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scepticus

Monkey Bisness

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so, whats up with these reports of central bank <-> BIS gold swaps then? Head on over to alphaville to gen up.

good or bad for gold?

good or bad for our economies?

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so, whats up with these reports of central bank <-> BIS gold swaps then? Head on over to alphaville to gen up.

good or bad for gold?

good or bad for our economies?

Thanks for the heads up,what is your take on it?

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The parallels with the late 60s, early 70s is interesting (in a Bretton Woods sort of way). I haven't a clue what it all means though.

Edited by Traktion

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my interpretation:

BIS has acted as a counterparty for some CB - supplying collateralised liquidity - presumably $US for the CB's gold.

If the CB cannot pay back the $US, the gold will be liquidated, I suppose to cover the difference.

If that happens, I am sure there are buyers looking for a chance to pick up the odd few tonnes- say China? Iran? Russia? India?

My guess is they would not have to liquidate the whole 380t.

Too complex for me- make of it what you will.

IMF Gold Swaps Misrepresented

Posted: Jul 06 2010 By: Jim Sinclair Post Edited: July 6, 2010 at 7:50 pm

Filed under: General Editorial

Dear Friends,

Reports about a large gold swap done by the IMF are being colored by a glib analysis of what a swap is as compared to a lease.

If the IMF was legally able to and leased this gold, I would agree with the fear of market sales as a means of bailing out euro banks or other entities.

Gold swaps are done with monetary authorities. Gold leases are done with "for profit entities" such as gold banks.

Gold Swaps are usually undertaken by monetary authorities. The gold is exchanged for foreign exchange deposits with an agreement that the transaction be unwound at a future time at an agreed upon price. The IMF will pay interest on the foreign exchange received. Historically swaps occur when entities like the IMF have a need for foreign exchange, but do not wish to sell the gold. In this case gold is a leveraging device for needed currency to meet requirements.

Conclusion:

The many reports today that characterize the large IMF gold swap as a sale of gold into the markets do not understand the difference between a swap and a lease as defined by with whom it is done and why.

All that scary crap written today is just that, crap.

The IMF swap so talked about today is not a threat to the gold price. In retrospect neither was the gold leasing as it was happening $1000 points lower. Certainly the swap is not and the various commentators today are not familiar with the differences.

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so its not a swap..thats technical...its a loan with gold as the security...thats plain English.

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If that happens, I am sure there are buyers looking for a chance to pick up the odd few tonnes- say China? Iran? Russia? India?

apparently various private buyers made offers to the BIS or IMF (can't remember which) but were turned down as ineligible. The gold will be moved around between sovereign and multinational governmental entities. china also making anti gold noises.

I suspect that at some point in the not to distant future, after whatever multilateral new deal (e.g. Bretton Woods III) is coming down the pike has been shaken on, then the entities holding left holding the gold will dump it all on the market after having already got rid of a good chunk of it to some patsy - perhaps some, hedge funds and out-of-the-loop sovereign wealth funds.

obviously this is all speculation on my part - but I am not inherently biased since despite my personal feelings about goldbugs in general I do hold a reasonable amount of the stuff (not actual physical mind).

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jesse is a great blog but the latter point about rather misses the point that gordon brown sold(and gave advance notice of said sale) because he was one dumb m*****f*****

I very much doubt that. He certainly had a motive for doing it and knew exactly what he was doing. Who knows whether he achieved his objectives, or what his motive was?

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let's look at the facts.three motnhs ahead of the sale,he told the market he was gonna do it.Now in anyone's book,that's dumb.especially when it's an eye watering amount in terms of daily volume.

market players didn't even have to collude with each other to extract the max profit from the tax payer.

I'm really interested in any reason he could have had that would have reasonably led him to do what he did.

you really can't think of any reason that GB might have wanted this to happen, or a mechanism where he might have been able to profit from it?

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let's look at the facts.three motnhs ahead of the sale,he told the market he was gonna do it.Now in anyone's book,that's dumb.especially when it's an eye watering amount in terms of daily volume.

market players didn't even have to collude with each other to extract the max profit from the tax payer.

I'm really interested in any reason he could have had that would have reasonably led him to do what he did.

There was an interesting conspiracy theory about this that surfaced a few months ago. It was that back then some large investment banks (GS was named I think) had for some reason and somehow amassed huge short positions on gold. Gold was rising and they were in deep trouble - so bad it was seen as systemic risk to the banking system. US authorities called Brown and made some sort of deal - he sold the gold, the price dropped, the banks were saved and Britain got something or other out of it but that wasn't clear at all. Maybe he was trying to save some big city players who he thought were critical to the UK eceonomy? Sorry I don't have the article, have a dig on google I'm sure you can find it. It might of been on zerohedge, who are a bit wacky I have to admit, but an interesting hypothesis nonetheless.

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  • 150 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
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      • up 5%



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