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The CME On Gold As Collateral And Its Unsurprising London-Based Custodian

Tyler Durden's picture





 

While the increasing use of gold as accepted explicit (not implied) collateral has long been known, especially with an increasing push by Germany to receive gold as the ultimate guarantee backstop of the only viable Eurozone extension  scheme, the Redemption Fund, the other side's perspective, that of the exchanges has been missing. Now, courtesy of a report by Harriet Hunnable from the CME, titled "Some Insights into Changes in the Gold OTC market", we can see just how the status quo views gold's rising role in a world increasingly short of good collateral (even if, as the Chairman says, it is anything but money). And yes: that the CME has its gold custodian facilities with JPM London, where it is subsequently infinitely rehypothecatable and where it serves to restock the occasiona physical shortage here and there, does not surprise us at all.

 


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Fri, 07/13/2012 - 11:16 | Link to Comment dereksatkinson
dereksatkinson's picture

Now if we could get 5% to take delivery..

Fri, 07/13/2012 - 11:18 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Take back the money supply!

Buy Gold!

Buy Silver!

Fri, 07/13/2012 - 11:22 | Link to Comment BaBaBouy
BaBaBouy's picture

GOLD To $50 Grand, Bitchies ...

Fri, 07/13/2012 - 11:39 | Link to Comment Pladizow
Pladizow's picture

Fox guarding the hen house?

Fri, 07/13/2012 - 11:48 | Link to Comment francis_sawyer
francis_sawyer's picture

long needles & thread... short billionaires...

Fri, 07/13/2012 - 12:40 | Link to Comment strannick
strannick's picture

So..JPM is the custodian for GLD, JPM is the custodian for COMEX, and both of these along with the BOE's gold, and whatever allocated/unallocated (no difference) gold is lying around is all stored in one big happy vault in London.

Thats handy for when JPM needs to take the allocated gold from customers at Brokerages like MFG and PFG.

JPM obviously recognizes the value of a good gold bar, as they realize most of the vaule in the quadrillion in derivative prices are simply made up by their prop desk anyway.

Fri, 07/13/2012 - 12:52 | Link to Comment Diablo
Diablo's picture

HSBC is the custodian of GLD.

 

Fri, 07/13/2012 - 13:18 | Link to Comment strannick
strannick's picture

Thanks, whoops. SLV...

Fri, 07/13/2012 - 12:21 | Link to Comment Darth..Putter
Darth..Putter's picture

ANY futures brokerage with JPMorgan as the custodian is a scarey risk!

Fri, 07/13/2012 - 21:31 | Link to Comment cynicalskeptic
cynicalskeptic's picture

These aren't foxes guarding the henhouse - they're velociraptors.

There's a reason the 'regulators' aren't doing their jobs.  They're hiding and running - afraid of being devoured a la Jurassic Park.

Fri, 07/13/2012 - 12:33 | Link to Comment fnordfnordfnord
fnordfnordfnord's picture

DOLLAR to $0.03, Bitches

Fri, 07/13/2012 - 12:49 | Link to Comment LowProfile
LowProfile's picture

I think you mean the USD is going to Au 0.0005 gm,

Fri, 07/13/2012 - 13:04 | Link to Comment fnordfnordfnord
fnordfnordfnord's picture

Something like that!

Fri, 07/13/2012 - 13:46 | Link to Comment prole
prole's picture

You are both right!

Fri, 07/13/2012 - 14:14 | Link to Comment Leopold B. Scotch
Leopold B. Scotch's picture

OLD NEWS...   $ 0.03????   That's already happened.

 

http://www.bls.gov/data/inflation_calculator.htm/

Enter the $1.00 today and the price adjusted back to 1913.  $ 0.04 is the answer.  Then consider how horribly rigged CPI has been for the last 30-years.

For those not initiated to the ways of politicized / corrupted "official" statistics, this is a great primer:

www.shadowstats.com/pdf/779-626538446.pdf

 

 

Fri, 07/13/2012 - 21:37 | Link to Comment cynicalskeptic
cynicalskeptic's picture

Ding! Ding! Ding!   We have a WINNER!!!!!

The sad thing is that 99,.99% of the peopel don't have aclue on how much less their money is worth, how much less their buying power it, how much their savings (if they have any) have lost in value.....       

 

My best in degree starting salary for engineering in the late 70's won't hire a bubbleheaded receptioninst today.  The car I would have paid $#500 for on graduation now costs $35,000.  The crap house my grandparents paid $12,000 for in 1948 sold for well over a half million a couple years back.  

And the Silver Eagle I bought to give to my kid when he got out of HS costs twice as much (even with the slamdowns on PM's) for college graduation four years later.

Fri, 07/13/2012 - 12:42 | Link to Comment LowProfile
LowProfile's picture

 

Take back the money supply!

Buy Gold!

Buy Silver!

...And TAKE DELIVERY!!!

Fri, 07/13/2012 - 11:17 | Link to Comment zilverreiger
zilverreiger's picture

they would never receive it

Fri, 07/13/2012 - 11:18 | Link to Comment dereksatkinson
dereksatkinson's picture

And the system would collapse..

Fri, 07/13/2012 - 11:31 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

If people didn't recieve it then some, maybe even most, would go out with the cash payment from their contract and buy bullion.  And yes, if that happened it certainly could wipe the shelves clean.  We are already close now.

Think if dimes carried a massive premium because the supply was low.  Think if silver demand continues to soar?  There are plenty of people out there that are talking about investing in gold and silver who haven't done it yet.

Right now 1% of investors hold some form of exposure to "precious metal" if by mining shares, ETFs, or bullion.  Think if we increased that to 5%.  It could mean a five fold move.

Now think if we got that whole move to happen in bullion.  It would wipe the shelves clean.  People have been investing in silver at a furios pace for years now.  The real question is not if, but when.

Buy silver

Fri, 07/13/2012 - 11:43 | Link to Comment Pladizow
Pladizow's picture

If contracts were forced to settle in cash, I would assume it would be because there would already be no physical on the "shelves".

Fri, 07/13/2012 - 11:56 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

At the COMEX, maybe.  At Ft Knox and the Citidel, probably.  At the NYFRB, most likely.  But there will be bullion on the shelves of coin shops until once second to midnight.  Thus why everyone should go meet their coin dealers if they haven't, and at least start buying silver coins.  If you can afford gold, by all means, by that.

Fri, 07/13/2012 - 12:55 | Link to Comment LowProfile
LowProfile's picture

You had it right at the top of the comments:  Buy GOLD.  Buy SILVER.  And only buy as much as you UNDERSTAND, or you are liable to panic when the wild price fluctuations start to happen.

I recommend holding 10 ounces Ag to every ounce of Au, but I was a speculator, and likely held too much silver.

I say was a speculator, because I owned both...  Until that unfortunate boating accident.  Learn from my fail!

FYI, I gave you an up arrow.

Fri, 07/13/2012 - 13:21 | Link to Comment francis_sawyer
francis_sawyer's picture

Based on the present GOLD:SILVER ratio, (& depending on your timeframe)... You are 'discounting' your gold purchase by buying Ag at the moment...

Fri, 07/13/2012 - 13:54 | Link to Comment LowProfile
LowProfile's picture

Agree if you are speculating that silver looks undervalued relative to gold at the moment.

The issue with silver is that if the Central Banks make a last-ditch attempt to maintain relevancy by putting a high bid under gold (they offer to buy all gold at say, $50k per ounce, instantly revaluing all gold upwards to that price point), doing so in order to recapitalize their balance sheets, even though silver will do well in that scenario (in a knee jerk fashion), it is very likely it will not appreciate in the same percentage terms as gold.

So, silver is more speculative than gold.  Purchase accordingly.

Only buy as much gold and silver as you understand, otherwise you will likely sell out, be disappointed, or both.

Fri, 07/13/2012 - 14:18 | Link to Comment Leopold B. Scotch
Leopold B. Scotch's picture

Settling out int cash already happened a long while back in the London markets.  They had to freeze the payout at a specified mark and hold, dislocating that cash settlement from the ongoing market price, which continued to shoot up.  This will happen again.

The whole point of owning gold is specifically to protect you from assets that are bullshit / deflating against real $$.

Fri, 07/13/2012 - 14:23 | Link to Comment Revert_Back_to_...
Revert_Back_to_1792_Act's picture

When you say GOLD:SILVER ratio, You are speaking of the price ratio?  If you had to guess about the physical ratio what would you say that is.  Comments from anyone on this subject are appreciated.

  Keep in mind, the USA took a LOT of gold out of the ground when they were trying to meet their obligations under Bretton Woods (which was basically impossible for them to do).  It is also important to note that the People of the USA could not own any real quantity of gold during this time period of about 35+ years.  They were mining the crap out of it though.  By the end of Bretton Woods, we had gold at $35.00 an ounce but it was trading everywhere else in the world for like $70.00 an ounce in terms of FRN's.  (These figures are out of my ass BTW). 

Mining operations like this - engineering on the scale of the pyramids.

http://en.wikipedia.org/wiki/Homestake_Mine_%28South_Dakota%29

 

 

Fri, 07/13/2012 - 14:55 | Link to Comment LowProfile
LowProfile's picture

Honestly, I have no idea what the actual, above ground physical ratio is, given what you point to, the fact we haven't done an actual audit of Ft. Knox since the 50's, rumors of Japanese gold in the Philippines, amount of silver consumed through industry, etc. etc. etc.

I only know that people with power will try and hold onto as much of it as possible, and in the case of the Central Banks, one way they can avoid losing ALL their power would be to put a bid under gold before the entire world stops using their multicolored toilet paper entirely.

Fri, 07/13/2012 - 13:29 | Link to Comment _ConanTheLibert...
_ConanTheLibertarian_'s picture

Don't want to rub it in, but were you the only one here with a boating accident?

Fri, 07/13/2012 - 13:43 | Link to Comment oddjob
oddjob's picture

No, he was the shill pissing all over Silver just 3 days ago.

Fri, 07/13/2012 - 13:48 | Link to Comment LowProfile
LowProfile's picture

Lol, shill.  Brilliant.

Fri, 07/13/2012 - 13:53 | Link to Comment oddjob
oddjob's picture

your 180 on a dime was better.

Fri, 07/13/2012 - 13:55 | Link to Comment LowProfile
LowProfile's picture

Try writing something someone might actually understand for a change.

Mon, 07/16/2012 - 00:46 | Link to Comment Western
Western's picture

He's saying your posts reek of a practiced internet advertiser with the specific goal of making silver a speculative asset.

Fri, 07/13/2012 - 12:27 | Link to Comment DosZap
DosZap's picture

If people didn't recieve it then some, maybe even most, would go out with the cash payment from their contract and buy bullion.  And yes, if that happened it certainly could wipe the shelves clean.  We are already close now.

Mr. Hendrix, problem with that, is the price would be so damned high, they are screwed.

People like animals, when they see a short supply of ANYTHIN they need or use, get the herd menatlity as you know.

No delivery, I think your SOL.

Fri, 07/13/2012 - 11:18 | Link to Comment AL_SWEARENGEN
AL_SWEARENGEN's picture

CME COCKSUCKERS!!

Fri, 07/13/2012 - 11:32 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

Just ordered 10oz of NZ silver coin.  Feels like my first bang.

Fri, 07/13/2012 - 11:44 | Link to Comment Pladizow
Pladizow's picture

Cold and heartless?

Fri, 07/13/2012 - 11:54 | Link to Comment tocointhephrase
tocointhephrase's picture

No, sticky pants, he woke up 2mins later 

Fri, 07/13/2012 - 11:58 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

no no, it was the real deal ... it was ... physical

Fri, 07/13/2012 - 12:04 | Link to Comment tocointhephrase
tocointhephrase's picture

Love you man!

Fri, 07/13/2012 - 12:41 | Link to Comment 12ToothAssassin
12ToothAssassin's picture

Welcome to the party, pal

 

http://www.youtube.com/watch?v=vD94dVu8lqQ

Fri, 07/13/2012 - 12:41 | Link to Comment CCanuck
CCanuck's picture

+1+1+1+1+1.....fuckn hilarious!

 

Fri, 07/13/2012 - 11:56 | Link to Comment CCanuck
CCanuck's picture

And Fuck the Loopy Cunts, playing the paper game.

Fri, 07/13/2012 - 11:22 | Link to Comment Shameful
Shameful's picture

Will be one hell of a day when all that gold gets 'vaporized'.

Fri, 07/13/2012 - 12:35 | Link to Comment XitSam
XitSam's picture

LONDON -- Due to unprcedented demand, custodians from JP Morgan and HSBC accessed their London vaults today and found nothing but dusty shelves, reports a mid-level JPM employee that has requested anonymity. "Completely empty. They are running around like headless chickens right now trying to explain where the allocated gold went," said the employee.

Officials from JP Morgan and HSBC said in a joint statement that there is no reason for panic. "The full resources of the banks are available to make good any gold deposits that may have been misplaced.  We are sure this is simply an accounting problem and will resolve it as soon as possible."

Outside the locked doors of HSBC's London office, a small mob of men in suits and bowler hats were demanding entrance and to know the location of their allocated gold. "It may be over a trillion £ missing. Me own deposit of 4,900 ounces is nowhere to be seen," said Mr. Gordon Tutwiller.

Gold and silver prices have skyrocketed on the news. Trading has been halted on all major exchanges.  Coin shops and bullion dealers are refusing to sell any bullion until the crisis is resolved. "My stock is locked in the safe. Who knows what the prices will be like in one or two days," said the owner of Clarkson's Coins and Bullion, "but I'm sure it will be much higher."

(Is there employment writing future news?)

Fri, 07/13/2012 - 12:47 | Link to Comment TonyCoitus
TonyCoitus's picture

WTF is a bowler hat?

Fri, 07/13/2012 - 12:56 | Link to Comment XitSam
XitSam's picture

"The bowler once defined British civil servants and bankers, ..." http://en.wikipedia.org/wiki/Bowler_hat 

Fri, 07/13/2012 - 13:58 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

...and now Bolivian women wear it while pounding out empanadas for their husbands in the copper mines.  Amazing.

Fri, 07/13/2012 - 12:51 | Link to Comment TeMpTeK
TeMpTeK's picture

" who the fuck ordered Tungsten?"

Fri, 07/13/2012 - 11:23 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Goldman Banker # 1 to Goldman Banker # 2 - "Well, we blew through all the paper collateral. Time to demand the good stuff from the Muppets clients."

Gold.......it's what's for dinner.

Fri, 07/13/2012 - 11:26 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Buy physical assets of real value, sleep well.  You are going to need your rest for the coming reset.

Fri, 07/13/2012 - 11:30 | Link to Comment Canadian Dirtlump
Canadian Dirtlump's picture

these fucks need a roll of quarters wrapped around my fist to their teeth for some collateral.

Fri, 07/13/2012 - 11:38 | Link to Comment Tinky
Tinky's picture

Preferably silver quarters.

Fri, 07/13/2012 - 21:44 | Link to Comment cynicalskeptic
cynicalskeptic's picture

What was the Peckinpah western where there was a shotgun loaded with dimes?   ..... slow motion shot as it was fired......   think it was Billy the Kid - 9 dimes in each barrel of a double barreled 12 ga.

Sun, 07/15/2012 - 14:17 | Link to Comment Tortuga
Tortuga's picture

There is a russian assian show where he reloads the shells with washers. ouch.

Fri, 07/13/2012 - 11:31 | Link to Comment alfred b.
alfred b.'s picture

 

    Bernanke, Geithner and Dimon make up the 3-headed monster that is ruining the US financial system, and that of the world at large!

    All of their dealings and manipulations are fraudulent with the sole intent of protecting the bankster cartel, while the administration and the doj is sound asleep.

    As the man says:  time to bring Mr Guillotine out of retirement.

   Buy physical gold and silver.

 

 

 

Fri, 07/13/2012 - 11:38 | Link to Comment Bay of Pigs
Bay of Pigs's picture

You left out the Bill Dudley at the NY FED

http://www.newyorkfed.org/aboutthefed/orgchart/dudley.html

Fri, 07/13/2012 - 11:45 | Link to Comment Pladizow
Pladizow's picture

All those men are following orders!

Fri, 07/13/2012 - 12:13 | Link to Comment malikai
malikai's picture

So are the TSA.

Fri, 07/13/2012 - 13:46 | Link to Comment Overfed
Overfed's picture

Soon to be just "SA", short for Sturmabteilung.

Fri, 07/13/2012 - 13:52 | Link to Comment alfred b.
alfred b.'s picture

 

  ....overmore, I  also forgot the most corrupt and broker-owned regulator of all times:  cftc's Gensler!   I'd be quite sure that he's probably still drawing a salary from Goldman for all of god's work that he's doing.

     I'm calling Mr. Holder right now....he's gonna want to know about this.

 

Fri, 07/13/2012 - 12:23 | Link to Comment DosZap
DosZap's picture

As the man says:  time to bring Mr Guillotine out of retirement.

I have come up with a way to speed the process up, use a circular rotating blade.

The old way is too quick.

Fri, 07/13/2012 - 11:32 | Link to Comment Quinvarius
Quinvarius's picture

Amazing.  The same place and same custodian for GLD.

And why is the CME storing anything in London?  That simply makes no sense.

Fri, 07/13/2012 - 11:34 | Link to Comment Canadian Dirtlump
Canadian Dirtlump's picture

probably because they were told if they didn't they'd commit suicide by shooting themselves in the back 4 times.

Fri, 07/13/2012 - 12:29 | Link to Comment DosZap
DosZap's picture

And why is the CME storing anything in London?  That simply makes no sense.

Think about it.

Fri, 07/13/2012 - 21:50 | Link to Comment cynicalskeptic
cynicalskeptic's picture

Cause the BOE will cover your ass with $200 gold if you're caught short.............     could also be because there's nothing left in Ft. Knox or the NYFed or West Point   All the gold that USED to be there - paid to Arab oil sheiks under the table whey they wouldn't take paper $ anymore - is stored in London.   And they think they actually OWN it?!?!? bwahaaaaaaaaaaaaaa   They're in for a rude shock when they find out the buillion banks 'borrowed' it and sold it all to China - all they own now are paper GLD receipts.

Fri, 07/13/2012 - 12:45 | Link to Comment Yardfarmer
Yardfarmer's picture

Why? even less regulation and oversight than in the former colonies. can you imagine that? or is it that the Fed actually answers to the BOE? The City of London is the epicenter of worldwide (criminal) finance. Witness the recent revisiting of the scandalous sale of UK gold By Gordon Brown to bail out Goldman's overweight derivatives position. With the gold carry trade unwinding, Brown telegraphed the sale of all UK gold at auction,an unprecedented step and succeeded in driving down the price of Au even further from what was to become presently a nearly 20 year low. While everyone crows about Liborgate being the greatest financial scandal in history, it will pale when the truth about the decades long gold and silver manipulation comes out. 

http://blogs.telegraph.co.uk/finance/thomaspascoe/100018574/the-price-of...

Fri, 07/13/2012 - 14:42 | Link to Comment Sean7k
Sean7k's picture

It is perfectly legal to rehypothecate any asset class, stocks or bonds in London. Make sense now?

Fri, 07/13/2012 - 11:47 | Link to Comment dracos_ghost
dracos_ghost's picture

They used "Haircut" in an official news release?! Nope, no low-life goombahs at the CME, nosiree.

Fri, 07/13/2012 - 11:45 | Link to Comment apberusdisvet
apberusdisvet's picture

They hold all the gold in London so that if any one in the US calls for redemption, they have to ship it via the White Star Line (cue Titanic theme).

Fri, 07/13/2012 - 12:10 | Link to Comment ITrustMyGut
ITrustMyGut's picture

+100 rl LOL

Fri, 07/13/2012 - 11:47 | Link to Comment americanspirit
americanspirit's picture

And let's not forget that the Chinese just bought the London Metals Exchange.  Could that be significant. Ah - by the way - that massive sucking sound from across the Pacific is caused by tons of Western physical gold being inhaled by hundreds of millions of Chinse, one gram at a time.

Fri, 07/13/2012 - 13:12 | Link to Comment Jim in MN
Jim in MN's picture

So if the Fu shits, wear it.

Fri, 07/13/2012 - 14:43 | Link to Comment Sean7k
Sean7k's picture

They didn't get the part that controls silver and gold sales. Just the more blase metals.

Fri, 07/13/2012 - 11:48 | Link to Comment GERxit
GERxit's picture

Just in case you are buying the real stuff (physical) make sure you store it in the right place
-> ex the countries that might ask you to give them your lovely coins in case they need it... and there will be an awful lot of them when the gold case finally turns out to be for real!

Fri, 07/13/2012 - 11:56 | Link to Comment LeBalance
LeBalance's picture

please list those outside the banking system who will not.

Fri, 07/13/2012 - 12:06 | Link to Comment GERxit
GERxit's picture

nothing's completely remote so I wouldn't go only for one country but what about Norway (huge oil fund backs lots of liabilities there) or Singapore (liberal place with little financing need), not sure whether I like Canada so much as they are quite close to the US and the US has definitely the better arms... 

Other ideas / criticism welcome!

Fri, 07/13/2012 - 12:44 | Link to Comment 12ToothAssassin
12ToothAssassin's picture

Burried around your real estate. Dont forget to bury many MANY beer cans too so that it is impractical to use a metal detector.

Fri, 07/13/2012 - 13:05 | Link to Comment GERxit
GERxit's picture

Good idea... if you have to dig em out again you'll first always be surprised wether it's a coin or a can. But in case it's a can you have something to drink while diggin for the next coin.

Instead of kickn the can down the road you're diggin the can from down below ;-)

Sun, 07/15/2012 - 14:12 | Link to Comment Tortuga
Tortuga's picture

to paraphrase a gangster on the totally racist "Parking Wars" show,

"You cain't tow my car, I'm Sovereign".

Fri, 07/13/2012 - 11:54 | Link to Comment Sutton
Sutton's picture

I think holders will be ultimately given shares in "Yet to be Mined " gold.

The paper will have O's and Ben's faces on it.

Fri, 07/13/2012 - 11:58 | Link to Comment LeBalance
LeBalance's picture

"The paper will have O's and Ben's feces on it."

made the obvious correction for ya.

Fri, 07/13/2012 - 11:55 | Link to Comment Central Wanker
Central Wanker's picture

London, a city where stuff just vaporizes...

Fri, 07/13/2012 - 12:12 | Link to Comment jumblies
jumblies's picture

It's a shame Bojo, most of Westminster and the traffic won't vapourise. But with the armaments they're sticking around the Olympic village I wouldn't be surprised if there's not a whole lotta vapourising in the next couple of months.

Fri, 07/13/2012 - 14:03 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

they're not guarding the Olympics, they're showcasing how they would guard their gold. It's a show of force.  

Sat, 07/14/2012 - 01:38 | Link to Comment HungrySeagull
HungrySeagull's picture

Now that is reaching a bit far.

Fri, 07/13/2012 - 12:52 | Link to Comment TonyCoitus
TonyCoitus's picture

I need to vaporize some redbud. Ahhh, feel better already!

Fri, 07/13/2012 - 12:04 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

Here's a conspiracy theory.  Put your tin foil hats on. 

The petrodollar has literally died already, not just metaphorically or figuratively but literally, and all the Mrken gun boats sent to the gulf etc. are simply escorting bullion like glorified brinks trucks to pay for the nations' would-be oil. 

All the stuff about like three or four main repositories of storage has me thinking that countries don't like moving masses of gold over seas because of ... pirates ... no really.  The risk of interception is too high and you certainly can't airfreight the stuff.  You have to float it.  So if you are going to float it, and be secure, you float it with a ... flotilla armed to the teeth. 

Fri, 07/13/2012 - 12:13 | Link to Comment ITrustMyGut
ITrustMyGut's picture

truth...is stranger than fiction!

Fri, 07/13/2012 - 12:16 | Link to Comment Diet Coke and F...
Diet Coke and Floozies's picture

Interesting theory...

Fri, 07/13/2012 - 21:55 | Link to Comment cynicalskeptic
cynicalskeptic's picture

I suspect that Ft. Knox was emptied years ago - that the Saudis and others stopped taking $US in payment after the oil crisis so we paid them under the table in gold.  Hence the tungsten cored bar stories....   need SOmething to show when questions get asked.

The reason the US military is out in full force in the ME is because we're now trying to take by force what we can't pay for anymore...... and that approach worked SO well with Iraq - though it seems like Libya 's oil is flowing (and THEIR gold is now safely stored elsewhere).  

Fri, 07/13/2012 - 12:11 | Link to Comment ultraticum
ultraticum's picture

Hugo Chavez flew his stash of oro back to Venezuela.  So while your theory about the Petrodollar could hold, a huge sum of gold can be air-freighted in a single flight.

Fri, 07/13/2012 - 12:45 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

No, they did not airfreight a single oz and they did not ship his total reserve.

http://blogs.reuters.com/felix-salmon/2011/08/23/how-to-get-12-billion-o...

Another great line from that Reuters article:

"the market in physical gold is tiny, and largely comprised of nutcases."

Fri, 07/13/2012 - 13:48 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

you need to post that ass more often.  +1 even as I stand corrected annd +1 from -1 for toothless...  17 tons of gold is 17 cubic meters, correct?  which is 2.57m x 2.57m x 2.57m, or 8.5ft x 8.5ft x 8.5ft, which is what, 8 pallets ... sounds like they will trim up by air when it's more efficient than boat but the big movements are via boat, I must insist.

TIN FOIL HAT: ON

Fri, 07/13/2012 - 23:06 | Link to Comment Praetor
Praetor's picture

17 tons is only equal to 17 cubic metres if the denisty =1, that of water. As the density of gold is ~20, then you can exect a volume of 0.85 cubic metres (assuming a single block).

Sun, 07/15/2012 - 14:08 | Link to Comment Tortuga
Tortuga's picture

They told me if I voted for Sarah Palin they would get my name.

Sincerely,

Nutcase Wannabe

Fri, 07/13/2012 - 12:47 | Link to Comment 12ToothAssassin
12ToothAssassin's picture

I think Hugo's stash is a relative mole hill. How many C-130s would it take to move the London or NYFRB stash?

Fri, 07/13/2012 - 13:49 | Link to Comment Overfed
Overfed's picture

The cargo capacity of a 747 is around 148 tons. That's a whole lot of $$ worth of gold.

Fri, 07/13/2012 - 14:07 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

148 tons ... if metric, that's 148 cubic meters, or 5.3m x 5.3m x 5.3m of gold.  1 metric ton is 35,274oz, 148 tons is 5,220,552oz @ $1600/oz [we'll say May of last year], that's $8.35 billion.

Fri, 07/13/2012 - 14:09 | Link to Comment Overfed
Overfed's picture

134 metric tons.

Fri, 07/13/2012 - 14:39 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

$7.6 billion then.

Fri, 07/13/2012 - 12:13 | Link to Comment americanspirit
americanspirit's picture

Actually what will happen is that holders of physical will be required to turn in their stash and in return will receive title to an equivalent number of cubic miles of seawater and permission to extract all the gold contained therein. A little inconvenient but after all we're all true patriotic Americans here right?

Fri, 07/13/2012 - 13:06 | Link to Comment Fred Hayek
Fred Hayek's picture

According to JP Morgan, Orson Welles' character Harry Lime in The Third Man was just harmlessly rehypothecating penecillin in post war Vienna.

Fri, 07/13/2012 - 13:08 | Link to Comment Jim in MN
Jim in MN's picture

 

You know what's funny?

 

While the aged, evil imps in the US and UK dream of returning to the 1920s or perhaps the 1890s, before FDR and all this middle class nonsense (and *cough* unions *cough*), the GERMANS also dream....

Did you know that not only were war reparations under the Treaty of Versailles payable in gold, but other assets (cattle, land, railroads, industrial production) that were paid to the Allies were actually valued in terms of gold by a serious Committee.

Germany....wants....it....back.

 

THAT'S funny.

Fri, 07/13/2012 - 14:09 | Link to Comment Overfed
Overfed's picture

IMO, the Germans were ruthlessly overpunished after WWI for a war that they didn't actually start.

Fri, 07/13/2012 - 13:20 | Link to Comment smiler03
smiler03's picture

More of  the usual bullshit about gold being collateral for Germany. Greece has about €4 billion in gold reserves. Now how much is Germany exposed to in a potential Greek default?

Greece's gold is a piss in the ocean compared to their liabilities, or is ZH suggesting that Germany can rehypothecate that gold to €1 trillion? 

Fri, 07/13/2012 - 14:28 | Link to Comment Panafrican Funk...
Panafrican Funktron Robot's picture

"Greece has about €4 billion in gold reserves. Now how much is Germany exposed to in a potential Greek default?"  

Think it through a sec.  You're assuming that Germany gives a flying fuck what the Euro price of that gold is.  They want it at whatever price results in the gold being theirs.  

"Greece's gold is a piss in the ocean compared to their liabilities"

Liabilities expressed in easy to manipulate fiat.  Again, Germany wants the gold, period, end of story. Gold = money = power.

Fri, 07/13/2012 - 17:28 | Link to Comment Balmyone
Balmyone's picture

I think everyone in the world should max out their credit cards buying gold and silver bullion. Then they should all default on their credit cards.

In 2-3 months, when the card companies decide to extend new credit cards, the same thing should be done.

Meanwhile, the market rallies nearly 2%, and silver and gold miners end the day largely unchanged. I'm so glad what's left of my equity portfolio is in gold and silver miners. I'm just getting crushed. YIPPEE!

Gold-Silver ratio at 58.18 - WHAT A JOKE.

Fri, 07/13/2012 - 23:03 | Link to Comment ClassicCommodity
ClassicCommodity's picture

The Big Boys are going GOLD. Silver is the path to serfdom and fail. Bimetallism ended over a century ago.

Fri, 07/13/2012 - 23:41 | Link to Comment jackinrichmond
jackinrichmond's picture

did sprott start buying more silver today ?  did anyone hear how many ounces he is adding ?

Sat, 07/14/2012 - 01:41 | Link to Comment HungrySeagull
HungrySeagull's picture

Does it matter?

Buying silver/gold is rather easy with the right credit line.

Better hope you can pay the balance off without selling your stash to do so.

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