Guest Post: Gold Swap Signals the Roadmap Ahead

Submitted by Gordon T. Long of Tipping Points

Sultans of Swap: Gold Swap Signals the Roadmap Ahead

The news rocked the global gold market when an almost obscure line item in the back of a 216 page document released by an equally obscure organization was recently unearthed. Thrust into the unwanted glare of the spotlight, the little publicized Bank of International Settlements (BIS) is discovered to have accepted 349 metric tons of gold in a $14B swap. Why? With whom? For what duration? How long has this been going on? This raises many questions and as usual with all $617T of murky unregulated swaps, we are given zero answers. It is none of our business!

Considering the US taxpayer is bearing the burden of $13T in lending, spending and guarantees for the financial crisis, and an additional $600B of swaps from the US Federal Reserve to stem the European Sovereign Debt crisis, some feel that more transparency is merited. It is particularly disconcerting, since the crisis was a direct result of unsound banking practices and possibly even felonious behavior. The arrogance and lack of public accountability of the entire banking industry blatantly demonstrates why gold manipulation, which came to the fore in recent CFTC hearings, has been able to operate so effectively for so long. It operates above the law or more specifically above sovereign law in the un-policed off-shore, off-balance sheet zone of international waters.

Since President Richard Nixon took the US off the Gold standard in 1971, transparency regarding anything to do with gold sales, leasing, storage or swaps is as tightly guarded by governments as the unaudited gold holdings of Fort Knox. Before we delve into answering what this swap may be all about and what it possibly means to gold investors, we need to start with the most obvious question and one that few seem to ask. Who is this Bank of International Settlements and who controls it?

BANK OF INTERNATIONAL SETTLEMENTS (BIS)

The history of the BIS reads with all the intrigue of a spy novel and comes with a very checkered past. According to the BIS web site, as a privately held bank, it decided in recent years to become wholly owned and controlled by the Central Banks of the world - a highly unusual decision for a private enterprise. Lengthy court cases in Le Hague were involved by private members who objected. Something like this is usually called a buy out or takeover, but there are no public records of any of the central banks making such an acquisition - an extremely strange set of events with little media coverage.

I am sure it can all be explained very logically until we get to the size of the balance sheet. We are talking close to a half trillion dollar balance sheet, or more specifically 259 billion SDR’s, which is approximately $400B. Where did the capital or deposits come from? The BIS goes out of its way to specifically assert it only accepts deposits from member central banks, though it does also state confusingly in the financial notes that there are deposits from previous financial statements from recognized international banks. Therefore, are we to conclude that the US Federal Reserve has huge deposits at the BIS? Though I couldn’t find the assets on the Fed’s balance sheet, I’m sure they are there in the small print or on the New York Feds balance sheet somewhere. It would be a legal requirement. It is a forensic accounting nightmare to find these items based on public documents of the various private organizations. Apparently it is just none of our business. For such a major element of the world’s operating financial structure to have such poor visibility, it seems preposterous until you actually do the research. It should be laid out so a freshman Economics class could easily follow the ownership acquisition and money flows. It isn’t and it appears to this researcher that it is intentionally opaque.

Since the BIS goes out of its way to ensure readers in its annual financial report that no private funds are accepted, maybe all we really need to know is what the BIS officially tells us. The BIS is owned and controlled by their member Central Banks. Therefore if the BIS was to do a gold swap of the magnitude of 349 metric tonnes, then board member Ben Bernanke would have known of it in advance and approved it. He would know exactly who the transaction was with and why. If he didn’t then he is legally negligent in his fiduciary responsibility as a BIS board member, because of the size of the transaction and its material effect. Other board members include: Mervyn King, Governor of the Bank of England, Jean-Claude Trichet, President of the European Central Bank, Axel Weber, President of the Deutsche Bundesbank and William C Dudley, President of the Federal Reserve Bank of New York. You can’t have it both ways.

Though we can suspect many things, there is no other conclusion we can reach than the swap is part of an agreed upon plan or concurrence between these board members. So what is the possible understanding or plan?

WHO GAVE UP THE GOLD?

There are not a lot of institutions who possess 349 metric tonnes of gold. So who needs $14B worth of cash and has this amount of gold? That shouldn’t be too hard to find.

Sovereign governments have historically created their wealth by invading other countries to pillage their treasuries which held gold, silver and the crown jewels. The winning and seizure of more land allowed the sovereign to give it to the nobles who used it to tax and tithe the feudal tenets. Recurring wealth flowed upward to the sovereign treasury.

Considering today’s EU membership, where sovereign countries can no longer print their own currency (the politicians first weapon of choice), there are three channels (other than the very politically unpopular increase in taxes and fees) open in modern times to raising money for the treasury:

1. The public sale of debt offerings instruments such as Bills, Notes and Bonds
2. The more recent and stealthy approach of selling assets, including revenue streams from such things as taxes, fees, licensing etc. These are sold into the securitization market through complex derivative structures such as Interest Rate and Currency Swaps contracts. This approach, as recently discovered, has been rampant throughout Europe even prior to the creation of the EU.
3. When you exhaust all of the above, you then sell the family jewels – the sovereign treasury of gold holdings.

The BIS was very quick to respond to public speculation about the massive gold swap when they immediately clarified that the gold swap was with a commercial bank.  Since by its own statements, as I mentioned above, it doesn’t accept deposits from non member banks, this seems confusing on the surface. Does it or doesn’t it accept private deposits?  It would be respectful to assume that the BIS is telling the truth and that they did in fact conduct the transaction with a private bank who was transacting the swap on behalf of a central bank or sovereign treasury. This would sort of make everything work. For the BIS to be telling the truth in all their statements, the transaction must be with a member central bank with the involvement of an intermediary commercial bank. But something still isn’t right here.

When you work through the details you quickly arrive at an astounding coincidence. Portugal shows it has 348 tonnes of sovereign gold. The swap was for 346. Portugal is a member bank, though does not sit on the Board, but attends the General Meeting as an observer only.  Portugal, as a member of the PIIGS, only days after the unearthing of the swap, was again downgraded by Moody’s, thereby making its lending costs even higher than the already elevated levels being demanded by the financial markets. There is a very strong possibility that the swap is with Portugal. Though who the swap is with is important to those trading debt and credit derivatives it isn’t quite as important to those interested in the gold market.

Ben Davies the CEO of Hinde Capital in London and a player in the gold market suspects (12:40) we may have a modified form of swap emerging. There is the possibility that the commercial bank is in fact a major gold bullion bank. Some of the bullion banks have major short positions on gold that far outstrip the annual physical production of gold. The disconnect between physical and paper gold along with rising gold prices is likely causing serious strains on their balance sheet. As Davies points out the gold may be transacted from a central bank to the BIS through a bullion bank while the gold physically remains with the originating central bank; is classified as ‘unallocated’ at the BIS but in fact remains on the books of the bullion bank. It effectively is double accounted for. The increase in gold would allow gold prices to be pushed lower, which in fact is what has been happening. A careful reading of the BIS financial statements shows more clearly the accounting for such a transaction.

There can be little doubt that the Gold Swap is with a central bank where the physical gold remains. The transaction is considered a deposit at the BIS (liability) but has been lent to a commercial bank (likely a bullion bank) as a loan (asset). The question is only why a bullion bank needs to borrow this quantity of gold, remembering it never gets the physical gold because it remains at the originating central bank. The reader is encouraged to read the Financial Policy notes #4,5, 6, 13, 14, 15, 16, 17 and 19 within the BIS Financial Statement for a clearer understanding along with Notes to the Financial Statements #4 and #11.

The BIS is known as the central bank to the central bankers.
The BIS may equally be referred to as the Central Gold Bullion Bank to the Gold Bullion Banks.

The March 31 2010 Financial Statement of the BIS shows 43.0B SDR’s of gold or 16.6% of total assets. According to note #4 to the BIS Financial Statements: “ Included in ’Gold bars held at central banks” is SDR 8,160.1 million (346 tonnes) (2009: nil) of gold, which the Bank held in connection with gold swap operations, under which the Bank exchanges currencies for physical gold. The Bank has an obligation to return the gold at the end of the contract.”  It is very important to appreciate this note is pertaining specifically to BIS ‘assets’ which in the case of banks are what the reader would consider ‘loans’. Under Financial Policy notes #5 to the Financial Statement the BIS is clear that under banking portfolios “all gold financial assets in these portfolios are designated as loans and receivables”. Separately, but very interestingly the BIS additionally states “ the remainder of the Banks equity is held in gold. The Bank’s own gold holdings are designated as available for sale”. 

SPECIAL DRAWING RIGHT (SDR)

If problems get worse for Portugal, as possibly the global economic climate worsens, then the gold may never legally belong to Portugal. The contracted swap terms at some point may simply reclassify it a net zero sale, if Portugal fails to return the cash portion of the swap. The BIS would have 346 tonnes of gold and Portugal the $14B of Euros it has long since spent to solve a 2010 problem. By then Portugal likely would need even more loans in whatever currency would replace a crumpling or possibly extinct Euro.

Up until 2004 the BIS denominated its financial statements in Gold Francs. It now has made a major shift to denominating itself into Special Drawing Rights (SDRs). The calculation is exactly the same as used for the IMF. The SDR is operating as a defacto currency.

It takes a little arithmetic (which is not done in the financial statements) to be able to get values in any currency that can give the reader a perspective of the scope of the activities at the BIS. The SDR reporting obscures the BIS’s significant size and scope.

FUNDING

For those who followed the European Sovereign Debt Crisis and the negotiations with Greece, you know that the IMF was an unwelcomed intruder into EU financial affairs. Greece on more than one occasion held the IMF as a negotiating ploy and as a funding alternative to the EU’s procrastination and lack of decisiveness.

The IMF’s willingness to interfere created a lot of bad feelings within the EMU and Germany specifically. As Ambrose Evans-Prichard reported:  “The ECB is barely on speaking terms with the IMF – the "Inflation Maximizing Fund" as it was dubbed in a Bundesbank memo - - The IMF has not caught up to the reality in Europe said ECB über-hawk Jürgen Stark on July 9th” The final EU bailout in fact heavily involved the IMF participation. The very busy IMF is the dominant crisis lender of last resort throughout all Central & Eastern European current financial problems.

What we are seeing is the emergence of another funding structure based on the SDR - SDR’s that have a degree of gold backing. The BIS now has a total of 12.4% of its deposits (32B SDR) in the form gold deposits. Note #11 to the BIS financial statements states: “Gold deposits placed with the Bank originate entirely from Central Banks. They are all designated as financial liabilities measured as amortized cost”.

ARE WE SETTING THE PINS UP FOR AN ALTERNATIVE RESERVE CURRENCY?

Are we moving towards the BIS and IMF being fractional reserve banks that will create money & credit - a reserve currency that will satisfy Russia and China with an element of Gold backing? A bank such as the BIS could easily assume this role (if it hasn’t already) as could the IMF with possible banking charter adjustments.

The chances are high that this is the roadmap we will find ourselves taking. Like all banking that started as Gold backed you could expect that in this case the little gold backing that starts the process is quickly diminished so a limitless money machine could begin functioning. The gold backing would likely be an initial requirement by Russia and China. The partial gold backing would lend credibility to the acceptance and a possible reserve currency alternative and eventual establishment as the global reserve currency.

SHADOW BANKING REPLACEMENT

The collapse of the Shadow Banking system and its attendant  SIV / CDO structures were at the root of the financial crisis.  That structure which is representative of a huge amount of the credit growth since the dotcom bubble burst isn’t coming back soon, if ever. The world needs more liquidity than the central banks or sovereign treasuries can currently deliver politically. The central bankers, huddled in their bimonthly board meeting at the BIS in Basel, Switzerland, know this better than anyone. Their discussions in the very halls of the BIS must resonate with them to use all the tools available at their disposal - quickly.

Paul McCulley and Richard Clarida at Pacific Investment Management Co. (PIMCO) have written extensively about the Shadow Banking System and its growth. An extensive slide presentation on the Shadow Banking System can be found on my web site at TIPPING POINTS. I won’t go into the detail here, but suffice it to say that the shadow banking system collapse has created a massive hole in credit creation that central bankers can’t fill in the manner in which they presently appear to be approaching the problem.  Of course appearances can be deceiving

The problem has now reached crisis proportions and the central bankers know they must urgently act in a coordinated manner. Deflation now has a firm hand on the global economy and this must be reversed. I have been calling for a US Quantitative Easing QE II of $5T in my writings for some time. This amount is required for the US alone. The entire global requirement is three to four times this amount.

The above chart serves as an illustration to simplify the essence of the Shadow Banking System . The international bankers prefer to refer to the process as Capital Arbitrage. An arms-length agreement allowed the banks to invest in a Structured Investment Vehicle (SIV) as an affiliate investment. The large spread that an SIV captured made it an excellent investment, but more importantly it allowed the banks to use their fractional reserve (10X) money creation abilities to buy risky securitization products without them appearing on their balance sheet. The banks received huge multiplier leveraged returns from the high yielding Collateralized Debt Obligations (CDOs) until the crisis imploded the game.

HOW MUCH LEVERAGE WILL THE CENTRAL BANKER CHOOSE TO COMPOUND?  => “x” times “y”

When the financial crisis unfolded you may recall that then US Treasury Secretary Hank Paulson’s (former Chairman and CEO of Goldman Sachs during the explosion of Shadow Banking structures) first solution was to create a $100B Super SIV. The SIV leverage thinking was so entrenched that this was the first ‘go to’ solution to fight de-leveraging. If we were to jump forward to today when we are further along in increasing and unprecedented de-leveraging, what the central bankers need to replace the shadow banking system is a vehicle that will deliver the previous scale of leverage PLUS an order of magnitude more. The answer is the Bank of International Settlements. The SIV model is used as illustrated ‘Shadow Central Banking System’ above.

With the use of the SDR ‘currency’, central bankers can compound fractional reserve lending.

IT’S ALREADY HAPPENING

It is my view this process is already well along. The following Bloomberg global money supply growth chart graphically shows this.  As the circles indicate, once again money is flowing into the pipeline or at least into global bank reserves.

CONCLUSION

The advantage of this approach is:

1. Leverage: Compounding money creation between banks
2. Partial gold backing: Present BIS levels of  12.4%
3. SDR: Offers a basket of currencies approach versus a single currency dependency.
4. Former Communist bloc regime backing: China and Russia would likely support this approach for a number of reasons, which they have already expressed as short comings to the current global reserve situation.
5. Reserve Currency: The SDR approach offers a migration path from today’s US$ reserve currency to an alternative bank reserve currency to a future global reserve currency.

This may be the final lever required to initiate a Minsky Melt-Up (see: EXTEND & PRETEND - Manufacturing a Minsky Melt-Up) and the $5T in QE II (see: EXTEND & PRETEND: A Guide to the Road Ahead) I have been writing about for some time now.

There are many questions that are raised in the above discussion - many about the future role and safety of gold. Time and space don’t allow for this here. I hope to work through the answers in forthcoming articles.

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The following gave me concern when I first read it many years ago and something for you to think about:

"...the powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations."

Professor Carroll Quigley
Tragedy and Hope: A History of the World in Our Time (1966)
President Bill Clinton’s Georgetown Professor

Sign Up for the next release in the Sultans of Swap series:  Commentary

Gordon T Long        
Tipping Points

Comments

[laosuwan]

links? I have not heard about this yet.

Thanks!

[uno]

This is a very good article about the BIS from Harper's Magazine back in November 1983.  

http://www.edwardjayepstein.com/archived/moneyclub.htm

[ATG]

"Inner club members publicly pay lip service to the ideal of preserving the character of the BIS and not turning it into a lender of last resort for the world at large. Privately, however, they will undoubtedly continue their maneuvers to protect the banking system at whatever point in the world it seems most vulnerable. After all, it is ultimately the central banks' money at risk, not the BIS's. And the inner club will also keep using the BIS as its public mask, and pay the requisite price for the disguise."

[Pooh-Bah]

GT Long.  Today like most days I'm going to have my employee install another water softener in a customer's house who will then send a monthly check of $25 dollars a month for years.  I already make plenty of money so why am I doing this? Because in my mind the more I make the cooler I am. Am I bragging? No. What I make is nothing compared to  some. Am I greedy?  No. I'm just trying to be cool. Why do people strive to be cool? I don't know.  I think back when we lived in tribes or clans we needed to show that we were valuable and contributed to maintain our position in the safety of the group. Are the richest most powerful people in the world any different? I don't think so.  Why would they try to rule the world? Because to them that would be really cool.

[George the baby...]

You lived in a tribe?  Now that's cool, but you must be old as hell.

[The Rock]

"Cash4Gold" bitchez!

I wish that everyone who "owns" gold (not physical) would  demand delivery.  What a run that would be!

http://www.youtube.com/watch?v=vWz9VN40nCA

[Yardfarmer]

G.T.Long's thorough analysis raises as many questions as it answers in this probing piece. It is common knowledge that the BIS, created in the 20s through the agency of Hjalmar Schact, Hitler's finance minister and Britains Lord of the Exchequer, Montague Norman and finally established in 1930, supposedly as a "vehicle" for the settlement of German Versailles Treaty obligations, was deeply connected with the Nazi regime. Indeed several members of its board of directors were subsequently convicted of war crimes at Nuremburg. Auspicious beginnings indeed. Post war attempts to dissolve the bank were thwarted by none other than John Maynard Keynes, and US Treasury Secretary Harry Dexter White, the prime movers behind the Bretton Woods Agreement in 1944 which gave birth to the IMF. Long's ominous closing quotation from Clinton's mentor, Carroll Quigley is most telling and prescient. We are entering an age of international neo-feudalism which echoes the equally prophetic Friedrich Hayek's "Road to Serfdom". The Machiavellian money master elites have achieved their decades long goal of international financial hegemony with the BIS/IMF matrix. The last object to that immense enterprise, the sovereign nation-state has been surmounted with the economic and societal dissolution of the United States. 

[OutLookingIn]

Yardfarmer - Agree. The long road is growing short. The ultimate aim of this Machiavellian plan is in sight and about to come to fruition for this group of uber elites. The private credit crises has been successfully socialized and transferred as the sovereign debt crises begins, with credit contraction continuing, tax rates will rise. Aiding in further erosion of sovereign financial power and eventual capitulation to an omnipotent one world bank which controls the one world currency. Interesting that it has been 46 years since Professor Quigley pronounced this very happening?

[DavidPierre]

1936-45: 

 The Nazi Schroeder Bank in New York merges with the Rockefeller interests to form Schroeder, Rockefeller & Company, Inc.

Carlton P. Fuller of Schroeder Banking Corporation is made president and Avery Rockefeller, nephew of John D. Rockefeller, owns 42% and is made vice president.

Baron Bruno von Schroeder and his cousin, Kurt von Schroeder of the Bank for International Settlements (BIS) and the Gestapo, own 47 percent.

Nazi shyster Allen Dulles serves on the board of the Schroeder Bank.

Nazi shyster John Foster Dulles is the bank's legal counsel.

The German parent bank acts as the financial arm of the Nazi Party and will, in the next few years, siphon large sums of money from the U.S. to Nazi Germany.

1936: 

 Prescott Bush, grandfather of George "I'm A Lyin' Guy" Bush, hires Nazi shyster and financier Allen Dulles to create a massive legal smokescreen behind which to conceal his dealings on behalf of the Thyssen steel interests, major backers and financiers of Adolf Hitler.

 Harry Laughlin, Director of the Harriman/Rockefeller master race project otherwise known as the Eugenics Record Office in Cold Spring Harbor, Long Island New York, is granted an honorary doctorate by Heidelberg University in recognition of his contribution to the "science" of Nazi eugenics.

[ShaneAshton]

Ok...with each passing day...my anger grows.  I can feel that many others are angry...but WHAT realisitically...can we do to stop this?

I am just sick and tired of watching all this with no realistic course of action but hide and hopefully when the sh*t hits the fan...they won't come after me.

ANY IDEAS CREW?

[Geoff-UK]

Don't draw attention to yourself in any way when it gets bad. 

Too many people who've swallowed the blue pill and won't be woken up before they're starving to death.

When it gets that bad, see my advice above.

[Walt Whitman]

Again...

"When bad men combine, the good must associate; else they will fall one by one, an unpitied sacrifice in a contemptible struggle."

     -Edmund Burke (1770)

[CIABS]

gold should be quoted in dollars per 1,000 metric tons.  this would put the spotlight on the question how many thousands of tons would china buy at the COMEX price if they could.  at the moment the price is less than $42 billion.  i'd say china would buy between 5,000 and 10,000 tons in a heartbeat.  in essence the BIS is probably doing what everyone should be doing if they can: buying physical gold at the COMEX price.

[Hunch Trader]

Unlike you, China can mine all they want. The past comment from China, which ironically sparked off the >$1000 gold speculation rally, probably meant that above $1000 they will be only miners, perhaps even sellers.

Good luck getting someone to buy your $50,000 gold coin from you, at anywhere near that price. That's a very short game of musical chairs.

[TWORIVER]

Interesting how Gold has responded negatively to the bounce in equities.

[JW n FL]

Thank you Tyler... Good to see you shinning a light where it needs to be shown.

Here is one of my old write ups on BIS... maybe you find it interesting, maybe not... I am trying to share good information so if you don't like the facts... don't read the facts... there are plenty of fluff pieces around for you narrow minded fools to read.

Who needs the little guy with...

Data on the five-fold growth of derivatives to $516 trillion in five years comes from the most recent survey by the Bank of International Settlements, the world's clearinghouse for central banks in Basel, Switzerland. The BIS is like the cashier's window at a racetrack or casino, where you'd place a bet or cash in chips, except on a massive scale: BIS is where the U.S. settles trade imbalances with Saudi Arabia for all that oil we guzzle and gives China IOUs for the tainted drugs and lead-based toys we buy.

?  U.S. government's maximum legal debt is $9 trillion

?  U.S. mutual fund companies manage about $12 trillion

?  World's GDPs for all nations is approximately $50 trillion

?  Unfunded Social Security and Medicare benefits $50 trillion to $65 trillion

?  Total value of the world's real estate is estimated at about $75 trillion

?  Total value of world's stock and bond markets is more than $100 trillion

?  BIS valuation of world's derivatives back in 2002 was about $100 trillion

?  BIS 2007 valuation of the world's derivatives is now a whopping $516 trillion

http://www.marketwatch.com/story/derivatives-are-the-new-ticking-time-bomb?pagenumber=2

And.... of course the lobby is very well funded... NOT the little guys Lobby of course... the multiple hundred Trillion dollar derivatives Lobby, is well funded... read below (as a start for most of you I hope).

If Gensler were to get his way, "all transactions in standard contracts" would "be required to be conducted on regulated trading facilities or exchanges."

The House passed a bill on December 11 that would increase transparency somewhat but that does not, in Gensler's view, go far enough.   He charges that lobbyists from the Chamber of Commerce and the National Association of Manufacturers managed to keep end-user exemption.  He proclaimed, "Corporate America is on one side of the debate, I’m on the other."  But he also proclaimed that "It is the Wall Street banks that benefit from the so- called end-user exemption from transparency, not the businesses that use derivatives," which would seem to indicate that he has a different idea of what's good for business than the people who run said businesses.

This is a situation where the American public has no position on the issue — indeed, the vast majority have no idea there even is an issue —  and in which the interested parties will therefore dominate the debate. Given the way our system works, it appears Corporate America will get their way, at least for now.  They've moderated the House bill and it's virtually inconceivable that the Senate will move it further in Gensler's preferred direction.

http://www.acus.org/new_atlanticist/derivatives-market-20-times-size-american-economy

So... Little guy's or main street... nothing but Tax Bills and big boys... who use our tax dollars to lobby against us... winning and winning big... Thank God the Sheepeople have been dumbed down and cannot grasp what is going on!

[ATG]

Derivatives $615 Trillion in most recent Dec 2009 BIS report.

Globe still getting more levered by bankers, Archimedes...

http://www.bis.org/press/p100511.htm

[DosZap]

More folks moving in, still INFINTESIMAL, compared to what's coming..........

Pay special attn, to the part about EUROPEEEN buyers..........

http://www.marketwatch.com/story/bullion-buyers-bank-on-gold-coins-2010-07-23?siteid=nbkh

[RockyRacoon]

And they had the guts to quote Nadler!  Idiot.

"Coins are unable to give you the most bang for your buck," said Jon Nadler, an analyst with Kitco Metals Inc., a dealer of coins and other bullion products. "Secondly, you are going to have questions about liquidity ... it's not going to be as easy as you think to sell them."

[Walt Whitman]

Just a far flung question...

Are the millions of square acres of resource rich land the Federal Gov't continues to take offline in the West, under the guise of conservancy and environmentalism, merely collateral for our withdrawals from the BIS casino window?

[plocequ1]

Look, It's simple. The market goes up when the Machine says it goes up. What the fuck is so hard to understand? Therorys, Charts, Greece, earnings , Guest posts are crushed by the wrath of the Machine. Charts are so fucking 80s. The Machine, The glourious Machine.

[Remington IV]

This is damning proof that the Tin Foil Hat I wear is not enough .

I need more aluminum

[paladin]

you need a Alcoa hat

[Remington IV]

<b> what ???? </b>

[JW n FL]

Owen D. Young: Agent for Rothschild agent JP Morgan – founder of the BIS   –  founder of RCA and Chairman of General Electric from 1922 until 1939. 

1929-1939

The BIS Chronology chronicles the main events relevant to the history of the Bank for International Settlements since it was created in 1929-30. Major financial, monetary and world events that are not directly related to the BIS, but that have had an impact on it, are listed in italics.

1929 Feb-Jun    Committee of Experts (Young Committee) meets in Paris to discuss the German reparations question 7 Jun    Young Plan to deal with the German reparations question, is officially proposed; the plan includes the creation of an international bank for this purpose 31 Aug    First Hague Conference to discuss Young Plan proposals ends 3 Oct-13 Nov    Committee to elaborate the structure and statutes of the international bank - named Bank for International Settlements - meets in Baden-Baden, Germany (Comité d'Organisation de la Banque des Règlements Internationaux, or COBRI) 24 Oct    "Black Thursday" at the New York Stock Exchange (Wall Street crash)        1930     20 Jan   Final Act, Second Hague Conference; Young Plan agreed 26-27 Feb   Central bank governors meet in Rome: official foundation of the Bank for International Settlements (BIS), nomination of President and Board members 8 Mar   Reichsbank President Hjalmar Schacht resigns over the Young Plan 22-23 Apr   First unofficial meeting of the nominated Directors of the BIS in Basel 12 May   First official meeting of the BIS Board of Directors 17 May  

BIS opens doors for business in Basel: Gates W McGarrah, President; Leon Fraser, Alternate to the President; Pierre Quesnay, General Manager

20 May   Founding banks subscribe first share issue 24-25 Nov   Meeting of Committee of Exchange Experts at the BIS

http://www.bis.org/about/chronology/1929-1939.htm

[trav7777]

I think this swap w/ the BIS was not manipulation...the CB could have just sold themselves.

Probably more a you want a loan then you give us some fucking collateral type of thing.  Remember the BIS came into effect as a result of Versailles, around the same time that some of the world's CBs were being "public-ized"  The same perpetrators are behind the BIS, which was supposed to be liquidated after the BW conference.

[Implicit simplicit]

I would give it five years before there is a new international new main currency reserve, rather than the dollar. It will probably be the Special Drawing Rights (SDR) that has been bantered about by many writers.

US dominance and military industrialists is broke, and the world will demand an alternative.

Just a wild guess.

[JW n FL]

New item in your series of interest:

SDR Valuation as of Jul 23, 2010
Disclaimer: The International Monetary Fund makes no warranties, express or implied, regarding these tables or the performance of this site. The Fund shall not be liable for any losses or damages incurred in connection with this site.
http://www.imf.org/external/np/fin/data/rms_sdrv.aspx?Month=07&Day=23&Year=2010&submit=Submit

Your IMF Update: SDR Valuation‏ From:

 [e-mail] 

Sent:

Fri 7/23/10 8:09 AM

[basejump66]

“Central banks stand ready to lease gold in increasing quantities should the price rise.” 

Sir Alan Greenspan, US Federal Reserve Bank, 24 July 1998

"We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded. The US Fed was very active in getting the gold price down. So was the U.K."

Sir Eddie George, Bank of England, September 1999

"The schools would fail through their silence, the Church through its forgiveness, and the home through the denial and silence of the parents. The new generation has to hear what the older generation refuses to tell it...The only value of nearly five decades of my work is a warning to the murderers of tomorrow, that they will never rest.”

Simon Wiesenthal

[Testicular Cancer]

I only heard of BIS two months ago when James Dines talked of them. I think that they are the ultimate Illuminists. The top secret society made of elite bankers of the world. Check their website (yes they have one). The most vague & non-commital page I have ever read on the web.

[nuinut]

ultimate Illuminists

I believe that would be The Pilgrims, rather than the BIS.

[paladin]

(snip)

Since President Richard Nixon took the US off the Gold standard in 1971,

as I see it FDR took the USA people off the gold standard.....Nixon took the world off the the USA dollar gold exchange....

[paladin]

thanks Tyler.....this was a great post..

as you all put the dots together.....you will see a pattern of a move....

as this....

IMF gold sales

A combined 212 tonnes was sold during that first phase -- more than
half the approved total -- snapped up by the central banks of India, Mauritius
and Sri Lanka.

India, the first customer, bought 200 tonnes,
followed by Mauritius (two tonnes) and Sri Lanka (10 tonnes).

you all do not see the pattern of the moves.

GOLD IS MONEY

[paladin]

Mauritius
and Sri Lanka.

you shit me on this....why did the IMF sell this gold to them..

well I ask ..is the IMF and the BIS trying to get some gold into some country's.....Banks???

and if so.....what is about to happen??

[gerryscat]

I'll say (post) it again:

Just watch "The Money Masters, How International Bankers Gained Control of America" and it will all make sense.

[drwells]

http://www.goldensextant.com/commentary37.html#anchor5208

"As Note 15 to its accounting policies (at p. 158) makes clear, the BIS in ordinary course makes "fixed-term gold loans to commercial banks." So, of course, do many central banks. What is unique about the 346 tonnes of gold swaps disclosed by the BIS is that the swapped gold was not sold into the market by the bullion banks but remained with the central bank or banks that leased it. In this respect the swaps present the same advantage as gold leased or swapped into GLD as discussed in the prior commentary: the metal stays within the banking system rather than going to adorn the women of India or to some other place where retrieval might require much higher prices.

This advantage comes at added cost to the bullion banks, for they must pay both lease rates to borrow the gold from the central banks and interest rates on the currency portion of their swaps with the BIS. But with lease rates at derisory levels and interest rates at historic lows, the added cost is minimal. In short, the gold swaps disclosed by the BIS appear well-adapted to the current realities of gold banking. They allow the bullion banks to fund their gold banking activities in more or less traditional fashion through gold loans from central banks while at the same time allowing the central banks to hold onto their gold rather than release it into an ever tightening physical market."

[paladin]

you all think the Central Banks went off the gold Standard.

not so......all they did was to make you all think they went off it..LOL....LOL

[Catallaxative]

QE? That's really going to help?

[paladin]

I have the PDF of the BIS statement..

you might type in a search of the PDF........GOLD

the BIS treats gold as a financial instrument

you will see this many times.

well shall we read BIS statement.....

will we see this........barbaric relic...

...no it is not there.

I will post the PDF of this later

[paladin]

Tyler..

may I say this of your site

only a few sites I see do this...

if you post a reply to a poster it is inserted in time as I posted it to the poster..as a real.......this is not true

not at the end of the thread...in a time stamp.

what you do is make me reread the thread for a post I posted..

nothing is in real time.....paladin

[Iam_Silverman]

"nothing is in real time.....paladin"

Ahhh, but here things are measured on the Time Line.  You know, where when you get to the end the survival rate is Zero?

[paladin]

end of bitch....Paladin

shall we get back to gold as money???

[paladin]

Federal Reserve Gold Certificate Ratio

you do not see the forest for the trees

do you all see what is going to go down....paladin

[paladin]

by Catallaxative
on Fri, 07/23/2010 - 19:11
#486323

QE? That's really going to help?

you said above.....I did not reply....as it inserted it as a real time post...

QE will help as to keep the game doing

[paladin]

OK shall we go on about gold....

More On the Federal Reserve Gold Certificate Ratio

Author: Jim Sinclair

Posted On: Thursday, August 14, 2008, 7:20:00 PM EST

More On the Federal Reserve Gold Certificate Ratio

Author: Jim Sinclair

Why will the effort to call any top in the gold price be a waste of time for the gold-ignorant gurus?

Prior to being reduced to zero percent and then removal from the books, there was a direct link between the value of US Treasury gold held (a fixed price of gold then) as a percentage of the growth of the US money supply. As an example, when the cover was deemed to be 25% that meant that as the money supply expanded the value of gold had to be expanded by 25% as well.

Because the price of gold was fixed, the gold cover clause, as this device was known, mandated an automatic change in the Federal Reserve Discount rate in order to depress the demand for funds in the US economic system.

There is an argument that says as the dollar was becoming a primary reserve currency, and world trade was growing at record rates, the automatic changes in a monetary system were restraining the true wishes of the Administration and Federal Reserve.

After the demise of the Bretton Woods Agreement, everything financial moved towards a floating system. The move away from fixed points towards a fully floating financial system was the process of removal of all financial ALARMS. No longer was there a currency parity rate that when hitting the lower or upper bands rang an ALARM. The concept of financial crisis no longer existed.

The movement of any currency up or down - as the Euro recently did - would have been considered a financial crisis. We have just witnessed multiple central bank interventions that are accepted by the establishment’s international investment community as a dandy deed in the cover up of other serious systemic weaknesses. As a result, upper and lower bands have been considered and implemented. To benefit the plan, the lower limit of $1.49 will not be defended yet in time the market will. $1.49 is only a point after which no great undertaking of intervention will be applied. Let the apples fall from the tree, if they please, as per today.

There is no return to a FIXED anything, but there is a clear indication of a return to the relationship of floating financial alarms, a marriage between the thesis of Bretton Woods and the floating sins of our Financial Fathers.

The Revitalized and Modernized Federal Reserve Gold Certificate Ratio will be tied to a broad measure of money supply, M3 or another new definition of liquidity.

The gold that the US Treasury has held primarily at the New York Federal Reserve will be valued at market at the time of adoption of this mechanism. Please understand that regardless of the arguments concerning the number of ounces the Federal reserve holds, since it will never be audited, accept what is said as correct. Now the floating increase or decrease in monetary aggregates will mandate a change in the value of the gold held by the US Treasury.

The US Treasury will never have to buy or sell any gold because vehicles will be created that are immediately traded on exchanges that will speculate on the changes in the broad base monetary aggregate in terms of the gold price. That will serve the needs as the aggregates increase.

This is in fact a public way to view the aggregate change by changing the value of another asset, which is a means of balancing the balance sheet of the USA as it was at the day of adoption. It is not convertibility. It floats and is not fixed.

When the need is greatest it will be seen as an acceptable return to a form of disciplined central banks actions. It will be a reinstatement of an alarm mechanism but with parts that float.

The market value of gold on that day will be a pendulum-starting point, not a fixed price. The broad measure of money supply on that day will be 100 on the liquidity index.

Assuming the dollar is at .5200, the adoption of this mechanism could mark the low of the US dollar for this chapter of the financial history of the USA.

There are other items that will have to fall into place if that is to be the dollar saver from a complete Weimar experience. But this is the major criterion for success.

I assume it is January the 14th, 2011 and gold is trading at $1,650 or higher. Then I would assume the price of gold to trade $100 above and below the price of gold on that day according to changes in the liquidity index.

If the USA would like to avoid the USD$ from a Weimar experience this is the key ingredient to preventing that.

The US dollar is headed in the direction of the Weimar Experience in order to satisfy financial failures of significance. Some smaller entities will be rescued by Federal Money, exploding the US Federal Budget deficit and putting the weight of more newly created dollars on the inherently weak dollar.

There is a 70% possibility that since central banks have moved to floating currency parities that the modernized and revitalized Federal Reserve Gold Certificate Ratio will follow under the pressure of future systemic and grave financial circumstances.

http://www.dailypaul.com/node/58020

do you all see what is going on....paladin

[Temporalist]

Missing Gold A King's Ransom in Precious Metals Seems to Have Disappeared

"On Nov. 1, Mayor Rudolph Giuliani announced that "more than $230 million" worth of gold and silver bars that had been stored in a bomb-proof vault had been recovered. A New York Times article contained:

Two Brinks trucks were at ground zero on Wednesday to start hauling away the $200 million in gold and silver that the Bank of Nova Scotia had stored in a vault under the trade center ... A team of 30 firefighters and police officers are helping to move the metals, a task that can be measured practically down to the flake but that has been rounded off at 379,036 ounces of gold and 29,942,619 ounces of silver .. ¹  

Reports describing the contents of the vaults before the attack suggest that nearly $1 billion in precious metals was stored in the vaults. A figure of $650 million in a National Real Estate Investor article published after the attack is apparently based on pre-attack reports.

Unknown to most people at the time, $650 million in gold and silver was being kept in a special vault four floors beneath Four World Trade Center. ²  

An article in the TimesOnline gives the following rundown of precious metals that were being stored in the WTC vault belonging to Comex. ³  

• Comex metals trading - 3,800 gold bars weighing 12 tonnes and worth more than $100 million
• Comex clients - 800,000 ounces of gold with a value of about $220 million
• Comex clients - 102 million ounces of silver, worth $430 million
• Bank of Nova Scotia - $200 million of gold

The TimesOnline article is not clear as to whether the $200 million in gold reported by the Bank of Nova Scotia was part of the $220 million in gold held by Comex for clients. If so, the total is $750 million; otherwise $950 million."

http://911research.wtc7.net/wtc/evidence/gold.html

[bigkahuna]

Good evening All, If we all followed to Jesus's teachings to the best of our ability-we would not be dealing with this magnitude of greed.

[Akrunner907]

I wonder how many people with physical gold are thinking about having their gold re-assayed?

[THE DORK OF CORK]

Excellent article but I was under the impression that the IMF stood for "ITS MOSTLY FISCAL" at least for countries other then the US.

The ECB seems to have adopted this approach - saving the monetary mess within its client banks but preaching fiscal austerity to its vassal states.

If base money was created and at the same time all that wasted credit money was destroyed we would not have had half the problems in Europe now.

But then again the ECB one and only priority is the preservation of its unsustainable banking system at all costs

[Withdrawn Sanction]

I have been watching the gold spot and futures prices this past week remain in persistent (though minor) backwardation.  Spot by my unscientific sampling of the Bloomberg ticker, has been $0.20 to $1.10 higher than the futures price.  Can any of the traders on the site explain this unusal, though not unprecedented, market phenom?  It's probably nothing, an anomaly, but then again.....Any thoughts out there, you professional metals traders?

[Stainmaker]

I did not have sex with Carroll Quigley

[Chunkton]

BIS for all intensive purposes is the boss of all the central banks, conspiracy is just dripping on this mob. There again if the US us happy with the Fed robbing them blind, then why even bother with the BIS as you can't even see that con.

Intereresting though they often publish contrarian views on what the other Central Banks are up to, and very good articles at that. Interesting, they are taking a position that contradicts their clolleagues, could be a nice play coming here later.

[Geoff-UK]

"intensive purposes"?

"intents and purposes"

[Grand Supercycle]

DOW/SP500 daily chart is bullish for now ...

http://stockmarket618.wordpress.com

[GetZeeGold]

In my best Doctor Evil voice.......

BWAHAA....HAA....HA...HA

Like where ya been dudes?

https://www.kitcomm.com/showpost.php?p=1031772&postcount=5

Full thread....

https://www.kitcomm.com/showthread.php?t=64481

[Fíréan]

As has been stated at an official hearing and reported in public that the Gold bullion market is leveraged at 100:1 this would allow the above mentioned value of $14  billion ( USD) to become (100 x 14 B) $ 1.4 trillion in someone's equation. ?!?

[GetZeeGold]

And who is the BIS again?

I'm still a little fuzzy on that. Maybe someone can educate me. WHO elected them pope of the world? Seems like a simple question.

http://www.youtube.com/watch?v=l_FZVD5lsAw