Every once in a while it is good to go back to basics. We have looked at the topic of whether gold even matters several times in the past. Charles Hugh Smith undertook the exercise of “re hypothecation” process last week and can be read here. He ends this article with a common sense question that asks “if gold is such a useless relic then why don’t they just charge the public for tours to see the gold in Ft. Knox? What’s the danger?”.
Actor after actor has been paraded forth to tell the public. “gold is a useless and barbaric relic”. We are told daily “it doesn’t pay any interest, it costs money to store it, you can’t eat it and Walmart won’t take it. It’s pretty for jewelry but that’s about it”. I ask the questions, why then do central banks bother to hold gold? Why the secrecy of our own gold holdings? We are told that no audit can or will take place because it would cost too much? Why not sell a few of the “useless bars” to pay for the audit?
The answers of course are all so obvious. Gold is badmouthed because it is the direct competitor of the U.S. dollar. We haven’t had an audit because the numbers would not match up and it would be discovered we do not have the gold we claim(ed) to have. Put simply, the “danger” is the U.S. will be discovered as a fraud, a thief and a liar if an audit took place. This is why we are bombarded daily with negative psyops regarding gold and why for the last couple of years the price suppression has been so openly blatant and fierce. It is ALL about the dollar and the privilege of issuing the reserve currency, namely the U.S. ability to hang on to this privilege.
The above is “U.S. centric”, the view or perception is far different in the rest of the world. China and Russia are openly buying gold for their coffers. They even encourage their citizens to buy gold for themselves. The Indians even smuggle gold into their country while being discouraged by a pro U.S. government. My point is this, the rest of the world knows what gold really is, it is money. I would even say many Western governments understand the game as proven by their requests to repatriate gold from N.Y. vaults, “trust” is waning.
You see, gold is “trust” itself. Gold is not “issued” by any country, the reality is, any country who has gold is seen to have “wealth”. Ask yourself this question, which is more important, whether the U.S. considers gold to be wealth or whether the rest of the world does? I have been asked the question “what if the U.S. decides to outlaw gold and make it illegal to own”? THIS is why you should own some or even the majority of your metal OUTSIDE of the U.S.. The rest of the world clearly views gold as valuable, you would have wealth outside where this wealth could either remain or be brought back in the form of another currency.
It should be clear to you by now that power is moving away from the U.S.. “Trust” is also moving away from the U.S., this is evidenced by the various actions of nations over the last several years, an alternative clearing system to SWIFT, currency hubs, the AIIB and other banking systems… AND their buildup of gold reserves. All of these measures have progressed as the U.S. has lost more and more trust. The world sees the U.S. in a very poor light for what we do and how we act. They no longer see us as a “model citizen” who follows the rule of law and will “call us” on this shortly.
As I have said previously, the “we’ll show you our gold and we demand to see yours” moment is close at hand. What exactly do you think will happen in this event? Can the U.S. get by with “trust us, the gold is there”? Can an audit demanded by the rest of the world be denied? And what if an audit is done and the U.S. turns out to have less than 1,000 tons and a bunch of custodial gold is missing?
Back to the top and the title, does gold really matter? I guess I can answer this with another question, “does trust really matter”? “Trust” matters in everything we do, from daily life to financial affairs. Trade depends entirely on trust and living standards depend on trade. The endgame of the Bretton Woods agreement is upon us because the leader, the U.S., has done so many dirty deals, twisted so many arms and abrogates the rule of law at will.
I believe the defining moment will be when either China formally applies for inclusion into the SDR or, when they outright announce what their gold holdings are. If China does apply for SDR inclusion, as I understand it they will need to provide audited figures for their gold holdings. They are a very polite and proper people but not the third world fools our press would have you believe. The intelligent move on their part would be to ask for an audit of the others included in the SDR. By requesting an audit of “all” they would be asking for an audit of Britain and of course the U.S.. They know full well these audits will not add up because they know they have purchased more gold than has been produced, it had to come from “someone’s vault”. In my opinion, this is the most likely way to “politely” expose the issuer of the world’s reserve currency as fraudulently abusing their power. Gold really does matter to the rest of the world which means when all is said and done, it will also matter in the U.S. whether we like it or not!
Excellent way to point out how an audit can be requested by China, in order to expose the true quantity of gold the USA purports to own!
As you stated, China can make the claim of owning 50,000 tons of gold …. and request that an audit of all gold that is calimed by all countries – must submit to an audit, IF China is to be audited.
Voila, the Chinese claim is false, and they only own 25,000 tons. Oooops, they are off by 50% (what a shock)! But wait a minute … The USA has only 800 tons, it is off by 90%!!! There was an extra ZERO (which is nothing) at the end of the 800 tons making it 8000 tons, HA HA HA!
Or what if: The new SDR composition requires 90% gold and 10% FIAT currency mix?
thanks G8, I write more about this for tomorrow.
Plausible scenario on China’s inclusion into SDR : on chinese demand to audit first, west would say – let audit no one, you good to go.
another millennium of manipulation folllows.
could be?
One my more striking memories from the 2006 era was the utter belligerence of the finance types whenever the topic of a housing bubble came up. During the collapse it became obvious they understood the bubble even better than the bloggers did during the time the finance psychopaths expressed exasperation with our utter ignorance.
To wit: I remember a bloomberg article that came out right when the German gold repatriation was meeting resistance. The author claimed that:
1) The gold bugs are idiots for insinuating the gold is not there.
2) Gold is a useless relic anyway.
3) If the gold bugs succeed in getting their audits and it turns out the gold is missing, the entire system will collapse and this will be on the heads of the goldbugs who caused all of it for no reason other than the pursuit of their bizzare fetish.
4) Because of the points above, we need to realize that people believe the gold is there and thats more valuable than gold.
I threw up in my mouth a little when I typed 4), but thats really what he said. As far as I’m concerned the elites tipped their hand long ago on this issue. They know the truth and they are counting on people to lack the self confidence to stand in defiance of the “educated”.
yes.
I hope you are right, that the IMF requests audited confirmation of China’s gold holdings. And, I hope you are right, that China asks for such from the U.S., Brits, et al. Both make great sense, but we all know how much logic weighs — i.e., little — in the short-term.
China, please make some game-changing moves, and soon!
they will, on their terms.
We agree with all that you say in this article & all the others—thanks for all the great info. One question regarding “outlawing/making illegal”—this is something that several in our family are concerned about. But, if all the financial & political elite, and the very wealthy all own gold (maybe secretly) will that not thwart any attempt at outlawing it? However, I think my own answer may be that these same elite did not turn in their gold to Roosevelt—only the sheepeople. Do you think it will be different this time, because of a more informed minority (thanks to people like you) & the world financial situation, that there will be enough resistance to thwart it? Take care, Ron (& Peggy)
it’s why you MUST hold some outside of the country.
Bill,
The U.S. needs a signed petition by U.S. citizens with the required amount of signatures to demand and perform a comprehensive audit of U.S. owned physical gold on hand, gold leased out/to whom/the terms, gold futures and options positions,etc. This to be done by a CPA firm with GATA people present, involved, observing to witness everything and documenting all work papers and outcome results so the CPA firm isn’t crooked.
I’m just the idea guy…….need GATA (Bill Murray) or someone to spearhead the petition effort. I’m ready to sign.
it will go nowhere.
A gold bullion audit for all won’t happen, simply because the Anglo-American supposed gold bullion holdings shortfall. Therefore China’s inclusion in the SDR basket will be denied, nullifying any need for an audit.
Caught between a rock and a hard place during a successful audit, the Anglo-American gold bullion hoard, would be shown as being there and the calls for redemption would flood in. Second big reason why an audit won’t occur.
This western gold hoard is there, only it is not unencumbered. It has been rehypothecated many times over. This would be the third big reason why an audit won’t occur. The “owners” of this gold bullion would all step forward asking for redemption of “their” gold. All one hundred owners of each ounce!
It’s not in the least bit of interest to the western financial oligarchy to have an audit. It simply won’t happen. They know it would spell doom for them and the current world financial system, on which their paper wealth depends.
I’m not so sure China will be denied.
When asked what type of government we had – a Republic or Monarchy, Ben Franklin replied, “A Republic, if you can keep it.” I think the same could be said of constitutional money. “What kind of money have we got?” “Precious metals, if you can keep them.”
The endgame is here; although the timing and flashpoint are still unclear.
One question, though; Do you think copper will have monetary value in the future?
copper? No.
Thanks for your input. That’s what I think as well, but I’ve been hearing a lot about it recently (last few months); enough for me to pay attention.
Put simply, the “danger” is the U.S. will be discovered as a fraud, a thief and a liar if an audit took place. Kinda ironic that leader of the “GOOD OLE USA” is the same. Maybe the reason he was placed there.
“lied to a few folks”.
Bill and Tim
Yep he certainly has
lied to a few folks
tortured a few folks
killed a few folks
Cheers
Col
I’m trying to read the signs. Given what I know about western bankers and what they will do and have done to skim yield, by hook or by crook,
the east is growing tired of the dishonesty. LIBOR, forex, precious metals..all markets have been proven manipulated.
In China, if they catch you doing that they kill you. Now I’m not in favor of that, but it shows how culturally different we are.
Our white collar criminals pay a fine orders of magnitude less than the profit they made while stealing and cheating.
They are sick of us and they will soon put us in our place. How?
yes, we are “culturally different”.
The writing is pretty much on the wall, we’re going electronic. We’re pretty much half way there already, credit cards, online banking, smart phones you wave across sensors to do your shopping, same with a variety of cards with chips you can use in vending machines, public transport etc. we’re heading to a cashless society, that’s the ultimate goal. No tax evasion, a money trail for everything….of course that will force some people to barter and that’s where your gold and silver may come in handy but it isn’t going to anywhere near the $10,000 or more you hear tossed about by the gold promoters…it will be relegated to the underground economy, if that, because so few people wil have it it may not even be bargain-able. In a cashless society how would the ordinary person evaluate gold, what’s it worth?
the international community will value gold.
How would digital currency work if the internet goes down, Kerry? The rest of the world is going to put reliable internet into every nook and cranny? Have you done much travelling around the world and tried to use the internet outside big cities in most non-western countries? Not going to happen, and it is the rest of the world outside the US which will soon be pricing gold.
good point.
“The gold price” in US dollars reached $1206+ during US open today. Starting about one hour after US markets closed, the usual whittling down started and has been underway four nearly four hours now.
We’ve seen the paper “price” dribbled down to $1199 and change so far. This is all very predictable.
I hope you can write a column sometime explaining who is doing this, why they are permitted to do it repeatedly and so predictably and how the mechanism of this works.
write it up.
Currently, the IMF’s SDR basket comprises: the dollar, the euro, the yen and the pound sterling, are all debit-based Fiat currencies that promulgates gold to be worthless.
Therefore, for the Yuan to be added to the IMF’s SDR’s basket, China would be required to also agree that its hoard of gold is also worthless. I personally think that China would NEVER comply to that insane demand, and would never be added the IMF’s SDR basket of currencies.
Since September 19, 2014, China has been selling gold from its hoard on a “Cash and Carry” basis, and China will exclusively determine the price of gold as long as it maintains a policy of immediate convertibility with physical gold.
Bill, your blogs are usually excellent. This time, however, you have excelled yourself and I cannot come up with an appropriate adjective (very excellent?).
Many thanks for terrific work, I look forward to it very much.
thank you Sanjeev!
One rule of economics is provision comes from production, not usery, nor welfare because both suck the blood of production.
At some point those on both ends of the financial spectrum will suffer because producers will stop over production and only produce for their own consumptive needs unless the producers have a reliable method to store their over production.
yes.
Well Bill..time is now short.
Very soon there will be an end to the bullion dance.
Paper markets soon to be crushed by physical.
Listen to what Andrew has to say on the matter..Just released.
http://www.sprottmoney.com/news/ask-the-expert-andrew-maguire-april-27-2015
Bill,
It broke my heart to see you write the following:
“THIS is why you should own some or even the majority of your metal OUTSIDE of the U.S.. ”
Even though I lived eight years in a foreign country and traveled to many others. Even though I have a fairly good understanding of the repeatability of “Rome fell,” I cannot imagine a single ideal foreign environment once things get so bad in the US that I have to worry about the feds stealing my precious metals, via either outright confiscation or heavy taxation. Why would an all-powerful foreign government not confiscate my holdings within their boundaries if the US were without the rule of law or under conditions of excessive law?
I’ve read many advisors who recommend one or more countries over the US, only to see others who are critical of those same recommendations. Can’t get through the mental fog that causes.
I will simply take my chances here, having prepped comprehensively and always trusting that the Lord will protect me and mine. If things don’t work out, well, it’s been a good 50+ years and I am thankful for the blessings enjoyed thus far.
in a non bank vault.