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Gold: The Solution To The Banking Crisis?

Tyler Durden's picture




 

Authored by Eric Sprott and David Baker of Sprott Global Resource Investment,

The Basel Committee on Banking Supervision is an exclusive and somewhat mysterious entity that issues banking guidelines for the world’s largest financial institutions. It is part of the Bank of International Settlements (BIS) and is often referred to as the Central Banks’ central bank. Ever since the financial meltdown four years ago, the Basel Committee has been hard at work devising new international regulatory rules designed to minimize the potential for another large-scale financial meltdown. The Committee’s latest ‘framework’, as they call it, is referred to as “Basel III”, and involves tougher capital rules that will force all banks to more than triple the amount of core capital they hold from 2% to 7% in order to avoid future taxpayer bailouts. It doesn’t sound like much of an increase, and according to the Basel group’s own survey, the 100 largest global banks will only require approximately €370 billion in additional reserves to comply with the new regulations by 2019. Given that the Spanish banks alone are believed to need well over €100 billion today simply to keep their capital ratios in check, it is hard to believe €370 billion will be enough protect the world’s “too-big-to-fail” banks from future crises, but it is indeed a step in the right direction.

Initial implementation of Basel III’s capital rules was expected to come into effect on January 1, 2013, but US banking regulators issued a press release on November 9th stating that they wouldn’t meet the deadline, citing a large volume of letters (ie. complaints) received from bank participants and a “wide range of views expressed during the comment period”. It has also been revealed that smaller US regional banks are loath to adopt the new rules, which they view as overly complicated and potentially devastating to their bottom lines. The Independent Community Bankers of America has even requested a Basel III exemption for all banks with less than $50 billion in assets,“in order to avoid large-scale industry concentration that would curtail credit for consumers and business borrowers, especially in small communities.” The long-term implementation period for all Basel III measures actually extends to 2019, so the delays are not necessarily meaningful news, but they do illustrate the growing rift between the US banking cartel and its European counterpart regarding the Basel III framework. JP Morgan’s CEO Jamie Dimon is on record having referred to Basel III regulations as “un-American” for their favourable treatment of European covered bonds over US mortgage-backed securities. Readers may also remember when Dimon was caught yelling at Mark Carney, Canada’s (soon to be former) Central Bank Governor and head of the Financial Stability Board, during a meeting in Washington to discuss the same topic. More recently, Deutsche Bank’s co-chief executive Juergen Fitschen suggested that the US regulators’ delay was “hurting trans-Atlantic relations” and creating distrust... stating, “when the whole thing is called un-American, I can only say in disbelief, who can still believe in this day and age that there can be purely European or American rules.” Suffice it to say that Basel III implementation has not gone as smoothly as planned.

One of the more relevant aspects of Basel III for our portfolios is its treatment of gold as an asset class. Documents posted by the Bank of International Settlements (which houses the Basel Committee) and the United States FDIC have both referenced gold as a “zero percent risk-weighted item” in their proposed frameworks, which has launched spirited rumours within the gold community that Basel III may define gold as a “Tier 1” asset, along with cash and AAA-government securities. We have discovered in delving further that gold’s treatment in Basel III is far more complicated than the rumours suggest, and is still, for all intents and purposes, very much undecided. Without burdening our readers with the turgid details, it turns out that the reference to gold as a “zero-percent risk-weighted item” only relates to its treatment in specific Basel III regulation related to the liquidity of bank assets vs. its liabilities. (For a more comprehensive explanation of Basel III’s treatment of gold, please see the Appendix). But what the Basel III proposals do confirm is the regulators’ desire for banks to improve their liquidity position by holding a larger amount of “high-quality”, liquid assets in order to improve their overall solvency in the event of another crisis.

Herein lies the problem, however: the Basel III regulators have stubbornly held to the view that AAA-government securities constitute the bulk of those high quality assets, even as the rest of the financial world increasingly realizes they are anything but that. As banks move forward in their Basel III compliance efforts, they will be forced to buy ever-increasing amounts of AAA-rated government bonds to meet post Basel III-compliant liquidity and capital ratios. As we discussed in our August newsletter entitled, “NIRP: The Financial System’s Death Knell”, the problem with all this regulation-induced buying is that it ultimately pushes government bond yields into negative territory - as banks buy more and more of them not because they want to but because they have to in order to meet the new regulations. Although we have no doubt in the ability of governments’ issue more and more debt to satiate that demand, the captive purchases by the world’s largest banks may turn out to be surprisingly high. Add to this the additional demand for bonds from governments themselves through various Quantitative Easing programs… AND the new Dodd Frank rules, which will require more government bonds to be held on top of what’s required under Basel III, and we may soon have a situation where government bond yields are so low that they simply make no sense to hold at all. This is where gold comes into play.

If the Basel Committee decides to grant gold a favourable liquidity profile under its proposed Basel III framework, it will open the door for gold to compete with cash and government bonds on bank balance sheets – and provide banks with an asset that actually has the chance to appreciate. Given that US Treasury bonds pay little to no yield today, if offered the choice between the “liquidity trifecta” of cash, government bonds or gold to meet Basel III liquidity requirements, why wouldn’t a bank choose gold? From a purely ‘opportunity cost’ perspective, it makes much more sense for a bank to improve its balance sheet liquidity profile through the addition of gold than it does by holding more cash or government bonds – if the banks are given the freedom to choose.

The world’s non-Western central banks have already embraced this concept with their foreign exchange reserves, which are vulnerable to erosion from ‘Central Planning’ printing programs. This is why non-Western central banks are on track to buy at least 500 tonnes of net new physical gold this year, adding to the 440 tonnes they collectively purchased in 2011. In the un-regulated world of central banking, gold has already been accepted as the de-facto forex diversifier of choice, so why shouldn’t the regulated commercial banks be taking note and following suit with their balance sheets? Gold is, after all, one of the only assets they can all own simultaneously that will actually benefit from their respective participation through pure price appreciation. If banks all bought gold as the non-Western central banks have, it is likely that they would all profit while simultaneously improving their liquidity ratios. If they all acted in concert, gold could become the salvation of the banking system. (Highly unlikely… but just a thought).

So far there have only been two banking jurisdictions that have openly incorporated gold into their capital structures. The first, which may surprise you, is Turkey. In an unconventional effort to increase the country’s savings rate and propel loan growth, Turkish Central Bank Governor Erdem Basci has enacted new policies to promote gold within the Turkish banking system. He recently raised the proportion of reserves Turkish banks can keep in gold from 25 percent to 30 percent in an effort to attract more bullion into Turkish bank accounts. Turkiye Garanti Bankasi AS, Turkey’s largest lender, now offers gold-backed loans, where “customers can bring jewelry or coins to the bank and take out loans against their value.” The same bank will also soon “enable customers to withdraw their savings in gold, instead of Turkish lira or foreign exchange.” Basci’s policies have produced dramatic results for the Turkish banks, which have attracted US$8.3 billion in new deposits through gold programs over the past 12 months - which they can now extend for credit. Governor Basci has even stated he may make adjusting the banks’ gold ratio his main monetary policy tool.

The other banking jurisdiction is of course that of China, which has long encouraged its citizens to own physical gold. Recent reports indicate that the Shanghai Gold Exchange is planning to launch an interbank gold market in early December that will “pilot with Chinese banks and eventually be open to all.” Xie Duo, general director of the financial market department of the People’s Bank of China has stated that, “[China] should actively create conditions for the gold market to become integrated with the international gold market,” which suggests that the Chinese authorities have plans to capitalize on their growing gold stockpile. It is also interesting to note that China, of all countries, has been adamant that its 16 largest banks will meet the Basel III deadline on January 1, 2013. We can’t help but wonder if there is any connection between that effort and China’s recent increase in physical gold imports. Could China be positioning itself for the day Western banks finally realize they’d prefer gold over Treasuries? Possibly – and by the time banks figure it out, China may have already cornered most of the world’s physical gold supply.

If global banks’ are realistically going to improve their balance sheet diversification and liquidity profiles, gold will have to be part of that process. It is ludicrous to expect the global banking system to regain a sure footing through the increased ownership of government securities. If anything, we are now at a time when banks should do their utmost to diversify away from them, before the biggest “crowded trade” of all time begins to unravel itself. Basel III liquidity rules may be the start of gold’s re-emergence into mainstream commercial banking, although it is still not guaranteed that the US banking cartel will adopt all of the Basel III measures, and they still have years to hammer out the details. If regulators hold firm in applying stricter liquidity rules, however, gold is the only financial asset that can satisfy those liquidity requirements while freeing banks from the constraints of negative-yielding government bonds. And while it strikes us as somewhat ironic that the banking system may be forced to turn to gold out of sheer regulatory necessity, that’s where we see the potential in Basel III. After all – if the banks are ultimately interested in restoring stability and confidence, they could do worse than holding an asset that has gone up by an average of 17% per year for the last 12 years and represented ‘sound money’ throughout history.

Appendix: Gold’s treatment in Basel III

Basel III is a much more complex “framework” than Basel I or II, although we do not claim to be experts on either. It should also be mentioned that Basel II only came into effect in early 2008, and wasn’t even adopted by the US banks on its launch. Post-meltdown, Basel III is the Basel Committee’s attempt to get it right once and for all, and is designed to provide an all-encompassing, international set of banking regulations designed to avoid future bailouts of the “too-big to fail” banks in the event of another financial crisis.

Without going into cumbersome details, under the older Basel framework (Basel I), the lower the “risk weighting” regulators applied to an asset class, the less capital the banks had to set aside in order to hold it. CNBC’s John Carney writes, “The earlier round of capital regulations… government-rated bonds rated BBB were given 50 percent riskweightings. A-rated bonds were given 20 percent risk weightings. Double A and Triple A were given zero risk weightings — meaning banks did not have to set aside any capital at all for the government bonds they held.” Critics of Basel I argued that the risk-weighting system compelled banks to overweight their exposure to assets that had the lowest riskweightings, which created a herd-like move into same assets. This was most evident in their gradual overexposure to European sovereign debt and mortgage-backed securities, which the regulators had erroneously defined as “low-risk” before the meltdown proved them to be otherwise. The banks and governments learned that lesson the hard way.

Basel III (and Basel II) takes the same idea and complicates it further by dividing bank assets into two risk categories (credit and market risk) and risk-weighting them depending on their attributes. Just like Basel I, the higher the “riskweight” applied to an asset class, the more capital the bank is required to hold to offset them.

tier1.gif

It is our understanding that gold’s reference as a “zero percent risk-weighted asset” in the FDIC and BIS literature only applies to gold’s “credit risk” - which makes perfect sense given that gold isn’t anyone’s counterparty and cannot default in any way. Gold still has “market-risk” however, which stems from its price fluctuations, and this results in the bank having to set aside capital in order to hold it. So for banks who hold physical gold on their balance sheet (and we don’t know of any who do, other than the bullion dealers), the gold would not be treated the same as cash or AAA-bonds for the purposes of calculating their Tier 1 ratio. This is where the gold community’s conjecture on gold as a “Tier 1” asset has been misleading. There really isn’t such a thing as a “Tier 1” asset under Basel III. Instead, “Tier 1” is merely the ratio that reflects the capital supporting a bank’s risk-weighted assets.

HOWEVER, Basel III will also be adding an entirely new layer of regulation concerning the relative liquidity of the bank’s assets and liabilities. This will be reflected in two new ratios banks must calculate starting in 2015: the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR).

tier1-2.gif

Just as Basel III requires risk-weights for the asset side of a bank’s balance sheet (based on credit risk and market risk), Basel III will also soon require the application of risk-weights to be applied to the LIQUIDITY profile of both the assets and liabilities held by the bank. The idea here is to address the liquidity constraints that arose during the 2008 meltdown, when banks suffered widespread deposit withdrawals just as their access to wholesale funding dried up.

This is where gold’s Basel III treatment becomes more interesting. Under the proposed LIQUIDITY component of Basel III, gold is currently labeled with a 50% liquidity “haircut”, which is the same haircut that is applied to equities and bonds. This implicitly assumes that gold cannot be easily converted into cash in a stressed period, which is exactly the opposite of what we observed during the crisis. It also requires the bank to maintain a much more stable source of funding in order to hold gold as an asset on its balance sheet. Fortunately, there is a strong chance that this liquidity definition for gold may be changed. The World Gold Council has in fact been lobbying the Basel Committee, the Federal Reserve and the FDIC on this issue as far back as 2009, and published a paper arguing that gold should enjoy the same liquidity profile as cash or AAA-government securities when calculating Basel III’s LCR and NSFR ratios. And as it turns out, the liquidity definitions that will guide banks’ LCR and NSFR calculations have not yet been finalized by the Basel Committee. The Basel III comment period that ended on October 22nd resulted in the deadline being pushed back to January 1, 2013, and given the recent delays with the US bank regulators, will likely be postponed even further next year. Of specific interest to us is how the Basel Committee will treat gold from a liquidity-risk perspective, and whether they decide to lower gold’s liquidity “haircut” from 50% to something more reasonable, given gold’s obvious liquidity superiority over that of equities and bonds.

The only hint we’ve heard thus far has come from the World Gold Council itself, which suggested in an April 2012 research paper, and re-iterated on a recent conference call, that gold will be given a 15% liquidity “haircut”, but we have not been able to confirm this with either the Basel Committee or the FDIC. In fact, all inquiries regarding gold’s treatment made to those groups by ourselves, and by other parties that we have spoken with, have been met with silence. We get the sense that the regulators have no interest in stirring the pot by mentioning anything related to gold out of turn. Given our discussion above, we can understand why they may be hesitant to address the issue, and only time will tell if gold gets the proper liquidity treatment it deserves.

 

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Fri, 11/30/2012 - 00:08 | 3022766 Bansters-in-my-...
Bansters-in-my- feces's picture

I licked my Gold today....
MMmmm...mmmmmm Good.

Fri, 11/30/2012 - 00:26 | 3022787 markmotive
markmotive's picture

Gold alone won't save you. But guns and ammo will help you guard your gold, food, family, property, dog, etc.

Another financial collapse could come with massive deflationary forces if the banking system adopts a gold standard. The second Great Depression won't be as pretty as the first.

Fri, 11/30/2012 - 00:36 | 3022815 icanhasbailout
icanhasbailout's picture

Schuld Mach Frei

Fri, 11/30/2012 - 00:49 | 3022829 Supernova Born
Supernova Born's picture

Which of these things is not like the others?

Fri, 11/30/2012 - 01:15 | 3022861 Oh regional Indian
Oh regional Indian's picture

In a word...NO.

Gold is the greatest head-fake since....well....Gold.

Little people never win with Au. It's big people money, little people's burden.

India is a shining example of that. Fooled by gold. They're peddling it in to Gold backed loan sharks at obscene interest rates as inflation bites on dailies/housing etc.

Old game, old, old game.

The ONLY solution to the banking crisis is de-globalization, planned de-growth of the Supply side monster, banks writing off book entry loans, steady asset re-pricing (down-pricing), allowing deflation to take it's natural course...cutting off the carry trade cheap monies for connected speculators...

Oh, and letting a couple of countries/currencies that have raped the world for a hundred or so years fucking well explode. It's a-ok, the rest of the world will carry on while said nations and their citizens deal with a healthy dose of reality.

like that.

ori

Fri, 11/30/2012 - 01:42 | 3022887 dlmaniac
dlmaniac's picture

Gold cannot fix lazyness. If a nation is full of suckers living on welfare then there's no fix until this laziness dissolves one way or another.

Fri, 11/30/2012 - 01:50 | 3022893 Oh regional Indian
Oh regional Indian's picture

I'll assume you are speaking of the westrn half here. In India it's not the lazy people, it's hard-working common folk who have long bought the gold story. And stored it,...and stored it and stored it... only to be eaten alive by inflation and forced to take out 15%-30% (REAL RATE) loans against it. Loans that will not be repaid since food is headed only one way...up. Oil is headed up. Housing is astronomical already and still rising.

And Gold loan companies are poorly regulated, which means in their upcoming crash, said gold will go further up the food chain.

The deepest question is really why are CB's vaccuming it up.... except for periods of convenient madness like Gordon Brown in 1999, India in 1989/1990 etc.

It's a game whose rules are totally obscure to us.

ori

Fri, 11/30/2012 - 02:01 | 3022905 CunnyFunt
CunnyFunt's picture

Oh Regional Indian, since India and China were among the last to abandon a silver standard, in your opinion, does there exist an active historical memory in India and China of the demonetization of silver which resulted in a great transfer of wealth from east to west?

Fri, 11/30/2012 - 02:24 | 3022920 Oh regional Indian
Oh regional Indian's picture

CunnyF, I'll answer you slightly tangentially.

Historical memory in India has been one of the most contorted, twisted and erased in probably all of the colonial conquests of the british empire (probably because it was so old and deeply engrained).

Indian history has been "directed" into making Indians at large, largely blind to our real history.

So, in a word, no. Even gold and the great transfer of Indian bullion that happened through out the 1930's as britain played the classic Capital COntrols+Export Controls+Artificial Food scarcity game (to pay off it's war debts to the BAnkers) to force people to turn in their gold by the tonne, which was then sold cheaply to england by treasonous Indian bullion merchants like the Birlas (now a major industrial family due to said treason)...., long and ugly story.

So, again, no.

I imagine it's the same with China as it's silver was impounded for opium (grown in India by the same treasonous rats) over the course of the two Opium wars....

When your next meal is at risk and government paper is what you pay to get it, a couple of generations and reality is all but forgotten.

Modern indian's know nothing of reality, real money, real world, real history... Zero.

Sad.

ori

Fri, 11/30/2012 - 02:38 | 3022926 CunnyFunt
CunnyFunt's picture

Thanks for that. It seems that way in every corner of the world now. It's sad but true.

Fri, 11/30/2012 - 02:46 | 3022928 Oh regional Indian
Oh regional Indian's picture

Sure CunnyF, sad but true is true.

And it will take a couple of generations at least to bring sanity back, but who has the time anymore? Or the will/way or means?

ori

Fri, 11/30/2012 - 02:53 | 3022932 CunnyFunt
CunnyFunt's picture

Right, time decay can be an awful factor in options, and all options expire.

Fri, 11/30/2012 - 07:36 | 3023086 Oh regional Indian
Oh regional Indian's picture

Interesting little social commentary as an aside.

America wakes up and the down arrowing begins in earnest. If this space is a fractal reflection of the American mind-set, it explains a lot.

FWIW.

ori

Fri, 11/30/2012 - 09:30 | 3023254 Enslavethechild...
EnslavethechildrenforBen's picture

A Gold Standard, if used not abused, does in effect work perfectly.

Physicz bitches...

Sun, 12/02/2012 - 09:40 | 3027806 e-recep
e-recep's picture

 a system that does not get abused eventually never existed, never will exist.

Fri, 11/30/2012 - 07:40 | 3023090 blindman
blindman's picture

Steely Dan live plays "Time Out of Mind"
http://www.youtube.com/watch?v=8G1tRCfMNxc
.
Steely Dan - Only A Fool Would Say That
http://www.youtube.com/watch?v=yqVtM1hax7Y
( this is a bit cheeky, revealing and funny )
.
Bob Dylan - Not Dark Yet ( time out of mind )
http://www.youtube.com/watch?v=RZgBhyU4IvQ
.
...time is running away ... ?

Fri, 11/30/2012 - 06:17 | 3023023 aleph0
aleph0's picture

So I was told ( and shown ) by well-to-do Indians in New Delhi :
Some British soldiers used spoons to prise the gems from the Hindu Temple walls before leaving.
The higher ranks & politicos  left with large coffers of precious metals and gems.
So it does seem that they are very aware of the Scams / Theft from the West ... and are not likely to forget.
FWIW

Fri, 11/30/2012 - 06:58 | 3023054 Oh regional Indian
Oh regional Indian's picture

Interesting aleph,

But propaganda, relentless brainwashing propaganda is so powerful a tool that Iranians love to run to the US if allowed, Japanese love and uphold the US as a beacon of something, the UK is full of subservient Indians and speaking from deep personal experience, most Indians still bow and scrape to the white man.

Interesting, eh?

ori

Fri, 11/30/2012 - 01:50 | 3022894 CunnyFunt
CunnyFunt's picture

+1

Nor can it fix ignorance.

Fri, 11/30/2012 - 02:41 | 3022927 CunnyFunt
CunnyFunt's picture

I really wish I have his job.

Fri, 11/30/2012 - 07:35 | 3023085 jekyll island
jekyll island's picture

Take one tonne of gold, drop it on a banker.  Repeat until you achieve the desired results.  Gold can resolve the banking crisis.  By the way, this will work on lazy entitlement mooches too.  

Fri, 11/30/2012 - 06:08 | 3023016 falak pema
falak pema's picture

Ori, I'm no believer in shooting stars going Nova, either of Bossa or Scotia variety. Super is another matter and beyond my skills of comprehension; as its God's or nature's work! 

Nor do I believe in the earth's equatorial/vertical divide between good and bad, east and west, sloth and intelligence.

Destiny is as man-made invention in my book; but its intimate conviction and gut feeling; as we are all blind, in the true geological scale sense. So I won't dwell on that from a philosophical angle. Let Karma speak for itself! 

But I do read history for what its worth  and try and see past trends to show the human dynamics of the  future. 

In the long historical trend, 1492 was a landmark year : age of religious intolerance in Spain and then in Europe, convoluted in religious wars, and discovery of New World. It led to western pre-eminence to this day. That cycle of 500 hundred years, built on Conquistador extraction of wealth, subsequent hyperconsumption of earth's fertile crust in the industrial age, may now be hitting a NATURAL asymptote. 

If that is true message of history then the new age will swing back from west to east, as people don't change EXCEPT under duress; as we see only too clearly in the PAx Americana meltdown today. We are heading to a new type of civilization paradigm, Copernician gamechanger, in these peak resources tipping times. And those stuck in past paradigm often have trouble to cut and run, to reinvent their past momentum. That is what 1492 taught us. Stamboul became outdated.

We don't know where the new frontier will emerge truly; all indications are that the west still has the techological edge but has lost its ethical value systems; its most precious heritage since its civilization began. As civilization is firstly homo-centric not techno-centric. Means and Ends...value systems define human effort. 

Who can tell how the great circle of life will spin; but spin it will and its downward momentum is lurking ominously. 

To come back to gold and stories told of Cressus...

 

Fri, 11/30/2012 - 06:54 | 3023051 Oh regional Indian
Oh regional Indian's picture

Indeed Falak. The inevitable swing of the pendulum.

And it's clear that it is a battle, age old at that, between heart and mind.

The east, by sins of omission or commission, is as "lost" now if you will, as the west is. Or has lost it under the boot-heel of some really vile domination, generationally.

Africa is such a case in point, overall.

Let us see.

And what were the stories told of Cressus?

ori

 

Fri, 11/30/2012 - 07:10 | 3023061 falak pema
falak pema's picture

it all ended in the sand...Cresus's dreams, his progeny's screams. 

The Lydian kingdom (Anatolia) lost to the Persians of Cyrus. His riches came from the sandy beds of the river Pactole. Full of gold, richest man of ancient times according to Herodotus. 

That if the tresor of Cresus
And al the gold Octovien,
Forth with the richesse Yndien
Of Perles and of riche stones,
Were al togedre myn at ones...

english poem of ye olde times! 

Fri, 11/30/2012 - 07:28 | 3023077 Oh regional Indian
Oh regional Indian's picture

AH, thanks for that Falak.

Ye olde english had a metre and timbre that was rich, unlike this fallen version we trade today.

ori

Fri, 11/30/2012 - 09:02 | 3023167 JOYFUL
JOYFUL's picture

In truth, ol' sock, the rivers of Lydia ran full of electrum, nature's finely balanced mix of gold 'n silver, and which was  cast into the natural currency of the people afore certain antecedents of TPTB got it into their heads to invent excuses why that perfect blend was not good enough...and that some kind of rake off in the form of seigneurage was good n necessary to keep the wheels of commerce grinding....

but that's just an empirical observation spun into what you will doubtless cast* as another 'conspiracy theory' and dismiss along with every other bit of evidence of the longstanding efforts of certain elements hiding amongst us to turn the garden of eden we were give into a veritable hell upon earth!

*be wary, squire, that such doubtless casting be a double-edge sword which can cut  to the quick one's own cred...and cast doubt upon those who serially deny the forest for the plethora of trees!

Fri, 11/30/2012 - 09:29 | 3023240 falak pema
falak pema's picture

Singing L. LaRouche's twentieth century song and Coleman's powerful mustard concoction is a bit like hoisting Hubbard's Dyanetics cubbard onto gullible America, as new beacon of Scientology torch of tomorrow's age; the new dawn of enlightenment's dogma, all neatly packaged like ONLY America knows how to do best into a seamless industrial package. 

I don't doubt the powerful thesis of the LaRouche school to provide an incisive analysis of monetary trends and their interplay with western geopolitics over the centuries. What I doubt and contest is the right of people to bend History to suit their purpose, however fine that purpose be. A global scheme of world governance hatched in second half of twentieth century, based on inuendo and fragments of historical interplay, is great drama that spices the analysis of deeper designs; but it is NOT history. Apple-like ideological  I-pad for the agnostic lost in materialistic trauma. 

What I am saying simply put is that making a dogmatic scheme to make history rhyme with it, to demonstrate the so called perennial crime against western civilization, is as hocus pocus as saying the seven sacrements of christianity decide your fate in the after world; wherever that be : in the heavens above or inferno below.

War without end and the Jewish Khazarian scapegoat. Ride on pale rider of mystification. 

War Without End :: View topic - John Coleman & Lyndon Larouche - the Jewish theme within

War without end has other simpler motivations in History and Man's psyche. And its not a global unending consiparcy, its the essence of individual man wanting to be OLIGARCH. 

Fri, 11/30/2012 - 11:38 | 3023666 JOYFUL
JOYFUL's picture

I was waiting for you to jump on the Larouche thing: classic case of throwing the baby out with the bath water...say what you will about LL and his cultist followers, the finest research(outside of AJ McCloys classic  -The Politics of Heroin in SE Asia) into the drug running mafia scam that is the USA government has been done by same...the work on Venice is equally top notch...your effort to dismiss it based upon provenance is a lowering of your own standards that will not serve you credit.

Similarly, whilst I despise the Scientology cult, in one of his few lucid moments. LRon managed to concoct simply the best, most effective method of purging drug residues and heavy metal toxins from the body...the Purif program...in the end, what mattered to me was that it worked, not who dreamed it up...

but it takes an open and enquiring mind to be able to sift through these kind of wheat versus chaff situations ...I fear that your expected easy swing has proven another great miss! You are left merely dismissing one so-called 'dogmatism' for your own favorite...quite a dog's breakfast I should say!

Please be so kind as to retrieve your sword from the ground and replace it in your scabbard...before you fall on it...I have no wish to see you induced to commit hari-kari mon frere.

Fri, 11/30/2012 - 01:25 | 3022875 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1

Freegoldtube?

Fri, 11/30/2012 - 01:03 | 3022845 SafelyGraze
SafelyGraze's picture

schuldenfreude

 

Fri, 11/30/2012 - 01:14 | 3022859 SafelyGraze
SafelyGraze's picture

after holiday-related conversations about money n finance n economy n blah blah blah ..

have lost patience with any more "gold-backed" comment about anything

"gold-backed"

if I borrow your rake and promise to pay it back, is the promise "rake-backed"?

sheesh

how about I borrow (i.e. take i.e. confiscate i.e. impound i.e. civil litigate i.e. eminent domain i.e. executive order i.e. vaporize i.e. commandeer i.e. muster) your damn rake

then I tell you "I promise"

and you say "you promise *what*"?

and I tell you i just "promise"

what would that be? a non-rake-backed promise? 

if you ask for your rake back, I will laugh. 

I sold it. 

also, you don't mind if I "borrow" your car do you? "I promise"

 

Fri, 11/30/2012 - 07:23 | 3023073 Gazooks
Gazooks's picture

..., or your wife, your children, your dog or your life.

Fri, 11/30/2012 - 00:41 | 3022816 bigdumbnugly
bigdumbnugly's picture

yeah that's pretty cool bansters but my dog can do you one (well, two actually i guess) better.

why does he do it?     because he can of course.

Fri, 11/30/2012 - 00:09 | 3022767 ebworthen
ebworthen's picture

Tangible value always trumps promised value.

The promise of a kiss is nothing compared to a real kiss.

Fri, 11/30/2012 - 00:10 | 3022768 crusty curmudgeon
crusty curmudgeon's picture

"only time will tell if gold gets the proper liquidity treatment it deserves"

That time is near.

Fri, 11/30/2012 - 07:44 | 3023095 Snidley Whipsnae
Snidley Whipsnae's picture

 From the text... China may have already cornered most of the world’s physical gold supply...

It's hard to believe that this sentence was incorporated when we know that the population of India has accumulated over 20 thousand tons of gold... and probably much more since this is an estimate and does not account for religious cults and gold smuggled into India.

I believe that it's important to remember that the Basel Committee on Banking Supervision would not be attempting to incorporate gold into the financial system in any capacity if the system were not under threat of collapse.

The pig-headed bankers of the West, especially those on Wall St, are fighting the proposed new rules tooth and nail because they recognize that gold incorporation would make it difficult to 'privatize the gains and social the losses'... as they have done since the incept of the Federal Reserve.

But, in the long (actually not so long now) run, gold will reincorporate itself into the banking system and world financial system regardless of what banking regulators do or say.

Mr Market always wins and when paper fails banks and people always turn to gold and silver. PMs are a dose of honest money and, as always, they will be required to entice populations back to banks after the collapse.

 

Fri, 11/30/2012 - 00:10 | 3022769 LetThemEatRand
LetThemEatRand's picture

This is the program where we see the woman in Gold.

Fri, 11/30/2012 - 00:11 | 3022771 newengland
newengland's picture

A word to the wise:

Gold, Tier 1 asset (BIS). Nuff said.

Fri, 11/30/2012 - 00:15 | 3022775 DoChenRollingBearing
DoChenRollingBearing's picture

Of course gold should be treated as at least the equal in quality to cash and sovereign debt.  Duh!  

But, of course something this big and complicated (Basel III) with so many moving parts is hard for a poor Bearing to judge.

On the other hand, when I was in Italy interviewing that big gold buyer in Rome, he answered "Banks" first when I asked him who was buying the gold from the refiners that THEY (Compro Oro = We Buy Gold) sell to.  "China" and "India" were next.  Banks!

Fri, 11/30/2012 - 04:29 | 3022962 fredquimby
fredquimby's picture

Banks need gold so they can sell it to people like me! I know quite a few folk now who are regularly squirreling away a gram or two every month.....We can buy it OTC in Switzerland. 1g, 2g, 5g, 10g or bigger....

Here is my latest addition:

https://pbs.twimg.com/media/A8zj_1NCIAA-MH7.jpg:large

:)

 

Fri, 11/30/2012 - 07:56 | 3023106 Snidley Whipsnae
Snidley Whipsnae's picture

DoChen... BANKS! It depends on one's definition of a bank. The Mid East oil rich countries and China have soverign wealth funds and they can buy/sell without effecting the balance sheet of the soverign central bank.

In fact, often the central bank of a soverign does not know what the soverign wealth fund has been accumulating/selling until assets are transfered to the central bank. We have seen this happen in China and in the Mid East most recently when a soverign announced that they had discovered a several hundred tons cache of gold that the central bank did not know about.

So, the PBoC probably does not know how much gold they have until the soverign wealth fund announces a transfer of gold to the PBoC. I have no idea who makes the decision about when to announce and transfer but it comes from a higher authority than the central bank since the announcement has political and financial ramifications... imo.

Fri, 11/30/2012 - 00:16 | 3022779 USS Bernanke
USS Bernanke's picture

Why consider gold when you can print unlimited amounts of Risk Free assets.

/endirony

Fri, 11/30/2012 - 00:28 | 3022807 fourchan
fourchan's picture

/game

Fri, 11/30/2012 - 00:16 | 3022783 mr. mirbach
mr. mirbach's picture

"As banks move forward in their Basel III compliance efforts, they will be forced to buy ever-increasing amounts of AAA-rated government bonds to meet post Basel III-compliant liquidity and capital ratios." 

Central Bankers cannot own governmets unless they buy bonds.

Fri, 11/30/2012 - 05:59 | 3023013 Urban Redneck
Urban Redneck's picture

They can just have their member banks buy the local politicians.  In in the case of BIII Jamie already owns Timmay's ass and now JPM doesn't have to take shit UST off the FEDs balance sheet and keep them on their own balance sheet (for now).

Fri, 11/30/2012 - 00:46 | 3022825 Caviar Emptor
Caviar Emptor's picture

Gold will appreciate in this biflationary environment. It is a hedge against the inexorable deterioration in the buying power of currency. And a hedge against them doing something really stupid. 

Fri, 11/30/2012 - 00:58 | 3022838 Hi Ho Silver
Hi Ho Silver's picture

My chickens are appreciating too. My hedge against hunger.

 

And of course they are going to do something really stupid. That's one of the first criteria for anything they do, it must be really stupid.

Fri, 11/30/2012 - 00:55 | 3022835 proLiberty
proLiberty's picture

""As we discussed in our August newsletter entitled, “NIRP: The Financial System’s Death Knell”, the problem with all this regulation-induced buying is that it ultimately pushes government bond yields into negative territory - as banks buy more and more of them not because they want to but because they have to in order to meet the new regulations..."

 

Add to this the state regulatory requirements on insurance companies that generally must hold the bulk of their reserves in the form of approved instruments, where the regulator leans heavily on his preference for Treasury instruments.  But this is no surprise since the entire regulatory, accounting and audit environment is fixated on nominal dollars (or Euros, etc.), without any care as any change in wealth the money represents.   

 

Fri, 11/30/2012 - 08:09 | 3023120 Snidley Whipsnae
Snidley Whipsnae's picture

... But this is no surprise since the entire regulatory, accounting and audit environment is fixated on nominal dollars (or Euros, etc.), without any care as any change in wealth the money represents...

Because their balance sheets are not structured to reflect any but nominal fiat. iows, the currency units on the balance sheets are simply units. Neither the balance sheet nor the bank cares what purchasing power each unit represents... in theory.

Also, it's interesting that no mention was made of the way gold is treated in Europe vs how gold is treated by the Fed. Gold is carried on balance sheet in Europe and is revalued every quarter to reflect changes in it's value in Euro currency. otoh, the Fed carries gold at the same price as ever; ie, about $42 per oz... but the Fed won't lease or sell gold for that amount. 

Fri, 11/30/2012 - 01:07 | 3022853 IridiumRebel
IridiumRebel's picture

Tungsten Standard?

Fri, 11/30/2012 - 09:41 | 3023294 kralizec
kralizec's picture

If the same bad actors and corrupt systems are still in control of central banks and governments, then yes, a Tungsten Standard may well be what you end up with, they'll just debase gold like the despots of old and the same sick game will continue...

Fri, 11/30/2012 - 01:15 | 3022860 Kastorsky
Kastorsky's picture

Basel Committee can screw itself.

When time comes no one will give a shit about their decisions.

Fri, 11/30/2012 - 01:18 | 3022867 The Duke of New...
The Duke of New York A No.1's picture

Gold - Smold ..... NY FED Tungsten is the real deal!.

Fri, 11/30/2012 - 01:25 | 3022873 hairball48
hairball48's picture

We need to look at the plus side of all this bank buying of Treasuries. The more UST's the banks hold, the faster they'll all fail when the USTreasury market finally goes tits up.

Fri, 11/30/2012 - 01:24 | 3022874 Zgangsta
Zgangsta's picture

Gold:  it's what's for dinner.

Fri, 11/30/2012 - 02:00 | 3022901 AgShaman
AgShaman's picture

Free 'jobber bits' to any country lucky enough to repratriate their bricks of wonder.

 

Fri, 11/30/2012 - 04:03 | 3022954 Dre4dwolf
Dre4dwolf's picture

There is only one answer , Default, Liquidation, new banks popping up to replace the old dead obsolete ones.

Fri, 11/30/2012 - 04:21 | 3022958 JOYFUL
JOYFUL's picture

... "Turkiye Garanti Bankasi AS, Turkey’s largest lender, now offers gold-backed loans, where “customers can bring jewelry or coins to the bank and take out loans against their value.” The same bank will also soon “enable customers to withdraw their savings in gold, instead of Turkish lira or foreign exchange.”...

I've said before, and it deserves to be said again...though my respect for Sprott and CO is great, they are just repeating a poorly researched newswire blurb that fails to play out when investigated in boots on the ground fashion...

Garanti Bank has offered the moon, and delivered moldy cheese, when put to the test...for a yabanci(foreigner) interested in accessing this potentially profitable means of employing their AU reserves Garanti Bank is a non-starter...their execution is horrendous, communication zilch, and holdback terms for any physical entrusted to them, prohibitive. Because of the high profile gold enjoys here, I had high hopes for some kind of progressive business thinking on the part of the banksters...

but in the end...they're just banksters...cons in bespoke suits...or high end thaubs...it's all the same, the usury game.

As for your other thought, Eric..."" If they all acted in concert, gold could become the salvation of the banking system"...  I'm sorry, but I've crossed the Rubicon with these scumbags...we don't need to 'save' the banking system...we need to let it run through traffic and let it lie flattened on the shoulder as roadkill.

Death to the banks. Viva the gold dinar, and the trade between free folk, minus the parasites of the moneychanging class.

Fri, 11/30/2012 - 06:22 | 3023029 Stats_Junkie
Stats_Junkie's picture

Are you an advocate of what they call 'the sharing economy'? If we abolish a set currency, people can trade and barter for all commodities according to their needs. Problem is, without a benchmark to set prices against, the deal you get depends on the generosity of your neighbour, or your bartering skills.

Do you feel lucky?

Fri, 11/30/2012 - 09:06 | 3023171 JOYFUL
JOYFUL's picture

I'm an advocate of long lines of dromedaries snaking through the starry night, towards the next caravanserai, and pack horse-led processions of nomads moving through the Pamirs in search of new pastures...traders, the lot of us, and knowing that there's always enuff, of anything, minus the moneychangers and wormtongues, we trade in piece...pieces of silver, piezas de oro, wisps of smoke rise up from the peace pipes of a peeple young enough to remember what made our forebears great, old enough not to fear our future...

benchmarks are made by those who spend too much time sittin, the mindset antique but what we are goin back to be the really really old of the really real...when things just work out cause we jus want em to...

as an acolyte of the Man from Rawhide Rowdy Yates times, an prolly from before youse was hatched, I'll turn that question around,  if it be a reference to  a certain magnum opus!!!! "punk"...."if you want a guarantee, buy a toaster!"

Fri, 11/30/2012 - 04:52 | 3022969 Debugas
Debugas's picture

no "Basel N" wil help to return confidence unless fraud is removed from banks balance sheets. Force them to mark to market DAILY!!!

Fri, 11/30/2012 - 04:54 | 3022970 FranSix
FranSix's picture

Turkey had better hope that gold prices are fixed in U.S. dollars exchange rate terms, in order to avoid a second collapse of their own currency.  The Turkish Lira had once been the world's least valued currency until six zeroes were dropped from the exchange rate.

http://en.wikipedia.org/wiki/Least_valued_currency_unit

 

Fri, 11/30/2012 - 06:12 | 3023022 Sandmann
Sandmann's picture

Still a disaster as most shops seem to think they can charge Euros and then reveal how overpriced Turkey is for meat, petrol, etc and only personal services ie. labour is competitive with Western Europe. Turkey seems oblivious to its price level vis-a-vis Germany and will lose tourists rapidly if Greece left the Euro

Fri, 11/30/2012 - 12:03 | 3023762 FranSix
FranSix's picture

They can charge Euros, but the medium of exchange is in Lira.  I find it extremely unusual that most people have not seen the Turkish currency crisis in context with the rest of the world, they aught to be having serious problems worse than Greece.  But nothing in the media.  

The numbers are very clear, that Turkey lopped six zeros off its denominations, and they heavily promote the deposition of gold.  So guess which country is surrpetitiously dumping allocated gold on London markets?  Has to be Turkey.  

As an aside, in terms of G.O.D., gold, oil, drugs, Turkey was once THE heroin exchange globally going way back. I would say that Turkey is ground zero for geopolitical tensions and has been that way for a very long time.

http://goo.gl/maps/SMn9c

A fixed gold price in foreign exchanges will completely change the whole price fixing scheme for the bullion banks.  And in preparation of negative nominal rate policy, the banks are up in arms.

Fri, 11/30/2012 - 05:29 | 3022993 KickIce
KickIce's picture

If the guillotine is made of gold, then yes, gold is viable solution.

Fri, 11/30/2012 - 05:37 | 3022997 Kiwi Pete
Kiwi Pete's picture

Congratulations to the Palestinians! Hopefully recognition as a state by the UN will spur the Israelies to begin good faith negotiations and bring on the 2-state solution. 

Shame on you Canadians for voting against this resolution. I thought you were more principaled than this. You may as well give up your sovereignty right now and join the US.

"The nations who voted against the upgrade of Palestinian status were the United States, Israel, Canada, the Czech Republic and Panama. The notion of Palestinian statehood was also objected to by several Pacific island nations, the Marshall Islands, Micronesia, Nauru and Palau."

http://rt.com/news/un-palestinians-non-member-832/

Fri, 11/30/2012 - 06:10 | 3023020 Sandmann
Sandmann's picture

To complete your Off-Topic Post why are you so hostile to the Kurds ? Why shouldn't the Kurds be recognised as under the Treaty of Sevres ? You are seemingly blind to the Kurdish nation and we should know why

 

 

 

 

Fri, 11/30/2012 - 07:23 | 3023074 Kiwi Pete
Kiwi Pete's picture

Hey, I'm hostile to Palau too but they probably were just bought off. What's Canada's excuse?

Fri, 11/30/2012 - 09:06 | 3023185 Sandmann
Sandmann's picture

probably hoped you could spell principled

Fri, 11/30/2012 - 10:36 | 3023451 oddjob
oddjob's picture

Harper is zioinist scum?

Fri, 11/30/2012 - 12:54 | 3023983 unrulian
unrulian's picture

we were probably bought off too...pipeline in 3...2....1....

Fri, 11/30/2012 - 06:19 | 3023024 Stats_Junkie
Stats_Junkie's picture

Corporate bonds, the new safe haven for investors, are also victims of QE-induced inflation. Why buy a fixed-income product at today's price, when you can get 20% off when prices are adjusted for the next inflation forecast?

If equity is not the answer, then maybe we should start using gold as a benchmark. Though bearing in mind the political situation in South Africa and other gold mining countries like Mongolia, perhaps we should set a premium on another material. Shale gas? Corn ethanol?

Suggestions welcome

http://jessking1311.wordpress.com/

Fri, 11/30/2012 - 07:19 | 3023068 blindman
blindman's picture

jca said ...
"
There are other ways to deal with unpayable debts than merely printing money. A novel idea is to make the issuers and holders of the bonds bear the negative effects of their bad judgement, as in the case of Iceland. But the Banks will always try to shift the burden, which they have created, to the financially illiterate and the weak.

And the problem is not even so much the Fed's propensity to stimulation in the manner of Keynes. The problem is that they are pouring the stimulus into an unreformed rathole of corruption, in the manner of sending aid to a country where it is intercepted by thieves and regional warlords, with little reaching the people.

The US does not have a spending problem so much as it has a 'corrupt financial system problem,' a 'wealth inequality problem with a stagnant wage base,' an 'unsustainable healthcare model problem,' and 'a free trade without adequate domestic policy based boundaries problem.' It was not all that long ago that the US was holding a small annual surplus. What changed was financial deregulation with the financialization of the economy, the easing of trade conditions, concentration of corporate power, tax cuts for the wealthiest, a corrupting political campaign bubble, and unfunded discretionary wars with their associated profiteering.

Forcing small business and workers to compete with state directed slave labor while maintaining a social system founded on private business and median worker wages is insane. The capitalists are not yet selling them the rope, but they are certainly selling them the 97%, and with them the bulk of their customer demand over time.

Perhaps the biggest problem is, as Lord Acton observed, that when you have a concentration of power, men with the mentality of gangsters have taken control. And the US financial system and corporate structure are highly concentrated based on historical standards, resembling the worst of the gilded age of robber barons, or some third world oligarchy in which the people live in voiceless misery.

In summary, I call this 'just monetize the debt without restraint' alternative the “pernicious myth of modern monetary theory.” There are quite a few examples of how this sort of other worldly myth, like the efficient market hypothesis, the Black-Scholes risk model, and the benefits of unrestricted trade, have turned out in the past. When you crush the reality out of a model with a few key assumptions that allow you to obtain a license to do what you will, you often open a Pandora's Box.

The real shame is that an economic tragedy is not outside the plans of some of the worst of the country's elite. Crisis provides opportunity if one is powerful enough, positioned for it, and egotistically twisted enough to think that they can control the madness once it is unleashed. I suggested that the Bankers would make the country another 'offer that they think it cannot refuse' as they did in the manner of TARP. The so called fiscal cliff may be the wrapping paper for it." ..
..
and more here ...
29 November 2012
Hyperinflation and the Pernicious Myth of Modern Monetary Theory: Dollar Vigilantes
.
http://jessescrossroadscafe.blogspot.com/2012/11/the-pernicious-myth-of-...

Fri, 11/30/2012 - 07:25 | 3023075 negative rates
negative rates's picture

A regulator is no regulator at all, if they can't find their liquidy based assets.

When you say"  Herein lies the problem, however: the Basel III regulators have stubbornly held to the view that AAA-government securities constitute the bulk of those high quality assets, even as the rest of the financial world increasingly realizes they are anything but that."

That is an understatement, you are now trusting a person who, behind closed doors, has already committed to stabbing you in the back, if you are not the one to know where the liquid assets are. It's the ultimate ponzi, because over 99.99999999999% of the population contributes to the kitty, but only a choosen few have access to the funds they collect. Smartin up people, do not trust your financial people, you were able to make enough to invest, invest it yourself.


Fri, 11/30/2012 - 07:50 | 3023101 Moe Howard
Moe Howard's picture

Gold is the solution to my personal banking crisis. I have become my own central bank. I convert FRNs to Gold as quickly as I can, as it comes in, minus living expenses.

My balance sheet is growing. Zero counter party risk.

Zero debt. 

I have never felt more free in my life. 

 

Fri, 11/30/2012 - 07:52 | 3023103 hawk nation
hawk nation's picture

To allow gold to hold a tier one asset base in the usa may start a run on gold and prevent further manipulation of prices

Although it may be in the banks best interest to hold gold it is not in the governments best interest so it will be intersting to see how this plays out 

Fri, 11/30/2012 - 08:00 | 3023112 blindman
blindman's picture

nothing can fix the master-slave, fraudulent,
paradigm transcribed into law by the master class;
nothing but extinction of the paradigm. if it lives
on it has it's structure and demands and it will
function as designed, consuming the victims on both
sides.
only music can fix it, real music, not the crap
they sell as music. so be on the look out for
real music i say ....
good mourn ing.

Fri, 11/30/2012 - 10:42 | 3023469 shovelhead
shovelhead's picture

Exactly so.

Only Trololol Guy and polyester suits can save us now.

Fri, 11/30/2012 - 17:39 | 3025091 blindman
blindman's picture

http://www.youtube.com/watch?v=t6FUR_nhGX8
.
if johnny carson was a singer, there ya' go !
but seriously folks ....

Fri, 11/30/2012 - 08:16 | 3023131 blindman
blindman's picture

[KR373] Keiser Report: Hermaphrodite Banking and ‘Angel’ Capitalists

Posted on November 29, 2012 by stacyherbert
http://maxkeiser.com/2012/11/29/kr373-keiser-report-hermaphrodite-bankin...
.
"We welcome Mark Carney to the City of London freak show at which Max predicts that Carney will play the bearded hermaphrodite who devalues the pound by 25 percent and yet only manages to introduce an ice age of economic growth." ...s.h.

Fri, 11/30/2012 - 09:04 | 3023182 Sandmann
Sandmann's picture

Interesting as the Exchange Rate is a matter for The Treasury and not the Bank so I suspect Carney is going to find life less comfortable than in Ottawa

Fri, 11/30/2012 - 09:16 | 3023204 blindman
blindman's picture

extreme discomfort coming right up is
my humble guess.

Fri, 11/30/2012 - 08:47 | 3023164 blindman
blindman's picture

more jca....
" “The man who is admired for the ingenuity of his larceny is almost always rediscovering some earlier form of fraud. The basic forms are all known, have all been practiced. The manners of capitalism improve. The morals may not.”

John Kenneth Galbraith, The Age of Uncertainty

"Gentlemen! I too have been a close observer of the doings of the Bank of the United States. I have had men watching you for a long time, and am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country.

When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin!

Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I have determined to rout you out, and by the Eternal, (bringing his fist down on the table) I will rout you out."

Andrew Jackson, Andrew Jackson and the Bank of the United States (1928) by Stan V. Henkels

"Do not forget that every people deserves the regime it is willing to endure!

Please make as many copies of this leaflet as you can and distribute them.

The White Rose, First Leaflet, Munich, 1942"
..
from same link above...
.
Carolina Cocolate Drops: Snowden's Jig
.
http://www.youtube.com/watch?v=nliiRDmBbEQ

Fri, 11/30/2012 - 08:48 | 3023165 Quinvarius
Quinvarius's picture

Gold is the only answer, as it has always been.  They need to spread it around and then ram it up to where it belongs so it can serve as collateral.  The market is in the process of doing this on its own.  A few ignorant bankers trying to protect massively underwater shorts from destroying them is all that temporarily stands in the way.

Fri, 11/30/2012 - 09:04 | 3023181 blindman
blindman's picture

http://www.youtube.com/watch?v=nliiRDmBbEQ
.
lesson in american music, carolina chocolate
drops.

Fri, 11/30/2012 - 10:01 | 3023342 sessinpo
sessinpo's picture

And the continued fallacy of supposed financial experts continue.

 

While Eric Sprott makes some interesting points as do many authors, they fail to address the real problem. That problem is having various dubious institutions and governments trying to dictate the fair value of such things as money or PMs. A total conflict of interest that is always manipulated and imbalanced because it actually distorts what the real price discovery should be through free markets.

 

So I give Eric Sprott a thumbs down. I know that may seem harsh, but quite frankly, I'm getting tired of supposed credible authors that can't even address the real problem but only focus on the symptoms. If Eric Sprott had any notion of a solution, then the article would be about how Basel shouldn't even exist just like the FRB and other worldly financial institutions.

Fri, 11/30/2012 - 10:55 | 3023530 tradewithdave
tradewithdave's picture

If gold is the solution to the banking crisis, then is Vector Gold (bringing future value of in-ground reserves into the present value calculation) the solution to the crisis of confidence in fiat?  How about a component of economic justice for the reset?  It could be an in-ground jubilee... you're rich!!

 

http://tradewithdave.com/?p=13884

 

 

Fri, 11/30/2012 - 12:36 | 3023918 Bicycle Repairman
Bicycle Repairman's picture

Given the current state of the banks, what can we say about Basels I & II?  Utter failure comes to mind.  Piling in twice as many worthless bonds will not improve things, either.

Until gold is required for these banks, they are just spinning their wheels.

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