By A.H. Krieg
In recent times a new banking practice involving the precious metals mining industry has made its appearance on the world markets. The process is called by various names but most commonly as precious metals leasing or gold and silver leasing. I have often ventured my opinion that bankers as a group are the robber barons of the 20th and 21st centuries. This new practice more than confirms that opinion.
The operative word, which is in fact a lie, in this entire fraud is leasing. Bear with me while I explain. Due to the fluctuations of the values of gold and silver some clever mega-bankers came up with a scheme to optimize and increase their margins. Central and Federal Reserve Banks by law are required to maintain a small percentage of their assets at hand as assumed hard collateral for the circulating fiat (1) currency printed by them. In other words Central banks have a storehouse where they keep some gold, together with stores at Fort Knox this supposedly is the collateral for the outstanding printed paper money. The fact that the volume of dollars printed just since Allan Greenspan took over the position as chairman of the board of governors of the FRS (2) far exceeds that reserve has not escaped our attention.
The word lease implies that you are borrowing something for which you pay a service charge, for its use, for the duration in which you hold the borrowed item. It furthermore implies that the lessee has the financial acumen to pay for the leased item and if not to replace it with one of equal and like value. This is not what is taking place here. The actual transactions are not only illegal but also highly speculative, while at the same time undermining the stability of our currency. Here is what’s taking place. Mining companies who have sold their inventory are borrowing Federal Reserve Banks gold reserves at an interest rate below prime, around one percent, lending interest charges and posting future mining production as the collateral of the principal borrowed. They then sell these borrowed from central banks gold stocks on the market and post future mining output to the banks. In other words there is no longer any reserve at the bank, (only a loan document) as well as at the mining company, whose assets have been diminished. Please understand this transaction for exactly what it is: fraud! This would be identical to your renting your house to someone and they then sold it to a third party and pocketed the money, promising to offer a condo as collateral at some future undisclosed date, while continuing to pay you rent. The basis of any lease agreement is that the leaser holds save the assets that he is leasing for return after contract end. What is instead taking place is that the leased asset is immediately sold. Furthermore it is a blatant violation of policy that banks must hold a percentage of their assets in hard currency, as back up collateral, all they remain with is a loan paper from a mining company whose assets are un-mined, unproven and in the ground. Consider the more than likely possibility that future mining costs will be higher than present, and as a result the mining company will bankrupt, having to replace the gold at a higher cost than production.
The primary reason for all this is that the central banks who are ripping us all off for billions each and every month wanted to rip us off some more. These are the very same central banks that through financing our national debt collect 40% on every tax dollar as interest on the national debt. They are now taking the funds (collateral hard currency) that they are by law supposed to hold in their vaults, and earning interest on those funds while no longer being in possession of them. These funds at least in principal are not the property of the banks but of the people. So in fact they are loaning out and making money on collateral for our paper money that does not even belong to them.
To make matters worse most of these (short term) loan papers are not played off but rolled over. The presently outstanding central bank loans to mining companies world wide amount to two years of total full out international mine production. That would indicate to me at least that these loans are not going to be re-paid, because if the mining companies delivered a full two years of production to central banks there would be no available gold, thus the price would go berserk.
Leasing a raw material is dishonest to begin with. A raw material has no utility, the only possible thing you can do with it is sell it or use it, as it has no utility leasing it is dishonest. What the mining companies are in fact doing is converting borrowed assets into cash, while the banks are making a 1% profit on what was previously the people’s static asset. In addition by calling the missing asset gold a loan they claim that they still comply with the law, having an asset. (Rental contract with the mining companies) To make matters worse silver was de-monetarized some time ago so Banks are not required to report on silver stocks at all, which have also been depleted.
Up to now we have been discussing gold, the situation with silver is far more serious. First is the fact that silver has been manipulated for a much longer time than old. Second silver was removed as a reserve, and government stocks have been almost totally depleted. Third silver has also succumbed to leasing, in the same way as gold. But worst of all is the paper short positions on the COMEX markets. Silver at this time in the Wall Street Journal shows future option market of about 800 million ounces. For over 10 years open positions for silver have exceeded total world annual mine production and including total world inventory. To my knowledge there is no parallel of such an action by any commodity in the recorded history of commodities markets. To re-cap there is now more silver speculation than the combined inventories and mainlining annual production. There is only one comment I can make on that, ridiculous!
This now should give you a good idea why the price of gold and silver has remained at such nonsensically low levels. Consider that the average mining cost for both metals remains below the July 2001 net selling price. It appears that for the last ten years central banks have been selling gold and silver at rates of about 16million ounces of gold and 110 million ounces of silver per year. And most of that has been in this nefarious loan swindle. The assumed gold and silver collateral for our paper dollars no longer exists; instead there are IOU’s, sort of reminds me of the SS trust fund!
(1) Fiat currency is paper money
(2) FRS Federal Reserve system—is not federal, has no reserves, and is a private corporation.
© 2001 Adrian H. Krieg - All Rights Reserved
Dr. A. H. Krieg is an author, inventor, and columnist more on www.kriegbooks.com