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.
As a gold buyer, 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, most investors will be caught by surprise. Millions of unprepared citizens will hit rock bottom.
By subscribing to our FREE e-letter, The Sovereign Investor Daily, you’ll ensure you won’t be among them.
What’s more, when you sign up for The Sovereign Investor Daily, we’ll send you our free report, "The Ultimate Gold Multipliers", which provides specific strategies and investments you can make to profit from the coming upheavel. Secrets like:
• Why some gold investments are better than others and which ones you should avoid
• How to invest in a sector of the gold market that is not susceptible to exploration costs of fluctuations in the stock market
• Which three companies are poised to profit the most on the rising cost of gold
Our independent, uncompromised research has predicted some of the biggest financial catastrophes in recent memory.
In an age when our personal and economic freedoms are being curtailed, our work has never been more important, and our voice never more indispensable.
Our team of analysts, editors and researchers headed by Executive Editor, Jeff Opdyke, scours the globe for investment opportunities and safe harbors that welcome expatriates with the promise of strict privacy laws and a stable financial system.
Subscribe to The Sovereign Investor Daily today and discover investment opportunities in stocks, commodities, currencies and asset protection strategies from Jeff and his team of experts including Ted Baumann, Bob Bauman, Chris Orr and Chad Shoop.
Plus, you’ll get instant access to Jeff Opdyke’s free report, "The Ultimate Gold Multipliers."
Simply enter your email below: