Things That Make You Go Hmmm... Like Gold Bullion, Gordon Brown, & A Growling Bundesbank

Tyler Durden's picture

2013 was an absolutely seismic year for gold, but, as Grant Williams details in his latest letter, the way in which the tectonic plates shifted has yet to be fully understood. Simply put, the gold in every central bank's possession around the world is the property of the citizens of that country - not of the incumbent politicians or central bankers. Consequently, if the people want it audited, there shouldn't be any reason to say no ... unless... Williams firmly believes that in the years to come, when we look back at the great game being played in gold, we will pinpoint January 16, 2013, as the day when it all began to unravel - the day the Bundesbank blinked and demanded its gold...

"It was probably a mistake to allow gold to rise so high."
– Paul Volcker

After a run-up to a spike-high of $415.50 on February 2, 1996, gold began to fall. It fell fairly quickly at first, losing 3% in six trading sessions; and then the decline steadied for a while but remained consistent — until, around the end of the calendar year, gold suddenly and inexplicably spiked straight down. By the end of 1996, it had lost 11% of its value.

As 1996 turned into 1997 the price continued to fall; and the new year saw several inexplicable downdrafts of considerable size and alarming speed which, by the time the dust had settled at midnight on December 31st, 1997, had cut the value of an ounce of gold by almost a quarter.

Gold market watchers were baffled at the continued weakness in their beloved metal. They bemoaned their bad fortune and pleaded with the gods above, but neither activity made any difference — the price continued to fall. (Sound familiar?)

"What a year this has been for gold,

 

"The price of the yellow metal fell almost 30% from its peak at the end of August a year earlier, to bombed-out lows amidst a wall of selling which included several very sharp and somewhat counterintuitive selloffs, including violent plunges in both the April-May time frame and again into year-end.

 

"Throughout the year, the spectre of manipulation was never far from the minds of all those involved in the gold market, whether they were crying 'foul' or asserting that, of course, there was no manipulation whatsoever and that those who suggested there might be were nothing more than conspiracy theorists, kooks, and whackos.

 

"The main suspects at the heart of the conspiracy theories were, naturally, the bullion banks and the central banks.

 

"The bullion banks, of course, have the eternal motive: profit; but what possible reason could central banks have for suppressing the price? None whatsoever, of course. The gold market is too small and too inconsequential for them to take an interest.

 

"And yet, rumours abounded that the bullion banks were in dire trouble and that a rising gold price could send one or more of them over the edge and into insolvency as a scramble for physical metal exposed massive short positions that had grown out of a fractional-reserve-based lending system backed (if not explicitly, then certainly complicitly) by central banks..."

Now THAT, you may well have thought, was the heart-racking, pulse-pounding introduction to my year-end look at the gold market. No preamble, no carefully constructed narrative to entice you into my latest little web, just BOOM! Straight into it.

And every word of the above makes sense based upon what we've seen happen in the past twelve months in the topsy-turvy world of element 79, which holds down the spot in the periodic table just after platinum and just before mercury.

But of course, nothing is what it seems when we are discussing gold.

That words above are the intro to the year-end review of gold that I would have written in 1999 ... had I been doing such things back then.

2013 was, in many ways, a case of been there, done that; and to understand what is happening today, it is extremely instructive to go back to 1999 and reexamine some very strange goings on at the UK Treasury, AIG, Rothschild, Goldman Sachs, and Number 11 Downing Street.

(Cue dreamy harp music.)

The chart of the gold price between February 1996 and August 1999 (above)  will look eerily familiar to anybody who follows the gold market closely; and for those who don't, just stick around and I'll show you what you've been missing.

...

2013 was an absolutely seismic year for gold, but the way in which the tectonic plates shifted has yet to be fully understood.

I firmly believe that in the years to come, when we look back at the great game being played in gold, we will pinpoint January 16, 2013, as the day when it all began to unravel.

That day, the day the Bundesbank blinked and demanded its bullion, will be shown to be the beginning of the end of the gold price suppression scheme by the world's central banks; and then gold will go on to trade much, much higher.

The evidence of suppression is everywhere, though most refuse to believe their elected officials are capable of such subterfuge. However, the recent numerous scandals in the financial world are slowly forcing people to realize that anything and everything can be manipulated.

Libor, mortgage rates, FX — all were shown to be rigged markets, but NONE of them have the importance that gold has at the centre of the financial universe, yet all of them are far bigger markets than gold and therefore much harder to rig.

Gold is a manipulated market. Period.

2013 was the year that manipulation finally began to unravel.

2014? Well now, THIS could be the year that true price discovery begins in the gold market. If that turns out to be the case, it will be driven by a scramble to perfect ownership of physical gold; and to do that you will be forced to pay a lot more than $1247/oz.

Count on it...

TTMYGH_20_Jan_2014

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Ignatius's picture

"The gold belongs to the people..."

'The People' didn't want the bank bailouts either.  How did that work out?

DoChenRollingBearing's picture

The tectonic plates have not stopped moving, and we will need even more time to interpret what has happened (and what will happen in the near-ish future).

Nothing is written in stone about gold just yet.  But the +/- 6000 year history of humanity actively assigning high value to gold speaks for itself.

Old ideas are usually better than new ones.  Old ideas have withstood the test of time.  Many ancient ideas are with us still.

philipat's picture

And yersterday's (Latest) PM smackdown could have been predicted and was right on cue. Quiet markets because of the US holiday and the imminent First Delivery notices against the (Large delivery) February Comex contract suggested this would take place. A Comex default would be, well, quite embarassing so we can expect further efforts to supress the price and discourage physical deliveries to continue over the next week.

zaphod's picture

Despite the draw down in physical stock, Germany only managed to get 5 tons out of the US. Where do you think the rest went?

DoChenRollingBearing's picture

We do not know the terms and conditions of the agreement sending Germany's gold back.  That value is some 500,000 times as much as a BIG bearing order is for us.  EVERYTHING in our bearing orders is either documented by terms & conditions, or else is part of customary practices in international trade.

Specifically re your question, I doubt many people know...

Stuart's picture

http://www.glennbeck.com/2014/01/09/what-really-happened-to-the-german-g...

 

watch this.  Not generally a G Beck fan but he pretty much nails it here.   There is no gold and this whole takedown is to bailout the banks who were short just like G. Brown did. 

DoChenRollingBearing's picture

 

 

OK, I will watch that, I am OK w/ Glenn Beck.

You and the ZH community might be interested in this as well:

Bron Suchecki is an expert on gold, he is a high level guy with The Perth Mint, he also writes his own blog on his own time.  While Bron is very mainstream (non-conspiratorial), and he has his disagreements with FOFOA, most of what he writes is just plain old good common sense.  The first two articles at Bron's blog below are in insider's (probable) knowledge of why Germany does not appear upset by slow gold delivery.  While Bron's comments are only somewhat parallel to my remarks about "terms and conditions", they do mirror them in one important way: we do not know what is in the agreement between the Bundesbank and the Fed:

http://goldchat.blogspot.com/

Midas's picture

I bet the Bundesbank spends more time worrying than the Central Bank of DoChenRollingBearing does.

DoChenRollingBearing's picture

Midas, that would likely be a good bet.

zhandax's picture

Let's add another layer of complexity on top of that.  How much gold could a 1938 destroyer carry?  Several of you, I am sure, can remember the story from a few years ago about the Italian bearer-bond border bust (damn, is that a mouthful).  Digging through the sludge, the story seems that seven destroyers full of ancient Chinese gold was put on deposit with the fed in the late 30's in return for 60-year bearer bonds in distinctive boxes to keep it out of the hands of the invading Japanese.  These bonds were defaulted on in 1998.  The Chinese sued in World Court, and it was ruled that the bonds must be redeemed on Sept 11, 2001.  Oh, and the gold in question was held in the vaults in the WTC. 

Let's see, who has been getting gold deliveries?  China?  yup.  Germany?  Not so much.  Now this whole story is murkier than East River water, but the stench usually leads back to the bodies.  Just because there is damn little reason to wear a tin-foil hat these days, with everything being either admitted or proven, what if this whole tax and treaty supported effort to outsource jobs to China was just to arrange repayment of those bonds?  However it transpired, something is rotten and it ain't in Denmark.

Occident Mortal's picture

That all sounds rather contrived.

 

 

I much prefer the simple theory that China has ambitions and /or scenario planning for pegging the Yuan to gold.

GetZeeGold's picture

 

 

So what are they doing with almost 1 trillion per year in QE again?

 

So I heard someone say the economy and everything was great cause the DOW was at 16500........yeah.......about that.

 

If you want to buy a few ounces of gold you might find it....but if you need to acquire tons of the stuff....forget about it.....cause it's just not there.

 

Don't shoot the messenger....I'm just passing on what I've been told.

Squid-puppets a-go-go's picture

i honestly dont reckon that - having the balls to default on those purported bonds - the US would give a fuck about 'making good' of any indebtedness to china. World court has very little clout. Sorry.

But intriguing info eniway dude.

regardless, problem with this article is he reckons that the manipulation to suppress prices thus far will give way to 'price discovery' perhaps in 2014

I think gold prices will go much higher this year - perhaps to $3k. But the big moves up are going to be from manipulation, too - not price discovery.

Moe Howard's picture

Do you have a link to the World Court ruling? Thanks.

outamyeffinway's picture

So there should be records of this court case..... Links?

OceanX's picture

" That value is some 500,000 times as much as a BIG bearing order is for us.  EVERYTHING in our bearing orders is either documented by terms & conditions,"

That's true, but you are purchasing a product correct?

Usually, when you are asking for something you own, to be returned, you are not so encumbered with complex, "Terms and Conditions" 

Buy why are people to ready to make excuses?   This all started when the Germans merely asked to see their gold.  It was only after they were denied visual inspection that they decided they should just bring it back home.

OceanX's picture

" That value is some 500,000 times as much as a BIG bearing order is for us.  EVERYTHING in our bearing orders is either documented by terms & conditions,"

That's true, but you are purchasing a product correct?

Usually, when you are asking for something you own, to be returned, you are not so encumbered with complex, "Terms and Conditions" 

Buy why are people to ready to make excuses?   This all started when the Germans merely asked to see their gold.  It was only after they were denied visual inspection that they decided they should just bring it back home.

LawsofPhysics's picture

When fraud is the status quo, possession is the law.  If you can't physically touch "it", you don't "own" it.

Any questions?

teolawki's picture

And it's a great deal more difficult to be deprived of property in your direct physical possession.

BanksterSlayer's picture

Alasdair Macleod, January 20, 2014

 

"Timing for a schism between central banks over gold could hardly be worse for them. Evidence has been accumulating at an accelerating pace in 2013 of the large scale of leasing transactions by Western central banks, potentially leaving them with very little monetary gold in their vaults. Asian buyers have turned an estimated eighty per cent of this gold into jewelry, and it cannot be returned. Indeed, the circumstantial evidence suggests that with or without the Bundesbank’s knowledge, this may have been the fate of Germany’s gold."

 

http://www.gold-eagle.com/article/bafin-enquiry-deutsche-bank

Moe Howard's picture

They had to steal the gold of Libya to pay Chavez. Who are they going to topple and steal the gold from to pay Germany?

RealityCheque's picture

I nominate David Cameron. Because...why the fuck not.

StychoKiller's picture

Wang Li bought a sixpack of Tsing Tao!

ZerOhead's picture

The remaining undelivered 700 tons of German gold is worth around $25 billion dollars or so at todays market price or about 10 days worth of the Federal Reserves ongoing QEternity.

So Angie Baybay... grow some balls... pick up the phone... yes THAT phone... place an order on the CRIMEX for 7,000 tons and request delivery next month.

Or you could just go to the spot market and pick it up yourself and send the Federal Reserve the bill...

zaphod's picture

Remember, no one asks for delivery. (Think of it as a Gentlemen's agreement between banks/nations)

ZerOhead's picture

And I always thought gentlemen didn't listen to other gentlemens conversations...

logicalman's picture

Tells you how many gentlemen are employed by NSA, don't you think?

Chief KnocAHoma's picture

It is worth $25-billion until they admit the gold is pledged, repledged, sold or stolen. Then what is it worth. No a big conspiracy believer, but do some reading. Nixon closed the window for a reason. If gold is a worthless relic... why do that? Why not keep it open and let the worthless relic fly out the window?

The lies began in 1913 and have become more complex and deeper ever since. Did you ever lie to your girlfriend? Then you had to tell another to cover your cover story. Then another to cover the cover story of your cover story.

Most here at The Hedge have very good common sense. So let me ask a question - Is it more likely short sighted pols have lied for their own benefit and empowerment, or do you really believe 60% of the people can take government $ without massive printing and fraud? Gold would have held back the massive printing and maybe too some progress, so we made our deal with devil. We wanted a fluid ever expanding economy. Only now we have discovered, something that can not continue forever... won't.

If the gold price was adjusted to reflect money in circulation, what would that figure be? What about to reflect all $ on all accounts including digital?

Something is not right - and the settlement is gona hurt like a bitch.

Cap Matifou's picture

Not gentleman's agreement, rather honor among thieves. You know how long that uses to last.

ebworthen's picture

Something tells me gunpowder will enter into this argument at one point or another.

The Wisp's picture

The Iraqi Oil Belongs to the Iraqi People..

  American Oil Belongs to Exxon.. ( George W. Bush ) /s

outamyeffinway's picture

"The People' didn't want the bank bailouts either.  How did that work out?"

 

They're more willing to use their guns, that's how.

donsluck's picture

More willing to BUY guns obviously. Hey, it's shopping! Use them? Not so much...

stant's picture

martin armstrong is now writing its time for gold, hardly a gold bug, just a fyi

Uber Vandal's picture

Keep in mind he was calling for $900 gold by May...... Last year.

He says many things. Something will stick, and he will be right.

philipat's picture

And Armstrong has also fallen for the US shale oil propganda. He believes that oil will be the salvation of the US and that the US will become the world's largest producer of oil, ahead of Saudi. Just as the MSM-fed propaganda wants the sheeple to belive as part of the general misinformation about economic recovery.

ZerOhead's picture

Yup... maybe for a couple of years at best...

BuddyEffed's picture

The only way the US becomes the worlds largest producer is if we add a few new states, like North and South Irax, West and East Arabia.

BooMushroom's picture

Or change some of the old ones:
Iwreck
Saudi Glassparkinglot
Iranfromthebomb
Ku-waitwheredidmycountrygo

TPTB have options...

disabledvet's picture

there was a tremendous demand explosion in the 90's...and yet here's the biggest price collapse of them all: http://faculty.winthrop.edu/stonebrakerr/book/oilprices.htm. It didn't reach the low of 6 bucks a barrel ala 1986...but ten bucks was pretty low...and lest we forget here was the biggest product launch outside of Windows 95:

http://en.wikipedia.org/wiki/Ford_F-Series_tenth_generation

hard to blame "Big Oil" but the collapse in fuel economy in the USA was dramatic.

http://www.cfr.org/world/katrina-oil-prices/p8834

http://www.forbes.com/sites/jamestaylor/2013/08/29/global-warmists-might...

hmmm. we now know there's a connection between Hurricane's and high oil prices...is there a connection between "collapsed energy prices and zero hurricanes" however?

Clearly "uncharted weather waters."

Muddy1's picture

Are you referring to Gerald Celente, by chance?

DavidPierre's picture

According to Professor William Black, the entire financial system is headed for an even bigger collapse. 

As a major warning sign, Professor Black points to Treasury Secretary Jack Lew’s complaint about no money for regulation in the recent budget deal.  Professor Black says,

“Jack Lew is the anti-canary in the coal mine because Lew has been gutting regulation for virtually all of his professional life. . . . Lew is saying, my God we’ve gone so far we’re going to cause the collapse of the system. . . . You know when Jack Lew keels over, you know that carbon monoxide has already killed everybody reasonable.”   

“The system is ungovernable . . . It has already largely imploded.”

http://usawatchdog.com/jp-morgans-frauds-are-epicunprecedented-in-world-...

DoChenRollingBearing's picture

All the more reason to GOTS...  Cash and gold are a pretty good combination if you have to pick just two assets.

Thank you for the link, I will go take a look.  One of these days it is going to blow.  Like a volcano (all at once) or like a gathering hurricane.

Get ready.  Get prepared.  Every way you can.  NO ONE knows how all of this will tuen out.

DavidPierre's picture

 

Mega default? They don't care!

Forbes has reported of a potential (probable?) "mega default" out of China. They even tell us "when", Jan. 31st and "who", China Credit Trust company.

http://www.forbes.com/sites/gordonchang/2014/01/19/mega-default-in-china-scheduled-for-january-31/ This is hardly "mega" anything as it's only in the $500 million ballpark...(the actual meat not even being a ham sandwich.)... but it is a "thread" that if pulled on hard enough or long enough could spread like an infection.

 

This debt (trust) came about as a loan to a coal company and the author speculates that 12% or there abouts is the interest rate... take a broader view.

The broader view being "this is China". Their economy is hugely leveraged and they have built, rebuilt and over built. They have even built entire cities that are empty. I'm not talking about sparsely populated, I'm talking about empty as in NO ONE lives there! Are they crazy? Or stupid?

No I don't think so, follow this through. They have accumulated stockpiles of copper, lead, zinc, etc. etc. not to mention gold...for free! They have built bridges, highways and even complete cities...for free! Free? Yes, I'll explain in a moment. They have worked, produced and "traded" to accumulate "dollars" over the last 10-15+ years at a pace not even seen by the U.S. in the late 1800's and early 1900's. It has been a marvel to watch. They have as I mentioned also accumulated gold. They have probably now accumulated a stack that rivals what the U.S. supposedly has (had). And yes, much of the building and "business" was performed (or funded) by the use of credit, crazy amounts of credit!

So how does this make them any better off than any other country in the world if their financial system collapses just as fast or even faster than the West? I believe that going all the way back to August 1971 that they "knew". They knew that when we went off of the gold standard the "end game" was then carved in stone. I believe that they completely knew where this would all end up...in a paper heap collapsed into a black hole of zero value. So what did they do? They "played the game".

They played the game and "helped" the U.S. go bankrupt by funding their debt needs. They also "built"...for their own future. You see, the Chinese look 100's of years to the future rather than to the next "quarter". I think that they fully knew that "when everything is worth nothing"...they would "have something". "Something" as in a brand new infrastructure. Infrastructure that the West can only marvel at. Who cares about the banking or financial system? Who cares if everything paper collapses..."we'll just start a new one"!

Do you see? They now have a modern country and it only took 10-15 years to build it (not to mention the small problem of poisonous smog). They knew that the financial system would ultimately come down so why should they go through a "re boot" to the system with rickety bridges and grass huts? Not only have they "modernized", they have also provided themselves with a place at the table...the HEAD of the table when it comes to currencies. They have in my opinion accumulated more gold than any other country in the world now has. They have created their own future and one that is bright because they have "money" (gold) while the West was "spending their past".

Will China just skate through a financial collapse...and one that may even start from an internal default? No, of course not but they are not looking at next year or the next 3-5 that it will take to pick up the pieces, they are looking out for generations to come! I have absolutely no idea "what" the event will be that turns the financial system upside down because there are just too many choices to pick from, I do suspect however that it will not be something "huge" and will be missed by most for several days. The Chinese however don't even care "what" it is because it doesn't matter. What matters is that their work is done, they have built infrastructure, modernized production, signed trade deals for the raw materials necessary for the future and accumulated "cash". Crazy or stupid? No, they have outsmarted the world while we watched...while they "helped us help them"! The last 10 or 15 years of work is viewed by the Chinese as virtually "free" when set alongside the next 100-200 years!

http://www.lemetropolecafe.com

new game's picture

pegged curency. gamed us at our own game. check mate!

Spitzer's picture

China has trade deficits with Germany and Germany's wages are higher then the US's

 

Savers will be savers

TheReplacement's picture

Let's make a simple deal with China, food for gold.

Enjoy the reset.

prains's picture

...how about air for gold?

Big Corked Boots's picture

Clean, drinkable water for gold?

These strategies will only go so far. The Amazon jungle will be a cornfield before the US can dig itself out of the hole bankers dug for us.

Villageidiot777's picture

GMO food for anything? Have you noticed chinese are buying farm land all over the world as fast as they can? The real question is, how is US going to feed its citizens in the future?