Ecuador Transfers Half Its Gold Reserves To Goldman Sachs In Exchange For "Liquidity"
Submitted by Mike Krieger of Liberty Blitzkrieg blog,
This is a great example of how the game works. In a world in which every government on earth needs “liquidity” to survive, and the primary goal of every government is and always has been survival (the retention of arbitrary power at all costs), the provider of liquidity is king. So what is liquidity and who provides it?
In the current financial system (post Bretton Woods), the primary engine of global liquidity is the U.S. dollar and dollar based assets generally as a result of its reserve currency status. Ever since Nixon defaulted on the U.S. dollar’s gold backing in 1971, the creation of this “liquidity” has zero restrictions whatsoever and is merely based on the whims and desires of the central planners in chief, i.e., the Federal Reserve. As the primary creator of the liquidity that every government on earth needs to survive, the Federal Reserve is thus the most powerful player globally in not only economic, but also geopolitical affairs.
The example of the so-called sovereign nation of Ecuador relinquishing its gold reserves to Goldman Sachs for “liquidity” which can be conjured up by the Fed on a whim and at zero cost tells you all you need to know about how the world works (read my post: Why Fiat Money is Immoral).
Now from Bloomberg:
Ecuador agreed to transfer more than half its gold reserves to Goldman Sachs Group Inc. for three years as the government seeks to bolster liquidity.The central bank said it will send 466,000 ounces of gold to Goldman Sachs, worth about $580 million at current prices, and get the same amount back three years from now. In return, Ecuador will get “instruments of high security and liquidity” and expects to earn a profit of $16 million to $20 million over the term of the accord.“Gold that was not generating any returns in vaults, causing storage costs, now becomes a productive asset that will generate profits,” the central bank said in the statement. “These interventions in the gold market represent the beginning of a new and permanent strategy of active participation by the bank, through purchases, sales and financial operations, that will contribute to the creation of new financial investment opportunities.”
This isn’t the first South American country we’ve heard about sending their gold to Goldman. Recall my post from late last year: Is Venezuela Selling Gold to Goldman Sachs?
This gold is headed straight to China or Russia. Good luck every getting that back amigos. Just ask Germany.
Full article here.
From Harvey Organ..... June 2 , 2014
Oh this is fun!!: Wall Street is concerned over China's hoarding of gold;
(courtesy China Times)
Wall Street concerned over China's gold hoarding
- Huang Shu-rong and Staff Reporter
- 2014-06-02
Leung Hai-ming told the portal that China's central bank took advantage of the US Federal Reserve's quantitative easing program in 2013, when the price of gold fell by 27%. The bank bought in over 1,000 tonnes of gold, representing almost one third of the world's 3,756 tonnes last year.
There is reportedly less than 180,000 tonnes of gold reserves left, and only 20% of that remaining gold is tradable. This means that the People's Bank of China will likely keep hold of the gold, limiting the gold trading volume — a concern for both the US government and Wall Street traders.
Leung said that the US Federal Reserve loans gold to investment banks such as Goldman Sachs, Citibank, JPMorgan Chase, Morgan Stanley and others every year to trade in the market. The amount of gold ranges between 400-500 tonnes and the move acts to artificially suppress gold prices.
When the prices are in their favor, these investment banks buy back the gold and return it to the Fed.
But this measure is absolutely useless because China's is hoarding the gold and does not follow the rules, Leung said. When it sees that gold prices are going down, the first thing it does is buy them, and does not sell when prices continue to fall. It seems that Wall Street cannot do anything to counter China on this, according to Leung.
The analyst said that the People's Bank of China is putting pressure on Washington and Wall Street as the US dollar has been linked with gold prices since its rise as the leading global currency.
The Fed hopes to manipulate gold prices in its favor, Leung said, but the Chinese central bank is standing in its way.
http://jessescrossroadscafe.blogspot.com/2014/06/gold-daily-and-silver-weekly-charts-cap.html
02 JUNE 2014
Gold Daily and Silver Weekly Charts - Cap and Fear
There are some very significant events happening behind the scenes, even though the markets would seem to hide this with their sleepily accommodative nature to the status quo.
I thought Volcker's call for a new Bretton Woods agreement was significant, in a Chamberlain-like manner. Volcker is certainly out of power, riding the tide of events more than shaping them now. But he certainly still has insights into what is going on.
I am a little surprised at the push by the neo-cons at this point to advance the New American Century. It makes me wonder.
There is plenty of room for speculation here. I will take a pass on it for now, and wait to see some indication of what is happening, before ranging out into the seas of possibilities.
This too shall pass.
Have a pleasant evening.
Silver Doctors....
Last week gold and silver fell sharply. 
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