Eric, what if the CB's leased the same gold to dozens of Hedge funds, many times over? Now I see why "Another" and "FOA" are convinced that some mining companies may default, rendering their shares as a possible risk.
"What will happen is that much of the current financial leverage, that is heading into it's last days, will be covered by delivering Euros as partial payment. When gold begins trading again at a new value (of perhaps
$6,000 US present buying power) in Euros, it will be easy for some of the defaulted holders of loans (oil and others) to be made whole in currency. With this in mind, some
entities with huge natural resource reserves have used them as collateral to originate the money used in a 1% CB gold loan. It is almost like selling oil for gold, don't you think?
With a gold valuation that high, the Euro will become The Hard Currency for the 21st century.
Now, to your question: A gold loan by a Central Bank to a “Financial Operator” (hedge fund and others) in indeed an unsecured loan! They have loaned their gold as “backing for
the deal” and must supply it if a default occurs. If they have loaned it to a Mine entity, they will have a right to claim the mine assets in a default. Therefore, a mine loan is not unsecured. Not a pleasant thought for the holders of gold stocks during a worldwide currency crisis!"
usagold.com
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