-- Posted Thursday, 18 April 2013 | | Disqus
By The Goodman Letter
A few days ago, this author published an analysis titled “Gold’s Price Collapse and 4,500 Tons of Mysterious American Gold Exports”. It was noted, there, that 4,500 tons of mysterious gold exports, above and beyond the amount that America was capable of producing, both from mining and recycling could not be accounted for. A calculation was done, resulting in a conclusion that the Fed actually had 2,200 tons of gold left.
There was one critical piece of the puzzle that had been overlooked, and that was the amount of gold that the Fed had claimed to be keeping back in 1991, which was the beginning of the gold export frenzy. It is very hard to find that information.The NY Fed does not publish them and, and upon being contacted, in its usual secretive manner, advises that they are unavailable to the public.
After continuing a diligent search, however, we finally found what we needed. In an obscure little pamphlet, published by the NY Fed, back in 1991, they claim that they were storing 315 million troy ounces, which calculates out to a bit less than 9798. Adding that into our estimate changes our numbers a bit, but strengthens our basic point.
With 4,500 tons of excess exports, that means the vault should have 5,298 tons of gold left, rather than 2,200 tons we previously calculated. But, it doesn’t. If we fast-forward to 2013, they are now claiming to store 6,700 tons. That leaves us with a discrepancy of 1,402 tons of gold. That is still a huge amount of gold which cannot be explained. We are certain that this amount of gold has been replaced by IOUs, against US-owned gold that is untouched and stored outside the Federal Reserve.
All the evidence of the Fed’s gold swaps remains the same. No less than Kevin Warsh, formerly a Governor of the Federal Reserve, admitted that they’ve got hundreds of pages listing gold swaps. And, there is still no evidence that foreign central banks repatriated any of the gold they were storing at the New York Fed. As we can see now, from the repatriations of Venezuela and Germany, such events are big news, and heavily discussed. They didn’t happen in the referenced time period.
We assume, therefore, that the 3,098 extra tons of gold were, in all probability, the voluntary sales by European nations that everyone knows were selling off large quantities of sovereign gold throughout that period of time. The total of 1,402 tons of missing gold is smaller than the previous calculation, but it is still a huge amount. It is still unaccounted for, and must represent the gold swaps former Fed General Counsel, Virgil Mattingly, spoke about and Fed Governor Kevin Warsh admitted to.
Given the probable breakup of the Euro zone, and the reestablishment of independent national currencies there, the bankers at the NY Fed are probably nervous about the likelihood that European nations, who are well known to be the major nations holding foreign gold at the Fed, are going to be repatriating huge tonnages, not too far in the future, to support confidence in new national currencies.
In other words, the absolute number of location swap liens may be smaller, but the argument remains the same. The numbers are lower but still huge. These final pieces of the puzzle supply yet more proof of what was done. The previous arguments are simply quantified “to the penny”, and nothing more. Even though the Fed may not have compromised as much of the US-owned stockpile as previously believed, the remaining gold would not last very long even at the previous lower uptake rate.
As noted in the previous article, well informed sources in London report that about 800 tons of gold was purchased by China, alone, since the start of 2013. With lower prices, the same pile of dollars can buy yet more gold. The NY Fed’s 5,198 tons of gold would only last marginally longer than 2,200 tons. The fact they are closing the secretive Fed gold loan window, before they draw their supply down to near zero simply shows that the NY Fed’s bankers are somewhat more cautious than suspected.
Wise people, who buy for the long term, have little in common with overleveraged get-rich-quick dreamers who play against the House in futures market gambling. Physical buyers always buy more gold, not less, when the price drops. They’ve done the same thing for decades now, if not for centuries. Their buying is the fundamental reason the price of gold has risen steadily since 2001. With lower prices, China’s uptake of gold will speed up. So will India’s. So will the uptake of gold everywhere, including the United States. Indeed, there are now widespread reports, not only from American jewelers and coin shops, but of intense gold buying by consumers in India and China. Those are the two biggest and key precious metals markets.
The “shock and awe” effort, by certain key manipulators, will come to nothing in the long run. Indeed, as illustrated by the previous article, there is a great deal of evidence, in the form of the CFTC Bank Participation and the Commitments of Traders reports that, since Goldman Sachs called the supposed “end” to the bull market in gold, on December 2012, American banks have been steadily handing over their short positions to speculators, and going long themselves.
-- Posted Thursday, 18 April 2013 | Digg This Article | Source: GoldSeek.com