Gold Price: The Single Greatest Determinant of the Upcoming Monetary Breakdown and Currency Collapse
SOTN Special Note:
Since time immemorial gold has functioned as the universal currency. Whatever its value was considered to be by a kingdom or nation effectively functioned as the benchmark against which everything else was valued.
The price of gold in modern civilization is no different. It is universally regarded as the barometer of the general economic health of the world. When the price of gold is high, there is much insecurity in the global marketplace; when the gold price is low, investors have much more confidence in future economic activity.
Because the US dollar was artificially propped up as the world reserve currency with the post World War 2 Bretton Woods Agreement, the petrodollar in particular began to function as the new benchmark. While this unsustainable arrangement guaranteed great prosperity for the USA, maintaining it exerted a tremendous amount of pressure on the worldwide system of currency valuation. The ever-increasing monetary stresses in the aggregate which resulted have now put the health status of the U.S dollar at great risk.
Every day that passes throughout 2016 will only see this precarious situation become more fraught with currency volatility and financial instability. In fact many of the armed conflict and military maneuverings across the planet are due to this underlying dynamic. The Federal Reserve’s over-reliance on what is basically a dollar printing press has significantly cheapened the value of all the greenbacks in existence.
As more countries decouple their payment systems from the petrodollar and sell their dollar-denominated debt, the FED has resorted to printing even more money out of thin air. Other nations, particularly those that are vulnerable to energy price fluctuations, suffer greatly due to this fatally flawed American monetary policy. Whenever the FED implements another round of quantitative easing to cure its financial flu, the rest of the world comes down with pneumonia…to the extent that they are married to the petrodollar. Venezuela is a perfect example of a nation not far from ‘respiratory failure’.
The Bottom Line:
It is in times like these, when economic instability and financial insecurity abound everywhere, that people and nations alike will reflexively move their money into gold and silver. Gold especially is respected as the best hedge against all types of market crashes and economic collapses. For this reason the citizens of India, China, Japan and the like have been purchasing gold and silver bullion at unprecedented rates. Such buying sprees have exerted even more pressure on the highly manipulated gold and silver markets. For these and other important reasons a gold breakout is not “If?” but “When?” … … … in 2016.
The explanations posted below present some essential background on how the world got put into this perilous position—an especially dangerous place for the U.S. economy.
State of the Nation
May 29, 2016
China’s Market-Shaking Gold Strategy Rocks Anglo-American Financial Domination
TMR Editor’s Note:
“Buyer Beware” has never been so important to heed when conducting paper gold transactions. Understanding the true history of the whole enterprise is essential. As follows:
Many gold buyers have mistakenly bought paper gold with the understanding that they will be able to convert to bullion upon demand or at some later date. This notion is tantamount to buying fool’s gold. Simply put, the physical gold will not be produced, especially if you buy from a London gold dealer.
The British Empire figured out very early on that whoever controlled the gold supply could effectively control the financial matrix of the entire world. So, they set about the process of doing just that. As an insurance policy against their new ‘Gold Standard’, the Brits also set up the London bullion market as “a wholesale over-the-counter market for the trading of gold and silver”. Toward the end of really locking down the entire global gold enterprise, the British marketeers also set up the London Bullion Market Association (LBMA).
Trading is conducted amongst members of the London Bullion Market Association(LBMA), loosely overseen by the Bank of England. Most of the members are major international banks or bullion dealers and refiners.
(Source: London bullion market)
The real problems (for the rest of the world) started when the controllers of this market implemented their scheme in such a way that totally controlled much of the physical gold supply, as well as a substantial majority of the gold trades, both physical commodity and paper EFTs. Whenever the same party controls this global gold game, it begins to operate as an integrated and horizontal monopoly. In so doing the manipulators of the London Bullion Market (LBM) began to take liberties which crossed every line into financial impropriety and economic malfeasance.
In fact these folks have gone so overboard in their fraudulent trading schemes that it is virtually impossible to track trades or understand how much gold is really available to cover all the bets. Were every gold paper holder who has a legitimate claim to his or her gold present that claim for fulfillment, the LBM would close its doors — FOREVER — the very same day. Yes, it’s that bad and much worse than anyone can possibly imagine!
For this and many other reasons the LBM quite deliberately lacks any meaningful transparency whatsoever. In this manner they are able to maintain the current duplicitous pricing regime which is totally misrepresentative of reality. In other words the present process of artificially suppressing the price of gold daily has become an institutionalized racket which the global marketplace knows to be completely fraudulent and illegal.
Only because the price of gold is so critical to the very foundation of the Global Economic & Financial System (GE&FS), the Brits have been successful is maintaining their ascendant position throughout the world markets, even though their true economic output has fallen considerably with the precipitous decline of their former British Empire.
However, the day of reckoning is near. The world community of nations has shown much less willingness to tolerate such blatant manipulations of the gold market. Especially when such flagrant forms financial engineering sustain the hegemony of Anglo-American predatory capitalism has the blowback now become highly consequential. The many recent maneuverings of the BRICS economic union, together with their newly created AIIB development bank (Asian Infrastructure Investment Bank), is just one example of how the international order is reforming a new GE&FS.
The article posted below is just one example of where truthful disclosures about the LBM will eventually create a global mandate to close it, once and for all.
The Millennium Report
May 26, 2016
An Inside Look at the World’s Biggest Paper Gold Market
Every day, there are a whopping 5,500 tonnes ($212 billion) of gold traded in London, making it the largest wholesale and over-the-counter (OTC) market for gold in the world.
To put that in perspective, Visual Capitalist’s Jeff Desjardins notes that more gold is traded in London each day than what is stored at Fort Knox (4,176 tonnes). On a higher volume day, amounts closer to total U.S. gold reserves (8,133.5 tonnes) can change hands.
How is this possible?
The infographic below tells the story about gold’s foremost trading hub, as well as the paper gold market in London, England:
London is dominant in global price discovery for gold.
In 2015, it accounted for roughly 88% of gold trade – most of which occurs between banks on behalf of their clients. Further, 90% of London trade is spot trading, which further emphasizes London’s importance in price discovery for gold markets.
While the high-level details of the market are visible, the individual mechanisms behind the London gold trade are less clear. There is very little detailed information provided on physical shipments, outstanding gold deposits or loans, allocated or unallocated gold, or clientele types. Trade reporting also breaks down at a more granular level, and datasets on the GOFO (Gold Forward Offered Rate) were also discontinued in January, 2015.
Almost all gold (95%) traded in London is unallocated and without legal title. This makes it easier to trade, but it also raises concerns about a market that is opaque to begin with. There are 5,500 tonnes of paper gold exchanging hands on paper each day, but there are only 300 tonnes of gold vaulted in London outside of the reserves for ETFs or the Bank of England.
What would happen if there was ever even a small rush to get the physical asset behind the paper? Is there a system in place for such an event, and how does it work?
Original graphic by: BullionStar