(Video Part 2, Part 3)
Roosevelt's Executive Order 6102 required U.S. citizens to deliver on or before May 1, 1933, all but a small amount of gold coin, gold bullion, and gold certificates owned by them to the Federal Reserve, in exchange for $20.67 per troy ounce. Under the Trading With the Enemy Act of October 6, 1917, as amended on March 9, 1933, violation of the order was punishable by fine up to $10,000 ($167,700 if adjusted for inflation as of 2010) or up to ten years in prison, or both. Most citizens who owned large amounts of gold had it transferred to countries such as Switzerland. On December 31, 1974, with Executive Order 11825, President Gerald Ford repealed the Executive Order that Roosevelt used to call in gold in 1933. This was necessary because on the same day Congress restored Americans' right to own gold. Furthermore, in 1977 Congress removed the president's authority to regulate gold transactions during a period of national emergency other than war.
Officially the destruction of America began on August 15, 1971, when the U.S. abandoned the gold standard. - Bob Chapman, A Financial Conflagration of Immense Proportions
The gold price suppression scheme — central banks have been rigging the gold price for the past 10 or 20 years. It was a matter of public record in July 1998 when Federal Reserve Chairman Alan Greenspan told Congress: "Central banks stand ready to lease gold in increasing quantities should the price rise." That is, Greenspan himself contradicted the usual central bank explanation for leasing gold — supposedly to earn a little interest on a dead asset — and admitted that gold leasing was all about suppressing the price.
The August Review
Originally Published on December 9, 2008
There has not been a formal audit on Fort Knox, for instance, since the Eisenhower administration. Official statistics on gold holdings are often contradictory. Getting plain answers from any Central Bank in the world, including the Fed, is virtually impossible.
When Richard Nixon canceled the Bretton Woods system in 1971, exchangeability of paper dollars for gold was terminated. Although the economic and financial experts swore that gold was an outmoded, ineffective and useless financial asset, cooler heads knew better. In recent years, these same experts have reversed field and are now proclaiming that gold is still, and always has been, a consistent monetary asset. Why the flip-flop?
The economic chaos in the world today is a direct result of policies set in motion to foster a New International Economic Order (NIEO). The NIEO was the explicit creation of the Trilateral Commission, founded by David Rockefeller and Zbigniew Brzezinski in 1973, and their early papers and task force reports clearly asserted their NIEO plans.
Members of the Trilateral Commission were instrumental in creating the European Union as well. The EU is the prototype of global governance that will soon exert its influence to reshuffle world relationships.
Since 1973, Trilateralists have dominated the Executive Branch of the U.S. government with politicians like Jimmy Carter, George H. W. Bush, Bill Clinton, Al Gore and Dick Cheney. Indeed, the Trilateral Commission has had undue influence and control over the development of globalization, and it was self-interested at best.
There is mounting evidence that there has been a larger plan underway to corner the global supply of gold, thus laying the groundwork for a global currency exclusively controlled by Trilaterals and their friends. By extension, economic and political mechanisms would be controlled to the same extent.
From a Trilateral perspective, the Bretton Woods system had two flaws:
- Gold was rapidly being decentralized into non-Trilateral hands.
- It limited the arbitrary creation of paper money to finance projects launched by Trilateral-related global companies.
In 1976, Antony Sutton wrote:
"The assault on gold today is an integral part of a planned move into a new economic order under the dominance of a single country. It was Nazi Germany in the 1940's; it is the United States in the 1970's. In brief, the war on gold that we observe today, and discuss below, is dollar imperialism, designed to maintain the U.S. dollar as the only world currency without competitors. The purpose is the formation of a world totalitarian state under Wall Street dominance." (The War on Gold, Antony C. Sutton, 1976, p. 63)Sutton's view was limited because he had not yet discovered the Trilateral framework just created three years earlier in 1973. We can see now that the totalitarian state is still clearly in view, but the self-proposed rulers of this new arrangement will be members of the Trilateral Commission, and their monetary "enforcer" will be gold.
2008 Gold Hegemony
Bill Murphy is the chairman of the Gold Anti-Trust Action Committee (GATA), which has asserted for almost 10 years that a concentrated gold cartel has been manipulating the price of gold. Murphy and GATA are highly regarded around the world on their work to expose this cartel.
On September 10, 2008, Murphy made an opening statement at the 2008 Las Vegas Hard Assets Investment Conference. Murphy's perspective and argument does not include the Trilateral Commission, but the players in his narrative are largely members or former members of the Commission.
This leads this writer to connect some dots between 1973-1976 and 1998-2008.
In Murphy's comments, note that the famous bullion banks of 2008 include Goldman Sachs, JP Morgan Chase, Citigroup and Deutsche Bank, all of which have at least one director or senior official sitting on the Trilateral Commission. In addition, the players Murphy names are members of the Commission.
As Sutton did in 1976, to imply a "war on gold" necessitates an eventual victory, a victor and a loser. It is already painfully obvious that the citizens of America are the losers: the middle class is being wiped out and we all hold a debased paper currency that is headed toward destruction.
The question is, who will the winner be? And what is the victor's intent over the conquered?
Bill Murphy's Opening Statement (Excerpt)
The Gold Anti-Trust Action Committee’s basic assertion for the past 9 ½ years is that there is a Gold Cartel out there suppressing the price of gold. It consists of the US Government, including the Fed and Treasury, various other central banks, and bullion banks like Goldman Sachs and JP Morgan Chase.
The motives of “the cabal” are to give support to the dollar, keep US interest rates lower than they should be, and to tone down the widely watched US barometer of US financial market health, that being the gold price. After all, whenever the price of gold soars, it congers up talk of too much inflation, a sinking dollar, or a crisis of some sort … all negative for Wall Street and the incumbent administration.
Therefore, “Shoot the Messenger” is the Gold Cartel’s key mission.
The suppression of the price of gold was the essence of Robert Rubin’s Strong Dollar Policy. What else did the US do to effect that policy? Talk? Jawbone?
It seems to have all started with Robert Rubin…
Rubin had Goldman Sachs (GS) borrow gold from the central banks to fund their basic operations. They could do so at about a 1 % interest rate. This was like FREE money, as long as the price of gold did not rise to any sustained degree for any length of time.
(all roads always lead back to Goldman Sachs)
Soon other major financial institutions realized what GS was doing and copied them. Rubin continued these operations as the Goldman Sachs CEO and then took it to a new level as US Secretary Treasurer. That is how the gold price suppression became the lynchpin of his widely acclaimed “Strong Dollar Policy.” GATA’s Reg Howe caught on to this notion in a paper titled, “Gibson’s Paradox and The Gold Standard,” co-authored by Lawrence Summers in 1988. Summers, a professor at Harvard at the time, succeeded Rubin as US Treasury Secretary. The bottom line of Summer’s analysis is that “gold prices in a free market should move inversely to real interest rates.” Control gold and it will help to control interest rates.
Bullion banks such as Goldman and Morgan became the Gold Cartel’s hit men, trading the gold market from the short side and bombing the market in coordinated anti-trust fashion at the beck and call of our government, making a great deal of money in the process … as you have all witnessed the past couple of months.
In a brilliant piece a few weeks ago, Ted Butler reported that three U.S. banks held a short position of 7,787 contracts (778,700 ounces) of gold in July, and, astonishingly the same three U.S. banks held a short position of 86,398 contracts (8,639,800 ounces) in August, an eleven-fold increase. Gold then declined more than $150 per ounce once Secretary Paulson (note: Paulson is ex-CEO of Goldman Sachs) gave the order, just as he did in May 2006 when a similar order was given, according to a US Senator from the state of Washington. Both times, various bullion banks made vast amounts of money quickly as the US government facilitated their short positions by feeding considerable clandestine central bank gold into the physical market.
It was the concerted, concentrated action of certain BULLION BANKS, which tipped off GATA what was going on nearly a decade ago now.
It was this clandestine feeding of central bank gold into the marketplace which clued GATA into the gold price suppression scheme. GATA is not alone in recognizing the central banks are not accounting for their gold properly. GATA revealed an IMF paper which corroborates GATA’s claims that much of the central bank gold has been double counted and that the central banks are not properly accounting for the gold no longer in their possession.
Now, think about it … if the US gold is, and has been, just sitting in our vaults, without a true independent audit since the Eisenhower Administration, what is their to withhold?
Is the gold price manipulated? You don’t need to read through GATA’s countless evidence to appreciate what is going on. It is on the public record… beginning with Alan Greenspan’s testimony before Congress in 1998: “Central banks stand ready to lease gold in increasing quantities should the price rise” … which is just what they have done!
Is the gold price manipulated today? Former Federal Reserve Chairman Paul Volcker wrote the following in his memoirs: “Joint intervention in gold sales to prevent a steep rise in the price of gold (in the 1970s), however, was not undertaken. That was a mistake...”
This Orwellian shared goal of financial stability, which began with the serious rigging of the gold price under Robert Rubin, has led us to the financial market mess we have today. It is wrong and must be stopped!
Is the cat out of the bag? In the 2007 May/June issue of Foreign Affairs, Benn Steil presented his paper, The End of National Currency. Steil is Director of International Economics at the Council on Foreign Relations. In his report, Steil stated:
"So what about gold? A revived gold standard is out of the question. In the nineteenth century, governments spent less than ten percent of national income in a given year. Today, they routinely spend half or more, and so they would never subordinate spending to the stringent requirements of sustaining a commodity-based monetary system. But private gold banks already exist, allowing account holders to make international payments in the form of shares in actual gold bars.
Although clearly a niche business at present, gold banking has grown dramatically in recent years, in tandem with the dollar's decline. A new gold-based international monetary system surely sounds far-fetched. But so, in 1900, did a monetary system without gold. Modern technology makes a revival of gold money, through private gold banks, possible even without government support."
This is hardly far-fetched. Zbigniew Brzezinski noted in 1972 that "the nation-state as a fundamental unit of man's organized life has ceased to be the principal creative force: international banks and multinational corporations are acting and planning in terms that are far in advance of the political concepts of the nation-state."
"Gold going to permanent backwardation means that gold is no longer for sale at any price, whether it is quoted in dollars, yens, euros, or Swiss francs. The situation is exactly the same as it has been for years: gold is not for sale at any price quoted in Zimbabwe currency, however high the quote is.
To put it differently, all offers to sell gold are being withdrawn, whether it concerns newly mined gold, scrap gold, bullion gold or coined gold. I dubbed this event that has cast its long shadow forward for many a year, the last contango in Washington ― contango being the name for the condition opposite to backwardation (namely, that of a positive basis), and Washington being the city where the Paper-mill of the Potomac, the Federal Reserve Board, is located. This is a tongue-in-cheek way of saying that the jig in Washington is up. The music has stopped on the players of ‘musical chairs’. Those who have no gold in hand are out of luck. They won’t get it now through the regular channels. If they want it, they will have to go to the black market."
If [Romanian economist, Professor Antal Fekete] is correct, and he has seldom been wrong, then the trap is snapping shut on who will own the gold in 2009. Free-market supplies of gold are drying up, but the price is being kept low as global institutions sop up whatever crumbs are left.
Several very serious implications can be drawn: the massive amounts of gold leased to bullion banks will ultimately be seized by these same banks as collateral against worthless paper loans made to the Central Banks.
Central Banks (including the Federal Reserve) could well be left to disintegrate in order to give way to a single global central bank controlled and fueled by the bullion banks who have Monopoly control over the world's gold. These superbanks are all closely tied to the goals and membership of the Trilateral Commission, whose members have methodically carried out a monetary policy designed to bring about this eventuality.
For all practical intent, individuals will be frozen out of the gold market at any price.
Indeed, a global totalitarian state may be closer than we think; as the globalist's golden rule states, "He who has the gold, makes the rules."
Originally Published on November 16, 2005
The key to understanding the manipulation of the gold market, this enormous scandal and fraud, is that it can be compared to a murder trial. In the United States a murderer can be put to death if he is found guilty beyond a reasonable doubt. Many times murder defendants are convicted based solely on "circumstantial" evidence because a reasonable person could reach no conclusion other than guilty.
For seven years GATA has discovered one piece of evidence after another supporting our long-held contention that the gold market is managed by certain central banks and their agents, the bullion banks. It is a price-fixing case involving some very powerful people and institutions … in fact it is a Gold Cartel. The U.S. attorney handling the Samsung conspiracy conviction said in an interview this fall that the United States had experienced an "epidemic" of price-fixing cases in the late 1990s. All GATA has done is uncovered one of them, the grandest of all.
For one to appreciate how this can go on and on and not be brought to the attention of the public, one need only to reflect on Enron and Refco. Before its initial public offering of stock, Refco was audited by the most highly regarded firms on Wall Street and nothing wrong was discovered. Yet look at what was really transpiring behind the scenes. Now the company is bankrupt and under criminal investigation.
That said, GATA does have its "smoking gun." It has to do with derivatives and central bank gold. The mainstream gold world says the central banks have nearly 32,000 tonnes of gold in their vaults (minus a small amount that has been sold in recent years or is on loan to gold producers for their hedging operations). GATA says the central banks have less than half of that -- the difference being what was clandestinely fed into the market to suppress the gold price over the last 10 years. The work of three respected GATA consultants -- Reg Howe, Frank Veneroso, and James Turk -- each using different methodologies, supports GATA's contention of vastly diminished central bank gold supply.
Veneroso made a presentation at GATA's African Gold Summit in Durban, South Africa, on May 10, 2001, laying out why the central bank gold loans are far higher than generally believed. This presentation, "Facts, Evidence and Logical Inference ... A Presentation On Gold Supply/Demand, Gold Derivatives and Gold Loans," may be reviewed at here. Howe and Turk have done the same at their Internet sites.
Meanwhile the International Monetary Fund has instructed central banks to lie about their gold reserves -- to count gold loans and swaps as gold in their vaults.
So as not to be so audacious without backup to validate our more than dramatic claim, let me explain. Canadian GATA supporter Andrew Hepburn posed the following question to the IMF in October 2001:
Why does the IMF insist that members record swapped gold as an asset when a legal change in ownership has occurred (see Tracking the gold suppression scheme to the International Monetary?The IMF responded:
"This is not correct: the IMF in fact recommends that swapped gold be excluded from reserve assets. (See Data Template on International Reserves and Foreign Currency Liquidity, Operational Guidelines, para. 72)."For more on this, see IMF caught lying to GATA and cooking member bank books on gold. The IMF link mentioned above is no longer operating. It was in 2001 as noted in the GATA dispatch.
Yet a footnote on the Internet site of the central bank of the Philippines contradicts the IMF's claim and reveals it to be bogus:
"Beginning January 2000, in compliance with the requirements of the IMF's reserves and foreign currency liquidity template under the Special Data Dissemination Standard (SDDS), gold swaps undertaken by the BSP with non-central banks shall be treated as collateralized loans. Thus, gold under the swap arrangement remains to be part of reserves and a liability is deemed incurred corresponding to the proceeds of the swap."The European Central Bank and other central banks corroborated exactly what the central bank of the Philippines declares about counting gold loans the same as gold in the vault.
The "smoking gun" part of this has to do with the gold derivatives on the books of the Bank for International Settlements in Switzerland. The gold establishment says the gold derivatives on those books have been associated with gold producer hedges. Yet in the last four years gold producers have reduced their hedges by more than 2,000 tonnes of gold, or more than 50 percent of their hedging at its peak. Consider this excerpt from a Reuters report from November 8, 2005:
"LONDON -- .... The Hedge Book report produced by Haliburton Mineral Services and industry consultants Virtual Metals said the so-called hedge impact of the global book fell by 1.0 million ounces to 52.8 million ounces. ... The global hedge impact in the July-September quarter was just more than half its level in the same quarter of 2001 when it peaked at 102.8 million ounces."Meanwhile, gold derivatives have gone up during that period of time, not down. While these are complicated and technical, Howe updated GATA's evaluation of the BIS gold derivatives in a report he posted at GoldenSextant.com in June, "Gold Derivatives: Skewing the World":
"On May 20, 2005, the Bank for International Settlements released its regular semi-annual report on the over-the-counter derivatives of major banks and dealers in the G-10 countries for the period ending December 31, 2004. The total notional value of all gold derivatives rose from $318 billion at mid-year 2004 to $369 billion at year-end. As subsequently detailed in table 22A of the June issue of the BIS Quarterly Review, released June 13, 2005, forwards and swaps increased slightly from $129 to $132 billion while options rose dramatically from $189 to $237 billion."Howe's report can be found here.
The only explanation for the dichotomy between the reduced hedges and the increased gold derivatives on the books of the BIS is undisclosed lending of gold and writing of central bank call options associated with the price suppression scheme.
There is one other anecdotal point to make proving how right GATA has been all along and what it means for gold investors in the years to come. For years GATA has claimed that the key to the eventual surge in the price of gold was the rising physical demand for gold amid the diminishing supply of central bank gold used to suppress the price. The gold establishment has associated the rise in the price of gold over the years with the weakening of the U.S. dollar. GATA has claimed otherwise.
We said the Gold Cartel was using the action of the dollar for price-rigging purposes. GATA has said over and over that the price of gold could rise hundreds of dollars per ounce and the dollar do nothing relative to other currencies. We said it would happen when the gold cartel began to lose control of its price manipulation scheme.
The euro came into existence on January 1, 1999, at $1.17. The price of gold that day was $284. As this is written in mid November 2005, the euro approached $1.17 again while gold has rocketed $194 per ounce since the beginning of 1999.
Here's more that helps to prove GATA's case about the gold market. At the beginning of 2005 gold was $420 and the euro was $1.30. In mid November the euro was trading at $1.17. But the price of gold was $478. The argument that gold is tied to the dollar has gone the way of the Dodo bird. Of course, should the dollar crash, which it should, this can only help the gold price.
The price of gold is headed to well beyond $2,000 per ounce.
GATA knows why.
Now you do too.
Bill Murphy is chairman of the Gold Anti-Trust Action Committee and proprietor of www.LeMetropoleCafe.com, an Internet site devoted to financial commentary with emphasis on the precious metals.
Originally Published on January 26, 2007
...The argument that the central banks have worked hard to suppress gold has merit. To understand why the banks would do that, rather than acting in what on the surface would appear to be their own best interests, one has to understand what was going on behind the scenes during gold’s long bear market.
Chris Powell, co-founder and secretary/treasurer of Gold Anti-Trust Action Committee (GATA) explains:
“I’m convinced that the gold price suppression scheme wasn’t really aimed at gold itself. Gold was the tail on the dog. It was aimed at boosting the government bond market, keeping interest rates down and making the dollar look strong.”In order to accomplish that, the central banks had to give bullion banks some incentive to cooperate. Which they did.
“By the bullion banks shorting gold,” Chris says, “they deceived the world about the level of inflation and money supply growth, and basically they shorted gold to buy U.S. government bonds and collect the difference. If you’ve been assured that the gold price is going down, you short the metal and use the proceeds to buy government bonds. You’re getting 5% on government bonds and the gold price is going down 5% a year, enabling you to close the short profitably, so you have a risk-free trade. You’re getting 10%, as long as the central banks are willing to back you with more gold sales to keep the gold price going down. And I think everybody was happy with that. Financial houses, recruited as the banks’ agents, were happy with their easy profits. The Treasury Department was happy because it boosted bond prices and kept interest rates down. And the whole world was deceived about the vast growth that was going on in the money supply. It worked for a while. Until they started worrying that they were running out of gold reserves.”Are they? we asked.
“That’s the zillion-dollar question,” Chris says. “The trouble is, Fort Knox hasn’t been audited since the Eisenhower Administration. Now, the central banks claim to have more than thirty thousand tons of gold in their vaults, but our research has found a lot of double counting, and in fact the IMF issued its own paper some months ago admitting that its rules were allowing the double counting of gold by member banks.”By double counting, we assumed he meant that they’re counting both physical and leased gold. That’s correct, he says, and jokes that,
“The actual disposition of Western central bank gold reserves is a more closely guarded secret than the plans for the construction of nuclear weapons, which are posted on the Internet today. You’ll never find out exactly where all the gold is and who really owns it.”The question of ownership is an important one, and it really muddies the waters. Who owns what, and where, is complicated by the use of gold swaps. We asked Chris to explain what a gold swap is.
“Basically an exchange. Say the Bundesbank and the U.S. Treasury Department get on the phone and Treasury says to the Bundesbank, ‘Hey, the gold price is getting a little high, we’d like to sell twenty tons over the next month to tamp it down, or at least lease twenty tons, could you do it from over there to keep our fingerprints off it?’ In return, they say, ‘We’ll give you title to twenty tons in the depository at West Point.’ The Bundesbank says, ‘no problem.’ They dispose of twenty tons in Europe through the London Bullion Market Association, and they get a note from the Treasury Department saying ‘ok, you now have title to these bars in the vault at West Point.’ And hopefully for the sake of the Bundesbank, they’re numbered bars and they can come visit them every once in a while.”We had to say that it all sounded very convoluted. It must be difficult to coordinate.
"Not really," Chris says. "The central banks are constantly talking to each other and they're all members of the BIS, which compiles extensive data on gold reserves, as well as derivatives and leasing.Thinking about all this, it seems to us that the Treasury Department, the Fed, and the European central banks were engaging in some mighty risky behavior. Chris agrees and says that, in fact, the house of cards almost came tumbling down when gold spiked in late 1999, in the aftermath of the Washington Agreement, and created a short squeeze.
“They need to talk, because they have to know whose gold is going out into the futures pit today. And most Western central bank gold, or a lot of it anyway, is held in trust by the U.S., whether it’s in Fort Knox or the basement of the Treasury Building in New York, or in the vault up in West Point.
“The West Point gold, by the way, was quietly reclassified a couple of years ago from ‘gold bullion reserve’ to ‘custodial gold bullion.’ No reason given by the Mint, no indication of who we were acting as custodian for. Then in July of 2001, the Mint redesignated 94% of the U.S. gold reserve as ‘deep storage.’ Go figure.”
With the Long Term Capital Management meltdown fresh in people’s memories (it had happened only a year earlier), the central banks feared that the gold squeeze could be even worse, taking down several major trading houses and possibly setting a whole row of dominoes falling.
In the words of former World Bank consultant Frank Veneroso, it was “an explosive gold derivatives crisis” and “the official sector intervened to prevent [it].”
The intervention worked. Gold retreated back under $300 and stayed there for two years. Traders were able to unwind their short positions without massive losses. Since then, of course, steadily rising demand has driven the gold price ever higher. Ongoing market rigging has been unable to suppress it, but has served to prevent the metal from finding its true equilibrium point, in Chris’ opinion. He believes that a day of reckoning will come. And what will that look like?
“Well, I don’t want to make any hard predictions about what will happen, or when,” he says. “But what I think is that we’re going to wake up someday and find out that the Western central banks have met—along with, maybe, some of the Asian central banks—and there are going to be new currency arrangements. Maybe in the name of helping the poor countries, the central banks are going to be buying gold at $1,500 an ounce or something like that. It’ll probably happen overnight, because I don’t think the central banks can withstand a steady escape from the paper currencies into the monetary metals. If they do it overnight, everybody’s locked into the fiat system, there’s no getting out. Either you’ve got your gold and silver or you don’t, and there’s no incentive to get out of the whole central bank system.”That sounded to us like a sudden and massive devaluation of the buck.
“Yeah,” Chris says, “I tend to expect that. In fact, that’s what the whole Plaza Agreement was about, back in the ‘80s under Reagan. It was a devaluation of the dollar. They don’t tell you these things are going to happen, they tell you they’ve already happened.”Since up to that point, we’d been talking about the central banks and the executive branch of the federal government, we asked if Congress knows about all this, too.
“The leadership in Congress does,” Chris says. “We told them. A friend of a friend got GATA a private meeting with Dennis Hastert, speaker of the House. The GATA delegation met with Speaker Hastert in his office at the Capitol on May 10, 2000 and we laid it all out for him. Also for Spencer Bachus, the Alabama Congressman who chaired the subcommittee with jurisdiction over gold and silver. Not that we really needed to. A couple of months later, I was able to deduce that we’d been given that meeting not because the speaker wanted to hear what we had to say, but rather wanted to know how much of this was leaking out, how much was known, how much of the whole thing was compromised. I can’t explain exactly how I know that, because it would put my source at risk, but trust me, I do.Forewarned is forearmed. In Chris’ words, either you’ve got your gold and silver or you don’t.
“Look, right now the Comptroller General of the U.S. is going around saying that we’re bankrupt and we’ve got to do something about it immediately. So everyone in government knows what’s happening. As I said earlier, my request to the world is not to look at GATA as some conspiracy nuts. We just want to point out the public record and ask people to pursue it and draw their conclusions. We’re not issuing wild charges or anything. We’re just trying to call attention to the admissions that have been made. And to get people to look at those admissions in a new light. Or in any light at all, as far as I’m concerned.”
Protecting your assets is imperative in these times of fiscal insecurity. The card house called “the United States economy” will collapse sooner or later, and you’ll be glad to have taken some precautions.
March 18, 2010
We’ve aggressively been advising readers to accumulate gold as a portfolio keystone from the very onset of its current secular bull market in 1999.
It has been our thesis, looking at a landscape littered with easy money and out-of-control government spending, that the piper had to be paid — in funny money.
How things have changed from when we were nearly a lone voice in the woods — with the list of institutional gold buyers growing longer with each passing day. Of those institutions, none is more important than the central banks. That’s because, collectively, they are the world’s single largest institutional holders of above-ground gold, and by a wide margin.
During gold’s long bear market hibernation, which lasted from 1980 to June 1999, the central bankers looked upon their gold holdings with something akin to embarrassment, happy to lend it out for small change or to sell some to raise a bit of cash.
Most famously, then-UK Chancellor of the Exchequer Gordon Brown sold off half of Britain’s gold’s reserves, about 12.9 million ounces, almost exactly at the 1999 bottom. The average price of gold in 1999 was $279 per ounce. Today, of course, gold is trading about $846 higher than that.
For years Doug Casey has told anyone who will listen that, in time, as the failures of the fiat system become obvious to all, central bankers would shift from sellers to buyers. Our own Bud Conrad elaborated on that point in an article in our International Speculator, circa September 2005, that I excerpt from just here…
If the central banks were to change course from being sellers to becoming buyers, the change would be dramatic. When might this happen? When the central banks see their own currencies and the reserve currencies they hold (mostly the U.S. dollar) in a persistent downtrend….With that setup, I want to bring an article out of Bloomberg to your attention…
…The real source of gold's rise will be the failure of the world's paper currencies at being stores of value. When currency crises force the central banks to stop their gold sales, we will know that the dollar is in serious trouble and prices of all commodities, including gold, will move much higher. Because gold has been held back, it could well jump more.
Central Bank Gold Holdings Expand at Fastest Pace Since 1964
March 18, 2010 (Bloomberg) -- Central banks added the most gold to their reserves since 1964 last year amid the longest rally in bullion prices in at least nine decades, data compiled by the World Gold Council show.
Combined holdings rose 425.4 metric tons to 30,116.9 tons, an increase worth $13.3 billion at last year’s average price, according to the data. India, Russia and China said last year they added to reserves. The expansion was the first since 1988, the data from the London-based council show.
Central banks, holding about 18 percent of all gold ever mined, are expanding their holdings for the first time in a generation as investors in exchange-traded funds amass bullion as an alternative to currencies. Holdings in the SPDR Gold Trust, the biggest ETF backed by the metal, are at 1,115.5 tons, more than the holdings of Switzerland.
Now, I don’t take this news as signs that gold is about to blast off to $2,000 overnight. But I do take it as a clear sign that big changes are in the works. With central banks increasingly unwilling to sell and willing to buy, that takes a primary source of supply off the market and puts a hard foundation under the gold market.
And it speaks volumes about their own confidence — or lack thereof — in the fiat money experiment that is starting to spark and fizzle in most concerning ways.
While many of you, certainly those Casey subscribers of any duration, are likely well positioned in gold at this point, it’s not too late for those of you who are new to the sector. There’s no time like the present to beginning regularly buying a coin or two, and to take positions in the gold stocks that will get a lot of attention from the masses as they figure out that we’re headed for a currency crisis.
By Luke Burgess, Wealth Daily
July 2, 2009
With gold prices getting ready to soar, we've decided to find out who owns the most bullion in the world.
It's no surprise that governments, central banks, and investment funds are world's largest holders of gold reserves. These organizations know gold is the ultimate store of value that protects against inflation and offers a safe haven during times of economic and geopolitical turmoil.
To find out who owns the most gold in the world, we referred to data from the International Monetary Fund's International Financial Statistics Report.
|Rank||Owner||Tonnes|| Share of Foreign Reserves|
The Netherland central bank, De Nederlandsche Bank, oversees the Dutch national finances, including the country's 612.5 tonnes of gold reserves. The Dutch gold is currently worth over $20 billion and accounts for 61.4% of the country's foreign reserves.
|Rank||Owner||Tonnes|| Share of Foreign Reserves|
Although Japan is ninth largest gold owner in the world, its 765.2 tonnes of gold accounts for just 2.1% of the nation's total foreign reserves. On the open market, Japan's gold reserves would fetch approximately $25.4 billion and are managed by the Bank of Japan.
|Rank||Owner||Tonnes|| Share of Foreign Reserves|
Conducting Switzerland's monetary policy is the Swiss National Bank, which oversees the country's 1,040.1 tonnes of gold. The gold is believed to be stored in huge underground vaults near the federal Parliament building in Berne, but the Swiss National Bank treats the location of the gold reserves as a secret. With the world's eighth largest reserve of the yellow metal, Switzerland's stockpile would fetch approximately $34.5 billion in today's gold market, accounting for 37.1% of the country's foreign reserves.
|Rank||Owner||Tonnes|| Share of Foreign Reserves|
The world's most populous country also has the world's seventh largest gold reserve. With a population of 1.33 billion, the country holds about $26 worth of gold per person, worth a total of almost $35 billion. The Chinese gold accounts for only 1.8% of the nation's total foreign reserves.
|Rank||Owner||Tonnes|| Share of Foreign Reserves|
|6||SPDR Gold Shares ETF||1,120.6||n/a|
Originally listed on the New York Stock Exchange in 2004, SPDR Gold Shares has been one of the fastest growing ETFs in the world. SPDR Gold Shares now trade on the Singapore Stock Exchange as well as the Tokyo Stock Exchange. All of the Trust’s gold is held by the Custodian, HSBC Bank, in their London vault except when the gold has been allocated in the vault of a sub-custodian.
|Rank||Owner||Tonnes|| Share of Foreign Reserves|
The Banque De France is responsible for France's gold holdings, which have been reported at about 2,450.7 tonnes by the International Monetary Fund. With the fifth largest gold reserve in the world, France's amount to about $81.3 billion, accounting for 72.6% percent of the country's foreign reserves, which is the second highest percentage of gold in foreign reserves on our top ten list.
|Rank||Owner||Tonnes|| Share of Foreign Reserves|
The Italian National Bank, Banca D'Italia, manages the country's large gold holdings, which account for 66.5% of its foreign reserves. With approximately 2,451.8 tonnes of gold in reserve, Italy's holdings are very close to France's and are also worth approximately $81.3 billion at current prices.
|Rank||Owner||Tonnes|| Share of Foreign Reserves|
|3|| International Monetary Fund||3,217.3||n/a|
The International Monetary Fund oversees the global financial system by following the macroeconomic policies of its member countries 185 member countries. It is an organization formed to stabilize international exchange rates and facilitate development and offers highly leveraged loans mainly to poorer countries. The IMF's gold policies have changed in the last quarter century, but the reserves remain in place for use in stabilizing international markets and aiding national economies. The IMF's official policy on gold as it is stated on the organization's website is governed by the following principles:
- As an undervalued asset held by the IMF, gold provides fundamental strength to its balance sheet. Any mobilization of IMF gold should avoid weakening its overall financial position.
- The IMF should continue to hold a relatively large amount of gold among its assets, not only for prudential reasons, but also to meet unforeseen contingencies.
- The IMF has a systemic responsibility to avoid causing disruptions to the functioning of the gold market.
- Profits from any gold sales should be used whenever feasible to create an investment fund, of which only the income should be used.
|Rank||Owner||Tonnes|| Share of Foreign Reserves|
The Deutsche Bundesbank, Germany's central bank, is the most influential member of the European System of Central Banks. With a hefty 3,412.6 tonnes of gold reserves, which are valued at about $113.2 billion at current prices, Germany's gold accounts for almost 70% of the country's total foreign reserves.
|Rank||Owner||Tonnes|| Share of Foreign Reserves|
|1|| United States||8,133.5||78.3%|
The United States holds the largest gold reserve in the world. With 8,133.5 tonnes, the US gold holdings are worth approximately $269.67 billion. This massive gold reserve represents about .9436 an ounce for ever person living in the country. The majority of the American gold is reported to be held in the world famous United States Bullion Depository in Fort Knox, Kentucky, although there is some controversy that suggests otherwise. The remainder of the US reserves are held at the Philadelphia Mint, the Denver Mint, the West Point Bullion Depository and the San Francisco Assay Office.
The top ten largest owners of gold in the world are reported to control a total of 24,258.3 tonnes, or over 855 million ounces. At current spot prices, this gold would be worth approximately $804.35 billion and represents about 15.4% of all the gold ever mined.
We continue to urge all Gold World readers to buy and hold both gold and silver in anticipation of significantly higher precious metal prices.How many Federal Reserve Banks are there, and where are they located?
A handful of "bullion banks", led by JP Morgan and Barclay's, are suppressing the price of gold and silver
Western central banks rigging gold market
Gold Price Manipulation Game Has Changed, The Achilles Heel Exposed
Bank retracts gold price-fixing report
Why central banks hold gold
The 2004 Central Bank Gold Agreement
How Much Gold Does the US Have In Its Reserves?
Officially reported gold holdings of the major countries
Lease Rate Spikes Prove (Gold & Silver) Price-Rigging
More documentation of central bank gold rigging -- buried
The Casey Files: The Gold Price-Fixing Conspiracy 1/26/07
GATA: Blanchard & Co.'s Gold Price-Fixing Lawsuit Against Barrick and Morgan Chase
As Good as Gold?
Gold and Silver Forecast 2009
Gold to Soar, U.S. Dollar and Treasury Bonds Crash
Gold Dips as Dollar Strengthens
Gold Producer 'GOLD Fields' Increases Production
The Goldsmiths - the Rich Rule Over the Poor
Goldman Sachs - Ringleader in Rigging the Gold Price
Global Coup d´État: World Governance
Goldman Sachs and JP Morgan - "Leaders of the Gold Selling Pack"
Who Owns the Gold?
Financial Services Modernization Act of 1999
Lord Rothschild fund joins World Gold Council to put £12.5m into BullionVault
Family Fortunes - 1/3rd of the Top 500 Firms are Family-controlled
Baron David de Rothschild, the head of the Rothschild bank. The Rothschilds have helped the British government since financing Wellington’s army to fight the French in 1815.
The Rothschilds: the First Barons of Banking:
Meyer Rothschild died on September 19, 1812. In his will he spelled out specific guidelines that were to be maintained by his descendants:
1) All important posts were to be held by only family members, and only male members were to be involved on the business end. The oldest son of the oldest son was to be the head of the family, unless otherwise agreed upon by the rest of the family, as was the case in 1812, when Nathan was appointed as the patriarch.
2) The family was to intermarry with their own first and second cousins, so their fortune could be kept in the family, and to maintain the appearance of a united financial empire. For example, his son James (Jacob) Meyer married the daughter of another son, Salomon Meyer. This rule became less important in later generations as they refocused family goals and married into other fortunes.
3) Rothschild ordered that there was never to be "any public inventory made by the courts, or otherwise, of my estate ... Also I forbid any legal action and any publication of the value of the inheritance."
January 21, 2009
We get the question: Why was Lehman Brothers allowed to go under? This was a seminal event in U.S. and global finance. It had to be done to take the system down even though Lehman’s owners were ultimate insiders. Why do you think you do not hear a peep out of Wall Street? It is because the key people in the key firms are in on it and taking orders - that is why. In the blink of an eye trillions of dollars were lost.
That amount of money is meaningless when you own the system. You can just create more. It is the power to create and control money and credit that always wins the day. The loss of confidence and trust now worldwide was deliberate. It allowed central banks and governments to totally control their fiscal and monetary systems. Essentially there was no one left to do so. Within the financial community those who understand what is happening dare not say a word or they’ll lose their companies or their lives...
January 21, 2009
Timothy F. Geithner, President Obama’s nominee to be Treasury secretary, testified before the Senate Finance Committee at his confirmation hearing on Wednesday. As president of the New York Federal Reserve since 2003, Mr. Geithner has been a central player in building the vast bailout plans that the government has extended to Wall Street firms and other troubled financial institutions, such as the giant insurer American International Group. After his nomination, it was disclosed that Mr. Geithner failed to pay more than $34,000 in taxes for Social Security and Medicare when he was a senior official at the International Monetary Fund from 2001 to 2003, including a small payment in 2004 after he left...
December 11, 2008
The credit crunch is not nearly as severe as the U.S. authorities appear to believe, and public data actually suggest world credit markets are functioning remarkably well, a report released on December 11, 2008, says.
Governments are pumping masses of public money into the economy across the world because of the difficulties of a few big, vocal banks and industries such as car manufacturing, which would be in difficulty anyway, according to the report published by Celent, a financial services consultancy.
“It’s just stabbing in the dark with trillions of dollars,” Octavio Marenzi, report author and head of Celent, told Reuters in a telephone interview where he questioned the depth of the analysis that preceded numerous fiscal stimulus packages.The report, much of which is based on U.S. Federal Reserve data, challenges a long list of assumptions one by one, arguing that there is indeed a financial crisis but that, on aggregate, the problems of a few are by no means those of the many when it comes to obtaining credit.
“It is startling that many of (Federal Reserve) Chairman (Ben) Bernanke and (Treasury) Secretary (Henry) Paulson’s remarks are not supported or are flatly contradicted by the data provided by the very organizations they lead,” said the report...
January 18, 2009
The incoming Obama administration is considering ways of using government capital to acquire bad assets and unclog the financial system, people familiar with the Obama team's thinking said on Saturday.
The U.S. Federal Reserve, Treasury and Federal Deposit Insurance Corp, a bank regulator, have been in talks about ways to ease a banking crisis that is again deepening -- and a government-run "aggregator bank" is among the options.
Outgoing Treasury Secretary Henry Paulson and FDIC Chairman Sheila Bair said on Friday a government bank to round up bad assets was one of a number of ideas U.S. regulators had been discussing to restore confidence in U.S. banks...
Proposed Aggregator Bank is a Trojan Horse for the New “United States Bank”
January 17, 2009
Eighty-three of the nation's 100 largest corporations, including Citigroup, Bank of America and News Corp., had subsidiaries in offshore tax havens in 2007, and some of the companies received federal bailout funding, a government watchdog said Friday.
The Government Accountability Office released a report that said Bank of America Inc., Citigroup Inc. and Morgan Stanley all had more than 100 units in countries that maintain low or no taxes. The three financial institutions were included in the $700 billion financial bailout approved by Congress.
Insurance giant American International Group Inc., which has received about $150 billion in bailout money, had 18 subsidiaries. JPMorgan Chase & Co. had 50 units and Wells Fargo & Co. had 18; both financial institutions received government bailout money...
January 17, 2009
House Democrats' version of the $825 billion recession rescue package would end billions of dollars in tax breaks the Bush administration quietly gave to banks last fall. Already almost exclusive beneficiaries of a $700 billion Wall Street bailout, banks are largely left out of the House stimulus package that President-elect Barack Obama wants passed quickly through Congress. Those getting financial bailout money wouldn't even be eligible for one of the main business tax breaks aimed at priming the economic pump.
Homebuilders, manufacturers, retailers and low-income families share the bulk of the $275 billion in proposed new tax cuts...
Bank of America Corp. was "rescued" January 16, 2009, by the U.S. government (taxpayers) through a $20 billion bailout (handout) and a guarantee for almost $100 billion of potential losses on toxic assets to cushion the blow from a deteriorating balance sheet at Merrill Lynch & Co., its recently acquired brokerage. The bailout (free money at taxpayers' expense) makes Bank of America the biggest recipient of taxpayer money next to Citigroup as the government pours cash into the nation's banks (so that they can buy other assets for pennies on the dollar to further consolidate wealth into the hands of the elite). The capital (handout) is on top of $25 billion (handout) that Bank of America previously got from the Treasury Department's Troubled Asset Relief Program (TARP) in October.
January 16, 2009
The U.S. government extended $20 billion of new aid to Bank of America Corp hours before both the largest U.S. bank, and the country's third largest, Citigroup, reported multibillion-dollar losses from the ongoing global credit crisis.
Bank of America posted its first quarterly loss in 17 years on the heels of the government's midnight announcement that it would help the bank absorb its January 1 purchase of troubled brokerage Merrill Lynch & Co.
The U.S. Treasury will provide the new aid in exchange for preferred stock, and along with the Federal Reserve and Federal Deposit Insurance Corp, agreed to limit Bank of America's potential losses on $118 billion in tainted assets. Also scrambling to survive huge new losses triggered by the credit crunch was Citigroup, which unveiled plans to split in two and shed troubled assets.
U.S. Treasury Secretary Henry Paulson, on his last full day in office, said a substantial portion of the second half of the government's $700 billion financial rescue fund should be reserved for bank capital programs.Top U.S. policy-makers said they are discussing setting up a government bank that would use federal funds to buy troubled assets from financial institutions to try to stem the crisis. Paulson and FDIC Chairman Sheila Bair both said an "aggregator bank" was one of several ideas U.S. regulators had discussed.
The Treasury said it will lend Chrysler LLC's finance arm $1.5 billion to help it make new car loans as part of a broader program to revive the U.S. auto industry. The Treasury earlier extended a $4 billion loan to Chrysler for its automotive operations and had granted $13.4 billion in operating loans to General Motors Corp...
Video: Has Bank Bailout Gone Too Far?
January 15, 2009
In a solid win for the Obama administration before it even takes office, the Senate on Thursday easily voted down a measure that would have withheld the remaining half of the $700 billion bailout fund. The chamber voted down the resolution of disapproval (S J Res 5) by a vote of 42-52 after a week of intense lobbying by the Obama team as it begins addressing the nation's financial troubles.
Next up is economic stimulus legislation that is expected to be worth more than $800 billion and will challenge the administration's ability to win crucial votes in Congress.
"This was a test of leadership at a time when leadership was desperately needed in our country," said Senate Majority Leader Harry Reid, D-Nev.But the outcome remained in doubt until early Thursday afternoon. Just a few hours before senators cast their votes, leaders on both sides of the aisle received a letter from Obama providing more details about the conditions he proposes to attach to the remaining $350 billion of bailout money. The Republican caucus requested that information during a meeting with Obama advisers Wednesday night.
Several senators credited other parts of the letter with tipping the scales for the vote. Obama also proposed directing a minimum of $50 billion toward foreclosure mitigation, increased transparency in the financial system and stronger reporting requirements for firms receiving bailout funds. The letter, signed by Lawrence H. Summers, Obama's top economic adviser, also placed the new president in the position to approve any transaction proposed by the Treasury Department.
"[Obama] has to sign off on it," said Iowa Democrat Tom Harkin, who voted against the resolution. "We know where the buck stops."Obama representatives spent the last week lobbying hard for the release of the next $350 billion from the unpopular Troubled Asset Relief Program (TARP) created last October (PL 110-343). But as of Wednesday night, Republicans were still searching for guarantees that the money would not go to industries outside the financial sector. The letter said the administration intends to use TARP funds only to aid financial institutions. Automakers would receive more funds only to guarantee long-term viability...
Senate Allows Release of Remaining Financial Bailout Funds
Republican senators have questioned the need to release the second half of the TARP money, citing the lack of a pressing crisis. Democrats cited reports that Bank of America and Citigroup are in need of billions more in TARP funds as a way to refute those claims...
January 13, 2009
Citigroup Inc agreed to merge its Smith Barney brokerage with Morgan Stanley's wealth management unit, a big step in the possible dismantling of what was once the world's largest bank. The joint venture will create the largest U.S. brokerage, known as Morgan Stanley Smith Barney, with more than 20,000 brokers and $1.7 trillion in client assets. The brokerage force will surpass Bank of America Corp., which bought former No. 1 Merrill Lynch on January 1.
Morgan Stanley will pay Citigroup $2.7 billion in cash for an initial 51 percent stake in the venture that could increase to 100 percent after five years, the companies said on Tuesday.
Citigroup, meanwhile, is expected to shed "non-core" businesses and may announce plans on January 22, a person familiar with the matter said, the same day it is expected to post a big fourth-quarter loss...
Janunary 11, 2009
Morgan Stanley could pay $2 billion to $3 billion or more for a controlling stake in Citigroup Inc.'s Smith Barney retail brokerage business, two people familiar with the matter said. The cash would be a big boon for Citigroup, which is under tremendous pressure from the U.S. government to shore up its balance sheet after taking $45 billion of government capital in October and November, they said. The bank is considering multiple options in addition to the Morgan Stanley deal...
The Associated Press
December 31, 2008
Government officials overseeing a $700 billion bailout have acknowledged difficulties tracking the money and assessing the program's effectiveness. The information was contained in a document, released Wednesday, of a Dec. 10 meeting of the Financial Stability Oversight Board. The panel, headed by Federal Reserve Chairman Ben Bernanke, includes Treasury Secretary Henry Paulson and Securities and Exchange Commission chief Christopher Cox.
While offering no details, the document also mentioned that officials at that meeting discussed "potential methods" of using the bailout program to help curb home foreclosures and ease problems in the housing market. More broadly, the officials discussed "the difficulty of isolating the effects" of the bailout program "given the variety of policy actions taken by the U.S. government to support financial stability and promote economic growth."
The officials also noted the "difficulties associated with monitoring the use of specific funds" provided to individual financial institutions, according to the document...
December 10, 2008
The Treasury Department has invested about $197 billion of the bailout money. About $49 billion more should soon be out the door (see our running tally here). Are banks boosting lending? Are they hording it? Are they using it to gobble up smaller banks?
Who knows. The Treasury Department certainly doesn’t have much of an idea about how that money’s being spent. The reason, as both the Government Accountability Office and a new report (PDF) today from the congressional oversight panel point out, is because Treasury isn’t tracking it. And it remains unclear whether Treasury thinks it ought to...
December 29, 2008
The U.S. Treasury said it will purchase a $5 billion stake in GMAC LLC, the financing arm of General Motors Corp. The Treasury will purchase a $5 billion stake in GMAC and lend $1 billion to GM so the automaker can contribute to the lender’s reorganization as a bank holding company, according to a statement issued yesterday. The loan is in addition to $13.4 billion the Treasury agreed earlier this month to lend to GM and Chrysler LLC...
December 24, 2008
The Federal Reserve gave an early Christmas present to General Motors' finance arm, allowing the ailing provider of auto loans to qualify for the government's $700 billion rescue fund.
The Fed announced late Wednesday that it had approved GMAC Financial Services' request to become a bank holding company. That designation makes GMAC eligible to receive a portion of the bailout fund and get emergency loans directly from the Fed. The plan also significantly reduces the ownership stakes of GM and Cerberus Capital Management LP, in GMAC.
Analysts had speculated that without financial help, GMAC would have had to file for bankruptcy protection or shut down, dealing a serious blow to GM's own chances for survival. The Fed cited "emergency conditions" in justifying its decision.
Before the Fed's decision, GMAC was facing a crucial deadline Friday to complete a deal with its bondholders that would allow it to exchange debt for equity. GMAC was struggling to convince investors to provide the capital that it desperately needed to win approval to become a bank holding company. The U.S. central bank acted before the debt deal deadline, which GMAC says still stands and will expire on Friday.
The Fed's move to provide government aid to one of the nation's biggest suppliers of auto loans was just the latest extension of the federal bailout program, initially designed to shore up ailing banks. As the credit crisis kept ballooning, the program expanded to include insurers, credit card companies, and the automakers themselves. Just last week, President George W. Bush ordered an emergency bailout of the industry, offering $17.4 billion in rescue loans, and citing imminent danger to the national economy.
"To make the auto package complete, they had to do something with the financing," said David Cole, chairman of the Center for Automotive Research. "It's really tied to the whole survival of the industry..."
December 23, 3008
The Federal Reserve said Monday it has approved commercial financial services firm CIT Group as a bank holding company. "In light of the unusual and exigent circumstances affecting the financial markets, and all other facts and circumstances, the (Federal Reserve) Board has determined that emergency conditions exist that justify expeditious action on this proposal," the U.S. central bank said in a statement.
CIT, with total consolidated assets of approximately 80.8 billion dollars, provides a variety of commercial financing and leasing products and services. The Fed's decision will allow the New York-based company to have permanent access to the central bank's emergency loan window.
Both Goldman and Morgan, financial institutions owned by the global elite, are reporting record losses for the fourth quarter of 2008; however, both companies were able to post a full-year profit thanks to earnings in each of the prior quarters. Despite posting profits for the first three quarters, the companies received $10 billion each from the government's Troubled Asset Relief Program (Morgan Stanley is a spinoff of JPMorgan, which received $25 billion in TARP money). They were made bank holding companies on September 22, 2008, just in time to be eligible for TARP money.
As bank holding companies, they have additional access to the federal taxpayers' $700 billion rescue plan, which will allow them to borrow at the Federal Reserve's discount window and make it easier for them to get sources of funding. Translation: These corporate behemoths that were chiefly responsible for the mess, which now threatens to plunge the globe into what even President George Bush openly speculates could be a calamity equaling, perhaps exceeding, the Great Depression, got their bills paid through tax-funded, government bail-outs.
Goldman and Morgan are bullion banks, the Gold Cartel’s hit men, trading the gold market from the short side and bombing the market in coordinated anti-trust fashion at the beck and call of our government, making a great deal of money in the process … as you have all witnessed the past couple of months.
Note that Treasury Secretary Henry Paulson is former CEO of Goldman Sachs.
Dow Jones Newswires
December 17, 2008
Morgan Stanley said Wednesday it lost $2.37 billion during its fiscal fourth quarter as it took a range of losses on assets amid one of the roughest quarters for investment banks. The New York-based firm, which is aggressively building on its new status as a bank holding company, lost $2.34 per share for the quarter ended Nov. 30. It lost $3.61 billion, or $3.61 per share, during the year-ago period when it took a $9.4 billion write-down on mortgage-related assets as the housing crisis began to spiral downward.
Analysts polled by Thomson Reuters, on average, forecast a loss of 34 cents per share. Analysts have been slashing their estimates for the past several weeks amid the ongoing market turmoil. Only a month ago, they were estimating Morgan Stanley would earn 30 cents per share. Over the past year amid the tumult, analyst estimates have often varied wildly from actual results because of uncertainty surrounding banks' holdings and the value of some illiquid assets.
Shares of Morgan Stanley fell $1.07, or 6.6 percent, to $15.06 in late morning trading. Morgan Stanley took a wide range of charges and losses during the quarter as the value of many assets held by banks plummeted amid the ongoing turmoil. Its fixed income division reported losses of just $1.2 billion during the quarter, compared with losses of $7.9 billion last year. The most recent quarter's loss was smaller because mortgage-related losses shrunk and commodities trading revenue increased with growing volatility in the sector.
Morgan Stanley took an additional $1.1 billion in other sales and trading losses tied to acquisition financing and write-downs on securities held by subsidiary banks. Another $1.8 billion was lost on investments in real estate funds, principal investments and investments tied to benefits for employee deferred compensation.
Morgan Stanley's quarterly loss comes just a day after competitor Goldman Sachs Group Inc. reported its first quarterly loss since it went public in 1999. Goldman lost a wider-than-expected $2.29 billion, or $4.97 per share. Like Goldman, though, Morgan Stanley was able to post a full-year profit thanks to earnings in each of the three prior quarters. Morgan Stanley earned $1.59 billion, or $1.45 per share, during fiscal 2008.
The pair's fourth-quarter losses came during a period when the investment banking sector nearly collapsed in September as Lehman Brothers Holdings Inc. filed for bankruptcy protection and Merrill Lynch & Co. sold itself, leaving only Morgan Stanley and Goldman as independent firms.
Both Morgan Stanley and Goldman quickly gained approval to (September 22, 2008) become bank holding companies in an effort to remain independent.
"The rate of change in the global financial system is extraordinary. Now the last of the Wall Street investment banking heavyweights, Goldman Sachs and Morgan Stanley, are about to flee the shadow banking system (and become retail banks). The Federal Reserve Board last night approved applications from the two remaining Wall Street investment banks to become bank holding companies. Their decision to seek refuge within the traditional banking system follows the forced merger of Bear Stearns into JPMorgan Chase, the collapse of Lehman Brothers and the proposed takeover of Merrill Lynch by Bank of America. The change in status will bring the two investment banks least-ravaged by the credit crisis within the supervisory orbit of the Federal Reserve Board and give them permanent access to the Fed’s discount window and the liquidity it provides. It would also enable them to attract retail deposits and reduce the volatility and risk associated with their reliance on markets for funding." - Stephen Bartholomeusz, 'The End of Shadow Banking', Business Spectator, September 22, 2008
M. Stanley Buys $217 Million Stake in Vietnam's State Oil Firm (December 2007)
JP Morgan Earmarks $750 Million for Asia Private Equity (February 2008)
Goldman Sachs Runs the U.S. Economy (September 2008)
Fed Makes Goldman Sachs and Morgan Stanley Bank Holding Companies (September 22, 2008)
Hong Kong Appoints Morgan Stanley Asia Chief to Crisis Group (October 2008
Morgan Stanley Puts $37.5 Million in First India Private Equity Deal (December 2008)
Goldman, M.Stanley, Bain to Buy into China Film Firm (December 2008)
Goldman Sachs' Link to the Fed, Treasury, Bank of England
September 23, 2008
Goldman Sachs Group Inc. and Morgan Stanley may be among the biggest beneficiaries of the $700 billion U.S. plan to buy assets from financial companies while many banks see limited aid, according to Bank of America Corp.
"Its benefits, in its current form, will be largely limited to investment banks and other banks that have aggressively written down the value of their holdings and have already recognized the attendant capital impairment," Jeffrey Rosenberg, Bank of America's head of credit strategy research, wrote in a report dated yesterday, without identifying particular banks.
December 17, 2008
The Federal Deposit Insurance Corp. may be implementing what is effectively a ban on new banks in metro Atlanta and other distressed areas nationwide, as the financial industry’s and broader economy’s deterioration accelerates.
The FDIC, the nation’s bank deposit guarantor, has increased scrutiny of new banks applying for deposit insurance in select areas of the Southeast and other regions, including Western states, industry insiders said. The new reviews, insiders said, make approval difficult in practice, if not impossible.
“It is a de facto ban,” said Stephen Johnson, CEO of Alpharetta-based consultant T. Stephen Johnson & Associates Inc. “I’ve never seen a time this difficult to get a charter.”Johnson is a longtime bank organizer and consultant in Atlanta, raising $500 million for various bank investments during his two-decade career.
Spurring the new rules are worsening industry performance and an increasing skepticism that new banks can succeed in the same places where others have failed this year, those familiar with the process said.
However, Mark Schmidt, the FDIC’s Atlanta regional director, adamantly denied that a ban, either formal or informal, is in place. He said the FDIC is continuing to review new bank applications, and expects some to receive approval. Schmidt did acknowledge deposit insurance approval is harder to get, and the FDIC is becoming more discriminating in who it approves nationwide, including in metro Atlanta...
December 12, 2008
Goldman Sachs will accelerate investment in China as opposition to foreign investment eases and the need for funding rises, an executive said. Kevin Zhang, a managing director for Goldman Sachs (Asia), said he was focusing on opportunities in China's growing consumer sector as well as renewable energy.
"We will continue to accelerate our pace of investment in China," Mr Zhang told reporters. "In the 15 years that I have been with Goldman, this is possibly the best investment environment I have seen," he said.The executive did not provide any value for Goldman's planned investments.
Mr Zhang was speaking on the sidelines of an event marking a near $US100 million joint investment by Goldman and China's CDH Ventures in Himin Solar Energy Group, the country's top maker of solar water heaters...
Earlier this year, US buyout giant Carlyle Group finally walked away from three years of negotiations to buy Xugong, the country's top construction equipment maker, after running into bureaucratic obstacles. The Xugong deal was seen as strategically sensitive by some Chinese officials and businessmen.
December 5, 2008
Shareholders approved Bank of America Corp's takeover of Merrill Lynch & Co, a transaction fraught with risk but one that will create a banking giant with a leading position in almost every major area of the financial system.
Bank of America will surpass JPMorgan Chase & Co and Citigroup Inc as the largest US bank, with $2.7 trillion of assets. Its brokerage, credit card, investment banking, mortgage and wealth management operations, plus its deposit base, will be the nation's largest or close to it.
The all-stock purchase valued Merrill on Thursday at $19.7 billion, down from an original $50 billion on Sept. 15 because shares of Charlotte, North Carolina-based Bank of America have slid. Shareholders of both companies had to approve the transaction, which is expected to close this month...
The takeover ends 94 years of independence for Merrill, in a year when Wall Street's top investment banks all met their demise or changed their stripes. Bear Stearns Cos was acquired by JPMorgan, Lehman Brothers Holdings Inc filed for bankruptcy, and Goldman Sachs Group Inc and Morgan Stanley converted into bank holding companies...
November 21, 2008
The inability of the current investment banking model to withstand the ongoing liquidity crisis has forced many investment bankers out of business or those few that have survived to get by on reduced or no bonuses this year. However, as lenders globally continue to write off and provision for a significant volume of soured loans, U.K.’s Rothschild group, one of the world’s leading investment banking organizations, has posted record results. The bank has been able to maintain its very strong performance again this year, despite the credit crunch, economic slowdown and the threat of a U.S. recession, with investment banking and corporate banking businesses both producing record revenues.
The bank, according to Timesonline -- reported a 31%, 459 million euro, improvement in profits. In addition, record results from the organization’s advisory and private banking operations enabled the bank to pay record bonuses to its 2,700 people in June.
The bank’s chairman David de Rothschild, following unconventional investment banking strategies, has steered his organization clear of proprietary trading, prime broking and other activities that have devastated rivals as a result of an environment where asset prices keep falling while liabilities remain fixed. The bank however, still wrote off 96 million euro because of souring loans. At some point, considering the global financial system is galloping off a cliff - today’s difficulties in investment banking will prompt an overhaul of the system favoring those players that have shown themselves to be the most cautious during this cycle.
Alongside its pro-forma group-wide results, Rothschild also unveiled that it had entered into a co-operation agreement in the field of M&A and Equity Capital Markets advisory in the food and agriculture sectors on a global basis with Netherlands’ Rabobank, a premier global financial institution providing financing and other services to food and agri business clients around the world.
As part of the deal, notes Timesonline, Rabobank is buying a 7.5% stake in one of the key holding companies in the Rothschild empire, Rothschild Continuation Holdings, which owns the N M Rothschild business in the U.K.
Rabobank becomes the second biggest investor outside the Rothschild family after the trading group Jardine Matheson, which owns 20%. This is Rothschild’s second joint venture with a Dutch bank.
Rothschild advisory clients include Rio Tinto (RTP), which is fighting a hostile bid from BHP, Billiton (BHP), and British Energy in its deal with France’s power giant EDF, a deal that gives the French company a dominant role in the British nuclear industry.
November 18, 2008
Dow Jones reported that Bank of America Corp. bought an additional 8.4 percent stake in China Construction Bank Corp. for $7 billion, so it now holds 19.13 percent of China Construction Bank with an intent to exercise an option to buy more shares in the bank.
Bank of America Buys Stake in China Construction Bank Corp. (June 2005)
November 15, 2008
The financial crisis is deepening, with the risk of seriously disrupting the system of international payments. This crisis is far more serious than the Great Depression. All major sectors of the global economy are affected. Recent reports suggest that the system of Letters of Credit as well as international shipping, which constitute the lifeline of the international trading system, are potentially in jeopardy.
The proposed bank "bailout" under the so-called Troubled Asset Relief Program (TARP) is not a "solution" to the crisis but the "cause" of further collapse.
The "bailout" contributes to a further process of destabilization of the financial architecture. It transfers large amounts of public money, at taxpayers expense, into the hands of private financiers. It leads to a spiraling public debt and an unprecedented centralization of banking power. Moreover, the bailout money is used by the financial giants to secure corporate acquisitions both in the financial sector and the real economy. In turn, this unprecedented concentration of financial power spearheads entire sectors of industry and the services economy into bankruptcy, leading to the layoff of tens of thousands of workers.
The upper spheres of Wall Street overshadow the real economy. The accumulation of large amounts of money wealth by a handful of Wall Street conglomerates and their associated hedge funds is reinvested in the acquisition of real assets. Paper wealth is transformed into the ownership and control of real productive assets, including industry, services, natural resources, infrastructure, etc.
Among the companies on the verge of bankruptcy are some highly lucrative and profitable operations. The important question: who takes over the ownership of bankrupt giant industrial corporations?
Bankruptcies and foreclosures are a money-spinning operation for the financial giants. With the collapse in stock market values, listed companies experience a major collapse of the price of their stock, which immediately affects their creditworthiness and their ability to borrow and/ or to renegotiate debts ( which are based on the quoted value of their assets).
The institutional speculators, the hedge funds, et al have cashed in on their windfall loot. They trigger the collapse of listed companies through short selling and other speculative operations. They then cash in on their large scale speculative gains.
According to a report in the Financial Times, there is evidence that the plunge of the US automobile industry was in part the result of manipulation:
"General Motors and Ford lost 31 per cent to $3.01 and 10.9 per cent to $1.80 despite hopes that Washington may save the industry from the brink of collapse. The fall came after Deutsche Bank set a price target of zero on GM."The financiers are on a shopping-spree. America’s Forbes 400 billionaires are waiting in limbo. Once they have consolidated their position in the banking industry, the financial giants including JP Morgan Chase, Bank of America, et al will use their windfall money gains and bailout money provided under TARP, to further extend their control over the real economy.
The next step consists in transforming liquid assets, namely money paper wealth, into the acquisition of real economy assets.
October 28, 2008
The $700 billion bailout/rescue funds were supposed to help banks stay liquid. As a result, they would presumably continue lending money, helping businesses operate and stimulate the economy. Consumers would also benefit because they would keep their jobs and be able to get loans to buy stuff.
Alas, that's not how all the banks see it. According to the Consumerist, Chase talks about using their $25 billion "as a war chest to buy other banks, and hoard it in case times get tougher."
Of course, if nobody's lending, we haven't solved the problem. This means that either the banks aren't interested in helping, or they don't think the problem is very big and it's just an opportunity to snatch up banks at a bargain.
October 27, 2008
The Treasury's $700 billion program to rescue the financial services industry, which began with a three-page memo six weeks ago, is evolving yet again. When the fleshed-out proposal was passed by Congress and signed into law Oct. 3, Treasury Secretary Hank Paulson's plan was to use the money to buy "toxic" mortgage-related securities weighing down banks and clogging the flow of credit to business and consumers. Then two weeks ago the Bush administration changed course and decided to invest $125 billion directly into some of the nation's biggest banks to restore confidence into the financial system and get capital flowing more quickly.
Now the Treasury is pouring another $125 billion into small and medium-sized banks, but some analysts contend the program has been transformed to a much more grandiose undertaking that will essentially weed out the weak banks from the strong.
Several of the banks that have received preliminary approval from the Treasury for investments have said they plan to use some of the money for acquisitions, including SunTrust and Regions Financial Corp., both of which expect to receive about $3.5 billion apiece. Even smaller institutions, like Seattle-based Washington Federal Inc., which announced a $200 million commitment from the government, plan to deploy some of the money to expand its retail franchise through acquisitions.
Many analysts believe the investments are being doled out to the strongest financial institutions, with the aim of spurring consolidation among banks and protecting the government from having to salvage some of the industry's weakest players. "It appears to us that these 'gifted' banks will receive the capital whether they need it or not, as they will likely do the cleanup on behalf of the Fed and the Treasury by acquiring weaker institutions," wrote Morgan Keegan & Co. analyst Robert Patten in a research note late Friday.
In what was the first instance of a bank using its investment from the government to make an acquisition, Pittsburgh-based PNC Financial Services Group Inc. said Friday it plans to acquire National City Corp. for $5.58 billion. PNC said it had received $7.7 billion in cash through selling stock to the government under the program.
Fox-Pitt Kelton analyst Andrew Marquardt believes a distressed sale was National City's only option after it became apparent that the Cleveland-based bank would not receive approval to participate in the government's program. "Our understanding is that a key reason for National City to sell in the same week that it reported third-quarter results was that National City management became aware that it was highly unlikely to be able to participate in the TARP capital purchase program," Marquardt wrote in a note to clients.
Critics of the program contend that the government will in effect wind up handpicking which banks win and which lose.
Assistant Treasury Secretary David Nason said Monday that the administration's major aim is to stabilize the financial system and that stronger institutions will be in a better position to make loans and support the overall economy. The emphasis on acquisitions makes sense, said Jason O'Donnell, senior research analyst at Boenning & Scattergood, but there are also significant ramifications.
"While on the whole it's positive in terms of its implications for improving capital, improving lending," O'Donnell said, "it is likely to have the unintended consequence of separating the winners and losers, which is normally a process that the free market is engaged in."And while further consolidation could very well lead to improved lending, it may take longer to achieve, said John Jay, senior analyst at Aite Group, a Boston-based financial services research firm. Meanwhile, the smaller institutions that don't get any government support will wind up walking around with a big target on their back, he said.
"If they're not given any type of government help, that is a pretty explicit statement on where they stand," Jay said.