This page has been archived and commenting is disabled.

How Central Banks Use Gold Swaps To "Boost" Their Gold Holdings

Tyler Durden's picture




 

With the specter of a "yes" outcome to the Swiss gold referendum finally being priced in by the market, and the frontrunning of the SNB's potential 1,500 tons of gold purchases starting to move the price of gold higher, a question has emerged: is there enough physical gold to satisfy Swiss gold demand in case of a favorable outcome to the referendum. Well, as Deutsche Bank reports, that may not even be an issue. Because as the following step by step explanation demonstrates, the SNB may simply "window dress" its balance sheet with gold swaps.

So for anyone curious how banks "represent and warrant" that they have thousands of tons of physical gold when in reality they have far less if not zero physical in storage and all in "synthetic" form, here is the blow by blow.

From Robin Winkler of Deutsche Bank

An early suggestion of the ‘gold initiative’ was to transfer Swiss gold reserves to a sovereign wealth fund to protect them from perceived mismanagement by the SNB. This idea was soon dropped. The concern behind the referendum is not the SNB’s management competence but the perceived shortage of gold reserves. Transferring the SNB’s FX reserves to a fund to avoid gold purchases would therefore be a blatant disregard of the political will and probably involve another referendum.

Gold swaps a more realistic option

Another option for the SNB would be using gold swaps to ‘window dress’ its balance sheet rather than holding physical gold or futures contracts. The SNB could borrow gold from counterparties prior to monthly balance sheet reporting dates, re-exchanging it for currency the following day.

There would be two advantages to such an approach. First, by borrowing gold to meet reserve holdings disclosure requirements for one day of the month, the SNB would be free to invest in other, higher yielding assets during the rest of it. Second, if the SNB chose to meet its gold requirements through physical or paper gold, it could still use swaps to smooth out purchases beyond the initial 5 year implementation period thereby minimizing its market footprint.

Gold swaps are politically more straightforward than the introduction of a SWF. There is a long history of monetary institutions using gold swaps dating back to the early 20th century. Indeed, in era of pre-Bretton Woods convertibility, gold swaps were frequently used to make up the gold ratio requirements of central banks. The SNB was in fact one of the most frequent users of gold swaps over the course of the 20th century (see appendix for more detail).

Second, using gold swaps to meet reserve ratio requirements would be consistent with international accounting standards. Gold swaps are recognized by the IMF as a legitimate means for managing central bank reserves.

Third, the amendment does not specify whether the gold has to be in physical or derivative form. The movement behind the gold initiative had initially demanded that all gold be held in bullion, rather than in financial derivatives such as swaps, but this is not an explicit demand of the constitutional amendment. The proposal does specify that SNB gold must be held in Switzerland. In theory, however, the SNB could meet this requirement by transacting swaps with counterparties whose gold is stored in Swiss vaults.

Is the gold swap market large enough to accommodate Swiss demand? It is unknown to what extent the major central banks engage in gold swap and repo transactions, since official statistics no longer disaggregate these. The BIS alone currently holds 236 tonnes of gold under swap agreements with banks. The IMF is prevented from entering gold swaps by its statutes. National central banks would need to step into the breach, as they did pre-Bretton Woods.

The SNB could also choose to use the market to conduct swaps. It is interesting to note that benchmark gold-dollar swap rates have recently traded negative (see chart above), meaning investors are paying to borrow gold. This is unusual as gold is traditionally used as a source of collateral for cash financing. While a number of factors may play a role, such as excess dollar liquidity or an increased demand for collateral on the back of the global regulatory developments, it is possible that anticipation of an affirmative vote in the gold referendum has played a role.

It is important to note that while gold swaps could help address concerns surrounding asset returns and the technical implementation of gold purchases, they do not solve the fundamental issue that the SNB would be obliged to commit a fixed share of its balance sheet to gold, in derivative form or otherwise. Under the terms of the proposal, these reserves would not be available for sale and therefore free to use for monetary policy. Moreover, they would be recorded in reserves, and therefore expose the SNB to balance sheet risks.

* * *

And a brief appending on Gold swaps in monetary history

Gold swap lines are still used between central banks today, but they naturally were a more important staple of global central banking during eras when global currencies were pegged to gold. Interestingly, gold swaps are historically strongly associated with the Swiss National Bank. Although the first gold swap arrangement was made between the Fed of New York and the Bank of England in 1925, worth US$200m of US gold against sterling, the SNB was the most frequent initiator of swaps during the Bretton Woods era. Transactions were made with both the BIS and other central banks. In 1955, the BIS accepted the first US dollars from the SNB in exchange for gold in a swap arrangement with a maturity of three months. In 1959, the SNB received gold from the BIS and the Bank of England in return for US$50m and US$20m, respectively, or roughly US$700m in today’s prices. The rationale was balance sheet window-dressing. Towards the end of 1959, a number of Swiss commercial banks were short of liquidity in Swiss francs given contemporary minimum reserve requirements. They thus entered dollar/franc swaps with foreign banks. The rapid influx of francs threatened the SNB’s own note cover and it in turn had to scramble to obtain additional gold holdings over the year end. Swaps did the trick, plugging the gold gap in its balance sheet at least temporarily.

Gold swaps came to be reciprocated between central banks. In 1961, the SNB entered a large gold/sterling swap with the Bank of England after the revaluation of the German mark had put downward pressure on sterling. To support the Bank of England, a series of bilateral swap arrangements were formalized among a number of central bank and the BIS under the ‘Basle Agreement’. By mid-1961, total swaps under the Basle Agreement amounted to US$904m, with the BIS accounting for US$154m of gold swaps alone.

After currencies were unshackled from gold at the end of the Bretton Woods era, gold swaps lost their significance somewhat, but they remain a customary tool of international monetary cooperation. It was commercial banks which most recently revived the concept during the financial crisis, when they entered extensive gold swaps with the BIS. The gold collateral was provided by national central banks such as the Swedish Riksbank.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Sat, 11/15/2014 - 11:36 | 5451561 pachanguero
pachanguero's picture

Theses bankster crooks will stop at nothing!

Sat, 11/15/2014 - 11:40 | 5451569 TeamDepends
TeamDepends's picture

They give corruption a bad/good name.  Can't decide which.

Sat, 11/15/2014 - 11:42 | 5451571 GetZeeGold
GetZeeGold's picture

 

 

Paging ANOTHER.....please pick up the white courtesy phone.

Sat, 11/15/2014 - 12:13 | 5451627 nope-1004
nope-1004's picture

This vote, however the outcome, means nothing.

 

Third, the amendment does not specify whether the gold has to be in physical or derivative form. The movement behind the gold initiative had initially demanded that all gold be held in bullion, rather than in financial derivatives such as swaps, but this is not an explicit demand of the constitutional amendment.

Sat, 11/15/2014 - 12:15 | 5451632 kliguy38
kliguy38's picture

Yes agree ......pure bullshit.....if you don't have it on your soil then its not yours

Sat, 11/15/2014 - 12:26 | 5451650 zerozulu
zerozulu's picture

Gold can be swapped with lead only.

Sat, 11/15/2014 - 13:47 | 5451829 BaBaBouy
BaBaBouy's picture

MANY Veterans In The Field Say Paper GOLD VS PHYS GOLD Is Levered 100/1.

So As I've Said earlier, I Speculate That The Ratio Is Much Much Higher, Maybe 200, 400 Or Even 1000 To 1...

So, Even If The Ratio Is 1/100, When You Buy An Ozs You Are Actually Buying A proxy Of 100 Paper Ozs.

Its Like Your 1 Vote Balances Out 100 Other Votes!!!

Sat, 11/15/2014 - 15:00 | 5451972 Manthong
Manthong's picture

Aw C'mon..

All you Debbie Downers..

Yellow sprayed tungsten is as good as gold to a bankster.

 

Sat, 11/15/2014 - 16:51 | 5452253 BurningFuld
BurningFuld's picture

Hope everyone is taking in to account all this "magic" gold.

Jump you fuckers!

Sat, 11/15/2014 - 17:39 | 5452284 Manthong
Manthong's picture

Sorry.. OT, but good to know..

Police Officers Draw Guns During Unannounced ‘Active Shooter Drill’ At Elementary School

“the officers burst into her class with an AR-15, she was in fear for her life.”

 ..according to Illinois Law, this is sufficient justification to shoot the cops.

..and just a fun thought.. if every kid and the teachers were carrying, nobody would get away being threatening and flashing a rifle around in a classroom.      :-D

OK, so that sounds completely absurd, but is it any crazier that having the law terrorize a school with a bizarre and maniacal exercise like that?

 

 

 

Sat, 11/15/2014 - 17:53 | 5452412 Squid-puppets a...
Squid-puppets a-go-go's picture

Everyones talking about the swiss needing 1500 tonnes. Thats only at these prices. the price pressure of their purchases should see gold rise in valuse such that perhaps they only need to buy 1000 or 500 tonnes in order to fulfil their 20% reserve quota

so a yes vote will be less 'expensive' and will be a self fulfilling prophecy of prudence

Sat, 11/15/2014 - 21:37 | 5452981 philipat
philipat's picture

Of course, we the people should demand that our CB's report Physical Gold holdings separate to derivatives, but then the jig would be up of course. Therefore it will never happen. Just dreaming......

Sun, 11/16/2014 - 06:51 | 5453810 saveandsound
saveandsound's picture

so a yes vote will be less 'expensive'

Actually it will cost excactly the same, that means 20% of SNB currency reserves. Rising gold prices just mean that they are going to buy less gold.

On the other hand, I wouldn't bet on rising gold prices just because the SNB has to buy 1500 tons or so during the next 5 years. CB buying or selling gold have always been a counter indicator. So far.

What happens if CB stop their gold buying? Who did see the oil prices drop coming?

I don't know much about the future, but to me the outcome of disproportionately growing mountains of debt can't result in rainbows and unicorns and Krugman becoming POTUS.

Sun, 11/16/2014 - 08:48 | 5453899 philipat
philipat's picture

So this is a lot like the "Repo" transactions that were an integral part of the 2008 debacle, especially Lehman. But I suppose we should understand that Banksters are Banksters, irrespective of whether they are TBTF Banksters or Central Banksters. Once a Bankster, always a Bankster??

Sun, 11/16/2014 - 18:46 | 5455259 Squid-puppets a...
Squid-puppets a-go-go's picture

your math only works on an assumption that they currently have 0% gold to GDP - theyre not starting from scratch, theyve currently got 8% - so any price appreciation will magnify the value of that 8% thus 'cheapening' the overall rise to 20%.

In fact, if the price of gold somehow rises 150% to $2600 / oz - they dont have to spend a cent

Sun, 11/16/2014 - 19:02 | 5455302 Urban Redneck
Urban Redneck's picture

They would also have to abandon the CHF-EUR peg and allow the currency to float freely (appreciate). However, since this would likely destroy the value of the SNB's paper reserves, so they might not have to spend a single cent even without an increase in the price of gold.

It's a multi-variable calculus problem that people are trying to solve by drawing a straight line with Birinyi's ruler.

Wed, 11/19/2014 - 03:05 | 5464303 saveandsound
saveandsound's picture

It's a multi-variable calculus problem that people are trying to solve by drawing a straight line with Birinyi's ruler.

full ack

Wed, 11/19/2014 - 04:36 | 5464386 saveandsound
saveandsound's picture

They would also have to abandon the CHF-EUR peg and allow the currency to float freely (appreciate).

Why is that?

They could continue the peg by buying vast amounts of EUR and USD, expanding their balance sheet. Sorry, I mean balance cheat. Would include acquiring gold as well. That would be a heck of a carry trade. ;-)

 

Sat, 11/15/2014 - 17:59 | 5452418 Paveway IV
Paveway IV's picture

"...Second, using gold swaps to meet reserve ratio requirements would be consistent with international accounting standards. Gold swaps are recognized by the IMF as a legitimate means for managing central bank reserves..."

Personally, I think international accounting standards SUCK when it comes to central banks. But good for you for pointing this out, Tyler. Even if it passes, the Swiss referendum is useless because it does not demand that the gold of the Swiss people be kept and held in physical form subject to frequent independent audit, melt and assay AND EXPLICITLY PROHIBITS RE-HYPOTHICATION.

Banks will scream bloody murder if they can't make money on the side gambling with other people's gold the way they have the last few hundred years. The point of the Swiss referendum should be that the gold assets of the citizens of Switzerland are not there for profit-making schemes of the central bank's member banks. Central banks always crow about the profits being returned to the people. Obviously they get their skim or they wouldn't bother doing it to begin with.

'Managing reserves' does not equal 'gambling with them for some extra coin on the side'. Central banks cannot be trusted with gold - EVER.

Fuck the Rothschild's gravy train of gold manipulation profits. A central bank has no business gambling (in collusion with bullion banks and member banks) with sovereign gold reserves of ANY nation. If it's too difficult to 'manage' the reserves without various gambling instruments, then piss off. We'll get someone else to manage the reserves that doesn't figure trading profit as part of their management strategy.

Keep your fucking hands off the nation's gold. Taxpayers don't owe you a living and have never (and will never) see a dime of the god damn 'manipulation profits' anyways. The Swiss cantons that supposedly got some of these profits in the past are just as likely to be forced to pay out in the future when the central bank's trading strategy goes south.

Re-hypothecating sovereign gold reserves are a central bank's scheme to skim some profit from the gold while transferring ALL their trading risk to the owners of that gold. A nation owes it's central bank NOTHING.

Fuck all central banks and their gold Ponzis.

Sat, 11/15/2014 - 12:30 | 5451653 Skateboarder
Skateboarder's picture

Average guy, even with decent paper/digital holdings, has absolutely no idea what role CBs play in the world. You can only hope that one distant day, when people the world over discover that all the paper promises they've been sold are lies and nothing but, they will remember the lesson and learn.

Sat, 11/15/2014 - 12:48 | 5451681 Rubbish
Rubbish's picture

Punchline nobody has any Gold but China Putin Indians and a few tin foil hats. When do we take over?

 

Gold Bitchez.......I pick up pennies

Sat, 11/15/2014 - 13:31 | 5451776 Son of Loki
Son of Loki's picture

I took some of my 'swaps' to the bank as collateral for a loan. The "dickhead" there told me where to go.

 

In reality, no one wants paper as a substitute for gold. It's a financial instition mirror trick, a magicians slight of hand charade, that will last as long as the Sheeples allow it.

Sat, 11/15/2014 - 13:41 | 5451800 Pinto Currency
Pinto Currency's picture

 

 

The global move to gold is relentless as central bank insanity becomes so obvious that even the most ardent paper chaser starts to look sideways.

The LBMA is on the verge of losing it in a convulsion.

Sat, 11/15/2014 - 18:07 | 5451876 Manthong
Manthong's picture

I will gladly give you 300 US FRN’s today for a Swiss Gold Francfurter on
Tuesday.

OK Mooks..

You all owe me for finding this one  :-))

https://www.youtube.com/watch?v=vPwW7RaPO_g

..and maybe one of you rocket scientists can tell me how much a hundred bucks of 1965 gold is worth today.

so suspend disbelief.. that looked like a pretty soft spring on the .45 and I don't think I would want the hammer back in an aircraft.

aarghh..  not a weekend in Vegas.. a week at the Bellagio!

ha ha.. there is your inflation, banksters!


 

Sat, 11/15/2014 - 15:02 | 5451880 knukles
knukles's picture

DON'T FORGET!
But one ounce passes thorough the City of London it has the power to be come Infinite.
If exclusively those playing the paper game are amongst the clique playing the paper game, and nobody calls BS (aka Delivery) then it's all "good".
Plus.  Don't forget that places like the CRIMEX can force cash delivery or in some cases even shares of ETFs*.
My oh my, the fantasies people weave.

*Of note, most of you guys here probably are too young to remember the Hunt Brothers cornering silver in the '70s on the CME and CBOT, where in part to unwind the cornering and delivery attempted by the Hunt's, the clearing corp(s) essentially declared force majeure/manipulation negating the threat of capitalizing on the paper/physical relationship and thereby kept their very own members (the shorts) in good stead.  The Hunts went on to file bankruptcy for this as well as several other associated ventures. 
See. 
The Leviathan takes care of itself.

Moreover at the time, I had been publicly espousing the necessity to ensure the integrity of the futures markets, that no contracts should ever need to be settled in cash.  That the buyer should always have the option to demand delivery.  This caused me some great pains when an S&P futures contract started trading which settled only in cash.  My bosses figured that was sufficient.  I claimed it to be tantamount to gambling or a lack of true convergence at delivery.  So I was told to STFU, grow up, fly right or GTFO.
And when the Hunts were forced to liquidate, I claimed that in my mind's eye it essentially constituted "fraud" or "theft" by the exchanges.
And was told to Never Ever say Anything Like That Again.

Sat, 11/15/2014 - 16:24 | 5452198 bbq on whitehou...
bbq on whitehouse lawn's picture

People with power forget they will not always be in power. When those who come to power later find out they cannot play the same games as before, real hard changes happen.

Sat, 11/15/2014 - 16:33 | 5452219 hendrik1730
hendrik1730's picture

That says it all, pal. Paper gold is .... paper. Fancy paper, though.

Sat, 11/15/2014 - 14:27 | 5451882 mccvilb
mccvilb's picture

You aren't wrong, and it's not just the average guy. Just ask the owners of Buba Shrimp. Not to worry.

Largest gold refiners in the world. 3,000 tonnes exported yearly from Swiss refiners and smelterers. Number of gold mines operating in Switzerland - Zero.

Paper gold? We don' need no stinkin'paper.

According to the MSM, Germany has been looking West asking the United States for the return of its gold. That story's for regular financial news consumption. They should have said look south as it was being converted from old Nazi gold to 99.9999% pure and then shipped off to parts unknown.

The Swiss are up to their Matterhorn in this shell game along with the central banksters, the "investment" banksters and the politicians. It's impossible to discern how deep this corruption cuts or who the real players and puppeteers are.

Sat, 11/15/2014 - 15:25 | 5452050 LikeyMikey
LikeyMikey's picture

None of Germany's Gold that the US has stolen was Nazi Gold.  It was all earned and accumulated in the 50's.

 

 

Sat, 11/15/2014 - 16:25 | 5452202 bbq on whitehou...
bbq on whitehouse lawn's picture

All great fortunes are stolen, the question is from whom.

Sat, 11/15/2014 - 13:22 | 5451757 DoChenRollingBearing
DoChenRollingBearing's picture

 

 

nope-1004

That's what jumped out at me too.  The SNB can still fake its way to "having the gold on Swiss soil".  The Swiss PTB have already found at least two ways to subvert the Initiative.

*  *  *

I did enjoy the perspective from the article of gold swaps since 1925.  Very instructive re how long the banksters have been doing this crap.

Sat, 11/15/2014 - 14:20 | 5451890 nope-1004
nope-1004's picture

Chen,

As I'm sure you have read, I paste it again here:

 

"It is the "practical understanding" that our modern world must use a "digital paper money" for commerce. All accept this. However, without a "gold currency" priced daily in the "free market", and used as real reserves, any "world reserve currency" would expand using "debt only" as the tool. This result brings the eventual reckoning for all users. The "host country" finds all other nations supporting its "lifestyle", even as those country's private financial infrastructure is destroyed. It is the rising US equity markets and falling inflation that so indicates the last days of the dollar! Many say this is a sign of strength for America, yet they know not what time of life the dollar has attained. The "old man" has he become even as persons place their financial horse upon his shoulders. The world debt structure of this "old man" is such that the true pricing of gold in a new currency, will bring such a weight as it will end his life! The purpose of the evolution in "paper gold trade" is offered in many reasons. At first, it was the "deception" to hide the "life age" of the dollar. Much as your Hollywood actors obtain the "facelift", yes? This "deception"(low gold price in US$), to the surprise of many, was created by the "Euro makers" not the "dollar makers". To their advantage, world traders and dollar investors were greatly fooled and, as you say, "jumped on band wagon" to help sell paper gold down! This action did prolong life of dollar as was needed, for the Euro was taking much time to complete…

It has always been the desire for the "hard currency" to settle old dollar debts. Dollar debts made "unreasonable" by the loss of "honest commerce" by "dishonest exchange rates". As has been from the past, and will be in the future, Gold does always settle the score!" 

Sat, 11/15/2014 - 17:35 | 5452365 DoChenRollingBearing
DoChenRollingBearing's picture

+ $55,000

Sat, 11/15/2014 - 20:45 | 5452873 Eternal Complainer
Eternal Complainer's picture

It's theatre.

Sun, 11/16/2014 - 08:45 | 5453894 Tall Tom
Tall Tom's picture

This vote, however the outcome, means nothing.

 

You are correct nope-1004. If voting actually changed anything then it would be outlawed.

 

Vote with your pocketbook, buy as much Gold as you possibly can afford, and then OPT OUT as much as you can. Vote with your pocketbook.

 

Withdraw as much as you can from the corporatocracy. Do not give them any money. Do not give them your services in employment.

 

Any legal action which you can do that will lead to their destruction...DO.

 

Cancel Thanksgiving. Cancel Christmas. Most corporations depend on your spending at this time of year to be profitable. Help them realize massive losses.

 

Help collapse this immoral, corrupted and dishonest system.

 

Your level of complicity is up to you. The more that you act in support of it the longer it will linger. Financial support is support.

 

Sat, 11/15/2014 - 11:44 | 5451575 Divided States ...
Divided States of America's picture

Im sure the russian and Chinese central banks are really backed by physical gold holdings, its just the west thats doing these shenanigans.

Sun, 11/16/2014 - 02:24 | 5453628 glenlloyd
glenlloyd's picture

It should have been written specifically to avoid derivative forms of gold if that's what they wanted, and I would venture a guess that if the people vote in favor of this those voters believe they're voting for physical bullion, not swaps.

Sat, 11/15/2014 - 11:38 | 5451564 TurdOnTheRun
TurdOnTheRun's picture

No longer interested if governments have the gold. Be your own bank.

Sat, 11/15/2014 - 12:25 | 5451646 Mr Pink
Mr Pink's picture

Sounds like the ramblings of a terist

Sat, 11/15/2014 - 12:32 | 5451660 Skateboarder
Skateboarder's picture

I'm sure the average Western teevee monkey can be trained to snitch on PM holders as terrizz. Only here though. Asia (and some of Europe) thinks otherwise.

Sat, 11/15/2014 - 15:05 | 5451991 knukles
knukles's picture

Well duh! 
In Asia and parts of Europe that don't get Dancing with the Quadriplegics

Sat, 11/15/2014 - 11:47 | 5451578 buzzsaw99
buzzsaw99's picture

Gold, huh, good God y'all

What is it good for?

Absolutely nothing, just say it again

Gold whoa Lord

What is it good for?

Absolutely nothing, listen to me

Gold, it ain't nothin' but a heartbreak...

Sat, 11/15/2014 - 11:47 | 5451579 Bell's 2 hearted
Bell's 2 hearted's picture

hoo counts the votes all that matters

 

hoo controls the vaults all that matters

 

"sorry, we're closed for inspection today ... cleaning ... come again ... someday"

Sat, 11/15/2014 - 12:24 | 5451644 kchrisc
kchrisc's picture

Ultimately, who operates the guillotines, is all that matters.

An American, not US subject.

Sat, 11/15/2014 - 11:47 | 5451580 bardot63
bardot63's picture

Brilliant!  If the Swiss vote to have their gold present & accounted for, the Swiss bankers just use paper gold.    Writing "gold" on a piece of paper is just as good as the physical.  Problem solved.

Sat, 11/15/2014 - 11:49 | 5451584 Bell's 2 hearted
Bell's 2 hearted's picture

would you prefer a gold star?

 

or sticker?

Sat, 11/15/2014 - 16:11 | 5452165 DaveyJones
DaveyJones's picture

as long as the paper is physical

Sat, 11/15/2014 - 11:55 | 5451581 JustObserving
JustObserving's picture

One of the reasons that the West attacked Libya to liberate if from its 144 tons of gold.  Does anyone imagine that the West will allow Switzerland to buy 1500 tons of gold? 

If the referendum passes, all the Swiss people will get is paper gold.

According to more than a few observers, Gadhafi’s plan to quit selling Libyan oil in U.S. dollars — demanding payment instead in gold-backed “dinars” (a single African currency made from gold) — was the real cause. The regime, sitting on massive amounts of gold, estimated at close to 150 tons, was also pushing other African and Middle Eastern governments to follow suit.

And it literally had the potential to bring down the dollar and the world monetary system by extension, according to analysts. French President Nicolas Sarkozy reportedly went so far as to call Libya a “threat” to the financial security of the world. The “Insiders” were apparently panicking over Gadhafi’s plan.

"Any move such as that would certainly not be welcomed by the power elite today, who are responsible for controlling the world's central banks,” noted financial analyst Anthony Wile, editor of the free market-oriented Daily Bell, in an interview with RT. “So yes, that would certainly be something that would cause his immediate dismissal and the need for other reasons to be brought forward [for] removing him from power."

http://www.thenewamerican.com/economy/markets/item/4630-gadhafi-s-gold-m...

Sat, 11/15/2014 - 11:55 | 5451596 SilverIsMoney
SilverIsMoney's picture

If the Swiss Govt screws their people over then so be it... I'm so sick of people not wanting to support obviously good things for sound money because "they" will find a way to break it.

Who gives a shit? Make "them" find a way to break it and don't let them off easy.

Go Swiss Go!

Sun, 11/16/2014 - 09:11 | 5453928 blindfaith
blindfaith's picture

 

From where?

Let me rephrase that....FROM WHERE?

All this 'tonnes' of gold that is 'reported' to have been bought by Russia, China, India (all honest folks) just does not add up unless it is being delivered by an Amazon drone from some comet, and thus not on the books of 'infact' available gold.  Just how was all this gold delivered and WHO was the seller of physical?  Rest assured, this would be known.

Any have any how much dirt has to be extracted to end up with 1 ounce?  Miners are not seeing the buys, so where is the proof of purchsed?  And, don't tell me any media is trustworthly enough to be believed 100% including Zerohedge.

Sat, 11/15/2014 - 12:08 | 5451620 Confundido
Confundido's picture

The referendum shall not pass if it's a YES. Like in Catalunya, it will be legally challenged and called "anti-democratic and anti-popular", because it endangers Arbeitzplatze.

Sat, 11/15/2014 - 12:20 | 5451637 SilverIsMoney
SilverIsMoney's picture

Again... FORCE THEM to go to those lengths so they can continue to discredit themselves and the Democracies they claim to support. Im so sick of this bullshit about how "they'll" find a way around whatever we try to do so we shouldn't try. That's bullshit. FORCE THEM to find a way around it so it gives us more foddler for the future... I dont care if it's Yes and the Swiss don't get 1 OZ of physical. That happening will get even the dumbest of people to wonder "why" "why do they want they gold?" is a question "they" cannot have ANYONE asking...

It's the battle of ideas that's most important. A Yes vote, no matter what the final outcome, could be a tremendous event for all of us who want this system to die...

 

Sun, 11/16/2014 - 05:43 | 5453771 effendi
effendi's picture

The good thing about the Swiss votors is that if they vote Yes on gold and the bankers pervert that to mean paper then within a short time the voyors will vote again to remove the banks wiggle room and specify physical gold on Swiss soil that has no issues to absolute Swiss ownership.

The Swiss votors love their referenda to get what they want.

Sun, 11/16/2014 - 09:16 | 5453931 Tall Tom
Tall Tom's picture

The people will not bring the system down. THe infighting of the Oligarchs will do that trick. Voting does not work as the corruption of morals and ethics run deep within the rotting structure.

 

That is what Deutchebank demonstrates with their suggestion to the Swiss National Bank. That is one absolutely corrupt institution.

Sat, 11/15/2014 - 13:41 | 5451803 Ignatius
Ignatius's picture

I don't know one way or a 'tuther about your theory, but one thing I am sure of is that they stole Libya's gold.

Sat, 11/15/2014 - 17:14 | 5452301 daveO
daveO's picture

The Gaddafi move that sealed his fate was less than a month before the west attacked him. In March, he announced he would sell Libya's oil for Rubles or Yuan, ditching dollars. That, alone, got him the death sentence! Didn't even need to go gold.

Sat, 11/15/2014 - 11:50 | 5451582 insanelysane
insanelysane's picture

Apparently you don't need writers if you just run what ever the regime sends down to be published.

http://www.businessinsider.com/layoffs-at-cnbc-2014-11

I wonder if any of these writers were asked to write an article on how rosy the employment situation is a few minutes before getting wacked?  Keep doing what you're doing CNBC, less Santilli and more Liesman and Cramer.

 

Sat, 11/15/2014 - 12:22 | 5451639 kchrisc
kchrisc's picture

You don't need writers when the script is provided to you.

An American, not US subject.

 

Cramer show script: "Go out and act like a buffoon and push this list of stocks so our friends can benefit and then dump them on the sheeple."

Sat, 11/15/2014 - 17:18 | 5452312 daveO
daveO's picture

He's a carnival barker running the old Pump and Dump. I instinctively turned against CNBS when they put him on the air, about 15 years ago. He was just revolting.  

Sat, 11/15/2014 - 11:49 | 5451583 Kaiser Sousa
Kaiser Sousa's picture

DEATH TO THE MONEYCHANGERS...
stay tuned...
Incurse Indians from Golden State Mint arriving next week from APMEX...

fuck you very much you fucking sociopath banker fucking scumbags....

Sat, 11/15/2014 - 11:53 | 5451591 fiftybagger
fiftybagger's picture

"the amendment does not specify whether the gold has to be in physical or derivative form"

Epic Fail!

Sat, 11/15/2014 - 12:22 | 5451642 SilverIsMoney
SilverIsMoney's picture

OR total lies and propaganda from DoucheBank...

As I understand it the Swiss would have to reclaim 1500 tons of PHYSICAL gold and even if some of that, or all of it, is paper it's a very destablizing event either way. I dont know why anyone cares what these dipshits at DB think anyway as they obviously have an interest in this failing.

Sat, 11/15/2014 - 13:43 | 5451691 Urban Redneck
Urban Redneck's picture

OR perhaps you have been absorbing too many of the total lies and propaganda from the gold bugs...

There isn't anything wrong with DoucheBank's Deutsche. The Swiss even wrote the referendum in Douche Deutsch so there wouldn't be any confusion by the important numbers such as Zwänzk or Feuf (since Schwytzerdütsch or any of its local flavors like Züridüütsch aren't written languages, so the spelling is a free-for-all, but makes for cool shibboleths in Schweizerdeutsch)...

the referendum reads:

I: Die Bundesverfassung wird wie folgt geändert:
Art. 99a (neu) - Goldreserven der Schweizerischen Nationalbank
1 Die Goldreserven der Schweizerischen Nationalbank sind unverkäuflich.
2 Die Goldreserven der Schweizerischen Nationalbank sind in der Schweiz zu lagern.
3 Die Schweizerische Nationalbank hat ihre Aktiven zu einem wesentlichen Teil in Gold zu halten. Der Goldanteil darf zwanzig Prozent nicht unterschreiten.

II. Die Übergangsbestimmungen der Bundesverfassung werden wie folgt geändert:
Art. 197 Ziff. 94 (neu) - 9. Übergangsbestimmung zu Art. 99a (Goldreserven der Schweizerischen National-bank)
1 Für die Erfüllung von Absatz 2 gilt eine Übergangszeit von zwei Jahren nach Annahme von Artikel 99a durch Volk und Stände.
2 Für die Erfüllung von Absatz 3 gilt eine Übergangszeit von fünf Jahren nach Annahme von Artikel 99a durch Volk und Stände.

Sat, 11/15/2014 - 14:34 | 5451913 cbaba
cbaba's picture

See below the Translation.
Article 3 says clearly SNB has to "keep assets in Gold"
Yes it doesnt say swap or derivatives but all it takes a smart Swiss citizen to sue SNB if they don't hold the assets in Physical Gold, then courts will decide if the gold means physical versus swap/derivatives, thats the ticking time bomb.

Translation to English:
I: the Federal Constitution is amended as follows:
Article 99a (new) - the Swiss National Bank's gold reserves
1 the gold reserves of the Swiss National Bank are not for sale.
2 the gold reserves of the Swiss National Bank are to be stored in the Switzerland.
3 the Swiss National Bank has to keep their assets largely in gold. The gold content may not be less than twenty percent.

II. the transitional provisions of the Federal Constitution be amended as follows:
Article 197 point. 94 (new) - 9 transitional provision Article 99a (gold reserves of the Swiss national bank)
1 a transitional period of two years after the adoption of article 99a through people and the cantons is for the fulfillment of paragraph 2.
2 a transitional period of five years after the adoption of article 99a through people and stalls applies the fulfilment of paragraph 3.

Sat, 11/15/2014 - 14:53 | 5451940 Urban Redneck
Urban Redneck's picture

They would lose. There is plenty of legal precedent as to the definition of "Goldreserven". Since Goldreserven already includes paper gold, unless the amended federal Constitution explicitly spells out a new definition for Goldreserven, the existing definition stands, and paper gold is acceptable as Goldreserven.

Sat, 11/15/2014 - 19:35 | 5452690 The Wizard
The Wizard's picture

Good point. However, is the term "gold reserves" defined as physical gold in the legislation? The paper derivative could be classified as an asset as the poster above states. As you point out, in a court proceeding a party could argue that paper gold is a gold reserve and not necessarily physical. Derivatives are presently classified as assets which is the bottom line problem to this monetary fiat shell game.

They would have to go back to the legislative committee meetings and uncover the intent of the terms.

Sat, 11/15/2014 - 11:54 | 5451593 Bernard_2011
Bernard_2011's picture

Leave it to the banksters to cook up another "legalized" fraud scheme.  This would be a brazen defiance of the will of the Swiss voters.  But that issue doesn't seem to come up in the Deutsche Bank "analysis".  Due to the Swiss outrage this would likely cause, I don't think the SNB would pursue these tricks.

Sat, 11/15/2014 - 13:10 | 5451729 nevadan
nevadan's picture

agree.  At least not at first,but over the five year window for implimentation........

Sat, 11/15/2014 - 12:00 | 5451601 SeattleBruce
SeattleBruce's picture

"The movement behind the gold initiative had initially demanded that all gold be held in bullion, rather than in financial derivatives such as swaps, but this is not an explicit demand of the constitutional amendment."

I see. The intention of the movement was to recover bullion, but since it's not "explicit" screw that. Why do I feel like this is a sophisticated version of the shell game con?

Sat, 11/15/2014 - 12:01 | 5451606 The Wizard
The Wizard's picture

In other words, the steps as to how to create a derivative and naked short gold.

Sat, 11/15/2014 - 12:47 | 5451678 saints51
saints51's picture

Thats the way I see it. Another loophole for the bankstas.

Sat, 11/15/2014 - 13:23 | 5451756 Urban Redneck
Urban Redneck's picture

It's so much worse than that... What's the banksters favorite modus operandi in pursuit of MOAR money? Levering up the balance sheet.

So what happens when the relatively well capitalized SNB simply cuts its own reserve ratio in half... cutting the theoretical amount of paper gold they must buy in half is only the beginning, because the 20% would be based on the price of gold of in CHF, so the more they weaken the currency, the less (paper) gold they must buy.

Clause 1 of article 5 of SR 951.11, the Federal Act on the Swiss National Bank reads-

Die Nationalbank führt die Geld- und Währungspolitik im Gesamtinteresse des Landes. Sie gewährleistet die Preisstabilität. Dabei trägt sie der konjunkturellen Entwicklung Rechnung.

Or in Zerohedge German- zee SNB must maintain zee price stablitay. Rapid strengthening of the CHF is illegal under Swiss law, regardless of the proposed changes to article 99 of the federal constitution in the referendum, and the National Bank Act is not altered in any way by the referendum

There are moar holes in this referendum than there are in a 75kg wheel of Emmentaler cheese.

Sat, 11/15/2014 - 12:05 | 5451611 Bay of Pigs
Bay of Pigs's picture

"Second, using gold swaps to meet reserve ratio requirements would be consistent with international accounting standards. Gold swaps are recognized by the IMF as a legitimate means for managing central bank reserves."

 

Is this supposed to be a joke? Gold swaps and leases are the most non transparent things ever invented by central banks.

Sat, 11/15/2014 - 13:16 | 5451745 seek
seek's picture

...Hence they're recognized at legitmate by the IMF.

Sat, 11/15/2014 - 12:04 | 5451612 Seasmoke
Seasmoke's picture

I have no problem with this. My 10 ounces will just become 10 tonnes. We all can become cowboys. 

Sat, 11/15/2014 - 12:48 | 5451685 GetZeeGold
GetZeeGold's picture

 

 

You really seem to have the knack for this.....this isn't your first time is it?

Sat, 11/15/2014 - 12:06 | 5451614 Maplehood
Maplehood's picture

From a technical perspective, gold and silver are posting some strong reversal patterns

http://www.goldsqueeze.com/analysis

 

Sat, 11/15/2014 - 12:10 | 5451621 Hubbs
Hubbs's picture

This reminds me of the so called "stress tests" for the big banks. It is not a true stress test if the stress applied is predetermined to be small enough so that all banks can "pass".

A corrollary  is the circular argument Roubini advanced that Banks that require a AAA rating by Standard and Poors or other rating agencies do not deserve their AAA ratings.

 

In other words, if you have to stress test soemthing, then that implies that you're not absolutely sure it is stress proof to begin with.

Sat, 11/15/2014 - 13:25 | 5451761 Cacete de Ouro
Cacete de Ouro's picture

In 1999, officials from the Bank of England, Bundesbank, European Central Bank and Banque de France shut down recommendations from IMF monetary accounting statisticians to try to improve the transparency of central bank accounting. At meetings in the BIS they successfully sabotaged an attempt to split out gold and gold receivables into their component parts of gold held, gold loaned, and gold on swap because it would have been 'highly market sensitive'.

The resulting accounting treatment of gold as an asset in central bank balance sheets goes against all standard international accounting practices.

No mainstream journalists have ever bothered to cover this story.

http://www.gata.org/node/12016

Sat, 11/15/2014 - 13:52 | 5451822 Cacete de Ouro
Cacete de Ouro's picture

Deutsche: "It was commercial banks which most recently revived the concept during the financial crisis, when they entered extensive gold swaps with the BIS. The gold collateral was provided by national central banks such as the Swedish Riksbank."

The Riksbank was said to have raised US dollar liquidity in the 2009 financial crisis by using some of it's gold as collateral in order to then help it's own Swedish fincni system.

See page 13 of World Gold Council report here:

http://www.gold.org/sites/default/files/documents/gold-investment-resear...

However, Deutsche now says (above) that the Riksbank gold lending was connected to the BIS gold swaps with commercial banks (bullion banks) borrowing gold from the central banks.

In 2010, the FT reported on the BIS gold swaps (Jack Farchy and Javier Blas). This FT report is, in a lot of ways, inaccurate because they didn't delve into what the real purpose of these swaps was (they just repeated what was told to them, but that's not a good enough excuse from the FT, they should do some proper investigations - which they never do with gold )

http://www.ft.com/intl/cms/s/0/3e659ed0-9b39-11df-baaf-00144feab49a.html

For the BIS gold swaps, there were more than 10 bullion banks involved, including HSBC, SocGen and BNP Paribas.

The more accurate theories on this were that the bullion banks needed gold and the central banks provided this gold with a guarantee from the BIS, that's why the gold swap obligation was then to the BIS.

The Banque de France was said to have been heavily involved in providing some of this gold also. And from above we know that the Riksbank was also.

So the central banks provided gold to the cartel of > 10 bullion banks to presumably meet some pretty serious obligations.

And this talk of lending and borrowing gold for US dollar liquidity is a smokescreen. The US dollar liquidity just facilitated the title movement of the gold.

Sat, 11/15/2014 - 20:12 | 5452791 StychoKiller
StychoKiller's picture

Jesus Herbert Christ!  This is like playing poker only NO ONE ever lays down their cards, and everyone is claiming to be holding a royal flush!

Sat, 11/15/2014 - 14:32 | 5451910 lunaticfringe
lunaticfringe's picture

Exactly. The stress test is absolute bullshit. Done for the benefit of the sheep who believe that garbage.

Sat, 11/15/2014 - 12:13 | 5451629 Kirk2NCC1701
Kirk2NCC1701's picture

Mr. President, tear down these [Eccles Building] walls!

Sat, 11/15/2014 - 12:14 | 5451630 Inthemix96
Inthemix96's picture

Dont tell me anyone of you Zh fuckers are suprised by the fact the 'Money Changers' will use any action, regulation, executive order, outright theft, stealing from their own mothers, anything, period even if it is blatantly against the law to rip us fuckers off?  These cunts are lower than the skin on a snakes belly.  They would sell their own kids into child prostitution to keep the game of thieves alive if need be.

They have no morals, no human compunction to behave in a manner befitting a human being, no empathy, no nothing.

They are bona-fide psychopaths, only in it for themselves first, themselves second, and themselves third, and fuck you till two days from Friday.

You deal with this type of infestation as you would with rats.  You cant empathise with a rat.  A rat doeasnt understand that a rat is just doing what a rat does, a rat cant do anything other than what a rat does, and neither can these fucking criminal wank stains of fallen humanity, they only understand thieving from their fellow man, as much as they can, whenever they can for as much as they can, and fuck the consequences as there are none, its written into law for these nefarious cunts.

So deal with with the vermin like the filth they are.

Exterminate the problem and the problem goes away, with extreme predujice.

Cunts

:-)

Sat, 11/15/2014 - 12:29 | 5451652 weyes1
weyes1's picture

let it all out, buddy...

Sat, 11/15/2014 - 12:53 | 5451692 GetZeeGold
GetZeeGold's picture

 

 

There's a time for tact and grace......and then there's a time for super awesomeness.

Sun, 11/16/2014 - 09:31 | 5453963 Tall Tom
Tall Tom's picture

Does screaming at the computer, "FUCK YOU BANKSTERS", at the top of my lungs at 5:30 AM Sunday Morning and, perhaps, waking my neighbors count?

 

They need to wake the fuck up...

Sat, 11/15/2014 - 12:33 | 5451658 centerline
centerline's picture

Bankers and politicans are no longer problem solvers.  They dont think in terms of doing such things.  Rather, they are pirates.  Win, at all costs and however necessary - feeding ego and pocketbooks.  Such behavior in smaller social circles would be ejected at minimum.  In more tribal settings might get one killed.  But, on a larger scale we can become profoundly more ignorant... allowing these vermin to not only walk the earth but to prosper and infect the world.  Shit, the public at large even emmulates predator behavior as if it is okay now.  Rapidly degrading into "every man for himself."

Shit storm cometh.  And this time around there are far more informed people than ever before despite the broader impression garnered from MSM feeds.  

Sat, 11/15/2014 - 12:41 | 5451674 Inthemix96
Inthemix96's picture

Correct Centreline.

Fuck the cunts mate.  Anyhow, how are you and the family?  Hope alls well.

;-)

Sat, 11/15/2014 - 16:22 | 5452195 GreaterFool1965
GreaterFool1965's picture

"YOU JUST BETTER START SNIFFIN' YOUR OWN
RANK SUBJUGATION JACK 'CAUSE IT'S JUST
YOU AGAINST YOUR TATTERED LIBIDO, THE BANK
AND THE MORTICIAN, FOREVER MAN AND IT
WOULDN'T BE LUCK IF YOU COULD GET OUT OF
LIFE ALIVE"

Sat, 11/15/2014 - 13:46 | 5451820 DoChenRollingBearing
DoChenRollingBearing's picture

 

 

Inthemix96

"...fucking criminal wank stains of fallen humanity..."

I am going to have to remember that one, maybe even steal it.

Sat, 11/15/2014 - 13:58 | 5451846 Pareto
Pareto's picture

......and our Saturday morning read....just wouldn't be the same without Inthemix96's efficient cuff upside the head to remind us of the pschopathic motivation that buttresses the money changers and the subsequent evil they instil throughout the entire system of production and exchange.  Nobody on ZH says it better or clearer.  cheers mate.

Sat, 11/15/2014 - 14:09 | 5451869 Inthemix96
Inthemix96's picture

Pareto my friend,

I cut through the bullshit and provide absolute clarity, I'm made of electrolytes.  And I dont talk fucking bollocks.  Just spit the cunt out and call a spade a fucking spade.

Cheers mate.

;-)

Sat, 11/15/2014 - 14:14 | 5451868 oddjob
oddjob's picture

I caught a rat the other day, unfortunately it was not dead. I filled a bucket up with water and drowned it. i did not enjoy it, I did feel sad, but I realized it had to be done. The rat did not deserve to die, but the people you refer to have earned it.

Sat, 11/15/2014 - 14:14 | 5451878 Inthemix96
Inthemix96's picture

You did what had to be done Oddjob mate.

As unpleasant as it is.  It does, have to be done.  Take heart in the fact that rat wasnt in control of the very life you live, the other vermin are, and they need exactly what 96 says.

With total, extreme, over the fucking top predujice.

They would do it to you mate without even blinking.  Every, fucking, time.  Its more than past time to end this charade we call 'Life'.

Take care friend.

;-)

Sat, 11/15/2014 - 14:45 | 5451939 oddjob
oddjob's picture

I sometimes find myself thinking most people are indifferent about living in a police state under the shadow of giant boot, then there you are.

Sat, 11/15/2014 - 14:59 | 5451970 Inthemix96
Inthemix96's picture

I would imagine you are just like me mate.  Old school, and I believe you are Oddjob.

They can try, cant they?

But then again, I dont fucking think so.  As you probably ponder.

Come and try.  Come get some.  Like me, I do believe you wont either accept this condone it and will fight back mate.  Not everyone will stand back will they?

NSA, GCHQ, really?  Come on then.

;-)

Laugh the wankers off mate, they couldnt organise a piss up in a brewery.

:-)

Sat, 11/15/2014 - 15:08 | 5452001 Skateboarder
Skateboarder's picture

They would do it to you mate without even blinking.  Every, fucking, time.  Its more than past time to end this charade we call 'Life'.

"They say that life's a carousel
Spinning fast, you've got to ride it well
The world is full of Kings and Queens
Who blind your eyes and steal your dreams
It's Heaven and Hell, oh well
And they'll tell you black is really white
The moon is just the sun at night
And when you walk in golden halls
You get to keep the gold that falls"

Black Sabbath - Heaven and Hell

Words and drums from our side of the pond, and tunes from yours.

Sat, 11/15/2014 - 18:10 | 5452461 Latitude25
Latitude25's picture

I take exception to the rat analogy.  I had pet rats when I was a kid.  Now cockroaches, those are the vermin that I could do away with however like cockroaches, bankers (in bunkers) are probably immune to high levels of nuclear radiation.

Sat, 11/15/2014 - 12:18 | 5451633 Bear
Bear's picture

Always get double posts from iPad ... Sorry

Sat, 11/15/2014 - 12:21 | 5451638 JetsettingWelfareMom
JetsettingWelfareMom's picture

Sounds like the bankers will employ a timeshare model to Swiss gold holdings...bending everyone over in the swaps, no doubt.

Anyone really surprised?

Sat, 11/15/2014 - 13:41 | 5451802 Urban Redneck
Urban Redneck's picture

The timeshare analogy is apt, because with a minor tweak to a regulation by the SNB, the Swiss domiciled gold ETFs, which are already required to store 100% of their physical gold in Switzerland, would be free to swap their ETF holdings with the SNB on a given day of the month endlessly... Then there is the always mysterious Zürcher Freilager (where the wealthy go to park and trade untold quantities of gold... tax free). Throw in the BIS for good measure and the SNB doesn't even have to build any new timeshares in Switzerland or import any physical gold.

Sat, 11/15/2014 - 12:22 | 5451641 Amish Hacker
Amish Hacker's picture

It took me a long time to read that article. I was doing fine until I got to the part where it says, "using gold swaps to meet reserve ratio requirements would be consistent with international accounting standards."  The laughing and crying that followed really slowed me down.

Sat, 11/15/2014 - 12:33 | 5451656 pitterrier
pitterrier's picture

One must ask, why do Western bankers do everything they can to avoid buying or holding gold?  Common sense, referendums, law, history, nothing will move them to purchase, hold and allow an honest accounting of their holdings.  Yes but, not important, silly, historic relic, has no value, nonproductive, does not generate a return, and an endless stream of excuses, misdirection, argument, legal/illegal maneuvers, but they will not buy physical gold.  "The lady doth protest too much, methinks," is what comes to mind.  So now I think we are getting closer to the answer to the question of why don't they just buy and hold physical gold - it is not because they won't, rather it is because they can't.

Sun, 11/16/2014 - 02:47 | 5453644 Wild Theories
Wild Theories's picture

it's also due to utility, a bunch of heavy yellow stuff can not be used as easily to generate returns as digital 1s and 0s in a computer system.

The simple transaction time and cost of having to phyiscally send the yellow metal around the world makes it "backwards" compared to the utility of digital script that can be wired anywhere in a few seconds.

 

utility and efficiency.

Sat, 11/15/2014 - 12:35 | 5451666 Creepy A. Cracker
Creepy A. Cracker's picture

This space intentionally left blank.

Sat, 11/15/2014 - 12:45 | 5451675 Son of Captain Nemo
Son of Captain Nemo's picture

As per your usual ZH... A very informative read!

Thx

Sat, 11/15/2014 - 12:48 | 5451683 ebworthen
ebworthen's picture

A bird in the hand is worth two in the bush.

Sat, 11/15/2014 - 12:56 | 5451701 metastar
metastar's picture

A bar in hand is worth trillions in the central bank.

Sat, 11/15/2014 - 13:08 | 5451730 Skateboarder
Skateboarder's picture

An ounce in your hand has a thousand claims on it. Like, trippy, dude.

Sat, 11/15/2014 - 15:28 | 5452054 Creepy A. Cracker
Creepy A. Cracker's picture

A piece of green paper marked with $ symbols in your hand is worth about nine percent less each year.

Sat, 11/15/2014 - 12:49 | 5451686 Hamm Jamm
Hamm Jamm's picture

put a ball under a cup and spin it around several other cups... and guess where the ball is  !!

honestly, the Central Bank Con game is going to end very badly for the bankers....  only the smart ones are jumping off tall buildings !

 

and the angry MOB will deal with the rest

Sat, 11/15/2014 - 12:51 | 5451688 breadonwaters
breadonwaters's picture

Whenever the mother-in-law visits for a week, we always put out the family photos of her in prominent places, so she thinks they are always there. We kinda laugh about the white lie implicit .......but when a CB uses swaps to fudge the Balance sheet on reporting days, it is the equivalent of only purchasing fire insurance for four days of the year.....just to show the mortgage holders their asset is protected.

Of course if the house burns down on a non reporting day, i imagine my sorry ass will be hauled into court by those same mortgage holders, an i will be jailed for fraud.

 

HMMMMMM

Sat, 11/15/2014 - 12:53 | 5451695 Bumbu Sauce
Bumbu Sauce's picture

Confirmation bias for the drooling.

Sat, 11/15/2014 - 13:06 | 5451696 metastar
metastar's picture

Swaps would be just another case of a totally criminal, corrupt, and illegitimate government disrespecting the fundamental will of the people.

What a damn shame it would be.

I have no doubt the scum will use some sleight of hand to benefit the banks because they are at heart dishonest people.

Sat, 11/15/2014 - 12:55 | 5451705 scatterbrains
scatterbrains's picture

What this Winkler wanker dude is really trying to say is

https://www.youtube.com/watch?v=C5T-OBDSeVM

Sat, 11/15/2014 - 13:03 | 5451722 rejected
rejected's picture

This article, obviously written by someone of the legal 'persuasion', exhibits a fine example of political word smithing. There is absolutely no way a law could be written to  withstand the kinds of word abuse that exists today.  All central banks these days operate under the mafioso code. The Federal Reserve is breaking every ethical law, written or unwritten, under the color of extroidinary times and saving the economy. This perverse attitude is spreading like Ebola and destroying our monetary system and the fabric of our society. Once one law is broken the rest go like domino's. You cannot have a solid monetary system without a solid legal system. This will only get worse until the rule of law, once again, overcomes the rule of tyrants.

Sat, 11/15/2014 - 13:16 | 5451746 nevadan
nevadan's picture

And that, in a nutshell, is the problem!

Sat, 11/15/2014 - 13:43 | 5451811 Pareto
Pareto's picture

+1 When you change money......you change EVERYTHING.

Sat, 11/15/2014 - 13:31 | 5451777 optimator
optimator's picture

This is akin to welfare moms moving their kids around to meet the social workers visits isn't it?

Sat, 11/15/2014 - 13:32 | 5451780 Consuelo
Consuelo's picture

I'll take U.S. foreign policy as a reliable compass of future geopolitical and economic events, vis-a-vis gold, over any sort of referendums passed within the sphere of Western banking/political interests.   Sorry to say, but nothing truthful at this stage within the sphere of Western interests will be allowed to see the uncorrupted or co-opted, light of day when it comes to sound currency.

Sat, 11/15/2014 - 13:33 | 5451781 AdvancingTime
AdvancingTime's picture

Better have you gold under lock and key, both knowing were it is and controling it!  If all you have is a promise what you hold may have little value. The value of "something" is not an issue to take lightly.

Value is not a constant and can be derived from several factors such as how liquid a market is, supply and demand or utility value, things can spoil or become obsolete making where you invest very important. Value is not as constant as many people think or always destined to rise. I have discovered that when you start buying things at ten cents on the dollar your money begins to go a long way. This is a lesson many people may soon learn, or maybe not. The article below delves into how values constantly shift.

http://brucewilds.blogspot.com/2014/05/value-and-worth-constantly-change.html

Sat, 11/15/2014 - 13:41 | 5451804 Shekels
Shekels's picture

The tribe is still worshiping the golden (Au) calf.

Sat, 11/15/2014 - 14:27 | 5451898 Consuelo
Consuelo's picture

Ba'al...

Sat, 11/15/2014 - 17:31 | 5452350 IndianaJohn
IndianaJohn's picture

Shekels, - the hell you say.

Sat, 11/15/2014 - 13:43 | 5451810 cherry picker
cherry picker's picture

What a bunch of bullshit.  You either have gold or you don't.  A swap is not gold.  A swap I assume is a piece of paper with words on it.  Gold is heavy and yellow.

If central banks do not have the heavy yellow stuff, assume they don't own gold.  It is that simple and by the way it also conforms to accounting standards.

Sat, 11/15/2014 - 19:22 | 5452681 Rhal
Rhal's picture

That approach to principal assets is primitive and old school.

And its the only thing that will stand the test of time.

Sat, 11/15/2014 - 14:12 | 5451873 NoWayJose
NoWayJose's picture

These swaps and gimics are why the referendum was conceived in the first place!

Sat, 11/15/2014 - 14:59 | 5451974 Burticus
Burticus's picture

I think the word "gold" in the referendum means gold, not paper or electrons.

Sat, 11/15/2014 - 16:57 | 5452255 Tinky
Tinky's picture

What the fuck are you talking about?

 

Die Bundesverfassung wird wie folgt geändert:

Art. 99a (neu) Goldreserven der Schweizerischen Nationalbank

1 Die Goldreserven der Schweizerischen Nationalbank sind unverkäuflich.

2 Die Goldreserven der Schweizerischen Nationalbank sind in der Schweiz zu lagern.

3 Die Schweizerische Nationalbank hat ihre Aktiven zu einem wesentlichen Teil in Gold zu halten. Der Goldanteil darf zwanzig Prozent nicht unterschreiten.

 

The Federal Constitution is amended as follows:

Art. 99a (new) gold reserves of the Swiss National Bank

1 The gold reserves of the Swiss National Bank are not for sale.

2 The gold reserves of the Swiss National Bank are to be stored in Switzerland.

3 The Swiss National Bank has to keep its assets to a large extent in gold. The gold content must be more than twenty percent.

Sat, 11/15/2014 - 17:09 | 5452291 Urban Redneck
Urban Redneck's picture

Die Goldreserven der Schweizerischen Nationalbank
Les réserves d’or de la Banque nationale suisse
Le riserve auree della Banca nazionale svizzera

It's a legal, grammatical, and linguistic point. The referendum addresses the "gold reserves" (not gold) of the Swiss National Bank. However, it also might be why so many people seem so confused about what the referendum says and what its implications are-- they are reading WHAT THEY WANT TO into a translated version.

Sat, 11/15/2014 - 18:15 | 5452401 Tinky
Tinky's picture

You've already made the point about swaps, etc., and it certainly won't help to clarify anything by making false claims. The word "gold" is used, and not only tied to "reserves".

Furthermore, I rather doubt that, in the event that the referendum were to pass, it would be so simple for the SNB to do swaps one day a month. The Swiss public does have an understanding of the difference between that kind of shell game and bullion, and they wouldn't stand for it for long.

Sat, 11/15/2014 - 19:02 | 5452582 Urban Redneck
Urban Redneck's picture

The SNB must follow the letter of law, and should comply with the spirit of the law. The letter of the law is clearly price stability, which rules out any action which results in rapid appreciation of the franc.

As to the Swiss public, what they would be reminded of if the SNB were to ignore the letter of the law in favor of the spirit of the law, is the situation we faced in 2011 when a managing director of Goldman Sachs was publicly bitching about the high cost to his gazillionare ass of visiting Switzerland in publicly published GS client notes (even though all the hotels here were empty and thus offering hugely discounted rates, and the Swiss government was quietly handing out "support" to struggling exporters, which incidentally makes the addition of all that eurotrash currency to the SNB balance sheet look like relatively wise "investing"). If that memory were more fully realized- the Swiss would gladly vote to dump their gold.

BTW the use of "gold" is not a false claim- Die Schweizerische Nationalbank hat ihre Aktiven zu einem wesentlichen Teil in Gold zu halten. Der Goldanteil darf zwanzig Prozent nicht unterschreiten. -- "Gold" is not the same as "gold".

The simplest litmus test is the sentence following: if the referendum was talking about physical "gold" and not "gold reserves", then the "20%" would mean that the SNB could simply maintain a large stash of ghetto quality minimum 5 carat (20% pure) "gold" bling, not maintain 20% of its balance sheet in gold reserves.

GLD also uses the word "gold" in its prospectus, but a lot of people seem to realize (begrudgingly) that their definition of "gold" doesn't match Blackrock's, JPM's and the CFTC's use of "gold" even though in English both words are four letters long and use identical Latin characters.

As to the SNB, who the fuck knows precisely what they will do if the initiative passes, the only thing we know is what they won't do, which is buy clear title to, and take custody of, 1,500 tons of good delivery bars in the next five years. But it would probably be a combination of strategies (including probably buying perhaps a hundred tons of gold to show "good faith" to the Plebs, while not disrupting the physical market) and doing what they must in order to suppress the CHF.

Sat, 11/15/2014 - 20:25 | 5452822 StychoKiller
StychoKiller's picture

Oh boy, now yer requiring Good Delivery bars!  You'll get gold fillings and like it!

Sat, 11/15/2014 - 21:30 | 5452962 Urban Redneck
Urban Redneck's picture

If the authors of the referendum had meant any sort of physical gold (bullion, bars, etc) they would have had to (at a minimum change the German from "in Gold" to "in Barren" and it would still be very bad form for legislative language (en les lingots d'or [french], lingotti d'oro [italian]).

As it stands, there are three separate translations (vetted by very dutiful and precise Swiss bureaucrats with excellent language skills) that explicitly talk about the share of total SNB assets to be allocated to the "gold reserves" identified in the title of the proposed Article 99a (the text of Article 99 makes it clear that "gold reserves" are a subset of "monetary reserves" so there is at least one "Fuck You" to the Bernank and his ilk that will remain on the books regardless of the outcome of the referendum, Gold is Money.

The only way to get the referendum to do what a lot of people want it to do... is to have the Federal Legislature (which opposes the Referendum) craft implementing laws and modifications to the National Bank Act to do all the things that the Referendum actually doesn't (so I wouldn't hold my breath, if it actually passes).

The precise language skills of Swiss bureaucrats don't always extend to English. The unofficial English translation of the Swiss Federal Constitution is sloppy to to the point of being incorrect given the literalist methodology employed in other articles where the translation of the current Article 99 has "sufficient currency reserves" as the English translation of ausreichende Währungsreserven/des réserves monétaires suffisantes/sufficienti riserve monetarie). Then again, around here we all speak English but simply finding consensus on the precise distinctions between "money" and "currency" just within the English language is a major headache.

Sat, 11/15/2014 - 17:45 | 5452387 Quaderratic Probing
Quaderratic Probing's picture

What is the value of your house if it's not for sale?

Can only be a derivative of other houses that are.

But not usable as an asset as it's not for sale.

 

Sat, 11/15/2014 - 16:09 | 5452161 yogibear
yogibear's picture

Right now the banksters are trying to destroy Russia's economy because Putin's not playing their one world government game.

Mess with the Russian  bear through lower oil prices and currency.

Sat, 11/15/2014 - 21:40 | 5452987 lakecity55
lakecity55's picture

Thus Putin gets Au and lines up with Xi.

Don't forget India; they are loosely allied with Russia.

Sat, 11/15/2014 - 16:11 | 5452162 Quaderratic Probing
Quaderratic Probing's picture

Peasants groping in the mud and rain pointing at the castle and mumbling " One day that guy will get his."

Banking is the biggest business on Earth and you think you can beat them.

All threats have and will be dealt with.

They have the power to completely stop all trading like in WW2 If needed.

 

Sat, 11/15/2014 - 17:18 | 5452308 Thaxter
Thaxter's picture

OT: this link is for the children on Zero Hedge who think joking about "fisting" women or beating them with boards is good fun.

http://www.abovetopsecret.com/forum/thread1042224/pg1

"Sexism, Misogyny and the rise and rise and rise of the internet asshole...."
Sat, 11/15/2014 - 18:20 | 5452497 limacon
limacon's picture

They going to need them .

 

Major religious trouble brewing in Ethiopia-MiddleEast .

Think "stealing the Ka'aaba" 

All currencies affected . 

 

Raiders of the-not-so-lost Ark . This happened 14 Nov 2014 , two days ago . 

http://worldnewsdailyreport.com/ethiopia-ark-of-covenant-reported-stolen...

Somebody is stirring it in a major way .

This theft is going to infuriate Christians , Jews , Islam , North Africa , Saudi's ,  etc 

The fall-out is only just starting .

 

See 

http://andreswhy.blogspot.com/2014/01/fall-of-aksum.html

Sat, 11/15/2014 - 19:03 | 5452614 Clesthenes
Clesthenes's picture

Hamm Jamm wrote,

The “game is going to end very badly for the bankers… only smart ones are jumping off tall buildings… and the angry MOB will deal with the rest”.

We should hope the MOB takes no part in this transaction; I, for one, would prefer an American – rather than a Bolshevik – revolution: one that advances liberty instead of tyranny.

And there is the trouble: there may be a handful of Americans who understand the difference between the two kinds revolution.  And worse, while all Americans have the power to make these bankers accountable for what they have done, and are doing, they (Americans) REFUSE to use that power.

They don’t even understand many ideals won/confirmed by the Revolution.

For example, Founders repeatedly declared that “no man is obligated to obey any law or pay any tax unless he has given consent to it”.  Did they mean this literally?  Of course they did.  From the first English settlement to the Revolution this was how affairs of the colonies were managed.  Every “law” and every “tax” had its origin in contracts between colonial assemblies and those who petitioned for redress of grievances.  The terms of the contract were sometimes referred to as “laws” of the contract while its money payments were treated as “taxes”.  And only petitioners were obligated to obey such “laws” and pay such “taxes”.  When redress was completed, related “laws” and “taxes” expired.

Once you learn this right of consent, you’ll come to understand there is probably not a constitutional tax on the books.

There, in two paragraphs I conveyed to you more real history than you learned in 12 years of elementary and high schools, and 4-6 years of university indoctrination.  You won’t learn this and other lessons from professors, or judges, or lawyers; the first two depend on continued grievances for their pensions, the third never learned such history, or law.

This right of consent was won with the Revolution… and who knows it?

There are three main reasons for these failures: one is that Americans have no knowledge of such power; the second, they’ve been herded into a kind of impotent stupor by medication and indoctrination; the third, that they aid, benefit or were complicit in such evil.

There’s a remedy for all three of these failures: 1) learn, and use, the law and procedures of redress (full article); 2) follow a health regimen that has REDUCED – not slowed – my biological age 50 years (it also un-does the damage done by medication and indoctrination); and, 3) see number one.

This health regimen has given me the coordination, health and physical condition of a professional athlete around the age of 20; I’m 70 years of age (for validation, video and webpage – each leads to the other).

Without the knowledge of historically-proven facts and methods I suggest, Americans would not know what to aim at, nor how to achieve it.

Sat, 11/15/2014 - 19:45 | 5452735 Alberich
Alberich's picture

Seems like there's some worry the resolution might pass, which means SNB would have to invent a way around it after the fact. Buy the rumor, sell the news on a commodity fixed below market clearing prices? Yes please...

Sat, 11/15/2014 - 19:46 | 5452746 iPood
iPood's picture

But doesn't this type of swap still leave the upside in gold with the gold lender (counterparty)... in essence it's just a collateralized loan? Will that satisfy the referendum ?

Sat, 11/15/2014 - 20:34 | 5452817 bentaxle
bentaxle's picture

So the "solid, reputable, reliable," International Accounting Standard says, you've got gold if.........you haven't got a fleck but you can borrow some gold, for 24 hours in what is only a ledger exercise, off someone who it doesn't belong to anyway so his ledger is fake too......and that counts, because The IMF is OK with it?

That ain't funny!

It's no different than your gold holding being reflected as true, because the auditor accepted sight of a polaroid taken in 1976 of some stack of bars, "proved" ownership.

 

 

Sat, 11/15/2014 - 20:30 | 5452840 fibonacci's claus
fibonacci's claus's picture

END THE IMF.  END THE FED. 

 

STATE BANKS WITH STATE OWNED GOLD, THAT IS THE SOLUTION.

Do NOT follow this link or you will be banned from the site!