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what I've been reading - December 2009 2nd Week

This is why you shouldn't keep all your savings in cash or in a bank:

From Bob Chapman's The International Forecaster 2009.12.05:

How could they exploit those accounting rules? Let's suppose that Central Bank A wants to decorate its balance sheet by building up its gold reserves and purchases 10 tons of gold in the gold market (perhaps from a producer, another central bank or a bullion bank) and then immediately leases the same 10 tons of gold to Bullion Bank A, which then sells the gold to Central Bank B, which then leases the gold to Bullion Bank B, which then sells the gold to a jewelry corporation, which turns out to be nothing more than a front company for an Illuminist crime family's gold accumulation schemes. They make a few pieces of jewelry and then send the rest to the smelters to make special bars for the Illuminist crime family. So now both Central Bank A and Central Bank B show the same 10 tons of gold as reserves on their books, even though neither one has possession of the gold, which has been sold into the Illuminist's private stash via its front company, which sale the GFMS treats as a jewelry sale when it was really for investment purposes. The chain of central and bullion banks that purchase, then lease, then sell, then lease again, then sell again could theoretically go on ad infinitum until a non-bank party like the "jewelry company" buys the gold and takes it off the market. You could say that the gold has been "ping-ponged."

(Note: We'll discuss the lease issues a little further down).

Now let's change the example a little. Let's say that the Fed gave Deutsche Bank a gold swap IOU for 10 tons of Fort Knox US gold in exchange for its cash value, and that Deutsche Bank sold 10 tons of their own gold to Central Bank A at the request of the Fed. This swap arrangement is used so no one knows that it is really the Fed that is dumping gold on the market instead of Deutsche Bank. Note that Deutsche Bank's cash position has not changed, as the money it gave the Fed for the gold IOU has been replaced by the proceeds of sale, or perhaps the proceeds from the bullion sale were used to pay the Fed for the gold IOU. In any case, the Fed and Treasury Department still carry the gold bullion backing the 10 ton gold IOU to Deutsche Bank on their books because the gold has been swapped instead of sold (yet another fiction) with a promise to redeem the gold IOU given to Deutsche Bank in the future, or to cough up the gold instead, while Deutsche Bank shows no change in its gold reserves because the Fed IOU for 10 tons of paper gold is now carried instead of its 10 tons of physical gold bullion which was sold to Central Bank A. Deutsche Bank can get away with this because IMF rules do not require central banks to distinguish between physical gold and paper gold on their balance sheets, but allow them to carry both types of gold reserves as one line item. Note that as per our example, the gold is now in an Illuminist crime family's coffers after being "ping-ponged."

Fascinating? Click "Read More" to read the next 4 paragraphs.

So let's take a look at the end result, shall we? We have the Fed/Treasury, Deutsche Bank, Central Bank A, Central Bank B and the Illuminist crime family (surreptitiously) all showing ten tons of gold on their books, or a total of 50 tons, but there is only twenty tons of actual bullion backing up these balance sheet assets. The Fed has 10 tons, and the Illuminist crime family has 10 tons. The rest have nothing but bogus paper promises. Now what if the gold that the Fed swapped with Deutsche Bank has been salted with tungsten? What if the Rockefellers stole it? What if it was leased and then sold through the London Gold Pool and has never been removed from the Treasury's books which have not been audited (and we mean a real audit, not a piecemeal pseudo-audit like the Never Ending Audit of 1975-1981)? Are you starting to see the potential catastrophe that has been developing for decades?

And there is no way to verify any of these machinations because none of the central banks ever get audited -until now. Do you see why we need to audit the Fed immediately? Do you think we could potentially be starting an audit run by citizens on their central banks all around the world? When they get a load of our results from the Fed audit, you can bet your Bippy they will! Let the audit wars begin!!! It's time to go total berserkers on the Illuminati!!!

Now let's discuss the leases as promised. You might ask: Doesn't Bullion Bank A have to return the gold to Central Bank A, and doesn't Bullion Bank B have to return that same gold to Central Bank B, pursuant to the terms of their leases? Not really. Of course, either of the bullion banks could cover their short sale of the gold by hedging their position with producer gold from a company like Barrick whose production they agreed to purchase at a fixed price, but we don't believe that enough gold was produced to cover all these gold machinations. As well, the producers are buying out their hedges en masse for cash as the price of gold climbs. Alternatively, the bullion banks could also lease gold from yet another central bank and take care of their prior lease while simultaneously creating a new lease in what amounts to a perpetual round robin of fraud that is very much like a Ponzi scheme, where one central bank gets its gold back while another shows the same gold in its paper gold reserves. Obviously, they can't both own the same gold at the same time. These frauds are made possible by the legal fiction which allows the sale of an asset by a lessee without the knowledge and consent of the lessor/owner. The same legal fiction holds true for the shorting of stocks. This is not true for any other assets on the planet. Try selling your leased vehicle, or your leased home or apartment, without the consent of the owners, and see what happens. You won't be able to close the deal, and you might go to jail.

These legal fictions are deceitful Illuminist devices which in reality are both fraudulent and fraud-enabling, which is evident from their perpetual abuse in bilking the public. Also note that if the leases were instead settled in cash, the central banks would have to clear the gold off their books, much to the horror of their depositors. They must avoid doing this as long as possible to stop their depositors from doing a run on the bank out of panic that its reserves are not covered by any physical gold. So instead, they simply renew the gold leases in perpetuity. If the bullion banks are not hedged and gold decides to skyrocket, the central banks are in real trouble because the bullion banks will not be able to cover their responsibilities under a myriad of outstanding leases without going bankrupt. Worse yet, much of the gold available to cover may well be tungsten-salted gold bullion, which means that the price of gold will go even higher, thus making even more red ink for the bullion banks. We believe the lease obligations of bullion banks are both massive and labyrinthine. An imminent implosion is on its way, with bank failures galore!

Please excuse his gleeful tone of voice. If you're worried about keeping all your savings in banks, check out*, the most convenient way to safely store a portion of your savings in gold.

Three last paragraphs that I found fascinating:

However, Nixon and Henry Kissinger were brilliant and audacious and, in 1971, offered to guarantee the security of Saudi Arabia if the Saudi’s would guarantee to sell their crude oil only for U.S. dollars. The Saudi’s agreed. Shortly thereafter (and for reasons I can’t fathom) the OPEC nations also agreed to sell their oil for only US dollars. As a result, anyone who needed to buy crude oil on the international market, must first have had dollars. No dollars, no oil.

This scheme effectively caused the paper U.S. dollar (no longer backed by gold or silver) to be backed by the world’s crude oil. So long as the world needed oil, the world needed our “petro-dollars”. So long as the world needed dollars, the dollar had something like “intrinsic” value, and the economic collapse that would have been precipitated by a pure paper, fiat currency was avoided—or at least postponed....

.... Enter Saddam Hussein who, circa A.D. 2000, started selling Iraqi crude for euros—a currency other than U.S. dollars. By doing so, he threatened the perceived value of the dollar. If the fiat dollar wasn’t the only currency that could purchase crude oil, what value could the fiat dollar have?

*Yes, we get a commission (a percentage of the commission Bullionvault would normally take anyway) if you click on that link. If this bothers you, just type into your browser instead.


  1. I believe you are right to be concerned about the integrity of the London Good Delivery system.

    However, BullionVault is part of that system and is therefore just as susceptible to being duped with tungsten "gold" bars as anyone else.

    I was also a customer of BullionVault and believe they are probably safe, but crucially, their assayers DO NOT test the bars they hold for actual gold content (just ask Adrian Ash), so they are entirely reliant on the integrity Good Delivery system.

    Also, their "warranty" that the bars are gold is pretty much worthless, because if the bars were analysed and found to be fake, BullionVault would be insolvent and unable to honour such a "warranty".

  2. Dear Anonymous,

    I e-mailed the people at Bullionvault, and here is their reply to me regarding your comments:

    Thanks for your email. Four-fifths of the world's annual gold-market turnover is re-worked from large bars into smaller items (rings, bracelets, bonding wire, leaf, coins etc). A fake would soon show, but there are NO reports of Good Delivery bars being found to be "salted with tungsten" -- none whatsoever.

    The internet authors claiming otherwise make basic mistakes about what the LBMA is, and about what it does. These errors undermine their pretense to "insider" sources. Yes, fake bars could certainly circulate outside Good Delivery, as the recent German TV report shows. But that 500-gram fraud was apparently spotted quite easily by a gold-foundry worker. Good Delivery bars, on the other hand, are closely studied by expert specialists, such as the independent assayers we send into the vault each year to check the quantity and quality of our clients' property.

    You can learn more about Good Delivery at the London Bullion Market Association (LBMA)'s website. You'll note just how exacting the criteria for refining and assaying are:

    There is no need to re-assay, because the Good Delivery standards do not end with production. Each bar must then be kept continuously inside secure, LBMA-accredited vaults. Even when they bear the correct bar stamps, large gold bars are not usually accepted from people outside the Good Delivery circuit, which is why taking a Good Delivery bar into private possession seriously dents its value. Any potential buyer, lacking the accredited storage history which ensures integrity, would rather deal accredited metal from an accredited source. It's this warranty -- that delivery is good -- which makes the professional wholesale market cost-efficient and liquid.

    BullionVault only buys Good Delivery bars, and each bar held for our customers continues to meet the necessary criteria for selling as Good Delivery, too. If any bar were found to be bad, the organization which sold to us would be liable in law. Our customers would not be exposed. Given that fact, plus the fact that no Good Delivery bars have been reported as "salted" -- and the fact that we hold only a tiny proportion of total Good Delivery production -- we are very happy to guarantee each gram of client gold property as 100% gold.

    Kind regards,


    Adrian Ash
    Head of Research

    Buy & Sell GOLD Online - at Your Price - Today

    Main office: +44 20 8600 0130

    Brook House
    229 Shepherds Bush Road
    London W6 7AN


No profanity, please, "... but only such a word as is good for edification according to the need of the moment, so that it will give grace to those who hear." (Eph 4:29)

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