Real physical gold is still the most valuable commodity and hard monetary asset to Governments and Central Banks.
That’s why central banks hold gold. Gold (whether paper or real) is a real and exceedingly important component of governmental liquidity. Even though the Nixon Shock of one-half century ago ended international conversion of the US dollar to gold, that did not end gold trade between governments. Importantly, worldwide control of governmental physical gold reserves (when possible) provides financial power to the global hegemon.
Historically* physical gold reserves of many nations have been held in London, New York, and Switzerland. Especially in Switzerland, because the Bank for International Settlements is there — sometimes called the ‘Nazi Bank’ – and it is the largest dealer in both gold and silver (yes, silver too!). The Bank for International Settlements defacto determines precious metal prices, a business it has been in for almost a century. The BIS works closely with the London Bullion Market Association; US Federal Reserve ESF; IMF; and COMEX. At the Primary Dealer bank level, gold and silver prices are manipulated to control those markets. GATA has done much work to reveal this criminal manipulation of precious metal prices.
But because the gaming of precious metal markets is ultimately controlled by the BIS and US government, only small fish are ever fried when they get caught. (Latest example here.) By means of manipulation and COMEX price suppression, the Bank for International Settlements, the Federal Reserve and LBMA, discourage the public from having a positive perception of gold. That’s because a store of value that might conceivably compete with paper reserve currencies must be suppressed to maintain the value of paper currency. Gold is popularly claimed illiquid, but that is simply not true for governments and gold. There is also a popular misconception that gold reserves physically move when they do not.
Governmental gold reserves sit in a vault. In the west and Europe, those vaults historically exist in London, New York, and Switzerland. While the account numbers assigned to those vaults may change, the gold seldom moves. (Wars do move physical gold; Afghanistan, Ukraine, Iraq, Syria, Lebanon, Nigeria, Mozambique, Sudan, and Zimbabwe serve as examples, with much stolen gold going to the UAE.) This gold trade system has been underwritten by the gold carry trade for many years, where a continual and mostly virtual trade in gold is essential to G7 powers and beyond, for their most important transactions, which require collateral. So, physical gold assets or proven gold reserves (Canada has no gold reserves buts relies on its gold mining capacity for perceived wealth) are of exceeding importance to governments and not just to their Central Banks.
For a long time, the above international gold trade provided a fairly stable means for governments to carry on their most important business. After all, the Nixon Shock did not end gold trade between governments. (While the United States allegedly maintains the largest physical gold stockpile in the world, the US claims that it its does not trade in gold. That’s a lie. And the US government values gold at only $42.22 US per ounce) Then, by 2017, and in fact long before, the United States and its allies shirked their perceived duty as honest gold depositories, not only via US economic sanctions, but by seizing gold assets from other governments. Banks seizing other government’s gold (in some form) include the Bank of England; Federal Reserve-US Treasury; Bank of Japan; the European Central Bank; and the Swiss National Bank.
Via this covert war on finance and treasure — seldom revealed publicly — governments must align with the fact that traditional repositories for governmental gold reserves: New York, London, and Switzerland… are now unsafe. Beyond such financial consequences for governments, a fracturing of the means by which the world’s most important transactions must be done, will have a future significant and detrimental impact upon the world economy. But of course that is what must happen, when the global hegemon itself is a gangster, and a criminal entity.
Steve Brown
*now diminished with potential change looming
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