Where's The Gold? The Risk To The Dollar From The Shift - Granite Grok

Where’s The Gold? The Risk To The Dollar From The Shift

Average lifespan of a reserve currency about 95 years - it's getting close!
Average lifespan of a reserve currency about 95 years – it’s getting close!
H/T ZeroHedge.com - Who's got the gold?
H/T ZeroHedge.com – Who’s got the gold?

GrokTalk! This week – I’ll cover the strange conundrums of the gold and currency markets, such as:

  • In spite of massive printing by most western central banks, the prices of gold and silver plunged in April and have not recovered.
  • Purchases of gold and silver by hard currency nations such as Russia and China, and an unprecedented increase in precious metal coin and jewelry purchases by individuals have caused temporary local shortages and premiums, but no overall price increase.
  • The low price has caused mines to suspend production in order not to lose money on every sale, reducing new supply, yet total demand is up, and STILL the price does not increase.
  • Fractional gold works until investors demand their metal! (TheAmericanDreamFilm.com)
    Fractional gold works until investors demand their metal! (TheAmericanDreamFilm.com)
  • In addition to the central banks, there is a tier of “bullion banks” who lease it from central banks, and then either sell it onward, or sell gold certificates (such as gold ETFs). Clearly what goes out on lease, must come back, unless the “loans” are continually rolled over. (And the evidence suggests…)
  • Some nations, from the sensible Germans, to the crazy Venezuelans, began demanding that the gold formerly stored for them in London, Paris, and New York, be repatriated to them physically. Perhaps Hugo Chavez was crazy like a fox!
  • The graphs of allocated gold (somebody has a real physical claim on it) vs unallocated (somebody nominally has a claim on it but might be paid in paper cash instead) in the vaults of certain banks suggested that there might be a severe “leakage” of allocated gold to cover an excess of claims over available metal.
  • Rumors have it that the super rich families are laying siege to said bank, threatening to withdraw ALL their business if the gold which they “own” is not forthcoming!
  • Those revelations of unexplained allocation changes at one bank in particular, were followed a short while later by an announcement that said bank was about to exit the physical metals trading business – IE Get out before the rubes discover the cupboard is bare!
  • While western nations play one kind of currency war (competitive devaluation by ever faster printing), our rivals for global hegemony are stockpiling gold, and arranging bilateral currency swaps, which will reduce the need for certain trades to be conducted in US dollars.
  • Look again at that chart of the lifespan of a typical reserve currency, and you can see that the sands of time are running out for the dollar unless we take urgent steps to fortify it! I guess we need to learn how to say “Do you feel lucky, punk.” In Chinese!

Read the prior article on fractional gold.

Tune in to GrokTalk this week as the Grok team grill me on the topic!

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