The Bankers New GoldJeff Nielson
14 December 2011
In a fresh sign of banksterdesperation, we recently learned that they have pushed lease rates for gold tothe lowest, negative level in history - i.e. they are paying people more moneyto "borrow" their gold than at any other time. We know this is a signof desperation, because back in the real world, buyers are paying premiums nearrecord-highs to buy their (real) gold.
There are numerous implicationsregarding this latest bankster tactic to suppress the gold market, but beforegetting into those let's explore all of the reasons why bankers like"leasing gold" in the first place. The starting point is to note thatit is with gold-leasing that we see the beginnings of the banksters' 100:1leverage in the gold market.
A banker is holding a quantity ofgold in his vault. He "lends" the gold to a trader, and suddenly youhave two parties both pretending to be the "owners" of that gold.Naturally, the banksters also like the fact that this is a totally opaque,unregulated/unreported transaction. The banksters can secretly lend out theirgold, and since the transactions are never reported, we lack the absolute proofthat none of this "loaned gold" is ever repaid.
There is certainly plenty ofcircumstantial evidence on which to base such a conclusion, however. In orderto review this evidence, we first need to know what is being done with thebankers' leased gold. A detailed analysis by veteran precious metalscommentator Frank Veneroso explains how and why "The ultimate borrowers inthe gold lending operation are these shorts in the gold futures and forwardmarket."
We immediately see a second reasonthe bankers love gold-leasing: all of the "leased" gold ends up beingshorted onto the market. What this directly implies then is that in order forthese gold leases to ever be repaid the short positions must be closed out sothat the gold (supposedly) backing the trade can be repatriated to the bank.However, what we see in the gold market is a huge, permanent short position inthe gold market - which has swelled enormously since Veneroso wrote the articleabove nearly a decade ago.
We now know that at least some ofthese gold leases have never been repaid, since the gold that was loaned outremains on the market. However, as a matter of simple arithmetic we can deducethat few if any of these leases are ever repaid. As I noted above, each goldlease creates "paper gold" (i.e. a "fractional reserve"gold market) and increases the bankers' leverage in the gold market.
We know from Jeffrey "I can'tkeep a secret" Christian of the CPM Group that the gold market isleveraged by approximately 100:1. Yet just as every new lease increasesleverage in the gold market, closing out any lease would reduce leverage by acorresponding amount. The combination of the permanently rising leverage, andthe permanently rising short position provide irrefutable empirical evidencethat little if any of this "leased gold" is ever repaid.
We can reinforce this conclusionfurther through common sense, and a basic observation of bankster behavior.Specifically, bankers never reduce their leverage voluntarily - the exceptionbeing short-term panic reactions each time their reckless gambling (again)pushes them to the verge of their own bankruptcy. However, as noted above thereis zero empirical evidence that the banksters ever reduce their leverage in thegold market on even a semi-permanent basis.
Having supplied several powerfulreasons as to why the bullion banks love to "lease" their gold (i.e.sell it to multiple buyers) begs the question: why aren't the bankers always"leasing" vast amounts of gold to suppress the price? Hopefully thatanswer is obvious to regular readers. If you want to loan ton after ton of goldonto the market, you must have some original bullion to lend into the market inthe first place.
Here is where we come upon a seemingparadox with respect to the recent explosion of gold leasing. We know that thebanksters have virtually run out of their own bullion, as the evidence isabsolutely conclusive. The same Western central banks which were openly selling500 tons of gold per year onto the market every year have now all totallyceased their gold sales. They have no more gold…or at least they had no moregold.
Yet here we have the same bankers directlyimplying that suddenly they have lots of gold. It makes no sense to announce"the greatest sale on gold in history" - only to run out of inventoryafter the few first customers have bought their fill. Clearly the bankers havesome new gold. This begs an even more obvious question: where did they get it?
Here, unfortunately, we must descendinto speculation. However it is speculation which we can back up with yet morecircumstantial evidence. As I noted in a previous commentary, as part of the"economic rape" of European economies, the bankers announced thatthey would be "willing to accept gold as collateral" for some oftheir (fraudulent) paper debts. How magnanimous of them!
As we all know, when Greece (finally)forced the bond parasites to absorb 50% "haircuts" on their holdingsthat was a default event. What happens when a debtor defaults on a debt?Collateral is seized. The latest statistics from the World Gold Council onofficial government reserves show Greece sitting with over 111 tons of gold.And as victims of the MF Global collapse have learned the hard way, ourcriminal governments (and the bankers who pull their strings) no longer see itas necessary to even report when they have taken something from people. Thusthe bankers could have looted every ounce of Greece's gold from its people andit could be months, years, or never before we finally find out about it.
One hundred and eleven tons is a lotof gold to lease, but it's certainly not the only gold hoard onto which thebankers could have recently latched their talons. Those who followed the"Libyan revolution" will have recalled a remarkable flip-flop by theWest.
At one moment, we had the vastlysuperior military forces of Muammar Gaddafi steamrolling the rag-tag,disorganized rabble we knew as the "Libyan rebels". They were on theverge of collapsing. All hope was lost. Western leaders lamented that the lackof "UN authorization" prevented these upstanding citizens of theglobal community from doing anything to assist the rebels - and there wasabsolutely no sign of any "movement" in those negotiations.
The next moment, the samedisorganized rabble which didn't even have a military command structure (letalone a nation to command) announced they had created a "centralbank". About ten seconds after that announcement, Western leaders announcea "sudden breakthrough" at the UN, and a drafted-and-approvedresolution instantly materialized. And before the ink was even dry on thatdocument, war-planes from several Western nations were on the way to Libya toenforce a "no-fly zone".
At that point we witnessed how muchregard these Western nations had for international law. When following the UNmandate and merely enforcing the "no-fly zone" was not producing theresult these nations desired, they simply tore up the resolution and threw itaway. Instead, they began carpet-bombing any/all areas under the control ofGaddafi, slaughtering his ground forces (and large numbers of civilians) inwhat is a textbook example of "war crimes".
This brings us back to the pivotalmoment when Libya's central bank was created. What possible purpose could therehave been for the rebels to create a central bank before they had even createda real army to take control of the country? There was no "banking" tobe done. And yet it was the creation of that symbol which was the obviouscatalyst for a massive military commitment by the West.
One thing we do know about centralbanks is that they are the official receptacles for a nation's gold reserves.Turning again to WGC statistics on national gold reserves, we see that Libyahad even more gold than Greece, 143.8 tons to be precise - and more than enoughfor a group of gold-hungry bankers to instruct their lackeys in government tomobilize their war-machines.
Let's summarize the facts. We hadWestern central banks totally running out of any gold to sell onto the market,with all gold sales having ceased for more than a year. Suddenly, we have thebullion banks announcing they have so much gold on their hands that they aredoing more than just giving it away, they are literally paying people to"borrow" it - in the greatest "gold sale" in all ofhistory.
We have the same bankers announcingthat the gold of Greece was now "collateral" for its sovereign debts.We then had the Greek government defaulting on those debts, directly implyingthe seizure of that collateral.
We had the "rebels" ofLibya on the verge of total annihilation, while Western governments claimedthey were helpless to intervene because it was "against internationallaw". We suddenly saw the rebels create an official receptacle for theirnations gold, and then had those same Western nations instantly launching amassive military intervention into Libya, where Western governments flagrantlydisregarded international law while committing their war crimes.
You be the judge.
For newer or more timid investors inthe gold market who fear that this latest operation is somehow an indication ofbankster omnipotence, relax. It was less than two years ago that the schemingbanksters thought they could torpedo the gold market through getting the IMF todump 400 tons of gold onto the market (50% more gold than that of Greece andLibya combined).
What happened then? As soon as thatgold hit the market, India swallowed-up half of it in one gulp. The price ofgold was permanently launched above the $1000/oz mark - and the gold market hasnever looked back since.
We know that the banksters arecapable of depressing the price of gold over the short-term. We also know fromthe six-fold increase in the price of gold over the past decade that they arelosing this "war". Meanwhile, it is only a matter of time until themasses realize that the worthless paper in their wallets is worthless. Soundslike a great time to buy gold - on sale.
Jeff Nielson
www.bullionbullscanada.com