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Aug 20

Hugo Chavez, Gold Runs, Bank Runs And Bank Holidays

by Allison

Here comes Hugo Chavez demanding the return of 211 tons of Venezuelan gold from the criminal bankers of London and New York. Max Keiser said today that the Bank of England does not have the Venezuelan gold and will be forced to go into the markets and buy it at increasingly higher prices.

Hugo Chavez has sent the gold market into backwardation. That means that the price of physical bullion delivered today is worth more than a paper promise of a delivery at some future date. That has driven the gold market higher since yesterday. $1,900 and $2,000 gold are in sight.

There is a difference between paper and physical gold. The US and UK governments lease their gold out to banks. They are not supposed to deliver the bullion. For example, they deliver a piece of paper saying you owe the government one million ounces of gold. This is mistakenly treated as an asset. Stock analysts report a bank in New York just bought a million ounces of gold. Then that bank sells that same paper gold five times. The proceeds of those five sales generate cash from the sales which also adds to revenues. But the original bank still shows the paper gold as an asset on its books. Then banks like HSBC and JP Morgan open ETFs (Exchange Traded Funds) GLD and SLV. People deposit real money into these ETFs thinking they own gold and silver. These funds have a mixture of bullion and lots of paper derivatives. (A derivative is a bet on the future value of a bond or a commodity like gold or oil.)

To make the dollar look good the Federal Reserve creates hundreds of billions of dollars which it gives to the banks to sell short the paper price of gold and silver. Note the US Plunge Protection team through the Treasury has a conference call every morning to 27 brokers and banks. The The Treasury and the FED ask these groups to manipulate all the markets with all losses to be picked up by the Federal Reserve printing more money. That is why I do tell the average investor to stay out of the futures markets.

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  2. Bullion Bank Trading – A Closely Guarded Secret
  3. Mexican Central Bank Quietly Buys 100 Tons of Gold
  4. Hugo Chavez Nationalizes Venezuelan Gold Industry, Demands 211 Tons Be Returned From Abroad – JPMorgan, Bank Of England & ETFs Scramble For Physical Metal
  5. Bank Of England Essentially Admits Intervening In Gold Market
  6. Chavez brings first shipment of gold to Venezuela from foreign vaults as global economy slides