Serpo
30th August 2011, 04:06 PM
Q: Do you think that Venezuela’s repatriation of its $11 billion in gold (http://online.wsj.com/article/SB10001424053111903392904576512961180570694.html) has the potential to start a run on the gold banks (http://www.zerohedge.com/news/chavez-pulls-venezuelas-gold-jp-morgan-great-scramble-physical-starting)?
A: Yes, absolutely. That will kick in further as the financial discord increases in Europe and the United States because nothing is improving. If anything, things are getting worse.
http://resourceclips.com/wp-content/feature_images/chavez_lg.jpg
Q: Hugo Chavez wants his gold. Is the gold there for him to get?
A: That’s a good question. This is what the GATA (http://www.gata.org/) story is, part of it anyway. The World Gold Council said the central banks have 20,000 or 29,000 tonnes in their vault; we say they have less than half of that. The rest has been lent out or used in swap operations, and it’s gone. Morgan Stanley was fined $2.5 million dollars a few years back for saying they were storing silver for clients when they weren’t.
Q: What happens if Venezuela is told it can’t have its gold?
A: You’ll have a complete panic. What’s the point of owning gold, if you can’t get it? And what was the Bank of England doing with Venezuela’s gold in the first place? I haven’t heard anybody ask that question. We know a lot of foreign gold is held here in the United States. GATA (http://www.gata.org/) sued the Federal Reserve, and we won a partial victory when they gave us nearly $3,000 dollars in expenses. We have a copy of the cheque. Basically, the United Sates says that there’s 8133.5 tonnes of gold just sitting there in US vaults that has never been mobilized. Under the Freedom of Information Act we asked for all these documents about gold swap operations and other things, and they wouldn’t release it. They said it was confidential, and the public isn’t allowed to know what’s going on. This doesn’t pass any type of smell test.
Q: How is it possible to ascertain the true price of gold, if we don’t know how much gold exists?
A: That’s a big question. Nobody knows whether the gold is encumbered or not. The United States can’t sell gold except by Act of Congress, but there’s nothing that says they couldn’t swap gold with Germany for example and lease it out. That’s what we’re trying to find out with of Freedom of Information requests, what has really happened to the US gold. As my colleague Chris Powell says, the United States would rather divulge its nuclear secrets than its gold secrets.
Q: Gold is supposedly leveraged at 100:1, which is higher than any of the banks. This seems wholly unsustainable.
A: Correct, and that’s what the fear is. Maybe that’s what Venezuela is sensing, and they like to make trouble with the United States. We don’t know what’s going on behind the scenes, and it is an unstable situation, as is silver. Silver is a mess, but JP Morgan continues to do what they’re doing. I think the silver market is going to blow up one of these days. It started to and they tackled it with margin increases, so it’s taking its time to recover, but boy, it’s going to go nuts.
Q: What do you think will be the results of Chavez’s nationalization of Venezuela’s gold mining industry (http://www.huffingtonpost.com/2011/08/24/venezuela-gold-industry-huge-chavez_n_934968.html)?
A: Their gold mining industry will fall apart. Supply will go down, so it’s bullish from that standpoint. But it’s a horrible thing to do. I think it’s going to backfire on them.
Q: It has become received wisdom that the rise in the price of gold is directly attributable to the belief that the world economic system is unstable. Do you think that these shorting moves and the continued uncertainty about how much physical gold exists suggests that the governments of the world do not want people to have the opportunity to safeguard their assets by investing in gold?
A: Gold is seen as a barometer. The establishment does not want to let the gold price go where it should, and that’s what GATA (http://www.gata.org/) has been all about all these years. The problem for these guys, the gold cartel as we call them, is that they’re running out of available central bank gold to meet physical market demand.
Q: If the gold cartel collapses, which companies and institutions will suffer the most?
A: Hopefully, JP Morgan: that would make my day. As most people know it’s the Fed’s bank, and they’ve been complicit in this thing the entire time. HSBC is a big gold short now. When we first started, the shorters were Deutsche Bank, Chase Bank, Morgan and Goldman Sachs. Now, Goldman Sachs stopped doing this years ago. Rothschild Bank got out of the fixing business in 2004, I believe, but for hundreds of years they were part of the gold fix operation in London. They knew what was coming, and they didn’t want to have any part of the short side.
Q: If the shortage of physical gold becomes critical, do you think there’s a possibility the governments might step in directly to prevent people from claiming their gold?
A: It’s possible. My opinion, maybe it’s a minority one, but if the United States did something like this the rest of the world would laugh at us and buy more gold. The Russians and the Chinese aren’t going to give a rat’s butt what the United States says about gold; almost no Americans own it. I don’t think they can do anything about it, because as our situation gets worse, more and more investors are going to want to own gold. The Chinese, the Vietnamese and the Indians are going to be buying like crazy on all these dips. If GATA (http://www.gata.org/) is correct, and we’ve been correct so far, they don’t have the ammunition to do anything about it. Why shouldn’t they let the free market work? If gold kept pace with inflation, it would be $2,400 to $2,500 an ounce. If they allowed it to trade freely, that’s where it would be, and that’s where it’s going.
http://resourceclips.com/2011/08/29/bill-murphy-on-venezuelas-gold/
Chavez expects gold to be back in Venezuela in 'weeks'
http://www.24hgold.com/english/news-gold-silver-Chavez-expects-gold-to-be-back-in-Venezuela-in-%20weeks%20.aspx?langue=en&article=3611453890G10020
A: Yes, absolutely. That will kick in further as the financial discord increases in Europe and the United States because nothing is improving. If anything, things are getting worse.
http://resourceclips.com/wp-content/feature_images/chavez_lg.jpg
Q: Hugo Chavez wants his gold. Is the gold there for him to get?
A: That’s a good question. This is what the GATA (http://www.gata.org/) story is, part of it anyway. The World Gold Council said the central banks have 20,000 or 29,000 tonnes in their vault; we say they have less than half of that. The rest has been lent out or used in swap operations, and it’s gone. Morgan Stanley was fined $2.5 million dollars a few years back for saying they were storing silver for clients when they weren’t.
Q: What happens if Venezuela is told it can’t have its gold?
A: You’ll have a complete panic. What’s the point of owning gold, if you can’t get it? And what was the Bank of England doing with Venezuela’s gold in the first place? I haven’t heard anybody ask that question. We know a lot of foreign gold is held here in the United States. GATA (http://www.gata.org/) sued the Federal Reserve, and we won a partial victory when they gave us nearly $3,000 dollars in expenses. We have a copy of the cheque. Basically, the United Sates says that there’s 8133.5 tonnes of gold just sitting there in US vaults that has never been mobilized. Under the Freedom of Information Act we asked for all these documents about gold swap operations and other things, and they wouldn’t release it. They said it was confidential, and the public isn’t allowed to know what’s going on. This doesn’t pass any type of smell test.
Q: How is it possible to ascertain the true price of gold, if we don’t know how much gold exists?
A: That’s a big question. Nobody knows whether the gold is encumbered or not. The United States can’t sell gold except by Act of Congress, but there’s nothing that says they couldn’t swap gold with Germany for example and lease it out. That’s what we’re trying to find out with of Freedom of Information requests, what has really happened to the US gold. As my colleague Chris Powell says, the United States would rather divulge its nuclear secrets than its gold secrets.
Q: Gold is supposedly leveraged at 100:1, which is higher than any of the banks. This seems wholly unsustainable.
A: Correct, and that’s what the fear is. Maybe that’s what Venezuela is sensing, and they like to make trouble with the United States. We don’t know what’s going on behind the scenes, and it is an unstable situation, as is silver. Silver is a mess, but JP Morgan continues to do what they’re doing. I think the silver market is going to blow up one of these days. It started to and they tackled it with margin increases, so it’s taking its time to recover, but boy, it’s going to go nuts.
Q: What do you think will be the results of Chavez’s nationalization of Venezuela’s gold mining industry (http://www.huffingtonpost.com/2011/08/24/venezuela-gold-industry-huge-chavez_n_934968.html)?
A: Their gold mining industry will fall apart. Supply will go down, so it’s bullish from that standpoint. But it’s a horrible thing to do. I think it’s going to backfire on them.
Q: It has become received wisdom that the rise in the price of gold is directly attributable to the belief that the world economic system is unstable. Do you think that these shorting moves and the continued uncertainty about how much physical gold exists suggests that the governments of the world do not want people to have the opportunity to safeguard their assets by investing in gold?
A: Gold is seen as a barometer. The establishment does not want to let the gold price go where it should, and that’s what GATA (http://www.gata.org/) has been all about all these years. The problem for these guys, the gold cartel as we call them, is that they’re running out of available central bank gold to meet physical market demand.
Q: If the gold cartel collapses, which companies and institutions will suffer the most?
A: Hopefully, JP Morgan: that would make my day. As most people know it’s the Fed’s bank, and they’ve been complicit in this thing the entire time. HSBC is a big gold short now. When we first started, the shorters were Deutsche Bank, Chase Bank, Morgan and Goldman Sachs. Now, Goldman Sachs stopped doing this years ago. Rothschild Bank got out of the fixing business in 2004, I believe, but for hundreds of years they were part of the gold fix operation in London. They knew what was coming, and they didn’t want to have any part of the short side.
Q: If the shortage of physical gold becomes critical, do you think there’s a possibility the governments might step in directly to prevent people from claiming their gold?
A: It’s possible. My opinion, maybe it’s a minority one, but if the United States did something like this the rest of the world would laugh at us and buy more gold. The Russians and the Chinese aren’t going to give a rat’s butt what the United States says about gold; almost no Americans own it. I don’t think they can do anything about it, because as our situation gets worse, more and more investors are going to want to own gold. The Chinese, the Vietnamese and the Indians are going to be buying like crazy on all these dips. If GATA (http://www.gata.org/) is correct, and we’ve been correct so far, they don’t have the ammunition to do anything about it. Why shouldn’t they let the free market work? If gold kept pace with inflation, it would be $2,400 to $2,500 an ounce. If they allowed it to trade freely, that’s where it would be, and that’s where it’s going.
http://resourceclips.com/2011/08/29/bill-murphy-on-venezuelas-gold/
Chavez expects gold to be back in Venezuela in 'weeks'
http://www.24hgold.com/english/news-gold-silver-Chavez-expects-gold-to-be-back-in-Venezuela-in-%20weeks%20.aspx?langue=en&article=3611453890G10020