and Japan. The big losers were the U.S., Great Britain, France and Germany. During the 26 years from 1965 to 1991, in these selected countries alone, 17,049 short tons of gold bullion moved into private hands. If the American drain of the previous 15 years were added in, that would come to a staggering 27,882 tons. The total amount of government-owned gold in the world, as estimated by the Federal Reserve Bulletin in 1973 was only 49,024 tons! In other words, in only 25 years, over half the world’s gold moved either into private hands or into the Soviet Union where reserves were kept secret. But the vast majority of this gold changed hands in just seven years, between 1965 and 1971 (see Appendix I). Then, the price of gold began to skyrocket.

The International Monetary Fund

Just what is the IMF, anyway? In 1944, the World Bank and the International Monetary Fund (IMF) were created at the post-WWII Bretton Woods Conference. The stated purposes of the IMF were to stabilize currency exchange rates, and to assist member nations with temporary balance-of-payments difficulties. In fact, the IMF was the long-dreamed international Federal Reserve System, designed to centralize the monetary power of the entire world in a single entity. Interestingly, the author of much of the Bretton Woods agreements was none other than the British socialist economist John Maynard Keynes.

There were 143 member nations in the IMF in the early 1980s. Most of the Communist countries, including the Soviet Union, did not join; and, of the Western nations, Switzerland has never chosen to participate. Member governments contribute to the operating funds of the IMF according to the volume of the size of their economies. Part of the contribution is in gold, the remainder in the nation’s own currency. A nation may borrow funds against the gold portion of its contribution if it encounters financial difficulties due to an unfavorable balance-of-payments situation. This is why IMF gold reserves swelled during the 1965-72 period.

Keynes knew he had to move carefully to not alarm the major nations as he lured them into the central bankers’ trap. Although he hated the idea of gold-backed currencies because it gave nations a degree of financial independence, he knew the only way he could convince them to join was to use gold backing for the IMF initially. As Keynes explained it:

“I felt that the leading central banks would never voluntarily relinquish the then existing forms of the gold standard; and I did not desire a catastrophe sufficiently violent to shake them off involuntarily. The only practical hope lay, therefore, in a gradual evolution in the forms of a managed world currency, taking the existing gold standard as a starting point.”

What an astounding admission! Here we have the architect of our present-day international monetary system admitting that he used gold backing for the IMF as merely a ruse to convince nations to join up, but then planned to remove them later on so their economies could be “managed” by experts like himself!

According to a report by the IMF, total world gold stands at 118,295 tons. Of that, 78,864 tons of gold is now in private hands.480 In other words, 66.7% of the world’s gold is held in private hands today. With gold so powerfully consolidated outside of national treasuries, a gold-based currency would be a recipe for private ownership of a national economy by a small clique of the world’s wealthiest people.

The European ECU

Notice from the preceding table that after 1973, the largest known holders of gold bullion were the Europeans. Not counting whatever is still in Fort Knox in the way of coin gold, the U.S. is only the seventh-largest holder of gold today.

There is speculation that this hoard of European gold bullion will be used to back the new European currency, the ECU, which will be in usage in the last half of the 1990s. It has been suggested that gold backing for the ECU was the only way Germany — the largest owner of gold today — could be convinced to go along with the new European central bank and its plan for a universal European currency.

It is also believed that it was for her opposition to ECU that Margaret Thatcher lost her job as British Prime Minister, to be replaced by the former Chancellor of the Exchequer, (the British version of America’s Secretary of the Treasury) John Major. Should gold backing for the ECU come about, it would instantly become the strongest currency in the world, being the only major currency backed by gold. But keep in mind; though a gold-backed ECU would be strong, twice as much gold is in the hands of private speculators.

Missing Soviet Gold

No one knows how much gold bullion was in the possession of the Soviet Union before its fragmentation in August 1991. But the general belief in American intelligence circles was that the Soviet Union had amassed the biggest stockpile of any nation at that time. The Soviet Union had the second-highest production rate of gold in the world — about 375 short tons a year, second only to South Africa — that produces about 937 tons/year. Incidentally, total American production is about 46 tons, while Canada produces nearly 72 tons/year.

It is suspected that the Soviets were heavy buyers of Fort Knox gold at the $35/oz. price, and from the dismal record of American aid to our supposed enemies, the Soviet communists, this may well have been true. In any case, shortly after the Yeltsin coup in August, 1991, I heard through friends in the intelligence community who knew of my interest in the disposition of Fort Knox gold that all the Soviet’s gold suddenly disappeared.

This was later confirmed by Claire Sterling in her highly-respected book on the Russian mafia, Thieves’ World. Sterling reports that on January 28, 1991, a Russian mafia leader named Roberto Coppola, telephoned an associate in the Italian Mafia, identified in court documents only as “G” and made him an incredible offer.

[Coppola] informs him that the Russian embassy is selling two thousand tons of gold, and there would be a 1% profit. He asks G. if he has the possibility of buying any. G says yes, and they agree to phone each other the next morning.”

Author Sterling is astounded.

“Two thousand tons of gold was worth $22 billion — more than the entire package of international aid for the Soviet Union proposed at a G-7 summit that autumn. Such quantities could hardly have hit the meticulously regulated world market without causing total disruption. Nor was so much likely to have been amassed abroad, still less sold, all at once. Nevertheless, a ‘package’ worth $12 billion was said to have moved out of the U.S.S.R. by the spring of 1991, ‘bypassing normal export channels,’ reported the Manchester Guardian.”

At a subsequent September meeting of the G-7 in Bangkok after the Yeltsin coup in August, Soviet economist Grigori Yavlinski told leaders that his country’s gold reserves were down to 240 tons. As Sterling put it:

“In November, Western analysts were shocked to learn that all the reserves of the Soviet Central Bank were missing. ‘Not a gram of gold remains; the vaults are empty,’ said Gosbank director Viktor Geraschenko.

As Sterling commented:

“The mystery of the missing gold still haunts investigators in and out of Russia; none of it has ever been recovered.”

Private Swiss banking contacts have confirmed to this author that much of the Soviet gold was flown out of the country just before the Yeltsin takeover and now resides in the Swiss gold vaults under Kloten Airport near Zurich.

Kloten airport comes up again in Thieves’ World. Claire Sterling reprints a cable from Leo E. Wanta head of an American firm, New Republic/USA Financial Group, Ltd., announcing the sale of 2,000 metric tons (2,200 short tons) of gold bullion.

Mr. Wanta, according to Sterling, is well known to the U.S. Secret Service “where files on him are a yard long.” He was convicted in Switzerland of money laundering and has subsequently been involved in a variety of Russian ruble scams. Whether or not this is the same block of gold is unknown. The cable indicates that the gold was stored at Kloten, and was being offered at 3% less than the London fix, indicating the owners wanted few questions asked about its origin.

1,000 Tons of Gold For Sale On the Black Market

Other large blocks of gold of dubious origin are out for sale. In July of 1979, a mysterious figure, said to have one foot in the intelligence community and the other in the underworld, John Philip Nichols, offered a remarkably huge lot of .999 gold bullion to a group of unnamed investors at a substantially reduced price, in other words on the black market. Here is a copy of one page of his telegram (see next page):

Interestingly, Nichols refers to himself as “Ali-JVF Goldfinger 007.” Ian Fleming, the author of the popular James Bond novel, Goldfinger, was head of the British counterintelligence service, MI-5. It is widely believed in the intelligence community that he wrote much of his fiction as a forewarning, as many authors of fiction do.

If the removal of all the “good delivery” gold from Fort Knox can be viewed as a deliberate raid on the U.S. Treasury, then such an operation might well have been years in the planning — namely 40 years — certainly time enough for Fleming to get wind of it and try to reveal it fictionally. Regardless of that, obviously, John Philip Nichols was serving as the sales agent for several different persons, offering several different lots of illicitly acquired gold. How can we be sure it was illicitly acquired? Because it was being offered for sale at $3 below the London fix.

Danny Casolaro

It is interesting to note that after Washington, D.C. crime reporter Danny Casolaro was found dead under suspicious circumstances in a West Virginia motel room on August 10, 1991, it was discovered that the last area of investigation he was involved in was the gold shipment mentioned in the above telegram. Investigative reporter Don Devereux of Phoenix, Arizona said he was contacted by Casolaro several times in the last two weeks of his life and Casolaro was apparently very interested in the “5-ounce wafers” of gold mentioned on page 2 of the Nichols telegram (not shown).

These wafers may be what are known in Asia as “tolo bars,” a typically Asian form of gold bullion. Devereux had been investigating a smuggling operation by Phoenix, Arizona organized crime bosses designed to import stolen gold from Asia. Devereux had barely survived an assassination attempt during his investigation. Another individual, unrelated to the investigation was gunned down execution-style in the parking lot where Devereux usually parked his vehicle, in a car nearly identical to Devereux’s.

Casolaro’s death was ruled a suicide and his body quickly embalmed before any autopsy could be performed, or even before any notification of next-of-kin, in violation of State law. His family still believes he was murdered because he knew too much.

What’s Going On?

It appears that someone out there likes gold — a lot. I’ve run across numerous other reports of national gold stockpiles mysteriously depleted or missing. Sometimes “suicides” of key officials are involved. Frequently these involve victims leaping from atop tall buildings to their deaths. Unfortunately, what I’ve described above is all I’ve been able to substantiate well enough to include and footnote. Perhaps the publication of this book will bring new information to light.
It’s clear that gold is being consolidated generally in Europe, particularly in London, Frankfurt, Paris and Zurich, but other reputable sources claim the same thing is happening in the Netherlands as well. In any case, the suspicion is that a gold-backed European currency could soon make a debut, and if so, it would quickly replace the importance of the dollar and deal a severe blow to the U.S. economy.

Probably America’s best strategy would be to withdraw the power to create money from the Federal Reserve, put it back into the hands of Congress where it belongs, then print debt free money in proper proportion to the needs of the national economic health. This would instantly put America’s economy on a firm financial foundation and thereby begin to attract gold back into the nation’s treasury. This book does not recommend a gold-based currency, but a rather a currency based upon a flexible strategy with as much gold in reserve as possible.

For Chapter 20 see:
http://z6.invisionfree.com/Bill_Still_Refo…hp?showtopic=29

>

>

The 1318 transnational corporations that form the core of the economy. Superconnected companies are red, very connected companies are yellow. The size of the dot represents revenue (Image: PLoS One)

Full size image

The 1318 transnational corporations that form the core of the economy. Superconnected companies are red, very connected companies are yellow. The size of the dot represents revenue (Image: PLoS One)

Revealed – the capitalist network

that runs the world

AS PROTESTS against financial power sweep the world this week, science may have confirmed the protesters’ worst fears. An analysis of the relationships between 43,000 transnational corporations has identified a relatively small group of companies, mainly banks, with disproportionate power over the global economy.

The study’s assumptions have attracted some criticism, but complex systems analysts contacted by New Scientist say it is a unique effort to untangle control in the global economy. Pushing the analysis further, they say, could help to identify ways of making global capitalism more stable.

The idea that a few bankers control a large chunk of the global economy might not seem like news to New York’s Occupy Wall Street movement and protesters elsewhere (see photo). But the study, by a trio of complex systems theorists at the Swiss Federal Institute of Technology in Zurich, is the first to go beyond ideology to empirically identify such a network of power. It combines the mathematics long used to model natural systems with comprehensive corporate data to map ownership among the world’s transnational corporations (TNCs).

“Reality is so complex, we must move away from dogma, whether it’s conspiracy theories or free-market,” says James Glattfelder. “Our analysis is reality-based.”

Previous studies have found that a few TNCs own large chunks of the world’s economy, but they included only a limited number of companies and omitted indirect ownerships, so could not say how this affected the global economy – whether it made it more or less stable, for instance.

The Zurich team can. From Orbis 2007, a database listing 37 million companies and investors worldwide, they pulled out all 43,060 TNCs and the share ownerships linking them. Then they constructed a model of which companies controlled others through shareholding networks, coupled with each company’s operating revenues, to map the structure of economic power.

The work, to be published in PloS One, revealed a core of 1318 companies with interlocking ownerships (see image). Each of the 1318 had ties to two or more other companies, and on average they were connected to 20. What’s more, although they represented 20 per cent of global operating revenues, the 1318 appeared to collectively own through their shares the majority of the world’s large blue chip and manufacturing firms – the “real” economy – representing a further 60 per cent of global revenues.

When the team further untangled the web of ownership, it found much of it tracked back to a “super-entity” of 147 even more tightly knit companies – all of their ownership was held by other members of the super-entity – that controlled 40 per cent of the total wealth in the network. “In effect, less than 1 per cent of the companies were able to control 40 per cent of the entire network,” says Glattfelder. Most were financial institutions. The top 20 included Barclays Bank, JPMorgan Chase & Co, and The Goldman Sachs Group.

John Driffill of the University of London, a macroeconomics expert, says the value of the analysis is not just to see if a small number of people controls the global economy, but rather its insights into economic stability.

Concentration of power is not good or bad in itself, says the Zurich team, but the core’s tight interconnections could be. As the world learned in 2008, such networks are unstable. “If one [company] suffers distress,” says Glattfelder, “this propagates.”

“It’s disconcerting to see how connected things really are,” agrees George Sugihara of the Scripps Institution of Oceanography in La Jolla, California, a complex systems expert who has advised Deutsche Bank.

Yaneer Bar-Yam, head of the New England Complex Systems Institute (NECSI), warns that the analysis assumes ownership equates to control, which is not always true. Most company shares are held by fund managers who may or may not control what the companies they part-own actually do. The impact of this on the system’s behaviour, he says, requires more analysis.

Crucially, by identifying the architecture of global economic power, the analysis could help make it more stable. By finding the vulnerable aspects of the system, economists can suggest measures to prevent future collapses spreading through the entire economy. Glattfelder says we may need global anti-trust rules, which now exist only at national level, to limit over-connection among TNCs. Bar-Yam says the analysis suggests one possible solution: firms should be taxed for excess interconnectivity to discourage this risk.

One thing won’t chime with some of the protesters’ claims: the super-entity is unlikely to be the intentional result of a conspiracy to rule the world. “Such structures are common in nature,” says Sugihara.

Newcomers to any network connect preferentially to highly connected members. TNCs buy shares in each other for business reasons, not for world domination. If connectedness clusters, so does wealth, says Dan Braha of NECSI: in similar models, money flows towards the most highly connected members. The Zurich study, says Sugihara, “is strong evidence that simple rules governing TNCs give rise spontaneously to highly connected groups”. Or as Braha puts it: “The Occupy Wall Street claim that 1 per cent of people have most of the wealth reflects a logical phase of the self-organising economy.”

So, the super-entity may not result from conspiracy. The real question, says the Zurich team, is whether it can exert concerted political power. Driffill feels 147 is too many to sustain collusion. Braha suspects they will compete in the market but act together on common interests. Resisting changes to the network structure may be one such common interest.

The top 50 of the 147 superconnected companies

1. Barclays plc
2. Capital Group Companies Inc
3. FMR Corporation
4. AXA
5. State Street Corporation
6. JP Morgan Chase & Co
7. Legal & General Group plc
8. Vanguard Group Inc
9. UBS AG
10. Merrill Lynch & Co Inc
11. Wellington Management Co LLP
12. Deutsche Bank AG
13. Franklin Resources Inc
14. Credit Suisse Group
15. Walton Enterprises LLC
16. Bank of New York Mellon Corp
17. Natixis
18. Goldman Sachs Group Inc
19. T Rowe Price Group Inc
20. Legg Mason Inc
21. Morgan Stanley
22. Mitsubishi UFJ Financial Group Inc
23. Northern Trust Corporation
24. Société Générale
25. Bank of America Corporation
26. Lloyds TSB Group plc
27. Invesco plc
28. Allianz SE 29. TIAA
30. Old Mutual Public Limited Company
31. Aviva plc
32. Schroders plc
33. Dodge & Cox
34. Lehman Brothers Holdings Inc*
35. Sun Life Financial Inc
36. Standard Life plc
37. CNCE
38. Nomura Holdings Inc
39. The Depository Trust Company
40. Massachusetts Mutual Life Insurance
41. ING Groep NV
42. Brandes Investment Partners LP
43. Unicredito Italiano SPA
44. Deposit Insurance Corporation of Japan
45. Vereniging Aegon
46. BNP Paribas
47. Affiliated Managers Group Inc
48. Resona Holdings Inc
49. Capital Group International Inc
50. China Petrochemical Group Company

* Lehman still existed in the 2007 dataset used

Graphic: The 1318 transnational corporations that form the core of the economy

(Data: PLoS One)

source HERE

>

>

Look whats coming :

The Islamic Dinar and Dirham:

What we have been discussing and calling to for a long time :

Debt free, Interest free Money, money that is not part of the Central Banks fractional banking scheme of milking the masses  (in their ignorance) of their hard work and honest trading by fiat currencies (with interest) to create astronomical private profit for the insider group of Banksters, a super rich elite that has corporate monopoly of financial transactions and services, which is in reality a giant “ponzi scheme” sucking in the suckers.

Nevertheless some have been aware for a long time, and more and more are waking up to the massive deceit and fraud, and are calling out for what Islamic Law legislated from the beginning for the just economic system, based honesty, responsible actions seeking God’s bounties, lawful livelihood,  trade and commerce: interest free debt free currencies.

Islamic Gold Dinar and Silver Dirham  

Islamic Gold Dinar and Silver Dirham

  • Mood THRILLED INTRIGUED FURIOUS SAD BORED

Davi BarkerAug 24, 2010 | 6:20 AM

Harsh criticisms of Islam and Muslims are becoming increasingly common in Western media, but one area they continue to command respect is in the financial sector, especially among Austrian economists.

In the wake of a mortgage melt down, a recession and unprecedented national debt many economists observed that Islamic finance, specifically its prohibition on interest, has shielded many American Muslims from economic crisis.

Now, a state in Malaysia is taking it one step further, by issuing an Islamic currency which they believe will protect consumers from the usury of inflation and market manipulation inherent to a debt based paper currency.

The Islamic Party of Malaysia (PAS) believes that the answer comes from Islamic history, when the dinar and the dirham were gold and silver coins. The PAS are currently the ruling party of Kelantan, a state within the nation of Malaysia.

On August 13, the government of Kelantan announced the launch of a gold dinar and silver dirham intended for use as an alternative to the Malaysian Ringgit notes and Sen coins. So far it has been reported that over 1,000 stores have agreed to accept the the coins for barter trade.

In 2002 Malaysian Prime Minister Mahathir Mohamed advocated for an Islamic Gold Dinar (IGD) system to facilitate international trade between Muslim central banks. This was not successful, but he is currently being advertised as a guest of honor by organizers of theWorld Riba Conference in Kuala Lampur.

This is the first time since the collapse of the Ottoman Empire that a Muslim government will issue gold and silver coins to be used by citizens in the market. However, the announcement has sparked controversy between the Kelantan state, and the Malaysian federal government, which argues that the authority to issue currency is the exclusive privilege of Bank Negara Malaysia (BNM), Malaysia’s central bank.

In a meeting with reporters and the Kelantan Umno Liason Body the next day, International Trade and Industry Minister Datuk Seri Mustapa Mohamed said, “I advise the Kelantan government not to do so (introduce regulations) as it likes. Matters concerning currency comes under the jurisdiction of the Federal government, and not the state government, and what had been done clearly breached the country’s law.”

Private individuals are already trading in Islamic currencies. Since 1992, the e-dinar company has minted their own gold and silver coins for private use. In 2000 they established a digital gold currency that be transferred like paypal. They were first incorporated in Labuan, Malaysia as e-dinar Ltd., and now have offices in Dubai, the United Arab Emirates and Indonesia.

Advocates of the gold and silver currency argue that precious metals are the only honest measure of value, and that paper currency is a kind of fraud or usury. When a currency has no commodity backing it there is no limit on the amount a central bank can increase the money supply and no limit on inflation. This gives governments access to near limitless credit, so they can borrow money to fund their projects without directly taxing their subjects.

The result is that the buying power of the new money is taken away from the buying power of the money already in circulation. Economists from the Austrian School point out that inflation is not caused by rising prices, but by a decrease in the buying power of the dollar which results from an increase in the money supply.

In the UK there is the Dinar Exchange, which describes itself as the “official certified supplier of Islamic gold dinar and silver dirham in the United Kingdom.” The organization recently held a series of roadshows in prominent UK cities to raise awareness about the project, and help set up business franchises that can accept the alternative currency.

So far few Muslims have taken an interest in the gold dinar in the US, and no company exists to distribute the coins. This may be because in the US, legal tender laws make it a crime to use gold and silver for private exchange.

However, some Americans are opening up to the idea. The Liberty Dollar, once a widely accepted and successful alternative silver currency was raided by the FBI in 2007. Bernard von NotHaus, monetary architect of the Liberty Dollar and co-founder of the Royal Hawaiian Mint Company, intends to challenge the constitutionality of the federal law in court.

In the mean time, the Free Lakota Bank, of the Lakota Nation issues and circulates their own silver currency. And in New Hampshire a private bullion exchange known as Shire Silver facilitates using precious metals in trade by measuring, certifying and packaging small bullion bars in denominations suitable for exchange.

Any way you slice it, whether the governments of the world like it or not, gold and silver currency is not going away any time soon.

>

Tuesday, march 15, 2011

Another State in Malaysia Introduces Gold & Silver Money

As we noted in January was going to happen, another Malaysian state (Perak) has now introduced its own Gold Dinar and Silver Dirham coins.Kelantan was first, in August of 2010.

Today, the Perak (state in Malaysia) government, introduced Gold dinars and silver dirhams. Menteri Besar of Perak, Datuk Seri Dr Zambry Abdul Kadir launch the world’s first financial instrument ever made of gold and silver with a purity of 99.9 per cent or 24 karats at the Perak state secretary building in Jalan Panglima Bukit Gan

tang Wahab, Ipoh. For a start, 1,000 pieces of gold dinars and silver dirhams had been manufactured and would be marketed through Yayasan Pembangunan Ekonomi Islam (Yapeim) and Nusantara Bullion Exchange (Nubex Sdn Bhd)…

Datuk Seri Dr Zambry said Perak Dinar also had higher level of quality as compared to the dinars and dirhams first produced by Islamic scholar Khalifa Abdul Malik ibn Marwan about 1,357 years ago.

“Gold dinars and silver dirhams produced then contained 97 per cent of gold and silver purity, but what we launched today are of higher quality because they are equivalent to 24 karats.”

As we also noted earlier, the Malaysian constitution (in ninth schedule, list I sub 7.a) does not allow its states to issue coins (much like the U.S. Constitution in Article I, Section 10); however, these coins are being privately minted by the “World Islamic Mint” under the authority of the Perak government (the Koran, like the Bible, forbids the use of fiat money and fractional reserve banking). The Perak gold dinars and silver dirhams are being produced by Goldnet International, a joint-venture company with the Perak State Development Corporation, in collaboration with KFH (Malaysia) Sdn Bhd.

Seriously, the time to start moving away from devaluating fiat paper and back to sound gold & silver money is NOW. We can see it as the mainstream media is reporting the growing number of U.S. States introducing legislation to do just that. But as we know, vested Statebanking interests and national banking cartels don’t like competition, as we’ve seen from the Federal Reserve in the U.S. We can expect that the Feds and the bank industry lobbyists will fight hard to stop the States from returning to the Constitutional mandate that they use only gold and silver coins in their financial transactions.

>

Introducing the Islamic Dinar & Dirham
Abu Bakr ibn Abi Maryam reported that he heard the Messenger of Allah, may Allah bless him and grant him peace, say: “A time is certainly coming over mankind in which there will be nothing [left] which will be of use save a dinar and a dirham.”
(The Musnad of Imam Ahmad ibn Hanbal)

1. History of the Dinar & Dirham

2. What are the Islamic Dinar and Dirham

3. Using the Dinar and Dirham

4. The Importance of Paying Zakat with Dinar & Dirham

1. History of the Dinar & Dirham

In the beginning the Muslims used gold and silver by weight and the dinar and dirhams that they used were made by the Persians.The first dated coins that can be assigned to the Muslims are copies of silver dirhams of the Sassanian Yezdigird III, struck during the Khalifate of Uthman, radiy’allahu anhu. These coins differ from the original ones in that an Arabic inscription is found in the obverse margins, normally reading “in the Name of Allah”. Since then the writing in Arabic of the Name of Allah and parts of Qur’an on the coins became a custom in all mintings made by Muslims.Under what was known as the coin standard of the Khalif Umar Ibn al-Khattab, the weight of 10 dirhams was equivalent to 7 dinars (mithqals).In the year 75 (695 CE) the Khalifah Abdalmalik ordered Al-Hajjaj to mint the first dirhams, thus he established officially the standard of Umar Ibn al-Khattab. In the next year he ordered the dirhams to be minted in all the regions of the Dar al-Islam. He ordered that the coins be stamped with the sentence: “Allah is Unique, Allah is Eternal”. He ordered the removal of human figures and animals from the coins and that they be replaced with letters.This command was then carried on throughout all the history of Islam. The dinar and the dirham were both round, and the writing was stamped in concentric circles. Typically on one side it was written the “tahlil” and the “tahmid”, that is, “la ilaha ill’Allah” and “alhamdulillah”; and on the other side was written the name of the Amir and the date. Later on it became common to introduce the blessings on the Prophet, salla’llahu alayhi wa sallam, and sometimes, ayats of the Qur’an.Gold and silver coins remained official currency until the fall of the Khalifate. Since then, dozens of different paper currencies were made in each of the new postcolonial national states created from the dismemberment of Dar al-Islam.

Allah says in the Qur’an:

And amongst the People of the Book there are those who, if you were to entrust them with a treasure (qintar), he would return it to you. And amongst them is he who, if you were to entrust him with a dinar would not return it to you, unless you kept standing over him. Qur’an (3,75)
Qadi Abu Bakr Ibn al-Arabi, the greatest authority on Qur’anic Law wrote in his famous “Ahkam al-Qur’an” about this ayat:

“The benefit that can be taken from this is the prohibition of entrusting the People of the Book with goods”.

Qadi Abu Bakr said: “The question concerning entrusting property is legislated by the text of Qur’an.” This means that the ayat is a legal judgement of absolute validity and of the greatest importance to the deen.

Entrusting wealth to non-Muslims is not allowed, but furthermore, taking a non-Muslim as a partner outside Dar al-Islam (where we stand over them) is extremely restricted, because they might cheat or might use our wealth in forbidden transactions.

Since paper-money is a promise of payment, can it be permitted to trust the issuers while they hold the payment (our property) outside our jurisdiction? History has also demonstrated repeatedly that paper money has been a permanent instrument of default and cheating the Muslims. In addition, Islamic Law does not permit the use of a promise of payment as a medium of exchange.

2. What are the Dinar & Dirham

The Islamic Dinar is a specific weight
of 22k gold equivalent to 4.25 grams.
The Islamic Dirham is a specific weight
of pure silver equivalent to 2.975 grams.

According to Islamic Law…

The Islamic Dinar is a specific weight of 22k gold (917.) equivalent to 4.25 grams.

The Islamic Dirham is a specific weight of pure silver equivalent to 3.0 grams.

Umar Ibn al-Khattab established the known standard relationship between them based on their weights: “7 dinars must be equivalent to 10 dirhams.”

“The Revelation undertook to mention them and attached many judgements to them, for example zakat, marriage, and hudud, etc., therefore within the Revelation they have to have a reality and specific measure for assessment [of zakat, etc.] upon which its judgements may be based rather than on the non-shari’i [other coins].

Know that there is consensus [ijma] since the beginning of Islam and the age of the Companions and the Followers that the dirham of the shari’ah is that of which ten weigh seven mithqals [weight of the dinar] of gold. . . The weight of a mithqal of gold is seventy-two grains of barley, so that the dirham which is seven-tenths of it is fifty and two-fifths grains. All these measurements are firmly established by consensus.” Ibn Khaldun, Al-Muqaddimah
How are the Islamic dinar used?

1.- The Islamic Dinar can be used to save because they are wealth in themselves.

2.- They are used to pay zakat and dowry as they are requisite within Islamic Law.

3.- They are used to buy and sell since they are a legitimate medium of exchange.

3. Using the Dinar & Dirham

Gold and silver are the most stable currency the world has ever seen.From the beginning of Islam until today, the value of the Islamic bimetallic currency has remained surprisingly stable in relation to basic consumable goods:A chicken at the time of the Prophet, salla’llahu alaihi wa sallam, cost one dirham; today, 1,400 years later, a chicken costs approximately one dirham.In 1,400 years inflation is zero.Could we say the same about the dollar or any other paper currency in the last 25 years?In the long term the bimetallic currency has proved to be the most stable currency the world has ever seen. It has survived, despite all the attempts by governments to transform it into a symbolic currency by imposing a nominal value different from its weight.

Reliability

Gold cannot be inflated by printing more of it; it cannot be devalued by government decree, and unlike paper currency it is an asset which does not depend upon anybody’s promise to pay.

Portability and anonymity of gold are both important, but the most significant fact is that gold is an asset that is no-one else´s liability.

All forms of paper assets: bonds, shares, and even bank deposits, are promises to repay money borrowed. Their value is dependent upon the investor’s belief that the promise will be fulfilled. As junk bonds and the Mexican peso have illustrated, a questionable promise soon loses value.

Gold is not like this. A piece of gold is independent of the financial system, and its worth is underwritten by 5,000 years of human experience.

4. The Importance of Paying Zakat with Dinar & Dirham

“Islam is based on five: testifying that there is no god but Allah and that Muhammad is the Messenger of Allah, establishing the prayer, paying the Zakat, the Hajj and the fast of Ramadan.”

Zakat cannot be paid with a promise of payment
Zakat can only be paid with tangible merchandise, called in Arabic ‘ain. It cannot be paid with a promise to pay or a debt, called in Arabic dayn.From the beginning the zakat was paid with dinars and dirhams. Most significant is that the payment of zakat was never allowed in paper money during all the ottoman period right until the fall of the Khalifate.Shaykh Muhammad Alish (1802-1881), the great Maliki Qadi, said that if you were to pay zakat with paper-money only its value as merchandise (‘ayn), that is, its value as paper can be accepted. Therefore, its nominal value is irrelevant as payment of zakat.”If the Zakat was obligatory by considering its substance as a merchandise, then the nisab would not be stipulated according to its value but according to its substance and its quantity, as is the case with silver, gold, grain or fruits. Since its substance [paper] is irrelevant [in value] in respect to the Zakat, then it should be treated as the copper, iron or other similar substances.”Fatwa of Shaykh Alish

Payment of Zakat is perfectly explained and regulated in the Islamic jurisprudence. For centuries when Islamic Law was enforced by a Caliph or an Amir, the Zakat was collected in gold and silver. When paper-money was being first introduced, during the last century by the colonial powers the traditional ulema rejected it as being opposed to Islamic Law. According to them paper money was to be treated as fulus or lower category of currency with limited used, basically just as small change. It is, for example, not allowed to make a qirad with fulus. Among those ulema, stands out the famous scholar of magrebi ascendance, Shaykh Muhammad Alish (1802-1881) who was the Shaykh of the Shaykhs of Maliki fiqh in the University of Al-Azhar in Egypt. He wrote in his Fatwa.

“What is your judgement in respect to the paper with the stamp of the Sultan that circulates like the dinars and the dirhams? Is it obligatory to pay Zakat as if it was a coin of gold or silver, or merchandise, or not?”

I responded exactly in the following way:

“Praise belongs to Allah and blessing and peace upon our Master Muhammad, the Messenger of Allah.”

“Zakat is not to be paid for it, because Zakat is restricted to the flocks, certain type of grains and fruits, gold and silver, the value of rotational merchandise and the price of the goods withheld. What is referred previously does not belong to any of these categories.”

You will find an explanation by comparison with the copper coin or fulus with the stamp of the Sultan which is in circulation and for which no Zakat is paid since it does not belong to any of the categories mentioned. It says in the “Mudawwana”: “Those who posses fulus for over a year for a value of 200 dirhams does not need to pay Zakat unless is used as a rotational merchandise. Then, it should be treated as if it was a merchandise.”

In the “At-Tiraz”, after mentioning that Abu Hanifa and Ash-Shafi’i obliged to pay Zakat for the fulus, [is stated that] since both affirm that the payment of Zakat is from value, and considering that Shafi’i has two contradictory opinions about the subject, the opinion of the school is that there is no obligation to pay Zakat for the fulus since there is no discrepancies about the fact that what counts with respect to the fulus is not its weight or its quantity but only its given value. If the Zakat was obligatory by considering its substance as a merchandise, then the nisab would not be stipulated according to its value but according to its substance and its quantity, as is the case with silver, gold, grain or fruits. Since its substance [paper] is irrelevant [in value] in respect to the Zakat, then it should be treated as the copper, iron or other similar substances.

And Allah, ta’ala, is the Wisest. And may Allah bless and give peace to our Master Muhammad and his family.

(Translated from the “Al-Fath Al-‘Ali Al-Maliki” pp. 164-165).

This Fatwa considers paper-money to be fulus, because it only represents money and does not have value as merchandise. It follows that since Zakat cannot be paid in fulus, which has no value as merchandise, it cannot be paid in paper-money, which value as weight of paper is null. On this basis, it becomes clear the urgent need to restore the use of the Dinar and the Dirham as payment of Zakat. If the millions of Muslims who now make their payment of Zakat in paper money would do it in newly minted Dinars and Dirhams, they will put in circulation millions of gold and silver coins into the mainstream of daily commercial activities of our communities. That single act will became the most important political act of the century, opening the path towards the establishment our own halal free currency breaking away from the usurious financial system.

The return to the payment of zakat in gold and silver is an essential part of the reestablishment of Islam.

Source

>

See about Islamic “Quran” and “Sunnah” Money, the Gold Dinar and the Silver Dirham, and other metal based, interest free currencies, at the following links, FYI :

> HERE

> HERE

on and on

>
Oh and some more new of interest

Return of the Gold Standard as world order unravels

As the twin pillars of international monetary system threaten to come tumbling down in unison, gold has reclaimed its ancient status as the anchor of stability. The spot price surged to an all-time high of $1,594 an ounce in London, lifting silver to $39 in its train.

gold nuggets and bars

Gold surged to an all-time high of $1,594 an ounce in London, lifting silver to $39 in its train. Photo: AP

9:28PM BST 14 Jul 2011

Comments1033 Comments

On one side of the Atlantic, the eurozone debt crisis has spread to the countries that may be too big to save – Spain and Italy – though RBS thinks a €3.5 trillion rescue fund would ensure survival of Europe’s currency union.

On the other side, the recovery has sputtered out and the printing presses are being oiled again. Brinkmanship between the Congress and the White House over the US debt ceiling has compelled Moody’s to warn of a “very small but rising risk” that the world’s paramount power may default within two weeks. “The unthinkable is now thinkable,” said Ross Norman, director of thebulliondesk.com.

Fed chair Ben Bernanke confessed to Congress that growth has failed to gain traction. “Deflationary risks might re-emerge, implying a need for additional policy support,” he said.

The bar to QE3 – yet more bond purchases – is even lower than markets had thought. The new intake of hard-money men on the voting committee has not shifted Fed thinking, despite global anger at dollar debasement under QE2.

Fuelling the blaze, the emerging powers of Asia are almost all running uber-loose monetary policies. Most have negative real interest rates that push citizens out of bank accounts and into gold, or property. China is an arch-inflater. Prices are rising at 6.4pc, yet the one-year deposit rate is just 3.5pc. India’s central bank is far behind the curve.

“It is very scary: the flight to gold is accelerating at a faster and faster speed,” said Peter Hambro, chairman of Britain’s biggest pure gold listing Petropavlovsk.

“One of the big US banks texted me today to say that if QE3 actually happens, we could see gold at $5,000 and silver at $1,000. I feel terribly sorry for anybody on fixed incomes tied to a fiat currency because they are not going to be able to buy things with that paper money.”

China, Russia, Brazil, India, the Mid-East petro-powers have diversified their $7 trillion reserves into euros over the last decade to limit dollar exposure. As Europe’s monetary union itself faces an existential crisis, there is no other safe-haven currency able to absorb the flows. The Swiss franc, Canada’s loonie, the Aussie, and Korea’s won are too small.

“There is no depth of market in these other currencies, so gold is the obvious play,” said Neil Mellor from BNY Mellon. Western central banks (though not the US, Germany, or Italy) sold much of their gold at the depths of the bear market a decade ago. The Bank of England wins the booby prize for selling into the bottom at €254 an ounce on Gordon Brown’s orders in 1999. But Russia, China, India, the Gulf states, the Philippines, and Kazakhstan have been buying.

China is coy, revealing purchases with a long delay. It has admitted to doubling its gold reserves to 1,054 tonnes or $54bn. This is just a tiny sliver of its $3.2 trillion reserves. China’s Chamber of Commerce said this should be raised eightfold to 8,000 tonnes.

Xia Bin, an adviser to China’s central bank, said in June that the country’s reserve strategy needs an “urgent” overhaul. Instead of buying paper IOU’s from a prostrate West, China should invest in strategic assets and accumulate gold by “buying the dips”.

Step by step, the world is edging towards a revived Gold Standard as it becomes clearer that Japan and the West have reached debt saturation. World Bank chief Robert Zoellick said it was time to “consider employing gold as an international reference point.” The Swiss parliament is to hold hearings on a parallel “Gold Franc”. Utah has recognised gold as legal tender for tax payments.

A new Gold Standard would probably be based on a variant of the ‘Bancor’ proposed by Keynes in the late 1940s. This was a basket of 30 commodities intended to be less deflationary than pure gold, which had compounded in the Great Depression. The idea was revived by China’s central bank chief Zhou Xiaochuan two years ago as a way of curbing the “credit-based” excess.

Mr Bernanke himself was grilled by Congress this week on the role of gold. Why do people by gold? “As protection against of what we call tail risks: really, really bad outcomes,” he replied.

Indeed

>
<><><>
<><>
<>

6 Responses to 8,000$ Gold? – (& Where did Fort Knox gold go?)

  1. Nice story, although the last part is a bit dubious in my eyes. I do hope to see more of this, but how can I stay updated with your posts? Best regards from Holland!

  2. I’m a penny stock person myself but I enjoyed reading this post. I will keep on visiting your webblog regularly. Keep up the news!

  3. Hey, just hopped over to this web site from reddit. It is not blog post I would normally read, but I loved your perspective on it. Thanks for making a piece worth reading!

  4. takis says:

    ford knox Gold? what gold how u think the us government “paid” for the “MONEY THEY BORROWED” from a private bank given the “right” to print bits of paper at will based on FA that everybody Has to use to trade with? how u think america OWES Trillions to few bankers who produce FA how do most countries on earth owe their balls to them? To be fair its Not the bankers to blame at ALL but the crooked politicians who sold their countries down the drain for few $ Bankers like all business men try to make as much profit as possible not always the most ethical way of course but when u give someone the right to print bits of paper with different numbers that ppl have to sweat for what do u expect? work 24/7 till u drop they just print few billion more n on top is fractional banking creating money on paper that they don’t even exist But u r compeating with that imaginary money, same as swimming in a current that someone controls the machine to increese the current at will sometimes degreesing the current a little to make u think u may will, i feel very sorry for the future generations but personally i Really don’t care now at all ppl allowed it to happen n now they are facing the music

  5. I’ve been coming here for a roughly a week now and have decided to make my first post to say thank you.

  6. Pingback: Sejour golf Agadir

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s