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Ecuador Transfers Half Its Gold Reserves To Goldman Sachs In Exchange For "Liquidity"

Tyler Durden's picture


Submitted by Mike Krieger of Liberty Blitzkrieg blog,

This is a great example of how the game works. In a world in which every government on earth needs “liquidity” to survive, and the primary goal of every government is and always has been survival (the retention of arbitrary power at all costs), the provider of liquidity is king. So what is liquidity and who provides it?

In the current financial system (post Bretton Woods), the primary engine of global liquidity is the U.S. dollar and dollar based assets generally as a result of  its reserve currency status. Ever since Nixon defaulted on the U.S. dollar’s gold backing in 1971, the creation of this “liquidity” has zero restrictions whatsoever and is merely based on the whims and desires of the central planners in chief, i.e., the Federal Reserve. As the primary creator of the liquidity that every government on earth needs to survive, the Federal Reserve is thus the most powerful player globally in not only economic, but also geopolitical affairs.

The example of the so-called sovereign nation of Ecuador relinquishing its gold reserves to Goldman Sachs for “liquidity” which can be conjured up by the Fed on a whim and at zero cost tells you all you need to know about how the world works (read my post: Why Fiat Money is Immoral).

Now from Bloomberg:

Ecuador agreed to transfer more than half its gold reserves to Goldman Sachs Group Inc. for three years as the government seeks to bolster liquidity.


The central bank said it will send 466,000 ounces of gold to Goldman Sachs, worth about $580 million at current prices, and get the same amount back three years from now. In return, Ecuador will get “instruments of high security and liquidity” and expects to earn a profit of $16 million to $20 million over the term of the accord.


“Gold that was not generating any returns in vaults, causing storage costs, now becomes a productive asset that will generate profits,” the central bank said in the statement. “These interventions in the gold market represent the beginning of a new and permanent strategy of active participation by the bank, through purchases, sales and financial operations, that will contribute to the creation of new financial investment opportunities.”

This isn’t the first South American country we’ve heard about sending their gold to Goldman. Recall my post from late last year: Is Venezuela Selling Gold to Goldman Sachs?

This gold is headed straight to China or Russia. Good luck every getting that back amigos. Just ask Germany.

Full article here.


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Mon, 06/02/2014 - 13:06 | 4817258 Stoploss
Stoploss's picture

" gold reserves to Goldman Sachs for three years"


It won't take that long.

Mon, 06/02/2014 - 13:07 | 4817261 RevRex
RevRex's picture

Buy sign.

Mon, 06/02/2014 - 13:09 | 4817265 strannick
strannick's picture

Lease = sell

Mon, 06/02/2014 - 13:09 | 4817269 insanelysane
insanelysane's picture

What is Goldman going to do with all of that worthless yellow metal???

Mon, 06/02/2014 - 13:13 | 4817286 Arius
Arius's picture

Smart decision i must say ... as another American investor Icon once pointed out we spent money to dig it from the ground, then we spent money to put in another hole and pay people to protect ... complete nonsense!

hopefully more central banks will realize it and do the same!

Mon, 06/02/2014 - 13:16 | 4817297 strannick
strannick's picture

Yes Ecuador paying the wolves -fedres, BOE- to guard their golden hehouse, can be quite pricey. Often, they will charge you storage fees even long after the gold is gone. i.e Morgan Stanley.

Mon, 06/02/2014 - 13:18 | 4817315 WhyDoesItHurtWh...
WhyDoesItHurtWhen iPee's picture

Once again "send us your scrap gold" you know, "barbaric relic" and all that.

Mon, 06/02/2014 - 13:21 | 4817321 Stuck on Zero
Stuck on Zero's picture

Am I mistaken but isn't that what the Spanish were telling the Incan Kings in the 1500s?


Mon, 06/02/2014 - 13:25 | 4817335 ParkAveFlasher
ParkAveFlasher's picture

"Yes, and give us your daughters too.  You don't need those."

Mon, 06/02/2014 - 13:27 | 4817344 Pladizow
Pladizow's picture

Aye Dios mio. Correa es muy stupido!

Mon, 06/02/2014 - 13:30 | 4817358 ParkAveFlasher
ParkAveFlasher's picture

No, just the latest in a long line of colonialist looters heading Ecuador.  He had everyone fooled with his quechua shirts and nationalistic gasbagging.

Mon, 06/02/2014 - 13:32 | 4817367 Pladizow
Pladizow's picture

How do you say, "Brown's Bottom" in spanish?

Mon, 06/02/2014 - 13:35 | 4817378 Ahmeexnal
Ahmeexnal's picture

Venezuela has done the same. False opposition.
Ecuador uses the US dollah as national currency. Venezuela is about to do the same. They just give the banksters a much needed air tank to survive.

Mon, 06/02/2014 - 13:39 | 4817384 ParkAveFlasher
ParkAveFlasher's picture

Well put.  Ecuador is an expansion reservoir for dollar transactions or oil-driven price offset mechanism for likewise.  That makes me wonder why gold and not oil as is typical.

The peasants are too uneducated to realize the finance trap they are in, they think that they can use dollars because they are so rich, you see?  So they all have two cars now (financed, of course) and make a quarter of what we make in the USD although their cost basis is the same.  Default, dead ahead!

Mon, 06/02/2014 - 13:58 | 4817431 Pinto Currency
Pinto Currency's picture



The Reserve Bank of India says the LBMA is levered 92:1 paper (vapor) to gold.

The LBMA can create 43,000,000 million oz. in trading positions with this gold from Ecuador.

Jabba just ate Ecuador's gold, burped and rolled over.


Mon, 06/02/2014 - 14:15 | 4817492 I MISS KUDLOW
I MISS KUDLOW's picture

oh come on with this story

Mon, 06/02/2014 - 14:26 | 4817528 THX 1178
THX 1178's picture

Liquidity crisis dead ahead.

Mon, 06/02/2014 - 14:33 | 4817542 knukles
knukles's picture

Well, they gotta borrow it from somewhere since the CHineee are hoarding it and making the Fed's life difficult....
All confirmed, officially via a Chinee report


It's sweeter than sucre

Mon, 06/02/2014 - 15:36 | 4817726 nope-1004
nope-1004's picture

I love the phrase "wasn't generating any returns".  The statement is so self serving, because it was the corrupt reserve currency Fed that devised a system to ignore gold, so of course it's "not going to generate any returns" under the umbrella of the US foreign petro-dollar policy.

Get rid of the Fed and this idiotic notion of one nation controlling all financial transactions, and that gold will generate returns because it will be the only tangible asset that carries inherent trust.


Mon, 06/02/2014 - 15:40 | 4817734 BaBaBouy
BaBaBouy's picture

Wooopiiii ...

The GERMANS Can Now Get A Bit More Of Their GOLD Back...

And ECUADOR???       Suckers................

Mon, 06/02/2014 - 16:08 | 4817832 12ToothAssassin
12ToothAssassin's picture

All your gold are belong to us gs

Mon, 06/02/2014 - 16:27 | 4817879 Troll Magnet
Troll Magnet's picture

This is why Ecuador is, well, Ecuador.


Mon, 06/02/2014 - 17:26 | 4818097 Rusty Shorts
Rusty Shorts's picture

Here's Andy, a guy I follow online. He travels all over and just happens to be in Ecuador right now, very interesting report...apparently it's a great place to hang out.

Mon, 06/02/2014 - 18:20 | 4818250 MartyBee
MartyBee's picture

A whopping 14.5 tons.

Mon, 06/02/2014 - 18:40 | 4818315 remain calm
remain calm's picture

You have to ask yourself why would GS give Dollars for gold which they think is worth less than $1000/oz. Things that make you go hmmm. FU GS

Mon, 06/02/2014 - 20:25 | 4818587 Not My Real Name
Not My Real Name's picture

Is it just me, or does it feel like the walls are rapidly closing in on us?

Mon, 06/02/2014 - 20:51 | 4818658 Crawdaddy
Crawdaddy's picture

Gracias Rusty - good link. I like this Andy.

Mon, 06/02/2014 - 16:31 | 4817894 MeMadMax
MeMadMax's picture

Ecuador is about as lefty loon as they come.

They make deals with drug dealers.

They have the strictist gun control laws on the books.

They have more "homemade" guns than most other countries.

They have more cops killed for their weapons.

They have a sky high murder rate that is near the top of the world.

The UN has stepped in on ecuadors "human rights" policies.



The only thing that keeps the place alive???



Mon, 06/02/2014 - 16:56 | 4818003 CheapBastard
CheapBastard's picture

Well, it's easier to siphon off "liquidity" to ones secret Swiss bank account then it is to 'disappear' kilo bars of the barbaric metal.


Just say'n.

Mon, 06/02/2014 - 18:31 | 4818282 disabledvet
disabledvet's picture

Best comment...and only non worthless one on the thread.

"If the Government folks are ready to loot the country before they flee...get a half billion DOLARES for the Government's gold first."

The story obviously is that Goldman Sachs has the half of course "all looters are welcome here."

Ecuador has a lot more than just oil...and what little of that they have they can't get out of the ground right now.

They should have hundreds of billions in shale gas and oil right now...but instead they rolled the dice on the dumbest lawsuit in history and look like they're about to flee the country.

Tue, 06/03/2014 - 01:19 | 4819290 gonetogalt
gonetogalt's picture

The thing about these banana republics is that the big guys only fuck with other big guys, and because their gov'ts are mainly disfunctional, there just isn't enough energy in the system to fuck with the rest of us proles...So ignore the laws on the books, just take the most fucked up, lawless country you can find, there you'll find the closest approximation of the libertarian ideal, free from being fucked with. 


(Until USAid gets here with a 'grant' to improve something)

Mon, 06/02/2014 - 15:42 | 4817730 BaBaBouy
BaBaBouy's picture


Tue, 06/03/2014 - 01:09 | 4819278 gonetogalt
gonetogalt's picture

Nice link, knuckles, that's it in a deadpan nutshell.

Mon, 06/02/2014 - 14:46 | 4817581 Manthong
Manthong's picture

I know GS is that evil.

I did not know that Ecuador was that stupid.

Three years… LOL.. Hey Ecuador, ask Germany how that works.

Even Chavez had some smarts.

Mon, 06/02/2014 - 15:02 | 4817633 ParkAveFlasher
ParkAveFlasher's picture

Chavez had enough sense to die from cancer that he acquired at around the same time as his "countrymen's" gold.

Mon, 06/02/2014 - 16:42 | 4817938 zerozulu
zerozulu's picture

We don't know the real story behind. Once a gringo printed fake dollars and by mistake printed 55 dollar bill. He thought it is difficult to sell it to Americans so he took it to a Mexican. Mexican said I only can give you 45 dollar for this. American said OK. Mexican when in side his house and came back with a 45 dollar bill.

Mon, 06/02/2014 - 15:30 | 4817699 Kirk2NCC1701
Kirk2NCC1701's picture

Well, there was this blonde in the B4alphaQ Constellation, to whom Kirk pledged Liquidity if she opened her gold vaults for a "robust audit".

;-)  Kirk out.

Mon, 06/02/2014 - 13:59 | 4817444 Silky Johnson
Silky Johnson's picture

Great deal! Here take this stuff of great value and give us some paper that has been shat out by Mr. Yellen.

And how come GS is so kind as to accept some worthless yellow rocks for a handfull of the almighty Dollah?

Mon, 06/02/2014 - 14:50 | 4817598 TeamDepends
TeamDepends's picture

Liquid Paper = Krugmanian Physics

Mon, 06/02/2014 - 18:16 | 4818233 hoos bin pharteen
hoos bin pharteen's picture

Now we know why gold was slammed the past few days.  It's a classic pawn shop play - Drive down the gold price to reduce Ecuador's "loan," and then wait for Ecuador to default.  

Tue, 06/03/2014 - 02:08 | 4819367 ebear
ebear's picture

Ecuador uses dollars because a previous government destroyed the national currency by issuing too much.  Sound familiar?

Mon, 06/02/2014 - 14:56 | 4817613 Lux Fiat
Lux Fiat's picture


Mon, 06/02/2014 - 15:15 | 4817661 EllaDara
EllaDara's picture

Los Brownas Bottomas

Mon, 06/02/2014 - 13:33 | 4817370 THX 1178
THX 1178's picture

Damn. Ecuador basically short-sold their stash. 

Wed, 06/04/2014 - 20:23 | 4825193 Jafo
Jafo's picture

Almost right.  I reckon that Goldman is going to short sell that gold into a falling market and slam gold good and propper to US$1,104 or even lower then buy it back.  They may do this several times.  However, this will put in the absolute bottom for gold and it will only go up from there.  Gold equities are going to take it even harder than phys and they will be massively good buying near that bottom.

Mon, 06/02/2014 - 18:30 | 4818279 twh99
twh99's picture

Only the virgin ones.

Mon, 06/02/2014 - 13:28 | 4817346 Herd Redirectio...
Herd Redirection Committee's picture

My take from this is... Ecuador didn't have the physical.  They had some receipts for gold.

Instead of demanding delivery (which they were implicitly told "Not gonna happen") they 'cut a deal' to accept USD in place of their paper gold.  To make it palpable to the people they have to say its for 3 years, and that its only been leased.

They never possessed it in the first place.

Mon, 06/02/2014 - 13:35 | 4817377 ParkAveFlasher
ParkAveFlasher's picture

Ecuador has real gold and real need for dollars as they are dollarized, and thus import at an international cost basis without the "benefit" of salary/productivity "par" (or even "bogie", for that matter).  Are they on an over-extended credit card and getting gut-punched by GS?  I wonder why their go-to of petroleum production is not bailing them out, if that is indeed the case.

Tue, 06/03/2014 - 01:25 | 4819300 gonetogalt
gonetogalt's picture

Equador mines quite a bit of gold, it's certainly physical and their own production. Stupid fucks, except for the probabilityof the bosses bailing out, then smart.

Tue, 06/03/2014 - 02:10 | 4819372 ebear
ebear's picture

"Equador mines quite a bit of gold"

Not really, compared to what they have in the ground.

Mon, 06/02/2014 - 13:59 | 4817443 Panafrican Funk...
Panafrican Funktron Robot's picture

The funny part to me is what they exchanged their gold (real or leased) for.  

This is either:

1.  Paper trash for paper trash


2.  Money for paper trash

I'm really hoping for Ecuador's sake that it's the first. 

Mon, 06/02/2014 - 14:04 | 4817461 Quinvarius
Quinvarius's picture

The gold confiscation everyone is afraid of already took place.  The bankers got the big nod from the government to steal all their client assets years ago.  If it is on deposit in a bank, the bankers own it.  And bankers like to sell other people's stuff until they run out.

Mon, 06/02/2014 - 15:25 | 4817689 Cacete de Ouro
Cacete de Ouro's picture

Yes, Ecuador already had some of its gold on deposit abroad.


From its annual report:

"Oro: Registra las tenencias en oro que mantiene el BCE en el exterior, ya sea para su custodia o como depósitos a plazo sobre los cuales se recibe un interés. El oro está valorado a precios de mercado."

"Add the gold holdings maintained by the BCE externally, either for safekeeping or as deposits on which receives an interest. Gold is valued at market prices."

Mon, 06/02/2014 - 20:38 | 4818617 Amish Hacker
Amish Hacker's picture

Maximum upside: $20 million earned in interest on a $580 million investment. That's only 3.4 % over the course of THREE years.

Probable downside: The gold is gone. Let's all meet back here in three years to see what happens.

Mon, 06/02/2014 - 18:32 | 4818289 Againstthelie
Againstthelie's picture

Herd Redirectio...

Is your name program?

Why does GS accept the physical only instead of modern paper certificates?

Mon, 06/02/2014 - 13:30 | 4817350 bonin006
bonin006's picture


(reply to stuck on zero)

I suspect the spanish were more direct - something like "hand it over before we kill you"

Tue, 06/03/2014 - 08:12 | 4819647 rydog1220
rydog1220's picture

But, but Ecuador is getting liquidity... in Velveeta cheese sauce it is liquid gold anyway. Goldman Sachs are just ruthless in their conquest for world domination 

Mon, 06/02/2014 - 13:16 | 4817303 DoChenRollingBearing
DoChenRollingBearing's picture


I just hope Peru does not get such a stupid idea...

But, at Peru has a lot of "deep-storage" gold (in the ground).

Mon, 06/02/2014 - 14:09 | 4817474 Toronto Kid
Toronto Kid's picture

Canada is the same. We sold ours at $400 an ounce. I thought that was stupid at the time, but then the US went into Libya ... if we need more gold we can always mine it.

Mon, 06/02/2014 - 19:14 | 4818422 BigJim
BigJim's picture

The shit is everywhere, man!

Tue, 06/03/2014 - 01:30 | 4819312 gonetogalt
gonetogalt's picture

Guyana mined over 400,000 oz last year, Scotia Mocota gets it all. (except what's smuggled.) Dumb fucks don't have any reserves as far as I know.  But the bosses do.

Mon, 06/02/2014 - 21:05 | 4818689 Blano
Blano's picture

Peru will just hand over yours, DoChen.  : )

Mon, 06/02/2014 - 14:03 | 4817459 ziggy59
ziggy59's picture

Lease is more like Least...

And we know what least rearranged is..


They aint called GOLDman for no reason

Mon, 06/02/2014 - 14:49 | 4817592 COSMOS
COSMOS's picture

When someone approaches you and says I have a deal for you, your red warning lights should go on.

Mon, 06/02/2014 - 14:11 | 4817484 Gringo Viejo
Gringo Viejo's picture

So what happens when there are no more third world countries to pillage gold from? China says...TANKS!

Mon, 06/02/2014 - 15:02 | 4817622 BrosephStiglitz
BrosephStiglitz's picture

You just don't get it do you?

Gold is a last resort store of value in a period of crisis.  Think about the extraordinary lengths that the European nations undertook to send their gold reserves overseas during the 2nd World War.  If bullion is so worthless, why was that the case?

You're half right, gold and silver don't add value.  They are an economic store of value.  But when the stock market is in the late stages of significant asset inflation, and bond yields are dropping everywhere because there is so much electronic paper chasing any potential investment opportunity, maybe it is time to hedge against that black swan moment.

Most of the financial markets, especially in the developed nations are categorized by decreasing returns relative to the initial principal needed to invest.  If you got into the markets in '09 you are probably sitting pretty, but no one in their right mind would touch the equities, or bond markets at this point in time.

Mon, 06/02/2014 - 21:43 | 4818778 Lionhearted
Lionhearted's picture

Thank you for that. I note your DISINFORMATION campaign.

Mon, 06/02/2014 - 13:13 | 4817288 FinalEvent
FinalEvent's picture

Well, now they can ship it quickly to Germany then.

Mon, 06/02/2014 - 14:47 | 4817583 InjectTheVenom
InjectTheVenom's picture

yeah...i'm sure that'll happen !    ;>)

Mon, 06/02/2014 - 13:41 | 4817381 CPL
CPL's picture'll never be delivered.  Since Goldman believes it is doing 'God's' work.  It will be their PLEASURE to give Ecuador 600 million from their own pocket in good faith of the ALMIGHTY.

It would only be correct to practice those pillars of faith that will allow their continued operation in good conscience for the future.

Mon, 06/02/2014 - 23:32 | 4819080 bilbert
bilbert's picture

Beat me to it, CPL - just another of the common courtesies Goldman extends to our smaller, resource rich countries.

In fact, GS is willing to "take one for the team" if Gold is selling for LESS than $1,250 in 2017!!

With all the curtailing of QE going on, and all the economic growth currently being reported, it'll be a miracle if Goldman merely breaks EVEN on this charitable "exchange" three years from now.

Vampire Squid??  I call BS!  If GS actually makes a profit on this charitable (to the point of being stupid) "deal", I'll drink a glass of the best 2007 Châteauneuf-du-Pape, and post it on YouTube.

Mark my words.




Mon, 06/02/2014 - 13:50 | 4817411 alexcojones
alexcojones's picture

Gold again? Reminds me of this joke.

What did the first pirates shout when boarding a treasure ship?

"Gold! - Man the Sacks!"


Mon, 06/02/2014 - 16:25 | 4817876 Bunga Bunga
Bunga Bunga's picture

What is Goldman going to do with all of that worthless yellow metal???

They will sell it to it's own customers after price hit $10,000+.

Mon, 06/02/2014 - 19:57 | 4818529 A Nanny Moose
A Nanny Moose's picture

....aaaaaand, it's gone.

Mon, 06/02/2014 - 21:51 | 4818800 fleur de lis
fleur de lis's picture

They'll stash it someplace where Equador will never see it again. 

Mon, 06/02/2014 - 21:57 | 4818808 fleur de lis
fleur de lis's picture

They'll stash it someplace where Equador will never see it again.

Mon, 06/02/2014 - 22:47 | 4818978 Me.Grimlock
Me.Grimlock's picture

Send it to our friends in Germany, natch!

Mon, 06/02/2014 - 13:09 | 4817274 gmrpeabody
gmrpeabody's picture

" gold reserves to Goldman Sachs for three years"

Might as well be three lifetimes...

just saying.

Mon, 06/02/2014 - 18:39 | 4818310 tenpanhandle
tenpanhandle's picture

just shows the outside timeline for total breakup.  i think 3 years is plenty time to be inside of.

Mon, 06/02/2014 - 14:36 | 4817552 Da Yooper
Da Yooper's picture


Ecuador no longer holds it & no longer OWNS it

FOOLS & their money are soon parted

Mon, 06/02/2014 - 16:22 | 4817872 eurogold
eurogold's picture

Shortsighted ! Bye bye gold !

Tue, 06/03/2014 - 20:24 | 4821646 papaclop
papaclop's picture

Oh good! Goldman will get to do a lot of "price slammin " in the precious metals markets. This gold also allows the Muppet -Masters to cover some of their short positions in the Gold and Silver Markets. By the time Ecuador realizes what happened that gold will be melted and recast in Switzerland, then it's on to China, where it won't be seen again until it's used to back the new reserve currency the Yuan. You won't want to be holding a lot of dollars then.

Tue, 06/03/2014 - 20:15 | 4821657 papaclop
papaclop's picture

Oh good! Goldman will get to do a lot of "price slammin " in the precious metals markets. This gold also allows the Muppet -Masters to cover some of their short positions in the Gold and Silver Markets. By the time Ecuador realizes what happened that gold will be melted and recast in Switzerland, then it's on to China, where it won't be seen again until it's used to back the new reserve currency the Yuan. You won't want to be holding a lot of dollars then. I wonder how much Goldman paid in bribes to get that sweet deal. Ecuador, kiss that gold goodbye cuz you just got fucked.

Mon, 06/02/2014 - 13:47 | 4817403 Zadok
Zadok's picture

We don't need no stinking gold...!

Mon, 06/02/2014 - 14:16 | 4817499 holgerdanske
holgerdanske's picture

How stupid can they be?

Just goes to show, Goldman must be scouring the world for gold.

Where are the new supplies going to come from after this?


Another reason why gold is down.

Might be a good time to buy in the near future.

Mon, 06/02/2014 - 14:35 | 4817550 sabatwo
sabatwo's picture

ok so i am having trouble posting but this is important  ...i am

one of my customers send a gold coin  that is right in weight size and thickness  turns out to have a tungsten core!!!  beware  eagle 2003

Mon, 06/02/2014 - 14:52 | 4817601 COSMOS
COSMOS's picture

I have a feeling there is a lot of tungsten going around.  I would say whatever you buy melt it down to make sure its real gold and video tape in case it isn't so you can get your money back.

Mon, 06/02/2014 - 15:35 | 4817721 Kirk2NCC1701
Kirk2NCC1701's picture

Not sure if you knew, but Warren Buffet cornered the market on Tungtsen 2-3 years ago.  He knew what was coming.

Tue, 06/03/2014 - 01:39 | 4819322 gonetogalt
gonetogalt's picture

The electronic thickness measuring devices sell for less than $500 USD and are non-destructive, use that in conjunction with an ohm meter specifically designed to give precious metal purity and for under $1000 USD you can't be hornswaggled...

If you remelt you give up the coinage premium and assume a junk gold discount, so a 15-20% loss...(edit)

Mon, 06/02/2014 - 16:30 | 4817893 Grosvenor Pkwy
Grosvenor Pkwy's picture

"one of my customers send a gold coin  that is right in weight size and thickness  turns out to have a tungsten core!!!  beware  eagle 2003"

Do you know the provenance of this coin? Where and when it was bought?

Mon, 06/02/2014 - 14:48 | 4817579 BrosephStiglitz
BrosephStiglitz's picture

You mean Goldman didn't want stawx?  Hm.

In other news physical silver supplies in most of the bullion dealers here (Europe) are running lowish on supply.  Silver coins now have a 4-6 week waiting period in most of the main suppliers.  That's Austrian, Canadian, Mexican, Australian and Chinese.  Only thing left are the more expensive Silver Eagles.

Had to really search this morning and switch dealers.

Mon, 06/02/2014 - 17:36 | 4817595 Larry Dallas
Larry Dallas's picture

I would love to know the basis per oz of this trade. $900? Less?

So sad

Mon, 06/02/2014 - 14:57 | 4817614 Ponzi Pontiff
Ponzi Pontiff's picture

Meantime, poor Julian Assange still holed up in the Ecuador Embassy in London.  Wonder how much "liquidity" they'll get for booting him out?  They've got fuck-all else left to pawn now ...

Mon, 06/02/2014 - 13:07 | 4817262 centerline
centerline's picture

Annnnndddd, it's gone.

Mon, 06/02/2014 - 13:15 | 4817299 NidStyles
NidStyles's picture

Yet, i want to know how these people think they will create profit without actually producing anything. 

Mon, 06/02/2014 - 14:59 | 4817619 IndyPat
IndyPat's picture

Um, I think they just keyboard in how much they want.

Mon, 06/02/2014 - 16:15 | 4817857 Bioscale
Bioscale's picture

This exactly was my first idea - what profits are they talking about? The government is going to spend the liquidity on operational expenses, no fucking productive investments. Looks like this whole event is just a friendly agreement from the Ecuador government to help the Goldmans for some reasons..

Mon, 06/02/2014 - 20:28 | 4818599 Matt
Matt's picture

So the government can survive one more day.

Mon, 06/02/2014 - 20:37 | 4818615 aphlaque_duck
aphlaque_duck's picture

I'm gonna go out on a limb here, and guess that it's not an arms-length deal. 

Tue, 06/03/2014 - 02:14 | 4819379 ebear
ebear's picture

"Looks like this whole event is just a friendly agreement from the Ecuador government to help the Goldmans for some reasons.."

More like an act of desperation.

Mon, 06/02/2014 - 13:08 | 4817263 suteibu
suteibu's picture

They will get back the same amount in weight or USD?

Mon, 06/02/2014 - 13:09 | 4817273 hedgeless_horseman
hedgeless_horseman's picture




Mon, 06/02/2014 - 13:24 | 4817328 dontgoforit
dontgoforit's picture

Will that be in $1's or $100's?

Mon, 06/02/2014 - 13:34 | 4817375 Winston Churchill
Winston Churchill's picture

$10,000,000,000 notes,

Mon, 06/02/2014 - 20:30 | 4818604 Matt
Matt's picture

UST, 100 year or perpetual annuity.

Mon, 06/02/2014 - 14:02 | 4817454 pashley1411
pashley1411's picture

Ecuador will receive in return an equivalent in "Clinton 2016, and forever" posters and banners.

Mon, 06/02/2014 - 15:18 | 4817671 ParkAveFlasher
ParkAveFlasher's picture

If it were to be in Princess Di memorabilia, they would probably accept.

Mon, 06/02/2014 - 13:08 | 4817264 Ban KKiller
Ban KKiller's picture

Bitch slapped!

Mon, 06/02/2014 - 13:09 | 4817266 Jumbotron
Jumbotron's picture

What....WAIT !!!

I thought you gold stackers said that gold is real money.  That it's liquidity personified.

I thought you said debt is not money.....that debt creation is NOT liquidity creation....even though that's how the Central Banks and the Banksters see it.......oh....wait.....right. 


Keep stacking.....and don't sell to Goldman

Mon, 06/02/2014 - 13:37 | 4817380 Arius
Arius's picture


however, why Goldman is taking the other side and giving up its liquidity?

i thought these were suppose to be the smart guys ... something is wrong  ...

Mon, 06/02/2014 - 13:55 | 4817426 JailBank
JailBank's picture

Are they giving anything up though? They got the money from the FED for free and handed it off to take tonnes of gold. Goldman can get more free dollars whenever they wish.

Mon, 06/02/2014 - 14:03 | 4817457 Panafrican Funk...
Panafrican Funktron Robot's picture

"however, why Goldman is taking the other side and giving up its liquidity?"

I don't think you meant that question to be rhetorical, but it really is.  Think it through.

"i thought these were suppose to be the smart guys"

They are.

"... something is wrong  ..."

Think "Stopler'ed".  If Goldman is recommending a trade, and you do that trade, you are the muppet.

If Goldman is the counterparty in your trade, you are the muppet.

Mon, 06/02/2014 - 14:22 | 4817512 Liquid Courage
Liquid Courage's picture

Do as they do ... not as they say.

Mon, 06/02/2014 - 17:58 | 4818177 Jumbotron
Jumbotron's picture


however, why Goldman is taking the other side and giving up its liquidity?

i thought these were suppose to be the smart guys ... something is wrong  ..."

Gold is down.....they plan to run it up.

Carry trade

Mon, 06/02/2014 - 13:09 | 4817267 Tenshin Headache
Tenshin Headache's picture


Mon, 06/02/2014 - 13:09 | 4817268 IridiumRebel
IridiumRebel's picture

"Due to recent ass fucking by central banks, we have concluded that placing our gold in the greasy hands of financial evil, we will ride the wave of bullshit to money making."

Mon, 06/02/2014 - 13:25 | 4817330 dontgoforit
dontgoforit's picture

Ah so!  That explains it!

Mon, 06/02/2014 - 13:09 | 4817270 goldhedge
goldhedge's picture

This is going to end well...for some other country.


Mon, 06/02/2014 - 13:32 | 4817365 i_fly_me
i_fly_me's picture

Yup ... I'm not sure which country that will be, but I'd bet you can't type anything in their language using my keyboard.

Mon, 06/02/2014 - 13:09 | 4817271 Sofa King Confused
Sofa King Confused's picture

And to think, I almost expatriated to Ecuador.  Did not think they were that dumb.

Mon, 06/02/2014 - 13:17 | 4817306 ParkAveFlasher
ParkAveFlasher's picture

If you've never seen the high mean level of dumbassery in Ecuador with your own eyes, then you need to venture out of the guarded community walls.  Colonialism never left.

Mon, 06/02/2014 - 15:30 | 4817700 jomama
jomama's picture

Cuenca is a fantastic city to retire.

Tue, 06/03/2014 - 01:43 | 4819331 gonetogalt
gonetogalt's picture

Under the radar, disfunctional gov't, what could be better?

Mon, 06/02/2014 - 13:10 | 4817275 Seasmoke
Seasmoke's picture

Wow. Why do these countries do this ?

Mon, 06/02/2014 - 13:15 | 4817295 ForWhomTheTollBuilds
ForWhomTheTollBuilds's picture

Well, to start out if they were storing their gold in London or New York, its already gone.  


So why not get some utility out of the gold everyone is pretendingstill exists between now and the time the Chinese pull the plug?


Besides, maybe the gold will get returned somehow someday by someone under some cicrumstances no one now can imagine.  Their alternative is to pull a Germany/Austria and then they will get nothing and no liquidity in the meantime.

Anyone have time to research where Equadors gold reserves are held?  Wouldnt it be interesting if they possessed about half and the other half was held outside the country?




Mon, 06/02/2014 - 15:45 | 4817748 ebear
ebear's picture

"Anyone have time to research where Equadors gold reserves are held?  Wouldnt it be interesting if they possessed about half and the other half was held outside the country?"

Ecuador has proven gold reserves on the order of 20 million ounces.   14 million of those are in a deposit known as Fruta Del Norte.    I know this because I was a shareholder of Aurelian Resources, the company that found them.

I came out of the deal in one piece thanks to Kinross's roll of the dice, however, had the government not changed and then subsequently shot itself in the foot where mining is concerned, they would have had a modern mining industry with all the employment and benefits thereof, and I would have been a

Post the Kinross fiasco, only the Chinese were willing to deal with Ecuador..  Here's how they're being treated:

At the time of the FDN discovery I did an in-depth analysis of Ecuador's economy and reached the conclusion that their oil production was in decline, and that without venturing deep into the Amazon, they would have to accept mining as an alternative to maintain national income.

Here's how that worked out:

So there you have it.  Ecuador has very rich copper and gold deposits worth billions of dollars and an idiotic leftist government that lacks the ability to do basic math.  My study indicated they would be in trouble within five years if they didn't develop their oil or mining sectors.  They've done neither, and so here they are five years later, having to deal with Goldman Sachs.

But I'm sure they'll make it up with bananas, frozen shrimp, cut flowers and eco-tourism.

Note: in fairness to the "little people" of Ecuador, given the history of Texaco (now Chevron) and Ascendant Copper, I totally understand why they support this government.


Mon, 06/02/2014 - 20:39 | 4818619 ParkAveFlasher
ParkAveFlasher's picture

File this one under "why I read ZH". Thanks for informing us.

Mon, 06/02/2014 - 13:16 | 4817302 Jumbotron
Jumbotron's picture

The Incans still getting their gold confiscated one way or the other.  First it was taken by the they are giving it away to Goldman.

Sheesh !  Will they....or we...ever learn ?

Mon, 06/02/2014 - 13:23 | 4817325 IridiumRebel
IridiumRebel's picture


Mon, 06/02/2014 - 13:26 | 4817338 dontgoforit
dontgoforit's picture

Goldman translated in spanish is: Sachs.

Mon, 06/02/2014 - 13:31 | 4817361 Jumbotron
Jumbotron's picture

LOL !   + 1000

Mon, 06/02/2014 - 18:00 | 4818185 Jumbotron
Jumbotron's picture

Bingo !

Mon, 06/02/2014 - 13:16 | 4817305 tony wilson
tony wilson's picture

the power of words








weather weapons or soros boots on the ground freedoms

Mon, 06/02/2014 - 13:29 | 4817351 THX 1178
THX 1178's picture

A blacked out DHS Van has been dispatched to your location. Thank You for playing.

Mon, 06/02/2014 - 13:20 | 4817320 negative rates
negative rates's picture

They desperately need money.

Mon, 06/02/2014 - 13:25 | 4817332 Jumbotron
Jumbotron's picture

They had it.  They just needed to reorient their economy around it.

Mon, 06/02/2014 - 14:27 | 4817470 omniversling
omniversling's picture

'Mortgaging the family silver' (or in this case gold) is not uncommon historically in crisis. Here in Oz we have CashConverters, a chain of pawnbrokers. What makes this gold so different from any other asset being pawned (Beeeeechez)? If I pawned my camera I'd get a fraction of it's resale value and it cant be leased for multiples of that. 

16 million over 3 years, then returned? But Goldman trumpeted 'gold to go to $800'...(Goldman Sachs’s chief commodities analyst Jeffery Currie is on record saying that gold will descend back to the $1,000 mark) How does Goldman recover that loan fee? And if they're prepared to pay $16m for the loan, what does it have to go to to cover it and still be profitable? Why buy around $1200 then have to return it when it's $800? This appears to be a keyhole through which to obseve the mechanics of phyz rehypothecation. Whatever GS plan to do with the gold, must be worth multiples of $16m to cover the fee plus profit/loss of earnings of that on say stawks. Or what do they know about timing that we can only guess or deduce? Backwardation anyone? Do not as they (GS) say, but as they do...acquire.

I was advised that (WERE I be fortunate to have any excess wealth to buy metal), in a crisis casting it into religious relics was a way to lessen the risk of confiscation. I thought casting it then painting it as a rusty boat anchor may be an alternative. The added value is that when out on the lake trying to find the exact place of the last 'boating accident', it would still be attached to a rope, and no-one would be the wiser. The metaphor of gold as an anchor made even more sense. Has anyone seen the Wat Tramit Golden Buddah in Bankok? To stand just meters away from 5 tons of shiny is truly vibrational. It survived centuries safely by being encrusted with painted stucco, disguised as a clumsy religious figurine. 

Warm greetings Zedgers, very grateful for your presence, insights, smarts, insults, sources, etc in these days of heavy weather on the lake. Here, a little barbarous eye candy to brighten your day:

Mon, 06/02/2014 - 15:42 | 4817712 Dr Benway
Dr Benway's picture

What is Goldman planning to do with the gold it borrowed? Sell it, in the most pricemoving way they can. It's a short.

Mon, 06/02/2014 - 13:10 | 4817276 youngman
youngman's picture

It shows that the Banks are asking for it....the demand is there..and they do not have any...wonder what Ecuador got....facebook stock

Mon, 06/02/2014 - 13:28 | 4817345 dontgoforit
dontgoforit's picture

...and twitter puts, ha, ha!

Mon, 06/02/2014 - 13:10 | 4817278 Jumbotron
Jumbotron's picture

"This gold is headed straight to China or Russia. Good luck every getting that back amigos. Just ask Germany."'s GOOD to be the middle man.....isn't it Blankfein ?

Mon, 06/02/2014 - 13:17 | 4817309 ThirdWorldDude
ThirdWorldDude's picture

I bet the squiddish bastard loves to bath in golden liquidity...

Mon, 06/02/2014 - 13:26 | 4817339 Jumbotron
Jumbotron's picture

Golden showers by a hand picked cadre of little people.

Thus are the perks of "doing God's work" .

Mon, 06/02/2014 - 13:11 | 4817279 SmittyinLA
SmittyinLA's picture

Equador is an active Socialist looting operation, assets are actively being transferred to the state for immediate looting as well as the Socialist citizenry is making large individual "investments" on behalf of each citizen for future letdowns. 

Equador needs more debt, they need to sell more assets and accumulate more unfunded liabilities.




Mon, 06/02/2014 - 13:12 | 4817282 tony wilson
tony wilson's picture



In return, Ecuador will not get rothschild  instruments of civil war and protection from haarp weapon array.

mossad,cia and mi6 security and zero blood spill liquidity

Mon, 06/02/2014 - 13:12 | 4817285 youngman
youngman's picture

so you give GS 580 milion dollars and you get 15 to 20 milion over three years..that is not much of a return is it????

Mon, 06/02/2014 - 19:21 | 4818447 BigJim
BigJim's picture

I'm willing to bet that 'liquidity' isn't going to the common man, either.

Mon, 06/02/2014 - 13:13 | 4817287 RaceToTheBottom
RaceToTheBottom's picture

Failure to deliver gets put off for another ? weeks

Mon, 06/02/2014 - 13:18 | 4817289 ParkAveFlasher
ParkAveFlasher's picture

Nice job Correa, you had everyone fooled.  You played a long game for a banana republican puppet, of the Chicagoan economista school, and now you are cashing out.  See you in Miami.

Mon, 06/02/2014 - 15:06 | 4817557 Oldrepublic
Oldrepublic's picture

Maybe Biden called Correa a second time?

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