Nothing like trying to clean up your legacy before you die, your lie blows up publicly …or both. Alan Greenspan decided to talk about “gold” in an Op-Ed piece this past week in an effort to clean up his legacy. The article was published by Foreign Affairs. Please read this opinion piece very carefully, or even twice before continuing.
OK, so now you’ve read “The Maestro’s” opinion on “Why Beijing is buying gold?” Do you buy his arguments? Even a little? I don’t buy any of it from start to finish (except for his admission gold and silver ARE monies), in my opinion Mr. Magoo who “couldn’t ever see a bubble before it popped” has just as bad hindsight as current sight even with the ability to see factual history. Actually, this is wrong as Mr. Greenspan “did” get it and I am now sure he always “has” gotten it …he just cannot ever really admit to this without being hung from a lamp post somewhere.
Greenspan contends that China could purchase a relatively small portion of their $4 trillion of reserves in gold without “much risk.” He says the interest lost and storage costs would be relatively small. Ya think? If the reserves pay almost nothing in interest and the gold can be stored in a State owned facility …and they are exchanging fake money for real money …is there ANY risk at all? Another area of humor is his contention the Chinese will “announce their plans” to purchase gold with a small portion of their reserves. Really? Do you really believe the Chinese will “announce” their future plans to the world and allow a bunch of speculators to front run them? …And after they are done “buying,” the price of gold will “fall back down?” I will address all of this shortly as I want to put his thoughts out first, before I fix his spectacles for him.
He then contends (quite correctly) gold and little cousin silver “are” money. Actually he says “currency” and they are “universally acceptable at ALL times.” Digressing just a bit, if (since) this is true, Ben Bernanke either perjured himself before Congress or is just plain ignorant as he told Ron Paul “gold is not money, it is held out of tradition.” Greenspan also correctly points out that gold nor can silver ever default. They are no one’s liability and do not rely on any sovereign’s ability to tax or perform for their values. In case you were wondering, Mr. Greenspan DOES “get it,” he always has…
… I think it is important to understand Mr. Greenspan’s thought process (es) along the way. He wrote a very well thought out and “very Austrian” article back in 1966 which explained gold thoroughly and why it is the “ultimate money.” “Ultimate money” is my term because of the word “ultimate,” meaning “last.” In any panic, market meltdown or banking panic, gold (and silver) will be the last currency standing. As other currencies become “unacceptable,” gold and silver will still be accepted to settle any debts or trade. Greenspan fully understood this in 1966, he fully understood it while Chairman of the Fed and churning out trillions of $ in fake money and he knows it now. He will know it until his last dying breath and is only now trying to “re paint” his legacy. A legacy which included spading the ground, planting the seed and watering regularly …to the destruction of Western capitalism. There is no one on the planet more responsible for where we are now than Mr. Greenspan, no matter how much he writes, speaks or tries to re paint history …this is a fact and is the legacy he will take to his grave with him!
Do you really believe the Chinese would ever tip their hand and say we “are going to” buy gold? Wouldn’t it behoove them to buy the gold first and then point out to the world “look what we did?” First, at today’s pricing they could amass as much gold as the U.S. claims to have with less than 10% of their reserves. Would this qualify as a “small enough percentage” in Mr. Magoo’s mind? Actually, China has already announced they plan to accumulate 8,500 tons which tells me they already have! They announced the ownership of 1,054 tons back in April of 2009, we also know they have imported almost 4,000 tons over the last two years. This brings them to 5,000 tons without accounting for 2009, ’10, ’11 nor ’12. It also does not account for an average of 350+ tons internally produced each year since 2009 which amounts to another nearly 2,000 tons. Including internal production we can already see nearly 7,000 tons, could they have possibly accumulated another 1,000 tons or so between 2009 and 2012? By my math, this comes to about 8,000 tons and “presto” they have as much as we “say” we do. Amazing!
At current pricing, China has enough in dollar reserves and Treasury holdings alone to purchase 70% of ALL the gold ever produced by man (yes I know, if they tried it they would blow the price to the moon and back). Alan Greenspan knows this and is fully aware of it which is why he used the term “relatively small percentage” in his writing. This is also why he finished his piece by talking about the “politics” of China and their “inability” (his words) to vault past the U.S. technologically. He says China stifles innovation by suppressing “freedom of speech and action”… change subject and maybe no one will notice.
I would simply ask the near sighted maestro a few questions. Did he really believe the Chinese would not eventually “use” their accumulated dollars to “buy stuff?” In fact, I believe they tried to purchase Unocal while he was Fed Chairman in 2002? And were told an emphatic no for national security reasons. Did he really believe they would not purchase gold with their dollars? More gold than the U.S. claimed to have? Heck, back then our gold was only worth $100 billion or so, did he think this too big of a hurdle? Suppression of gold and silver prices were full blown during his tenure, did he really believe it would or could work after watching the U.S. lose 60% of their holdings via the London Gold Pool and then the price of gold to explode?
Here is what I think. I believe the Chinese already have 8,000 tons of gold more or less (not including the Elders gold). They know for a fact that much of what they own came from the U.S. (and let’s not forget German gold held at the Fed). China’s accumulation could have only come from one place. It had to come from “where” it was previously held since China has purchased more than was available by current production. I believe China floated the 8,500 ton number in preparation for making a global bid for gold. It would not surprise me to see China say something like “we will buy any and all gold at $4,000 per ounce until further notice.” This would surely accumulate gold and eventually the selling would dry up. I believe they would then raise their bid and attract more gold. Maybe their total would amount to 15,000 tons or even the 20,000 tons the U.S. had before the 1960’s, where would this put China in the financial world? It would put them well ahead of the U.S. and number two Germany combined …if they really have the gold they claim to have. Maybe China would say something like “we’ll show you ours if you show us yours” to prove the Western gold is gone? This would leave who, France and Italy as number 2 and 3 in the world? Please don’t tell me the IMF because they won’t be showing anybody anything. I don’t really believe the Chinese want to “prove” the West has no gold left but I do believe they want their silver (which was leased over 10 years ago) back. They may only use the “phantom” gold situation of the West as “leverage” …or they may simply blow up the game if they end up being stiffed on their silver.
In any case, Alan Greenspan had to know where this would end up. He had to know the world would finally want to “spend” some or all of the dollars he and his warped cohorts created. He had to know some of these dollars would end up chasing gold which is and was a finite amount within Western vaults. He had to know that each bubble he created would burst and then the next “necessary” bubble to reflate the system would grow and then again ultimately pop.
By what he wrote all the way back in 1966, it is clear to me that Alan “Mr. Magoo” Greenspan was and is a really smart guy who knew exactly what would ultimately happen (but I don’t think he thought it would happen in his lifetime). It does not matter what “colored glasses” he is trying to prescribe to the masses by what he say’s or so eloquently pens. He clearly knew the value of gold as proven by his 1966 paper and speech. He was in office when Nixon defaulted on the international dollar and then was Chairman of the Fed when dollar and debt creation began to go parabolic. He was there from the beginning, he was there during and he is still here now in the end acting as if he “never knew.” He did and he does, the only thing he can now hope for is some event to come along big enough, obvious enough and public enough which wipes out the system …to point at. “Surely no banking or financial system could have survived that?” he will say. I’ll bet however, Mr. Magoo doesn’t even need glasses to see how beautiful his own personal stack of gold is!
Not to get off topic, but what’s going on with platinum manipulation? It’s been slammed down worse than the other metals.
which is really dumb because there are only 2 main producers in the world …Russia is one of them!
Aaaahhh…I think you just answered the question for me. And oil is also getting slammed down, which is a big part of Russia’s economy.
Bill, I’m sure you’ve heard of Bix Weir’s “Road to Roota” theory. Greenspan a good guy? This was the plan all along to blow up the system from within? Returning us to sound money? What say you?
to return us to sound money? I highly doubt this was “the plan”.
Here’s my unique take on what REALLY happened 🙂
Greenspan’s Golden Secret
Greenspan’s Golden Testimony
All the best
thanks Bix. This may have been how they recruited him to begin with but the plan if true is no longer viable because “our” (the people’s) gold is gone. How do you back a currency with gold if there is none? In my opinion, “destruction” may once upon a time have been the plan but not to go back to gold in the West as we have divested far too much to ever (our lifetimes) be able to go back. Do you really believe those pulling the levers have put good intentions for society ahead of their own greed? I don’t.
I agree, Bill. Sound money is absolutely THE last thing that the banksters want. This is so because they cannot manipulate it anywhere near as blatantly as they can fiat currencies that they can zap up out of thin air. As with all other things, though, money has value when extraordinary effort goes into its creation. Almost no effort is required to create more fiat, so its intrinsic value is practically nil. Gold and silver, on the other hand, require a great deal of skill, effort, and capital to produce. Their intrinsic values are high and they are worth every penny of it.
My thought on sound money is that it will only return once everything else has failed in spectacular fashion and not 1 day before that. There is simply too much wealth and power derived from fiat currencies to let them go without a complete collapse revealing “the man behind the curtain” for who and what he truly is to one and all; yes, even the sheeple… or perhaps especially the sheeple, because the rest of us already get it.
yes Ed, exactly.
PBOC floating the idea of China (eventually/now) owning 8500 tons of gold?
Unofficial announcement, so to speak – subject to furthere revision – depending on circumstances at that time?
The questions are:
*When will PBOC/China announce an Offer/Bid price?
*Will it be a one-time offer of, say – 100x current paper price – since that is the ratio of paper to physical?
*Or will it be incremental rising bids, as Gold goes into hiding (as stated here)?
thank you genius, my guess is in incremental bids whenever supply dries up …until they are “full”.
My guess is that China likely already has about 15k tons of gold and is looking to at least double that. The Chinese are a nation that truly appreciates history. Unlike the US “education” system, the Chinese are avidly into history and use it as a guide and point of reference as they move into the future. They KNOW that the US once had about 28k tons of gold and that this was when the Bretton Woods “agreement” came to be. They also understand that this was not so much an agreement as the US telling all other nations what was going to happen in our war-torn world. We had the world’s largest intact industrial base, military, farm production, oil production, steel production, and gold hoard. We also had nuclear weapons and the ability to deliver them anywhere in the world. No one else was even close. We could have ruled the world at that time had we chosen to do so. In many ways, we did just that but it was never in an official capacity. China would like to be in that position and they are doing everything in their power to achieve it. If we keep doing the same dumb things we’ve been doing lately and they keep doing the same smart things they’ve been doing, they will achieve that goal… and we will have helped make it possible.
again yes Ed!
Unless….the USA has a boat load of Gold (in ground or stashed somewhere) that it plans on revealing after the reset when Gold is freely traded (tin foil hat off) Right Bix!? For such shiny element(s) PM’s are sure shrouded in lots of shade. Oh well can’t complain @ these banksters subsidized prices! Stack on my friends.
Sir Alan plays Dumb. How disingenuous is that? The man who presided over the greatest transfer of wealth and the destruction of the reserve currency of the greatest world power of the 20th century, and he basically says, ” How could I or anyone Know it would all turn out like this?” The man is utterly reprehensible. Were he not part of the “Club” he would get his just deserts by the people of this nation, for which he is most responsible for having brought us to the very brink of destruction. May Almighty God give him exactly what he deserves.
not the 20th Century, for ever …as in ALL TIME!
Yes. For ALL TIME.
Greenspan lost the plot and America has lost the lot.
Ahhhhhhhhh; apparently the mirror delivers a strong message to some.
I remember reading about JD Rockefeller, you know, that nice business man, as he began getting older he started giving away large sums of money.
The contention was that he was basically trying to buy his way into heaven by righting some of the many wrongs he had dealt.
Good luck Al. Don’t bother to hoard any gold now because it’s going to melt where you’re going!
very good Dave!
“Good luck Al. Don’t bother to hoard any gold now because it’s going to melt where you’re going!”
Yep. lol But it WILL last longer than fiat, which will burst into flames instantly upon his arrival. His room has been ready for some time now. >:-}
Congratulations on another stellar analysis. As a Westerner, your understanding of the Chinese thought process is outstanding. My only exception is your suggestion of offering $4,000 per ounce of gold would be expected by a broker. As you are well aware, the Chinese think both big and long-term.
This offer would only occur after the Chinese fixes long-term price of gold to its Yuan. Therefore, the Chinese would not want to establish a fixed long-term price of gold at that very high price.
My personal guess is that the Chinese would offer a price below $1,500 per ounce of gold. Since the Yuan is fully gold backed and can be invested globally, many sources of gold will buy Yuan with their gold. This will be a long-term process, but is typical Chinese.
Thank you Dr., if I may, I need to correct you. You are thinking in yuan while I am thinking in dollars. Why is $4,000 too high? In current yuan yes I agree, yuan may not devalue at all from here versus gold (although I believe there will be some devaluation). In dollars …this is different. Dollars may end up devaluing to $1,000,000 or far more per 1 ounce of gold. You do understand what I am saying here I believe, at current “prices” it may only be $1,500 (in purchasing power) yet far more in actual dollars as it declines against other currencies. That said, I do not believe $4,000 is too high in current purchasing power value, what comes is very very bad and capital will attract to gold (cash) and bid up the real price …just my opinion.
Thank you for your reply. I did not confuse $4,000USD with the Chinese Yuan. A current price of $4,000 per ounce of gold would be equal to 789.53 Yuans per gram, using the current USD/CYN exchange ratio of 1:6.1393. The SGE Gold Benchmark Price(AM)is 241.20 Yuans, dated 20140930. The next Gold Benchmark Price will be issued on October 8, 2014.
I assumed that the Chinese had previously been attached to the long-term purchasing power of gold, which in this case the price of gold would be set at 789.53 Yuans per gram of gold for the next 100 years.
If the US had experienced a hyperinflationary future, the Chinese would match its hyperinflationary growth by reducing the USD/CYN ratio. If the USD/CYN ratio is reduced to 1:1, then the price of gold would become $9,33104USD per ounce of gold. If the ration is reduced to 1:0.1 then the Dollar price would be $93,310.43 per ounce of gold, and my guess is that the US FRN will have already joined the Confederate Dollar and the Continual Dollar into history before a 1:0.1 ratio is issued by the Chinese State Administration of Foreign Exchange (SAFE), established by PBOC.
Since the Chinese will be required to limit their issuance of Yuans to match their hoard of Gold, the Chinese have already established globally Currency Exchange Hubs, which will thoroughly investigate the legal ownership of all foreign currencies before they are exchanged for fully convertible Gold-backed Yuans.
After the Chinese Yuan becomes gold-backed, there is no incentive to bid up the price of gold, since it could be long-term fixed at less than $1,500USD per ounce of gold. All transactions for al precious metals at the Shanghai Gold exchange (SGE) and the Shanghai International Gold Exchange (SIGE) are exclusively in Yuans and Grams on a cash and carry basis.
Seriously Bill, this is one of your best and most intriguing articles ever. As from your announcement on Tuesday, I’ve been on the final countdown for this piece. I’m coming from Europe and I had to read it a few times, just to bring all pieces together. One time soon, the entire charade will be refered to as “the war on errorism”. Oh, and this Alan op-ed is weird, I agree. Something’s not right.
thanks Mr. G.
Two things Mr. Holter..
If the fed creates a fiat currency, and then uses this currency to purchase over one trillion dollars worth of stock (QE)….do we now have a fiat stock market?
Second – It seems the price of gold and silver are moving in perfect tandem with the US dollar…dollar goes up 8%…gold and silver go down 8%. Since the major buyers in gold and silver are the “East”…is this how they (the manipulators) lower the US price of metals without increasing demand in China India, etc?
… but they have increased the demand for gold and silver as you can see it everywhere East and West.
Koos Jansen confirms a likely 15,000 tonnes of gold in China!!
would not be shocking.
If you look at the last graph in the article (Estimated Total Chinese Gold Reserves) you can see that the Chinese govt holdings (official + mine production) is about 8500 tonnes, thus confirming your suspicion that they already have the 8500 tonnes.
Excellent article. I like the Mr. Magoo because he does talk and laugh and fiddle and walk like Mr. Magoo. He also reminds me of the monopoly man. LOL!
I finally did read Greenspan’s article in Foreign Affairs. I couldn’t quite figure out why he wrote it. It doesn’t really hang together as a coherent piece in my mind. Remember at some point you said that the elites feel they have to warn the masses about things that are coming down, even if they do it in a rather indirect manner. I took this article to be that. I think Greenspan is warning us that the Chinese are accumulating enough gold to bypass the USA, or have already done so. He also told us that the central banks of the G-10 have an agreement to manipulate the price of gold and are still doing it. Then there is the timing of the article, published on Sept 29th, just prior to the latest attack pushing the price of gold below $1200, now down to $1186. The whole thing is kind of odd. What is coming next??
I don’t know what’s next but a markup or reset is in the cards somewhere.