Tag Archives: gold leasing

Indian Government Gold Schemes Destined To Fail

The new schemes are aimed at monetizing some of the huge amounts of gold believed to be in private hands in India – in particular some of the religious temples have huge hoards of gold which have been built up over the years. The idea is to give gold holders a way of generating income from their bullion holdings, although the general distrust of the economic system which prompts Indians to hold gold in the first place will indeed likely have a limiting impact on the take-up.   Lawrie Williams, LINK

The India Government is rolling out a plan designed to coerce Indians into putting their gold into banks in exchange for receiving interest on the gold deposits.  The “Gold Monetization Scheme” and “Gold Sovereign Bond Scheme” are both aimed at “monetizing” the gold held by private citizens.  But why are the banks in India interested in getting ahold of the massive amount of privately held gold in India?  In reality, these “schemes” are nothing more than a thinly disguised “scheme” to implement a fractional gold system.

I highly suspect that the Fed/U.S. Government was instrumental in pushing this plan through the Indian Central Bank and Finance Ministry.  India will import at least 1,000 tonnes of gold this year (easily over 1,000 tonnes when smuggling is considered).  This is putting extreme stress on the ability of the western Central Banks/bullion banks to source gold that can be delivered into the big eastern hemisphere buyers, who require and demand physical delivery.

It’s in the Indian DNA to buy and hold possession of gold in all forms.  They have inherent distrust of the economic system, which is why they buy and hold physical gold in the first place.  In fact, as the article linked above references, there’s been a gold deposit program in place since 1999 but has attracted only 15 tonnes since its inception.

Exchanging gold in hand for a piece of paper that promises the payment of interest plus the return of that gold at a specified date in the future leaves the investor exposed to a high degree of counterparty.  Unquestionably the Indian Government wants to this gold so that it can turnaround and lease it to the western Central Banks, who are in desperate need of a steady supply of gold to deliver to China.  As for the extreme degree of the counterparty risk involved, just as the German Government…

 

Gold Manipulation: It’s Much Bigger Than You Think

From Michael Edwards, editor of the Activist Post:   All of your work is outstanding, but this one goes beyond – wow, thank you very much for your analysis. This is one of those stories that can really open people’s minds on a broad scale that there truly are things called “conspiracies.”  Maybe if people can face the obvious, they will dig even deeper.

The gold price manipulation scheme will go down as the biggest financial market scandal in US history for numerous reasons. They include the destruction of the free market system in the United States. The manipulation of the gold and silver prices eventually led to the manipulation of US interest rates via the Fed, the stock market via the Plunge Protection Team, and to the currency markets.  – Bill Murphy, GATA.org

The gold manipulation scheme has taken on historic proportions.  It’s been going on for several decades – witness the London gold pools of the 1960’s which were implemented to prevent the price of gold from taking off because the U.S. was running out of gold with which to back the Treasury debt it had issued to foreign creditors who were redeeming their Treasury notes for gold per the Bretton Woods Agreement.

Ultimately this scheme failed when Charles de Gaulle famously began redeeming France’s Treasuries for gold because he had calculated that the U.S. had issued significantly more Treasuries than it had gold to back those Treasuries.  France pulled out of the London gold pool operation and a couple years later Nixon was forced close the gold window or, rather, end the convertibility of foreign-owned Treasuries into gold.

Frank Veneroso, who wrote the brilliant “Gold Book” in 1998, told Sprott’s John Embry and I many years ago that the gold price suppression scheme was “much bigger than you think.” Frank found out the US Government was taping his phone calls and ever since has shut up about what GATA has to say. Frank was the one who exposed the gold leasing scheme, which is how The Gold Cartel did their thing so many years ago. It is how GATA knows the central banks have well less than half the gold they say they have in their vaults. Frank got his information from a Bank of England source who has since died.  – Bill Murphy

Each new financial crisis (emerging market debt, Long Term Capital, tech bubble, housing/credit bubble, etc) was met with successively larger amounts of money printing and credit creation.   Print money to keep the banks and the markets from collapsing and create more credit to keep the giant Ponzi scheme going.  Once the gold bull market got underway in late 2000/early 2001, in order support the monetary intervention required to keep the U.S. systemic “shell game” going, the manipulation of the gold markets began to intensify.  It also started to become more obvious in nature to those where researching, trading and investing in the precious metals sector.  GATA was and is instrumental in exposing and reporting the facts about the manipulation of the gold market.

At the end of 2000, the Treasury had $5.6 trillion in debt outstanding.  The current amount is $18.15 trillion but there is a debt issuance ceiling in force now for which the Obama Government is circumventing by raiding Federal pension funds, the Social Security Trust, issuing IOU’s and other cash “reservoirs” that will soon run out.  The debt ceiling will have to be lifted again, like to $20 trillion.  That’s nearly a 400% increase in just Treasury debt since 2000.  At the end of 2000, the Treasury debt to GDP ratio was 54%.  Today it is 102.5% and this does not include the Treasury’s Fannie Mae and Freddie Mac guarantees.  In other words, the amount of Government debt has grown at twice the nominal rate of the U.S. economy in the same time period.  Note: the “wealth” produced by the U.S. is part of the theoretical backing of the dollar.

This is just Government on-balance-sheet debt.  Total Government contingent liabilities, i.e. on-balance-sheet plus off-balance-sheet, is now estimated by several different sources to be at least $200 trillion.  This would include pension, Social Security, and several other Government entitlement programs.  Recently it was estimated that State pension funds are now underfunded by at least $2 trillion.  Student loan debt  is now well over $1 trillion, of which 30%-40% in arrears or in outright/technical default,   Most private pension funds are at least underfunded by 50%.  

An “underfunded” liability is a socially correct term for “debt.”  When the stock and credit markets re-collapse, the underfunded status of most if not all pensions will likely approach more like 90%.  Some pensions will  be wiped out.

Then there’s the derivatives…

The point here is that the fundamentals underpinning the precious metals market have strengthened cumulatively since the gold bull market began.  There has not been one point in time in the last 15 years, in fact, when these fundamentals have weakened.  What has changed is the degree of intervention engaged in by the Central Banks and U.S. Government as a means of preventing the price of gold from rising and signalling to the world that the U.S. political and economic system – the system which issues the world’s reserve currency – is increasingly corrupt, criminal and entirely fraudulent.

Yes, China has its issues as well but it has two things that the U.S. does not:  $3.4 trillion in foreign currency reserves backed by a big trade surplus and a massive amount of gold.  On the other hand, the U.S. foreign reserves are roughly $39 billion and it runs a $40 billion/month trade deficit.  It is highly unlikely that the U.S. Government possesses legal title to little if any gold.

In my opinion, the ability of the U.S. in conjunction with its European vassals and the BIS to keep the U.S. dollar fiat money system in motion is largely dependent on the ability to keep the price of gold suppressed.  In 2011, when silver threatened to take out $50 and gold was headed in the $2000’s, the U.S. elitists were staring into the abyss.  That’s when the gold market intervention took on a whole new dimension.  This is best visualized with this graphic:

FEDBALGOLD1

The dislocation in the correlation between the price of gold and the size of the  Fed balance sheet shown in the graph above is further supported by the manipulation activity reflected in these two graphs (inset chart on the right graph sourced from Zerohedge, with my edits) – click to enlarge image:

UntitledGOLD_Q1

The graph on the left shows the massive paper ambush on the gold futures market on Sunday evening July 19. An enormous amount of paper gold contracts were dumped into the Comex’s globex electronic trading system during one of the slowest trading periods at any point in time during the trading week. A bona fide seller trying to sell a big position at the best possible execution prices would never have dumped a position like this. The only explanation is that someone wanted to drive the price the price of gold lower and make a point of doing so. This particular occurrence in the gold market has been a recurring event over the life of the gold bull market. However, the frequency of the above trading pattern has significantly increased since 2011.

The graph on the right is the daily, year-to-date graph of the price of gold. As you can see, despite the continuous strengthening of the underlying fundamentals supporting the price of gold, including the heightened risk imposed on the global financial system by the probable financial collapse of Greece, the price of gold trended lower during Q1 2015. The inset graphic, however, shows the big spike in gold OTC derivatives issued and held by the big banks, JP Morgan being the largest issuer of OTC gold derivatives. There is a definitive correlation between the big spike in gold OTC derivatives and the downward pressure on the price of gold.

PaperGoldRatio

This graph on the right, prepared by the TFMetalsReport, shows the record level of the ratio of paper gold to physical gold on the Comex – 117x.  You can see the ratio exploded and went vertical starting mid-2013, which is right around the time Bernanke delivered his infamous “QE taper speech.”  This graph unequivocally reflects the sense of desperation by the Fed and the Treasury in its efforts to push the price of gold lower using the extremely fraudulent paper gold market.

Finally, since mid-December, when it seems some sort of derivatives bomb exploded – LINK –  the anti-gold propaganda from the media has significantly intensified.  This especially true since the July 19 ambush.  It’s not just anti-gold propaganda, however,  it’s a grotesque preponderance of insidious misinformation and disinformation.  The blatant manipulation of the gold market in conjunction with the rabid dissemination of anti-gold rhetoric from both the financial press and Wall Street reeks of desperation – desperation to keep a lid on the one market signal that would undermine the elitists’ perpetuation of the U.S. dollar-based systemic Ponzi scheme which enables them to loot and confiscate middle class wealth (“middle class” being defined as anyone not wealthy enough to buy their own politician or not in the privileged position to benefit from the wealth confiscation schemes).

The Shadow of Truth will be releasing a podcast in two-parts of a two hour conversation with Jim Willie sometime tomorrow.  In a portion of the podcast, Jim Willie lays out the elaborate scheme being used to keep interest rates low and to push the dollar higher in one last desperate attempt to maintain the reserve status of the U.S. dollar and global hegemony of the United States, both of which are being systematically dismantled. Keeping a lid on the price of gold is the nexus of the blueprint for implementing the extreme market intervention by the Federal Reserve and the Treasury’s Working Group on Financial markets.

When the intervention in the gold market fails, which it inevitably will as have all other market interventions in history, it will have the systemic affect of delivering a massive blow from a 2 x 4 on the back of the heads of the unsuspecting public in this country.  In other words, be prepared for life to become very uncomfortable in every respect.  My personal view is that will be the case even for those of us who have taken steps to prepare for this inevitability.

State Of Texas To The Fed/Government: “We Want Our Gold”

This Texas Gold Depository Bill represents a direct threat to the western Central Bank fraudulent fractional gold reserve system in which most if not all of the bullion held by the Fed, ECB banks and the Bank of England has been leased or hypothecated.  This Bill, if passed, represents a direct threat to the wealthy elitists’ ability to loot our system using the U.S. dollar Ponzi scheme.  – Investment Research Dynamics

Two big public pension funds in Texas – University of Texas and the Texas Teachers Retirement System – own more than $1 billion worth of gold.  It was originally being held in the form of futures and ETFs.  In 2011, uncomfortable with owning gold in paper form, University of Texas took delivery of bars and “safekept” them in an HSBC vault in NYC.

Now there’s Bill sitting on the Texas Governor’s desk waiting to be reviewed for his signature.  Clearly, there are powerful entities in Texas who are concerned about the possibility that the gold owned in physical form by the State of Texas is at risk if it remains in storage in a bullion bank vault in NYC.

I think that somebody was looking at that, we better have this under our complete control,” said constitutional lawyer and gold expert Edwin Vieira, of the Texas bill. “They don’t want to have the gold in some bank somewhere and in two to five years it turns out not to be there.”  – Edwin Vieira, Constitutional law expert specifically as the Constitution relates to money 

While the State of Texas is going to attempt to pre-empt the risk that the physical gold owned by Texas has been or will be hyothecated or leased, I would bet that the bars already have counterparty ownership claims attached, even if the bars are still sitting in HSBC’s vault.

It’s no secret anymore that the western Central Banks have leased out most of the gold being stored in their vault facilities.  Anyone who denies this is either completely corrupted or a complete idiot.   Even Alan Greenspan admitted to Congress that the Fed leases gold to control the price:

Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise.  – Alan Greenspan, July 24, 1998

Re-read that statement and think about what Greenspan is saying.  He’s implicitly stating that the Fed can create enough paper gold – i.e. gold in lease form – in order to contain the price of gold.  Please note:  gold can be leased without actually moving the physical bars if the counterpart to the lease does not demand delivery.  However, the ownership of that bar for legal purposes has transferred to the counterparty to whom the bar was leased.

Thus, in theory, a Central Bank can create a limitless supply of paper gold if it is not required to deliver any bars.  This is the same idea behind Bernanke’s famous “helicopter speech” in which he stated that electronic currency can be created in infinite supply.

 

HSBC has likely already leased out or hypothecated most if not all of Texas’ gold bars sitting in its vault.  While HSBC would be on the hook for the gold bars owed to Texas, Texas would be at risk for the possibility that HSBC would be unable to procure and deliver even a single gold bar. This scenario would arise if HSBC were to go bankrupt, a risk of which is clearly outlined in the GLD prospectus (HSBC is the custodian for GLD).

“This exact scenario happened with futures broker MF Global. I knew people who had warehouse receipts to gold bars with a specific serial number. But that gold had an encumbered title and they became unsecured creditors in bankruptcy,” said Weiner.   – Keith Weiner, President of the Gold Standard Institute  LINK

Apparently the wiser people in Texas were watching closely when Germany asked the Fed to ship over 600 tonnes of gold bars that had been “safekept” in NYC since the end of WW II.  In so many words the Fed/US Government said:  “we’ll send you your gold when we’re good and ready to send it.”

The message is that the gold was not there to be shipped.  Obviously Germany was not going create a massive political problem for itself by attempting to force the U.S. legally to produce and ship the bars.  Instead the German political leaders simply winked at the U.S. and said “okay, we understand the problem -take your time.”

Even more interesting perhaps, is a provision in the Texas Bill which prevents the Federal Government from seizing the gold bars:

Section A2116.023 of the bill states: “A purported confiscation, requisition, seizure, or other attempt to control the ownership … is void ab initio and of no force or effect.” Effectively, the state of Texas will protect any gold stored in the depository from the federal government.  LINK

It will be interesting to watch this situation unfold, especially if Governor, Gregg Abbott signs the Bill.  You can read the article from which I sourced the above quotes here:  Texas Has The Potential To Uproot The Monetary System

I hope I’m wrong about this, but if I put my “think like a criminal” thinking cap on, I can envision a scenario in which the powerful political and money interests in Washington, DC and NYC exert a full assault on Governor Abbott to veto the Bill.   This is the kind of legislation that could potentially expose the fraudulent fractional gold reserve system in the U.S. in which the ratio of paper claims to gold is several multiples.  In fact, it’s the type of legal movement that could burn down the U.S. dollar.

22% Of Austria’s Gold At The Bank Of England Is Missing

My colleague Rory Hall of The Daily Coin has posted an article sent to him by Peter Boehringer, who is leading the effort to force the German Goverment to repatriate all of its gold held by the Fed, the Bank of England and the Bank of France.   In the article, Boehringer presents the findings of an audit conducted by the Austrian Federal Court which states that 22% of Austria’s national gold held at the Bank of England is missing.

Essentially what the text presented by Petern Boehringer says is that a report published by the Austrian Federal Court (“OBRH”) states that at least 22% of Austia’s gold which the Austrian Central Bank – “Oesterreichische Nationalbank” (“OeNB”) – has been “safekept” at the Bank of England is missing. It also states that in 2009 as much as 56% was missing:

The composition of the gold holdings of the OeNB in the years 2009 to 2013 changed greatly. Thus, the proportion fell to non-physical inventory of approx. 56% in 2009 to approx. 22% in 2013

You can read the entire text of Rory’s post here:   22% of Austria’s Gold Is Missing From The Bank Of England.

This , of course, implies that the Bank of England is illegally leasing out foreign-owned gold which is being held in “safekeeping custody” at the Bank of England. No shock there to anyone who has been studying the precious metals market since GATA made the information available to the world about all of the illegal gold activities being conducted by western Central Banks in the late 1990’s.