read only if you want to believe <<gold rise to over $10,000 US per ounce>>
from Le Metropole Cafe lemetropolecafe.com
(I did a copy+paste of only the juicy and most succulent of thoughts)
two camps: debt holding countries of
the US dollar and countries who are distancing themselves from US debt
by way of physical gold possession and the Euro.
US/IMF faction
Euro/BIS faction
The US/IMF camp is
dollar based paper and debt; the Euro/Bis camp is gold-based currency
and gold bullion and oil.
The current run up in the US dollar and equities market is a result of
the skewed influence of the US dollar in world economic events and shows
its strength when viewed from its holding the existing role of the world
reserve currency. It is this role of 'reserve currency' that is the
center focal point of a currency war currently in progress.
This war is
masked by the power and control of the media of the US/IMF faction and
by the apparent strength of the dollar and the dollar stock markets. It
is this apparent strength that blinds all of us to the hidden currency
war now playing in the world's markets.
The strength of the dollar might be its aquilles heel, though. The
equities market in the US has been fueled apparently by two major
sources of funds: baby boomer 401K mutual funds and Yen and Gold-carry
money. It is this latter source of money that has just now come into
question as legitimate and healthy -- just look at Japan's economy and
what the YEN carry trade has done there. It is the gold-carry trade that
maybe the David of the dollar Goliath or the hair of Samson, the dollar.
Carry trading in Yen and Gold is simple to understand. It is borrowing
Yen or gold at a low interest rate, selling it into the market -- which
drives the price down and the dollar up -- then buying US bonds or
equities at a higher interest rate. The loan is repaid and the
differential interest is pocketed, and the process is repeated for as
long as the price of the YEN and gold drop.
More recently the gold carry trade has
been slowed or stopped to, but in the case of gold-carry, many of the
many borrowers of gold rolled over their loans and NEVER paid them back.
This is because they didn't have to until NOW. Now the gold price is at
or below production cost for most mines. Once the Central Banks (mostly
Europe) stopped leasing gold a short while ago, the estimated 14,000
tons of gold that has been involved in the gold-carry trade needs to be
paid back. It is impossible to pay it back in gold as most of the
Central Bank loans demanded so now it would seem that the financial
parties in the gold-carry business need a source of gold to pay back
these loans. It appears that only two escape hatches exist for the
gold-carry players. Keeping the price of gold down by shorting it on
COMEX (this is akin to naked shorting as insufficient gold bullion
doesn't appear to exist to cover the 200,000 open interest contracts) or
repaying the loans in a medium acceptable to the banks who loaned the
gold in the first place. It seems as though the Euro may become the only
accepted means of repayment.
One can see that the carry trades have driven the Yen and gold to all
time recent lows. In the case of the YEN more can be printed or made
available for repayment. In the case of gold, only 2500 tons of gold are
mined each year. To cover the 14,000 (alleged) shortage of gold would
take over five years at current production levels.
The remarkable thing about the carry trades is the shear number of
financial institutions who have participated in it. In other words, the
carry trade is pervasive and to unwind it will affect major world
financial institutions.
and opinion on this hidden war now unfolding. I believe they believe
they came forward after the cards, have been played that will ensure the
outcome of the currency war for title of world reserve currency ends up
in the Euro/Bis camp.
Let me explain. They claim that the BIS and the European Central banks
allowed the gold-carry trade to go on for years to proliferate
gold-based debt and ownership worldwide, using leasing as gold leverage.
Now it has become so pervasive that much of modern financial
institutional debt is a direct result of the carry trades, especially
gold-carry. Simply put, gold is the payment due in short order.
Insufficient physical gold stock exists free and clear of central bank
vaults and mining production of many major mining companies is hedge up
to 10 years hence that the only way to pay back without gold appears
destined to be Euros.
In other words, somebodies were suckered. Nearly risk-free (or so they
thought) interest money was available through the carry trades that
everyone got on board that knew about and cashed in. The result? The
Central Banks are owed an alleged 14,000 tons of gold with interest by a
wide-variety of institutions. Now you can see why they believe that the
dollar/IMF faction has lots. They can't pay back their debts without
converting to gold or Euro's and that means converting US bonds and
equities into Euros or gold. Since their is virtually no physical gold
to be had, we see gold continuing to be held back in price and kept away
from the $300 number that could trigger a failure of the COMEX exchange.
Now, light has been shed on the hidden battle for reserve currency. Up
until the Euro was introduced the only possible competitor for world
reserve currency status was gold. Gold doesn't lend itself freely for
exchange. (hard to email it) But with the introduction of the Euro with
nothing near the debt load of the US dollar and 15% in reserve
currencies being that of gold bullion, a proxy for gold was born that
can now compete with the dollar for the reserve currency status.
that in their opinion, we are seeing the last leg of the dollar as the
world reserve currency and that the Euro will soon replace it in that
capacity. The would further tell you that when that happens, in their
opinion, that the COMEX gold exchange that trades in gold futures will
cease to function or become totally ineffective in establishing the true
value of gold in US dollars as the open interest contracts that trade
their can not be satisfied by physical gold as it is all spoken for.
Because of that, they would say that gold will rise to over $10,000US
per ounce. They have said that owing physical gold is the only true
measure of secure safety for ones wealth.
a powerful group of nations that have difficulty with the debt load
of the US/IMF faction and the negative influence this debt will
ultimately play upon them.
two major influences: the US/IMF faction with the dollar as the reserve
currency (major players are US/England/Japan) and the Euro/Bank of
International Settlement (BIS) with the European Union Countries and the
Bank of International Settlements.
From their standpoint, they believe
the Euro has already won because gold is owed by so many institutions in
the US/IMF camp that it is too late for the dollar not to succumb to its
own debt load. They believe that what we are witnessing now is the last
act of the dollar as a reserve currency.
the largest pro-gold groups -- the Europeans and the
Gulf states -- want a world currency "not subject to the performance of
the American economy." In other words, a currency not tied to American
treasury obligations, or the percpicacity of any other nation for that
matter. That currency for those of us who have reached for the deeper
truths of economy is called gold.
Your statement: "As a matter of long term policy, do you believe that
ECB will "sell" gold to defend the Euro or "buy" gold to defend the
Euro? Each of course would entail a different course of action with
respect to reserves of the new national bank. Along these lines,will ECB
buy gold from its member treasuries, or will it simply force them to
transfer it to ECB coffers if needed to defend the Euro?
If the Euro, as you suggested, is
being printed to buy dollars isn't this just another manifestation of
the U.S. exporting its inflation? It appears to me that the Euro will
need to be defended -- and not with dollars -- but with gold! "
the largest pro gold groups are
those who want a world currency that is not subject to the performance
of the American economy. At this moment and in this period of economic
history, all currency reserves held by foreigners (non-Americans) is a
debt of the US Government and by extenuation through tax collection, a
debt based on the ability of the American economy to function
profitability!
In essence, America has told the world that as long as the business of
this country is functioning, your wealth, as represented in Marks, Yen,
Pesos, etc. is backed with performing US debt. It's like saying, "as
long as your neighbor, next door, does not loses his job, you will not
lose all your money! Most people would be surprised at how clear this
is, outside the USA sphere of influence. This, the largest of the pro
gold group, is largely made up of countries with economies that have no
need to sell most of their production to the US. The business of these
communities would not totally fail without the American engine. Yes,
they would slow down, but not collapse, as trade with other countries
would continue. To add what was said before: If your neighbor loses his
job, you can still trade with the other people in the town, as long as
the currency system is not based on your neighbors debts!
This group, made up of much of Europe and the Middle East, is not
looking for a return to the old Gold Standard, but perhaps something far
better. They do not see any advantage in holding the currency bonds of
one country, as a reserve asset of future payment, over holding physical
gold as a reserve asset in full payment. The fact that the debt reserve
asset pays interest is little more than a joke in these banking circles.
Any paper currency, the dollar included, can fall in exchange value
against your local currency far more than the interest received! In
today's paper markets, the only true value in exchange reserves, held by
a government as currency backing, is found in it's effectiveness for
defending the local currency from falling against other currencies. In
other words, use the reserves to buy your countries money. But, this is
a self defeating action as sooner or later the reserves are used up!
This fact is not lost on many, many countries around the world, as they
watch their currencies plunge, lacking reserves as defense. Ask them how
important the factor of earning interest on reserves is under these
conditions.
On the other hand, buying gold on the open market, using your local
currency, works as a far different dynamic from selling foreign
bond\reserves. This action takes physical gold off the market, and in
doing so increases it's value in dollar terms. Gold is and always has
been the chief competitor with the dollar for exchange reserve status.
The advantage here comes from the fact that governments do not run out
of local currencies to use in buying gold, as opposed to selling foreign
currency reserves to buy the local currency on the open market. Of
course, the local price of gold goes sky high, however, in this action
you are seen as taking in reserves, not selling them off.
Also, as gold begins to rise against the dollar, the local gold reserves
are seen as assets of increasing value, backing the local currency.
Under these conditions, with a stable currency, citizens will purchase
more gold as it is seen as a positive asset. Not unlike a rising stock,
everyone wants an increasing investment. Contrast this action against
that in Korea, where everyone sold gold as it increased in an unstable
currency!
Basically, this is the direction the Euro group is taking us. This
concept was born with little regard for the economic health of Europe.
In the future, any countries money or economy can totally fail and the
world currency operation will continue. What is being built is a new
currency system, built on a world market price for gold.
the USA will see a hyper inflation of
it's currency and a gold price in dollars that reflects it.
the gold price rise will be sudden
and also hyper fast. as it will occur just after a rapid plunge in
dollar based assets including, stocks, debt and the entire banking
system. This action will destroy virtually all gold based paper assets
as they are also dependent on a functioning economic system.
Back to your original question. The Euro will not replace gold, it will
evolve into a gold transactional currency. It will also price Euro gold
very high, perhaps $6,000 in current dollar terms buying power. However,
in actual dollar terms of the future, $30,000 US will reflect the
American debt as the negative reserve asset it truly is. The ECB will
have an easy time issuing Euros to buy gold from the member banks. The
real political warfare will be in trying to force them to sell the gold
at all, once this ball starts rolling. The Euro has, in effect already
been dispersed in the form of Gold Leases not gold sales. One has only
to look at the official gold holdings of most central banks to see that
physical gold sales are little more than the average, with a good amount
of that coming from nonEuro countries. Gold is a funny thing, it can be
sold many times and pass through many countries and still remain in a CB
vault. Truth Be told, some 14,000 metric/ton have been sold this way.
Far more than the street thinks. Using this amount it's easy to see how
certain entities have moved off the dollar standard in the last few
years. If we use a future price of $6,000+US, the move is about
complete.
The process: An oil country (or others) goes to London and purchases one
tonn of gold from a Bullion Bank. The BB borrowed this gold from the CB
(leased). The one tonn gold certificate is transferred to the new owner.
The gold stays in the CB vault and the owner goes home. The CB leased
this gold to the BB and expects it to be returned plus interest. The BB
financed the Actual Purchase of this gold mortgaging assets of the
buyer. The BB, who created the loan, then uses the cash arranged in this
venture to contract with a mining company (or anyone wanting a
gold/cross financing deal) to purchase production gold, using this cash
to pay for it. In the eyes of the mining company, the BB just sold gold
on the open market, for cash, and will purchase future production at the
contracted price. The mine does not know where the gold came from, only
that it was sold and a fixed cash price is waiting. Of course, most of
this made more sense when gold was higher. There were thousands of these
deals, structured in every possible fashion. Look to the volume on LBMA
and you see where the future reserve currency is traded today!
Now when we look at this picture, who is at risk here? The Euro CB Group
still holds the physical gold and will buy it back from the new owners,
if asked, using printed Euros. The new gold owner has just replaced his
dollar reserves with either bargain priced gold, or Euros at an exchange
rate never to be seen again! Some of this was done to buy the pricing of
oil in Euros. The BB owe the CBs 14,000 tons of gold that they must
collect inthe future from producers or currency speculators. And they
must collect it by paying what will be a, then, ridiculous price of
$300/$400US, while the world market price will be, well, a little
higher.
With Canada, Australia, and perhaps England having sold much gold to
hold US$, much of the English speaking, IMF/dollar world is about to
change. Any country, Japan, Mexico, etc., that has locked their future
by selling most of their production to the American economy , is headed
for a depression. |
