By Dominique de Kevelioc de Bailleul
As Italian and Spanish 10-year note yields breakout to ‘engine light’ levels of more than 6 and 7 percent, respectively, the China-led BRICS announced at the G-20 in Mexico an additional $95.5 billion ‘contribution’ to the IMF’s emergency bailout fund, with China signing off to $43 billion of the total package.
As renowned historian of economics Niall Ferguson put it on the eve of the Greek election, Sunday, “If there’s going to be a Lehman moment in the crisis it’s going to be next week.” Well . . . that’s this week.
But, so far, the Lehman-like moment hasn’t arrived and won’t.
Granted, no nation gains from a sudden collapse of the eurozone. However, China, the biggest creditor of them all, with approximately $3.2 trillion of Western fiat on its books, won’t come to the financial aid of the hopeless European Union (from its own making) without some form of collateral—or maybe a deal, instead, in which something of tangible value could be acquired very cheaply in return for its ‘altruism’.
That tangible central bank asset can only be the coveted asset, most dear as a hedge against the endgame for the dollar—gold!
Though the Fed and its high-profile cheerleaders (billionaire icons Warren Buffett, Charlie Munger and Bill Gates) poo-poo gold’s intrinsic value to dupe/contain the awesome collective purchasing power of the American and European people from entering the tiny gold market in force, the reality of its price rise against every currency for the last 12 years tells quite a different tale.
“Gold is a reserve currency, as far as the market is concerned,” Sprott Asset Management’s Eric Sprott told FinancialSense Newshour’s Jim Puplava in an Oct. 2011 interview. Sprott went on to say that central banks and the shrewd money know the endgame for the dollar will include gold as the backbone of a new global monetary system—a system that presently finds China sorely lagging in gold reserves when compared with the core EU nations and the U.S.
According to IMF data of 2010, China is way behind, though estimates of China’s real gold reserves reach as high as much as more than 3,000 tons—a still meager amount considering China’s deep central bank reserves.
China, 1,054 tons, 1.8 percent of reserves
United States, 8,133.5 tons, 76.6 percent of reserves
Germany, 3,396.3 tons, 73.7 percent of reserves
France, 2,435 tons, 71.8 percent of reserves
Netherlands, 612.5 tons, 61.9 percent of reserves
Italy, 2,435.8 tons, 73.4 percent of reserves
Spain, 281.6 tons, or 39.2 percent of reserves
Portugal, 382.5 tons, or 89.2 percent of reserves
Greece, 111.7 tons, or 81.3 percent of reserves
And here’s how JP Morgan’s gold suppression scheme works for the Chinese but not the American people (or Europeans).
A rising gold price, or better still, a soaring gold price crashes the dollar (all G-8 currencies) and China’s $3.2 trillion of reserves. No one wins under that dire scenario except those holding privately-held gold—the castigated tiny group referred to as ‘preppers’.
Moreover, an overt announcement issued by the West to transfer gold to settle payment (the scheme devised under Bretton Woods) after multiple decades of trade deficits would not work either, as years of artificially low gold prices would create immediate and furious front-running by the market, thereby drastically reducing the number of gold-tons China would receive for its fiat, and causing rapid runaway inflation, globally.
Additionally, public outcry of the overt and sudden transfer of wealth from the West to the East would be political suicide to those in power at the time. For example, the protests among the overall prosperous German people at the thought of Germany pledging its gold to back the EFSF last year was fierce and has caused its president Angela Merkel dearly in the polls.
Therefore, the solution is to covertly transfer gold to China through the LBMA, the Comex or any backdoor available to Western central banks in a gradual manner. JP Morgan’s trading desk is the mechanism, while the CFTC pretends to investigate the gold manipulation matter to delay further the day of reckoning.
On Mar. 8, Jim Sinclair brilliantly observed that Western central banks know the jig is up for any hope of maintaining the current financial system and plan to prop-up a seriously listing global economic ship for as long as possible before the inevitable revaluation of gold is announced. In the meantime, China stockpiles gold in preparation of a new gold-backed monetary regime.
“So their [central banks] efforts, in my opinion, are not to depress the price of gold, but to prevent gold from rising into the area where it becomes ballistic,” Sinclair told King World News (KWN).
Sinclair continued by stating that gold will continue to rise enough to prevent a force majeure in the gold market, but the plan by the Fed is for gold to rise in an orderly and stealth manner for as long as possible in the hopes of preventing another post-Plaza Accord (1986) stock market crash of 1987, or an Asian currency crisis of 1997.
“The major players in this game of power need stability for as long as possible,” Portola Group founder Robert Fitzwilson told KWN, Mar. 19. “Stability, in this case, is defined as the absence of chaos and absolute panic.”
Commenting on the enlarged pledge by the BRICS out of the G-20 meeting in Mexico, Monday, the US-centric IMF President Christine Laggard told reporters the additional contributions by the BRICS demonstrate “the broad commitment of the membership to ensure the IMF has access to adequate resources to carry out its mandate in the interests of global financial stability.”
She added, “Countries large and small have rallied to our call for action, and more may join. I salute them and their commitment to multilateralism.”
Multilateralism. Code word for a globally coordinated agenda, which must include a reconciliation of global imbalances and a revaluations of the world’s reserve currencies to achieve that alleged “global financial stability”.
As Western powers dupe its constituencies into holding dollars and euros throughout the crisis, the Chinese have been given red-carpet access to cheap gold through JP Morgan’s price suppression scheme. As the Chinese buy huge quantities of the yellow metal, JP Morgan helps ‘paint the tape’ for the ‘punters’ and inexperienced money managers, alike, who look for trends to buy into as a momentum trade. No trend in gold has emerged for nearly one year, giving China that much time to accumulate the gold it needs before the Big Reset.
“Why would the West give China that gold at discounted prices?” KWN’s Anonymous London Trader asks, rhetorically. “Yes, the bullion banks act on behalf of the central banks to manipulate the price, they act as agents, but the central banks and their agents are also aware that the Chinese are building up their gold reserves. This is the bigger picture which the gold bears do not understand.”
Correct. But the bears will fully understand the “bigger picture” when the time comes after the Chinese have accumulated enough gold during an orderly bull market in the yellow metal.
U.S. political leaders have outsourced American jobs to China throughout the past two decades, given military technology to China during the Clinton Administration, and now prepare the Chinese for a new global monetary regime at the expense of the American people. It’s all about “multilateralism,” as globalist Christine Laggard refers to the BRICS’ generosity—and she “salutes them.”