> someone who would definitely agree with that sentiment --- Uncle Bill Murphy
And here's someone who, while agreeing with Uncle Bill that the CB gold is "missing" after having been lent to the bullion banks, disagrees over what is going to be done about it.
lewrockwell.com
>>>If the bullion bank cannot repay the loan, then its IOU is publicly exposed as not being as good as gold. If the central bank were to press the bullion bank for repayment, rather than rolling over the loan, then the bullion bank could go bankrupt, which would reduce the value of its IOU’s to something less than face value. This would create a legal crisis for the central bank, which would lose reserves on its books.
What would a central bank do then? Simple: buy more government bonds to offset the reduction in gold reserves.
The main problem would not be the lack of repayment but a lot of unwanted public interest. "What did the central bank do with our gold?" A default by bullion banks would be a public relations problem, not a monetary problem.
To forestall this PR problem, central banks are prepared to sell off more gold to keep its price down. This will enable the bullion banks to continue to draw interest from the investments they made with the money they generated by selling the leased gold.
Everyone is happy, except for people who think that government currencies should be backed by gold.<<<
The conclusion is priceless:
>>>When you read explanations for anything central bankers have done or plan to do regarding gold, bear the following in mind:
1. The explanation makes no sense.
2. The explanation was never intended to make sense.
3. Central bankers want to avoid PR problems.
4. They have leased out gold that will not be repaid if gold goes over $800/oz.
5. If they try to get their gold back with gold at $800, their debtors will declare bankruptcy.
6. Loans on the books to defunct debtors will reveal the fact that leased gold is not the same as gold in a vault.
7. This has bad PR implications.
8. The central banks are trapped by their own gold-leasing programs.
9. They must now sell gold in order to create the illusion of bullion banks’ solvency.
10. This will act as a depressant on the price of gold for as long as central banks continue to lease gold and sell it.
11. The public will slowly get back that portion of its gold that China’s central bank doesn’t buy at these subsidized prices.
12. Indian fathers will continue to receive their gold subsidies from Western central banks.
13. Indian daughters will have dowries in gold, just as they have had for 3,000 years.
14. In exchange, Americans will have Alan Greenspan, who seems to have been around almost as long as Indian dowries – and is beginning to look like it.<<< |
