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Wikileaks Discloses The Reason(s) Behind China's Shadow Gold Buying Spree

Tyler Durden's picture


Wondering why gold at $1850 is cheap, or why gold at double that price will also be cheap, or frankly at any price? Because, as the following leaked cable explains, gold is, to China at least, nothing but the opportunity cost of destroying the dollar's reserve status. Putting that into dollar terms is, therefore, impractical at best, and illogical at worst. We have a suspicion that the following cable from the US embassy in China is about to go not viral but very much global, and prompt all those mutual fund managers who are on the golden sidelines to dip a toe in the 24 karat pool. The only thing that matters from China's perspective is that "suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar's role as the international reserve currency. China's increased gold reserves will thus act as a model and lead other countries towards reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the RMB." Now, what would happen if mutual and pension funds finally comprehend they are massively underinvested in the one asset which China is without a trace of doubt massively accumulating behind the scenes is nothing short of a worldwide scramble, not so much for paper, but every last ounce of physical gold...

From Wikileaks:



"China increases its gold reserves in order to kill two birds with one stone"


"The China Radio International sponsored newspaper World News Journal (Shijie Xinwenbao)(04/28): "According to China's National Foreign Exchanges Administration China 's gold reserves have recently increased. Currently, the majority of its gold reserves have been located in the U.S. and European countries. The U.S. and Europe have always suppressed the rising price of gold. They intend to weaken gold's function as an international reserve currency. They don't want to see other countries turning to gold reserves instead of the U.S. dollar or Euro. Therefore, suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar's role as the international reserve currency. China's increased gold reserves will thus act as a model and lead other countries towards reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the RMB."

Perhaps now is a good time to remind readers what will happen if and when America's always behind the curve mutual and pension fund managers finally comprehend that they are massively underinvested in the one best performing asset class.

From The Driver for Gold You’re Not Watching (via Casey Research)

You already know the basic reasons for owning gold – currency protection, inflation hedge, store of value, calamity insurance – many of which are becoming clichés even in mainstream articles. Throw in the supply and demand imbalance, and you’ve got the basic arguments for why one should hold gold for the foreseeable future.

All of these factors remain very bullish, in spite of gold’s 450% rise over the past 10 years. No, it’s not too late to buy, especially if you don’t own a meaningful amount; and yes, I’m convinced the price is headed much higher, regardless of the corrections we’ll inevitably see. Each of the aforementioned catalysts will force gold’s price higher and higher in the years ahead, especially the currency issues.

But there’s another driver of the price that escapes many gold watchers and certainly the mainstream media. And I’m convinced that once this sleeping giant wakes, it could ignite the gold market like nothing we’ve ever seen.

The fund management industry handles the bulk of the world’s wealth. These institutions include insurance companies, hedge funds, mutual funds, sovereign wealth funds, etc. But the elephant in the room is pension funds. These are institutions that provide retirement income, both public and private.

Global pension assets are estimated to be – drum roll, please – $31.1 trillion. No, that is not a misprint. It is more than twice the size of last year’s GDP in the U.S. ($14.7 trillion).

We know a few hedge fund managers have invested in gold, like John Paulson, David Einhorn, Jean-Marie Eveillard. There are close to twenty mutual funds devoted to gold and precious metals. Lots of gold and silver bugs have been buying.

So, what about pension funds?


According to estimates by Shayne McGuire in his new book, Hard Money; Taking Gold to a Higher Investment Level, the typical pension fund holds about 0.15% of its assets in gold. He estimates another 0.15% is devoted to gold mining stocks, giving us a total of 0.30% – that is, less than one third of one percent of assets committed to the gold sector.

Shayne is head of global research at the Teacher Retirement System of Texas. He bases his estimate on the fact that commodities represent about 3% of the total assets in the average pension fund. And of that 3%, about 5% is devoted to gold. It is, by any account, a negligible portion of a fund’s asset allocation.

Now here’s the fun part. Let’s say fund managers as a group realize that bonds, equities, and real estate have become poor or risky investments and so decide to increase their allocation to the gold market. If they doubled their exposure to gold and gold stocks – which would still represent only 0.6% of their total assets – it would amount to $93.3 billion in new purchases.

How much is that? The assets of GLD total $55.2 billion, so this amount of money is 1.7 times bigger than the largest gold ETF. SLV, the largest silver ETF, has net assets of $9.3 billion, a mere one-tenth of that extra allocation.

The market cap of the entire sector of gold stocks (producers only) is about $234 billion. The gold industry would see a 40% increase in new money to the sector. Its market cap would double if pension institutions allocated just 1.2% of their assets to it.

But what if currency issues spiral out of control? What if bonds wither and die? What if real estate takes ten years to recover? What if inflation becomes a rabid dog like it has every other time in history when governments have diluted their currency to this degree? If these funds allocate just 5% of their assets to gold – which would amount to $1.5 trillion – it would overwhelm the system and rocket prices skyward. 

And let’s not forget that this is only one class of institution. Insurance companies have about $18.7 trillion in assets. Hedge funds manage approximately $1.7 trillion. Sovereign wealth funds control $3.8 trillion. Then there are mutual funds, ETFs, private equity funds, and private wealth funds. Throw in millions of retail investors like you and me and Joe Sixpack and Jiao Sixpack, and we’re looking in the rear view mirror at $100 trillion.

I don’t know if pension funds will devote that much money to this sector or not. What I do know is that sovereign debt risks are far from over, the U.S. dollar and other currencies will lose considerably more value against gold, interest rates will most certainly rise in the years ahead, and inflation is just getting started. These forces are in place and building, and if there’s a paradigm shift in how these managers view gold, look out!

I thought of titling this piece, “Why $5,000 Gold May Be Too Low.” Because once fund managers enter the gold market in mass, this tiny sector will light on fire with blazing speed. 

My advice is to not just hope you can jump in once these drivers hit the gas, but to claim your seat during the relative calm of this month's level prices.

h/t Simon via TF Metals Report


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Sat, 09/03/2011 - 17:25 | 1630035 honestann
honestann's picture

In gold we trust.

Sat, 09/03/2011 - 17:34 | 1630056 Troll Magnet
Troll Magnet's picture

No.  In Gold They Trust.  We trust paper.  Oh well.  At least our food isn't made out of plastic.

Sat, 09/03/2011 - 17:44 | 1630078 nope-1004
nope-1004's picture

I trust any hard PM that can't be duplicated at the whim of some ponzi "policy maker".


Sat, 09/03/2011 - 17:47 | 1630082 Troll Magnet
Troll Magnet's picture

Well, yeah.  Some of us do (trust gold).  But most Americans are still asleep.  Hell, we might be in a coma!

Sat, 09/03/2011 - 18:15 | 1630141 doomandbloom
doomandbloom's picture

Ben Fulford mentioned something like this in his blog a few days ago... Some secret meeting with 57 country finance ministers...i thought it was his imagination.

Sat, 09/03/2011 - 19:52 | 1630346 escargot
escargot's picture

Ben Fulford?  Oh yeah....the guy who claims he was told by secret ninjas that he would be made the Japanese finance minister, right? 

Yes, I think it might have been his imagination.

Sat, 09/03/2011 - 20:19 | 1630379 CubanCigar
CubanCigar's picture

That and the shootout over the financial codes in downtown Tokyo the Yakuza told him about

Sat, 09/03/2011 - 22:00 | 1630518 Yen Cross
Yen Cross's picture

Me likey a good Purple Punch!

Sun, 09/04/2011 - 13:15 | 1631515 BaBaBouy
BaBaBouy's picture


Bitchezzz ... 

Thats what should dominate your brains going forward, for a very long time indeed.

And it will Serve You Well.

Sat, 09/03/2011 - 22:35 | 1630529 jeff montanye
jeff montanye's picture

thanks for letting me back on.  the current new yorker has an ad where some brokers have a gold brick thrown through their window and suddenly it's an ad for gld, with, of course, the bullion cachet.  my girlfriend and i laughed.  i said you know that stuff is not real gold, it's paper.  she just looked at me.  she is 80% silver miners (up a 100+%), 20% srs (bought at 17).   

Sat, 09/03/2011 - 22:48 | 1630579 Yen Cross
Yen Cross's picture

The New Yorker?  You need to test drive a ( Bid to Cover ratio) ...> Non existant .

Sun, 09/04/2011 - 02:14 | 1630859 Arkadaba
Arkadaba's picture

I like conspiracy theories as much as the next guy. And sometimes they even have credence. This Ben Fulford guy though - no. He was born in Canada and he seems to be an outright loonie (no pun intended).

Sun, 09/04/2011 - 10:20 | 1631259 Thomas
Thomas's picture

All this money flow discussion is unnecessarily complicated. If gold is 0.15% of assets and it goes up to, say, 3% of assets, then it will appreciate 20-fold relative to those assets. Easy math. Now if it goes up to 5% of assets, not only is the math easy but my eyes start watering in earnest.

Sun, 09/04/2011 - 11:08 | 1631318 Solid Gold Bubble
Solid Gold Bubble's picture

especially when you divide the number you get by 16 to get $3925/oz silver... 

Sun, 09/04/2011 - 11:30 | 1631345 High Plains Drifter
High Plains Drifter's picture

fulford is the son of rich jews from new york. i believe he has some mental issues. he is a complete idiot and nobody should waste their time listening to this idiot. he lives in japan and he speaks japanese and i am not sure what he does for a living besides live off of his daddy's money....

Sat, 09/03/2011 - 19:56 | 1630352 Josephus
Josephus's picture


Sat, 09/03/2011 - 21:45 | 1630498 Piranhanoia
Piranhanoia's picture

Which of the family is this one?  I hear they are all over the television and people want to know just everything. Are they really Houri's?  do you know?  do you want pictures?   swimsuit or with basketball jones?

sorry, sarc off.

Sat, 09/03/2011 - 22:02 | 1630519 Michael
Michael's picture

I heard a gold analyst on CNBC World asked the question;

Q; How do you know when gold is in a bubble?

A; When every guest on CNBC is recommending people buy gold.

Sun, 09/04/2011 - 11:30 | 1631346 Deadpool
Deadpool's picture

remain somnambulist. allow JPMorgan suppression. Allow us to buy AU and AG on the cheap. When they awake/when they are done suppressing the game is over and prices will be stratospheric.

Sun, 09/04/2011 - 15:57 | 1631899 trollin4sukrz
trollin4sukrz's picture

Coma- hell most are totally fvkin brain dead. Dont even try to wake them either or u will be slammed with out  the respect of added grease. Makes for sore assholes.

Sat, 09/03/2011 - 18:39 | 1630209 Skid Marks
Skid Marks's picture

the whim of some ponzi "policy maker".



Executive Order 6102


The Gold Confiscation Of April 5, 1933


Sat, 09/03/2011 - 18:53 | 1630242 DosZap
DosZap's picture

Skid Marks,@ 18:39,

No one (in this day and age) is going to pay one iota of attention to any EO, or PDD, in regards to giving up PM's.


We know too much.

Sat, 09/03/2011 - 18:58 | 1630251 DoChenRollingBearing
DoChenRollingBearing's picture

+ $1880 and green

Come and get it, bitchez!

Might get Pb at a high velocity first though...

Sat, 09/03/2011 - 19:26 | 1630311 spiral_eyes
spiral_eyes's picture

In my view, the real question is just how willing the Federal Reserve and U.S. Treasury will be to defend their massive gold holdings — after all, selling a big chunk of that "barbarous relic" at a higher price (let's say $3,000 or $5,000 an ounce) would go some way to paying down that huge crushing weight of fiat debt without having to resort to printing moneyLet's not forget that Bernanke's mentor, Stanley Fischer the head of the bank of Israel, presides over a central bank with zero gold reserves.

Sat, 09/03/2011 - 19:43 | 1630332 nuinut
nuinut's picture

Zero declared gold reserves.

Sat, 09/03/2011 - 19:46 | 1630338 Long-John-Silver
Long-John-Silver's picture

and lots of gold plated tungsten

Sat, 09/03/2011 - 21:34 | 1630482 Sokhmate
Sokhmate's picture

more euphemismically known as salted gold (technically it is peppered tungsten)

Wed, 09/07/2011 - 20:28 | 1644137 iHanuka
iHanuka's picture

When I wrote that Israel hold no gold I based it few sources.
Bank Of Israel spokesperson, the world gold council data and Stanley Fischer's statements addressing the Israeli parliament.

Sat, 09/03/2011 - 19:45 | 1630335 Jendrzejczyk
Jendrzejczyk's picture

Would it be better for the Treasury to hold the gold, and tell the rest of the world that our gold is now worth $74,000 an ounce to back up all the airdollars we printed?

Sat, 09/03/2011 - 20:18 | 1630377 spiral_eyes
spiral_eyes's picture

I think that might be America's endgame... The Rebirth of the Dollar...

Sat, 09/03/2011 - 21:58 | 1630515 DosZap
DosZap's picture

 Jendrzejczyk @19:45,

Sure, if that was their goal, why would they cut their own throats, and SAVE the world econs they are desperately taking down on purpose.

People seem to think this is all an accident, and there is no rhyme or reason..........there is.

LOOK,watch,both hands..................

This is pre-planned event,for those that think they are trying to get this controlled you are truly in the dark.

If by magic we could go back to what we USED to call normal, how does the NWO come into effect?.

It can we MAKE it so.

Just like their doing. We/they, have to bring everyone under central control..........or it won't work.

Sun, 09/04/2011 - 00:02 | 1630669 Temporalist
Temporalist's picture

This story demonstrates "they" are losing control as China is exerting its monetary muscles.  I think China is the sleeping giant in this currency war WWIII and all they have to do is buy gold.  Russia will comply, Middle East will comply, India will comply; most of the world really.

Sun, 09/04/2011 - 00:30 | 1630695 i-dog
i-dog's picture

""they" are losing control as China is exerting its monetary muscles"

...*sigh*... China is a PART of the plan (and so is Russia) -- and they have been so since at least 1958. The Luciferian Globalists (both Sabbateans and Jesuits, working hand-in-hand) work to much longer timescales than democratic governments and corporate boards.

Sun, 09/04/2011 - 00:38 | 1630704 Oh regional Indian
Oh regional Indian's picture

Spot on i-dog. They are all on the same team.


Sun, 09/04/2011 - 09:25 | 1631200 Inibo E. Exibo
Inibo E. Exibo's picture

This is the first time I've heard it blamed on Sabbateans.  Next your going to tell me Jacob Frank was working for the Rothschilds.

Sun, 09/04/2011 - 10:59 | 1631282 i-dog
i-dog's picture

You said it for me ... however, not 'for' but 'with'. It was a marriage of convenience: means (Rothschild), motive (Weishaupt) and opportunity (Frank) came together at a meeting between the three in Frankfurt in 1785.

Weishaupt (on behalf of his controlling Jesuits) had already divulged his plan to the Illuminati at the Masonic Congress of Wilhelmsbad, held in a Rothschild castle in 1782. Rothschild, an Ashkenazi who had probably already become a Sabbatean, had only recently become filthy rich as a result of his dealings on behalf of the protestant Prince William of Hanau (grandson of King George II of England), beginning in 1775. Frank had earlier, in 1759, convinced thousands of his followers to convert to Catholicim (as a 'cover' for their Sabbatean beliefs), which enabled them to infiltrate the royal courts of Europe.

That's when the Sabbateans (jews in name only) and Jesuits (catholics in name only) joined forces for planned Luciferian global domination.

Sun, 09/04/2011 - 11:16 | 1631328 High Plains Drifter
High Plains Drifter's picture

billy graham's name before he changed it was frank.....was it not?  interesting , no?  what kind of people go around changing their names all the time?  so here we have this great evangelist who got his start by money inflows from a notorious satanist, william randolph hearst, and graham would never had been anything unless powerful people had helped him gain fame. now then, may i ask , what was the real and true purpose of billy graham, 33 degree freemason. grasshopper, there is much we do not know, no????

Sun, 09/04/2011 - 11:10 | 1631319 High Plains Drifter
High Plains Drifter's picture

the rothschilds are sabateans.............the jesuits are a very minor cog of no real value at this time. at one time they did have much power but at that time , they were needed and necessary and so they were created and the reason for the society of Jesus was to destroy and to kill all those who refuse to bow the knee to the jewish inspired goy false world religion that is called is falsely said that the inquisition was created to find jews who had faked their religious conversions. but in reality the inquisition was created by jews who pretended to be good catholics and since most of popes were also conversos as well, they had no problem in their machinations. their overall goals and strategies were to destroy anyone who refused to bow the knee to the roman church and refused to give their money to the roman church, a false church, created by the jews to fool the goyim. today thqt "church" sits. it is empty spiritual shell filled with empty people  and the organizational structure is in place, waiting to be used again for its intended those who bow the knee to rome i say to you, come out of her while you still can.......

Sun, 09/04/2011 - 14:25 | 1631492 i-dog
i-dog's picture

"the jesuits are a very minor cog of no real value at this time"

Au contraire, Blackadder! The Jesuit Knights of Malta are far more politically powerful than their wealthy Hofjuden ... and the religious Jews are in for a shock when the Sabbateans currently running Israel sell them down the river in the weeks ahead.

The Sabbateans and Jesuits are all but indistinguishable from one another and are closely intermarried ... the Sabbateans are not "jews" (in that they do not follow the Torah or Talmud) and the Jesuits are not "catholics" (in that they are not "Christian" followers of the New Testament) -- they are both Luciferians with superstitious pagan beliefs and rituals that date back through Middle Kingdom Egypt to Babylon (as does the "jewish" Old Testament ... which was cobbled together thousands of years later based on Egyptian and Babylonian history and legends #).

The Skull & Bones initiation includes swearing a blood oath, kissing the Pope's slipper then being 'knighted' by Don Quixote (Loyola). The higher masonic degrees were all written by the Jesuits. The Bohemian Grove rituals are Sabbatean/Jesuit. All recent US presidents have had audiences with the Pope and kissed his hand in obeissance. World leaders (and leadership candidates) who have sworn blood oaths to serve the Jesuit Black Pope, as Knights of Malta---that supercede any other oaths of office they may have sworn to their own countrymen (ie. they have committed treason)---include: Silvio Berlusconi, Queen Beatrix, Michael Bloomberg, Boutros Boutros-Ghali, 4 Bushes (GHWB, GWB, Jeb & Prescott Jr), Bill Clinton, Dwight Eisenhower, Gerald Ford, Rudy Giuliani, William Randolph Hearst, J. Edgar Hoover, 2 Kennedys (Joe & Ted), King Juan Carlos, Henry Kissinger, Nelson Mandela, Thabo Mbeki, Rupert Murdoch, Ronald Reagan, 2 Rockefellers (Nelson & David) ... and a raft of other well known power brokers, catholic cardinals and deceased leaders (including all previous directors of the CIA and some US Secretaries of State and Treasury). They are far from minor cogs and the Black Pope rules the White Pope from behind the screen.

It is the Jews that are an irrelevance.


# The religious jews have been furiously digging all over Israel for all of the 63 years since they gained control in 1948 ... in a vain attempt to find any evidence for the fairy tales of their Torah. They'll never find any because the stories of 'Noah' and 'Abraham' and 'Iaaac' and 'David' and 'Solomon' and 'Moses' and 'the Exodus' are merely plagiarisms of Egyptian pharaonic history mixed with Babylonian legends.

Sun, 09/04/2011 - 14:41 | 1631684 High Plains Drifter
High Plains Drifter's picture

oh here we go. its those wascally evil jesuits.  yeh sure pal. been down that rabbit hole before and it leads to nowhere. 

here are the two major proponents of the "its those evil jesuits"


a simple question would be, who owns the city of london? the jews or the jesuits? money is power and power is money. who owns most of the world's gold, the jews or the jesuits? the jesuits are some silly thing that was created to do a job and today they are almost out of the picture more or less. perhaps they too will be brought back one day, when the time is right, but i doubt it. i see no reason for it. jews started the jesuits and these jewish jesuits bowed the knee to jewish popes......blah blah blah....

don't mess with hpd about this bullshit. anyone that comes around certain blogs talking about jesuits is summarily shown the door because it is nothing but pure bullshit and misdirection and misinformation and experienced people know this....

i am hpd, and i approve of this message...

Sun, 09/04/2011 - 22:56 | 1632525 i-dog
i-dog's picture

"yeh sure pal."

I'm not your "pal" ... and you're sounding like an idiot or a shill. You've completely missed the point while staring at your Jewish curtain. Pull it aside and look behind it, if you wish to find the magician(s).

The Jesuits are an illusion ... Judaism is an older illusion ... just as Communism is a newer illusion ... all created as devices by the rulers to overawe, divide and conquer. ALL 'isms' are illusions for both the masses and the acolytes alike. Even initiation rituals into the 'secret societies' are just devices to ensure that the blood oath of allegiance (to the level of the hierarchy that a gullible acolyte is being accepted into) is taken very seriously by the acolyte.

The true rulers have bloodlines that pre-date all these isms (and, no, they're neither reptilian nor 'superior beings' ... they're just damned determined).

Sun, 09/04/2011 - 11:21 | 1631333 High Plains Drifter
High Plains Drifter's picture

i keep telling people that any movement by china is choreographed and they are just playing their part. the same jews who started russian communism floated across the border and started it in china as well. chairman mao, the most powerful man in china, the murderer of millions of people, was just some punk they chose for the job and the jews were the boys behind the curtain pulling the strings on this puppet and making him dance to their well as any of the other talking heads in that country. they bow the knee to their jewish masters just like all zog countries....they are members of the imf. if the chinese were refusing to go along with the program, kind of like gaddafi did, then they would be bombed into the stone age with depleted uranium bombs like anyone else that is considered to be a axis of  evil be it.....i am hpd, and i approve of this message...........

Sun, 09/04/2011 - 11:50 | 1631375 Ranger4564
Ranger4564's picture

Thank you for bringing some sanity to these speculations.  It's as if people just forget that there is a global plan in play and to be global, it has to account for global contingencies, which means, all countries are controlled, the same as the Western nations, Middle East, African nations, etc.  No nation is free, and all governments are already pwned. There's no point in pretending some rogue nation will break the cabal. In fact, there is likely no point in buying gold, because in the end, we'll still have to fight for our freedom or surrender all possessions.  At that point, what we value will be in such flux, that gold may become irrelevant.  Just saying.  BTW, I'm 100% invested in G + S + Mining.

Sun, 09/04/2011 - 14:32 | 1631688 High Plains Drifter
High Plains Drifter's picture

nazi germany and ww2 japan refused to go along with the new world order. so they were destroyed and they were called  what? the axis powers. no?  so then fastfoward til today. now we have the axis of evil. why? because these countries refuse to bow the knee to the new world order.....they used the amerikan mercenary armies in ww1 and ww2 and now to destroy anyone who stands in the way of world government.  i am hpd, and i approve of this message...

Sun, 09/04/2011 - 08:48 | 1631166 Smiddywesson
Smiddywesson's picture

Yes, the Israelis have no gold, and they keep it with the nuclear warheads they don't have either.

Sat, 09/03/2011 - 20:29 | 1630400 macholatte
macholatte's picture

So what happens if people start buying micro gold contracts (10 oz) and then demand delivery?

Do you get the goods without paying a premium?  Can you get it delivered to your house via FedEx and not have to screw around with all the storage BS?


{I put this question in here at this location in the thread because there's an argument going on down below and I'd really like some feedback on this}

Sat, 09/03/2011 - 21:29 | 1630477 James
James's picture

Read the fine print in your contract.

Tue, 09/13/2011 - 02:42 | 1662741 Skid Marks
Skid Marks's picture

Come and get it, bitchez!

Might get Pb at a high velocity first though...



You and all your friends are in fantacy land. If and when the jack boots come to your house, you will hide in the corner and it will be your children who will protect you. Guns & Ammo bravado is bullshit. I say this as a collegue, a fellow traveler, not as any kind of insult to you or your friends, but as a word of caution from someone who knows. Your life and your freedom are worth much more than the shiny metal. Let us all hope you will never have to confront that challenge and all this is rhetoric and nothing more.

Live Long and Prosper


Sun, 09/04/2011 - 07:43 | 1631129 Tompooz
Tompooz's picture

Don't underestimate TPTB. The protection that physical gives is limited.

First of all, all sellers of gold need to report on their sales. Your address and the quantity you have purchased is in that new database. Maybe even with a surveillance pic.  Ready for that eventual knock on your door.

Second, it will be easy to pass a new law that will outlaw all sales of gold without documentation. "To combat scams of fake gold" and of course the perennial money laundering and ha! terrorist financing.

If you then want to cash in on your physical stash, you will have the problems associated with  undocumented phyz.

I advocate 50% paper for quick sale and 50% phyz for keeps.


Sun, 09/04/2011 - 08:56 | 1631176 Smiddywesson
Smiddywesson's picture

I don't think they will confiscate from individuals for reasons I've stated numerous times.  They don't need your stash.  They very well may take your profits in the form of a windfall profits tax on speculators, but they won't provoke a physical confrontation.  They don't need to.

Sun, 09/04/2011 - 13:22 | 1631518 Ganja Jane
Ganja Jane's picture

It's not a question of whether 'they' need to; it's not even a question of whether 'they' can; it's comes down to when they want to.Look at what they did/are doing to the Liberty Dollar!

<sarcasm> I'm just waiting around for the anouncement that thanks to the Southern Poverty Law Center, all the financial terrorists of the SLA, Zero Hedge, TF Metals and Keiser's Crash JP Morgan Campaign are being brought to 'justice.' </sarcasm>

Sun, 09/04/2011 - 09:59 | 1631232 Bendromeda Strain
Bendromeda Strain's picture

What are going on about? Don't understimate who? Those stuttering, babbling aholes profiled on "Inside Job"? I'm quaking in my boots. Leviathan government is more dysfunctional than ever, or haven't you been paying attention?

That new database

Oooh spooky. Boogety boogety. Hold me.


Sun, 09/04/2011 - 11:19 | 1631332 Solid Gold Bubble
Solid Gold Bubble's picture

In that film, George Soros and DSK are interviewed and portrayed as the good guys. The stuttering and babbling assholes you refer toare just minions and shills for the Real Bosses who are not even hinted at as existing. The film is clearly the work of TPTB, and I was quite disappointed to see it advocated by ZH a few months ago.

Sun, 09/04/2011 - 11:55 | 1631386 Ranger4564
Ranger4564's picture

I agree... not too many people realize or express that DSK / Soros / Buffet / etc are all just lackies for the real monied class.  The Financiers as I call them, are not so visible, and are definitely not any of the people we commonly refer to, except for maybe in a rare case or two.

Sun, 09/04/2011 - 10:58 | 1631303 Believable-Hypocrite
Believable-Hypocrite's picture

"To combat scams of fake gold" and of course the perennial money laundering and ha! terrorist financing.


It's actually " for the children."

Sun, 09/04/2011 - 15:16 | 1631809 Prometheus418
Prometheus418's picture

There's something to what you are saying, but it's advice with only limited value.  What you've said is somewhat true, or at least, potentially true- but that does not affect many situations.

I can see how you're viewing things, and based on where you're likely coming from, you are entirely correct.  What you've described can and will affect those who are currently well-off, or at least moderately so.  Those who have six digits to put into gold in one fell swoop will be noted and tracked- that's almost inevitable, as a small coin shop is not likely to have the volume available to cater to such sizable demand, and you will need to deal with sellers who have a strong interest in following all the applicable rules and regs.

The same comes into play when it is time to sell.  It will never be that hard to sell an ounce or two- that is what the black market is, and always has been for.  It'll be a problem if you intend to liquidate a 1000 oz. box of gold in one shot.

Now to provide the counter point to your argument, it's not only possible, but actually very easy to purchase small quanities of bullion coins that are recognizable enough.  In gold terms, you've got double eagles and kruggerands- in silver, you have not only silver eagles, maples and philharmonics, but you also have sizable private stashes of pre-1964 90% silver coinage.  There are milk jugs, coffee cans and suitcases full of the stuff tucked away in sheds and closets, under beds and in attics- while most people don't think about them much, it's just not that hard for someone to research and quickly realize that they have something of value when they are going through Grandpa's stuff when he passes on or goes to the nursing home.  These coins will be trickling back into the system for the next hundred years, and there's no way to stop that from happening, PTB or no.  They don't have to go to dealers, if it's a pain in the ass for the person selling them- they could easily just start circulating from hand to hand.  Nobody tracks anything you bought from your neighbor with cash or goods.

In another case, coin shops do not take your personal information- at least, not at the one I frequent.  I have some cordial conversations with the guy behind the counter, but the shop is 40 miles away, and I've never told him my name, and he's never asked.  There is a big sign on the counter that says Cash Only.  How are they going to track that, exactly?  I had more invasion of privacy buying my girls school shoes yesterday, where the cashier wanted my name, phone #, address and e-mail to get a couple of pairs of shoes.  I shut her down and asked why she needed to know when I was paying cash.  "It's for coupons."  Well, I don't need coupons, so I asked her, politely, to bag them up and skip the information collecting.  If they would have pressed the issue, I would have left- and that is for childrens' shoes.  Why on earth would I allow that behavior when buying metals???

In both of the cases above, the metals are anonymous, and do not need to enter any system.  They were minted by governments, and the marks and seals imprinted by the dies are the only authentication most people need.  No one questions whether or not a Morgan dollar is "real-" the question itself is stupid.  No one was forging coins 100 years ago, in anticipation of the silver price going up today.  The documentation is stamped on the coin itself.  In the case of the bullion, it is still true, but often carries the added weight of being encased for protective purposes.

On the other hand, if you walk in with a gold nugget, or a silver bar, good luck with that- but that's not something that will be a problem someday, that's an issue right now.  Nobody has to make a law or regulation about it, it's just human nature.  If I give you a lump of something without documentation, how do you know what it actually is?  Unless it's a large quantity, and you really, really want it, you're not going to go through the expense and trouble of having it indepedantly verified.

The problems you see are when you are considering buying from and reselling to an extant system.  It's an easy pattern to fall into, particularly if that system has made you relatively prosperous.  What most physical holders anticipate is not buying from AMPEX and reselling the coins to a reputable dealer (at least, that's not what I expect.)  It's to buy recognizable metal however it can be done with relative privacy, and to hide that metal until it is needed for purchases in a SHTF situation, most likely on a black market.

Sun, 09/04/2011 - 17:55 | 1632267 Carmagnole
Carmagnole's picture

How legal would it be to melt yourself some of your gold to make it stick to the outside of this nice tungsten brick and place it in your drawer labelled "my little gold stash", while the rest of your unmelted gold has an unfortunate accident with a hole in the ground and a camping shovel ?

Sat, 09/03/2011 - 19:09 | 1630276 Quinvarius
Quinvarius's picture

So the government PAID people the correct market price for for their gold based on the existing money supply.  So what.  I'll take 50k an ounce for mine right now.

Sun, 09/04/2011 - 08:58 | 1631178 Smiddywesson
Smiddywesson's picture

I'll take 50k an ounce for mine right now.

I wouldn't.  First, what would I put my money into to protect it?  Second, the price of gold will continue to rise until the financial crisis is resolved.  Taking $50k per ounce before the end means you will be sorry later.

Sun, 09/04/2011 - 09:27 | 1631201 Inibo E. Exibo
Inibo E. Exibo's picture

First, what would I put my money into to protect it?



Sat, 09/03/2011 - 19:17 | 1630291 Esso
Esso's picture

I suppose they could outlaw the possession of PMs. Boy, that oughtta really supress the price.

Sat, 09/03/2011 - 20:28 | 1630396 Esso
Esso's picture

I was being sarcastic, folks. The outlawing of PMs would be like Prohibition. That damn near turned the whole country into alcoholics. Same deal with the "War On Drugs," it's easier for a 5-year old to get ahold of black tar heroin than it is to sneak a beer out of daddie's fridge.

If the goob outlawed gold, the value would skyrocket, everybody would want it. I'm not sure if that's a good thing or a bad thing though.

Sat, 09/03/2011 - 22:29 | 1630567 Troll Magnet
Troll Magnet's picture

i don't think they'd ever outlaw gold ownership but IF they did, how would one go about cashing it in? if it's illegal, you can't really do anything with it. well, nothing legitimately anyway.

Sat, 09/03/2011 - 22:54 | 1630584 Yen Cross
Yen Cross's picture

You are beginning to test my "patience"" In a bad way!


  I'm over the Christy Brinkley Thingy Dingy!

Sat, 09/03/2011 - 23:41 | 1630640 foofoojin
foofoojin's picture

two words.


(ok a little more)

dogs cannot be trained to sniff for gold. and you can melt gold into bullets and snipe them into a soft tree a half mile away across borders... yes I actually know a person that moved gold by copper painting his hunting rounds. and one time had to go dig a couple of onces out of a tree when a .... you know what, road trip.

Sun, 09/04/2011 - 02:48 | 1630968 Doña K
Doña K's picture

It is not illegal at this moment to move bullion gold in or out of the country. No duty or tax.

Sun, 09/04/2011 - 00:29 | 1630694 Snidley Whipsnae
Snidley Whipsnae's picture

You're out of touch. If the US declares gold ownership illegal in the US that is not going to effect the remainder of the world from accumulating gold and/or remonotizing gold. It would simply impoverish US citizens more when the paper fiat collapse happens. The US cannot act unilaterialy with regards to gold without becoming an isolated nation, left out of the commodities backed currency that is coming. When the dollar sinks so low that the oil producing states refuse to accept it, with what will the US use to purchase oil? How about Europe when the Euro collapses? Or Japan? etc.

Do you believe that India, with the population owning ~15,000 tons of gold, will suddenly tell their citizens that they have to turn in their gold for fiat? How about China? Malaysia? The oil producing states of the Mid East? etc, etc, etc...

One thing the US could do as suggested by Jim Rickards... Peg the dollar to gold at about $5K -$7K per oz and defend that peg. Instant dollar devaluation and debt reduction. Also instant economic collapse, financial collapse, etc. It's going to collapse anyway on the current economic course...Why not have restructured banks and a new commodities backed currency ready? 

A gold backed currency or a currency pegged to gold/PMs/commodities is coming, we just don't know which soverign will introduce it first.

Get popcorn and PMs and enjoy the show.








































































































Sun, 09/04/2011 - 01:39 | 1630779 nuinut
nuinut's picture

One thing the US could do as suggested by Jim Rickards... Peg the dollar to gold at about $5K -$7K per oz and defend that peg.

No, they can't. That would cause a repeat of the Nixon shock, where there is a run on the US gold reserves, just this time at $7k/oz instead of $35/oz and the US gold window would be closed again in no time... China (and most of the ROW) would just love to exchange their dollars for thousands of tonnes of physical, but there is not the flow of physical in the real world to accommodate that desire.

Fixing the exchange rate of currency to gold is the entire problem. The exchange rate of any currency for (physical only) gold needs to be set by the market, and the market only. Gold values currencies. Always has; the only thing that has ever changed has been the perceptions of 99% of the western world (not the few at the top who changed those perceptions, they always owned gold) who have been conditioned to accept an illusion that fiat paper values things. Accepting an illusion does not mean that reality ever changed, however. 

Any currency finds value only in its capacity to be exchanged for assets. A currency which does not buy you anything is valuless. An honest monetary system is one in which the money is valued by the assets, not the assets by the money.

Anyone who thinks currency values assets has their thinking backwards. I understand that most people are in this category, but this unfortunately just proves my point. Until such time as the assets once again value the currencies openly and unhindered, we will have problems, and no artificial peg to physical gold will be sustainable. A gold standard differs from today's floating fiat "system" only in that the currency's printers cannot misappropriate the saver's value as fast as today, but misappropriate it they did, as I described here.

Any gold standard pegs gold to a currency at a lower than market rate and the printer pockets the arb.

Sun, 09/04/2011 - 06:14 | 1631072 Snidley Whipsnae
Snidley Whipsnae's picture

Nuinut, you are right of course, about the initial peg being overwhelmed by 'dollars for physical', and emptying the US gold coffers.

I was unfair to Rickards because I didn't include the other provisos of his scheme of a dollar/gold peg.

What Rickards said is that if the 'initial peg' is overwhelmed by gold purchases then the peg should be increased quickly until gold buys equal gold sales. In addition Rickards said that prior to introducing the 'sliding peg' that the dollar should be backed by gold at the ratio of about 40%. So that those wishing to have physical instead of paper could convert their paper. US Dollars were not backed 100% by gold, even when the US was on the gold standard. The US assumed that there would not be a 'rush on banks to redeem paper for gold', so the backing was ~ 40%.

It's possible that this type 'gold standard' is to be introduced. It would be interesting to find out what the peg would have to be set to cause inflows and outflows of gold to equal. If all dollars and dollar denominated assets in the world were backed 40% by gold the dollar/gold ratio would be very large... $50,000 oz?

One of the biggest problems to be overcome is that modern fiat currencies have nothing to be devalued against... and that is why we are seeing the 'remonetization' of PMs. Rickards scheme would solve this problem...and bankers/soverigns are getting increasingly desperate for a solution that allows them to survive.

Sun, 09/04/2011 - 07:21 | 1631108 nuinut
nuinut's picture

A sliding peg is not a peg at all... to be increased until buys equal sales! What a crock. If he's not describing a peg Rickards shouldn't call it one.

Meanwhile Rickards adjusts ever closer to FOFOA, without ever acknowledging him, similar to others.

US cannot control this process... they have got themselves into a singularly awkward position regarding gold, having defaulted on their own gold obligations twice already. You seriously think ROW is gonna let the US tell them what their gold is worth? I don't.

One of the biggest problems to be overcome is that modern fiat currencies have nothing to be devalued against...

Of course they do... the goods and services they can be exchanged for, the only thing which GIVE them value to begin with.

I was unfair to Rickards...

Sounds to me like Rickards is being unfair expecting people to swallow his convoluted scenarios that allow the US and Wall St to skate on thru... notice how everyone's price targets for gold continuously move higher and their "gold standards" evade a proper definition? Could it be that they're just making it up as they go along?

Sun, 09/04/2011 - 10:46 | 1631286 Bendromeda Strain
Bendromeda Strain's picture

If you want to be fair, you should opine a little on FOFOA's declarations about the Euro. NOBODY has a handle on the sequence of events, not even the mythical Another. Why you would expect Rickard's to acknowledge an anonymous second tier blogger also eludes me. FOFOA himself admits he just digests and regurgitates the original Gold Trail writings. I get the whole guru thing, but it is the opposite of balls to take a swipe at men like Rickards, who are ostensibly wise, on the same team, and out there promoting under their own reputation

Rickards has been far more right than wrong so far, everything else is just speculation.

Sun, 09/04/2011 - 13:56 | 1631625 Motley Fool
Motley Fool's picture

If you listen to Rickards latest interview he also now regurgitates the concepts on operation twist as put forth by Tyler many months ago.


Credit where credit is due. 

Sun, 09/04/2011 - 14:26 | 1631678 Bendromeda Strain
Bendromeda Strain's picture

Right. Someone hasn't been paying attention. Rickards was called out on ZH as far back as March over (no) QE3. If you want to accuse him of plagiarism now, do some due diligence.

Sun, 09/04/2011 - 16:11 | 1631943 Motley Fool
Motley Fool's picture

I have a lot of respect for Rickards. I have been listening to him for a while; this phrasing and terminology is new afaik. Still, here is the link, listen for yourself. :)

Sun, 09/04/2011 - 07:27 | 1631115 tradewithdave
tradewithdave's picture

If I am understanding "the plan" correctly, the post above is partially correct.  Your pocket money (your mortgage payment, car payment, groceries, etc. - say $5,000 per month) will come from an account that is not based on any form of fractional reserve currency.  This will be non-leveraged money thereby mitigating systemic risk. This is the first half of the currency that will be designed to satisfy the double coincidence of wants.

The second half of the currency, the one mentioned above that will have the "gold backing" will be the portion of the currency that is leveraged.  It will have a small percentage of gold backing and this will be your 401(k), pension and other time deposits that are essentially tied up... thereby mitigating systemic risk.  Penalties for withdrawl or liquidation will be huge and there will be extreme time constraints and requirements that must be met to get your money out of the system. 

Mr. Rickards is working overtime in the information, or possibly disinformation aspects of this campaign.  Keep in mind that his current employer was "previously" employed by George Soros.  In my opinion, he is carrying out a White House agenda.  Where is the leverage being relocated to?  This rebalancing with China via gold is being made possible by the Dodd-Frank workaround of the leverage via the non-regulated forex treatment of gold as a currency via the new HKMex and the new Pan-Asian gold exchange spot.  The Orientals will be hard at work driving up the value of the Occidental balance sheet before the deflationary event is dropped on their heads. 

How the banks, following their roll-up, get recapitalized in gold:

An open letter to Mr. Rickards:

The architecture of the new currency:




Sun, 09/04/2011 - 10:32 | 1631266 Snidley Whipsnae
Snidley Whipsnae's picture

tradewithdave... Thanks for the links.

Sun, 09/04/2011 - 09:34 | 1631207 Smiddywesson
Smiddywesson's picture


"It's possible that this type 'gold standard' is to be introduced. It would be interesting to find out what the peg would have to be set to cause inflows and outflows of gold to equal. If all dollars and dollar denominated assets in the world were backed 40% by gold the dollar/gold ratio would be very large... $50,000 oz?

One of the biggest problems to be overcome is that modern fiat currencies have nothing to be devalued against... and that is why we are seeing the 'remonetization' of PMs. Rickards scheme would solve this problem...and bankers/soverigns are getting increasingly desperate for a solution that allows them to survive."

So much packed into these few lines.  I don't see any way out for the central banks than to do exactly as Snidley suggests.  Our society is too fragile for a generalized collapse, and TPTB do not intend to fade away with the old system.  A gold related system, with gold prices high enough to establish a stable banking system, to account for all the dollars out there, AND make their gold worth enought to dig them out of debt, is the only answer. That will only work if they are able to amass enough gold prior to a collapse.  Hence, kick the can. 


Sun, 09/04/2011 - 10:13 | 1631246 MsCreant
MsCreant's picture

I'ne listened to the Rickards interview. He stresses he is not calling for this to happen, but rather that he sees it as inevitable.

Sun, 09/04/2011 - 10:38 | 1631271 Snidley Whipsnae
Snidley Whipsnae's picture

True MsCreant... I did not mean to imply that Rickards is offering up solutions...

He is merely pointing out possible destinations... based on where we are and the direction of our drift.

Sun, 09/04/2011 - 11:00 | 1631306 Bendromeda Strain
Bendromeda Strain's picture

Thank you

As Trade w/ Dave would oh so eloquently infer, I do not see Rickards as some disinfo, cointel plant. Folks are certainly more informed by exposing themselves to his offerings. Hedge accordingly, in all things.

Sun, 09/04/2011 - 09:11 | 1631192 Smiddywesson
Smiddywesson's picture

A commodities backed currency would handcuff the bankers from manipulating the new currency.  A gold related currency would leave them free to continue gaming the system, the true purpose of central banking.


Ex.  If the currency were backed, among other things, by copper, central bankers could push up copper prices to justify more printing.  However, in doing so, they would ruin the economy.  Too many industries rely upon copper.  The same holds for almost any other commodity.  Only gold can go up or down without creating major disruptions, so my guess is gold.  Well, that and the fact that central banks are buying.  :-)

Sun, 09/04/2011 - 10:44 | 1631281 Snidley Whipsnae
Snidley Whipsnae's picture

SW... " A gold related currency would leave them free to continue gaming the system, the true purpose of central banking."

Correct,,, and since when the new currency is introduced there will probably still be no inventory of US Gold, how would anyone know if the 'new currency' is backed by 40% gold or 10% gold?

...and 40 more years of kicking the can till Mr Market uncovers the lie of 'new gold backed US Currency'... Mr Market always wins but sometimes it seems to take eons.

the banksters are shrewd... never underestimate them...

Sun, 09/04/2011 - 13:04 | 1631494 Kayman
Kayman's picture

the banksters are shrewd... never underestimate them...

The banksters are criminals... never underestimate their underhandedness...

Sun, 09/04/2011 - 15:03 | 1631770 zerozulu
zerozulu's picture

It is hard to foresee consequences. I think prohibition caused reliable and fast car industry.

Sat, 09/03/2011 - 21:13 | 1630453 TeMpTeK
TeMpTeK's picture


Executive Order 6102"

Blah Blah... To whom do presidential executive orders apply to anyway? Hmm.... Military personnel maybe? Or...can Congress stop California from allowing Medicinal marijuana within its borders? Or better yet.. can they ban guns in school zones in anyone of the 50 states?(See U.S. v Lopez) Apparently not!!!.... Territorial Jurisdiction is a Bitch! and gold confiscation is a coin dealers wet dream...

Sat, 09/03/2011 - 19:43 | 1630329 nuinut
nuinut's picture

nope-1004 said:

I trust any hard PM that can't be duplicated at the whim of some ponzi "policy maker".

Then you will have observed that the "gold market" which is referred to in the article is composed almost entirely of paper claims on gold, rather than physical gold... putting the actual value of physical orders of magnitude higher than their estimates.

FOFOA said:

As the physical reserves within the BB [bullion banking] system are all moved into allocated accounts, at some point the remaining claims will simply have to be cash-settled. At that point all paper gold markets will cease to exist and all that will be left is the stable supply of above-ground physical gold in the absence of external inflatable (or deflatable) influences.

And when this happens, the dollar will fall in value very quickly, and with it, all savings tied to debts denominated in dollars. What this will reveal on any balance sheet that contains both dollar-based assets and gold, is that gold will rise to fill the void left by the dollar. The balance sheet will not collapse. But the wealth will have transferred from dollar assets into gold.

This is the main significance of all the Central Banks stocking up on gold today as well as the Eurosystem's quarterly mark to market policy. 

China are doing more than just amassing physical gold reserves, they are currently implementing an allocated (ie. physical) spot gold exchange (Pan Asian Gold Exchange (PAGE)) as well.

This spot gold price is based on allocated contracts. Watch the spread between PAGE and COMEX when the PAGE spot price goes live. Physical will move toward PAGE if it is priced higher there, while COMEX will fall as traders begin to make the distinction between contracts which can be cash-settled and contracts which are physical-settled, and sieze the arbitrage.

Sat, 09/03/2011 - 21:53 | 1630510 DoChenRollingBearing
DoChenRollingBearing's picture

+ $1880 now

+ $55,000 later

THAT was a great point, if we see a price differential between PAGE vs COMEX (assuming PAGE is honest, an assumption...), then that brings us closer to freegold.


Sat, 09/03/2011 - 23:34 | 1630632 sgorem
sgorem's picture

thanks, couldn't have explained IT better myself:)

Sat, 09/03/2011 - 23:40 | 1630639 Oh regional Indian
Oh regional Indian's picture


One of the bedrocks of FOFA's thesis is the resurgence of the Euro and the Euro's massive Gold Reserves AND the fact that they mark them to market.

Now 2 of those three legs look really shaky.

So yes, the Euro might drive Gold to it's Freegold value.

More and more though, somethinig tells me that if Gold becomes "free", nothing else will be. Free that is. Including you and me.

Only a fascist/wartime/warlike EU will hold together at this point. And if Libya and UK/France's shameless aggression thereof are any indication, it's getting there fast.


Sun, 09/04/2011 - 00:08 | 1630674 Temporalist
Temporalist's picture

When saying "Euro's massive gold reserves" why is that shaky?  The Euro Zone agreed to a paper standard why not now just switch it to gold?

Sun, 09/04/2011 - 00:19 | 1630682 Oh regional Indian
Oh regional Indian's picture

Who controls that decision in the currently broken financial system of the EU? Who holds it? Is it ECB gold? Will Italy agree to clean up it's internal debt issue by lease/sale of it's massive reserves by EU diktat? Hardly.

10 years ago yes. Now? I say it would be very difficult to pull Europe together, if you know what I mean.


Sun, 09/04/2011 - 11:26 | 1631341 High Plains Drifter
High Plains Drifter's picture

i believe europe will continue on like it is more or less due to the fact that the controllers want this. this is what they want and what was in their plan from the beginning and a deviation from this plan would not be in their best interest. nationalism is not what they want. racial awareness is not what they want. this is one reason why so many muzzies are being dumped on white europe. because they want to break down the racial harmony there to create weakness. and so it has happened and so it will for me and my house, i shall not bow the knee to these creeps. i shall never give in and i shall not go quietly into the night. i am hpd and i approve of this message......

Sun, 09/04/2011 - 12:20 | 1631414 Temporalist
Temporalist's picture

My point is each sovereign has their own gold holdings and in the event of a Euro defaiult they could still have a single currency agreement between the Euro participants if they agree to switch to a gold standard.  No "dictat" necessary just agreement.


I agree with you and HPD that now the sovereignty is in jeopardy but the Euro Parliament does not have complete control yet at all and the nations have not yet lied down and gone quietly...yet.

Sun, 09/04/2011 - 03:35 | 1631027 nuinut
nuinut's picture


Freegold (FOFOA's "thesis") is not driven by the Euro. It is a natural evolution of the monetary system, and the only way in which the Euro is relevant is that it's designers anticipated this evolution and structured the Euro so that it would function in this new environment.

This was done in two ways which differ from the dollar, but which other currencies have since begun to emulate (wonder why?):

1. Sever the link to gold. The Eurosystem balance sheet shows its gold reserves marked to market, as you say. Instead of fixing the exchange rate between gold and the Euro, this is left for the market to decide... gold is publicly valuing the euro, for all to see, on the balance sheet of the euro issuer. The asset is valuing the currency

2. Sever the link to the nation-state. As we see the Euro member nations cannot devalue their currency, as much as many of them would currently like to. The currency is free from political influence... and is free to be valued by the market. This valuation is publicly visible in the MTM value of the Eurosystem's physical gold reserves on their balance sheet.

The reason most observers are having difficulty understanding this arrangement and the way it functions is because they are misinterpreting what that balance sheet is saying; it is not the euro valuing the gold, it is gold valuing the euro.

So we see that as the situation develops, the Euro member nations are having their currency devalued, publicly and unhindered, by the market, via gold.

The euro was designed to function in the new paradigm, that is all. Freegold does not need the euro.

This post:Paper, Pyramids & Paradigms does not address the euro, but does describe the perspective with which one can easily understand what is unfolding currently before our eyes, and understand how the euro, unlike the dollar, is built to go with the flow rather than resist it.

Oh regional Indian said:

...somethinig tells me that if Gold becomes "free", nothing else will be. Free that is.

Look, if you don't understand gold or the euro, and you clearly don't, then you are not in a position to appreciate the implications, are you? Individual access to free-trading gold, unhindered by claims (paper gold), price-fixing and other shenanigans is exactly the thing that gives individual sovereignty.


Why else do you think it has been hindered?

Sun, 09/04/2011 - 03:57 | 1631039 Oh regional Indian
Oh regional Indian's picture

You said "Look, if you don't understand gold or the euro, and you clearly don't"

I'll take slight umbrage to that, since understanding is always mixed with context and conditions.

That said, I understand where you are coming from. All I know is that politics/military will overshadow any nonsense (from the controller's POV) regarding sovereignity etc. Perhaps you need to widen the basis of your own convictions to see that FOFA's world considers a narrow plank, not taking into account war, europes history of fascism and the fact that the little guy has never been allowed to win. 

Individual access to free trading gold. Like the wild west? Eh? Sure, I want to live like that.



Sun, 09/04/2011 - 04:27 | 1631047 nuinut
nuinut's picture

So why has gold been hindered, always fixed, pegged or supressed?

This underlies war and politics. I think it is you who needs to widen the basis of your understandings, ORI, starting with cause and effect.

The monetary system underlies everything, it is the foundation of any society. Without one we are just self-sufficient individuals. Wars, fascism, whatever, all are to secure advantage over the monetary system; control the gold and you control everything, but give everyone access and they hold their own sovereignty.

We are now at a point where they are increasingly demanding that access as the inequities of the artificial system overpower it. Simply too big for politics/military to overshadow any longer. 

I gave you a link to my context and understanding, in my own words. It's only a few minutes reading, in plain english. Large font, some simple diagrams.


Individual access to free trading gold. Like the wild west? Eh? Sure, I want to live like that.

Now you're just being silly. A gold standard is not free trading gold; quite the opposite, it is fixed.

You enjoy living as you do now?

Sun, 09/04/2011 - 11:21 | 1631334 DaBernank
DaBernank's picture

You think the € currency is free from political influence? Dream on. The ECB has gold reserves of only ~550 tons and now has €120.3 billion in PIIGS debt on it's balance sheet and they haven't even begun to really deal with Italy and Spain yet. Most of this debt monetisation has been for Greece, accounting for 2% of the Eurozone GDP and 4% of its population. Printing is the only way for them in the future. With it or without it, the EZ starts breaking up because the political dream of an integrated Europe and orgs like the ECB ignore the real people in the individual nations and their distinct identities.

Sun, 09/04/2011 - 13:38 | 1631593 Temporalist
Temporalist's picture

The "Eurozone" has more gold than everyone combined at over 10k (near 11k) tons between the participating nations.  They are already trying to take the gold of Greece, Portugal, etc. and gold will play an increasingly important role in the future of the Eurozone monetary system.

Sun, 09/04/2011 - 15:03 | 1631769 DaBernank
DaBernank's picture

Perhaps I'm not clear. Even with 10k tons, per capita it is around the same amount as the US, no big deal and doesn't match debts until 55,000 an ounce not to mention much of that Euro gold is physically in New York and London.

The "Eurozone" is a purely political concept anathema to the wishes of the majority of the people in the individual nations. It's alright during the speuclative bubble (1920s and 2000s) but during the bust, look out. When the country I live in is "ordered" to surrender its gold to Brussels, Vienna will laugh and ignore them, likewise Berlin, Paris, Amsterdam, Lisbon, etc. The gold will not leave individual states, it does not belong to Brussels, the ECB would have to send mercenaries to get it, the people of Europe want out of this failed projekt. Let's talk about this again when the gold from Athens is physically being transported to Brussels, I believe we will have a New Drachma first.

Sun, 09/04/2011 - 14:23 | 1631674 Oh regional Indian
Oh regional Indian's picture

"Individual access to free-trading gold"

Your words from the post above. But I won't call you silly. Just drunk of FOFA's golden kool aid.

The rest of your tone is too pedantic. I'm sure it's okay to disagree and I just happen to believe that FOFA isn't all that.

And neither is gold.

And I do enjoy living as I do now. I'm out of the system. Thanks for asking.


Sun, 09/04/2011 - 14:55 | 1631748 nuinut
nuinut's picture

ORI, are you never going to answer the question?

Why has gold been fixed, pegged or fractionalized for so long?


If a proper unhindered market discovered price for physical gold would make everyone "less free" as "somethinig tells you", then wouldn't this be happening already as an integral part of your conspiracy theory?

Let's stick to the topic.

Can you not answer the question?

Sun, 09/04/2011 - 08:34 | 1631155 Léonard
Léonard's picture


Only a fascist/wartime/warlike EU will hold together at this point. And if Libya and UK/France's shameless aggression thereof are any indication, it's getting there fast.

I'm sure you meant to say the USA shameless aggression on Lybia via their puppets Cameron and Sarkozy, two guys pretty much hated by English and French people.

Sun, 09/04/2011 - 14:29 | 1631683 Oh regional Indian
Oh regional Indian's picture

Indeed leonard, even though the true lines of control seem a little jumbled. i think it is impossible to tell who the hidden hand is.

What we do know is that his (her) minions are doing an awesome job screwing up everythign in sight, eh?


Sun, 09/04/2011 - 09:42 | 1631219 Smiddywesson
Smiddywesson's picture

The balance sheet will not collapse. But the wealth will have transferred from dollar assets into gold.

Nuinut gets it.  The wealth will transfer between balance sheets too, from ALL assets, into gold.  If you don't hold gold, you will lose wealth to those who do and you won't even have to write a check to the IRS.  What is being planned is the biggest tax in history.  Minus any defaults on debt, the debt that is owed is going to be paid for by everybody with anything but gold.  Your pension fund is paying off the debt.  Your house is paying off the debt.  Everything you own will deflate as they inflate the measuring stick of wealth, gold.

Sat, 09/03/2011 - 18:50 | 1630235 Long-John-Silver
Long-John-Silver's picture

At least our food isn't made out of plastic.

They make Plastic with food!

How is corn plastic made?
Sat, 09/03/2011 - 20:23 | 1630385 my puppy for prez
my puppy for prez's picture

It might as well be!  Almost everything is GMO (mutant!), pesticide-laden, irradiated, pasteurized, and basically sapped of nutrition!  

So we've got THAT going for us...

Sat, 09/03/2011 - 20:58 | 1630432 A Lunatic
A Lunatic's picture

I regularly see milk in the grocery store with a due by date, five weeks out. That shit ain't milk.

Sat, 09/03/2011 - 23:55 | 1630657 foofoojin
foofoojin's picture

I have never scene that. however. the nesquik strawberry milk has a 180 "shelf stable" life.

Sat, 09/03/2011 - 21:25 | 1630474 James
James's picture

Chicken Mcnuggets have plastic in them.

Sat, 09/03/2011 - 22:28 | 1630565 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

That's the Happy Meal prize -- much smaller these days!

Sun, 09/04/2011 - 00:04 | 1630671 CompassionateFascist
CompassionateFascist's picture

I don't care! They taste great. Mcnuggets.'s what's for lunch. (Tomorrow). Today I had a 7-11 Big Bite hotdog c ketchup, relish, and jalapenos. It's still repeating on me....

Sun, 09/04/2011 - 00:11 | 1630676 Temporalist
Temporalist's picture

Ohh the Truckstopper...deadly...

Sun, 09/04/2011 - 04:33 | 1631051 Byte Me
Byte Me's picture

It's still repeating on me....

That's the polypropylene in the relish then..

Sat, 09/03/2011 - 17:40 | 1630069 Silver Shield
Silver Shield's picture

The Case for a 1 to 1 Gold to Silver Ratio.

If the Chinese love gold...

Buy silver.

Sat, 09/03/2011 - 17:52 | 1630092 JW n FL
JW n FL's picture

Buy Both!!

Be Patriotic.. if not to the Government then your fellow Americans!

Sat, 09/03/2011 - 18:53 | 1630243 Long-John-Silver
Long-John-Silver's picture

My current Gold to Silver ratio is 25% Gold and 75% Silver. I try and maintain that ratio as I convert my fiat dollars into each. One day soon I will no longer be able to convert dollars to Gold and Silver. No one will make that trade.

Sun, 09/04/2011 - 09:27 | 1631203 FEDbuster
FEDbuster's picture

Don't forget to trade some FRNs for food, too.  A two year supply for each member of your family should get you over the hump, after that you better have the ability to produce or barter for your needs.  In a post Walmart world, there will be no need for lawyers or pension fund managers.

Sun, 09/04/2011 - 11:35 | 1631353 High Plains Drifter
High Plains Drifter's picture

that is a good ratio imho. the real juice is in silver. but most people don't realize that. but they will and soon enough. silver is the poor man's gold and junk silver will one day soon, no longer be called junk...........ah the smell of real the morning......

Sat, 09/03/2011 - 18:21 | 1630164 Troll Magnet
Troll Magnet's picture

Oh, man...If GS ratio ever becomes 1:1, I'm buying me a small island!  

Sat, 09/03/2011 - 22:56 | 1630590 Yen Cross
Yen Cross's picture

- Blankfeinmeister?><

Sat, 09/03/2011 - 18:29 | 1630184 Motley Fool
Motley Fool's picture

Words for the stupidity of this article fail me. 

The historical ratio of bread to gold was also lower, bread was a lot more hassle to make.

Suffice to say, I don't want to get into it, but do yourself a favour and buy some gold too, so you don't lose all your savings.

Sat, 09/03/2011 - 18:06 | 1630122 Transitory Disi...
Transitory Disinflation's picture

ZEROHEDGE will SOON IMPLODE! 10,9,8........


Everyone hide the Internet is coming.

Sat, 09/03/2011 - 18:16 | 1630143 JW n FL
JW n FL's picture



$16 Trillion Dollars???




Wall Street Aristocracy Got $1.2 Trillion in Fed’s Secret Loans




SEC Covering Up Wall Street Crimes?




How about the $2.5 Trillion in Social Security Bailouts??


a real smart girl said these words the other day and they have stuck with me.. (Daddy Bush)

who's your farmer? _________________________

who's your banker? _________________________

where's your money? _______________________

she warned of the housing problems.. she was the head of Department of Housing under Bush.

Fitts served as managing director and member of the board of directors of the Wall Street investment bank Dillon, Read & Co. Inc., as Assistant Secretary of Housing and Federal Housing[1] Commissioner at the United States Department of Housing and Urban Development in the first Bush Administration, and was the president of Hamilton Securities Group, Inc., an investment bank and financial software developer.


Sat, 09/03/2011 - 18:40 | 1630215 lasvegaspersona
lasvegaspersona's picture

What part of the 250 page GAO paper we're you directing us to?

Sat, 09/03/2011 - 20:29 | 1630399 CSA
CSA's picture

Can someone tell me why this guy spams with articles and links that no one goes to?  Same freaking cut and paste.  If you're going to sound an alarm, don't act like a spambot.  


Can someone else please explain how he got 2 thumbs up?

Sat, 09/03/2011 - 21:33 | 1630481 James
James's picture

vote for yourself and call a friend?

Sun, 09/04/2011 - 00:11 | 1630678 CompassionateFascist
CompassionateFascist's picture

Well, C.A. Fitts is a good one. Right in synch with Fight Club on most issues. In fact, during her gub'mint years, she tried to investigate ZOG theft of trillions. Got a visit from Men in Black: "desist, or you will cease to exist". Nice.

Sat, 09/03/2011 - 21:01 | 1630436 papaswamp
papaswamp's picture

ZH covered weeks ago dude...way behind.

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