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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Activatecard who wrote (70464)	5/27/2001 3:44:13 AM
From: Alex	Read Replies (1) \| Respond to of 116927

A Bugs Eye View Of Bullion Banking The question was posed "what are the Bullion Banks (BBs) actually doing?" Being that this is a complicated and varied subject I thought to present a simplified view of what is going on. I do not attempt to quote the statistics and details, rather to present a view that makes one aspect of interest to gold bugs, a little clearer. Central Banks have gold bars sitting in the back room. They are assets on the books, but they produce no income. They are non-performing. So the CB's "lease" this gold to the Bullion Banks to collect a little interest. The BBs takes this gold and SELL IT! Lets stop here and see what the current state of affairs is. The CB "owns" the gold, they have just loaned it out for a fee. The third party that bought the gold from the BB owns that gold as they just paid cash for it. Hmmm. Now two parties own the gold. The third party probably is fabricating jewelry or electronics or making teeth for Mike Tyson. At any rate, the gold no longer exists in "deliverable" form. So we have two owners and no deliverable gold. Definitely not a good state. The BB takes the proceeds from the sale of the gold it did not own and invests it. All is well and good IF, and I repeat IF, the price of gold does not rise, AND if there is some source of available gold for delivery which can be purchased to repay the loan in the future. Again. let's look at the state. The CB "owns" the gold. The BB "owes" the gold, and the gold is gone! To fully understand the state, one must be aware that the world is producing about 2500 tonnes of gold a year and consuming about 4,000 tonnes of gold a year. The difference is primarily provided by CB leasing. (Lets ignore recycling peoples teeth and cable terminals etc. for this explanation.) This leasing is in fact adding to the yearly supply. Actually an understanding of the state at this point is essential to understanding the situation we find ourselves in today. Each year the world creates some amount of negative imbalance in the supply of gold. Currently that deficit is approximately 1,500 tonnes a year (not an absolutely accurate number but good enough to understand the point). To illustrate what the risk is, let's look at what could happen when TSHTF. The world is consuming at 4,000 tonnes, producing at 2,500 tonnes. At pay back time, in essence you have to add the total "leased" gold to the current consumption, or subtract it from the available supply depending on your perspective. So lets just say that next year a miracle happens and the world get sane. The CBs and the BBs recognize what they have created and realize that they must pay back all of the gold loans in some predictable scheme. Let's say they agree to pay back the leased gold at 1,500 tonnes a year. Now we have 4,000 tonnes of consumption. Mines ( and recycled gold teeth etc.) produce 2,500 tonnes, from which we subtract 1,500 tonnes for loan pay back. That leaves us 3,000 tonnes a year SHORT of meeting demand. The shills for the cabal will produce all kinds of smoke to obfuscate the situation, and my numbers are indeed crude, but the situation as I lay it out is solid for illustration. And since our assumption was that the CBs were calling back their leases, they are no longer available as a source to satisfy demand. When demand exceeds supply by a factor of 4X, the price must go up in a free market. (Note, even if the CBs and BBs never come to own up to the situation they created, the CBs will eventually run out of gold to lease and that situation will be even worse than the scenario I have laid out.) Some day the gold will have to be paid back or the CBs will have to tell the people who actually own the gold, that they sold it for the lowest price they could get for it. But the CB will say it's OK because they got $s for it. That's right, yesterday we had gold, today we have green toilet paper and a promise from the US Govt. that they will back the green toilet paper with....you got it, more green toilet paper! Of course, we know that sheeple are basically ignorant and will just say "uh, OK!" The people who frequent Gold Eagle and other educated folks understand what has been going on. They understand the value of the green toilet paper vs gold or silver. That is why so many are disgusted with the creature that currently hides in the lair in DC or other government's capitals. Back to BBs. It is they who owe the CB the gold. It is the BB that will have to find a way to repay the CB. Will they repay with green toilet paper? Will they repay with a promise and a kiss from some bankrupt miner who is selling gold he has not mined yet? (Forward sales.) Will they repay in one of the other forms of paper rather than in gold? Merlin never figured out how to turn base metal into gold. The BB's won't do any better. At this point it will take destruction of this unholy CB - BB scheme or Govt. intervention. The latter is the biggest threat to gold bugs. I don't care if the BBs go bankrupt, but I do care that a CB has stolen the peoples gold and frittered it away and in doing so created a "crisis". Governments have one skill that is above all others. In a crisis, they take something from the citizen. They either take more taxes so that they can pay off the parties that created the crisis, or they take away the freedom to own gold. They want to take your gold and give it to the parties that have been damaging the gold market for over ten years. They are totally unrestrained by the fact that the act is unconstitutional and immoral. The numbskulls we elect and send to DC could in fact make it illegal to own or posses gold. They could confiscate it. Do you know that the US Govt. has an "official" price of gold? It is less than $50 per oz. That is what they would try to pay you for your gold eagle or maple leaf. Do you know that the US govt. has already made the possession of gold illegal once? Well, I hope this sheds some light. I have treated a complex subject with an over simplified example rather than detail, but the concept presented is sound and consistent with what is going on. BC BN "Scruffy" May 28, 2001 gold-eagle.com