AS CHAVEZ PULLS VENEZUELA´S GOLD FROM JPMORGAN, IS THE GREAT SCRAMBLE FOR PHYSICAL STARTING ? / ZERO HEDGE ( A MUST READ )

As Chavez Pulls Venezuela's Gold From JP Morgan, Is The Great Scramble For Physical Starting?

Submitted by Tyler Durden on 08/17/2011 16:27 -0400

The major systemic story in the gold world is that gold is often leveraged 50 to 100 to one. This means that the major banks and brokerages will trade, or sell, up to 50 to 100 oz. of gold for every 1 oz. that they have in their possession. This is similar to fractional reserve banking, which they also do, where they will only have $1 of cash on deposit to back up, up to $100 worth of deposits at their bank. This fraud only works so long as people are too scared to take delivery, and guard their own cash or metals. Every now and then, people wake up, and demand their cash or metals. The difference with metal is that there is no "lender of last resort", like with the Federal reserve who can print money to bail out the banks. The new mine supply of metal is simply not enough to cover the amount of metal on deposits. But what's worse, is that nations have printed up hundreds of times as much paper money, more than the gold that ultimately backs up their currencies. Gold no longer backs up Federal Reserve notes, and even if it did, US gold has not been audited in the last 50 years, and even if it exists, it would provide only about a 1% backing to the currency. (Hence, the 100 to 1 leverage).

The second major development in the gold world is that this week, Venezuela is now trying to obtain their gold, from out of major western financial institutions that might not have the gold.


http://libertycpm.com/2011/08/as-chavez-pulls-venezuelas-gold-from-jp-morgan-is-the-great-scramble-for-physical-starting/


Venezuela is trying to obtain 99 tonnes of gold from the Bank of England. The Bank of England sold half their own gold, selling about 250 tonnes out of 500 tonnes, around 1999-2001 back at $250/oz. to suppress the gold price, and to "earn" an interest rate on foreign currencies. The Bank of England might not even have Venezuela's gold!


I wonder if Venezuela is considering a military response to institutions like JP Morgan if they are not paid back?


Remember, it was France who broke the back of the gold manipulation in 1971, by trying to convert gold certificates into real gold. Back then, the certificates were called US Dollars! That event started gold on it's bull market move from $35/oz. to $850/oz.


If history is any guide, gold might begin a major move up over 25 times, up to about $40,000/oz. over the next ten years now.