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Brett Arends, writing in the Wall Street Journal Why I Don’t Trust Gold explains the rise of gold in the following way:
If the price rises you’d think there must be a shortage. But data provided by the World Gold Council, an industry body, tell a remarkable story.
Over that period the world has produced—or, more accurately, recovered—far more gold than anyone actually wanted to use. Since 2002, for example, total demand for gold from goldsmiths and jewelers, and dentists, and general industry, has come to about 22,500 tonnes.
But during the same period, more than 29,000 tonnes has come on to the market.
The surplus alone is enough to produce about 220 million one-ounce gold American Buffalo coins. That’s in eight years.
Most of the new supply has come from mine production. Some, though a dwindling amount, has come from central banks. And a growing amount has come from recycling—old jewelry and the like being melted down for scrap. (This is a perennial issue with gold. I never understand why the fans think gold’s incredible durability—it doesn’t waste or corrode—is bullish for the market. It’s bearish.) So if supply has consistently exceeded user demand, how come the price of gold has still been rising?
In a word, hoarding.
Gold investors, or hoarders, have made up all the difference. They are the only reason total “demand” has exceeded supply.
When the open interest in silver futures contracts exceeds 800 million oz., and when the silver on deposit for delivery is a mere 50 million oz., it does not take a genius to figure out that something is out of balance. That's only a 6% backing!
When the London OTC market trades in excess of 125 million oz. of silver per day, and only has 75 million oz. of physical in the vaults, again, it does not take a genius to figure out that something is out of balance there, too. The BIS notes that the OTC "over the counter" other precious metals derivatives exceed $200 billion, which is about 12 billion oz. of silver, or almost 24 years worth of mine supply, and 160 times the 75 million oz. they have left!
It should not take any hearings or investigations. But the investigations serve the purpose of revealing the numbers to CFTC commissioners who may not otherwise know.
The London fraud is easier to understand, even though it is bigger. Why? In Europe, there is the VAT, and on silver, it's about 17% if you take your silver out of the banks, and take delivery. Therefore, most people leave it with the banks. But there is no "it", no silver.
The big brokerage houses promise silver at lower commissions, but only if you don't ask for delivery.
The gold and silver markets are no different than a bucket shop, it's cheaper, but if you don't take delivery, your silver does not exist.
Don't investors know that it's a race to see who gets physical first?
He who takes delivery first is no fool, but will become master of the financial universe!
Don't people realize that demand is already 160 times greater than the market can clear? Don't people know what that means to the price, going forward, once people, 1 in 160 silver investors, ask for delivery?
Amazon Review :
Where does money come from?
Where does it go?
Who makes it?
The money magicians' secrets are unveiled.
We get a close look at their mirrors and smoke machines, their pulleys, cogs, and wheels that create the grand illusion called money.
A dry and boring subject?
You'll be hooked in five minutes.
Reads like a detective story — which it really is.
But it's all true.
This book is about the most blatant scam of all history.
It's all here: the cause of wars, boom-bust cycles, inflation, depression, prosperity.
Creature from Jekyll Island will change the way you view the world, politics, and money.
Your world view will definitely change.
You'll never trust a politician again — or a banker.
Quote from : Wikipedia : G. Edward Griffin
G. Edward Griffin (born November 7, 1931) is an American film producer, author, and political lecturer.
Starting as a child actor, he became a radio station manager before age 20.
He then began a career of producing documentaries and books on often-debated topics like cancer, Noah's ark, and the Federal Reserve, as well as on Libertarian views of the U.S. Supreme Court, terrorism, subversion, and foreign policy.
Since the 1970s, Griffin has promoted laetrile as a killer of cancer cells, a view not accepted by a majority of scientists.
He has also promoted the Durupınar site as hosting the original Noah's ark, against skeptics as well as near-Ararat Creationists.
He has opposed the Federal Reserve since the 1960s, saying it constitutes a banking cartel and an instrument of war and totalitarianism.
In 2002, Griffin founded the individualist network Freedom Force International.
Quote from : Wikipedia : G. Edward Griffin : Mandrake Mechanism
The "Mandrake mechanism"
The Mandrake mechanism is a term coined by Griffin in this book.
Mandrake the Magician was a comic strip character from the 1940s.
He had the ability to magically create things and, when appropriate, make them disappear.
Griffin's view is similar to many other gold-standard supporters' critique of the fractional reserve banking system and the Federal Reserve in particular: that it makes money "magically" appear from nothing.
In Griffin's view, the "magical" quality of this mechanism is really just a simple mathematical limit (mathematics).
When banks loan money, they don't actually loan existing money.
Rather, they allocate money to loan, but they are limited by how much money they can create.
The law basically says that, for each dollar a bank has on hand in one of its savings accounts, it is allowed to create another 90 cents to give out as a loan.
(The dollar from the savings account is still there, and can still be spent by the person who owns the savings account.)
This loan is then spent, and the recipient puts it into another bank, and that bank can now loan 90 cents times 0.9 = 81 cents.
This can be repeated many times (depending on the demand for loans) until it approaches its mathematical limit of 10 dollars.
For example, when the Federal Reserve holds on deposit 1 billion in marketable United States Treasury security then the banks in the banking system, public and private, and bound by US financial law, are able to generate 10 billion in new debt over time.
In September, 2008 the US Public Debt was 5.8 trillion and from that debt there was a potential to create approximately 53 trillion ((5.8x10)-5.8=52.2) dollars of money (as debt).
and simply don't understand gold.