Gold: Delivery or Default?

Jeez, Louise. Where does the time go? It's now 12:08 EDT and I'm just getting started. Where to begin? How do I put all of the stuff that's swimming around in my head into some kind of coherent format?

Primarily, I'm trying to connects these dots with the idea that "history doesn't necessarily repeat but it does rhyme":

  • Strong physical demand
  • Declining Comex reserves
  • The draining of the GLD, with "inventory" now down 18.16% YTD
  • Paper price raids with attendant margin hikes
  • Lease rates and cash vs futures backwardation
  • Bullion bank default

You see, I've come to the conclusion that the current situation is far more complicated than I had expected it to be. Rather than a simple sell-stop washout, it seems that there is something considerably more serious lurking just behind the scenes and out of our field of vision.

Yesterday, I had a conversation with an old friend. He's a sharp guy who has been in financial services industry for over 20 years. He reads this site and has come around to the idea of "market management", not just in the metals but nearly everywhere. He asked me two simple questions:

  1. How? How did the big banks get in this position of being so heavily short?
  2. Why? Why are they heavily short and what are they trying to accomplish?

Because we were trying to get caught up after after having lost track of each other for several months, I only had the time to answer a part of the two questions...the "why"...and forgetting that, as an industry veteran, he's far more sophisticated than the average person who asks "why". But this got me thinking. In fact, this whole exercise of dot-connecting has been rolling around in my head ever since. I'm typing this up today, not because I've solved the puzzle but because I'm hoping that the sheer exercise of typing will help the thought process.

So I suppose I should start by revisiting my friend's question. The bullion banks are short for a number of reasons, one of which is this: For the longest time, leasing gold and selling it into the market was free money. You borrowed some gold from the BIS. You sold it at 100:1 leverage on The Comex. You took the cash from the sale and bought something else. Stocks. Bonds. Whatever. And you kept the spread. Pretty simple. And when the time came to repay the leases, you bought some gold back or simply rolled the contracts. As long as physical demand stayed low, you could theoretically play this game ad infinitum. These "bets" got larger and larger and eventually more and more banks joined the fray. And now, in some sense, here we are.

The banks have leased, hypothecated and rehypothecated just about every ounce of gold that they can get their hands on. And again, from their point of view, all should be well.

BUT, ALL IS NOT WELL.

And the problem is...Physical Demand. Again, as stated two paragraphs ago: "As long as physical demand stayed low, you could theoretically play this game ad infinitum". But the jig is up. The cat is out of the bag. The wrench is in the works. And it all goes back to debt and quantitative easing.

You see, the game is over. The Banks don't want to believe this but you know it's true. I know it's true. Millions worldwide know it's true. High Net Worth individuals trying to protect their assets know it's true. Sovereign Wealth and Pension funds know it's true. And, most importantly, Creditor Nation Central Banks know it's true. All of us are demanding physical gold (and silver) and it is putting incredible strain upon this current, highly-leveraged, fractional reserve bullion banking system.

So now lets get back to trying to project the future by connecting the dots of the past and present.

  • Strong physical demand. Where do I start? 1000 mts delivered through Shanghai YTD. 15-25 mts allocated and delivered in London each day. Feb13 and April13 Comex contracts totaling deliveries of 2.5 million ounces. Sales records at the U.S. Mint. I could go on and on with links galore but you get the picture.
  • Declining Comex reserves. Registered gold reserves at the Comex have fallen to multi-year lows. As of yesterday, registered reserves were only 2.28 million ounces or enough to settle just 22,800 contracts or 5% of the total open interest.  http://www.cmegroup.com/delivery_reports/Gold_Stocks.xls
  • The draining of the GLD, with "inventory" now down 18.16% YTD. As you know, we've been watching this closely and with amusement. Yesterday alone, the GLD shed 18.35 metric tonnes. That's 590,000 troy ounces or 1,475 London bars. Back on April 11, 2013 the GLD had "inventory" of 1,181.42 metric tonnes. As of yesterday, it was just 1,104.71. This means that since the recent paper price beatdown began seven trading days ago, the GLD has shed 76.71 metric tonnes of gold. For all of 2013, a total of 245.21 metric tonnes of gold has egressed from the GLD. That's 7,883,684 troy ounces or 19,709 London bars. (I could C&P all of the pallets necessary to hold these bars but I don't want to crash my servers.) Note the numbers, however. Almost 8MM troy ounces have been withdrawn ytd. As of yesterday, the total Comex warehouse stock of eligible (unallocated, non-deliverable) and registered (available for delivery) gold was just 8,781,909 ounces.
  • Paper price raids with attendant margin hikes. This next link isn't very much fun to read but I ask you to review it, regardless. You'll even find a comment in there from yours truly. (I like the "Franz Ferdinand" analogy...it just didn't work out that way...yet.) In trying to get this point across, though, reading this old story and considering it from the perspective of current events is helpful. Note the date it was written. Think about what happened next. Then think about what has happened over the past two weeks. http://www.zerohedge.com/article/how-comex-lost-20-its-registered-silver-one-week-or-where-theres-smoke-run-theres-probably-r
  • Lease rates and cash vs futures backwardation. Now this is where it gets really interesting. Back in the late 1990s, Gordon Brown ordered the liquidation of a vast amount of English gold. He's since been ridiculed for selling at the low which has subsequently been called "Brown's Bottom". But was he really just blindly and foolishly dumping gold or was there something far more significant taking place behind the scenes? Please stop here and read this: http://fofoa.blogspot.com/2010/07/red-alert-gold-backwardation.html You see, once again the "public story/narrative" is nowhere near the truth. We now know that Brown was actually forced to sell England's gold in order to stave off a bullion bank collapse, a collapse that posed a systemic risk to the global financial system. Gold was delivered for the purpose of covering Goldman Sachs' grossly mismatched leases. Deliveries were made and the system was saved. Physical demand subsided as the dot-com and real estate bubbles were inflated. With the goal of avoiding a repeat of this near-disaster, the banks began to actively manage an ascending gold price in order to keep supply and demand in some sort of equilibrium. It worked pretty well until 2008. It really began to get away from them in 2009, with the advent of overt quantitative easing. Then, in September of 2011, with the U.S. downgrade and the Swiss Franc devaluation, it was decided that price must be crushed (a plan which continues to this day) in the hopes of controlling demand. To the bankers dismay, demand for metal did not decrease. After slowing in 2012, it has increased significantly since the QE∞ announcement last autumn. Crushing price only served to buy time. And now it appears that time has run out.
  • Bullion bank default. Which then brings us to this. About four weeks ago, the Dutch bank, ABN AMRO, declared that it would no longer deliver physical gold to its clients. http://www.zerohedge.com/news/2013-03-24/another-gold-shortage-abn-halt-physical-gold-delivery & http://silverdoctors.com/dutch-bank-abn-amro-halts-physical-gold-delivery/ & http://forexmagnates.com/abn-amro-halts-physical-gold-delivery-another-sign-all-trading-is-simply-for-pieces-of-paper/ Now combine those three articles with these two bits of analysis, written in just the past 24 hours: http://redgreenandblue.org/2013/04/22/james-howard-kunstler-where-the-hell-did-all-the-gold-go/ & http://www.zerohedge.com/contributed/2013-04-22/why-western-banking-cartel’s-gold-and-silver-price-slam-will-backfire-and-how. We also hear anecdotally how both Andrew Maguire and Jim Sinclair know of contacts who have recently been denied delivery of supposed "allocated" gold from their bullion bank accounts: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/4/22_Maguire_-_Elaborates_On_The_LBMA_Default_%26_Ensuing_Panic.html & http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/4/23_Sinclair_-_Swiss_Bank_Just_Refused_To_Give_My_Friend_His_Gold.html

OK, so now it's 3:08 pm EDT and what have I accomplished. Are the dots connecting? Can we draw any conclusions or even educated guesses as to what might happen next? You know what...I don't know. But I do know this:

The current situation has many parallels to past events. Is there enough evidence to conclude that the end of the fractional reserve bullion banking system is right around the corner? Perhaps "conclude" is too strong of a word. Put it this way: Is there enough evidence to infer that its a near-term possibility? Yes. Absolutely, yes.

So what do we need to watch going forward? How about these seven items:

  1. Physical demand. If it begins to wane in the days ahead OR if it declines or ceases after the next price drop, then the banks will likely be able to buy more time.
  2. Lease rates. If the gold lease rate spikes positive like it did in 1999 or how silver did in 2011, you'll know that supply is getting extremely tight.
  3. The CoT structure. Though they haven't been able to pull it off yet, the banks may try to cover shorts to the point of being net long, thereby transferring the "short risk" to the Specs.
  4. Paper price. Do the banks dare rig price even lower, risking an even greater surge of physical demand and an increase in the rate of inventory depletion.
  5. GLD "inventory". Someone in the previous thread made mention of something that FOFOA noted recently. The GLD is down 245 tonnes YTD. It took over two months to "lose" the first 100 tonnes (1/2/13 - 3/7/13). It took about 6 weeks to lose the next 100 tonnes (3/8/13 - 4/16/13). And we have now lost 41 tonnes in the four days since. Will this acceleration continue?
  6. Comex warehouse inventories. They currently hold enough gold to settle and deliver the June and August contracts. Then what? From where will they get their gold to replenish these stocks.
  7. Global tonnage demand. Not through New York but London, Shanghai and Dubai. Does the pace of these allocations and deliveries increase or decrease with price?

So, I've given you a lot to think about today. (Welcome to my world!) I hope I've left you with the impression that things are extremely complicated at this moment. Far more complicated than what you're being told, where the "mainstream" opinion claims that gold is declining because of a lack of global inflation or the sunny prospects of economic growth. That analysis seems a little shallow now, don't you think?

To me it seems that the banks have once again walked the world to the precipice. If physical demand continues unabated, the fractional reserve bullion banking system will likely collapse as member firms and exchanges are eventually forced to default. Rest assured, we'll keep our eyes wide open, looking for additional clues and warning signs. For now, though, just continue to practice your primary safety drill: Buy metal, take delivery and add it to your stack. While you still can.

TF

322 Comments

Istack's picture

I vote for Default

This physical shortage seems to be nearing a breaking point.  Something has got to give.  Seems like the word on the steet is that the default has already started.  It is also interesting to me that as paper price has been smashed down so consistently over the last two years, I have found that my resolve to hold onto my position and buy the dips has only increased.  It seems like many hold this growing sentiment as well.  Keep stacking!

SilveryBlue's picture

Turd is back!

Atta boy. Now to read

Goldman Sachs claim to have covered their shorts.

tyberious's picture

I got

NEXT!

Thanks Turd!

Karankawa's picture

Along the same lines. This is NOTHING BUT A PSY-OP!

The reason everybody feels like shit isn't because the dollar price of gold is down, we all love truth, honest, and integrety.  Americans are under FULL ATTACK with lies and deception.  Stand with the truth and look knowing in the EYES of evil and deception.

dgstage's picture

Let me be First

to say I hope you do not have to eat your hat.

Zoltan's picture

Top Five

Thanks Turd.

Z
 

pforth's picture

There is no premium to buy physical!!!!

As much as it pains me to conclude this: sure, coins and small bars are having supply chain problems and sure demand for physical appears to have spiked  BUT  until I see premiums develop for physical bullion funds like PSLV, PHYS and CEF vrs their paper equivalents SLV and GLD we must conclude that there is NO premium for physical silver or gold in size. (Note that as of today premiums on PHYS, CEF and PSLV are NEGATIVE)
 
This also means that I do not believe Jim Willie when he quotes recent $2000 per ounce transactions of gold and silver.  No one would pay 2000 per ounce for $20 million of gold when they could just buy shares of PHYS and get delivery at $1400 (and yes PHYS and PSLV deliver).
 
achmachat's picture

Pining

..didn't make it to "first" :-(

dnlward's picture

I think my 'Maguire's Real

I think my 'Maguire's Real Time Trades' $$ window has stopped updating.  Is it working for anyone else?

Urban Roman's picture

Howcome

Why do all these comments consist of a single period '.' ?

OK, now I'm off to read the article ...

[edit]
I think it's a safe assumption that all the folks who had allocated metals have been Corzined by now. 

And anyone who had unallocated GLD or the equivalent, if they have the paper certificates, can use them to  line the bottom of the birdcage. 

@dnlward, 
I think Maguire's "Past Performance of Trades" window only changes when Turd manually updates it. If you click through to the Coughlan site, the current figures are: 
Past 30 days -- $8,370
Since April 2012 -- $91,340

achmachat's picture

pforth

not sure if:

- trying to be funny

- obvious troll

- plain stupid

Bollocks's picture

13th!

Lucky for some smiley.

lodmund's picture

physical supply

plenty available in both london and the channel islands

Wizard's picture

Just a What If.......

What If.

What if, The Powers That Be decided then to use the Comex system upon its opening to artificially raise the price of Gold and Silver to the same absurd levels as they have managed to suppress them?

Gold $20,000, $50,000 or even 100,000 an OZ.  Hell, why not a Million?

Silver $5000, 7,000 or 20,000 an OZ.

Pick a number any number

Hell for that matter they could price Silver higher than Gold if they wanted to because it is not only a precious metal but also a Strategic Metal. The Main Stream Media could easily sell it to people. To keep it out of everyone’s hands except for ultra-rich and Governments. Also allocate it to certain companies that they want to succeed that needed silver.

For The Powers That Be. Any arbitrary number would work that is out of reach for people without their own printing press.

What if the Comex Opening was the time they had chosen to not give a damn about propping up the Dollar anymore?

How many people here had not wakened up yet then?

How many of us would be massively lighter in our stack?

How many fewer friends and family members would we have not been able to waken?

Basically how much more screwed would much of us be if we had not had this time? And what I consider to be a purely miraculous opportunity and gift of time to learn.

With the Powers That Be suppressing the price in fiat allowing me to further add to my stack and learn the things that I have learned in the time we have had so far. Versus pricing out of almost everyone here’s ability to purchase it

As bad as thing are, Things could be Much, Much Worse.

Except for a series of fortunate circumstances that has led us all to this place in our life, every one of us could easily be one of the blissfully unaware sheeple .

I also had the overwhelming need to unplug this past weekend and contemplate if my actions are worth the effort. Well after spending time with some family and friends, I came to the conclusion,

Absolutely Yes!!

Because like many of us here I am the lone voice in the wilderness in my little circle. And though my little circle runs at nowhere near the level I do, and the rest of Turdville does. The only reason they have even heard ANYTHING on the subject is because of my being led to learn everything I can about this as if my life and the lives of my family depend on it.

I Believe Those that have the Knowledge and Ability also have the Responsibility.

Cry Me A River's picture

APMEX JUNK SILVER BUY-BACK PREMIUMS JUMP TO $3.50

It Looks Like Apmex Would Like The Physical Silver Market To Remain Above $25 Regardless of Paper Price Fluctuations. Here's The Chart---Very Vertical Indeed!

Also, This Comes At The Same Time As Their Re-Introduction Of "CULL JUNK SILVER" To Their List Of Available Silver Products:

When I Reported On This The First Time I Saw It, I Postulated That They Are In The Process Of Culling Their Remaining Junk Supplies In Order To Separate "Standard Junk Silver" From "Cull Junk Silver" For The Purpose Of Either Selling It By Weight Or Raising The 715 oz. per $1000 Face Standard To Some Higher Level Such As 718 oz Sometime In The Future. Time Will Tell:

Road_Scholar's picture

Ernest Hemmingway, once said

"How did you go bankrupt? Two ways. Gradually, then suddenly."  Rhymes a bit the TBTF banks' situation?!

Northern Border's picture

Force Manure !

Ladies and Gentlemen, 

Get your waders on, this one is going to be deep and messy.

End game upon us.  Prepare accordingly and get as many in the life boats as you can. 

NB

Bollocks's picture

lodmund

"plenty available in both london and the channel islands"

What are you on about? That's bollocks. I've been reporting on this for the last few months.

London supplies are at their lowest ever. Yes, ever.

The biggest channel island seller, Guernsey Mint, sell what they don't have, even when they say "in stock". I know this for a fact, having been buying regularly from them for the last couple of years.

"plenty available"

Plenty of BS available.

Texas Sandman's picture

@pforth

At the risk of feeding a troll.

> BUT  until I see premiums develop for physical bullion funds like PSLV, PHYS and CEF vrs their paper equivalents<

Apples & Oranges.  The reason you hold PHYSICAL silver or gold is to avoid counterparty risk.  Entrust them to counterparties and you defeat the purpose of owning them in the first place.

All of the things you mentioned are still paper.  Yes, they REPRESENT physical holdings.  However, that's not the issue.  You must keep these (paper) etfs in a format where they can easily be confiscated by TPTB.  The lesson of Cyprus (notably NOT denied by our own federal reserve) is that assets held in street name can be taken.

In other words, if I hold 1000 shares of PSLV at Etrade & Etrade gets in trouble, the Cyprus precedent would allow them to take my PSLV to bail out etrade.

Specifically, I refer you to this correspondence exhange between GATA & our beloved treasury where they claim the authority to confiscate any financial instrument in time of emergency:

http://gata.org/node/5606

Same can not be said for bars of silver or gold buried in the back yard & protected with an AR-15 assault rifle.

Yes, they could brand you an outlaw or whatever.  But I guaranty you there were many, many people who didn't turn in their gold with the 1930's confiscation order, there was only one attempted prosecution, and it was unsuccessful (a stupid individual who left his gold in the banking system & the bank turned them over to the government).

PSLV and CEF are simply not equivalent to gold or silver bullion held in your personal possession and protected at gunpoint.  Specifically, each of those are shares in which a foreign country has an interest & therefore rather specifically can be confiscated under the statutes referenced on the gata node.  Thieves whether neighborhood ones or government are lazy.  They'll go after stuff they can steal with a few keystrokes of a computer.  Thousands and tens of thousands of gun battles in cities is something TPTB would engage in only as a last resort.

Get it?

pforth's picture

Reply to @achmachat

Not a troll, possibly stupid but been posting here for a long time now and have a good history.  Just trying to improve my understanding of things....

It is certainly true that retail level gold and silver is being snapped up quickly.  That has drained product and increased premiums substantially at that level.  If this demand keeps up it will inevitably put pressure higher up the chain. But we are looking for gold and silver becoming hard to get and having premiums at the bulk institutional level before things break.

Wouldn't the premium's on PSLV, CEF and PHYS be a good place to start looking for that?  No one doubts that the silver and gold is there and they certainly have traded at substantial premiums in the past.  They are not risk free--your brokerage account can still be MFGlobaled but when bulk PM's get short in supply they should certainly trade with a higher premium than say GLD or SLV. Right?

AgAuthaChristie's picture

@Pforth

I am afraid you are right.  The Jim Willie claim is patently ridiculous. Something does seem to be happening but at this point people are blowing it way out of proportion. The disconnect isnt nearly enough at this point.

The Watchman's picture

Smart Man

Samuel-Adams-Quotes-4.jpg

Dr Jerome's picture

Just when I start to question being a stacker/prepper...

I took a trip from our small town to the big city yesterday. The sights gave me much to reflect upon.

The purpose of the visit was to become certified to work on homes contaminated with lead so our small real estate business can do our own renovations and repairs. I think we will give up the real estate business...

The class designed to help us follow EPA regulations opened my eyes a bit wider than usual. My wife and I decided we want no part of being a lead-certified contractor. A single mistake can cost thousands in EPA fines. Multiple mistakes with the EPA can run you out of business. A good friend was taken to the woodshed by the EPA—fined 12K and they made him produce the records of every lead job he has performed in the past four years. He has stopped doing that kind of work.

On the drive home, we skipped the freeway to avoid traffic and crossed town on the surface streets. I was appalled at the condition of the city. The streets were crumbling and patched, crumbling some more and patched again and still full of holes. Homes were run down. Some remodeled nicely, but most in poor shape. I wonder if government grants paid for the remodeling?

The new EPA rules make renovation expensive—very expensive. As a business, renovating and flipping homes is a losing proposition in that town. Nobody can afford to rebuild the homes. The city cannot afford to resurface the streets and sidewalks. Small business buildings were empty, Factories were empty. Other businesses were clearly struggling, judging by their "notice me" advertising and poor shape of their premises. Many people were just hanging around, walking, not dressed for work, living on government largess, I presume. And as we drove, we saw that even more factories were empty—big ones--in this mid-west factory town.

The only signs of growth were in the medical industry. The suburbs looked fairly healthy, on the surface.

As I reflected, I recalled that nearly every large city I have visited lately is in similar shape—Dayton, Cincinnati, Indianapolis, many areas of NY. I am pessimistic about the future. There is not enough private incentive and profit to rebuild our cities. Far too many residents do not earn their living, but are dependents. It makes perfect sense why the city police departments are buying tanks and training for riots. There are no solutions on the horizon.

And you know what? The small town I live in is no better. No jobs. Run down building everywhere. Deteriorating homes. The kids are moving to the cities to find careers. The city and county officials are struggling with a declining tax base—raising property taxes to make up for the shortfalls due to foreclosed and abandoned properties. Not enough money to even salt or plow all the roads last winter.

But don’t worry—the green shoots show that the economy is growing and these temporary headwinds will soon give way to real economic growth which will allow the Fed to safely unwind their positions. We will be hailing the genius of the Bernank for a century to come.  Right?

Is this the future for American cities?  Seems like the cities of Europe will have a much easier time of shifting back to a local, low-energy use economy. America's inner cities are not worth rebuilding and the suburbs require lots of oil to function.

I think I'll hold the course and keep prepping.

Texas Sandman's picture

Junk to the moon!!

My own order at provident for a small bag has been sitting there for weeks.

Seems the most reliable way to lay your hands on the stuff is ebay these days.

Tex.

pforth's picture

Reply to @texas sandman

You make good points.  CEF, PSLV, PHYS etc have less risk than GLD and SLV (and future's contracts with the COMEX) but perhaps brokerage level rehypothication is keeping the premiums in these instruments back.

That being said, I do know that you can get 1000 ounce bars of silver from places like http://www.bmgbullion.com/ for physical possession with 1 or 2% premiums.  Don't know what would happen if you tried to buy 1000 of them though.

Karankawa's picture

AgAuthaChristie

"Something does seem to be happening but at this point people are blowing it way out of proportion. The disconnect isnt nearly enough at this point."

It depends on what 'disconnect' you are speaking of.

I agree with Sandman in his post above.  The disconnect is between Paper representations of physical, and physical personally held.

I totally agree with the first part of your first sentence that "Something does seem to be happening ..."

People in the background are making moves and it's being reflected in the marketplace.  What do they know?  I have no idea.

What could it be?  Here is a possibility:

Congress just voted to make insider trading rules ... Not Include Congress.

What if they know of a last ditch effort to save the economy, and large physical funds were going to be a part of it?  Those are some pretty big piles.

Think congressmen/women care about the people or they ball the MUST keep rolling, for the 'good of the people?

Lamenting_Laverne_and_the_Scoundrel_Suctioncups's picture

Whadoyado? - Part 1

We are thinking in tandem here. I have been hit by information overload as well. I think that the next big shoe to drop will be a massive sell off in Crude, but to explain that, I have decided to go much further back to try to tie the dots together for myself. I will share the result with you guys on the way, so this is the first post in a series. 

As earlier stated, I think this is the big one, and that there are good forces at work to manage the transition. I could not explain why, and I decided to go back... way back to try and identify, why we are indeed at a historic moment in time, and who the entities are working to slow down the devastation and and to hamper the efforts of dark forces. 

I thought it would be too wordy, but seeing that Turd is also trying to dig into the deeper meat here, I will post my writing anyway, since they seem to address part of the "how" and "why" questions, Turd received. There are quite many moving parts to put together, so what follows is likely to be messy, and I am at present not sure where it ends. There will be references to Sinclair, Conspiracy and Freegold, so if you don’t like that, please skip to the next post. Everything that follows is my opinion, ideas and speculation, but not every line of thought and source has been tested (e.g. Wiki), so there are probably mistakes too.  Here we go:

Whadoyado?

There is a war being waged, and I ask myself what are the real objectives. To illustrate, lets start with Ilya’s question from an earlier thread:

Ilya Repin says: "I just hope everyone here knows what they are wishing for with a high Silver price.. this banging the drum for 500$ Silver and 50,000$ gold is really banging the drum for destruction of everyones living standards."

That would be conventional wisdom, but is it really true? Does Gold really make a difference to regular people in daily life. I would say no. What really matters to regular people and the real economy is the price of Oil. If control of the price of Oil is lost, it will have catastrophic consequences almost immediately – starting with the inability to stay warm in the winter, and to produce things at a price people can afford. 

The reason Gold is important, is because without Gold, you will get no Oil. Hagarth posted a video yesterday with a picture of the Saudi Aramco gold disc. These discs are proof of gold payment for oil, going way back.

Everything in modern life therefore circles around Gold and Oil – basically all the rest is some degree of noise. Back in the day when the Saudis discovered Oil, the TPTB knew that the world gold supply had been cornered from day one, because the Saudis would spend their revenue on Gold.

Therefore, the people who had a desire to rule the world, had to control both Gold and Oil. In short, they would need to corner the Gold market and the Oil Market.

At the time, the Gold was spread around in sovereign countries, controlled by different factions. How do you relieve those factions of their gold and centralize it in one place. Well, inspired by the Gold Secrets film from Turdville TV night, my very short and simplified speculation right now is , that WWI was about impoverishment of the powerhouses of the time, and by leveraging the financial chaos to the maximum, WWII was about luring the countries to send their Gold off to “safety” in the US after having been caught in a pinching maneuver between Stalin and Hitler, that made sure no Gold would be sent East. Mission accomplished.

During the Bretton Woods discussions, the BIS was accused of having facilitated transfer of looted Gold from the Nazi occupied areas into Switzerland and possibly maybe even back to the US. Norway and other European countries demanded that the BIS should be liquidated at once, but non other than John Maynard Keynes, who was a British delegate at the conference opposed this measure. He was voted down, but the execution was magically reversed with the help of Harry Truman. https://en.wikipedia.org/wiki/Bank_for_International_Settlements

(In conspiratorical parenthesis:  Norway has a generally prudent people with emphasis on a high degree of transparency and democracy. They also have North Sea Oil and hence probably of interest to TPTB. They vigorously fought the Nazi occupation to prevent the Nazi from getting access to heavy water for nuclear weapons production. Last year, I think, the Olso Boerse introduced limits to HFT by adding a charge to orders above a certain limit, that was not executed – the limit number was of no consequence to human traders – only for fleecing computers – which must have been a poke straight in the eye of TPTB henchmen in the form of certain hedge funds. Finally, Normay was hit by a terrorist attack of a “so called homegrown lone right wing extremist” some time back….. now where did we hear that before.)

Back on track - As we know, Bretton Woods established the USD as world reserve currency with the explicit backing of deposited gold, some never to be returned, and with the gold confiscated from the US public in the 1930’ies. The Globalists now had the tools to continue with the next stage of the plan: To corner private gold in the rest of the world and to corner oil.

(To be continued in part 2)

Nigel Black's picture

got to love these free, non-manipulated markets

Keep walking, nothing to see here...

Lamenting_Laverne_and_the_Scoundrel_Suctioncups's picture

Whadoyado? - Part 2

(Continued from Whatdoyado? part 1)

Bretton Woods kept the oil flowing into the US from the Middle East and along with the US’ own production, a manufacturing boom ensued. Prosperity all around. Lots of money was spent on warfare which the Globalist Industrial Complex was happy about.  The objective of the warfare was basically to weaken any perceived threat and to aid the corner on Gold and Oil.

In the years following WWII the League of Nations was expanded in the attempt to avoid more war. It became the UN. There are already indications in the late 1950’ies and early 1960’ies, that a struggle was in action with regards to control of the agenda at the UN. I have not dug into the detailed positions, but simply point out that overall “The corner of Gold and Oil agenda” (and possibly other natural resources) seemed to be in full swing in Africa during the 1960’ies in the old colonies, and a proof that “someone” was not happy with the activities of the UN could be deducted from the mysterious death, and possible assassination of UN General Secretary Dag Hammerskjold on his way to broker peace in Congo in September 1961.

http://en.wikipedia.org/wiki/Dag_Hammarskj%C3%B6ld

After this we saw the assassination of Kennedy in November 1963. An attempt to co-opt the UN does in any case make a lot of sense, if you are a Globalist with ambitions to conquer foreign lands for resource control. In this case, you could definitely use an international vehicle to produce some legitimacy for your campaigns.

So the campaign for Oil and Gold continues. However, opposing forces are throwing sand in the machinery because “Trust is as good as gold” no longer seem to stick quite as well. This leads up to “Show me the Gold” and the collapse of the London Gold Pool and Nixon closing the Gold window a few years later.

What now? – There is no longer as much Gold available to pay the Saudies outright or to let them buy in the market with the Oil proceeds. That there is trouble brewing becomes clear, when we look at the Gold Chart and the Oil Chart together, keeping in mind that TPTB cannot function without a continuous flow of oil.

The price of oil moves only a little from 1971 to 1973. Maybe there was still enough Gold to cover this period of time. Another reason could be, that from 1971 to 1973 there was a fixed exchange rate between the currencies, and it was not until 1973 the currencies were allowed to float. Another interesting tidbit, that is probably just as important was that until 1973 the Arabian American Oil Company (later Aramco) had been on private hands paying royalties in Gold to the Saudi King.

Aramco was founded as a subsidiary of Standard Oil in California, which I believe is a Rockerfeller company, and up to this point in time, I guess TPTB had been in full control over the Saudi Oil flow by use of the Gold discs. However, in 1973 the Saudi state aquires a 25% stake in Aramco – signalling the State = King taking an interest in the inner workings of the company, which was followed up by an acquisition of the remaing 75% in 1980. The 1973 change of direction could be in response to US backing of the Israel in the Yom Kippur war of 1973.

http://en.wikipedia.org/wiki/Saudi_Aramco

So does this mean that TPTB was kicked out on the sidelines or merely that they had finished infiltration of the Saudi elite, and hence could control the situation from within with local actors – I don’t know, but the change of direction was interesting. If we look at what TPTB did afterwards and what happened in the markets, we might get an idea.

After Nixon closed the Gold window in 1971 the price of Oil only rose 2,24 to 3,29 from 1971 to 1973. Then from 1973 – the year where the currencies started to float, and the year of state participation in Saudi Aramco – the Oil price rose massively from 3,29 to 11,58 in 1973-1974. Gold went from 65ish to 200ish during the same period. This indicates that the Saudi King no longer received the Gold, he wanted, so he had to buy it in the market, and charge more for his Oil to reflect the worthlessness of the green paper notes, he initially got.

This unleashed the Gold Bull that had been held captive via the London Gold Pool after WWII and during the Vietnam War spending spree in the 1960’ies. This indicated to me that the control of Saudi Oil had been at least temporary lost or diminished. It was also catastrophic to the Gold corner plans, because a Gold Bull Market would mean that Gold would soon be scattered all around the globe in big and small hands, but unfortunately in both cases much further out of reach for TPTB. He he.

Something had to be done. Whatdoyado…whatdoyado? Well, ya go and talk to the financial wizards of course. After the CME Group had been trading “industrial” commodities like Silver from 1933, Platinum from 1956 and Palladium from 1968, they suddenly felt the need to introduce a Gold Futures Contract, which started trading on – you guessed it – 31/12-1974.

Gold retraced most of the up-move over the next 2 years. In addition to this, Kissinger allegedly managed to persuade first the Saudis and next all of OPEC to only receive USD for Oil in return for a “security” presence in the Middle East. How he managed to do this, when one of the reasons that Saudi most likely turned interested in own Aramco affairs, was the Yom Kippur War, is interesting, but I am sure that he also promised to secure a steady stream of Gold to Saudi, because the Financial Wizards had come up with a plan, that could work to provide exactly that. 

(To be continued in part 3)

Syndicate contentComments for "Gold: Delivery or Default?"