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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, in turn, is done in order to warn people of the grave financial/economic peril which looms ahead of us; thanks to the unholy alliance of unscrupulous bankers and corrupt 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 duplicitous 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 myriad 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 directly: the sixfold increase in the price of gold, the extremely abrupt end to Western gold-dumping, and the naked hunger which 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 Forbes Magazine tells us, there are also indirect ways in which we can deduce that actual supplies of bullion are extremely limited, such as the unscrupulous people who sell “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 Forbes Magazine spot these gold-scammers? Halfway around the world in China.

There are a few preliminary points to make regarding Forbes’ “discovery”. First of all it is incongruous (bordering on outright absurdity) 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 (supposedly) prestigious New York financial publication pointing an accusatory finger halfway around the world, even though it openly acknowledges that “details are unclear how the scam worked”. Meanwhile, with 25% of Wall Street bankers being openly confessed thieves, the sleuths at Forbes Magazine claim to be totally unable to “see” manipulation and scamming taking place right outside the windows of their own head office – despite a trail of bread-crumbs so obvious that even Inspector Clouseau could get to the bottom of things.

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 Forbes discovery. There is this observation, made by the Forbes talking-head herself. 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 Forbes “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 Forbes alluded.

It is hard to reach any conclusion other than a lack of honesty when we have this large financial publication (with enormous research resources) able to spot a “mole-hill” halfway around the world, while feigning the complete incapacity to see a “mountain” right outside its own 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 21^st 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, which a reader was kind enough to point out to me. 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 which 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.

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written by Jeff Nielson, July 25, 2012

[quote

Jeff: There has been an enormous pushback on requested sovereign gold audits; Germany, the Netherlands, US. Additionally, one of the first Obama EOs was to take control of all mineral resources on US public lands, and the NDAA order of Jan/2012 further gave the President TOTAL control over all US assets, including individuals for their labor. I wonder if Harper will do the same in Canada? The above certainly indicates to me that many (if not most) of the gold hoards claimed by Western sovereigns has long been leased,swapped, hypothecated or re-hypothecated. Without question, most of the recent movements of gold have been to the East and Mideast. Before that, I can only assume that the Rothschild vaults were incrementally increased. Additionally, a probable 50% of global production is being withheld from the "free" market by China, Russia and some former USSR republics.

The bottom line is that current owners of tonnage are not traders, but long term holders. If the sheeple wake up, or if funds start to allocate even 5% of assets to gold, there will not be enough gold available to the market to satisfy demand. The prognostications, therefore, of experts estimating gold in the 5 figure range, are probably accurate. The only question is timing...

Good observations Apberusdisvet!

This plays into a general theme which I like to discuss on our forum: the metaphor of throwing pebbles into a pond. Toss just the occasional pebble into a pond and the small/gentle ripples they cause will disturb no one -- and attract no attention.

However, as the numbers of pebbles steadily increase the "ripples" turn into WAVES, and at that point can no longer be ignored. Here we see yet ANOTHER Western "pond" where the ripples are starting to turn into waves.

The end is near...

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written by apberusdisvet, July 25, 2012

Jeff: There has been an enormous pushback on requested sovereign gold audits; Germany, the Netherlands, US. Additionally, one of the first Obama EOs was to take control of all mineral resources on US public lands, and the NDAA order of Jan/2012 further gave the President TOTAL control over all US assets, including individuals for their labor. I wonder if Harper will do the same in Canada? The above certainly indicates to me that many (if not most) of the gold hoards claimed by Western sovereigns has long been leased,swapped, hypothecated or re-hypothecated. Without question, most of the recent movements of gold have been to the East and Mideast. Before that, I can only assume that the Rothschild vaults were incrementally increased. Additionally, a probable 50% of global production is being withheld from the "free" market by China, Russia and some former USSR republics.

The bottom line is that current owners of tonnage are not traders, but long term holders. If the sheeple wake up, or if funds start to allocate even 5% of assets to gold, there will not be enough gold available to the market to satisfy demand. The prognostications, therefore, of experts estimating gold in the 5 figure range, are probably accurate. The only question is timing.

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written by Jeff Nielson, July 24, 2012

Jeff you raise an important issue here,
"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"

It must be synchronicity because I came to your article straight after reading a post by FOFOA on this very point.
http://fofoa.blogspot.co.uk/2012/07/fallacies-1-paper-gold-is-just-like.html

"Nobody is claiming there are more than 5 billion ounces of paper gold. In fact, there is probably far more physical in the world than paper gold. Enough physical gold to cover all of the paper a few times over perhaps. But that doesn't matter, it is only the flow that matters." - FOFOA

What is your take on the importance of the Stock to Flow ratio and is their REALLY more gold than paper gold stashed away somewhere in the world, albeit out of the hands of central bankers?
And more importantly, does it matter? FOFOA thinks not. But he seems to put Gold on a separate pedestal to other commodities, even Silver. Scarcity is not a bullish quality for him contrary to all common sense.
Is he spouting pseudo-intellectual pyscho-babble or is there something in what he says? I must admit, I find some of his ideas attractive - Free Gold for example, it seems similar to Hugo Salinas Price`s proposals but for some reason only applies to Gold and not Silver. Can`t for the life of me figure out why.

Good question Dylan.

I've been a consumer of the FOFOA blog myself over the years, so I know firsthand there is definitely some very useful insights on that site. However, my personal view in recent years is that I've found a lot of the writing less-than-persuasive, especially when they write about silver.

With respect to their discussion of "stocks vs. flows" this is something of an over-simplification. I prefer to discuss this issue as inventories versus stockpiles, since this deals with the FULL supply picture.

Inventories represent the total amount of a good IMMEDIATELY available for sale, while stockpiles represent the total quantity of a good -- including amounts which only MIGHT come onto the market at higher prices.

With respect to any/every open trading position, these can ONLY be "backed" by inventories. So the whole "stocks vs. flows" discussion is totally irrelevant to this key issue. The ONLY supply measurement which matters in a market TODAY are inventories, and inventories are GROSSLY inadequate to cover more than a tiny portion of the banksters (leveraged) trading positions.

The FOFOA discussion would seem to complicate this dynamic more than it resolves it.

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written by Jeff Nielson, July 24, 2012

Do you think we can expect the gold price manipulation to end or at least decrease if the BIS and Fed make gold a tier 1 asset? To my way of thinking this would be a given.

Jimha, I can't really provide an answer to that without getting into what I plan on discussing in Part II. So in this case I'm going to have to say "stay tuned"...

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written by Dylan, July 24, 2012

Jeff you raise an important issue here,
"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"

It must be synchronicity because I came to your article straight after reading a post by FOFOA on this very point.
http://fofoa.blogspot.co.uk/2012/07/fallacies-1-paper-gold-is-just-like.html

"Nobody is claiming there are more than 5 billion ounces of paper gold. In fact, there is probably far more physical in the world than paper gold. Enough physical gold to cover all of the paper a few times over perhaps. But that doesn't matter, it is only the flow that matters." - FOFOA

What is your take on the importance of the Stock to Flow ratio and is their REALLY more gold than paper gold stashed away somewhere in the world, albeit out of the hands of central bankers?
And more importantly, does it matter? FOFOA thinks not. But he seems to put Gold on a separate pedestal to other commodities, even Silver. Scarcity is not a bullish quality for him contrary to all common sense.
Is he spouting pseudo-intellectual pyscho-babble or is there something in what he says? I must admit, I find some of his ideas attractive - Free Gold for example, it seems similar to Hugo Salinas Price`s proposals but for some reason only applies to Gold and not Silver. Can`t for the life of me figure out why.

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written by jimha, July 24, 2012

Do you think we can expect the gold price manipulation to end or at least decrease if the BIS and Fed make gold a tier 1 asset? To my way of thinking this would be a given.

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