Haystack June 2012

[Rasta]

Earlier months in this thread:
Haystack May 2012
Haystack April 2012
Haystack March 2012
Haystack February 2012
Haystack January 2012
Haystack December 2011
Haystack November 2011
Haystack October 2011

[Rasta]

USNews.com: Calls for a U.S. Gold Audit Miss the Point

By JAMES RICKARDS
Analysis should always be based on the best available evidence and not speculation. I have seen some evidence, gathered from military and Treasury officials, that the gold is where the government says it is. I have seen no evidence whatsoever that it is not. Based on this, I assume the gold is there. If I learn differently someday, I'll change my view, but until then I'll base my economic and monetary analyses on the fact that the United States is the proud owner of 8,133 metric tons.

The gold can be leased in paper transactions without ever leaving Ft. Knox or West Point. The leased gold can then be rehypothecated by J.P. Morgan to other banks and so on until multiple parties all claim some title to the same physical gold. That gold goes on to support an even larger inverted pyramid of "paper gold" transactions in futures, options, forwards, swaps, and so-called unallocated storage. One reason not to do an audit is to avoid all of the awkward legal title questions that would arise once the physical existence issue was settled. The Treasury would rather ignore gold than open Pandora's Box.

[Adamus]

USNews.com: Calls for a U.S. Gold Audit Miss the Point

By JAMES RICKARDS
Analysis should always be based on the best available evidence and not speculation. I have seen some evidence, gathered from military and Treasury officials, that the gold is where the government says it is. I have seen no evidence whatsoever that it is not. Based on this, I assume the gold is there. If I learn differently someday, I'll change my view, but until then I'll base my economic and monetary analyses on the fact that the United States is the proud owner of 8,133 metric tons.

The gold can be leased in paper transactions without ever leaving Ft. Knox or West Point. The leased gold can then be rehypothecated by J.P. Morgan to other banks and so on until multiple parties all claim some title to the same physical gold. That gold goes on to support an even larger inverted pyramid of "paper gold" transactions in futures, options, forwards, swaps, and so-called unallocated storage. One reason not to do an audit is to avoid all of the awkward legal title questions that would arise once the physical existence issue was settled. The Treasury would rather ignore gold than open Pandora's Box.

So why did we sell our gold? A 1000 tons in 40 years. We'd better leased it to contribute to the (paper)system .

[Rasta]

So why did we sell our gold? A 1000 tons in 40 years. We'd better leased it to contribute to the (paper)system .

Because our politicians could, without being stopped. A nice phrase from Dutch prime minister Wim Kok: "By selling the gold reserves, we can reduce our deficits." Something which obviously never happened.

[Indiana Jones]

We sold national gold reserves but at the same time increased our deficits .....

[bailouts4ever]

Come on pals!

Don't cry for your sold gold - at least you had it at some time. The Germans have done that much "smarter" and much "more efficient"! We have acquired gold with our trade surpluses, have stored it in countries that have most likely leased/sold it. So on paper we have gold which for "cost reasons" we do not store. The paper solution is thus much safer...

[bailouts4ever]

Morning,

I heard of this development about more than six months ago. Now it's in the press.

http://www.welt.de/wirtschaft/article10 ... h-vor.html

German companies prepare for Euro collapse. Consultants and lawyers are hired in order to install legal entities in order to crop and withdraw financial assets from local susidiaries in crisis states. Companies further empty their Euro denominated accounts abroad (during night time and over weekends) in order not be safe in case of a Euro exit.

Cheers.

[bailouts4ever]

Ah, and yes...

Have you ever considered that yesterday the Euro group jerks have decided to give money to Spain with nothing in return. Until now Ireland, Portual and Greece received government funding in return to reforms and austerity. Spain yesterday managed to get bank funding in return to nothing.

HORRAY!

That surely does not open the door to moral hazard and make the others (Ireland, Portugal, Greece) ask why they stick to reforms and austerity. Guess it won't take long til these countries ask for a renegotiation of their bailout terms...

[Spruitje]

Hey, let's have a look into the ECB's balance sheet and check what the Portuguese banks and government has passed on the ECB as "collateral".

http://www.ecb.int/paym/coll/assets/htm ... 120427.txt

We all now that particularly government bonds are safe as can be...if you now take a look into the about the middle of the above document you will find a column called "PRICE SPECIFICATION". There is a set of bonds with a maturity date of December 31, 9999 - no joke - the year 9999. Issued by the Portuguese Central Government during WW2 these bonds have now been passed on to the ECB as collateral.

Bonds being paid by in 7987 years being accepted as collateral says everything about the Euro system.
Best greetings.

Perhaps we talk here about the "perpetual bonds"? ... However it stays worthless collateral.
kept me awake last night

[Adamus]

Ah, and yes...

Have you ever considered that yesterday the Euro group jerks have decided to give money to Spain with nothing in return. Until now Ireland, Portual and Greece received government funding in return to reforms and austerity. Spain yesterday managed to get bank funding in return to nothing.

HORRAY!

That surely does not open the door to moral hazard and make the others (Ireland, Portugal, Greece) ask why they stick to reforms and austerity. Guess it won't take long til these countries ask for a renegotiation of their bailout terms...

the Belgians: "it doesn't cost us more than a 1.000.000.000 euros". Loss = Profit