- US-Iran Crisis Could Cause Delivery Defaults And Expose The Fraud Of The Paper Gold System
What if the international crisis induces buying of physical, or what if adversaries of the US counterattack by weaponizing gold?
by Chris Powell of the Gold Anti-Trust Action Committee (GATA)
Dear Friend of GATA and Gold:
Our friend B.A. tonight challenges optimism among gold and silver investors that the latest crisis in the Middle East will explode Western central banking’s longstanding gold price suppression policy.
But things may be different lately insofar as for months there have been signs of big changes in the gold and silver markets, including indications of exceptional tightness. For example:
— The resolution of most Comex gold and silver futures contracts through the mysterious emergency “exchange for physicals” mechanism.
— The extraordinary increase in open interest in Comex gold and silver futures contracts.
— The Comex’s strange and urgent increase in the out-of-system collateral permitted to be used by the major bullion banks that short gold.
— Increased acquisition of gold by central banks that are not afraid to reveal their admiration for an asset that central banks were generally unloading just a few years ago.
— The reversal of the usual gold flow from London to Switzerland, a flow now going from Switzerland to London, where the shorts largely reside and from where they would need to cover.
— Assertions by Swiss gold fund manager Egon von Greyerz and London metals trader Andrew Maguire that Swiss banks have already imposed “bail-ins” on depositors seeking to withdraw both gold and cash — in effect a gold and cash confiscation.
— The New York Fed’s recent sudden injection of tens of billions of dollars into the financial system through the big New York banks, some of which are bullion dealers, and the dubious explanations given for this.
— The refusal of the Federal Reserve, Treasury Department, and Commodity Futures Trading Commission to answer or even acknowledge a few basic critical questions about the gold market not just for GATA but also for a member of Congress.
— The inability of the usual smashes in the futures market to push gold and silver prices down much for long.
This is exactly what the U.S. government has feared as long ago as 1974, when U.S. Secretary of State Henry Kissinger was warned about the possibility by his deputy, Thomas O. Enders, in a meeting in Kissinger’s office. The remarkable transcript of this meeting was discovered in 2013 by gold researcher Jan Nieuwenhuijs, then writing under his pen name, Koos Jansen, and was analyzed by GATA here:
The transcript remains on the internet site of the State Department’s historian, a wonderful if studiously overlooked explanation of the U.S. policy of gold price suppression:
Gold, Enders told Kissinger, is the international “reserve-creating instrument” and whoever has the most gold can change its price periodically and thereby enrich himself and alter all the world’s financial valuations in his favor. Gold, Enders explained, is the great threat to the dollar and U.S. control of the world financial system and as such it must be pushed out of the system.
In any case, the previous U.S.-instigated gold price-control system, the London Gold Pool, failed in 1968 for geopolitical reasons and the current gold price control system will fail eventually too. As was said by the leader of the doomsday cult first portrayed by some British comedians including Peter Cook and Dudley Moore back in the 1960s: “We must get a winner one day”: