The war on Gold currency

[PathWalker]

China Launches Yuan Gold Fix To "Exert More Control Over Price Of Gold"
http://www.zerohedge.com/news/2016-04-19/china-launches-yuan-gold-fix-exert-more-control-over-price-gold

Overnight a historic event took place when China, the world's top gold consumer, launched a yuan-denominated gold benchmark as had been previewed here previously, in what Reuters dubbed "an ambitious step to exert more control over the pricing of the metal and boost its influence in the global bullion market." Considering the now officially-confirmed rigging of the gold and silver fix courtesy of last week's Deutsche Bank settlement, this is hardly bad news and may finally lead to some rigging cartel and central bank-free price discovery. Or it may not, because China would enjoy nothing more than continuing to accumulate gold at lower prices.

The first Chinese benchmark price, derived from a 1 kg-contract traded by 18 participants on the Shanghai Gold Exchange (SGE), was set at 256.92 yuan ($39.69) per gram on Tuesday, equivalent to $1,234.50/ounce.

China's gold benchmark is the culmination of efforts by China over the last few years to reform its domestic gold market in a bid to have a bigger say in the bullion industry, long dominated by London where the global spot benchmark price is currently set. As is well known, as the world's top producer, importer and consumer of gold, China has balked at having to depend on a dollar price in international transactions, and believes its market weight should entitle it to set the price of gold.
The battle field is ready, the war began today. Or it is just a make belief competition handled by the same owners.

[shaberon]

Well, when China fairly won Britain's silver, they got the Opium Wars. Huge sub-stratum of the Western system even now.

Rothschild sold their seat on the gold fix back around 2004. At the time, I got the impression they thought that paper/derivative contracts were better income than resources. That's a pretty big step, to let go of something you created over 200 years ago.

I watched the price of gold rise drastically. In effect, it was much like the mandatory gold confiscation of the 1930s. As an agent of a corporation, I personally cleaned out families of millions of dollars of their gold. It's gone now.

At the time it was clearly known it was headed for India and China. I tried to be informative to people about this permanent wealth transfer not just out of their hands, but out of the country where you wouldn't see it again. But I cannot remember that having an effect on anybody.

Then we found the Fed lacking a gold inventory, and gold=plated tungsten showing up in big transactions world wide.

China said many centuries ago that they had no need to conquer the world. In time, it would come to them. We're just finding out how accurate old Chinese tales are, no matter the viciousness with which they have been assaulted.

This price is 600 times as much as ordinary Americans received in the 30s.

[ozmirage]

"Gold backed money" is a dead end.
Why?
Trapping an economy by the bottleneck of a scarce precious metal is suicide.

World supply of gold (est) 5.6 billion ounces (troy).
World population (est) 7+ billion people.
Less than one ounce per capita.
(Using the Coinage Act of 1792 as reference, it computes to roughly $16 per capita)
With such a stagnant money supply, any INCREASE in output forces a DECREASE in price. Work more, get paid less. Owe money? You're [bleeped] !

[shaberon]

True but, this maneuver just gives them leverage on the market and increased circulation of yuan, which, iirc, is still a "basket" currency, with gold being added into the basket. It doesn't look like they went with the American coinage act, either.

I've already worked more for less, gotten bleeped for owing funds, and haven't ever seen a metals standard for the currency.

China is just such a big country that horrible things can happen to millions of its people and it just blinks a little bit and keeps going. You can crash their stock market 30% and blow up six of their chemical plants and they will come out the biggest user of resources, owner of foreign lands, and provider of infrastructure.

It's been sitting there for some 2,500 years so I would call them--the same owners. The West started a make-believe competition with them very recently compared to that, and doesn't have much left to pretend to compete with; even less if the Deutsche Bank situation starts plowing other major institutions.

[robinr1]

totally disagree......a currency itself must be backed by something....otherwise u have what is taking place around the world right now... a gold backed currency works just fine assuming the free market is able to set the price...

yes that price would be at least 50 times what it is now imo....





"Gold backed money" is a dead end.
Why?
Trapping an economy by the bottleneck of a scarce precious metal is suicide.

World supply of gold (est) 5.6 billion ounces (troy).
World population (est) 7+ billion people.
Less than one ounce per capita.
(Using the Coinage Act of 1792 as reference, it computes to roughly $16 per capita)
With such a stagnant money supply, any INCREASE in output forces a DECREASE in price. Work more, get paid less. Owe money? You're [bleeped] !

[ozmirage]

totally disagree......a currency itself must be backed by something....otherwise u have what is taking place around the world right now...
Ah, you're suffering from a mild rash of "money madness" - the belief that the money token must have intrinsic value.

What is the function of any money token?
To PASS VALUE to a future trade when simple barter is insufficient.

The mistake is to assign an ABSTRACT VALUE to some "thing" that is a subset of the set of "ALL THINGS IN THE MARKETPLACE."

Imagine all goods and services divided into ten equal blocks: A, B, C, D, E, F, G, H, I, and J.

G (gold) is enacted as a medium of exchange equivalent in value to the remaining 9 blocks.

1/9 G trades for A, 1/9 G trades for B, and so on.

The problem arises when one wishes to trade 1/9 G for all G.

That.Does.Not.Compute.

And neither does any money token based system where a subset of a set is deemed to be money.

The next disaster occurs when the marketplace of all goods and services grows larger than the proportional growth in the money token.

This precipitates economic tragedy - because as one produces MORE one is paid LESS. And if one is a debtor, uh - oh. Deflation destroys creditor - debtor arrangements.

Lastly, the notion of a money token that has value (or is "backed") triggers HOARDING. Obviously, if each year's deflation drives up the buying power, people will not spend that ever more valuable money. Which defeats the function of the money - facilitate trade. This strangles the marketplace, as money becomes even more scarce, and collapses trade. Many an ancient civilization collapsed from their own success strangled by their money madness.

Basically, you want a money token system that is not hoarded, maintains proportionality with the dynamic marketplace, and facilitates equitable trade, so that all goods and services may be traded. And not be so scarce that usurers can get rich extending credit at usury.
Precious metal "Backed" money can't do that.

Remedy discussed here:
http://projectavalon.net/forum4/showthread.php?89905-Money-Madness

[ozmirage]

totally disagree......a currency itself must be backed by something....otherwise u have what is taking place around the world right now... a gold backed currency works just fine assuming the free market is able to set the price...

yes that price would be at least 50 times what it is now imo....
Really?

Let's do some math:

Current Gross Domestic Product is roughly 18 trillion dollar bills (no par value).
Fort Knox depository (allegedly) holds 147.4 million ounces (troy) of gold bullion, that has an approximate coined value of 2.9 billion dollars (not dollar bills).

And we want proportionality, so that all goods and services may be traded with existing gold coins.

18 trillion dollar bills / 2.9 billion dollar coins
computes to 6206:1.

$250,000 house => $40 (gold) (roughly 2 $20 gold double eagles)
$50,000 car => $8 (gold)
$15,600 min.wage / annum => $2.51 per annum (4.8 cents per week)

D'Oh!

[Calz]

I like to keep things simple.

We are screwed .... yes???

[ozmirage]

I like to keep things simple.

We are screwed .... yes???
Yes -and- No.

Yes, if we remain in the money-mad economy.
No, if we extricate ourselves from it, and shift to a private money system to facilitate equitable trade.

(A lifestyle of prodigious production, not constrained by usurers and collectivists - think 'punk Amish')

[PathWalker]

Nice report about the Fort-Knox paradox.
http://news.goldseek.com/GoldSeek/1459873827.php

By Gary Christenson

Officially the Fort Knox Bullion Depository contains 147.3 million ounces of gold. However, the last audit was performed over 60 years ago. According to reliable sources “audits” since then have been incomplete and inadequate.

Second Thoughts on US Gold Reserve Audits

Lost 7 Audit Reports

Hiding the Elephant: Fort Knox’s Vanishing Act

Doubts about America’s Gold Holdings

Question: If the Bullion Depository still contains over 147 million ounces of gold, why not audit it, prove the existence of the gold, and eliminate speculation? The US government spends over $70 billion on “food stamps” every year and nearly a $Trillion per year on “defense,” so cost is not the issue.

Current policy seems to be “don’t ask, don’t tell” because the answer might be disconcerting, might destroy the narrative that the US gold still exists, and the revelation of missing gold might encourage other embarrassing questions …

Some speculation and possible scenarios:

Scenario One: Fort Knox Bullion Depository contains 147 million ounces of gold, as claimed, but the Department of the Treasury ignores calls for a comprehensive audit.

1. “Trust but verify” apparently applies to the nuclear weapons in other countries but not our gold. Why?
2. Why refuse to perform a comprehensive audit? Cover-up?
3. If an audit proved that 147 million ounces of gold were safely stored inside the vaults, it would be a political victory. Why would the Bush or Obama administration, such as in 2008 or 2016, NOT want a political victory when their credibility was weakening?
4. The implication is that an audit would fail and no political victory was possible.

Scenario Two: Fort Knox Bullion Depository is essentially empty – say it contains less than ten million ounces of gold.

1. That begs the questions: Where did the gold go? Who should be indicted? Why have politicians for the past 50 years lied about it?
2. Under scenario two the Department of Treasury cannot do an audit and desperately wants to avoid the scandal of missing gold.
3. The only viable option is “stonewall.” Maintain that an audit is unnecessary, too expensive, or already has been done.

Scenario Three: Fort Knox Bullion Depository is essentially empty of real gold – say it contains less than ten million ounces of gold but also contains perhaps 140 million ounces of gold plated tungsten.

1. A comprehensive audit would easily detect the fake gold.
2. The same questions from scenario two would plague the Department of the Treasury, the President, and the Federal Reserve.
3. The only viable option is “stonewall.” Maintain that an audit is unnecessary, too expensive, or already has been done.

CONCLUSIONS:

* If the Fort Knox Bullion Depository gold exists, as claimed, there is little reason to refuse a comprehensive audit.

* Since all requests for a comprehensive audit have been rejected, it seems likely that a “cover-up” continues.

* If an unpopular President wanted a political victory, he would have ordered an audit of the Fort Knox gold if an audit had been a viable option. Since no audit was initiated, it seems likely that a gold audit would have produced problematic results with unanswerable questions.

* Germany requested (several years ago) the return of a portion of their gold stored at the New York Federal Reserve, but Germany was denied access to their gold and denied the return of much of their gold for about seven years. If the German gold still existed in New York, why were they denied the return of their property? If the gold in New York was “missing,” it could have been replaced by gold from Fort Knox, if the Fort Knox gold still existed. Apparently that did not happen. What is the rest of the story?

* Gold “leasing” has been documented. Gold leased by a bullion bank from a central bank can be sold in the international market, yet is still officially listed in the vaults of the central bank. Official gold can exist in two (or more) places at once …

* It is possible that most sovereign and central bank gold in the United States, including the Fort Knox gold, the United Kingdom gold, and German gold is no longer stored in western vaults, and has been melted down and converted to the one kilo bars preferred in Russia, India and China.

* An honest and credible audit would confirm or deny such speculation. Further “stonewalling” encourages such speculation. What is the rest of the story?

Gary Christenson
PathWalker believes in 3rd scenario.
There are other more extreme scenarios involving regime changes and gold confiscation/nationalization.

[ozmirage]

Scenario Three: Fort Knox Bullion Depository is essentially empty of real gold – say it contains less than ten million ounces of gold but also contains perhaps 140 million ounces of gold plated tungsten.

PathWalker believes in 3rd scenario.
There are other more extreme scenarios involving regime changes and gold confiscation/nationalization.
Based on the State of Emergency, since 1933, and the abrogation of the U.S. Constitution as the supreme law of the land, one might conclude that a rogue power has been ruling since 1933... with our consent.

There are many many ramifications and consequences to such a scenario.

One might conclude that every administration and presidency, since 1933, has been by enemies of the American people. All those whose lives and wealth were destroyed by such enemies would be disillusioned, to say the least. And that a counter revolution to the revolution of 1933 would be (ahem) unpleasant and chaotic, at best, and leads one to suggest that stockpiling supplies for at least 12 months (or 24 months) would be very wise.

[PathWalker]

:blushing:Jim Willie 2016-may-05

Pkitz0i7v0k
- Confirms US Navy finance it provisions with Silver metal (reported by Simon Parkes).
- Explain why the gold market is not exploding
- Explain the fraud in silver market
- Explains the China position
- Predicts the silver will break the corruption rigging
- Law is not enforced due to "national security"
- Describes how the price rig affect on mining production
- World shipping decline linked to the petrodollar war
- Deutsche Bank disclosure explained with China interests and control and the law suits trail
- Predicts domino bank failures in the PIGS
- Explains exported FED quantitative ease to EU
- Energy sector will cause banks failures
- Plan for banks debt reset with China backed on gold
- Coming dollar collapse bail-in and its impact on US population

[PathWalker]

China's Largest Bank Is Quietly Cornering The Market For London Physical Gold
http://www.zerohedge.com/news/2016-05-16/chinas-largest-bank-quietly-cornering-market-london-physical-gold

We have followed the ownership changes of London's massive vaults with keen interest ever since our December 2014 article when we reported that Deutsche Bank's gold vaule was for sale in "Massive 1,500 Ton Gold Vault For Sale In The Heart Of London, One Previous Owner, Asking £4,500,000 O.B.O." The fate of that particular vault was revealed earlier this year when Reuters reported that none other than China's largest bank, ICBC Standard Bank, was buying the lease on Deutsche Bank's London gold and silver vault, "enlarging its footprint in the city's bullion market"

The Chinese and South African lender is aiming to fill the gap left by Western banks, which are retreating from commodities to cut costs and reduce regulatory burden. "They (ICBC Standard Bank) have taken on the lease for the vault," the first source said.

Deutsche Bank's vault became operational in June 2014 and has a capacity of 1,500 tonnes. It was built and is managed by British security services company G4S. "The figure that was initially talked about may have been around $4 million, but it's way lower now," a second source said, without disclosing the figure paid for the vault.

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/12/291%20Abbey%20Road_0.jpg

We thought that ICBC would be content with its purchase of one of London's biggest vaults but that appears to not have been the case. Earlier today, ICBC Standard Bank reported that it was also buying Barclays' London precious metals vault, giving the Chinese bank the capacity to store gold worth more than US$80bn in the secret location.

The vault, which can store 2,000 tons of gold and other precious metals such as silver, platinum, palladium, was opened by Barclays in 2012 and took more than a year to build. The location of the vault is secret, but the lender has said it’s within the M25 road that orbits London.

"This is an exciting acquisition for the Bank. This enables us to better execute on our strategy to become one of the largest Chinese banks in the precious metals market,” Mark Buncombe, head of commodities at ICBC Standard Bank, said in the statement. "The acquisition of a precious metals vault allows us to expand our services in clearing and processing."

Barclays' decision to exit the business comes as U.S. and European Union regulators investigate whether at least 10 banks, including Barclays, JPMorgan Chase & Co. and Deutsche Bank AG -- manipulated prices of precious metals such as silver and gold.

Barclays Chief Executive Officer Jes Staley said in January that the bank was assessing “various options" to exit its precious metals business while vowing to speed up disposals from the bank’s non-core unit, which houses 51 billion pounds ($73 billion) of toxic and otherwise unwanted assets.

As Bloomberg reports, China's (and the world's) largest bank expects the purchase of the vaulting business and related contracts to be completed in July, it said in an e-mailed statement Monday. No financial details were given.

About $5 trillion of transactions are cleared every year in London’s gold market, which Barclays is exiting as it pulls out of precious metals.

The purchase follows last week's acceptance of the ICBC Standard into London's precious-metals clearing system after last month it won classification as a market maker by the London Bullion Market Association.

With this latest takeover by a Chinese bank of a London mega vault, it leaves only the HSBC gold vault (profiled here recently) where the inventory of the GLD is also stored, not in Chinese hands as well as, of course, the vault of the Bank of England.

Asside from its boilerplate statement according to which the state-backed ICBC seeks to "expand our services in clearing and processing" as of this moment the real explanation behind China's increasingly more clear intentions of becoming the dominant provider of london bullion vaulting services remains unexplained.