Allegation that Central Banks Have Rehypothecated, Leased or Outright Sold the Gold They Claim to Have Is Gaining Momentum
We noted in
2012 that there are serious questions
as to whether the Fed and other central banks really have the gold
holdings which they claim.
This story is starting to go mainstream.
The
Financial Times writes today
(h/t Zero
Hedge):
A year ago
the Bundesbank
announced that it intended to repatriate 700 tons of
Germany’s gold from
Paris and New York.
Although a couple of jumbo jets could have managed the transatlantic
removal, it made security sense to ship the load in smaller
consignments.
Just how small, and over how long, has only just become apparent.
Last month Jens Weidmann, Bundesbank president,
admitted that just 37 tons had arrived in Frankfurt. The original
timescale, to complete the transfer by 2020, was leisurely enough,
but at this rate it would take 20 years for a simple operation. Well,
perhaps not so simple. While he awaits delivery, Herr Weidmann is
welcome to come and look through the bars in the Federal Reserve’s
vaults, but the question is: whose bars are they?
In the
“armchair farmer” fraud you are told: “Look, this is your pig,
in the sty.” It
works until everyone wants physical delivery of their pig, which is
why Buba’s move last year caused such a stir.
After all nobody knows whether there are really 260m ounces of gold
in Fort Knox, because the US government won’t let auditors inside.
The delivery problem for the Fed is a different
breed of pig. The gold market is far more than exchanging paper money
for precious metal. Indeed the metal seems something of a sideshow.
In June last year the average volume of gold cleared in London hit
29m ounces per day. The world’s mines are producing 90m ounces per
year. The traded volume was many times the cleared volume.
The paper gold in the London Bullion Market
takes the familiar forms that bankers have turned into profit
machines: futures, options, leveraged trades, collateralised
obligations, ETFs .?.?. a storm of exotic instruments, each of which
is carefully logged, cross-checked and audited.
Or perhaps
not. High-flying traders find such backroom work tedious, and prefer
to let some drone do it, just as they did with those money-market
instruments that fuelled the banking crisis. The drones
will have full control of the paper trail, won’t they? There’s
surely no chance that the Fed’s little delivery difficulty has
anything to do with the cat’s-cradle of pledges
based on the gold in its vaults?
John
Hathaway suspects there is. He worries about all the paper (and
pixels) linked to gold. He runs the Tocqueville gold fund (the clue
is in the name) and doesn’t share the near-universal gloom
of London’s gold analysts, who a year ago forecast an average
$1700 for 2013. It is currently $1,260.
As has been
remarked here before, forecasting the price is for mugs and bugs. But
one day the ties that bind this pixelated gold may break, with
potentially catastrophic results. So if you fancy gold at today’s
depressed price, learn from Buba and demand delivery.
And
last week, Glenn Beck – hate him or love him, he’s got
the 594th most
popular website in the world and many viewers on Dish network and
various cable providers – did an entire 20-minute episode on the
issue:
This story hasn’t yet made it to the New York Times, the Washington Post or network television … but it is gaining momentum.
Read more at http://investmentwatchblog.com/is-a-major-gold-scandal-going-mainstream/#1BYUH084gioFvx6J.99
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