http://beforeitsnews.com/economics-and-politics/2013/10/treasury-refuses-to-sell-its-gold-even-in-the-event-of-default-2457056.html
( Treasury cannot sell gold that it doesn't own as same has been leased out , a cynic would say ... )
From before......
http://fredw-catharsisours.blogspot.com/2013/10/gold-and-silver-updates-october-1-2013.html
Excerpted from Harvey Organ - 10/ 1/13
****
Fellow Canadian Bryant Blake (who goes by the handle Rhody) has discovered something huge with respect to accounting for gold by the World Bank. The world bank has hinted in the past that it wished to discount leased gold. Its looks to me that they followed through on their promise. I will send this to Reg Howe is the authority on these matters and I will report back on his findings.
from Bryant Blake
"please feel free to bring in any of your associates to investigate the drop in reserves for the U.S, Germany, and France that is shown on the World Bank reserve table
http://data.worldbank.org/indicator/FI.RES.TOTL.CD.
You might want to post the world bank link table on LeMet in case the world bank removes it from the public domain. Below is a table which converts the drops in reserves to drops in gold holdings. Based on the numbers, all of the U.S. and German gold, and most of the French gold is gone if it is assumed that SDR and currency reserves stayed the same from 2011 to 2012. Even if the SDR and currency reserves for these countries dropped to zero, the 2012 reserves indicate gold holdings dropped about 70%. -Bryant
***
More from Bryant...
http://www.usmint.gov/about_the_mint/?action=annual_report The 2012 us mint report on page 42 reports deep storage gold with a market value of $435 billion on 9/30/12. This compares with end of 2012 us reserve per world bank of $139.1 billion. I remember some talk of the world bank discounting leased gold a few years ago. If they have implemented this it appears the us has leased all of its gold and has none which is unencumbered.
http://jessescrossroadscafe.blogspot.com/2013/10/the-disappearing-gold-bullion-from-west.html
Here is one take on the gold inventory conundrum that I posted about last night. I am not entirely comfortable with the full extent of this analogy. Perhaps it is because I had always imagined that coat check rooms were for the most part honestly run with no leverage, lol.
If you know that there is going to be a dislocation of inventory in the cloakroom, the first thing the average person would do is get their own coats out. And the less scrupulous might buy up all the tickets they could to redeem for other people's coats, and then sell what unfilled tickets that remain at whatever price they might get. Those doing God's work might even short sell tickets, if such thing was possible, and take side bets against them.
My correspondent goes on to say that a strong message was contained in the valuation that was given to the Cypriot gold during their recent crisis.
As you know I tend to mark the realization that there was a serious problem with the request from the Bundesbank for the repatriation of German gold that was refused and deferred for seven years by the Fed. It still amazes me that so few are trading on that event. It was like the earth shifted when I heard about it. How Germany Disrupted the World Gold Market
My correspondent goes on to say:
And as for what will come of the actual assets, the gold bars, that do exist after the claims may be force settled there might be some precedent for it.
In a crisis possession is nine tenths of the law, as was obvious to many unfortunate account holders in the collapse of the highly leveraged MF Global. Even when it comes to clear title to assets and the sanctity of customer accounts, actual physical possession and a good set of lawyers, not to mention political influence, is a powerful argument.
Do we know of any big players that have gone long gold this year, signaling perhaps a well informed change in their sentiment, even if it is not reflected in their own positions? I suppose we might suggest a few.
Why would anyone force or risk such an outcome that would be damaging to the bullion banks, and risk the Western banking system? It might be convenient but incorrect to attribute maliciousness to what is more easily explained as simple self-interest in the best capitalist tradition.
The rise of the BRICs as an economic force is a meaningful development.
I have the feeling that a resolution for this currency war is being crafted behind the scenes, with Russia attempting to broker a gradual currency compromise using their chairmanship of the G20 this year. The Anglo-Americans are resisting, but primarily for terms, and for time to allow their favorite banks to square themselves up in the face of this change.
Regardless of the background and motives, the remarkable decline in Western gold inventory and the enormous buying in Asia and the Mideast is something to be considered. To my mind the inability of the US to return Germany's gold in a reasonable timeframe was a watershed event.
There is always the opportunity to attempt to ignore an impending crisis with a flash of unrealistic bravado. Let them eat billion dollar platinum coins.
And the difficulty of the US dollar in maintaining its status as the world's reserve currency is highlighted by current events, not only the political deadlock in Washington, but also the many bilateral agreements to settle trade in non-US dollar terms.
In summary, there are a number of odd things going on. And the unhappiness of the BRICs with the status quo is public.
My correspondent and I believe that there will be an 'aha' or even a 'holy shit' moment coming. But predicting when it will and how it will arrive is not possible, at least from my seat in the house. By the time the retail investor figures out what is happening the wave of the future is already rolling in.
My correspondent is a little less shy of putting out a forecast but no timeframe.
What snowflake will trigger the next avalanche, or what I call trigger event will set the tipping point in motion? I could not even begin to say. I am sure others have more informed opinions on this, and none of them are speaking with the likes of us, at least not in a crony capitalist culture. They are busy doing for themselves and their friends.
Let's see what happens. China is a powerhouse now, but it may fall from the heights, as did Japan Inc. which seemed unstoppable in 1989.
But all things considered, unless I was considered TBTF at the very least I would not wish to have a significant obligation to deliver gold bullion in this market structure, even if I had hedged the risk. Sometimes risk can be remarkably hard to measure or even define.
Related: The Amazing Disappearing Gold Bullion
Prepare for a New Gold Standard - Thanong Khanthong
( Treasury cannot sell gold that it doesn't own as same has been leased out , a cynic would say ... )
It took more than six months for the Department of the Treasury to answer Utah Republican Senator Orrin Hatch’s questions about how the Treasury would respond to a government shutdown or the failure of the Congress to raise the debt limit. But its response is revealing. Even in the event of a pending default, the Treasury will not be selling any of its gold reserves to pay the government’s bills:
Treasury … considered a range of options with respect to how Treasury would operate if the U.S. had exhausted its borrowing authority.
Treasury considered asset sales … [but] rejected the option of selling the Nation’s gold to meet payment obligations because selling gold would undercut confidence in the U.S. both here and abroad, and would be destabilizing to the world financial system.
When popular and knowledgeable journalist Brett Arends learned about this, he was astonished:
The Treasury’s position is, in a word, extraordinary. We hear all this skepticism these days about gold. Yet the Treasury itself considers U.S. gold holdings to be a key element in maintaining confidence in the country’s soundness — and the stability of the international financial system.
Why wouldn’t the government just dump [its] holdings for whatever it could get?
The admission, according to Arends, is tantamount to confessing that the paper that passes for money isn’t as valuable as the gold it is hoarding:
In other words, according to the official position of the U.S. Treasury, the promises and commitments of the government, and its “full faith and credit,” are actually worth less than gold.
They’d rather default than lose their bullion.
It’s reasonable for Arends to be confused. After all, when then-Representative Ron Paul (R-Texas)challenged Federal Reserve Chairman Ben Bernanke over the matter, Bernanke demurred, backpedalled, and then gave it up, protesting that no, gold isn’t money, but it is considered an important part of central banks’ reserves.
What neither Arends nor Bernanke mentioned was the Washington Agreement on Gold. This classic “gentlemen’s agreement” between members of the banking cartel was signed in 1999 and has been renewed every five years since, where, in a deal signed over lunch among a number of international bankers, gold is determined to be off limits and not for sale unless agreed to privately, in advance.
Read More Here
Treasury … considered a range of options with respect to how Treasury would operate if the U.S. had exhausted its borrowing authority.
Treasury considered asset sales … [but] rejected the option of selling the Nation’s gold to meet payment obligations because selling gold would undercut confidence in the U.S. both here and abroad, and would be destabilizing to the world financial system.
When popular and knowledgeable journalist Brett Arends learned about this, he was astonished:
The Treasury’s position is, in a word, extraordinary. We hear all this skepticism these days about gold. Yet the Treasury itself considers U.S. gold holdings to be a key element in maintaining confidence in the country’s soundness — and the stability of the international financial system.
Why wouldn’t the government just dump [its] holdings for whatever it could get?
The admission, according to Arends, is tantamount to confessing that the paper that passes for money isn’t as valuable as the gold it is hoarding:
In other words, according to the official position of the U.S. Treasury, the promises and commitments of the government, and its “full faith and credit,” are actually worth less than gold.
They’d rather default than lose their bullion.
It’s reasonable for Arends to be confused. After all, when then-Representative Ron Paul (R-Texas)challenged Federal Reserve Chairman Ben Bernanke over the matter, Bernanke demurred, backpedalled, and then gave it up, protesting that no, gold isn’t money, but it is considered an important part of central banks’ reserves.
What neither Arends nor Bernanke mentioned was the Washington Agreement on Gold. This classic “gentlemen’s agreement” between members of the banking cartel was signed in 1999 and has been renewed every five years since, where, in a deal signed over lunch among a number of international bankers, gold is determined to be off limits and not for sale unless agreed to privately, in advance.
Read More Here
From before......
http://fredw-catharsisours.blogspot.com/2013/10/gold-and-silver-updates-october-1-2013.html
Excerpted from Harvey Organ - 10/ 1/13
****
Fellow Canadian Bryant Blake (who goes by the handle Rhody) has discovered something huge with respect to accounting for gold by the World Bank. The world bank has hinted in the past that it wished to discount leased gold. Its looks to me that they followed through on their promise. I will send this to Reg Howe is the authority on these matters and I will report back on his findings.
from Bryant Blake
"please feel free to bring in any of your associates to investigate the drop in reserves for the U.S, Germany, and France that is shown on the World Bank reserve table
http://data.worldbank.org/indicator/FI.RES.TOTL.CD.
You might want to post the world bank link table on LeMet in case the world bank removes it from the public domain. Below is a table which converts the drops in reserves to drops in gold holdings. Based on the numbers, all of the U.S. and German gold, and most of the French gold is gone if it is assumed that SDR and currency reserves stayed the same from 2011 to 2012. Even if the SDR and currency reserves for these countries dropped to zero, the 2012 reserves indicate gold holdings dropped about 70%. -Bryant
| Change in Sovereign Reserves | |||
| Country |
United States
|
Germany
|
France
|
| 2011 Gold Price |
$1531/oz
|
$1531/oz
|
$1531/oz
|
| 2011 Total Reserves($Mil) |
530,267
|
234,104
|
168,490
|
| 2011 Gold equivalent of reserves (mil oz) |
350.92
|
152.91
|
110.05
|
| 2011 Gold equivalent of reserves (Tonnes) |
10,915
|
4,756
|
3,423
|
| Official Gold Reserves 9/13 (Tonnes) |
8,134
|
3,391
|
2,435
|
| % Gold value of total reserves |
74.5%
|
71.3%
|
71.1%
|
| % Gold value of total reserves WGC 9/13 |
71.6%
|
68.6%
|
66.8%
|
| 2012 Gold Price |
$1657/oz
|
$1657/oz
|
$1657/oz
|
| 2012 Total Reserves($Mil) |
139,138
|
67,422
|
54,230
|
| 2012 Gold equivalent of reserves (mil oz) |
83.97
|
40.69
|
32.73
|
| 2012 Gold equivalent of reserves (Tonnes) |
2,612
|
1,266
|
1,018
|
| Drop in Gold Reserve (mil oz) |
266.95
|
112.22
|
77.32
|
| Drop in Gold Reserve (Tonnes) |
8,303
|
3,490
|
2,405
|
| Remaining Gold (Tonnes) |
0
|
0
|
30
|
| Total Gold Reduction (Tonnes) = 13,930 | |||
| Total Gold Reduction (Mil Oz) = 447.86 | |||
More from Bryant...
http://www.usmint.gov/about_the_mint/?action=annual_report The 2012 us mint report on page 42 reports deep storage gold with a market value of $435 billion on 9/30/12. This compares with end of 2012 us reserve per world bank of $139.1 billion. I remember some talk of the world bank discounting leased gold a few years ago. If they have implemented this it appears the us has leased all of its gold and has none which is unencumbered.
http://jessescrossroadscafe.blogspot.com/2013/10/the-disappearing-gold-bullion-from-west.html
04 OCTOBER 2013
Currency Wars and the Ghost of Bear Stearns - The Mass Exodus of Gold Bullion
“Quoted gold prices are like a coat check room at a nice hotel. Imagine that over time things develop so that there are 60-100 coat check tickets for every coat in the coat room.That makes some sense. There is an informal market in coat checks where the market sets the price. But those with asymmetric information on the true risks and valuations move the price where they wish it to be for their own advantage.
If the insiders that ran the coat room suddenly realized that the value of coats was much greater than the quoted price, what should happen? The supply of physical coats should fall & the “price” of coat check tickets should fall as well as insiders realize that with 60-100x leverage, 59-99% of the coat check tickets are actually worthless because there aren’t coats to back them.
Think about the bank run on George Bailey’s bank in ‘It’s a Wonderful Life.’ How many people get 100% of their deposit claim checks? Only one, right? Everyone else that wants immediate access to their claim check takes a BIG haircut to the ‘face value’ of that claim. What you are watching in gold markets is a slow-motion version of a classic bank run on a highly-levered depository.”
If you know that there is going to be a dislocation of inventory in the cloakroom, the first thing the average person would do is get their own coats out. And the less scrupulous might buy up all the tickets they could to redeem for other people's coats, and then sell what unfilled tickets that remain at whatever price they might get. Those doing God's work might even short sell tickets, if such thing was possible, and take side bets against them.
My correspondent goes on to say that a strong message was contained in the valuation that was given to the Cypriot gold during their recent crisis.
"In the summer of 2007, the BSC subprime mortgage hedge fund basically went to $0, and the message to the markets should have been that 'big chunks of the subprime market are worthless.' But that message at the time was so extreme that very few traded off it.That is possible, although one could dismiss the actual valuation as a token gesture to a weakened country. But the international organizations' desire for gold, and the extreme valuation placed to entice it, does suggest that the true valuation of a large quantity of gold in a financial crisis is significantly higher than where it is now.
Similarly, the Cyprus bail-in math (10 tons of Cypriot gold for $10B from ESM, IMF) would suggest that physical gold collateral is worth $31,250/oz in a crisis and that most, but not all, market participants are discounting it because it is such an extreme number.'
It probably is extreme, but some big smart people are buying gold like it is not so extreme, in much the same way that some of those same big smart people turned big sellers of subprime protection right after the BSC mortgage hedge fund blow up.”
As you know I tend to mark the realization that there was a serious problem with the request from the Bundesbank for the repatriation of German gold that was refused and deferred for seven years by the Fed. It still amazes me that so few are trading on that event. It was like the earth shifted when I heard about it. How Germany Disrupted the World Gold Market
My correspondent goes on to say:
"I think if something 'breaks' in gold markets, the COMEX futures, and perhaps other futures exchanges, would be settled out at the prior last trade, in cash."I think quite a few people believe in that outcome. We would expect a variation in premiums and valuations depending on how great the counterparty risk, and the ease which one might have to obtain any bullion for which they have a claim. As you have seen from posting here in the chart below, the claims per ounce on some venues are quite high.
And as for what will come of the actual assets, the gold bars, that do exist after the claims may be force settled there might be some precedent for it.
In a crisis possession is nine tenths of the law, as was obvious to many unfortunate account holders in the collapse of the highly leveraged MF Global. Even when it comes to clear title to assets and the sanctity of customer accounts, actual physical possession and a good set of lawyers, not to mention political influence, is a powerful argument.
Do we know of any big players that have gone long gold this year, signaling perhaps a well informed change in their sentiment, even if it is not reflected in their own positions? I suppose we might suggest a few.
"Global physical trading patterns are hitting critical tipping points whereby emerging markets are becoming the lion’s share of some global goods and services demand/production and oil demand. And they have NO interest in maintaining the status quo, because they appear to be acutely aware of the fact that the Anglo-American 'exorbitant privilege' has been funded directly by their sweat equity.This brings to mind the Chinese best seller Currency Wars by Song Hongbing that was the Harry Potter of the Chinese intelligentsia about 2006. I have written about it several times as a phenomenon in Asian thinking, in much the same way that some would point to Ayn Rand's influence on thought in the West.
Or to put it more bluntly, why would the BRICs want to settle their trades between themselves in dollars so that they can help to fund their own military encirclement that has consistently acted against their interests?”
The rise of the BRICs as an economic force is a meaningful development.
"For the 1st time we have someone big enough, in both economic size and military strength, to break the status quo, the means to do so by moving physical trade settlement amongst themselves away from USD, and the motive of satisfying intense domestic political desires to improve living standards for their people and to obtain more control over the basis for settlement of commodities, which among other things would result in lower oil prices."It is possible that if this is true, we will see some initial indications of tension in the commodity marketplace in the manner of Lehman Brothers.
I have the feeling that a resolution for this currency war is being crafted behind the scenes, with Russia attempting to broker a gradual currency compromise using their chairmanship of the G20 this year. The Anglo-Americans are resisting, but primarily for terms, and for time to allow their favorite banks to square themselves up in the face of this change.
Regardless of the background and motives, the remarkable decline in Western gold inventory and the enormous buying in Asia and the Mideast is something to be considered. To my mind the inability of the US to return Germany's gold in a reasonable timeframe was a watershed event.
There is always the opportunity to attempt to ignore an impending crisis with a flash of unrealistic bravado. Let them eat billion dollar platinum coins.
And the difficulty of the US dollar in maintaining its status as the world's reserve currency is highlighted by current events, not only the political deadlock in Washington, but also the many bilateral agreements to settle trade in non-US dollar terms.
In summary, there are a number of odd things going on. And the unhappiness of the BRICs with the status quo is public.
My correspondent and I believe that there will be an 'aha' or even a 'holy shit' moment coming. But predicting when it will and how it will arrive is not possible, at least from my seat in the house. By the time the retail investor figures out what is happening the wave of the future is already rolling in.
My correspondent is a little less shy of putting out a forecast but no timeframe.
"The most likely scenario is that physical gold goes up to a really, really big number in some sort of global currency system reset, thereby completely collateralizing most of the sovereign debt out there.Sounds plausible as anything else I suppose. We both doubt that they will 'confiscate' the gold in private hands for a number of reasons. A windfall profits tax of some sort would not surprise me, if the Democrats are in the driver's seat, although I could see a greater number of states passing gold and silver friendly laws to attract capital.
Gold miners go up a lot, but not as much as physical gold because the governments will effectively seize them and turn them into public utilities complete with annual dividends that are probably equal to a big percentage of current miner share prices."
What snowflake will trigger the next avalanche, or what I call trigger event will set the tipping point in motion? I could not even begin to say. I am sure others have more informed opinions on this, and none of them are speaking with the likes of us, at least not in a crony capitalist culture. They are busy doing for themselves and their friends.
Let's see what happens. China is a powerhouse now, but it may fall from the heights, as did Japan Inc. which seemed unstoppable in 1989.
But all things considered, unless I was considered TBTF at the very least I would not wish to have a significant obligation to deliver gold bullion in this market structure, even if I had hedged the risk. Sometimes risk can be remarkably hard to measure or even define.
Related: The Amazing Disappearing Gold Bullion
Prepare for a New Gold Standard - Thanong Khanthong
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