A picture from the gold vault of the Federal Reserve Bank of New York (Photo credit: Wikipedia)
Between Friday, April 12th and Monday, April 15th, the price of gold suddenly fell over $200 in the “April Plunge”. That price decline was precipitated by some person or persons selling 300 tons of gold into the market in just one minute and was therefore the result of intentional manipulation. The price decline was intended to cause those who own gold to panic, sell their gold at a reduced price, and abandon gold as an investment and as a hedge against the collapse of fiat currencies.
That price manipulation was made possible by “gold leasing”–an officially-approved accounting fraud. ”Gold leasing” allows a major holder of gold (say, the Federal Reserve) to “lease,” say, 100 tons of its gold to third parties who then sell or lease that gold to others. By means of “gold leasing,” the Federal Reserve can claim to still own that 100 tons of gold that has been leased–but not sold–to third parties The pretext of ownership is maintained under the fiction that those third parties will one day restore the physical gold they’ve leased from the Federal Reserve back to the Federal Reserve.
By means of the fraud that the Fed still owns the 100 tons of gold it has leased–when, in fact, that hold has been sold into the market–the same 100 tons of gold can be multiplied to show up on the nation’s and market’s books as 200 or more tons of gold. By means of this leasing fraud, the apparent supply of gold is so increased that the price of gold is suppressed or even made to decline.
For example, suppose I “leased”–rather than sold–100 one-ounce gold coins to you. Since I only leased–but did not sell–the 100 gold coins to you, I can still report that I own 100 ounce of gold. But, at the same time, suppose you sell those 100 gold coins to a third party and that third party will also claim to own those 100 gold coins. Result? On paper, there appears to be 200 gold coins when there are still only 100 actual gold coins. By means of leasing, we’ve created an additional, but illusory, 100 ounces of “paper” gold.
Suppose, after I leased 100 gold coins to you–instead of selling them, you leased those same gold coins to a third party. Then, you could also claim to still “own” the same 100 gold coins that I claim to own and that the third party claims to own. Result? Our accounting records would show 300 gold coins where there are still only 100. And if the third person to whom you leased the 100 gold coins also leased those coins again to a fourth party, our accounting records could show that were 400 gold coins–when there are still only 100 actual gold coins.
By means of this leasing fraud, we could create the illusory supply of 400 gold coins where there were only 100. If the world thought the supply of gold coins was 400 rather than 100, the price of gold coins would be significantly reduced.
There’s no telling how many times the same gold coins–or tons of gold–have been leased and released and perhaps leased, again. Leasing may at least partially explain reports that, for every one ounce of physical gold that’s traded on COMEX, 99 ounces of “paper” (“leased”?) gold are traded.
The 99:1 ratio of paper gold to physical gold traded on COMEX raises the fantastic implication that, if the markets stopped trading in “paper/leased” gold and demand remained unchanged, the price of physical gold might increase by a factor of 99. If so, an ounce of today’s gold priced at $1,500 per ounce might one day sell for $150,000.
Of course, no one predicts the price of physical gold to increase by 99 times. But when you look at the math, the market ratios, etc., it’s not hard to imagine that if the world lost faith in paper gold and removed paper gold from our markets, that the true price of physical gold could increase by five to ten times.
• The gold leasing scheme is based on the pretext that the physical gold is leased rather than sold and will therefore be replaced to original owner at some point in the future. Thus, if I leased 100 gold coins to you that were worth $150,000 today, you would restore those 100 gold coins (not $150,000 in fiat currency) to me at some time in the future.
And, therein, lies the problem with gold leasing. I.e., what happens if I leased 100 gold coins to you in AD. 2009 when the price of gold was $1,000 per ounce and you agreed to return those coins to me five years later in A.D. 2014 when the price of gold was $2,000 per ounce?
Well, as long as you kept the 100 coins in a box in your closet for those five years, there’d be no problem.
But suppose you sold those coins to a third party for, say, $160,000 in A.D. 2009 and made a fast $10,000 profit. If you no longer possessed the coins in A.D. 2014 (when the price of gold is $2,000/ounce), you’d have to buy 100 gold coins for $200,000 when the lease ends and then hand those coins over to me. You’d lose $40,000–about 25% of your original investment.
If you’d leased the coins to a third party, and he leased them to a fourth party, etc., the cumulative losses to each party could be cataclysmic. If all of the leases came due at about the same time, the demand for gold coins would rise and the price might follow from, say, $2,000 an ounce to maybe $3,000. More, as the leases came due and it became apparent that there were only 100 gold coins available to satisfy lease obligations of, say, 500 gold coins, it would be recognized that the supply of gold coins was perhaps only 20% of what had previously been believed. As the known supply of gold coins was reduced, the price of gold coins might increase from $3,000 to $5,000 per ounce.
Result? Many of those who leased gold coins back in A.D. 2009 could be bankrupted when they had to return those physical coins in A.D. 2014.
• The process described in relation to leasing coins applies when the Federal Reserve leases tons of gold. I.e., suppose the Fed leased 100 tons of gold for five years to a bullion bank back in September, A.D. 2009 when the price of gold was $1,000/ounce. Under the terms of the alleged “lease,” the bullion bank is scheduled to restore that physical gold to the Federal Reserve next year (A.D. 2014), when the price of gold could easily be $2,000 per ounce. But if the bullion bank no longer owns or has possession of that 100 tons of gold, the bullion bank will have to buy gold on the market (at twice the price it originally paid to “lease” that gold) in order to return 100 tons of gold to the Fed. Repurchasing 100 tons of gold for $2,000 an ounce after first selling that gold for $1,000 per ounce could drive the bullion bank into bankruptcy.
In fact, I’d bet that the bullion banks that leased the gold from the Fed were, from the beginning, the designated “patsies”. The original architect of the “gold leasing” scheme was probably the Federal Reserve and/or the world’s central banks. They had to know that gold leasing is a kind of Ponzi scheme that would inevitably collapse. Not wanting to be held responsible for that collapse, it seems reasonable that the Fed intended from the beginning that the bullion banks would be “sacrificed” into bankruptcy and perhaps even criminal liability when the gold leasing scheme inevitably failed.
I.e., the day may be coming when the Federal Reserve (which claims to have about 8,200 tons of gold held on behalf of the American people) will be shown to have much, much less gold than is claimed. The American people will be angry and want their gold back. The Fed will defend itself by claiming to have “innocently” leased the gold to the bullion banks which were supposed to return the physical gold to the Fed. But, alas and OMG!, the bullion banks have been mismanaged, gone bankrupt and will be unable to return the gold to the Fed. The Fed will claim to have acted in good faith, the bankrupted bullion banks will be blamed, Congress will be “shocked, shocked I tell you!” and hold hearings, wrists will be slapped, the loss of what may be several thousand tons of America’s gold will be excused–and the Federal Reserve will skate away, largely unscathed.
The truth, however, is that those who leased hundreds or even thousands of tons of gold never expected to see that gold again. From the beginning, their real purpose was to create a falsely multiplied “supply” of paper gold to suppress the price of physical gold and thereby support the illusion that fiat dollars have value.
• The following video was produced on April 12th (the first day of the April’s “Plunge” in the price of gold) and offers a brief explanation the relationship between gold leasing and the fall in the price of gold.
The video is mistaken in one regard: The speakers express their initial concern that the sudden fall in gold’s price would cause people to loose confidence in gold, sell their gold at reduced prices and even abandon gold as an prudent investment and/or hedge against a fiat currency collapse. However, gold dealers later reported that after the “Plunge,” there were 50 buyers for every seller. More, demand for gold increased dramatically around the world.
The net result of the April Plunge has been renewed confidence in gold and an increased demand–exactly opposite to what the architects of that “Plunge” had presumably intended. If anyone has panicked after the April Plunge, it hasn’t been those who own gold–but it may have been those who caused the April Plunge.
In retrospect, we’re left to wonder whether the April Plunge was an expression of the world’s fiat-currency banking system’s power to manipulate the gold markets–or if it was an expression of the system’s desperation over the need to somehow sustain fiat currencies in general, and the fiat dollar, in particular.
The answer to that question is not yet in. However, where I first thought I saw “unbridled power,” I am beginning to see abject desperation. If the fiat currency supporters have really become desperate, then the fiat currency’s collapse might be much closer than most suspect.
Here’s the 00:10:37 video:
