Posted on 11/29/2014 11:42:43 AM PST by blam
The bullion banks have re-hypothecated gold by a factor of 110-to-1. That means that there are 110 "ounces" of paper gold for every ounce of real gold. As long as this Ponzi Scheme continues, the price of gold stays low and the petrodollar reigns supreme. This is our modern version of the London Gold Pool.
The BRICS nations are tired of American bullying and the use of American and NATO troops to support American global hegemony. As the BRICS see it, we have replaced the Soviet Union as the world's Evil Empire. Because of our military advantage, warfare against us can only be successfully waged on an economic front where the gold rig is our Achilles' Heel.
Russia and China are buying the gold we're selling when holders of gold option contracts stand for delivery in physical gold. Large numbers of 400 ounce "good delivery" bars are sent to Switzerland where they are smelted into 1 kilogram bars, which is the Chinese standard, and are taking up residence in the gold vaults of the BRICS nations.
Why?
My own theory is that at some point, China and Russia will pull the golden rug out from under the US, force the price of gold to catastrophic levels and crash the petrodollar. This will escalate into worldwide sovereign debt defaults which will crash the world's fiat currencies. The final result will be Russia and China dragging the US, kicking and screaming, into a new gold standard in which Russia and China have most of the world's gold. We will no longer be the global hegemon, and we will have to adjust to being a Third World nation colonized and financed by Russia and China.
That would crash our political systems, and a new third party would take power. As I said in my essay Federalism: Yesterday and Today, the future is either federalism or fascism.
“In order to fight the Cold War, it was Eisenhower who violated the Breton Woods agreement by creating more money than our gold could back. “
Eisenhower didn’t create the problem by violating Breton Woods. The source of the trouble was the dollar’s role as world reserve currency which resulted in the “Triffin Dilemma”.
https://en.wikipedia.org/wiki/Triffin_dilemma
The Chinese believe that Triffin Dilemma is still with us and at the root of the 2008 financial crisis.
I forget whether it was Triffin or someone else who said that the owner of the world’s reserve currency will export his nation’s jobs overseas. For those who want to bring American jobs home, that would mean giving up the possession of the world’s reserve currency and accepting a different place in the world’s pecking order.
In 1961 eight nations formed the London Gold Pool to defend the $35/oz gold price. But because of Triffin’s dilemma the market price of gold was already higher, and this resulted in a two tiered gold market: the “official” price for gold traded between governments and the free market price.
Inflation in the US from LBJ’s Great Society spending programs and the Vietnam war made the disparity between the market price and the official $35 price even greater. By 1967 the French stopped believing in the London Gold Pool and began exchanging their accumulated dollars for gold. The British Pound collapsed in November 1967 provoking a run on gold. In March 1968 trading was suspended in the London gold market and the US Congress repealed the requirement that there be a gold reserve backing the dollar.
https://en.wikipedia.org/wiki/London_Gold_Pool
Apparently Keynes had warned the Bretton Woods conferees that employing the dollar as world reserve currency wasn’t going to work. He proposed creating a tool that he called the ‘bancor’. It wouldn’t be an international currency, it would strictly be for clearing international trades. And its benefit is that it would have freed the dollar from the Triffin dilemma trap.
The IMF created something like the bancor in 1969, SDRs or “special drawing rights”, and the Chinese believe these should replace the dollar’s role as world reserve currency. Maybe they’re right.
Thank you for explaining. I read an article this morning along those same lines.
Something’s definitely up on the global stage with regards to gold.
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