19 Oct 2012

The Gold Rush: why are we not being told the truth?

By Richard Cottrell: We are now approaching one of the most important tipping points in world history and yet we stagger on, besotted by iPhones and other electronic brain frying clutter in the expectation that things being as they are will remain the same in the future.
One can assume that the people of Hiroshima and Dresden thought that too, before they were toasted to a crisp by the latest advances in peace-keeping technology.
The entire new world order that kicked off with Bretton Woods in 1944 and then spread like a global rash – the World Bank, the IMF, the European Union – is now playing one of the most pointless mind games since our ancient ancestors taught themselves how to work markets with systems of exchange. Forms of money made barter largely redundant. In came precious metals, and especially gold.
The bright shiny stuff was not, of course, easily portable in large quantities. So it was stocked up in treasury houses and money minted according to the value of those reserves judged against the general credit stakes of any given country.
When we read that this, that, or the other country – the US included – is ‘off’ the gold standard, this is nonsense. Nixon took the US ‘off’ the gold standard in 1971 after a caretaker checked one bright morning and found there was nothing left to actually get off.
From that moment on the dollar was consigned to its inevitable fate as a paper fiat currency, supported by other countries with large gold hoards stored at home, or as invariably became the case, in the vaults of the US Federal Reserve.
Editor’s note: The Federal Reserve has formally admitted that they do not, in fact, “officially” own any gold and have not owned gold in some time. See the testimony below:

Lately something very peculiar is happening to gold.
Largely uncommented on by the lackey corporate media, there is a silent war for gold.  The war is led by the ‘Northern Empire’, the United States, which is effectively reversing the Nixon edict by holding large quantities of bullion that belong to other countries.
Whenever the subject does come up we hear the usual ‘safe as houses’ explanation trotted out. Yet, a few canny observers are catching something on the wind that may be so shocking that it seems unreasonable, in practical terms, to contemplate.
Is the ‘Northern Empire’ planning to nationalize gold hordes held in the US on behalf of foreign depositors?
Let’s see. As of right now, 60% of Germany’s gold is locked up in the vaults of the New York Fed.  Not exactly cashable in an emergency, so to speak. Why has Germany dispatched all that heavy metal across the Atlantic? What’s wrong with the solid basements of the Bundesbank, if the ECB smells so cheesy?
In practical terms, the Germans are in the same bind as all the other holders of US treasury notes, exchanged as shareholdings in the US economy. The US demands gold pledges in order to prevent the dollar imploding. Gold is now the ‘ghost Bretton Woods.’  In may also be spectral in other ways, as we will shortly discover.
The unspoken truth is that the dollar system is so thoroughly rotten it makes the euro look like a lively stripling youngster. If it were not for the fact that it owes some sixteen trillion bucks to the world – and counting – the US government might be tempted to return to the official gold standard to support the dollar.
Unfortunately, this is a misunderstanding of the problem. The American problem is the paper that the US holds – treasury commitments due to foreign central banks – not in the immediate instance, the usefulness or value of solid gold.
But the Fed is not the only central bank with a liquidity problem. The European Central Bank is close to (if not actually) insolvent – and where do you read about that in the corporate coffee house sheets? Try this on for size. The ECB is out in the breeze for some 3.02 trillion euros at the latest audit, which put another way is about a third larger than the entire Germany economy, reckoned as that is as the power station of Europe.
This is entirely due to a second draw down of loans (bailouts) to tottering duffer states which, at the same time the ECB, in league with the EU and the IMF, is trying to bankrupt. These are the economics of the madhouse.
The ECB does not have the solid assets to back those loans. And do remember dear readers that the various beggar states of the EU are lining up begging bowls empty for another big dollop of porridge.
The real central bank in Germany – namely the Bundesbank – has worked out that should the euro go belly up, then the federal balance sheet will suffer to the extent of half a trillion euros, which is almost twice the size of the annual German state budget. Now this is not just some nightmare which blows away when the sun comes up, because there is no sign of the sun coming up.
Aux la contraire. The euro is heading steadily south in true pear-shaped fashion to Greece, Spain, Portugal, and Italy, where its unkind fate will be decided.
Meanwhile, the Fed stocks up on other people’s gold, if it can get it, that is. Hugh Chavez, the Other Castro, is not backing the western order of things. Venezuela is the world’s 15th ranking gold holder, she has, practically speaking, more than either Saudi Arabia or the UK (no surprises there, after Gordon Brown emptied the vaults to pay the housekeeping bills, just as gold sunk to rock bottom – proof of the old adage that a fool and his money are soon parted).
Mexico’s central bank, on the other hand, has been compelled to admit that almost 95% of its modest gold holdings are held hostage in New York. Mexico is not a client of the United States. It is a prostrate vassal. It’s an interesting role reversal if we go back to the Conquistadores who raped El Dorado to prop up a dying, decadent empire with Aztec gold.
No prizes in a reader competition to name the latest dying, decadent empire.
The Mexicans will not get their gold back, ever. Its effectively US property now and will remain so, short of the Mexican army crossing the Rio Grande.
Chavez would not have piled his hoard into New York City in any event. But the fact that he is willing to repose his faith in the Russians or the Chinese speaks volumes. Chavez watched the fate of the Libyan state, smashed and battered back to the Stone Age for the sake of the Northern Empire getting its sticky hands on Gaddafi’s gold.
Moreover, the Russian treasury is quietly stocking up on gold, so it is not likely to snaffle the gold of others. Putin has also amassed, as we learned recently, a huge hoard of diamonds, the world’s largest in fact. That the Kremlin should be considered a model of probity represents the fiscal equivalent of a magnetic reversal of the poles.
The Fed’s filching of other people’s wealth should not come as any surprise to anyone who follows the wholesale looting practiced by Wall Street. The boundary is seamless, of course. If the US is quietly contemplating massive monetary world disorder, in which the only antidote would be gold to support the Northern Empire’s chief currencies, the dollar and the euro, then we begin to understand the beginnings of a bunker policy.
Yet I think this is a serious under estimate of the gravity of the approaching crisis. I opened this piece by saying that people tend to think what they see around them will still be there tomorrow. One only has to think back to the victims of Boxing Day tsunami in 2005 to see how erroneous this can be. In softer terms, the victims of the housing foreclosure tsunami in the United States, and those who are losing the real value of their pensions and wages in the artificially imposed austerity crisis right across Europe at this moment.
Perception is deceptive because the mainstream organs of information distort the prism of perception with falsehoods and half-truths and blind the popular audience with soap operas and organized distractions like football, the Olympic games and the recent ‘royal’ jubilee in the UK.
So we ignore the famous law promulgated by Sir Thomas Gresham (an early British entrepreneur) – actually re-formulated, because the basic tenets can be traced back to early thinkers in Arabia – concerning ‘good money driving out bad.’
Gresham and his predecessors were really sending a very important message far into the future concerning over-valued currencies displacing under-valued ones. Of course in his day there wasn’t a single currency system embracing the whole of Europe – and no USA either. So today we are better off reading his message as predicting a likely return to alternative payments systems in the wake of a dollar and euro collapse.
Here we find a partial explanation, at least, for the epidemic of ‘local currencies’ sprouting everywhere in Europe, right across North America, and now even in Africa. In many cases, town, city or regional monies can be operated alongside barter or exchange systems, and which taken together, present viable alternatives to many formerly straight cash operations. If the lights went out, life would go on, like oxbow rivers constantly seeking new channels.
It is possible now in the UK to pay some utility bills in this fashion, so, are we approaching the legalization of alternative tenders? Why are governments nodding this through, given their struggles to support stricken mainstream currencies?  The answer of course is to continue even in some primitive form some kind of taxation system. That is only conceivable so long as the future sees it as essential to maintain the notion of the traditional nation state, rather than a localized patchwork quilt of loyalties.
Tax is one of the main supporting buttresses of what we are still pleased to call the ‘nation-state.’
Governments are invariably wrong in everything that they do, and that is why the battle is on to save an unsaveable currency system like the euro. That is why the printing presses are working around the clock turning out fiat and dollars and euros. The show must go on. But the people pulling levers behind the streams are as about in charge of the situation as the Wizard of Oz with his fantastical smoke and mirrors.
The Mexican people were denied the right by every bureaucratic obstacle to know exactly where the nation’s gold was actually held, until the dams of conspiracy collapsed.  We do not know exactly how much gold the Bank of England really holds. It may not be very much. We do know there are pastiche, doctored gold bars around, which means effectively, in circulation (the mineral equivalent of printing money).  We also know that 60% of Germany’s gold is sleeping quietly close to the Hudson River.
We also know that the price of gold (and to some extent, silver) is ruthlessly manipulated, not so much by speculators (the usual cry) as professional riggers owing loyalties to those hubs of the Northern Empire, Wall Street, the Federal Reserve, the Old Lady of Threadneedle Street and the ECB. I would not be at all surprised if a full independent audit revealed that the Empire ‘s real gold stocks are lower than proclaimed, not to mention those stocks which might not pass assay.
What then if there were a run on gold? Commentators other than myself regard that as a very interesting question indeed. Another is whether the gold (and silver) brokers are fibbing concerning how much of what is bought and sold could actually be taken away in physical form if the armored truck called.
There are no independent inventories of gold vaults. We have the feeble word of those who do not, in any event, deal in the truth as a significant medium of exchange.
The usual rent-a-quote soothsayers are only too happy to pass us off with glib assurances that springtime is just around the corner, the ‘recovery’ is under way, the ‘green shoots of prosperity’ are sprouting once again. This is so much stuff and nonsense.
The world financial order and the global economy are absolutely busted and will not be repaired by any of the quick fixes proposed by the likes of Mario Draghi, head waiter at the ECB, the preposterous little Mervyn King at the Bank of England (who wouldn’t have much better luck running a whelk stall) and ‘eyes wide closed’ Ben Bernanke, chief printer at the Fed.
The future will be peopled with robots turning out goods for diminishing consumers with nothing that could be called real work. That’s not in the far distant future, it is right now.
In such a picture, you may well ask, “what’s gold anyway?” The answer is that gold is the lubricant of an expiring system and the authorities set over our heads either do not or will not understand this.  In the circumstances it is perfectly logical to both inflate the value of gold along with how much of it really is on call for same day delivery and how much, in brute terms, is counterfeit. How much so called held stocks would not pass even a paper assay?
That said, we can now see perfectly behind that curtain where the wizards are at work.  They are performing a confidence trick by snatching up as much spare gold they can lay hands on. But, if we can’t believe in the illusion of precious metals, how then can be expected to repose our trust and faith in worthless fiat currencies?
Richard Cottrell is a writer, journalist and former European MP (Conservative).


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