Just a note for the stories below:
1) The present worth of all Gold ever mined !140.000 tonnes of Gold x 10.000 $/Kg = 1.4 trillion dollars ! (1 tonne =1.000 Kg) Today about 30,000 of these tonnes are believed to be held by various central banks around the world, but I'll use all the gold mined not to give you a heart attack.
2) US national debt is (officially) 6 Trillion (unfocially $14 Trillion) or 4 (officially or 10 unofficially) times the present worth of all the Gold ever mined ! - Silver Derivatives = More Physical Silver then traded on the COMEX Markets
3) Bonds outstandind = $38 Trillion
4) Gold Derivatives just at JP Morgan/Chase = over $23 Trillion
5) Interest Derivatives = $70 Trillion plus
6) Swaps, "Round trip trades" and other "off the book deals" are unknown
7) United States is out of Silver and buying on the open market to mint the "Silver Eagles"
8) Your 1950 Dollar is worth 3¢ (Federal Reserve Fiat Paper Devaluation by Inflation)
(9) In the US environment of socialist government-sponsored theft
through inflation. There are more paper US Dollars in the world then can be backed by any promise of the Federal Reserve or the US Government! And will probably be DEVALUED at least 40% (or as much as 90%) when the NEW COLORED NWO BILLS are changed over in 2003.
"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value." Alan Greenspan 1967
THEGOVERNMENTS PAPER FIX FOR PRIVATE GAIN OF PRIVATE BANKERS BY THE TRANSFER OF THE PEOPLES WEALTH TO THE BANKERSthe growth of J.P. Morgan Chase's huge positions in gold and interest rate derivatives with the decline in gold prices and 8.5 TRILLION goes up in smoke
HOW & WHYThe Outrageous Manipulation Of Gold Prices
"If there is no or little producer hedging who owns the mega-large gold derivative book, some $23.5 trillion, could it be the US Treasury? Who else could own 68% of all bank-owned gold derivatives?""This is going to be the biggest gold and silver market in world history."
Manipulation in the price of gold by the Federal Reserve, IMF, World Bank, BIS and Bullion Banks only makes it cheaper for the owners of the international banks to transfer it to themselves at a lower price at the cost of Freedom of the people.
Swaps, Round Trip Trades, off-balance sheet deals, stock options, unfunded pension liabilities and other creative accounting methods - used to create the illusion - and defraud the public and investors
Gold is a direct bet against the monetary system: Gold investors figure an ounce of gold is always worth something, even if the government is in shambles and currency is worthless. For two decades, the powerful U.S. economy kept the dollar strong and gold prices low. But lack of confidence in the financial system and the specter of more terror attacks are pushing gold prices up — and individuals back into the gold market.Fervent gold investors believe the government is desperately trying to squash gold prices and prop up the stock market. "The last thing they need is a gold rush," says Doug Casey, editor of International Speculator, a gold-oriented newsletter. He thinks gold will win out. "Gold is like a coiled spring," he says. He predicts it will top $1,000 an ounce.
"The dangers of a massive bank default tied to tricky interest-rate and bullion derivatives. J.P. Morgan Chase is the largest issuer of gold-linked derivatives in this country.""Morgan has something like $23 trillion in derivative positions on their books, according to the Office of the Comptroller of the Currency. It is the norm to account for 2 percent of those derivatives to be at risk. That is a mighty big number."
It seems that everyone has a different figure on the Derivatives Monster The $24 Trillion Derivatives Monster
DerivativeNorth American Banks Under Growing Pressure From Gold Derivative Positions
******************************************************
HAVE THE PRIVATE BANKERS & POLITICANS STOLEN THE GOLD OF THE AMERICAN PEOPLE ?
Rumor 0n USAGOLD.COM (06/11/02; 08:31:18MT - usagold.com msg#: 77970) has it that here are currently $71 Billion in gold derivatives in US banks according to the Q1-02 OCC Report. Using $290/ounce as the benchmark, a calculation At reveals that
244,827,000 ounces have been "Loaned" from the US Treasury as
gold derivatives.
It is unclear whether the West Point "Custodialized" gold
[54,000,000 ounces (1,700 tonnes)] is included in the derivative
totals as yet another Fed "Loan" probably from Germany.
That 244 million ounce figure converts to 7,614 tonnes of US Treasury gold.
Folks...there isn’t but 8,000 tonnes IN the US Treasury. The JPM gold derivatives are gold "Loans". They "Borrowed" gold from the US Treasury to sell into the market. How Much Treasury Bullion is LEFT?
Just as an example of paper derivative verus physical gold. There be about 260,000 tonnes of derivitive gold bought/sold every year. Now considering there has only been aboot 137,000 tonnes ever mined......... the Physical gold traded every year, is aboot 4,000 to 5,000 tonnes. The physical market of gold is only aboot 2% the size of the derivities market. Whats going to happen when time to pay up comes? Same goes for Silver and the other metals. Is this more Enron & JP Morgan "ROUND TRIP TRADING"? ******************************************************
$28 more on the price of gold and say goodbye systemThe largest banks have $30 trillion worth of derivatives tied to gold. ( Derivatives are highly complex financial instruments that derive their value from another paper instrument. ) ******************************************************
(05/26/02; 05:17:45MT - usagold.com msg#: 76577) Graefin (msg#: 76574) Derivatives & Hedging
Firstly, there are no stupid questions, just a lack of knowledge on a particular topic until said knowledge is acquired.
Derivatives are financial tools which are "derived" from basic investment vehicles: for example, call and put options that you already know are tools derived from their underlying asset classes which can be stocks amongst others. Futures, swaps, forward contracts are also derivatives.
Hedging is the act of using these derivative tools to protect against adverse movement of your financial asset against you: Lets say you bought 100 shares of Gold Fields stock, and upon further reflection, you became concerned that the stock may decline significantly. To protect your investment, you could purchase a put option on Gold Fields, which would increase in value as the value of the stock dropped. When done correctly, the gain on the put option would cancel out the loss of value of the stock.
This is in direct contrast to speculating outright using these same tools for profit. The tools were actually designed as risk management tools - hedging your bets as they say. ******************************************************
DOES THE US HAVE ANY OF THE PEOPLES GOLD LEFT? HAVE THE BANKERS STOLEN AMERICAs GOLD?
Part of the puzzle
(05/24/02; 09:51:30MT - usagold.com msg#: 76492) @rPowell Central Bank Gold ...there's alot less than meets the eye Why? Double counting for gold "Loans" and "Swaps".
See...the world's absolute gold reserves are badly misrepresented by the current IMF accounting practice of a lessor and lessee BOTH claiming ownership of loaned and swapped gold.
The IMF's own accountants refused to accept this defacto implementation at their October 1999 Santiago Conference. That conference was devoted almost wholly as a gold swap workshop [All detailed examples were selling never buying gold]...clearly a plan to manipulate pog by a kind of giant shell game.
What is the physical deficit [How much gold is "Loaned"]? Reg Howe thinks 10,000 tonnes not including the 3,000 tonnes of durable producer hedges[Forwards].
What this means is that central banks who loaned their gold [Which was then sold] are going under water with each move upward in pog. They are, in a sense, like Barrick....a slave to an unlimited upward risk. it is becoming more and more obvious they will never get their gold back at anywhere near what they loaned it for.
They are reduced to a "strategy" of hope. Hope for "something" that will lower the demand and hence the price of gold. They are losing the gold war.
The most potent weapon in the war against the cabal has been the truth. It is what they can never deal with effectively.
In this regard, Bill Murphy is smashing them into the ground in London with revelations that the JPM gold "Derivatives" book is really a pure loan book. The names [Countries] to whom JPM reloaned the gold are causing big problems. Terrorist nations.
At one time JPMs loan book was worth $60 Billion [Avg pog of $260]. Do the math. That is many thousands of tonnes of gold "Borrowed" from...whom?
The US Treasury of, course. Therefore, the US treasury has none left according to GATA's source. Not a bar.
Don't be fooled by the recent "Reduction" in gold derivatives reported to the OCC. The BIS gold derivatives have gone up by comparable amounts thus it is fair to infer that JPM just swapped their liabilities with their buddies in the G-10.
It's called the socialization of risk...something The Master of the Universe is good at....Unofficially it is called the "All boats sink theory".
Look for the rats.
(I think a ROPE might be better, thats how Andrew Jackson would do it!) ******************************************************
Date: Wed May 22 2002 14:01 moa (JPMorgan roundtrip trading in paper gold) ID#206260: Copyright © 2002 moa/Kitco Inc. All rights reserved
now that the courts established JPMorgan's fraudent activity in Nat. Gas contracts roundtrip trading with Enron and offshore partnerships why hasn't CFTC prevented them from participating in other commodity markets, like gold??? ... until they are given a clean bill of health.
they have been found as crooks but no one dare investigate them fully ... it doesn't make any sense to let a criminal back out into the streets after an indictment..... why let JPMorgan carry on fecking one and all in the commodity markets with their fraudlent trading schemes???? .... and still they play on. ******************************************************
ONLY IN AMERICA ******************************************************
(5/22/02; 00:40:07MT - usagold.com msg#: 76208)
Olson Says Recession Raises Concerns About Bank Loans
http://quote.bloomberg.com/fgcgi.cgi?ptitle=Economies&s1=blk&tp=ad_topright_econ&T=markets_bfgcgi_content99.ht&s2=ad_right1_economies&bt=ad_position1_economies&middle=ad_frame2_economies&s=APOpy6xZTT2xzb24g&ao=22806805
Palm Beach, Florida, May 21 (Bloomberg) -- Federal Reserve officials are concerned the recent recession will lead to a increasing number of bad bank loans and expose derivative problems on bank balance sheets, said Fed Governor Mark Olson.
Banks have increasingly used more complex methods of reducing risk in the last decade that require increased attention by management and regulators. Fed bank regulators have found some banks incorrectly reported the use of financial derivatives used to offset the risk of some banking transactions, Olson said.
``Though the Federal Reserve has not noticed widespread abuse in this area, we have uncovered instances in which the financial reporting has not reflected the substance of the transaction, and we have asked that it be corrected,'' Olson said. ******************************************************
(05/21/02; 17:16:09MT - usagold.com msg#: 76167) Sinclair....
http://lemetropolecafe.com/hemingway_table.cfm?cfid=245820&cftoken=8062595&pid=2234
Snip...
In this manner all the gold derivatives valued notionally at $280,000,000,000 on the books of 48 countries commerical banks will become REAL VALUE at $354 due to risk control programs calling for more longs to offset the shorts. The $60,000,000,000 Morgan position will also become real value is just the same way but for much more complicated reason. It is the demand caused by the risk control program which mandates the long that has to meet the short on the gold derivative spreads as the price of gold rises. Assuming gold sells at $354 ,a full cover which will be called for by all risk control systems; and that is a functional impossibility because $280,000,000,000 = 26 years production. That amount of gold simply does not exist, not even in all the central banks of the world. It would be equal to 900,000,000 ounces of demand mandated by the world commerical banks risk control programs over $280,000,000,000 notional value today of all gold derivatives granted on their books. This is FACT. ****************************************************** ******************************************************
(5/18/02; 04:41:08MT - usagold.com msg#: 75920)
Rogue Waves & Standard Deviations - Part 2
http://www.financialsense.com/stormwatch/update.htm
"Gearing in Gold - Barrick Gold
Another example of a company that has become highly leveraged is Barrick Gold. The company is one of the largest hedgers of gold and silver in the mining industry. Barrick is known for its hedging operations in gold and in silver. Recently, a $23 price movement of gold turned Barrick’s hedge book from positive to negative in the blink of an eye. The company reported a $46 million profit for Q1. The real number should be $437 million when you take into consideration the loss in the company’s hedge book from Q4 of last year. At that time, the company’s hedge book was in the black by $356 million. As of the end of Q1 of this year, the hedge book was negative by $127 million -- a change of $483 million from the previous quarter.
Gearing in Silver
Various examples exist today of markets, companies or hedge funds that are highly geared. Some of the most ominous are J.P. Morgan Chase, Barrick Gold, and the silver short position on the COMEX. The net silver short position of commercials on the COMEX is 45,000 contracts or roughly 225 million ounces of silver sold short. The COMEX has only 103 million ounces available in its warehouses. Of that 103 million ounces, 32 million are eligible, but not yet registered and available for delivery. In other words, the short position is three and half times greater than ready supply should investors suddenly demand delivery of physical silver.
Gearing in Derivatives - J P Morgan Chase
Another example of a company that has become highly geared is J.P. Morgan Chase. According to the recent OCC Derivatives Fact Sheet report, the bank held $23.5 trillion in notional value in derivative contracts as of December 31st, 2001. Those contracts were backed by only $693.6 billion in assets and only $41.1 billion in equity. In terms of the bank's assets, J.P. Morgan Chase has implied leverage of 34 times its asset base ($23.520 trillion divided by $693.6 billion in assets). However, the bulk of those assets of $693.6 billion don’t belong to the bank. The bank has only $41.1 billion in equity to cover any losses that might occur because of holding those derivative contracts. In this case, it is the bank's equity that backs the derivatives which means the bank's real leverage is 573 times. That is insane! In his testimony before the Senate, Professor Frank Partnoy said that Enron made LTCM look like a lemonade stand. If Enron made LTCM look like a lemonade stand, then JPMC makes Enron look like your kid's Christmas Club Fund at your local bank." ••••••••••••••••••••••••••••••••••••••••••••••••••••••
From Le Metropole -- Sharefin, 02:45:16 05/11/02 Sat
What might the Enron experiences tell us about Gold Derivatives?
By James E. Sinclair
Is it possible that the end of the bear market in gold, which we have certainly feel has occurred, is the beginning of the demise of the financial integrity of the gold derivative and therefore many of the gold banks. We shall see but there is a great deal of reason to suspect the financial integrity of the instruments.
Thanks to Reginald Howe all the information you require to keep yourself abreast of the size of the total commercial bank position in the gold derivative market is available on his web page www.goldensextantcom. Mr. Howe has even provided the hyperlink required for direct access to the facts and figures.
Harry Schultz (www.hsletter.com) has outlined for you the exact position of all the producing gold companies short spread position. This will be continually monitored for you in the Harry Schultz Letter.
All these figures are as of the latest reporting period with new figures due shortly.
Total Gold Producers Short Gold Spreads as reported in HSL are 97,446,190 ounces which is today worth USD$30,344,743,566.00. This represents two years full production of all producing gold mines. However this figures represents only 13% of the value of the total Gold Derivative market according to the Bank for International Settlements Yes, the total size of the G 10 commercial banks derivative positions is valued by the BIS at a lower gold price than today at $218,000,000,000.00. Harry Schultz & I will pains takingly examine the figures in order to offset longs against shorts to render a better figure for you.
The commercial bank net short spread position will, in our opinion, represent a net position of 100,000,000 to 200,000,000 ounces in short gold spreads. Regardless, it should bring the total short spread position to net short of an at least a total of 3 to 4 years production. We hope that will be the final number but stay tuned as we diligently work to provide you with the real gold picture.
The notional value is the value that a derivative such as a call is determined if you multiplied the price at which call is written times the ounces for which the call was written. For instance if you had a call on 100 ounces of gold at $325, the notional value is $32,500 but the call may have cost you only $2000. Our calculations indicate to us that at $354 every derivative on gold will reach its notional value. Therefore you can say that notional value will become real value because the call is exercisable by the bull interest in this case. For those that argue this $354 price, please remember that if gold for delivery one year out rises the price of gold every year out also rises but to a larger degree.
Therefore we conclude that;
1/Notional value becomes real value at the average price of gold over the past five years plus the average catango (a condition that exists when cash gold sells at a lower price than forward gold is called a catango) when it becomes the market price. In the most practical sense, knowing the inside of this market, the price of gold at which notional value of all present gold derivative becomes real value at $354 gold.
2/All derivative dealers maintain software programs for risk control. When I ran an arb, I & my partners determined what risk percentage of nominal value we would permit as we pursued our arb business on any given item such as gold, silver etc. I was never interested as the proprietor in each trader's position. What I watched was the entire house position. Risk control programs vary from gold bank to gold bank but the computer mathematical logic is the same. All gold hedges are short gold spreads (a spread is a long position against a short position). For the gold producers it takes many different forms but is basically the same logic. A producer could simply sell deffered delivery gold against gold in the ground as an example.
By our calculation as gold closed over $305 the risk control programs began to call for increased longs to offset the short in the short gold spread. This explains the strong action in gold over the last two weeks. It also explains the absence of the gold cartel right now. If they were in to sell now they would be buying from themselves on their risk control programs. This maintains the risk exposure fixed at a predetermined level for the arbitrage dealer gold bank. At $354 gold, the risk control programs will call for one ounce long for every ounce of gold short. The gold producer hedges at 97,466,190 ounces industry wide.
These producer positions have been laid off (a term meaning trade to) to the subsidiaries commercial/investment banks called gold banks that in turn lay off the long side by selling into the various paper gold items from Comex and London deferred to derivative of third and fourth forms. The skinny is someone will be buying 97,466,190 ounces or going quite broke at gold $354.
As a professional trader in the gold market for a total of 43 years experience, allow me to assure you the gold market is in the hands of the bull today. It appears to me as if Hung Fat and Dr. No have the producers and what I call "Wise Guys" by the neck. Anyone who thinks there is a public in this market knows nothing about gold. Gold never leads the commodity market, it follows it.
I would like to call your attention to what I see as the real risk to the gold producers:
The present vehicles used by the gold producers has produced a total short spread position of 97,466,190 ounces worth today USD$30,344,743,566.00 are:
1/ Unregulated.
2/ Non transparent.
3/ Traded in private treaty.
4/ Without reporting of trading statistics.
5/ Without the ability for the gold producer to lift legs of the spreads independently
6/ With a requirement that changes or closures must be made only at the gold bank that granted the short gold spread.
7/ Without a right of offset between the gold producer and the gold bank.
8/Priced by computer modeling, not market forces of supply and demand.
9/Without a clearing house facility to give a reasonable guarantee to financial performance.
10/Granted generally by subsidiaries of the well known investment or commercial bank.
11/ These subsidiaries generally do not publish balance sheets. It appears that for SEC purposes all which is required for a subsidiary is reporting if or not they comply with capital requirements in area of their domiciled if there is any.
12/Those that do publish financial figures usually do not give figures for total derivatives to which they are obligated to.
13/These subsidiaries have no automatic guarantee for their trade debts in case of bankruptcy
14/These subsidiaries are generally not domiciled in the USA.
To the short spread positions of the gold producers of 97,466,190 ounces, you must add at least a short gold spread position of that same amount or larger for what I call the "Wise Guys." The "Wise Guys" are traders in the market without a commodity hedging reason to be there.
They are the gold lease boys that use the funds for other than mining purposes and the carry trade gang who seek to profit as gold bears while capturing the difference between cash gold and forward gold in unlisted markets.
In my opinion, at $354 gold the foundational transactions of the gold derivative market could be tested. The melt down could then in full swing. We shall see as the gold market is no longer in the hands of the bears. The bears have lost their death grip on gold, if or not they know it. Be prepared for the arrival of central bank selling. The Cartel is neutralized by the risk control programs as buyers. I suspect that the next arrival of large cartel selling in gold will be hours before some central bank announces a large sale of gold. Expect the market to pull back but not as much as expected. Then Hung Fat and Dr. No will oversubscribe the auction and away we go on the upside for the price of gold. This will mirror the events of 1978, 1979 & 1980.
Both the junior exploration and development company plus all producers from modest to major who have hedge position will be placed in dire to uncomfortable conditions. Junior exploration and development companies with percentage deals with the majors are in as much and more danger than a major gold producer with a war chest of money.
Every junior exploration and development company subordinates their percentage of the property to the means of creating the loan which included full recourse to the derivative position taken by the major to produce the non recourse development loan. I believe when the cash call comes because of the derivative melt down the juniors will have to hand over their percentage property position to the major. This is why Harry advised and I have taken TNX towards the royalty route which has no exposure to the derivative of the major.
The non gold related people in gold derivatives, "Wise Guys", will be pulled down in whatever entities they are dealing if the melt down occurs. Balanced positions or even bull positions are no protection for the gold producer dealing in the gold derivative market today. If a melt down occurs gold producers who have no rights of offset in their contracts with the gold bank will be in serious difficulties regardless of their position. They will in the ensuing bankruptcy lose their credits and have to pay up on debits.
The gold producers should certainly ask themselves why they remain in gold derivative positions even if those positions are balanced when major traditional dealers exit the marketplace. If Credit Suisse First Boston and Rothschild's as example are expunging derivative contracts from their book, why does a gold producer take comfort holding such items? We are in a gold bull market and the gold equity or convertible bond financing window is open. The gold producers should either replace the non recourse gold loan with traditional financing or take recourse to the company on all development loans in order to expunge all derivative contracts now. ******************************************************
Here is an important article (Comstock)
WHY THE MARKET DID NOT COLLAPSE AT Y2K, THE TECH BUBBLE OR 9/11
Plunge Protection Team? (05/10)
“Plunge Protection Team”, which
appeared in the Washington Post on February 23, 1997 under the
byline of Brett D. Fromson. From this article and other sources,
here is what we know as fact. Following the October 1987 market
crash, the Federal Government became concerned about the
potential disastrous effects of another market unraveling and
began to seek ways of averting a financial collapse resulting from
a stock market meltdown. As a result President Reagan issued
Executive Order 12631, dated March 18, 1988, establishing a
Working Group on Financial Markets (Working Group). The group
was to consist of the Secretary of the Treasury and the chairmen
of the Federal Reserve Board, the Securities & Exchange
Commission and the Commodity Futures Trading Commission. The
purpose of the group was to prepare options to deal with a
serious stock market collapse that could seriously impact major
financial institutions and the economy.
Since that time the group has met regularly, and each agency has
prepared a plan to deal with a potential crisis. Significantly, the
Executive Order specifically stated that the group should consult
with “representatives of the various exchanges, clearinghouses,
self-regulatory bodies, and with major market participants to
determine private sector solutions wherever possible." We also
know that Chairman Greenspan has previously stated that the
financial authorities would intervene under certain circumstances
to prevent a meltdown. In a speech given on January 14, 1997, he
said, “We have the responsibility to prevent major financial
market disruptions through development and enforcement of
prudent regulatory standards and, if necessary, in rare
circumstances, through direct intervention in market events.”
(So when you loose your unbacked fiat money because of another ENRON, JP MORGAN/CHASE DERIVATIVES SCAM don't cry, you should have bought gold & silver. CAN IT HAPPEN HERE? Just look at Argentina after the IMF & World Bank finished with them.)
******************************************************
(05/11/02; 14:48:40MT - usagold.com msg#: 75418)
re IMF - this is from an old document my husband recently
unearthed in his father's filing cabinet:
Basically, what happened (in September 1975) is that the
International Monetary Fund (IMF) was shot down as manager of
the world's monetary system and was replaced by the Bank for
International Settlements (BIS) in Basel, Switzerland. It is the most
important single monetary event since the Bretton Woods
Agreement of 1944, which created the IMF. It is one of those
events which change history.
If it had not been for a Reuters dispatch in the small hours of
Tuesday, September 2, 1975 we would not have caught the key
phrase... "REAL CONTROL IS THE RESPONSIBILITY OF THE BIS." These
eight fateful words were part of the longer message detailing the
Gold Agreement reached on 8/31/75 by the "Group of Ten" finance
ministers who met quietly on the Presidential yacht "Sequoia"
anchored in the Potomac River on the two days preceding the
IMF's annual meeting. This Gold Agreement was widely trumpeted
in our press as being a final defeat for gold. Nothing could be
farther from the truth, as we shall see. "REAL CONTROL IS THE
RESPONSIBILITY OF THE BIS." Thereby hangs quite a tale.
The IMF and the BIS have been fighting since 1944. In that year,
World War II was drawing to a close. Europe and Japan were
bombed-out wrecks. There was no business - their only business
was war. The only country that had any sort of an economy was
the United States, which stood supreme. Our cities and industries
were intact. We had $25 billion in gold. Nobody else had any. We
were absolute Number One, in a position to dictate what the
shape of the postwar world would be. So we called a meeting of
the world's financial leaders at Bretton Woods, New Hampshire to
tell them what an American peace would mean.
However, there were two jokers in the deck. The representative
for the U.S. was one Harry Dexter White, a brilliant economist,
soon to be identified as a Russian agent. The British representative
was the famous economist John Maynard Keynes. Keynes was
either a Communist or a Fabian Socialist, whose theory of deficit
spending has warped the thinking of two full generations of
economists in this country and England, with disastrous effects on
the entire Free World.
Both White and Keynes insisted that the Bank for International
Settlements be dismantled, and that the IMF be the only monetary
authority.
The Bank for International Settlements was established in 1920,
after World War I. Its name describes its functions exactly. It
restored the prostrate economies of Europe and provided the
machinery for settling debts of countries whose currencies had no
meaning. The BIS represented then, as it does today, the
hard-money, gold-oriented central banks of Europe who
understood that the way to keep Communism from taking over
the world was to stop the debauching of currencies which creates
inflation and despair everywhere. No wonder Harry Dexter White
and John Maynard Keynes wanted to destroy the BIS.
It was a close thing, but the BIS survived. Thus the battle lines
were drawn between the IMF and the BIS, each going for the
jugular of the other. At first the BIS was pitifully weak, and the
IMF had things its own way. The dollar was supreme. Gold was
fixed at $35 an ounce, and the dollar was officially declared to be
the world's reserve currency. This meant that the dollar had the
same value as gold and could be legally held as a reserve in each
nation's treasury.
What all this led to was that the U.S. could simply issue dollars to buy whatever it wanted all over the world, and the other nations
had no choice but to accept the dollars whether they wanted
them or not. Thus was the world inflation started which would
prove so devastating to other nations, but so helpful to the
Russians. For some years no nation dared oppose the U.S. in all
this, because we provided the military shield against Russia.
But the various nations were recovering from the war, and in
1957 the BIS people began to fight back. De Gaulle became French
president in 1957, and he decided to test the theory that the
dollar was as good as gold. He began to turn in dollars for gold at
the $35 rate. This caused dismay in Washington, and De Gaulle was
smeared in our press as the incarnation of evil. (Axis of Evil now is used) Other nations such as Germany, Italy, and Switzerland also began to claim our gold, and in 1961 President Kennedy forced the Europeans to form the London Gold Pool to support the dollar at $35 an ounce.
The gold drain continued until one horrendous week in March,
1968, when the Gold Pool lost about $4 billion. In a panicky
weekend meeting in Washington the Gold Pool was ended, but not
until our $25 billion in gold had been cut in half, to about $13
billion. This dreadful gold run ended with the so-called
"Gentleman's Agreement," in which the various Central Banks
agreed by handshake not to buy gold in the open market. This
preserved the shaky fiction that gold was still worth $35.
I first became aware of the BIS in late 1971, when an obscure
item in the Federal Reserve Bulletin indicated that something
called the Bank of International Settlements had bought ALL of
South Africa's gold production for that year. After many inquiries it
began to dawn on me that the BIS was the agency by which the
Central Banks were buying gold for their own account. The BIS
was not a party to the "Gentleman's Agreement," and not bound
by it. The BIS could buy gold for its members' accounts and never
report it to the U.S. or the IMF. By a coincidence, South Africa
became a full voting member of the BIS in 1971, the first
non-European nation to be so honored. (The U.S. and Japan were
not then voting members, though they were permitted to attend
BIS meetings as observers.)
Perhaps you can see why I became a BIS-watcher. Slowly I
began to see that the BIS was managing and manipulating the
entire gold market. They kept things cool, always held the low
profile, and concentrated on winning by changing the rules of the
monetary game. The first big change came in late 1971. It was a
classic.
In August, 1971 President Nixon devalued the dollar by 10% and
announced that we would deliver no more gold at $35 or any
other price. Within a few months President Pompidou of France, a
key BIS member, met Nixon for two days in the Azores. Pompidou
persuaded Nixon that since the dollar had been devalued by 10%,
gold should be raised by the same 10%. Nixon agreed, and
announced that henceforth the official price of gold should be
$38.00 an ounce. I shall never forget the look on Pompidou's face
as he stood with Nixon in front of the TV cameras after that
meeting. He looked like the cat with canary feathers all over him.
He knew that the myth of $35 gold was finished, because if
something can move an inch, it can move a mile.
So the gold rat-race was on. In a matter of months, the price of
gold roared up to $70 an ounce, corrected to $60, then took off
for $130, had a stiff correction at $90, and then headed for almost
$200 before coming back to its present level just over $150.
Pompidou had changed the rules.
That was the big change, until this most recent one on September
1, 1975. How does the BIS get its way, against the U.S. and the
IMF?
I am virtually certain that the BIS gets its way by using our debt
against us. This is the way all high flyers are brought down. The
Europeans, Japanese, and Arabs have such enormous amounts of
U.S. Treasury bonds that they can blackmail us any time they wish
by refusing to renew these debts when they come due. If only
about one-fifth of this debt were presented for payment in one
month, it would close our banks. It is that simple!
With President Ford frantic to be elected in 1976, the last thing he wants is a banking crisis. So when the BIS boys come at him with
that sort of a threat, he knuckles under like a pussycat, and the
BIS gets back in control. How do you like that for a script?
Despite the fact that the press brayed all over that this September 1 Gold Agreement was a smashing defeat for gold, let's look at some other things the BIS crowd won:
1. Central Banks can now buy gold for their own account. No U.S.
president since Roosevelt has ever agreed to such a thing.
2. The IMF is going to return one-sixth of its gold to the original
contributors, at $35 an ounce. This was heralded as "phasing gold
out of the system," but all it is is phasing gold out of the way. In
five more years, the IMF won't have any gold at all, so it is the
IMF that is being dismantled. This means that no IMF or U.S. sale
of gold will ever depress the price.
3. The official price of gold is now abolished. This means that the
only actual price anywhere is the market price. Each nation thus
has a vested interest in seeing that the market price goes as high
as possible. This includes the U.S.
4. There will be no official price for gold for two years. Translate
this that there WILL BE an official price in two years. In other
words, Mr. Ford agreed to make the dollar convertible into gold at
whatever the price of gold is in September 1977, long after he is
either defeated or re-elected. No skin off his nose here.
••••••••••••••••••••••••••••••••••••••••••••••••••••••
(4/17/02; 03:14:45MT - usagold.com msg#: 73594)
******** Argentinean “Tears” *********
“What can we learn from the “tears” of the Argentines?”
We can learn the fate of all currencies that are based on
confidence in a system of “faith and credit”. That is the ultimate
fate of all currencies is that they eventually fail. Why has Gold
survived as a form of wealth for at least 9,000 years beginning
with the ancient Thracians until now? Gold survives because Gold
requires no faith. Gold has intrinsic value and is not dependent on
any government. It is the ultimate currency of sovereign beings.
History gives us an almost endless list of failed currencies from
ancient China, to the Weimar Republic, and more recently
Argentina.
The Argentine Example
Recently the Argentine Peso collapsed and now has lost about
two-thirds its value. In fact to go shopping (if you are fortunate to
have any script) you can pay in pesos, lecops (another
government script), patacones (One year Argentine government
bonds) various tickets, vouchers, other forms of monopoly money
(lecors, quebrachos, cecacors, bocanfor, bocades, bosos,
independencias, federales, petroms and huarpes), and of course in
US Dollars. If the Argentine people had only a third of their savings
in Gold, they would have broke even. Instead most lost at least
66% of their saving (at a minimum).
Argentines were already getting used to dealing with a dizzying
array of new "quasi-currencies", as many of the nation's
cash-strapped provinces started printing their own bills. So much
for the theory of “faith and credit” applied to fiat currency.
Argentines are allowed to use these paper IOUs (patacones) to pay
provincial taxes. But to prevent them from quickly falling below
face value and incurring the wrath of the people, the authorities
required that everyone from petrol station proprietors to
McDonald’s accept them.
Barter clubs are springing up across the nation as people trade
goods and services for “creditos”. Meanwhile with all the influx of
these "quasi-currencies" (probably as much as 5 billion pesos
worth) along with about 12 billion pesos in circulation, the
accumulated debt of Argentina is growing at a staggering rate.
Argentina’s currency crisis is too far gone to save and the
Argentine economy truly is in a “Death Spiral”. The truth is that
Argentina is bankrupt. Its institutions are dysfunctional, its
government disreputable, its social structure is failing. For
Argentina it’s “Game Over”.
Like sheep, dishonest International bankers and politicians fleeced the Argentine people of their wealth. The bankers have absconded with the countries wealth with the help of the corrupt politicians.
The Argentines wealth was destroyed while the banks were closed
thus preventing them from withdrawing funds while the Argentine
Peso was devalued. We have seen this scenario play out time and
again.
A Scottish/French Example
John Law (1671-1729) was a Scottish economist, gambler, banker,
murderer, royal advisor, and exile. Exiled in Europe because of a
duel, Law ingratiated himself into the French court through
patronage and friendship of the Regent, the Duke of Orleans. The
state of French finances after Louis XIV's death in 1715 was so
dismal that the Duke turned to Law for assistance. Law proposed
the establishment of a state-chartered bank with the power to
issue unbacked paper currency, the Banque Générale, which was
established in 1716. Around the same time, Law also established
the Mississippi Company, an enterprise designed to develop the
then-French colony of Louisiana in North America. French
merchants were required by law to accept these “notes” as
payment under threat of death. Another great transfer of wealth
had begun. Gold and Silver flowed to the bankers and paper
flowed to the people.
Law's note-issuing bank was a spectacular success - until it
collapsed after a bank run in 1720, plunging France and Europe
into a severe economic crisis, which had an important role in
setting the stage for the later French Revolution. Indeed, the
experience of Law's banking schemes on France were so
traumatic that, until recently, the term "banque" was largely
eschewed by French banks in order to avoid stoking up memories
of Law’s unfortunate institution (the common substitute term was
"credit", as in "Credit Lyonnais", "Credit Agricole", "Credit
Foncier", etc.).
An American Example
In 1933, a dishonest thief in presidential clothing did the exact
same thing in the United States. He confiscated the Gold and issued
an executive order making private ownership illegal. Then as
banks closed up this thief had the value of the US Peso (also
known as the dollar) was devalued in 1934 from $35.00/oz. to
$20.67/oz. by nearly as much as 41% by changing the rate of
exchange of dollars to Gold. Who was this thief? His name was
Franklin Delano Roosevelt.
As the Spanish philosopher George Santayana (1863-1952) said:
"Those who cannot remember the past are condemned to repeat
it." In a similar vein, Americans are doomed to repeat the same
mistakes. A great transfer of wealth is under way as bankers
create credit and the people go into debt. They trade their sweat
and blood for easy credit in order to live large. When that day
comes to pay the piper, all that they have will belong to those to
whom they are indebted. The great wealth robbery will make
criminals like Franklin Delano Roosevelt and John Law mere
footnotes in history.
A Current Japanese Example
Japanese have an approaching date with disaster. The Yen has
fallen in value as the insolvent Japanese banking system careens
into a “Death Spiral” of accumulating debt. The bank loan debt
picture is so bad that collapse is inevitable. Bankers have even
gone so far as to hire martial arts experts to collect.
Many Japanese citizens are at least taking some personal
responsibility by accumulating Gold as the ultimate insurance.
Sales are accelerating since the banks and the government no
longer insures time deposits over 10,000,000 Yen (about $75,000).
Next April Fools Day 2003, deposits of all types of savings will no
longer be insured over 10,000,000 Yen. Another fleecing is about to
happen.
Conclusion
We can’t learn anything from the Argentines, though we should.
We’ve been down this road before. If we haven’t learned anything
yet, we never will. We are being set up just like the Argentines
with fast easy credit. Just sign on the dotted line and spend away.
The banks and the equities markets will always be open – right?
Don’t count on it.
On September 11, 2002, Wall Street closed up shop and the closure
lasted several days. That was because of a terrorist attack. How
does anyone think the US Government will react when confidence
in the US banking system or currency is lost? Since the “Gold
Window” was closed in 1971 and the US Dollar was no longer
backed with Gold or coined in Silver, the value (purchasing power)
of the US currency has fallen hard.
As the national debt rises to unsustainable levels we too face the
same fate as Argentina. The transfer of wealth in the US has
already begun ever since Richard M. Nixon met with his advisors
on Sunday August 15, 1971. The shift can be seen as the mighty US
Dollar has lost purchasing power since the "Gold Window"
slammed shut.
Europeans should also take note. How can 12 countries with
different political systems adopt sound fiscal policies at the same
time to keep this currency viable? At the very least Europeans had
better make some preparations as well. Better yet, accumulate
physical precious metals as the ultimate insurance policy against
the ravages of criminal bankers and governments.
"Those who cannot remember the past are condemned to repeat
it."
4/17/02; 05:27:57MT - usagold.com msg#: 73602)
*** Argentinean “Tears” ***
“What can we learn from the “tears” of the Argentines?”
The strong (overvalued) US dollar got Argentina in big troubles.
Argentina needed badly a devaluation and a modest devaluation
would have been good for Argentina. But Argentina could not
devalue because of the dollar peg. The only way to devalue was to
abandon the dollar peg...
In 1934 and 1987 the only way out for the US was a large
devaluation.
Today the US dollar is grossly overvalued due to over printing.
(Feds are slowly in the process of devaluing the dollar down 40%,
it's down 6.6% so far this year. Get ready for the lost in your buying power if you only have Fiat paper as money and not gold & silver.)
USE YOUR BACK BUTTON RETURN
