"The Chinese Don't Want Dollars Anymore, They Want Gold" - London's Gold Vaults Are Empty: This Is Why

Tyler Durden's picture

Today gold slid under $1200 per ounce, dropping to a level not seen in three years. Judging by the price action one would think that gold is not only overflowing from precious metal vaults everywhere, but can be found thrown away on the street, where nobody even bothers to pick it up. One would be wrong. In fact, as Bloomberg's Ken Goldman reports, "you could walk into a vault in London and they were packed to the rafter with gold, and the gold would trade from me to you to somebody else. You could walk into these vaults today and they are virtually empty. All that gold has been transferred out of London, 26 million ounces...." To find out where it has gone and why it is never coming back, watch the clip below (spoiler alert: listen for the line: "the Chinese don't want US dollars anymore, they want gold").

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matrix2012's picture

The Triffin Dilemma / Reserve Currency Paradox

 

The Triffin dilemma (or the Triffin paradox) is a theory that when a national currency also serves as an international reserve currency, there could be conflicts of interest between short-term domestic and long-term international economic objectives. This dilemma was first identified by Belgian-American economist Robert Triffin in the 1960s, who pointed out that the country whose currency foreign nations wish to hold (the global reserve currency) must be willing to supply the world with an extra supply of its currency to fulfill world demand for this 'reserve' currency (foreign exchange reserves) and thus cause a trade deficit

 

The use of a national currency (i.e. the U.S. dollar) as global reserve currency leads to a tension between national monetary policy and global monetary policy. This is reflected in fundamental imbalances in the balance of payments, specifically the current account: some goals require an overall flow of dollars out of the United States, while others require an overall flow of dollars in to the United States. Net currency inflows and outflows cannot both happen at once. 

 

The Triffin dilemma is usually used to articulate the problems with the U.S. dollar's role as the reserve currency under the Bretton Woods system, or more generally of using any national currency as an international reserve currency.

trader1's picture

Act I

Strauss-Kahn became the front runner in the race to become Managing Director of the IMF, with the support of the 27-nation European Union, the United States, China and most of Africa. On 28 September 2007, the International Monetary Fund's 24 executive directors selected him as the new managing director. Strauss-Kahn replaced Spain's Rodrigo Rato.[24] On 30 September 2007, Dominique Strauss-Kahn was formally named as the new head of the International Monetary Fund (IMF). The only other nominee was the Czech Josef Tošovský, a late candidate proposed by Russia. Strauss-Kahn said: "I am determined to pursue without delay the reforms needed for the IMF to make financial stability serve the international community, while fostering growth and employment".[25] Under Strauss-Kahn the IMF's pursuit of financial stability has included calls for a possible replacement of the dollar as the world's reserve currency. An IMF report from January 2011[26] called for a stronger role for special drawing rights (SDR) in order to stabilize the global financial system. According to the report, an expanded role for SDRs could help to stabilize the international monetary system. Furthermore, for most countries (except for those using the US dollar as their currency) there would be several advantages in switching the pricing of certain assets, such as oil and gold, from dollars to SDRs. For some commentators that amounts to a call for a "new world currency that would challenge the dominance of the dollar".[27]

In 2008, the IMF Board appointed an independent investigator following allegations that Strauss-Kahn had had an affair with a subordinate, Piroska Nagy, who was married at the time to economist Mario Blejer. Nagy alleged that Strauss-Kahn had used his position to coerce her into the affair.[28] She was later made redundant and Strauss-Kahn assisted her in getting a new job.[29] The IMF board issued the findings of the investigation; while noting that the affair was "regrettable and reflected a serious error of judgment on the part of the managing director", the board cleared Strauss-Kahn of harassment, favoritism or abuse of power, and indicated that he would remain in his post.[30][31] Strauss-Kahn issued a public apology for the affair. Le Journal du Dimanche dubbed him "le grand séducteur" (the Great Seducer).[32]

Strauss-Kahn made comments that could be perceived as critical of global financial actors, in an interview for a documentary about the late-2000s financial crisisInside Job (2010). He said he had attended a dinner organised by former Treasury Secretary Henry Paulson in which several CEOs of 'the biggest banks in the U.S' had admitted they (or perhaps bankers in general) were 'too greedy' and bore part of the responsibility for the crisis. They said the government "'should regulate more, because we are too greedy, we can't avoid it.'" Strauss-Kahn said he warned the officials of a number of departments of the U.S. government of an impending crisis. He also said: "At the end of the day, the poorest – as always – pay the most."[33]

Referring to his diplomatic efforts to secure IMF aid for Europe following the 2010 sovereign debt crisis, economist Simon Johnson described Strauss-Kahn as "Metternich with aBlackBerry".[34][35] In May 2011, referring to the IMF's change of heart in favour of progressive rather than neoliberal values, Joseph Stiglitz wrote that Strauss-Kahn had proved himself to be a "sagacious leader" of the institution.[36] Following Strauss-Kahn's arrest for sexual assault in New York, economist Eswar Prasad said that should he be forced to step down, the IMF "will find it hard to find as effective and skilful an advocate for keeping the institution central to the global monetary system".[34]

John Lipsky, the IMF’s second-in-command, was named acting Managing Director on 15 May 2011.[37]

Strauss-Kahn resigned from the IMF on 18 May 2011, after being arrested by NY police on 15 May over allegations of sexual assault.[38][39]

 

Act II

This past week, in a rather surprising attempt at public relations, new IMF head Christine Lagarde released an essay on the worldwide economic meltdown entitled “Global Action For A Global Recovery”:

http://blogs.reuters.com/great-debate/2011/09/26/global-action-for-global-recovery/

The gesture appears similar in nature to the Federal Reserve and Ben Bernanke’s sudden efforts to assuage negative public sentiment towards central banks using highly publicized media events designed to add a “human identity and touch” to the normally faceless and soulless global banking cartel. Giving Nosferatu a sentimental makeover while the country struggles entrapped by his icy bear-hug of death is no easy task; it takes finesse. Something which neither Ben Bernanke nor Christine Lagarde seems to have.

For those who theorized that Largarde’s ascension to IMF mascot was due to a nefarious plot meant to supplant former head Strauss-Kahn because of his overt pursuit of the destruction of the U.S. dollar, I would like to point out that though we have not heard much from Lagarde so far, what we have heard has been almost directly in line with the policies of Kahn, and the end of the dollar’s world reserve status is still very much on the menu for the IMF. All in all, it is highly probable that Kahn is just another perverted sadist (like most of the banking elite), and that the IMF had to move fast to nominate a woman to replace him before the words “banker” and “rapist” became interchangeable (as if they weren’t already). The overhaul was purely cosmetic. The threat that the IMF presents to our national sovereignty and financial future continues. Thus, a fresh propaganda campaign is clearly in order…

 

Act III

http://hbr.org/2013/11/i-try-to-spark-new-ideas

We’re at a phase now when many companies are doing well but are not adding jobs. How do we get an expansion that also creates employment?
That’s a very important topic. There is a fear out there that we’re seeing the growth of a “robot” economy—that today’s growth is capital- and technology-intensive but not job-intensive.

Can the IMF do something to, say, stimulate private banks to lend to businesses?
We can advocate, we can exhort—and we do that in our reports—and we can identify where there are bottlenecks and where monetary transmission does not operate properly. But we don’t have the tools to make it happen. That’s up to central banks, governments, and regulators.

What do you think it would take for the U.S. to regain its competitiveness?
To me, competitiveness is delivered through either pricing or quality—and by that I mean a proper mix of technology, invention, and brands. One thing that would help is continued innovation, an area that has been extremely beneficial to U.S. competitiveness. My advice is to never give up on education and to never give up on the development of the sciences, because that’s where a lot of productivity and competitiveness come from.

Are you concerned that China’s economy may be running into trouble?
The key questions for China are: Will it move from the middle-income stage and become an advanced economy, and will it include people in a sufficiently cohesive way that the social fabric holds? There are also concerns about credit growth. Can the country keep a leash on shadow banking? Can it take on corruption? But I have been dealing with China for the past 20 years, and I have been amazed at how its leadership has been able to adjust.

Are there things the world’s leaders need to do to fix the capitalist system? For example, reduce the focus on short-term results?
Yes. Capitalism tends to move from crisis to crisis. The same goes for governments. If the next election is only two years away, why should anyone worry about medium-term objectives? It’s a big problem.

Are there any so-called intractable problems you’d like to solve during your term?
I would like to see much better synchronization and collaboration among global financial and economic decision makers. If all governments could extract themselves from their domestic bases and look at the long horizon of bigger issues, that would be a dream.

 

Act IV 

???

TheObsoleteMan's picture

The gold price isn't set by the market, that is the Achilles heel of gold. It is "fixed" {what a proper word} everyday, and paper shorted into the ground by the establishment whenever they want to. My question is: Who is going to change or even challenge this paradigm?  Who will wrest away control from the market mafia? The markets have been captured. They no longer trade in a free and reasonable way. That is what Bush meant when he said to effect:"We have to change the market to save it". Save it from what? It has suffered a much worse fate.

fijisailor's picture

When deceit, lies and corruption are rampant throughout the system it will collapse on itself like the USSR.  Gold will then not be manipulated.

Pareto's picture

If you like your gold.....you can keep your gold.

CHX's picture

If you want our gold, you can have our gold. There, fixed it.

Pareto's picture

+1 yes you did.  more accurate.

Obama_4_Dictator's picture

Damn it when is the 10 Year going to skyrocket?  I want this system to collapse already.....I can't take it anymore - I'm slowly drowning by doing the right things, ie, saving, investing in sound money, not spending, renting - while I see other friends make huge amounts of money by being brainwashed - fuck this. Now I know why that guy in Dallas flew his plane into that IRS building, not that I condone that kind of behaviour, but I can see how it can drive one to madness....

webspin's picture

You want the system to collapse?!? With faulty logic like that it's no wonder you missed the greatest bull run in assests in all of American history. If the system did "fall apart" you'd be eaten alive by those of average abilities.

Obama_4_Dictator's picture

Yes, I want the dollar to collapse.  I have invested in assets - they keep getting beat down though - I started buying at 12 an oz.  I'm at cost average, so it's no big deal - I just think americans deserve to live like the citizens of third world countries - and if I have to suffer along with them, then so be it -  I want americans to relaize that we are not better than the rest of the world.  We can't keep exporting inflation.

chindit13's picture

Tough not to be King, eh?  Tough not to get everything you "want".  Tough to be wrong....er....early.

While you're waiting for the collapse, why not take a moment to look at the growth in China's money supply and do a comparison with the US.  Why not take a look at the growth in Chinese debt and its stock of assets, too.  Take a look at the total system lending in the US since QE began, then reconsider how "money" is created in a fractional reserve system.  Just for kicks, study China's vertically integrated loss leader, otherwise known as their export economy.  See how that is reflected in the SSE chart since Autumn 2007.  Take a moment to consider how and why China creates yuan, and how that ties in with their vertically integrated loss making machine.  Oh, and check the actual figures for China's purchases of USTs and note they actually do seem to want the dollar (but they don't like the yen as much as they did for years).  China has Primary Dealer status, you know.  When you're done with China and figuring what they have done to themselves, take a look at Japan and see what they've done (to themselves).  After that just randomly pick a spot on the map and see what the government there has been up to.  Turkey? India?  Indonesia?  Actually, it's probably better to grab an atlas and start at "A".

Last thing....mark to market every day.  Acquisition cost is just for the ego.

GrinandBearit's picture

Soon to be the greatest collapse in American history.

PTR's picture

It's easier to deal with with circumstances that are known (and in motion) than unknown and yet to pass (if they even do.) 

 

"If you see ten troubles coming down the road, you can be sure that nine will run into the ditch before they reach you." - Calvin Coolidge

GrinandBearit's picture

There is still one more thing you can do... move into your parents basement... no rent means more fiat to trade for Au!  :o)

Obama_4_Dictator's picture

I don't think my Wife would like that, plus  Iwould have to move to Cali from Texas....that's jsut not in the cards....got some stuff they don't like here in TX that I can't bring legally to Cali

ManWithaPlan's picture

Franz Ferdinand (18 December 1863 – 28 June 1914)

sixbilliondollarman's picture

hmmm...China likes Gold, Nuclear submarines & new aircraft carriers.

I think they are starting to like Hawaii too.

 

http://www.youtube.com/watch?v=vrIs-kiPEkw

sixbilliondollarman's picture

hmmm...China likes Gold, Nuclear submarines & new aircraft carriers.

I think they are starting to like Hawaii too.

 

http://www.youtube.com/watch?v=vrIs-kiPEkw

PTR's picture

I wouldn't be surprised if my mortgage deed is already directly in Chinese hands via securitization.

Disturbed, yes.  Surprised, no.

novictim's picture

"...Gold slid under $1200 per ounce..."

 

                                       *giggle*

novictim's picture

Best line from the gold clip:

                                                                 "...stocks have really underperformed the market..."

 

                                                                      LMFAO

Debugas's picture

who cares about physical ? paper market is multiple times bigger

Al Huxley's picture

That's the spirit - paper market is what really counts, physical metal's just a byproduct of the all-important paper, and demand for paper gold is at all-time lows.  If physical runs out it won't really affect the paper market - maybe just make it more efficient because storage costs will drop.

BigJim's picture

Get with the program Al - if there's a problem, they'll just print more!

Agstacker's picture

I have a fantastic Unobtanium ETF just waiting for you to invest in!

falak pema's picture

OT / An interesting approach to the NEW ALgorithmic age of controlled and policed Cyberspace.

A new take on the Internet age  by MIT technology review published by researcher Evegeny Morozov : Imagine if Big business and Big state saw this coming and planned accordingly.

1° The Big corporations built up their models to capture clients based on publicity  meme.

2° Big State built up the Internet to create an information cum security network.

It was all planned to be a control and anticipate model  for predicting user behaviour patterns RIGHT FROM INCEPTION based on studying user behaviour in order to anticipate trends from BOTH perspectives BASED on the same data base; aka PRism type meta bank.

How to exploit it ? Based on sophisticated Algorithms/expert systems and super computer number crunching capacity. Al Gore's secret world? 

THis would mean as from inception aka 1995, the two models were piloted by a JOINT NSA/Corporate think tank, Similar to RAND CORP think tank for MIC development in Cold War age.

So companies like Aol and Microsoft and Yahoo and Google and Apple and Intel could have pooled resources on different projects with the NSA/think tanks  ( AD Little/ Booz Allen) to build up their own business models that talked to the NSA data based one; right from the beginning.

Just like in big finance HFT algorithm development the government agencies and Corporates SHOED in the ALgorithmic age to automate analysis and to preempt or forward guide consumer/blogger behaviour patterns based on model feedback loops.

Awesome forward planning if true, to PREDICT BEHAVIOUR PATTERNS OF USERS IN TERMS OF PURCHASING AND OPINION FORMULATION segmentation. 

This would explain  why we are here in Facebook world, Google world and JPM world. It was all backed up by a state cum corporate modelling program based on expert systems and automation.

Now the Oligarchy can play chess with us using their BOT programs on all fronts! 

WOW! Just wow. Our Privacy and our freedom to express ourselves is check mated by Big Brother; corporate cum state octopussy.

 

trader1's picture

by design or by accident?

both?

BigJim's picture

 RSA, now a subsidiary of computer storage giant EMC Corp, urged customers to stop using the NSA formula after the Snowden disclosures revealed its weakness.

I can't see them growing their customer base from here on, can you?

seek's picture

Nope. Fuck them, they deserve it.

BigJim's picture

Karma's a bitch :-)

falak pema's picture

this story dovetails well with my post on the MIT study

matrix2012's picture

And because the world's largest news dispenser, Reuters, carries this exclusive little secret, I guess it has been doing something good for the masses.

The world is really perplexing now when the Snowden's revelations are pushed to the frontlines by Corporate Media.

 

Now should we regard the MSM as the saviors that are doing good for the betterness of society?

 

How to grasp this seemingly contradictory phenomenon on the surface?

 

Welcome to an enlightened Matrix World :-)

 

* Yes, falak pema's explanation fits the senses of the intriguing learning mind in trying to decrypt the labyrinth, the worldwide web

Constitutional Republic's picture

Wise Chinese. However, they do have a Rothschild-led central bank, so that will be a curse upon them, as it has been in every other place.

End the Fed, and its private shareholders' jackboot on the entire world; born in Germany, expanded from Britain; still looting the world, with the EUSSR as its latest incarnation.

 The Internationale; the woolf in sheep's clothing.

tip e. canoe's picture

they do have a Rothschild-led central bank

that's a new one and i thought i knew all the good tinfoil.

any evidence to back up the statement?

Constitutional Republic's picture

The Bank of China bought a 20 percent stake in La Compagnie Financiere Edmond de Rothschild (LCFR) for 236.3 million euros (US$340 million) in 2008.

There's much more evidence involving China's central bank structure since then if you can be bothered to do your own homework instead of mither others, boy. Pay attention to the word 'structure'.

Slowly, slowly, catchy monkey. The Rothschild-led central bank cartel ensnare every nation, by hook or crook. That is their modus operandi, as an organized crime syndicate.

End the Fed.

trader1's picture

i thought i heard it all, until your post.  

so the zionist, jewish banker cabal is actually held captive by the chinese?  

 

$340 million, 20% stake implies an enterprise value of ~ $1.7 billion.  

 

that's chump change on the mulit-national corporation stage.

 

only anti-semitics (and easily manipulated po' white folk) believe your kind of clap-trap.

 

 

 

tip e. canoe's picture

ah yes, silly me

http://www.chinadaily.com.cn/bizchina/2008-09/19/content_7043047.htm

sorry, but BOC <> PBOC, you're one P short of a central bank there bub.

if you actually read the article, looks like the lizard kings made the deal to sell their "investment products" amongst the nouveau-riche.    sort of like Blackrock, which if you ever bothered to go to China vs. talking out your ass about a place you know very little about, has billboards plastered all over the major cities, promising 8%+ on their shiny vehicles.

if the Chinese want to be suckers enough to buy that crap, then so be it.  if i were as conspiracy-minded as you, i would actually be looking into how many western institutions the Chinese have extracted a pound of flesh from in return for access and ask yourself why that is.

+1 for the use of the word "mither" though.   that's the first time I've heard that word used outside of Downton Abbey.  you a fan of the show?   have you caught the Xmas episode yet?   drama, drama, drama...

 

 

tony wilson's picture

the british especially the scotch yes i said scotch eye nose it is a drink but they are a fucking piss shower anyways the scots  the scotch nose about gold.

browns bottom

gordon fucking child rapist brown nose about gold cos he sold all the uk's to lord fucking edwyn rothschild at a real nice man being blackmailed price.

yo gay blair and the scotch rapist what a anal pairing.

browns bottom yuk

Atomizer's picture

Hello Tony, our thought to you is FIAT. Fix it again Tony. Despite our cultural issues lets work together. I hope you realise Brussels is aiming to dominate the show.  Merry Christmas and Happy New Year to you and your family. :)

Atomizer's picture

Hello ZH gang. Hope all is well. Packing to go north for Christmas. I will be pissing and moaning for the first couple of days, Mrs. Atomizer decision. Anyhow, do you remember this link a few weeks back?

 

Global Financial Warfare Simulation

Play this during watching above link. Apple users, sorry you cannot multitask your device to experience this. Open both windows first. Click natural first, then start global next. Funny as shit.

The Folk Implosion - Natural One

tip e. canoe's picture

nice remix.   love the song.   Rickards is such a douche.

enjoy the holidays.

Atomizer's picture

Agreed, Rickards likes to spin. However... there are solid packets of information if you listened closely. Merry Christmas as well. Closing down computer and heading north. According to UnAccuWeather update, it will be between 14 to 24 degree F on Christmas Eve.

I will be shivering cold and barking how I don’t miss this climate during winter. Probably chime in, where’s my fucking global warming that I was promised! ;.)

Signing off

falak pema's picture

That global financial war simulation is an awesome intellectual exercise for predicting how reality will catch up with fiction.

The guy, a CIA appartchick apparently, says max. THREE years for Peak cheap Money (feeding Chinese Gold plays) and PEAK cheap Energy (feeding oil price hike) to hit the FAN in monetary armageddon.

As I have said, based on ZH's brilliant analysis since all these years, in this financial CB experiment of unimaginable crony first world banking collusion, we are now in never never land hopium to avoid the D word : world DEFLATION to occur as result of uncontrollable inflation pains precisely because of QE infinity printing...

And, these two asymptotes will be met when the Oligarchy scam thieves fall out.

It ended Pax Britannica in the same way with WWI and WW2. Those imperial colonial thieves fell out, their model of Metternich-Castlereagh concoction lasted 100 years; Dear Henry's role models of PAx Americana age. 

It'll do the same to PAx Amerciana hegemony and this fiat pumping of Reaganista doctrine has built the NWO oligarchy world all fed on reserve FIRE asset steroid pumping.

History and human nature just keep repeating. Reaganomics hubristic America now like Charles V's universal empire in Counter Reform wars that bled it dry.  (Just beating on my usual drum and I apologise for repetition ad nauseam, as the world keeps kicking me in the gut with its incredible divulgation of this ongoing conspiracy of predatory mindset that unfurls like the Spanish Inquisition.) 

(I assumed back in 2011 when ZH started opening my eyes to the incredible MATH of WS asset pumping that it would be around 2017...when tipping point would be reached. When all the juice of QE would be used up...)

This simulation says three more years...which makes it something around 2016/2017 for the great D word to implose on us...

Well, enjoy your Xmas turkey until then! The sign of the times will add a particular flavour to it which stimulates my love for living; all the while keeping this hidden world distant from that festive occastion.

Merry Xmas all!

(And, I hope deep down in me that he and I and ZH are wrong and miracles do occur and Santa comes down that chimney, lol, we stay morons in pathos).

hootowl's picture

When couched in arcane and nihilistic allusions, your comments are nothing but wasted linguistic bullshit.

falak pema's picture

agreed on form but quizzical about substance. As my final remark said. Pray illuminate me on the nihilistic allusion of my concoction.

stiler's picture

If anyone is in the mood for a couple of really good sermons on the leisurely weekend, the first is by a Hawaiian Arab [?] and the second by a Jewish Christian (if you don't like, don't watch) the first is a Youtube, the second an audio which is pretty challenging. Warning.

http://youtu.be/AUWZFZsd9rg

http://www.blogtalkradio.com/rapturereadyradio/2013/12/15/grounded-in-th...

 

Merry Christmas!

Stilus