Treasury To Sell SPR Oil To Pay Bills…Why Not Sell Some Gold Instead?

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The U.S. Government plans to sell millions of barrels of oil from the Strategic Petroleum Reserve starting in 2018 as means of raising cash in order to help fund the massive and growing spending deficit – Bloomberg LINK.

This is part of the new budget deal which has been agreed to between the leaders of Congress and the Obama gang but still needs full approval from the House and the Senate.

But given that the general consensus in mainstream America that gold is no more useful than a Pet Rock,  why not unload part of the alleged U.S. gold holdings rather than a useful, strategic asset like oil?   By now everyone who cares to examine the issue understands that the U.S. Government has endorsed and supported an aggressive program being executed by the Fed and the big Wall Street banks to suppress the price of gold at any cost.

Why not let the gold market engage in unfettered price discovery and then sell some Treasury gold instead of oil?  Even at today’s price, if the U.S. were to sell a mere 1000 tons – or just 12% of its alleged 8100 ton stash of gold – it would be able to raise $37 billion.   If the gold is really there and it’s just collecting dust why not sell the gold?

The answer is pretty obvious…the gold is not there to sell – just ask the German Government…

20 thoughts on “Treasury To Sell SPR Oil To Pay Bills…Why Not Sell Some Gold Instead?

  1. The mere fact 12% of its alleged 8100 ton stash of gold only raises $37 billion is proof of how under priced gold is! That doesn’t even cover the new $60+ billion contract just awarded to Northrop Grumman to build a new stealth bomber.

    We are in deep trouble when we can’t print billions and HAVE to sell our gold, if we have any.

  2. So the oil market is not yet low enough to completely destroy the derivatives linked to the junk bonds in the fracking industry. What we need is a bit of strategic dumping of commodities, that will step up the demand for T Bills at a time everyone else is dumping them. $1.4 quadrillion in derivatives that are rigged to soak up the drop in demand for T bills from everyone else. The T Bill demand moves from an investment instrument to a main function as a banking collateral instrument. Hey ho, what you can do with funny money and casino financial system.

    The long term strategy bankrupt all the players on the other side of the derivatives who now can’t get off the hook at all and repossess the T bills just prior to setting the reset.

    Some of the names of the people on the other side of these trades can be read in this book “Godfather of the Kremlin” by Paul Klebnikov. No wonder Claude Dauphin had a heart attack in Bogota, Columbia explaining to his investors the outlook for their money. I think after this presentation his heart would have been pumping a lit to strongly as the investors might have got a little emotional.

    Jim Willie says the reset has been delayed by a year. can see why, just long enough to clean everyone out.

    Deutsche Bank is having it’s back to back trades investigated by the Fed. If you read Godfather of the Kremlin it is not a surprise Putin is screaming from Moscow that if the judges in New York attack his cronies he is going to default on the dollar. I wish Putin good luck with that strategic attack, I don’t think a trillion makes much difference when you have $ 1.4 quadrillion in derivatives to soak up the demand.

    The only weakness the system has is gold and silver held outside the system. Putin and Xi obviously can’t and won’t pull the trigger or they would have done so by now. Just exactly what that would a major PM rally unleash.

    In 2008 a very senior internal auditor was retiring from UBS and I asked him why they couldn’t ring out the derivatives and he said ‘the winners won’t let the losers off the hook. I don’t know why the BIS can’t push that through’. He then changed the conversations to Berlusconi and asked me about his back to back media buying through London (a tax evasion dodge). I didn’t then realise that theses conversations were linked but looking back I can now see they were.

    The only way the BIS could get out was to smash the other side of the derivatives trade which they are doing first by skyrocketing commodities and weakening the dollar to pull everyone in 2011 a sucker rally (Marc Rich got out in the IPO’s at the top). Now they are smashing everyone into the ground to break the derivatives and skyrocket the dollar.

      1. Don’t believe anything Americans say. However I do remember Willie when Hewlett Packard placed the lease finance for their first entry into European manufacturing in Wales. I also remember Bill Murphy when he tried to start a secondary market in Latin American debt at Drexels in 1986.

        These are the only people I take any notice of from America in this area. If you haven’t met them and pressed the flesh don’t believe a word, is a rule worth following.

      2. By the way if you want to know why something really serious is happening right now look at McGuire and Ben Davies. Neither of them are saying anything at all publicly. That’s how London works. You know something serious is happening because the lights are on in governor of the Bank of England’s offices when you go home at night and are still on in the morning when you go to work. Otherwise there is absolute silence about what is happening in the press and on the trading floors. The only people who talk about it are in the work out groups.

  3. The US Govt. probably filled up the reserves in the $120+ barrel range and now will sell it
    in the $42 dollar range. Sounds like the incompetent fucks that they are. None of these assholes could run a small business period!!!

  4. If you listen to Harry A. Dent the dust on the gold bars will be worth more than the gold itself. The U.S. government should really make sure the cleaners don’t go into the vaults and remove all that precious dust. 😉

  5. I have a question for Glencore Fan. Read your comment with great interest. Did not understand one line, which I think was a typo? “Just exactly what that would a major PM rally unleash”. Is it possible for you to clarify that section, as I think it is important to your overall message>

    1. If Russia and China push up PM’s then the likelihood is that the LBMA will either have to change the rules to make gold a virtual commodity unrelated to the price of au or ring out the contracts and the OTC derivatives. Unfortunately the very best cover for a force majeure and the subsequent reset of the system is war. The rules allow for this type of force majeure and war allows the public to be prepared for a major drop in living standards.

      War is not in Russia’s interest as it is trying to rebuild its civil society and China is always days from an internal uprising. Quite often in China there are riots with 100,000’s of people which are completely unreported. The Party is very aware that to stay in power they need an iron rice bowl with if it all possible rising incomes. This is very hard to deliver in a state of war.

      1. Thank you for responding to my question, Glencore Fan. By implication, does this mean that the gold contracts cannot be settled in isolation – i.e. cannot be settled without blowing out all derivatives everywhere? Since hardly anyone in the west owns gold, why would such an extreme cover story be needed?

        If you’re willing to answer a further question, I was intrigued by a line in your first comment where you said the only weakness in the system is physical gold and silver held outside the banks.

        Again, since hardly anyone has any physical gold/silver, could you clarify how this weakens the system?

        Thanks in advance… very interested in what you have to say.

        1. Calling a force majeure does not blow out all the derivatives. The force majeure is called by the LBMA, there is no reason why the ISDA should call a force majeure at all, in fact there are lots of reasons why it shouldn’t. The physical commodity markets, of which gold is one, have force majeure clauses because in days gone by ships carrying the goods could be impeded by war. This does not apply to F/X transactions so there is no reason a force majeure at the LBMA should trigger a force majeure in the derivatives markets generally. Under the rainbows the gold or silver price would be fixed at the last trading of the LBMA in gold and silver. The rest of the swaps in the rainbow yen vs. dollars etc. would carry on and on and on until finally the “right winners” are established however long that takes.

          Russia and China would find their economies entirely disrupted in the process and their trading partners like Glencore bankrupted and their offshore accounts frozen as in Deutsche Bank. The West would fair badly but China and Russia are potentially at greater risk.

        2. The LBMA decides the force majeure in the bullion markets and the ISDA call the force majeure in the F/X markets. It is very unlikely that if the LBMA called a force majeure the ISDA would also call a force majeure, indeed there is no reason for them to call a force majeure. More likely is the final days trading prices would be applied to the rainbows for the duration of the contract with the rest of the clauses being enforced.

          The force majeure in LBMA exists because in days gone by sailing ships could be impeded in their passage by war. Gold deliveries could be held up. this des not apply to F/X contracts.

          I very much doubt a force majeure in the LBMA would blow out the derivatives market generally.

          1. Thanks yet again for answering my question, Glencore Fan. You do seem to bring an extremely rare level of insight into these issues. If you’re willing to answer one more, I’ll jump right to my ultimate query, regarding your statement that “the only weakness in the system is physical gold and silver held outside the system.”

            I am assuming by this you refer to the banks’ ever-expanding position in metals contracts which cannot be delivered, while the current low prices will eventually cause physical supply to run dry, putting the banks at risk either way – with low or high prices.

            My big question is if you see holding gold/silver outside the system as risky for the individual, if he/she is willing to hold for an indefinite waiting period?

            I personally see the biggest risk as being political, in that the value will remain but the rules of the system might make it difficult/impossible to realize that value by imposing restrictions/taxes/etc on selling.

            How risky do you think it is for a individual to hold metals in the long-term?

            Thanks again for your insights… I am thinking quite hard about the things you have said so far…

  6. @ “The U.S. Government plans to sell millions of barrels of oil from the Strategic Petroleum Reserve starting in 2018…”

    Oil must be refreshed from time to time anyway. You don’t want to use the 10 year old oil for your precious cars….

    Enlightened governments will start the refreshing procedure when in its abundancy oil is as cheap as gold….

  7. The US government selling anything for dollars is stupid. We can manufacture dollars out of thin air any time we want to. We’ve been doing it for years (i.e. 18+ trillion dollar debt).

  8. Hold it Houston, we got a problem – Trying to sell SPR oil when there’s oversupply everywhere, with China has running out of places to stash their stored oil, demand is down, prices are down – not such a good idea.
    Better idea – How bout an explosion or two at the SPR storage facility, blame it on foreign agents, and then purchasing more oil will help the beleaguered domestic frackers and the Keystone conmen.
    Don’t event talk about selling the mythic US gold hoard – way, way too seditious, Comrade, and besides, selling T-bills is the best racket going.

    1. The real takeaway from this story is they won’t sell reserve oil supplies until 2018, three years form now This story is all smoke and mirrors to make it seem like Washington is doing something, or doing something stupid as usual.

      From Mike F- “None of these a**holes could run a small business period!!!”

      These bureaucratic boneheads couldn’t run a flippin lemonade stand, not without sickening their customers first by using lemon scented dish soap in the lemonade instead of real lemons .

      The crowd in Washington explained quite briefly-
      Those who can – do.
      Those who can’t – teach.
      Those who can’t teach – become critics, bureaucrats or politicians, a useless bunch one and all.

  9. Why I think Andrew Maguire might be right:
    1. Huge Gold flow from West to East.
    2. Glencore and their ilk are blowing up.
    3. Central Banks and (china, Russia, India, and Asia) are hoarding Gold.
    4. The fed is stuck at zero and likely going negative on interest rates.
    5. The Dollar is too strong for multinationals to compete globally.
    6. Deutsche Bank is imploding. Repercussions anyone?
    7. Derivatives tied to oil and the fall of leveraged indebted oil companies.
    8. The Fed Put = sanctioned fraud. Markets are misaligning on risk.
    9. Russia, China, and their pals challenge U.S. dominion. The U.S. is outplayed.
    10. 20 Trillion in debt = unsustainable
    11. 200 Trillion in liabilities = unsustainable
    12. Abenomics is a failing Japan which is the 3-4th largest economy in the world.
    13. Aging America, Europe, and Japan. The Old can’t retire / youth unemployed.
    14. 1/2 of working aged Americans sucking at the American social tit.
    15. Baby boomers and seniors are risking all in ponzi fraudulent markets.
    16. The world from Brazil to Ukraine to Syria to Europe is unstable.
    17. Local (P.R. )and State governments (IL) are over indebted and will default.
    18. Housing market is deflating, inflating, and gyrating like a drunken whore.
    19. Clinton /Trump candidacies tell the story of American leadership.
    20. Pension and 401K shortfalls. Prepare for poverty.
    21. The rest of the world signed up for AIIB and a new financial system.
    22. We’ve outsourced our manufacturing. Our largest export is the Dollar and countries like Greece are raped for the exploits of their failed bankers and elite.

    Its your life and your choice, but this movie doesn’t look like it has a happy ending. The last bastion of safety in Exiter’s pyramid is Gold. Andrew Maguire only has to be right once for a lot of bad things to occur to American wealth. We are paper Lion’s hear us roar with anger and pain as the U.S. is outplayed in Iran, Syria, Iraq and the Ukraine, and Like angry children our proxies blow up civilian airplanes. I’m sickened by it.

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