The Golden Rule

"He who has the gold, makes the rules" ~Lyndon Forman

First it was millions, then billions and now trillions of dollars. The mind just becomes numb looking at all those zeros.

I heard an analogy the other day by Gerald Celente regarding just how much a trillion dollars is.
Gerald said. "If you were to spend One Million dollars a day, a day, since the time that Christ was born until today, you still would not have spent a trillion dollars."
So I did the math, and you know what? He was right. In fact you would not have spent 3/4 of a trillion dollars. Yet the Washington elite have decided they can do it in less than a year.

Why do I bring this up? My biggest fear that comes from this crises are the solutions put forth by Washington. I fear that in order to save Capitalism they will destroy the currency, and all those benefits that come from being the world’s reserve currency.

“By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”

John Maynard Keynes

On April 2, 2009 twenty of the world’s richest countries met in London. In addition to the united front and photo op’s by these banksters, another development occurred which might have went unnoticed by many.

IMF Gold sales
At the G20 meeting, the International Monetary Fund was pressed to sell 403 tons of its gold reserves to be used to ease the global financial crisis. This wasn’t the first time the IMF has threatened, or been used as leverage to drive the price of gold down.

What has transpired since has been no less than extraordinary.

China has since gone on record as advocating that the IMF sell its entire 3,217 tons of gold holdings. The Chinese central bank may be looking to purchase another 4,000 tons of gold, which is a larger amount than all the gold reserves reported by the IMF, and is also larger than those held by all but a handful of the world's central banks. At a price of $1,000 per ounce, China would need barely five percent of its central bank reserves to buy this much gold.

Since the G20 it has been pretty hush in regards to IMF selling its gold.

In the last few days, the IMF has said instead that it plans to sell bonds to finance its activities

My bet is the IMF will never sell its gold because I believe it doesn’t have any to sell. I will explain later.

Since 2003 China has been secretly buying gold with the vast foreign reserves that they are sitting on.

On April 24, the Xinhua News Agency reported that China's gold reserves had increased from 600 tons at the end of 2002 to 1,054 tons, a rise of 76 percent Until this announcement, the Chinese central bank had continued to report only the 600 tons in reserves. The spokesman claimed that all gold had been purchased from domestic mine sources.

Here is where our story takes a twist. The World Gold Council and GFMS are suppose to be the premier experts and consultancies when it comes to precious metals. These are the firms that are suppose to be in the know. According to GFMS

"GFMS Ltd. is the world's foremost precious metals consultancy, specializing in research into the global gold, silver, platinum, and palladium markets. GFMS is credited with producing the most authoritative surveys of the gold and silver markets."

These are the people who are the foremost authorities and yet China has been purchasing gold for the last seven years and they didn’t know it? None of their reports include the Chinese central bank gold purchases as part of gold demand. Even more damaging to their reputations, these reports do not show any gold supply to cover what the Chinese have purchased. So where did it come from?

What is significant about the Chinese announcement is that China has openly declared gold to be a monetary asset and one that they are buying. For seven years they have accumulated this precious of all metals and finally determining that it should be counted as PBC monetary reserve.

Why now? Maybe you hadn’t heard that both China and Russia are calling for a NEW reserve currency. And what better way to bolster ones own currency than by backing it with the world’s oldest form of money.

China Moving towards reserve currency status

Zheng Lianghao, managing director of the World Gold Council's Far East division, said that China's gold reserves, besides providing a hedge against the risk of U.S. Dollar weakness, could be used to back China's yuan, bolstering its appeal as a foreign reserve currency.

According to John Ing, a portfolio manager with Maison Placements in Canada, "The U.S. should be afraid, very afraid. China is questioning the dollar's status as a reserve currency and, at US$1,000 an ounce, gold has become the world's de facto currency.

Shortly after the G20 President Obama drafted this

On April 16, U.S. President Obama wrote a letter to congressional leadership seeking support for the U.S. government to loan the International Monetary Fund $100 billion. This is part of a plan for the IMF to expand its New Arrangements to Borrow (NAB) program from $50 billion to $500 billion.

President Obama is portraying this loan as an investment rather than an expenditure when he stated in the letter, "Such participation effectively represents an exchange of assets rather than a budgetary expenditure, and it will not result in budgetary outlays or any increase in the deficit. That is because when the United States transfers dollars to the IMF under the NAB, the United States receives in exchange another monetary asset in the form of a liquid, interest-bearing claim on the IMF, which is backed by the IMF's strong financial position, including its significant holdings of gold."

Why would the US need to exchange assets when the IMF could just sell its gold outright? Because the IMF doesn’t have any gold! It may have never possessed the gold it was reported to have had. If it did ever hold any gold I would be willing to bet my left nut that they to, have been leasing their gold as part of the gold suppression scheme like other central banks.

" The IMF does not physically hold the gold. It has been pledged by member nations who, in theory, have delivered the gold to one of four countries designated as depositories. The United States and United Kingdom are two of the designated depositories. It is entirely possible that one or more nations might, if called to turn over their gold, default on delivering their gold commitment.

" Although the IMF tries to pretend that it audits the gold holdings, it then immediately contradicts itself by reporting that holdings in depositories are not audited by the IMF.

" There is significant suspicion that some of the gold pledged to the IMF has been leased. If the IMF were to try to sell it, that could force the recall of some gold leases.

" It is also possible that some of the gold pledged to the IMF has conflicting ownership claims.

" The IMF only theoretically has 3,217 tons of gold, which at $920 gold spot is worth only $95 billion. Where would be the collateral for the other $400 billion of planned borrowings?

Never heard of the gold suppression scheme?

Paul Craig Roberts was assistant secretary of the treasury in the Reagan administration poses this question:

How long can the US government protect the dollar's value by leasing its gold to bullion dealers who sell it, thereby holding down the gold price? Given the incompetence in Washington and on Wall Street, our best hope is that the rest of the world is even less competent and even in deeper trouble. In this event, the US dollar might survive as the least valueless of the world's fiat currencies.

Maybe from the maestro himself.

There is a significant business in oil-based derivatives, for example. But unlike farm crops, especially near the end of a crop season, private counterparties in oil contracts have virtually no ability to restrict the worldwide supply of this commodity. (Even OPEC has been less than successful over the years.) 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

Of course this does not take into account the highly suspect European Central Bank Gold Agreement (ECBGA) both 1 & 2. Now entering into its last months and well under the 500 tonne limit.

Will the U$D survive is up for debate. One thing that is certain is that many other central banks are now holding that barbarous relic, many are buying, and many are now demanding delivery.

The new vaults of DMCC will be a home to the gold allocated to the Dubai Gold Securities (DGS) Exchange Traded Funds (ETFs). The vault may also become a natural choice for storage of gold reserves by central banks in the regional market, analysts said.

DMCC's new vault became operational on April 26 this year. "We want to bring the gold held under DGS ETFs at the HSBC vaults in London to Dubai.

"It's a natural home for the central banks in the region to store their gold in Dubai rather than in London where they have typically held their gold. Particularly when DMCC has a state-of-the-art facility to store such precious metals," said Jeffrey Rhodes the CEO of INTL Commodities DMCC, a Dubai-based gold dealer.

Jim Willie
puts it plainly.

both the Germans and Persian Gulf states have demanded the return of all gold bullion held in the United States and London. Pressure is on the Commodity Exchanges in New York and Chicago (COMEX) and the London Metal Exchange (LME). They are fast losing their physical metal, and are loaded to the gills with illegal short contracts that grossly lack collateral.

One would be prudent if they had at least some PM’s to protect oneself.



I am currently numb

This is an astounding post, amazing development and I am so numb from all of the bad news...

today it really hit just how many people are out of work and in a few more weeks...those people are going to start becoming homeless...

that I cannot comment on this. In the morning I will but it just went over my head as so beyond belief I can't absorb it.

I am beginning to think this is all by design

I don't like to fall to conspiracy theories but when you have such a large amount of politicians bound and determined to kill our currency....what else can I think?

When you have a government that is bound and determined to add more and more and more debt...what else can I consider?

What is going on, who is in control....(as they asked in Butch Cassidy & the Sundance Kid) I ask, who are those guys.

Unemployment marches ahead and many people are starting to fall off the government UM radar.

And the stock market keeps advancing. Hm? The citizens are in deep doo doo, the companies are in deep doo doo but the traders are happily buying. I'll eat my hat if this isn't a bear market rally, a suckers rally. My gut tells me around the 10,000 mark (give or take a few) and all the insiders are going to bail with their money.

This is why

people need to protect themselves. Something that is out of control of the government and has no counter party risk attached to it.

However a general shift to gold would undermine the power of central banks and their influence on the economy. ~Rob Mackinlay

Stop thinking the Gov't is going to help ... if they wanted to help they wouldn't be using tax payer dollars to bail out insolvent institutions.

I wouldn't call this a conspiracy theory. When the facts are lined up this is no longer theory its a policy. A policy that will ultimately fail when the governments of the world run out of gold to lease.

You're a bit late

I've known several conspiracy theorists who have been predicting the fall of the petrodollar as a world reserve currency for the past 25 years.

According to them, it wasn't the invasion of Kuwait that got us embroiled against Saddam, but the threat of selling oil in Euros instead of dollars.

Executive compensation is inversely proportional to morality and ethics.

Maximum jobs, not maximum profits.

Worldwide gold demand up 38%

The rise in investment demand is overwhelming the fall in jewelry demand.

(Bloomberg) -- Gold purchases rose 38 percent in the first quarter, led by investment demand that exceeded usage by jewelers for the first time since at least 2004, according to the World Gold Council.

Global demand increased to 1,015.5 metric tons, from 733.9 tons a year earlier, the London-based council said today in a report based on figures from research company GFMS Ltd. Investment purchases more than tripled to 595.9 tons while jewelry demand fell 24 percent to 339.4 tons.

Investment demand for coins, bars and exchange-traded funds was the highest since at least 2004, when GFMS began tracking them, and “could well be” a record, GFMS senior metals analyst Philip Newman said. Jewelry demand had accounted for about two- thirds of gold demand in the past 30 years, he said.
“Investment flows in the first quarter of this year were unprecedented and, based on an analysis of the past 30 years of the gold market, probably unsustainable in the long term,” UBS AG analyst John Reade wrote in an e-mail. Concerns about inflation and currencies “are likely to continue for the next year or so and this should keep investment flows strong, if not perhaps at the super-strong levels seen in the first quarter.”

The U.K. Royal Mint used 75 percent more gold in the first quarter than a year earlier and the U.S. Mint’s sales of 1-ounce American Eagle gold coins more than quadrupled in January.
Total demand from India fell 83 percent to 17.7 tons, from 107.2 tons a year earlier. In Thailand, total usage was a negative 16.9 tons, compared with net demand of 2.1 tons a year earlier. Purchases in China rose 1.8 percent to 105.2 tons from 103.3 tons. In the U.S., demand rose 15 percent to 55.2 tons.

“Certainly over the long run, you’re going to see China permanently taking a bigger role,” said Rozanna Wozniak, London-based investment manager at the council. “Across the world, there has been an increase in recycled gold sales, due to a combination of profit taking and distress selling due to difficult economic conditions.”

Demand in Germany for bars and coins expanded fivefold in the first quarter to 59 tons, according to the report.

“Throughout the western world, the safe-haven motive to buy gold was very strong due to economic uncertainty,” Wozniak said. “In Germany, it also appears to be motivated by inflation.”

The one thing that is unsaid in this article is that gold is an alternative to paper money. A massive increase in physical gold buying is a vote of no confidence in paper money.

Peak Gold?

Since 2001 the price of gold has tripled, yet gold production has fallen significantly.

Is there gold out there

to be found? Certainly .... just not at $1000 an ounce. :o)

Its amazing that you can tell somebody that you know of an asset that has gone up 15% a year on average every year for the last 8 years and they are interested .... and then you mention that its gold and they tune it out right away.

Stop playing the paper con(fidence) game!

This is something that has interested me

As Oregon was once a gold-producing state, and many of our ghost towns were due to gold not being profitable to mine at $100/oz.

Which means those old veins and mines are still out there, and at some point it will be profitable for machines like the Sumpter Valley Dredge to operate again.
Executive compensation is inversely proportional to morality and ethics.

Maximum jobs, not maximum profits.