Skip to comments.The European Gold Confiscation Scheme Unfolds: Euro Parliament Approves Use Of Gold As Collateral
Posted on 05/25/2011 8:52:08 AM PDT by SeekAndFind
Wonder why Europe is pressing so hard for Greece (and soon the other PIIGS) to collateralize its pre-petition loans on a Debtor in Possession basis? Here is your answer: "Yesterdays unanimous agreement by the European Parliaments Committee on Economic and Monetary Affairs (ECON) to allow central counterparties to accept gold as collateral, under the European Market Infrastructure Regulation (EMIR), is further recognition of golds growing relevance as a high quality liquid asset. This vote reinforces market demand for a greater choice of assets that can be used as collateral to meet margin liabilities." Luckily for Greece, it has 111.5 tons of gold in storage (somewhere at the New York Fed most likely). Looking down the road, Portugal has 382.5 tons, Spain 281.6, and Italy leads the pack with 2,451.8 tons.
Complete press release:
The Economic and Monetary Affairs Committee of the European Parliament has approved gold to be used as collateral confirming its status as a high-quality liquid asset
Yesterdays unanimous agreement by the European Parliaments Committee on Economic and Monetary Affairs (ECON) to allow central counterparties to accept gold as collateral, under the European Market Infrastructure Regulation (EMIR), is further recognition of golds growing relevance as a high quality liquid asset.
This vote reinforces market demand for a greater choice of assets that can be used as collateral to meet margin liabilities.
Natalie Dempster, Director of Government Affairs at the World Gold Council said:
It is very significant that the European Parliament is putting its weight behind the argument that the unique characteristics of gold make it an ideal form of high quality liquid collateral.
We now look forward to the European Parliament and Council of the European Union upholding the inclusion of gold in the next stage of negotiations around EMIR which will now take place after the July plenary vote. The ratification would mark a significant step forward in redefining what constitutes a highly liquid asset under the Capital Requirements IV Directive, due in the coming month, from the European Commission.
Market demand for gold to be used as a high quality liquid asset and as collateral has been building for some time. In late 2010, ICE Clear Europe, a leading European derivatives clearing house, became the first clearing house in Europe to accept gold as collateral. In February 2011, JP Morgan became the first bank to accept gold bullion as collateral via its tri-party collateral management arm. Exchanges across the world, such as Chicago Mercantile Exchange, are now accepting gold as collateral for certain trades and London-based clearing house LCH Clearnet has said that it also plans to start accepting gold as collateral later this year, subject to regulatory approval.
The World Gold Council has examined this trend and has defined the characteristics that make gold an excellent form of collateral in its study Gold as a source of collateral. The report includes a case study on ICE Clear Europe, explaining why the central counterparty clearing house has started to accept gold as collateral and how this operates in practice.
As regulators, from G20 countries, demand that more OTC trading is cleared on exchanges and with the ongoing world economic difficulties further eroding the credit worthiness of other forms of collateral, we expect to see increasing demand by clearing houses, exchanges and investment banks to use gold as collateral, says Natalie Dempster.
And all those US citizens who have been buying gold should prepare for its seizure, a la FDR.
Das vierte Reich ist dumm nicht.
We have seen gold mines opening up in our part of the country where they were banned in the past. The Feds must be getting worried. One mine has stated that they believe there is over 700,000 ounces of gold in the existing mine. It has been closed for decades by the Feds.
Not gonna happen.
So how much does Greece’s gold stash equal in dollars/euros?
Would it be enough to pay off their debts? Or at least a big chink of it?
That would be a epic disaster politically and economically, so your probably right.
Are they going to do house to house searches?
If they allow gold to inflate in relation to the Euro and Dollar then they will use it to get out of debt. Fiat money destruction.
Silver is on an upswing again.
I gather the gist of this is that the EU thinks it can force those nations that are deeply in debt to remain in the Euro, by confiscating their specie, so they cannot recreate their own currencies.
However, they have forgotten the lesson of the Papiermark, the Rentenmark, and the Reichsmark after WWI.
With WWI (1914), Germany split its currency from gold to protect it from international manipulation, by making it a purely fiat currency. At the end of the war (1918), and deeply in debt, they decided to pay their debt by printing more money, causing hyperinflation. This lasted until 1922-’23.
Then they replace the Papiermark with the Rentenmark, a temporary transition currency, at the rate of 1 trillion Papiermark = 1 Rentenmark. Later in 1924, the Rentenmark was replaced by the Reichsmark.
This was made possible by backing the Rentenmark with industrial and agricultural land. Then, when the Reichsmark was introduced, it was based again on gold.
The Reichsmark was then stabilized further with a fixed exchange rate in WWII, set against the currencies in German occupied nations, with advantage to the Reichsmark.
So how does this compare to Greece, or the other PIIGS?
If Europe thinks that it can force Greece to remain in the Euro, Greece could still recreate the Drachma, but solely as a fiat currency. And while this would stop trade with Greece, any stability at all would attract the attention of the other PIIGS, to do the same. And this could overwhelm the EUs ability to force control over them.
Greece would then just postpone debt repayment, or even abrogate it, and quickly try to move to as self sustaining an economy as possible, likely making bilateral trade deals with some of the other PIIGS for critical supplies.
Since Germany is perhaps the largest creditor nation in Europe, and would lose its shirt in this deal, it would likewise be strongly inclined to abandon the Euro as well, unless there was a major renegotiation of treaties so that Germany would never again be left holding the bag for less responsible nations.
They might even consider leaving the common market.
Those who think we should be ready to have our gold confiscated should remember that many of us who own gold also own lead. No one person can stop a government but a lot of us, one at a time, can and will winnow out some of the collectors and there will come a point in time when there are no more collectors left alive. There are some things up with which we will not put.
“Those who think we should be ready to have our gold confiscated should remember that many of us who own gold also own lead. “
I think you are right on here. Couple gold confiscation with IRA nationalization and you will have massive tax non compliance and civil strife. People will resist in all sorts of ways. When FDR did this, most people did not see this coming and could not react. At that time, the USD was still mostly backed by gold, today it is backed by BS. Furthermore, almost ALL the people who own gold do so because they distrust fiat money, the Fed and US government in general.
All of these things together could push the nation off the edge. The silver lining will be, if there is an actual civil war, it will be open season on weasily Dems, commies, union thugs, Leftists and all the other assorted filth of the nation.
That didn’t happen when FDR pulled it off.
That is an awesome Title there. It almost wrote itself!
National compliance with that edict was around 1% during the Great Depression. It will be even less obeyed (and resisted violently) this time around.
Not even close. The "rich" will have their physical stashed outside the country. The asset stripping target will be the poor / middle class who only have a few ounces of gold and/or silver.
And if they try it they will NOT exempt your wedding rings / jewelry this time around.
What makes you say that Pecos?
The feds took control of all gold of anything that wasn’t jewelry in the 30’s. Today, the banking and 401K records make that even easier. It would be a very easy class warfare game.
I have been thinking about buying more gold jewelry as a safety net. Maybe buying jewelry when it is on sale. I don’t know about the resale value of jewelry. Does anybody think this is a good idea? I don’t mean going crazy with jewelry but just buying a piece here and there when it is on sale. Jewelry is a luxury but it also has a practical side since it does not lose its value like so many other things that we spend our money on.
Skip the jewelry and go with recognizable gold and silver coins.
In summary, don't invest in anything you have not become very knowledgeable about. Someday, I could tell you about the absolutely stupid thing I did with $14,000, but that is a tale for another day.
Thanks for sharing your experience. I am thinking of buying silver coins what do you think of that?
If you decide to go that route, stay away from coins whose price is driven by their numismatic value (i.e., rarity and condition). Those are more in the eye of the beholder than other factors.
I obviously do not know your personal situation, but my tendencies in investing these days go in the direction of (a) learning practical skills that others will pay for [think blue collar trades, Semper Gumby!] to augment my good college education, (b) food storage, (c) high quality non-trendy clothing. This is not to say that all of my buying power goes to this sort of “head down, the disaster is heading our way” mentality, but you were asking about investing. We all have to enjoy the journey as well. Maybe your journey will include learning a musical instrument, regardless of age. Maybe it will include building an airplane, even if you don't currently have a license to fly it.
“Man is that he might have joy”, a thought that I often forget when cleaning out the cesspools that can develop at work or at home.