The New Philosophers Stone, Turning Paper into Gold & Power.

The New Philosophers Stone, Turning Paper into Gold & Power.

Some of the big players have been ‘Shorting’ the Gold & Silver markets for possibly 40 years, keeping the price low and in the minds of many, converting these metals from a store of wealth, to a, ”Barbarous Relic”.

1971 Nixon removed the USA from the Gold standard and from that point on; the American economy has run on a debt fueled cycle of booms and busts. Each cycle allowing the privileged insiders (Central Banks, Corporate Banks etc) to clean the plate of the average Joe’s Buy & Hold’ Pension account or their attempts to make money from the markets not knowing the game has been rigged from the start.

Each bust followed by more debt to blow another bubble. None of this would have been able to occur if Governments had been kept to the Gold standard, hence the first motive for the Manipulation of the 2 metals we (the few) associate with real Money. Fiat money has allowed the USA to be the worst offender, being the Global base currency.

The US Dollar has had the most to loose from a free Gold & Silver market. Hence in the past decade the need to maintain the massive short positions companies like JP Morgan have utilized to stomp down the Metals natural, market propensity to appreciate as paper currency depreciated.

Enter the GFC, we saw new Orwelian exercises in supporting Bankrupt Institutions, “Quantative Easing” “Economic Stimulus Spending”. Euphemisms for printing Money in amounts inconceivable 30 years ago. We have yet to see the ultimate effect. Institutions were bailed out, corporations put a Gun to the Congressional head. Marshal Law, Global Collapse of Banking. Congress, The EU & United Kingdom took Private Debt and gave it to the Taxpayers futures.

The Shadow Banks and Shadow Power Elites have never considered Gold or even Silver to be a “Barbarous Relic”, just a nuisance that had to be controlled. As the next round of QE enters the Veins of the US economy, a brief respite will be bought before the same fundamental problems surface and the result of the Trillions of created Dollars turns the thinking investors mind to the probability that America and several other nations are in so much debt it can never be repaid.

When the first person / nation decides to dump these worthless bits of paper before everybody else gets the same idea; the rush will have started, the Currency Crisis of 201? Will have begun. All that will have real value will be tangible assets, Soybeans, Coffee, Oil, Gold and Silver. To enable any form of trade to proceed the seller will want security.

Until the world comes up with that , a new currency backed by tangible goods; global trade will stop. Enter a new era call it Hyper Inflation, or Debt Deflation, the defining characteristic of this time will be the end of Fiat Money. The worlds Banking System implodes.

For a time No one will know the value of anything except, that one primary universally recognized substance; Gold & to a greater degree Silver as it will be in very short supply as it will be one of the first Metals to become ‘extinct’. There is little above ground and less, year by year below it.

Rich & Powerful people like to remain Rich & Powerful; their assets will not be stored in vaults full of worthless currencies. The Shadow Bankers and the ‘Power Elite’ call them what you like. They will be the first to know when the Sh*t is going to hit the Fan. In probability they will probably push the first Domino, nobody likes to be caught by surprise. Hence the best way to predict a coming ‘Trend’ (Disaster) is to precipitate it yourself.

2012 is the popular next “Date of Consequence”, the Mayan Calendar and all the predictions that go with it. If there is truth to it or not , the fact remains millions of people expect ‘something’ to happen and I believe the real World Government will not disappoint. People will be very susceptible to something that appears to be real change, hope for a better future.

Obama followed Bush, Bush we put the madness down to a weak & double digit IQ. Obama kicked the people in the Gut, nothing worse than having your dreams smashed in front of you. At least Bush didn’t inspire expectation, Obama and the “Yes We Can” will be remembered as the shyster of hope. Like Hitler; an Orator, a man of the time a new JFK. Instead he surrounded himself with the Banksters and Corporate Mob. The way to destroy hope is to take it to a new high; then push it off a cliff.

There is not enough Gold and especially Silver to serve the needs of the 1% of 1% that now own almost everything without a Chinese Stamp on it. Every major Western Government is now a Corporate Fascist State, ID Cards, CCD cameras and Microphones, a Trillion Dollar Spy system that sifts through every call, E Mail or Tweet. While we were not watching freedom was gradually, quietly, brilliantly obliterated. Go to your next Election and who will it be ? Blue or Red ? Liberal or Labor ? Tell me the difference please.

This essay is about the Gold & Silver side of the run for security that is coming soon, The Short positions will be slowly unwound, and those that aren’t will probably be owned (passed along) to a convenient corporation that will simply bankrupt its self. In the meantime the insiders will have been buying Gold & Silver over the past years; stockpiling it, Gordon Brown helped the cause selling Kilotons of Britons Gold, then we had 911, all the Gold stored under building 4, were did it go? All the Unallocated ETF’s how much is there? Where is it whilst It Vaulted? It has been conveniently undervalued, for the decades this agenda has played out. These people are not fools; they know Gold & Silver, Platinum & Rhodium, Palladium and Uranium are convenient stores of wealth. Essential to whoever takes the controls of a Global Economy hitting the skids. Whoever puts out the first Gold / PM Backed currency will rule the world.

We the people have had 40 years of essentially no real growth in assets, 1 person could support a family, once upon a time. Now two people can barley keep their heads above water and 20 Million Americans are not.

The time we have left is shorter than any one thinks, remember it’s the first to leave the room that wins the game while others get trampled. The Powers That Be (TPTB) cannot afford to be caught ‘short’ as time goes on they will get very nervous and somebody might try a grab for the prize.

Here is where the part of the agenda to accumulate vast amounts of Bullion at bargain prices can work for you, buy now while few are talking about it, Silver is almost unknown as a commodity to the average investor. One rule is to TAKE PHYSICAL DELIVERY. The Gold and Silver ETF’s, these funds (If you read the fine print) do not promise real Bullion delivery should you hold ”Unallocated” accounts, you as a holder of a piece of paper; will collect in exchange another piece of paper. Paid to you during the up turn of Hyperinflation, the cash will be essentially worthless.

The ETF is brilliant in its criminal simplicity; you provide the cash whilst they use your money to purchase Bullion and the using a Fractional Reserve leverage it to 12, 50, 100:1 ratios. Imagine 50 people all thinking they own 100 ounces of the same Bullion Bar. Even if you have an allocated account with some of these ETF’s you may never see the Gold, terrible things happen in crisis situations, the Sub Holder of the Sub Holder of the Vaulting company happens to be a crook and cannot be located and neither can your Bullion.

Its all in the fine print, you will be paid but it will be in American Dollars and I suggest by the time you wake up to the nature of the Fraud being perpetrated; all you will have to show for it is a handful of $10,000,000 Dollar notes to buy lunch at Mac Donald’s after you finish your shift making Fries.

The above is not Investment advice, I am not an Economist, it is an essay exploring ideas. No liability taken if you act upon material printed above.


A Quote from the Daily Reckoning…………..

“Just remember that ETFs are ultimately, like a complicated mortgage derivative, subject to counter-party risk. If the day comes when trust evaporates from the system, value will evaporate from the ETFs. If you want to play gold’s short-term ups and downs, the ETFs are an ideal instrument. Otherwise, stay away.”

Addison Wiggin
for The Daily Reckoning

GOLD & FRACTIONAL RESERVE BANKING OF UNALLOCATED BULLION.

GOLD & FRACTIONAL RESERVE BANKING OF UNALLOCATED BULLION.

I have listened to "The Great Gold Debate" on the Financial Sense Newshour with Jim Puplava & try to draw a reasonable conclusion from the statements of both Adrian Douglas and Jeffrey Christian. The paragraphs below are direct quotes from articles written by each. The Debate: http://www.financialsense.com/fsn/2010.html

Adrian Douglas: How much imaginary gold has been sold?


In the last 14 years the supply of dollars has increased from $4 trillion to $15 trillion (+275 percent) while the gold price has risen from $400 in 1995 to $1,000 in 2009 (+150 percent).


….”There has to be an alternative massive supply of gold to make the price rise slower than the influx of dollars.”

……. “When the GLD trading characteristics are applied to the OTC daily trading volume, it gives an implied minimum inventory stock level of 64,000 tonnes. Given that the actual inventory cannot be more than 15,000 tonnes, this tells us that 49,000 tonnes of imaginary gold has been sold. That is to say "unallocated gold.”

…………….”This lends credibility to at least the ballpark level of our estimate. It means that about 50,000 tonnes of gold has been sold that is in excess of actual real stocks. This does not include all the lookalike scams of pool accounts, gold certificates, unallocated brokerage sales, ETFs, etc., which might be another 10,000 tonnes.



So the order of magnitude of the net short position of gold in the world is 60,000 tonnes. This is against a total possible claimed gold supply of 30,000 tonnes from all central banks, a figure GATA believes is now less than 15,000 tonnes."
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CPM Group Jeffrey Christian's Final Response to GATA



…..However, “Gold also is a financial asset that is banked. In bullion banking jargon, this is called an unallocated account. Just like cash deposited in a checking account, the bank represents that it has enough assets to service the expected volume of withdrawals, but it doesn’t necessarily have enough bullion to allow all the depositors to withdraw all their gold all at once. many gold “certificate programs” are unallocated bullion accounts.”


“This is well understood by professionals in the industry and by most investors involved in these assets. Again, it should come as no surprise to anyone with bona fide credentials as an expert of any kind in the gold bullion marketplace. Yet GATA has tried to portray the fact that banks are required to hold only a portion of their gold assets, as they do money, as somehow being scandalous."

(Emphasis added, David) "END QUOTES"

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CONCLUSION:

To my non-Accountant mind, Christian states that Banks treat Unallocated Gold as they would ‘unallocated money’, the probability of Fractional Reserve Banking of Gold is 100%. The question remains one of what the ratio is 4:1, 12:1 or would they be even more irresponsible based on past experience.

I find it hard to believe Bankers could resist the temptation to exploit the asset and use the paper to manipulate prices when opportunity arises.

Personally I bet its about 12:1 or 180,000 Tons. 5,787,134,382 Billion Oz @ $1000 per Oz that’s ah? 5.7 Thousand Billion or $5.7 Trillion give or take a billion.

Thinking from the Banks point of view, would it be logical that the ‘Paper’ funds deposited with the Bank for unallocated Gold the money received from the Investor would be added to the Banks bottom line of assets. From that point on the paper for the Gold turns back into a Ledger entry. The Banks lend money based on their Capital multiplied by the Fractional Reserve method over time.

The Banks are not doing anything out of the normal from their point of view, keeping only enough Gold to meet Allocated Redemptions and a few demanding customers would be sufficient.

This lends credence to the theory that Banks act to suppress the price of Gold to:

1) Discourage people from redeeming Physical Bullion not in existence.
2) Keep the price from costing their bottom line by having to pay more to meet redemptions. (Do they act in a manner that stretches the Law or is their no Law to prevent them using the Gold on their books as they would with a cash deposit.
3) Prevent a feedback loop in the Gold price if Gold was considered a ‘Hot’ investment and the demand on their supply of Physical Gold was to escalate.

Plenty of logical reasons that explain how both parties believe they are right and the primary questions are.

??: IS ‘FRACTIONAL RESERVE GOLD BANKING’ REAL AND DO THE BANKS AND FUNDS ACT ILLEGALLY TO MANIPULATE THE MARKET BY VIRTUE OF SIZE AND OPACITY?

At 12:1 and $5 Trillion at stake, greed might allow standards to slip a bit? Even at 2:1 its about a half a Trillion. The Banks have a lot of motivation to keep a nice balance of incoming funds for Paper Gold, a slowly rising volatile price to keep the funds coming and allow for big profits regardless of the Market direction. Meanwhile investing the Trillions of Funds Assets into other profit markets.

As always please check my Math and post re any false assumptions I may have made.

The Ultimate argument in favor of holding Gold and Silver is the evolution of the GFC , now a 'Sovereign Debt Crisis' soon to become a 'Global Currency Crisis'. This will occur when people who have spent lifetimes accumulating wealth see no safe haven, Cash is only as good as the country behind it. Real Estate is on a downward sloap, Bonds, Stocks etc all have uncertainty and the fear generated by uncertainty.

Sooner than later investors will go to basics, almost a racial memory of holding the only real store of wealth. (Forget profits just holding your wealth will be #1 priority). Gold and Silver are the only investments that make any sense.

Considering the fundamentals of Silver (low supply above ground, critical Industrial use, perception of value as currency. Personally I believe Silver will reach $100 an ounce in 3 to 5 years. Depending on how long the Financial System can keep standing on ever increasing amounts of paper money.

With a Quadrillion of Derivatives floating around and Trillions of created money entering the system an end is inevitable. What we avoided after Lehman Brothers will come back as a Credit Crisis of Global Proportions. Not only will Banks not trust each other, they won't trust the paper money from the USD to the Euro or UK Pound.

Now will the average person, finding themselves at closed ATM's, or more probably restrictions from Government on withdrawing your money. We will have an Inflating Currency

parallel to a Deflating Economy the real Economy separating from the paper backed and Electronic systems.

The Kaos will be proportional to the time it takes to purge the system and create a new one backed by a basket of real assets.
World Governments have been doing everything they can to push the time further down the road. Like a Bulldozer pushing soil it will take more to move less.

What mystifies me is that there are intelligent people in Government that must know where this will lead (Quantitative Easing, Stimulus etc) we cannot attribute it to Keynesian and Austrians thinking a bit differently. I would propose the Powers That Be are simply sucking the system dry while they can, robbing the Museum during the War no ones able to see past the smoke.

When they have taken all that can be got...they walk away and leave the world to sort itself out. If you don't believe Conspiracy Theory relating to the Financial world and the evolution of systems to remove Legislation and oversight, create the federal Reserve Banks, all to enable the very few to exploit the majority. You would be ignorant of a long history of these events.

There has been no fundamental improvement of the Human Nature, we are in WW3 and have been since 911 when the present unending War was created. "Beware the Military Industrial Complex" Eisenhower was telling us something, he knew that few would listen.