Russian Central Bank To Offer Gold-Backed Loans (Or Why The Spam-Standard Is Coming To An End)

Tyler Durden's picture

The spam standard is ending. In news that is likely about to throw the mouth-foaming Keynesians in for a perpetual loop, the Russian Central Bank has quietly announced the sneakiest gold confiscation ploy in history. Reuters reports: "Russia's central bank will offer gold-backed loans for up to 90 days at an interest rate of 7 percent, it said in a statement on Friday, expanding its lending facilities for dealing with any future liquidity crunch in the banking system." So let's get this straight: Russia, which has been dumping US bonds with unseen vigor, and which has been buying gold at a record pace, has just offered its citizen the once in a lifetime opportunity to trade in their hard assets for paper in an imploding fiat system, but with promises to make 7% worthless percent. Oh, and when the "liquidity crunch in the banking system" goes away and one hopes to reclaim title to their gold, one will just find that the title certificate was signed by one Linda Greenova, and said title is perpetually lost in Siberian limbo. And while one waits to reclaim said title from robosigning transgressor #1, Bank of USSR, those heavily armed gentlemen in camouflage attire who just broke into your apartment will not wait to reclaim what now rightfully belongs to mother Russia.

More:

The gold-backed lending was approved by the board of directors at a meeting on Friday. The rate on the facility is in line with the central bank's Lombard rate on borrowing secured against high-quality bonds.

 

"This measure fits the central bank's policy of developing refinancing instruments within the banking system. The facility will be unlikely in strong demand, only at times of liquidity crunches," said Maxim Oreshkin, chief economist at Credit Agricole in Moscow.

 

Levels of rouble liquidity remain at comfortable levels for now, with the overnight interbank rate having hovered within 3-4 percent range since early 2010 compared to more than 10 percent seen during the crisis of 2008-2009.

Next up: the LBMA uses Leonardo DiCaprio to incept the same idea in the brain of the Chairman, who then tells Bill Dudley to hand out a free iPad with a lifetime supply of semi-edible apps for anyone who pledges their gold to the Fed. First on a voluntary basis. Then, not.

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anynonmous's picture

more like gold backed tungsten

or is that tungsten backed gold

Michael's picture

Gold and silver are kryptonite to world central banksters.

Pladizow's picture

But Wait, Trav7777 says gold is in a bubble now that its only 5% off its all time high!

So where is that Smiley Face Finger Fuck TravKKK?

Just another no nothing, stupid, full of shit troll!

WestVillageIdiot's picture

Thank you for letting me hijack this thread but New York has just announced they will be suspending mass transit at noon tomorrow.

That should be bullish. 

WestVillageIdiot's picture

Thank you.  We have planned for this.  We are not at ground level.  I plan to take video if it gets ugly on Sunday.  I hope everybody is okay through this.  We will do what we can. 

pods's picture

If you get bored, do NOT watch Escape from New York or C.H.U.D.S.

pods

spiral_eyes's picture

everyone's scrambling for gold. keep buying the dips, gentlemen

http://azizonomics.com/2011/08/21/the-great-gold-squeeze/ 

IQ 145's picture

I'd just like to post that the margin on a 100oz. gold contract is only $9500. there's been quite a lot of discussion about the raises in margins; but the absolute value of this, present, vargin; is very reasonable. A 100oz. gold contract is "worth", (whatever), about 180,000$. a 5% margin is not a problem for people in this market. I believe you'll see margins rise to 10%; I have no idea when. But this will not stop the traders either. Many futures traders have traded in ":hot" markets previously when the margins were raised to 10%, and above 10%; but the great majority of the activiity continues. These are pretty well-heeled people and these kinds of numbers aren't going to scare them out of anything; much less Gold; if they make their minds to do it. Just sayin. Some perspective on this margin question.

tmosley's picture

That is correct.  It is not the value of the margin that is important.  It is the change, and more specifically HOW it is changed.

If it is changed multiple times in a few days, it is devastating.  If it is changed ONCE, then there is a single quick hit to the the price in one direction or the other, then the market quickly normalizes.  Changing them constantly drives away speculators, meaning the exchanges make less money.  If they do that over and over, there MUST be a reason for it.  People don't destroy their businesses for no reason.

Tuco Benedicto Pacifico Juan Maria Ramirez's picture

"and" ladies.  I know a lot of women with bucks who are loading up.  I am looking for one interested in adopting me but no luck so far.  I am even considering taking a bath (sorry I forgot Warren Buffet like all metrosexuals takes baths) I mean shower.

toxic8's picture

The water is right across the street from my house in Brooklyn, should I be worried?

 

Wasn't Irene tracking eastward and losing strength?

 

Mass transit suspended.. shit, better stock up on liquor!!

Yes_Questions's picture

The one thing they never tell you to stock up on, easily as important as the other items on the official lists.

Hang in there.

 

macholatte's picture

BREAKING NEWS!!!  VIRGINIA QUAKE  BREAKING NEWS!!! 

The USGS has determined that the epicenter of the Virginia earthquake was in a cemetary just outside of DC.The cause appears to be all of our Founding Fathers rolling over in their graves. Due to the unusual severity of the quake that hit near D.C., the GOP representatives in the House called an emergency sessionand adopted a bill to rename the fissure that runs under the Capital. It will now be known as "Obama's Fault."

IQ 145's picture

LOL ! Damn, I wish that man would retire; and get his buddy Warren to retire too, while he's at it; and fire Bernanke on the way out. Oh well; it is what it is.

Tuco Benedicto Pacifico Juan Maria Ramirez's picture

All puppets.  Lose them and they will be replaced by new puppets.  Have we not figured this out yet!?

Terminus C's picture

Your magnificent boobs are gone!

mick_richfield's picture

I must say, Terminus, that it seems an ungentlemanly observation to make.

Pladizow's picture

Yes sorry, I had them on display so that I could easily see them in the thread.

But with so many copy cats lately I had to put them away.

Currently in search of a new avatar.

NotApplicable's picture

How about a single boob, or just a nipple? That's different.

Mr. Mandelbrot's picture

Or a penis, that would be original . . .

Yes_Questions's picture

Or a penis and boobs: go all out Bankster.

hunglow's picture

I'm happy.  That Au has a rise.

Rome is burining's picture

The trifecta!

To alien for me.

EvlTheCat's picture

I'll never love again! :(

fiddler_on_the_roof's picture

Trav7777 did call the silver crash perfectly. $48 something. I sold at $46. I don't expect s silver run again until next year spring 2012(I could be wrong)

Hearst's picture

Silver's going to surprise everyone to the upside.  Every time it gets whacked down, like a water bouie held under water it quickly advances back up.  As most know, central banks hold no Silver today.  At least I can't think of one that has any.  Silver will go out of control very soon.  Put even a fraction of the interest Gold has recently received around the world into Silver coupled with a couple MSM news bites and the strain on physical will cause Apmex to issue one of thier 'pre-market disruption' notices that all sales are temporarily halted due to market volitility.  Reopening at $150+ per oz, 6-12 week delivery.   

     What was that schill report last year?  CPM's own calculations showed Silver represented as a total global asset registered at .007%!!  That is unreal!  Second to oil, Silver is used for more items industrially than any other commodity and yet it is extraordinarily under owned, under supplied, critically needed but costs 1/44th of 1 oz of Gold!  Silver's going to leave everyone (or almost everyone) completely dumbfounded.  The bubble and mania speak will make their rounds again but it wont mater.  Economic law will exert itself maybe by the end of the year and Silver's assent will be spectacular!  Then we get to witness the implosion of the manipulated short positions and fraudulent SLV.  This is going to be sick!

BayAreaAlan's picture

Hype much?

I own more silver than most, but your posting is hype, not fact, based.

tmosley's picture

So you own what, a half an ounce?

Most people own NOTHING beyond some sparse wiring in their electronics or some cheap jewelry.

Silver has and will continue to surprise to the upside.  The fundamentals dictate that that will happen under ANY set of circumstances short of a mile wide meteorite made of silver crashing onto some of Warren Buffett's land.  The only question is this: what will be the nature of the rise?  Either the supression efforts continue, and we get an explosion and industrial panic followed by a blow off top before settling at a short term equilibrium point around a quarter the price of gold (the blow off top could go to many multiples the price of gold, rhodium style).  Alternatively, other markets could open and allow real price discovery to happen, allowing an orderly rise to the parity with gold which drives an increase in recyling and mining efforts resulting if a fall back to the same short term equilibrium as the other scenario.

The equilibrium value will be the same in either case because the stock and flow of silver are the same in both cases, absent the market preturbations created by the actions of the big players.  

Surly Bear's picture

I keep buying my son coins. 

knukles's picture

I keep stealing my son's coins.

akak's picture

I keep sunning my non-steel coins.

SumSUN's picture

I'm a sun-keeping coins.

Tuco Benedicto Pacifico Juan Maria Ramirez's picture

God is watching you and he is waiting around the corner for you with a club and it ain't filled with cotton.

 

Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Yes, he is leaving the post 1965 dimes and quarters in his piggy bank for you, ya dumb ass.  He has his 90% well hidden!:)

Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Same here Surly!  It's the least we can do for our kids after we allowed this shit to happen!

Hook Line and Sphincter's picture

Paper meteorites inscribed with the word 'silver' land all the time.

Mr. Mandelbrot's picture

tmosley, I know you're an astute PM guy and I agree that there will be an explosion in silver price at some point relative to gold, but when when the expected move happens, my approximately 50/50 gold silver ratio (I keep finding fraction of spot deals on silver, but never gold) will quickly be converted to 90/10+ gold.  Everyone talks about a 16:1 historical ratio being proper, but if silver gets anywhere close to 1/25th of gold, I'm cashing in big time.  I'd rather not hold too much of the "poor man's" anything . . .

tmosley's picture

That is exactly the right move, though I would argue that your ratio is too conservative.  You will do exceptionally well following your strategy.  You won't become ultra rich, but you will be wealthy.

Always, always, ALWAYS have an exit strategy.  Mine is to exit into gold on a cost average basis averaging somewhat above parity.  The exit strategy for gold is there as well, ie buy farm land, real estate, stocks, etc.  Things with a return, which produce things for society.

Ahmeexnal's picture

A harem or two would also be a good strategy.

Dyler Turden II Esq's picture

If 1/4 the price of gold is the SHORT-term equilibrium price, then what do you reckon the LONG-term equilibrium price to be?  Roughly...

tmosley's picture

Probably around 1/10 as mining ramps up and recycling efforts become entrenched and capitalized.

It won't go much higher than that due to the fact that so much silver is used in applications where it can't be recovered at any reasonable price.  Think medical applications where you would have to retrieve it from urine, or worse, the bodies after death.  Remember, the gold sticks around, but silver is scattered to the winds in nearly irretrievable forms.

mt paul's picture

monster bar 

in the cats litter box...

 

just because...

 

 

Hearst's picture

Bayarea, hype would be if the few facts I gave for owning Silver were untrue.  The fact is Silver has every potential to (re) become the second most sought after financial asset in the world, while still currently being the most underowned!  A few decades of powerful, constant propaganda and legal tender laws has almost completely removed from the understanding of the general populace how valuable Silver is.  Together with industrial use like Eric Sprott said, Silver is going to be the investment of the decade.  Realizing those facts we should be shouting this news to everyone and anyone we care about, keeping with a longer term perspective and not being caught up with day to day price movements.  Gold is currently trumpeting the truth to the world of what these metals are and represent.  Silver is soon to follow! 

IQ 145's picture

Now come on; he's not an unreasonable person; I've been seeing his posts for years and he's not a wing-nut. It's just his opinion; and none of it is impossible. The market is so small a few wealthy European families could get together and buy the whole freaking Comex Warehouse. There, now you can tell me I'm hyping. Facts are little short on the ground, I believe, but there sure isn't a lot of surplus silver laying around, and there sure did used to be. Now, that's a fact; what it portends  for the next year, I really couldn't tell you. It's a little unusual tho, to see the price of something go down for a significant whiile at the same time the supplies are being bought up faster than it's getting mined. I supposed everyone might stop buying it; if peace and prosperity breaks out, for instance.