From Turdville With Love; An open letter to the good people of Switzerland

201
Mon, May 12, 2014 - 9:51pm

I hate to be the bearer of bad news, Switzerland, but what you suspected all along is actually true. Your gold is gone. All of it. Leased and sold away by your central bankers and politicians.

As recently as 1996, the Swiss Franc was considered "good as gold". Why was this the case? Since the early 20th century, the Swiss Franc had offered a reserve backing of gold. This uniquely sound currency had given the country of Switzerland considerable financial power and independence, yet, at the urging of their politicians and central bankers, the Swiss willingly forfeited this enviable position.

The demise of the Franc and Swiss sovereignty began in 1992 when the Swiss made the fateful decision to join the International Monetary Fund (IMF). The IMF's Articles of Agreement (Article IV, Sec 2b) clearly state that no member country can have a currency linked to gold and, as such, Switzerland immediately set out on a course to de-link the Franc from gold. Just four short years later, the Swiss National Bank (SNB) and the Swiss government had formed a plan to eliminate the Franc's gold backing and, in March of 1997, a revision of the Nationalbank Act was passed and all links of gold to the Franc were removed. Further, since the Swiss constitution mandated sound money, it had to be amended, too. Thus, in a hastily organized vote, a new Swiss constitution was approved in May of 2000. (https://www.efd.admin.ch/dokumentation/medieninformationen/archiv/00382/...) This served to finally and permanently sever the Franc's gold backing and initiated the Swiss into the world of global fiat currency.

The SNB has spent the 14 years since leasing and re-leasing the country's gold reserves. In 1999, the SNB reported gold reserves of 2,590 metric tonnes. The most current "audit" of SNB reserves showed just 1,040 metric tonnes of gold remaining on the balance sheet and I believe that none of this is actual, physical gold. Instead, what the SNB holds are paper claims and promissory notes. The remaining 1,040 tonnes has been sold and re-sold into the marketplace by greedy bullion banks, intent upon suppressing price through the leverage of paper metal futures contracts and rehypothecation. In other words, the "gold" that the SNB claims to hold/own on behalf of the Swiss people is gone. This makes the Swiss people just another bagholder, certain to be left in line wanting with all of the other holders of unallocated accounts when the fractional reserve bullion banking system inevitably collapses.

Furthermore, I've come to the conclusion that it was this last bit of Swiss gold that was utilized to suppress and manipulate price away from the alltime highs of September 2011. What makes me think this? Let's start with a history lesson...

Again, the Swiss officially forfeited their birthright of national independence and sovereignty when they joined the IMF in 1992. Then, by formally de-linking the Franc from gold in 2000, they accepted full membership into the clique of fiat currencies. Regardless, and perhaps just by tradition, the Swiss Franc was still considered a "safe haven" currency as late as 2011. But that's when things got out of hand.

You recall 2011, don't you? Under the weight of $600B worth of QE2, the U.S. Dollar Index was collapsing. From a high near 90 in mid-2010, it had fallen to near 73 by the spring of 2011. Shortly thereafter, the U.S. fiscal situation began to wobble as "Debt Ceiling" negotiations took place in Washington and the U.S. credit rating was downgraded by Standard & Poor's. The ensuing political rancor drove gold from $1500 to $1900 in eight weeks. Also catching a bid in this "safe haven" trade was the Swiss Franc and, in the summer of 2011, it also rallied over 20%.

"We can't have this!", screamed the Swiss Keynesians. "Something must be done or our export-driven economy will suffer", they warned. So what happened next? The SNB went ALL IN.

In the wee hours of Tuesday, September 6, 2011, the SNB announced a permanent and horrific change to the Swiss currency. Henceforth, the Franc would be linked/pegged to the Euro. No more safe haven bid. No more national sovereignty. Going forward, the Swiss were all in. Their fortunes had been officially tied to the fortunes of the European Union, for better or for worse. At this point, there was no further reason to hold any gold in reserve. Why would the Swiss need it? Their currency was now officially fiat and it's value was permanently pegged to another fiat, the Euro. What purpose would gold serve going forward? As the Keynesians say, it had become "a barbarous relic".

Left as the sole remaining "safe haven", one would have expected a huge rally in gold on 9/6/11, likely moving price up and through $2000/ounce from the weekend close near $1920. Instead, with the same counter-intuitive move to which we've all grown accustomed in the time since, gold was raided and price was smashed. Here are some flashback c&ps for you. First two charts from 9/6/11 and 9/7/11 showing the unusual price action:

And, as you might imagine, I was actively chronicling these events on this site. Here's a sample from Wednesday, Sept 7:

"I think it's quite clear now why gold responded yesterday in the opposite direction from what you would have expected. With central banks actively managing a debasement of their currencies, we are now seeing them also attempt to actively manage a debasement of gold, too. Be careful. Be very careful.

We all wondered yesterday why gold would plunge on the SNB news. Now we know. In an attempt to mitigate the "negative" effect on francs priced in gold, the SNB sold a massive amount of gold futures at the same time. How do we know this, because it appears that the same thing earlier today.

Yes, that's 7,000 contracts (700,000 ounces) (nearly 22 metric tons!) dumped on the Globex while London and NY are closed! This should also raise your deja vu spidey senses regarding silver in May. The $ drop in silver was greater because the silver market is considerably smaller. However, it's the same strategy. Maximize the downward impact and collateral damage by executing the attack at a time of minimal liquidity. This all wreaks of malicious manipulation. If you are trading, be prepared for anything."

And there you have it. Speculated upon at the time and again here in this post: The SNB is the culprit. It was the remaining SNB gold that was leased and dumped onto the market in late 2011, shoving price back from the record highs and smashing gold for nearly 0 in a little over three weeks. What was left of the Swiss gold was then leased to bullion banks throughout 2012 and the first half of 2013. Physical demand only increased, however, and that remaining Swiss gold has now been delivered to China and points East. Yes, the SNB still shows this leased gold on their balances sheet as an asset. Most every other western Central Bank utilizes the same accounting gimmick. Instead, it should be listed as a liability as the actual, physical underlying is no longer there. It is...gone for good.

Sensing this, a movement has begun in Switzerland to reclaim their sovereignty and birthright. The Swiss People's Party (SVP), which was the only major party voting against the new Constitution back in 2000, began an initiative last year to re-enforce a gold backing to the Franc. After collecting more than the requisite 100,000 signatures, a national referendum on the issue is planned. First, however, a vote was held last week in Swiss parliament. This procedural vote is basically a "recommendation" from Parliament, designed to impact the eventual, national vote. Here's how Bloomberg described it in an article dated May 5:

SWITZERLAND (BLOOMBERG) - >

Swiss parliamentarians urged rejection of a popular initiative that would curtail the Swiss National Bank’s independence by requiring it to hold a fixed portion of its assets in gold.

Members of the Swiss parliament’s lower house voted 129 to 20 with 25 abstentions today against the plan, which demands that at least 20 percent of the central bank’s assets be in gold. It would also disallow the sale of any such holdings and require all SNB gold be held in Switzerland.

No date for a national vote has yet been set. The government in November also recommended the initiative be opposed, saying it would impinge upon the SNB’s ability to conduct monetary policy. Parliament and the multi-party government issue recommendations on all national referendums as a matter of procedure.

Of course! How could anyone, in their right mind, be in favor of this:

  1. Demanding that at least 20% of your central bank assets be in gold
  2. Disallowing any sale of said gold
  3. Require repatriation of all foreign-held gold

Don't you silly peasants know what's good for you? By making these demands, you "impinge on your central bank's ability to conduct monetary policy" and "curtail the SNB's independence"!

Then, check this out, also from the same Bloomberg story. Last year, even Thomas Jordan, the head of the SNB, got in on the act:

"SNB President Thomas Jordan took the extraordinary step of commenting on politics last year when he urged rejection of the initiative, saying it would crimp the Zurich-based institution’s independence and force it into “large-scale” purchases to meet the required 20 percent threshold."

Hmmm. "Large-scale purchases", just to get back to the 20% threshold? Well, that's interesting, now isn't it? And what about this repatriation requirement? Why should that be a big deal? The SNB currently provides this list of its gold storage:

  • 70% (728 mts) of the gold is already held in Switzerland
  • 20% (208 mts) is held at The Bank of England
  • and 10% (104 mts) is held at The Bank of Canada

I can't speak for the 104 metric tonnes held in Canada but the Swiss people should be very nervous about the gold the SNB allegedly stores in London (https://www.tfmetalsreport.com/podcast/5678/empty-vaults-london). Also, the SNB has been reticent to discuss where in Switzerland their gold is stored. Could this be because the "gold" is stored with the Bank of International Settlements for easy distribution and leasing? And where is the BIS? It's in Basel, of course. And where is Basel? It's in Switzerland!! How about that??

Look, I'll cut the chase here to save some time. Here's the "open letter":

To the good people of Switzerland:

You have been scammed and sold down the river. Your politicians and bankers, in a pathetic attempt to consolidate power and curry favor with the EU, have given away your independence and your historic sovereignty. You should be angry.

The initiative you have taken and the referendum you have planned are all well and good. I applaud you for taking these steps within the context of Swiss law and tradition. However, you must understand what is truly at stake and if you don't take more powerful and forceful acts soon, the likelihood of you ever regaining your birthright as an independent, sovereign nation is slim.

The next steps you undertake must include these:

  • Demand an immediate and full, independent audit of the SNB gold reserves. This is your gold, not the SNB's, and you should be allowed a full accounting.
  • All Swiss gold that is held domestically must be held in Swiss-owned bank vaults, not at the BIS.
  • Demand an immediate repatriation of all foreign-held gold. Do not accept excuses regarding "logistics". Give the BoE and the BoC no more than 90 days to return your gold.
  • Immediately de-peg the Franc from the Euro and divest yourself of all accumulated Euro holdings. Ignore the Keynesian shills who would have you believe that a strong currency is bad for economic growth.
  • Use the process of divesting yourself of the Euro to accumulate and rebuild your gold reserves. Then, use these reserves to once again partially back your currency.

The world is rapidly changing and tomorrow will not be like yesterday. The current global financial system, based upon promises, debt and unlimited fiat currency will one day soon by replaced by a system that returns the world to a sound money platform. The monetary powers of the 21st Century will come to the forefront by virtue of their accumulated reserves of sound money, not by their addiction to easy money.

You, Switzerland, still have time to act and prepare but you must move quickly. The possibility exists for you to reverse course and demand change but time is short. The end of the great Keynesian experiment is upon us. Reclaim your gold and your sovereignty now or be forever consigned to the trash heap of fiat currency history.

Faithfully submitted with all sincerity,

TF

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rl999
May 14, 2014 - 9:12am

London silver fix to be

London silver fix to be scrapped from August

SINGAPORE/LONDON Wed May 14, 2014 9:04am BST

Reuters) - The London silver "fix", a global benchmark for spot silver prices, will cease to operate after Aug. 14, the company that administers the process said on Wednesday, amid rising regulatory scrutiny of price-setting in bullion markets.

Deutsche Bank AG, HSBC and Bank of Nova Scotia will continue to participate in the fix until then, the London Silver Market Fixing Ltd said.

Last month, Deutsche Bank had resigned its seat on the London gold and silver fixes without finding a buyer after its decision to withdraw from the bulk of its commodities business.

"Deutsche Bank has postponed its resignation from the London Silver Market Fixing from 29 April 2014 to 14 August 2014, at which point the benchmark will terminate," according to an emailed statement from the bank. The gold fix, along with other commodity benchmarks, has come under increasing scrutiny by regulators in Europe and the United States since the London Interbank Offered Rate (Libor) manipulation case last year.

Deutsche Bank's decision earlier this year to leave the fix process raised questions about the future of such a price-setting process, which happens through a teleconference between the participating banks. The banks are facing lawsuits accusing them of alleged price manipulation.

(Reporting by A. Ananthalakshmi and Veronica Brown in London; Editing by Richard Pullin and Muralikumar Anantharaman)

rl999
May 14, 2014 - 9:10am

london silver fix ends

Curtain to Fall on London's Historic Silver Benchmark

Move Comes After Deutsche Bank Resigned its Seat on Gold and Silver Fixing Panels

By

Francesca Freeman

Updated May 14, 2014 6:27 a.m. ET

The curtain will soon fall on London's historic silver benchmark, after the process was deemed unviable following the exit of one of the three price-setting members.

The London Silver Market Fixing Ltd. said it would cease to administer the process, known as the 'fix', as of Aug. 14, but said it wasn't in a position to comment on what happens...

rl999
May 14, 2014 - 9:09am

hate to quote anything from these asshats but..

from the clowns at business insider

and the Yen is jumping on hawkish comments from a ex-BoJ official, propelling the DXY back over the 80 level – a headwind for commodities. That said, Gold is up 70bp, and back over the 200dma – while Silver is jumping 1.3% as London ends the Silver Fixing.

--That seems like the type of news that T-ville would be all over.

ggnewmex
May 14, 2014 - 9:04am

LOL

If very recent history stays true, I can comfortably say that the price of Au and Ag will be 1307 and 19.91 ( +- 4 cents)

at 1PM NYC time.

Trading has been weird like that lately. I sure would not be initiating a position based off price action.

Verus nemo
May 14, 2014 - 8:56am

If today's movement upward were to persist through

tomorrow or Friday----with Au up 1% already today and Ag up 2%----I wouldn't be surprised to see the CME Group, Inc impose those new daily movement limits in PM idea they floated just last week. If/when that happens, I suspect that we'll see much of any available PMs be 'hoovered-up' quite rapidly, even down to the odd and battered silver rounds at one's LCS. Gold already is essentially unavailable at my LCS.

On a separate but related note, it certainly looks as though we'll see GOFO rates stay negative (at least for the 1 month out) for the first time throughout a non-delivery month. That'll make June potentially exciting...

-SilverIsMoney-
May 14, 2014 - 8:39am

Im guessing ECB response...

Tapering is bullish for PMs... Always has been regardless of what the experts will tell you.

Less cheap money = Lower Stocks = Flight to Safe Havens

Id even go so far to say that this time around because of how dependent the system is on low rates that spiking interest rates will also be bullish.

Mickey
May 14, 2014 - 8:35am

If you have not been a gold bull for long

You will be amazed at how fast pm can run up.

small market size, and as turd pointed out a few years ago, first the honest shorts have to close them, then go long.

the dishonest shorts are just paper trading while they build up their physical.

ggnewmex
May 14, 2014 - 8:34am

Could this move

be related to the de-dollarization of the world which appears to be coming faster than ever? or more simply, a technical move..

hmmm

_tr0jan_
May 14, 2014 - 8:16am

POP

Gold 1306

Silver 19.90

erewenguy
May 14, 2014 - 8:10am

The cracks in the dam are growing wider

https://americanthinker.com/blog/2014/05/death_of_the_dollar_menu_shows_...

Death of the Dollar Menu shows Fed's Wage Erosion

Nicholas Arnold

“Got a buck? you’re in luck!” This jingle was a staple for you ever since your parents started giving you an allowance....

Today, the Dollar Menu is dead. They say it’s the Dollar Menu “and more” but the only “more” is going into the cash register. Even the substandard McDouble has been hiked by almost 60 cents. Hopefully, you make enough that you don’t need go there much anymore, but what about your kids? Assuming you pay them the same allowance, it’s not going as far as yours did just a decade ago. It’s not just happening in the fast food industry either: working Americans are feeling the pinch everywhere from grocery prices to gas, and are being forced to put less in savings for retirement so they can buy essentials today. So why are our wages shrinking? Some politicians argue that corporations are fattening their bottom line. Probably true, but at most, only half the story: in the late 90s, the “Dollar Menu” era if you will, most of our policies on taxes, trade, and regulation were, for most Americans, the same as they are today. The only thing that was different was monetary policy: under Fed Chairmen Paul Volcker and Allan Greenspan in the 80s and 90s, the Federal Reserve operated under rules that governed their interest rates and monetary production, fondly remembered as the Great Moderation. About 13 years ago, the rules were thrown out, and the result has been rapidly increasing cost of living. The sad part is the rising prices aren’t even acknowledged by government officials, since the Consumer Price Index (which measures official inflation) excludes the cost of food and energy, things every worker needs to buy.

What can we do? First, we need to take a hard look at the monetary policies at the heart of the problem. Rep. Kevin Brady and Senator John Cornyn have taken a step forward by introducing a bipartisan, bicameral Centennial Monetary Commission to look at the data for six different monetary regimes the Fed has pursued over the past 100 years, and make recommendations as to which ones led to the greatest job creation and growth. Unlike an audit-the-fed push, this proposal hasn’t been polarized (it’s even been sponsored by the President of the freshmen Democratic Caucus, Rep. John Delaney) and would give us an opportunity for course correction without compromising the independence of the Fed. For anyone trying to save for retirement, for anyone who feels sick whenever they pay at the pump or buy groceries, for anyone who feels like their savings are shrinking, it’s time to look at our current easy money policy and say “we are not lovin’ it…”

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