Document:Gold Smoke and Mirrors

The murky world of gold custodianship, trading and gold price suppression.

 blog post  by Peter Presland dated 2010/03/25

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Subjects: Gold/custodianship, Gold/Price fixing
Source: Sabretache (Link)


Wikispooks Comment

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The post and follow-up discussion provides insight into the murky smoke-and-mirrors world of gold and gold derivatives (i.e. paper promises) trading. At the time of writing the trade in physical (i.e. bullion) gold remains dominated by the London market with price heavily influenced by the New York COMEX options and futures exchange - with the various Gold based "Exchange Traded Funds" playing a subsidiary (but arguable significant) price determining role.
See Also

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• The Spoils of War:The Secret Story of WWII Japanese & Nazi Gold - by David Guyatt
• The Genesis of the Gold-Tungsten: The Rest of the Story - An essay by Roy Kirby about the discovery of 60 tons of Tungsten-filled gold bars in an Asian depository in 2009. Links from the file page provide access to in-depth analysis of what preceded the near doubling of the gold price (as at October 2010).
• The Spoils of War by David Guyatt. A brief introduction to the subject of NAZI and Japanese gold plunder during and following World War II. The present gold market cannot be understood without serious study of the "Black Gold" of WWII

★ Start a Discussion about this document
Gold Smoke and Mirrors

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Gold in the news again

Questions about those gold sales by Chancellor Brown back in 1999-2002 being reported in the UK papers and evidence from 'ZeroHedge' of what was really behind them.

Since retiring from my trading activities I have not followed the markets as closely as before. However, I have remained a keen student of Gold and its role in economic and monetary affairs. I haven't posted on it recently but have digested a constant drip of credibly sourced articles and commentary, attaining pretty much the status of received insider wisdom, which in summary suggests that the amount of paper claims against ALLOCATED gold, allegedly held by the Banksters, is in the ball-park of 50 times the bullion actually stored in their vaults.

(Allocated gold you understand is defined as gold which is identifiable by serial number as belonging to a named individual or other owner and which is stored and insured in a particular vault at some charge to the owner).

If this is correct, then everyone who THINKS they own some gold and that it is stored on their behalf in this or that vault - makes no difference where in the Western World - actually only has a claim against the institution that issued them with their paperwork - forget serial numbers, they mean diddly-squat

The situation is similar to the standard fractional reserve fiat system except that, in the case of ALLOCATED gold, it is illegal (but who among the banksters cares a toss for legal niceties unless they can be used to their advantage?). To symplify, suppose that all allocated gold were stored in the same vault and all those to whom it is 'allocated' were to want to view it - you know, do a sort of audit - on the same day; each viewing could take no more than about 30 minutes in a round the clock operation (10 minutes for an eight hour day) because each viewer would be shown the same physical stuff - serious problems with the logistics of keeping them apart too eh? - and that of course is the nub of the matter. It all rests on the rather naive belief on the part of the 'owners' that they're dealing with honest institutions - oh dear.

The situation is magnified and complicated by 'non-allocated' gold accounts where it is admitted that the account holder merely has a paper claim and the assets backing it are indeed used in a 'fractional reserve' fashion. The shenanigans here probably dwarf the 50:1 allocated ratio because it involves the Comex and other futures and paper trading operations. And when you factor in credible estimates of 'Black Gold' well, the mind boggles. But, so long as the 'owners' do not demand personal physical delivery the fraud will continue. It sure does appear to be creaking at the seams right now though.

As for Gordon Brown, I have no doubt whatsoever that his gold sales were deeply mired in precisely these considerations. The 'official narrative' - as always - is just so simplistically absurd. Which is why that Telegraph article is careful to point out that there is no question of allowing all the paperwork to be made public - weasel-words from the leader of the opposition notwithstanding. If Cameron doesn't know the score by now (highly unlikely in view of his parroting of all the other 'official narratives') it looks like he damn soon will - and anyway, for obvious reasons he can be relied upon to assist in the demolition of Brown who appears to be stumbling into the role of fall-guy. He's privy to some very dangerous knowledge though. His personality type must be worrying to some very powerful interests and I wonder if elevation to a peerage will really be enough shut him up.

Comments

• xxx said:

Intriguing.

Any chance you could be slightly less oblique and spell it out a bit for the slower learners like me? What do you mean precisely by 'deeply mired in precisely these considerations'? How does Brown's selling of the gold relate to the situation you describe regarding paper claims against allocated gold? And who is 'privy to some very dangerous knowledge', it's not clear whether you mean Brown or Cameron. And what does the dangerous knowledge consist of and what does the danger consist of?

• Sabretache:

Too complex and convoluted to give chapter and verse so, in brief:

Formal linkage between gold and fiat currency was finally severed by Richard Nixon in 1972 (France was demanding physical delivery and bullion was exiting Fort Knox and other alleged repositories at an alarming - for the authorities - rate). Since then the world has operated under a system known as Bretton Woods 2. It is largely undocumented and has consisted of regular meeting between the G2 - 5 - 7 etc countries (in wider concentric circles) and co-ordinated by the US dominated IMF. There is overwhelming evidence (publicly rejected by 'the authorities') that a central plank of holding Bretton Woods 2 together has been coordinated activity by the major Central Banks and their agents to keep a lid on the price of precious metals - especially gold. The reasons are complex but directly connected in ruthless logic with maintaining confidence in paper claims on - on what?? - thin air basically - hence Gold becomes 'That barbarous Metal' etc.

Since London (CB - The BOE) and New York (CB - The Us Federal Reserve) dominate the pm's market in that order and overwhelmingly it is those two institutions that are the most heavily involved in supervising the nuts and bolts of the trading activities that ensure the agreed suppression.

That's the background as briefly as I can manage.

Selling UK gold was (to me and many others) self-evidently part and parcel of ongoing agreed coordinated actions to remain in control of the gold price (in fiat terms) - ie keep a lid on it. That's what I mean by 'deeply mired in...'.

The 'dangerous knowledge' is inside, chapter and verse knowledge of the nuts and bolts of something that is at fundamental variance with 'the official narrative' - OK need-to-know compartmentalisation operates but Gordon Brown clearly must know things which must remain hidden at any cost. Cameron has been vetted. The judgment is probably that he can be relied upon not to (at least) rock the boat. His initiation to the higher degrees will proceed should he become PM.

The danger consists in being considered a serious, credible, knowledgeable and possibly immanent threat to VERY powerful interests. That should need no further elaboration.

• xxx said:

Thanks for taking the time, that was very helpful. I guess the thing I don't understand is, if 'they' needed to sell off some gold to manipulate the gold price, how come it was ours that got sold off? I'm sure they didn't draw straws for it...

• Sabretache said:

".... how come it was ours that got sold off?

Smoke and mirrors. Can't be sure it WAS ours. All we do know is that 400 tons of the stuff WAS auctioned in several lots over a couple of years. For the PR purposes necessary to spook notions of a prospective price explosion in the general population, it was no doubt agreed that it would be UK gold (London being the dominant player anyway); but what we are NOT privy to is the side agreements between the US/IMF etc as to how accounting for the sale would be entered among them. Absolutely no way of knowing where the physical bullion went either - if it went anywhere at all that is - probably still sitting in the same vaults it always was, with similar complex cascades of paper claims on it continuing to circulate in what we are assured is a free market.

We have a 'for public consumption' version of what happened with Gordon Brown in the starring role at the time - 'The official narrative' - That's all.

IMHO that narrative is about as trustworthy and accurate as, for example, the 'official narrative' reasons for our waging war on Iraq and Afghanistan

• xxx:

Ah right, I see where you are coming from. (And, of course, I totally get it about the disjunct between the 'official narrative' and what is really going on .)

The thing that intrigues me, though, is this. It appears that in playing ball here Gordon Brown was required to sell (or appear to sell) our gold reserves at the lowest price in 20 years. That makes him look pretty stupid, at least in the eyes of us poor saps not privy to the hidden agenda. Was that just unforeseen or something he knew but just had to take on the chin?

• Sabretache said:

But to what extent was relative failure foreseen? - that is the question. Seen from the perspective of the day and factoring in the hubris of power, it no doubt seemed to be a bold action in a string of successes that would earn some serious Brownie points ('scuse the pun) - if in doubt predict that the trend (and one's own superior cleverness) will continue - that sort of thing.

At the time, the gold price had been bumping around the nadir that followed the price explosion consequent upon Nixon's final breaking of the linkage, for quite a while. The descent from those highs was a managed, relentless, hard work affair, project still in full swing. I doubt TPTB envisaged the comprehensive failures in both economic and geo-political theory that were immanent; rather a continuation of the post 70's boom etc. Even so, to reach those highs in inflation adjusted terms, gold would need to trade at maybe 2-3 times its current price.

I don't claim all the answers - far from it - but I do know this: Anyone who aspires to understanding what is REALLY going on in the world has a far better chance of doing so by following the Claud Cockburn maxim, "don't believe anything until it has been officially denied", than its opposite. The existence of the 35 year old gold price suppression scheme is a good case in point.

• yyy said:

Nice one. As for the question, Why the UK's gold? Don't worry, it's not just you. Australia's gold was flogged off at the bottom of the market too. Best I can recall it was on account of it no longer being needed. It probably took up too much space I expect and they needed somewhere to put the new rec room or something. Who knows? Either way, it's gone.

Aside from that, have you been keeping up to speed on the gold/tungsten substitution caper? I don't understand why there hasn't been more on this. Theoretically it should have stopped the world in its rotation. But it didn't. God forbid the price of gold should respond to anything other than the Rothschild's say-so.

Try whatreallyhappened.com and search for 'tungsten'.

Otherwise, when I bought my gold and they asked me if I wanted to store it with them, between the simple realities of the fractional gag and the possibility of a repeat of Roosevelt's US gold confiscation of 1933, I thought it best to say 'no'.

• Sabretache said:

Hi yyy - nice to hear from you.

Yep, I've followed the tungsten thingy. Must admit my reaction to the first 'news' of it - about 6 months ago if memory serves - was that it plays into the hands of the price suppressors. The people likely to be most deterred from buying and taking personal delivery of gold by such news are precisely those most feared by the system - ie the small retail buyer. The big problem for the retail buyer is that there is no easy way to spot a tungsten cored bar or coin, there being only about 1% difference in their respective specific gravities - IOW those cheapy little plastic balances on eBay are unlikely to give a definitive answer.

My guess is it's small to medium-sized criminal entrepreneurs behind them but, since they serve official purposes rather well, investigations and prosecutions are likely to be hampered in similar, if less thorough and widespread, fashion to those into 'The Pedophocracy'.

The Gold 'Markets' really are a murky smoke-and-mirrors world though. The stuff is hardy EVER moved around the world in bulk, so all (alleged) large transactions simply involve ledger entries and bits of paper. What the Banksters REALLY want to know when any such transactions are mooted is simply "Will the physical stuff - assuming it exists in the first place - be moved, and if so where to?. That way they can make any necessary paper position adjustments. If it is to remain where it is, then the circulating paper chase goes on as if nothing has happened - other than the perception changes precipitated by - shock-horror - sale of our national gold reserves.

We, the Sheeple, are infinitely gullible.