Central banks – the last bastion of conservative fiscal responsibility – are active in the dark world of “gold leasing”.
Think of it as a giant Ponzi scheme sanctioned by global governments. Central banks lend out their gold to bullion banks for about 1% of the gold’s value, and the bullion banks promise to return the gold by a certain date. The bullion banks then sell the gold to you and use that money to buy Treasury paper to earn 2% or 3%, thereby creating a nice, easy profit on the spread. It’s the golden carry trade.
The dangerous twist is that the central banks continue to list the leased gold as an asset on their balance sheets, even though the gold no longer exists as a physical commodity the bank can put its hands on immediately. How can you and a central bank own the same piece of gold?
The obvious reality is that such a situation cannot exist in the tangible world of trees and rocks and gold bars. It can only exist in an ephemeral world of financial gerrymandering tied to paper assets.
What happens if, in a crisis, a bullion bank cannot buy back and return the gold it has leased?
A crisis is going to expose the fact that the emperor has no gold. In that world, the dollars that are in your wallet dive precipitously due to a lack of trust in the central bank… and gold soars to unimagined heights.
By buying the correct gold asset, you would see the value of your gold soar as the central banks rushed to buy gold to meet repatriation demands. And even if they shot down repatriation demands as a way to manage the little snafu, gold would still soar because the rest of the world would realize, “Houston, we have a problem…”
When this crisis hits our nation, most Americans will be caught by surprise. Millions of unprepared citizens will hit rock bottom.
And you're ready to do something about it.
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