Posted on 07/19/2013 2:15:15 PM PDT by Errant
For over a month, JPMorgan managed to mysteriously avoid matching up the gold held in its (world's largest) vault with the Comex delivery notice update. However, as of today, that particular can will be kicked no more. Starting yesterday, JPM reported that just under 12,000 ounces of Eligible gold (the same Registered gold that two days earlier saw its warrants detached and convert to eligible) were withdrawn from its warehouse 100 feet below CMP 1. But it was today's move that was the kicker, as a whopping 90,311 ounces of eligible gold were withdrawn, accounting for a massive 66% of the firm's entire inventory of non-Registered gold, and leaving a token 46K ounces, or a little over 1 tonne in JPM's possession.
Needless to say, today's massive move which increasingly puts JPM's gold holdings in the danger zone vis-a-vis future delivery notices which just refuse to stop, has pushed total JPM vault gold to a new all time low of just 436k ounces, or a little under 14k tonnes with just 12 tonnes, or 390k ounces, of Registered gold left and rapidly draining. And to think that two years ago around this time JPM had over 3 million ounces of gold in its possession.
Finally, those who believe there is a connection between the ongoing run on JPM's vault gold, the suppressed price of the metal, the redemption of Bundesbank gold, and the fact that 3M GOFO has now been negative for 10 straight days or the longest period in history it has been below zero, and indicating an unprecedented gold collateral shortage, you are correct.
Finally, putting it all in context, this is what 1 ton of gold looks like in the real world courtesy of Demonocracy:
China continues to increase oil consumption, while we use less oil. Oil has been running over $108 per barrel.
Yes, they did. They knew it was time to take physical possession and have been hammering redemptions ever since. Why do you think the Bundesbank was told that we would give them their gold over a period of years? I'm still convinced that a tunnel exists from the JPM vault leading to the NY Fed across the street.
I’ve been reading a book, When Money Dies, written in 1975. It isn’t just about the economic collapse of the Wiemar Republic, but includes Hungary and Austria as well. If you can find a copy, and there is a more recent reprint available, you should read it. Paying billions of Marks for a loaf of bread says a very great deal about the wisdom having priorities straight.
White rice lasts for a very long time when properly stored. Beans, when properly stored, too, lasts a long time. Using these two items together boosts the available protein your body will absorb, but better yet they are a terrific base for adding seasonal vegetables, and meat, fish, and poultry in small amounts. Buying canned beef, chicken, fish, and ham (the last from Denmark is available at WalMart) can last longer than their ‘Use By’ date.
Having room for a vegetable garden makes sense, and a few hens (no rooster!) for eggs does too! Along with a hunting license and a fishing license, you’ll rarely be hungry and there are many places in America where you would thrive.
In France they use “intensive horticultural techniques” because house lots are small and every inch counts. Using the former flower and decorative planting beds is common as is composting for enriching the soil.
If you want to know more just mail me.
My father was eating C-Rations during the Korean War that were can twenty years prior...he lived. I had C-Rations in 1980 that were canned in the early sixties; I am doing fine. It depends what you buy and how it is stored. Rice last damn near an eternity if it is properly stored. I’ll let the preppers continue, but expecting food to last ten or fifteen years is not unreasonable.
“Did Bernake shut down the printing presses?”
The Fed doesn’t have a printing press. Exchanging treasuries for currency does not increase the money supply. Creating new debt does. The Fed does not sign promissory notes.
Watch China. Western Europe is already in deflation. Japan has been in deflation for decades. The US is in deflation that is being masked by the Federal government creating new debt as fast as it can - mainly through student loans.
Precious metals are a commodity - which generally fall significantly during deflation. Oil is the exception, due to unrest in various parts of the world.
That's assuming oil isn't being impacted by civil unrest around the globe - specifically in Egypt right now.
However, you're correct that oil would drop in a normal deflationary environment that is free from the threat of war.
The world's central bankers are not increasing the money supply - quite the opposite. That's why Western Europe keeps talking about having Eurobonds that act similarly to our Federal treasury notes.
The US is able to create vast amounts of new debt because of our Federal system of government. Western Europe has no such bailout luxury.
China is seeing their outstanding loans begin to decrease. This means that their money supply is decreasing - deflationary.
Central banks do not print money. They issue currency as a liability against assets of Treasury securities that they obtain from primary dealers. There is no "new" money created in this transaction.
New money is created any time a promissory note is signed. Shrinking debt and bankruptcy cause a decrease in the money supply - since all money is debt based.
People still think of precious metals the same as when money was not debt based - prior to 1600 in Europe.
There is nothing wrong with "fiat" currency - as long as the currency represents labor that has already been completed...instead of a claim on the future labor of others.
China's economy is slowing. They depend mainly on trade with Western Europe and the United States for survival. They're entering deflation along with the rest of us.
China will need to seek new trade with India and Brazil as part of the BRIC coalition. However, their products are too expensive for these countries, so China will need to devalue their currency to make this happen. Cheap Chinese junk will become even cheaper Chinese junk for us.
Central banks do not print money. They issue currency as a liability against assets of Treasury securities that they obtain from primary dealers. There is no "new" money created in this transaction.
This is partially true. Instead of printing "money", numbers are keyed into a computer that sends an encrypted data stream connected to another computer at a bank someplace, allowing that computer's accounting program to adjust the balance of available funds on hand for issue.
What are the assets these funds were issued against? Worthless government securities, themselves issued against previously issued worthless government securities never be repaid?
Just one example:
" During a 2½ year period starting at the end of 2007, the Federal Reserve provided more than $16 trillion in secret bailouts to banks and other companies around the world, according to a government audit of some of the U.S. central bank’s operations.
Fed Audit: Trillions For Foreign Banks, Conflicts of Interest
Others:
Wall Street Aristocracy Got $1.2 Trillion in Secret Loans
Government Says No to Helping States and Main Street, While Continuing to Throw Trillions at the Giant Banks
You write: "There is nothing wrong with "fiat" currency - as long as the currency represents labor that has already been completed...instead of a claim on the future labor of others."
Do the loans the Fed has made above meet that criteria? Has there ever been a fiat currency in the history of mankind that did not eventually become worthless? Look at this chart below of how much the dollar has depreciated since the Fed was formed at a secret meeting on Jekyll Island.
Do you really want to put ALL of your eggs in a basket guarded by these guys below? Speaking of that "basket", it's one so messed up, or messed with, it has NEVER allowed outside auditors to examine it.
Just sayin'...
#30
I’m not sure I get your point when you write: “Exchanging treasuries for currency does not increase the money supply. Creating new debt does.”
Ok,but the Treasuries are new debt, aren’t they? And at this point the vast majority of them, especially the longer term ones, are bought by the Fed. So the Fed is enabling the creation of vast amounts of new debt. Not exactly a printing press, ok. But an effective currency debasement machine, no?
I'm saying that people confuse "money" and "currency". They are not the same - even though most economic courses treat them as such.
In a debt-based monetary system, "money" is the total amount of outstanding physical and verbal promissory notes. Paying off debt causes a decrease in the "money" supply. Bankruptcy causes a decrease also, since the promissory note becomes void of future repayment. This is why a debt-based society must always keep creating new debt to replace old debt - or deflation happens. Vast amounts of new debt being created can create inflation. That's why the Fed always sets a nominal 2% desired "monetary" inflation rate. Inflation is really bad, but deflation is pure evil.
By the way. I'm not sticking up for the Fed. They are the personification of evil - and intentionally brought on the monetary crisis that began in 2008 by purposefully withholding debt creation. This is why the US government has been on an absolute tear to create new debt - since the major banks won't. This is also why both Demon-rats and Republicans allow it to happen, while the Republicans give lip service to debt reduction - which won't - and can't happen without an enormous deflationary spiral. We're stuck, and the primary dealer banks are causing it.
Currency is simply a physical (or electronic) means of completing trade. we use currency instead of money - mainly so that people never learn what money truly is. Things make a lot of sense if one can correctly separate the two ideas in their mind.
Ok,but the Treasuries are new debt, aren’t they?
Maybe...A lot of Treasury auctions are used to roll over existing Treasuries that are maturing. This does not increase the "money" (debt) supply. Any Treasuries that are sold as "new" debt do indeed increase the "money" supply.
And at this point the vast majority of them, especially the longer term ones, are bought by the Fed.
Many of them are. However, replacing Treasuries with currency do not increase the "money" supply - since no new debt is being created through the action. Also, the physical currency supply is not really increasing much either, since the Fed is just electronically crediting the Primary Dealers (who they buy the Treasuries from) accounts at the Fed. The Primary Dealers are just sitting on asset and doing nothing with it (except earning a tidy 3% for their "troubles"). You can easily see this by looking at the H.4.1 report that the Fed releases each week. Do a Google search for it.
So the Fed is enabling the creation of vast amounts of new debt. No, they're not through Treasury purchases. That creates no new debt al all. They do allow the US government to get further in hock by holding Treasury auctions periodically. Any "new" debt created out of these auctions (that isn't used to roll over existing debt) does increase the money supply - but not fast enough to account for the debt that is currently being destroyed through bankruptcy and payoff.
Not exactly a printing press, ok. But an effective currency debasement machine, no?
It's not a printing press at all. And there really isn't a debasement of currency, since we still have a problem (like the rest of the world) where our outstanding debt is threatening to go negative (reduction in the money supply). Take a look at the Fed's G.19 report (Google for it). You can see that the only real new debt creation that the US government has been effective at is student loans. There are now close to $1 trillion dollars of outstanding student loans. Stupid kids...these loans can't be released through bankruptcy. The average 2013 college graduate has around $35K in outstanding loans. That's average. Some have none, many have a lot more.
Sorry for the novel, but I try to teach people how to understand debt-based money, and why deflation is so dangerous.
The bottom line is that the large banks are deliberately causing this across the world (including China). The last time this happened at this level was the Great Depression - and the banks played both sided in the ensuing world war, becoming massively wealthy in the process. Bullets and bombs are expensive.
Goldbug ping.
“I’m still convinced that a tunnel exists from the JPM vault leading to the NY Fed across the street.”
Probably true. Those rotten old downtown buildings have lots of tunnels and passageways. Anyway... JPM is the Fed’s designated senior agent in gold price suppression
Ben is an idiot. No, it's not him.
This is partially true. Instead of printing "money", numbers are keyed into a computer that sends an encrypted data stream connected to another computer at a bank someplace, allowing that computer's accounting program to adjust the balance of available funds on hand for issue.
Those numbers that are keyed into a computer do nothing to increase the money supply - read my previous posts on this thread. Also, do a search for - and read - the Fed's H.4.1 report The Primary Dealers are sitting on the electronic funds generated from the Treasury purchases. Now if they took those funds and began issuing loans agains them then I would agree - big problem. That's not what they're after though. They want deflation - where existing debt is harder to pay off, instead of inflation - where existing debt becomes much easier to pay off.
What are the assets these funds were issued against? Worthless government securities, themselves issued against previously issued worthless government securities never be repaid?
The Fed's H.4.1 report shows that the assets those funds were issued against are primarily US Treasury securities - along with MBS securities - and recently some foreign bonds, so that Western Europe doesn't implode too quickly into deflation. The banks want Europe there, just not through an uncontrolled crash.
US government securities are not worthless at all. They are a promise against your future labor - and the future labor of the rest of us. They are only as worthless as the result of your upcoming labor. :-) There are a lot of US Treasuries auctioned to roll over existing debt that is maturing. However, most of these securities are held by Primary Dealers (largest banks), and not the Fed.
Do the loans the Fed has made above meet that criteria? Has there ever been a fiat currency in the history of mankind that did not eventually become worthless? Look at this chart below of how much the dollar has depreciated since the Fed was formed at a secret meeting on Jekyll Island.
All loans are against the future labor of the entity signing the promissory note (or the future labor of others that the signee may control). Loans create economic slaves. That's why are debt-based monetary supply is so evil. It only exists through economic slavery (much of it done willingly - some implicitly, like US Treasuries).
A debt-based monetary supply must - necessarily - operate through the concept of gradual monetary inflation. Otherwise, monetary deflation can occur which will more quickly collapse a nation. Monetary inflation works on an exponential curve, so there will always come a point where the "knee" of the curve is hit - and the very real issue of hyperinflation becomes evident. That's why the large banks that control the economies of the world (through the central banks) will periodically crash debt creation. They typically do it after a short period of massive new debt creation (like the roaring 20's, and the early 2000's). This makes it so that they can grab the underlying assets when large numbers of entities go bankrupt - and then resell at a later time for large profit.
The world bankers are currently crashing debt. They are also creating instability in many regions of the world - which I believe will lead to war - which the bankers will fund both sides of (just as in previous wars in modern history).
After the world money supply has been sufficiently crashed (due to the debt exponential curve) , then things will start over - with gradual inflation and continued debt slaves...
"Fiat" currency is not evil. It has been used quite successfully in many parts of history. Look up "tally sticks" that were used in England prior to debt-based money being forced on them by William and Mary in the 1590's.
The important facet of "money" isn't that it be gold and/or silver. It's that "money" should only be created through labor that has been completed - not created through the promise of future labor. The large banks have forced the "Wimpy" economy on everyone - "I will gladly pay you tomorrow for the hamburger that I eat today."
No - I am not Ben. I passionately hate debt-base money...
The gold market is extremely small compared to others. Maybe 5 billion or so. In a deflationary panic money can rush into it and send gold into orbit...DESPITE the deflation you are talking about. When people fear bank runs (on bullshit digitally notated US dollars) and defaults then gold is a safe haven. Perhaps not as good as FRNs or Euros under your mattress but in that league
Gold has dropped $500 dollars over the past number of months. It's not going to make anyone rich. Yes, it will "never be worth $0 - but you can can say the same thing about any commodity.
Remember when people used to clamor about how the US Dollar will drop to the level of toilet paper? Have you looked at it recently? The US Dollar Index is over 82 - and is only that low since it is weighted against the currencies of other nations - many of whom are in a worse deflationary situation than we are.
Look for the US Dollar Index to keep rising (into the 90's) - and for gold and silver to keep dropping (even though there will be a few minor rallies due to emotion).
One can either acknowledge deflation, or face it unprepared - not a good idea.
I just want to make a few, quick observations. First, I can't believe anyone could be so ugly to another as this: They are only as worthless as the result of your upcoming labor. :-) That's just downright nasty! lol
Ben is an idiot.
And you know this how??? :)
We agree on quite a lot. I think we only completely disagree on "Fiat Currency." Frankly, IMO, it IS evil. Its only redeeming quality is its utility, of which today, there are currencies (i.e., crypto-currencies) that offer even greater utility while having similar qualities of gold in relation to manipulation.
The important facet of "money" isn't that it be gold and/or silver. It's that "money" should only be created through labor that has been completed - not created through the promise of future labor.
I believe we agree here. Almost anything else, besides that which is created out thin air (i.e., fiat) can meet those needs, and ARE created through labor or discovery. Almost anything else is a better vessel for containing/preserving value, be that an actual person's labor, or in exchange for something else of value. I'm not against the idea of labor as a measure of value. Actually, I would consider it as a basic element in determining value. I'm not against debt, if secured by something of value, or threat of bodily injury. lol
I certainly acknowledge deflation. Been expecting it for sometime now as a major indication of serious economic problems just below the horizon, and headed out way. That said, I also look for continued QE, forced upon us by an out of control government. What we don't know is how TPTB will react, or handle this. Like you, I think war is a possibility.
Where I disagree with you - maybe - is holding gold through ups and downs. As someone gone Galt, I really don't own it for trading purposes. I have it for insurance - likewise food, protection, tools, and implements of production of necessities.
There are better means of exchange besides fiat. Means of exchange much less able to be manipulated by a few powerful who like most all humans, are unable to resist the temptations to cheat, or to take advantage of those blind to their machinations. Heck, they're even open about it, as the king of fiat, Mayer Amschel Rothschild infamously proclaimed, "Give me control of a nation's money and I care not who makes the laws."
Biblical Scripture even makes a distinction between "money" and "gold". The great danger in "fiat money", as we're seeing, is the ease at which it can be manipulated by a few, and by that virtue the manipulation or control of the many... currency proclaimed, "
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