Central Bank Gold-Grab Intensifies, Part I
VANCOUVER (Silver Gold Bull) -- There was a major gold scam in China, which we will discuss later. But before we throw stones 7,000 miles away, let's look at what's happening here.
Precious metals commentators (the legitimate ones) are continually striving to tear away the veils of deceit and propaganda, in order to present the global economy (and the world as a whole) in a realistic manner. This is done in order to warn people of the grave financial/economic peril that looms ahead -- thanks to the bankers and politicians (and regulators).
It is a frustrating task. It is a fundamental trait of human psychology that most people expect tomorrow to be just like today. Couple that inherent defect in thinking with history's greatest propaganda-machine, continually blaring to the masses an endless chorus of "don't worry, be happy," and the result is as predictable as it is tragic: Hordes of lemmings blissfully marching toward the gaping chasm ahead.
This is why we continually look for opportunities to demonstrate how the actions of the bankers are entirely contrary to their words, and thus reinforce the reasoning and analysis of commentators like myself. Recall how the bankers and their minions in the ivory towers of academia have spent nearly a century attempting to brainwash the masses into believing the absurd proposition that gold was/is "a barbarous relic".
To reinforce this big lie, the bankers dumped thousands of tons of gold onto the market -- gold that (ironically) was actually owned by these same legions of lemmings -- because (amazingly) all of the peoples' gold has been placed in the custody of this cabal of private bankers, the central banks. It was a strategy doomed to fail; because today they have no more gold to dump, and their big lie has been exposed. Now nothing remains except for them to attempt to (quietly) buy back -- or simply steal -- as much of this gold as possible.
This task is greatly complicated by the fact that Western bankers cannot simply go out and re-purchase large quantities of gold on the open market, for many reasons (including the fact that gold-buying by other central banks is already soaring to record levels). To begin with, supplies of actual bullion are very tight. We can deduce this in various ways: The six-fold increase in the price of gold; the extremely abrupt end to Western gold-dumping, and the naked hunger that governments such as China and India are demonstrating in finding new supply sources for gold bullion (i.e,. ore that hasn't even been dug out of the ground yet, let alone refined).
As Kitco.com tells us, in this piece picked up by Forbes, there are also indirect ways in which we can deduce that actual supplies of bullion are extremely limited: unscrupulous people are selling "paper gold" to chumps, only for the chumps to discover that they are holding all "paper" and no "gold." Where did the intrepid sleuths of Kitco spot these gold-scammers? Halfway around the world, in China.
There are a few preliminary points to make regarding Kitco's "discovery." First of all, it is incongruous (bordering on outright absurde) that these same corporate media talking-heads have spent literally decades scoffing at even the possibility of bullion-scamming of this nature taking place in New York and London, despite mountains of empirical evidence and even a bona fide whistleblower. Indeed, one of these New York fraud-factories has already been fined once for its own "paper bullion" escapades.
Yet here we have this financial publication pointing an accusatory finger halfway around the world, even though it openly acknowledges that "details are unclear how the scam worked." Meanwhile, 25% of Wall Street bankers are confessed thieves.
Putting aside this unique and suspicious form of financial tunnel-vision (which seems to only exist in New York and London), there are several other points to note about the Kitco discovery. There is this observation: Imagine, mused the scribe, if that $59 billion had been put into actual gold (and silver) rather than worthless paper how that incremental investment could have driven gold and silver prices higher. Thus, halfway around the world when Kitco "sees" a bullion scam, it can also see the obvious bullish implications of people buying paper while thinking they are buying bullion.
Yet when ex-Goldman Sachs banker Jeffrey Christian testifies before the CFTC that the ratio of "paper gold" to actual bullion in the markets of London and New York is somewhere in the magnitude of 100:1, these same media sleuths suddenly become totally unable to see any bullish implications at all. This is despite the fact that the London/New York bullion markets are roughly one hundred times larger than the scam (and market dynamic) to which Kitco alluded.
Kitco has the ability to spot a "mole hill" halfway around the world, while feigning the complete incapability to see a "mountain" right outside its own N.Y. office windows. However, this is only the beginning of the blatant double-standard exhibited by both the banksters and their media-minions, as they rapidly back away from their own hundred-year propaganda campaign that gold is a mere barbarous relic.
While both the banking cabal and corporate media have vainly continued to present the (public) front that the U.S. dollar (and U.S. paper in general) is the world's ultimate "safe haven," it is gold whose status is being elevated by these bankers again and again -- at the same time that the U.S. dollar is being rapidly stripped of its status as "reserve currency;" in a 21st century reprise of "Tulipmania".
What happens when the transition to a new reserve currency is nearly finished and bewildered dollar-holders are sitting with $trillions in this surplus paper? It will give new meaning to the words "stampede" and "panic."
Meanwhile, with respect to the rise of gold, first European bankers proclaimed that gold would once again (officially) be considered "financial collateral" for any/all sovereign debts of Europe's Deadbeat Debtors. As I noted when this was initially announced, the motive seems abundantly transparent: With these hopelessly insolvent economies about to default on their fraudulent bond debts (as Greece has already done), the bankers are seeking to seize these nations' remaining stockpiles of bullion. Why buy gold when you can simply steal it instead?
Then there is the campaign to elevate the status of gold as an asset in the hands of these actual fraud-factories, themselves. Here I'll defer to the observations of a writer named Michael Lombardi, referred to me by a kind reader. Lombardi first noted that the Bank for International Settlements has already proposed promoting gold (once again) to being a full "Tier 1" financial asset. Now, he notes, the Federal Reserve has made the same proposal with respect to the capital reserves of U.S. banks.
Lombardi explains the enormous significance of this change, and some of the (extremely bullish) implications that this has for the precious metals sector. In being elevated to a Tier 1 financial asset, 100% of gold's market value would count toward the ultra-critical capital levels of these banks (versus only an absurd 50% weighting at the present time). Essentially, this one change would instantly make gold literally twice as attractive and twice as valuable to all these Big Banks.
Lombardi also notes that these proposals come within the context of extreme pressure being put upon banking pseudo-regulators to dramatically elevate the capital reserve requirements for all these banks. In Part II, I'll expand further upon the bullish implications for these changes, and then look ahead to how these new dynamics could play out in bullion markets in the months ahead.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.