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Ecuador Transfers Half Its Gold Reserves To Goldman Sachs In Exchange For "Liquidity"
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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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?
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Any society needs to support itself. In an 'american' world, it means having USD to have an access to the world markets of commodities. No society can do otherwise.
Making it an issue of government is one 'american' trick to conceal the way 'americans' corner humanity.
The article exists to feed gold bugs' fantasy. The lesson given by this situation is harsh on gold bugs.
It shows that the USD prevails largely over gold. That country could not circulate gold as a currency and obtain as much as it would when circulating USD.
Second, it also reveals what goldbugs are: they are miracle of fiat currencies. If they can accumulate gold, it has nothing to do with gold properties as a currency, it all has to do with fiat currency properties.
People with USD can build up on gold. The reverse is not true.
To AnAnonymous:
The SOLE REASON that the "green paper" (FRNs) has any value is because the U.S. military will bomb into nonexistence any country that attempts to use an alternative form of money. Thus we witnessed the attacks on Iraq and Libya.
HOWEVER, the percentage of trade conducted in FRNs is rapidly decreasing every year, mainly due to Iran, Russia, China and India - the only countries that the U.S. cannot bully into submission. And the number and size of non-dollar trade contracts grows by the day!
As an American living outside the U.S., I have converted most of my FRNs into gold, property and Rubles, with a few other currencies added to the mix. The U.S. dollar (FRN) is DOOMED and will CRASH as soon as the first major physical gold purchase cannot be delivered.
At that point the U.S. dollar will have less value than TOILET PAPER.
-- Jack
The level of trade is getting down because 'americans' have put the world on the path of depletion of resources.
With less and less inputs to the world economy, despite the 'american' claim they know how to overcome the environment, trade is destined to fall as there is going to be less goods to trade.
The USD is doomed as it is backed by the resources it buys. When there is no more resources to buy, the USD is gone.
I'd rather have real toilet paper than fake money. With the world awash in the 30 TRILLION new dollars created since 2008, on top of all the dollars they already had, every new dollar they print is worth less than real monopoly money. This money creation is a hidden form of taxation.
The LOWER the price of gold, the MORE I buy. And I am about to buy more this week.
WHY would anyone or any country SELL their gold when the price is down? (Except for Canada and Great Britain, of course!)
Obviously, someone needed the physical gold in order to fulfill a delivery, and to avoid crashing the U.S. dollar.
When the first major purchase of physical gold results in a NON-DELIVERY, the U.S. dollar will CRASH and the price of gold will skyrocket!!!
Everythings up for sale when the American Printing Press is running hot!!
So...in summary here's a Krieger paragraph fixed:
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 fucked...
1 Second after the Door closed....
So the Gold is safe then...
Gold, what Gold
Three years later:
"You want your gold back? Well here it is, a certificate showing 466,000 ounces on deposit in your name -- ECUADOR. Goodbye now."
Goldman CEO refers to his clients as Muppets. Have you ever see Blankfein? He reminds me of a Tootsie Pop; a skinny ass body and a head like a cue ball. Nothing is beneath these crooks. They will sell you on some stocks then bet against you as soon as you leave the room or hang up the phone. I wouldn't let them handle my dog's bank account. Watch for Goldman to increase it's short position in Gold and Silver. CROOKS. Sucking up your taxes so Blankfein can make 30 million a year.