Sunday, December 8, 2019

Leaked Mnuchin Pic Shows ONLY 1 GOLD Bar Left at Fort Knox!!!


from SilverDoctors:

The photo from just now is epic! We are breathless, speechless, and not quite sure what to make of it… 

“You mean to tell me this is all that’s left???”

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The Truth About the Fort Knox Gold

by Jim Rickards, Daily Reckoning:

One of the little-known items on the Fed’s balance sheet is a vital asset it received from the U.S. Treasury a long time ago…

During the Great Depression, in 1933, President Roosevelt issued an executive order requiring anyone with gold to surrender it to a Federal Reserve bank or any member bank of the Federal Reserve system.

The Federal Reserve banks also required the commercial banks to hand over their gold to the Fed. Now, suddenly, the gold went out of the commercial banks into the Federal Reserve Bank.

But under the Gold Reserve Act of 1934, the Fed was ordered to surrender all its gold to the Treasury Department. All the nation’s gold in effect came under direct government ownership.

Now, this is key: The Federal Reserve is actually a private system, while the Treasury is an arm of the U.S. government. And the Fifth Amendment of the Constitution prevents the government from taking private property without just compensation.

To get around that legality, the “just compensation” was a gold certificate the Treasury issued to the Fed in exchange for its physical gold.

To this day, the Fed carries that gold certificate on its balance sheet.

The Treasury officially values its gold at $42 an ounce. That was the official gold price from 1973, two years after the U.S. abandoned the Bretton Woods system. Of course, the market price of gold today is almost $1,300 an ounce.

But if you take the face value of the gold on the Fed balance sheet, divide it by $42 an ounce and then come up with a number of ounces and convert that into tons, it comes out to over 8,000 tons.

That’s highly interesting, because that’s how much gold the Treasury currently owns.

The Treasury needs at least 8,000 tons of gold to back up that paper certificate it handed the Fed back in the 1930s to satisfy the Fifth Amendment.

If you take the 8,000 tons on the Fed balance sheet in the form of this gold certificate, market to market at $1,300, that mounts to well over $300 billion.

So the secret to the Fed’s balance sheet is its “hidden gold asset,” that gold certificate it received from the Treasury in the 1930s.

Nobody talks about this or admits it. But our whole system is based on gold.

But what about the gold in Fort Knox? Is it actually there?

There is a lot of confusion on this subject.

First off, Fort Knox was built in 1937 partly to house gold that the Treasury was scooping up after the Gold Reserve Act took effect. The gold had been kept it in vaults in the basement of the Treasury. But they ran out of space, so they built Fort Knox to house the gold.

Many gold bugs and conspiracy theorists say there is no actual gold in Fort Knox. They say the reason the government will not audit the gold, for example, is because the gold is not there.

But the truth is quite the opposite.

If you are the Fed or the Treasury and you want people to think that gold is unimportant — which they do — why would you audit it?

You audit things that are important. You do not audit things that are unimportant. If the Fed doesn’t want you to think that gold is important, it follows that they would not audit it. Auditing it pays gold too much respect.

I am in favor of an audit, just to be clear. But the fact that the government does not audit the gold does not tell you that the gold is not there. They just do not want you to pay any attention to it.

But is the gold actually in Fort Knox?

Let me say it right now: Yes, the gold is there. I actually have some evidence that the gold is there from military sources.

Incidentally, most people think all the Treasury gold is in Fort Knox. But that is not correct. A little more than half the gold is at Fort Knox, but the rest is stored at West Point on the Hudson River in New York.

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Explaining ACChain, Lynette Zang, Crypto Currency & The Mark of the Beast


from Real Speaks:

In the last few weeks major events have unfolded around crypto currencies that clearly show that we are on our way to a New World Order One World Currency… and its digital.  Some are saying that this is the Mark of the Beast System.  Signs include plans of the IMF to use a vehicle called the SDR that will be pegged to a digital currency using the ACChain quantum computing platform.

U.S. Banks Precious Metals Derivative Exposure Surged In The Beginning Of 2017


by Steve St. Angelo, SRSrocco:

According to the most recent report on the U.S. Financial Institutions Derivatives trading activity, the U.S. banks held a record amount of precious metals contracts in the first quarter of 2017. Not only did the U.S. banks report a record amount of precious metals contracts, but they also held an unprecedented quantity in notional value of commodity and equity derivative contracts.

There just seems to be a lot of paper floating around in our highly inflated stock, bond, and Forex markets. And… there needs to be. Without an ever increasing amount of leverage via their derivative bets and hedging, these markets would be in serious trouble. Furthermore, the practice of using contracts to hedge bets upon on other derivative bets has put the financial market in a highly fragile state.

The Office of the Comptroller of the Currency (OCC) put out its First Quarter 2017 Quarterly Report on Bank Trading and Derivative Activities. In that report, they published the following chart on the U.S. Banks’ notional value in precious metals contracts:

As we can see in the chart, the overall trend has continued higher since 2000. What is interesting is that the notional value of precious metals contracts held by the U.S. banks was even greater in the first quarter of 2017 versus Q4 2012 when the prices of the precious metals were much higher.

In looking at previous data, some quarters reported a larger amount of precious metals contracts, which was due to the banks adding short contracts as the price of precious metals increased. However, Q1 2017 of $43.6 billion was up considerably versus the $28.3 billion in Q1 2016.

For example, in Q3 2016, U.S. banks also held $43.6 billion in precious metals contracts. Again, this was due to a lot of short contracts held by the U.S. banks when the gold price surged to a high of $1,366 in the third quarter of 2016. As the gold price sold off over the next several months, the precious metals contracts declined in the fourth quarter of 2016:

We can see this in the last bar on the chart on the right. But what is interesting is the significant increase in U.S. banks’ precious metals exposure in the first quarter of 2017, shown in the first chart above, when the number of short gold contracts the large U.S. banks held declined significantly in the graph below:

Now, this is only showing the U.S. banks’ gold contracts. These contracts do not include other precious metals, such as silver, platinum, and palladium. However, gold is by far the largest market. If we include the FX contracts (forward exchange contracts), the total notional amount is enormous:

The total notional amount of U.S. banks’ FX & Gold Contracts was a stunning $34.5 trillion in the first quarter of 2017, up from $30.7 trillion at the end of 2016.  Here is the definition of a Forward Exchange Contract by Investopedia:

Forward Exchange Contract: A forward exchange contract is a special type of foreign currency transaction. Forward contracts are agreements between two parties.

Forward contracts are not traded on exchanges, and standard amounts of currency are not traded in these agreements. They cannot be canceled except by the mutual agreement of both parties involved. The parties involved in the contract are generally interested in hedging a foreign exchange position or taking a speculative position.

The nature of forward exchange contracts protects both parties from unexpected or adverse movements in the currencies’ future spot rates.

So, these FX Contracts are hedges on the movements of different fiat currencies spot prices. We don’t know the percentage breakdown of the Gold or FX contracts. However, I would imagine the majority being in the FX Contracts that are hedging the different fiat currencies.

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by Jim Quinn, The Burning Platform:

With all the turmoil in the last few weeks over websites, censorship, free speech, and leftist tech corporations banning sites they don’t like, I thought it would be a good time to clarify my vision and purpose for The Burning Platform. First, TBP is not an alt-right, white supremacist or pro-nazi website. I also don’t consider it a pro-Republican website. It’s been built by being anti lots of stuff. I don’t want to be part of any group that would have me as a member.

My philosophy is practical libertarian. I want to be left alone to live my life as I choose. I don’t care how others live their lives. The less government, the better. The purpose of our military is to protect our country from invasion, not policing the world. The Austrian School of economics makes the most sense to me. Keynesian economists are either liars or brain damaged. I’m a strict Constitutionalist. I despise Wall Street bankers, the Federal Reserve, liberal politicians, GOP establishment politicians, neo-cons, fake news corporate media, the military industrial complex, government apparatchiks, the surveillance state, and the Deep State oligarchs.

The site’s patron saints are Ron Paul and David Walker. The mistreatment of Ron Paul by the corporate media and the GOP establishment during his 2008 and 2012 campaigns for president was the motivation for me to begin writing. The name of the website is taken from a quote by David Walker which I believe sums up the dilemma facing our country. Our fiscal situation is now far worse than it was when he made this statement in 2007. But still, the ignorant masses continue to mindlessly sleepwalk through life staring at their iGadgets as the American Empire accelerates towards bankruptcy and a great fall.

“The US government is on a “burning platform” of unsustainable policies and practices with fiscal deficits, chronic healthcare underfunding, immigration and overseas military commitments threatening a crisis if action is not taken soon.

There are striking similarities between America’s current situation and the factors that brought down Rome, including declining moral values and political civility at home, an over-confident and over-extended military in foreign lands and fiscal irresponsibility by the central government. The fiscal imbalance meant the US was on a path toward an explosion of debt.

With the looming retirement of baby boomers, spiraling healthcare costs, plummeting savings rates and increasing reliance on foreign lenders, we face unprecedented fiscal risks. Current US policy on education, energy, the environment, immigration and Iraq also was on an unsustainable path. Our very prosperity is placing greater demands on our physical infrastructure. Billions of dollars will be needed to modernize everything from highways and airports to water and sewage systems.”

 David Walker – 2007

The original intent of creating this website was to have a place where I could post my articles without being censored. Seeking Alpha began changing my articles and eventually banning me. Financial Sense black balled me. They both sold out to Wall Street. After having a falling out with my original web master and then running the site on the cheap by myself for a few years, a massive denial of service attack in 2014 looked like it would be the end of TBP. That is when fellow blogger Mike Krieger and TMWNN came to my rescue. TMWNN fought off the denial of service attack and has protected TBP ever since.

TBP went from a half assed shoestring operation to a more professional website. My generous readers stepped up with a significant level of donations and the big boob ads get plenty of clicks from my dirty old man demographic, generating decent ad revenue. The site has changed dramatically over the last few years as my annual visitor totals have doubled from 4.4 million to 8.8 million. Not bad for some guy doing this in his spare time.

As the TBP community has grown I had to make a choice. I could just write an article or two per week and leave the site dormant for most of the week. I have very limited time, especially during the workweek. It became clear to me the community wanted to interact on a daily basis, so I decided to turn TBP into a mini Zero Hedge with 15 to 20 posts per day from various writers. I’ve been thrilled to have multiple TBPers become great contributors to the site with an outstanding array of articles and viewpoints. I’ve become more of a publisher/editor and less of a writer. I prefer writing, but keeping this community entertained and involved on a daily basis is more important.

The entire point of this website is to piss people off, wake them up to the evils being done by their government, uncover the fake data pumped out on a daily basis by the government and media, reveal the propaganda techniques used by the Deep State to keep the sheep sedated, and warn them of the financial peril that unequivocally will destroy our country. I view everything through the lens of the Fourth Turning. Strauss & Howe’s generational theory makes total sense to me. There is nothing that has happened since I read that book in 2007 to make me question it’s hypothesis. We are in the middle of a Fourth Turning and I’m trying to help people navigate through it.

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Out of Control: The Washington War Making Machine


by Phil Butler, New Eastern Outlook:

The alleged DNC leaks and the so-called “Russiagate” are a hoax concocted to perpetuate crisis, and nothing more. Most people sense this, but cannot effectively argue with the massive propaganda machine drumming in every American ear. The most powerful country in the world is now a runaway war making machine. Here’s a new and sentient look at the supposed Russian election meddling.

Washington is “off the reservation” since Hillary Clinton lost the 2016 race for president. The government of the United States is now making policy and law based on what groups of elites want, and not on what is best for the American people. Most of my friends in the US will not even argue this point. We’ve always known that politicians lie, only now have the lies threatened the foundations of liberty. Presenting no tangible evidence whatsoever to the American people, US legislatures ask the people to take on faith allegations that effect billions of people around the world. Corporate, government, and foreign interest corroborate without any shred of proof. If we had not overused the spooky “Big Brother is Watching” message these last few years, then this Orwellian reality could at least have a moniker. The sequence of recent events should have peaked our interest, but they have not. Trump goes to Europe and meets Putin. Immediately afterward Congress is whopped over the head by the Israeli lobby (AIPAC) to draft and vote a law lumping Russia in with North Korea and Iran. All the while concrete evidence is withheld from the American people, and contravening evidence is ignored. Some even say the presidency has been usurped, and the crisis machine stampedes onward. Russia’s Prime Minister, Dmitry Medvedev said:

“Trump’s administration has demonstrated total impotence by surrendering its executive authority to Congress in the most humiliating way.”

We should feel as if we are caught on a hamster wheel right now, but somehow the masses move on in numb apathy. The Nation reports on a group of former US intelligence officials saying the hack of the Democratic National Committee’s computers in 2016 was an inside job, and the mainstream deconstructs. The Veteran Intelligence Professionals for Sanity, or VIPS, said there was an insider leak that occurred thanks to someone with access to a DNC computer. Quoting author Patrick Lawrence:

“The evolution of public discourse in the year since is worthy of scholarly study: Possibilities became allegations, and these became probabilities. Then the probabilities turned into certainties, and these evolved into what are now taken to be established truths. By my reckoning, it required a few days to a few weeks to advance from each of these stages to the next. This was accomplished via the indefensibly corrupt manipulations of language repeated incessantly in our leading media.”

In short, we accepted the lies and the liars are further emboldened. What else do liars on a mission for themselves do? Authoritative discourse is being shunned in favor of wild speculation and malicious machination. Rolling Stone’s Matt Taibbicharacterizes the whole Russiagate affair and the new Red Scare as “an ongoing freakout” for anyone truly in the know about Russia. His report unmasks the hysterical mind melt surrounding these issues citing people like former DNC chair Donna Brazile tweeting this week, “The Communists are dictating the terms of the debate”. Excuse me, but are American’s really dumber than bread? “The Communists?” Taibbi’s story brings up the likes of Vladimir Potanin, Boris Berezovsky and Mikhail Khodorkovsky, which in turn reveals the true motivations behind all the anti-Putin and anti-Russia narrative – financial skullduggery. And we all know it by now. Russiagate is just another part of the globalist battle plan for chipping away at mother Russia for her wealth. But back to cases with no evidence.

In the case against Russia, the world has on the one hand professional liars, AIPAC puppets, military industrial complex pawns, and the same military geniuses that swore WOMDs existed in Iraq. This side has produced nothing but some drummed up story that the Romanian hacker “Guccifer 2.0” hacked the election. On the other side there are researchers a plenty including William Binney, formerly the NSA’s technical director for world geopolitical and military analysis and designer of many agency programs now in use; Kirk Wiebe, formerly a senior analyst at the NSA’s SIGINT Automation Research Center; Edward Loomis, formerly technical director in the NSA’s Office of Signal Processing; and Ray McGovern, an intelligence analyst for nearly three decades and formerly chief of the CIA’s Soviet Foreign Policy Branch. The latter group, who are joined by the likes of Robert Parry and a cadre of independent investigative journalist, have presented compelling arguments that have never been addressed by Washington. For Parry’s part, this report contains all that is needed to understand the situation. I quote from the letter VIPS sent to President Trump, which was shared by Parry on Consortiumnews concerning a request for proof sent to President Barack Obama:

“Addressing this point at his last press conference (January 18), he described “the conclusions of the intelligence community” as “not conclusive,” even though the Intelligence Community Assessment of January 6 expressed “high confidence” that Russian intelligence “relayed material it acquired from the DNC … to WikiLeaks.”

Obviously, this was an effort by the outgoing president to excuse himself should proof against Russiagate be uncovered. In the letter to President Trump, the former spooks of VIPS also warn of CIA and NSA capabilities of astounding capability. Significant in this section of the letter, and from the WikiLeaks Vault 7 revelations, was something called Marble Framework, which is a digital development apparently suppressed by the New York Times and other media. The Marble Framework is a secret anti-forensic Marble Framework, which is basically an obfuscator or a packer used to hide the true source of CIA malware. So, what WikiLeaks revealed about Marble is essentially the CIA framework for framing the Russians or anyone for the agency’s own clandestine efforts. Short version, the CIA probably used Marble to implicate Putin and Russia and nobody in “owned media” broke the story properly. Furthermore, when the news did surface legislators ignored it just as if they were involved in the frameup.

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Did the Economy Just Stumble Off a Cliff?


by Charles Hugh Smith, Of Two Minds:

The signs are everywhere for those willing to look: something has changed beneath the surface of complacent faith in permanent growth.

This is more intuitive than quantitative, but my gut feeling is that the economy just stumbled off a cliff. Neither the cliff edge nor the fatal misstep are visible yet; both remain in the shadows of the intangible foundation of the economy: trust, animal spirits, faith in authorities’ management, etc.

Since credit expansion is the lifeblood of the global economy, let’s look at credit expansion. Courtesy of Market Daily Briefing, here is a chart of total credit in the U.S. and a chart of the percentage increase of credit.

Notice the difference between credit expansion in 1990 – 2008 and the expansion of 2009 – 2017. Credit expanded by a monumental $40+ trillion in 1990 – 2008 without any monetary easing (QE) or zero-interest rate policy (ZIRP). The expansion of 2009 – 2017 required 8 long years of massive monetary/fiscal stimulus and ZIRP.

This chart of credit change ({5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}) reveal just how lackluster the current expansion of credit has been, despite unprecedented trillions of stimulus pumped into the financial sector.

Here are two other snapshots of debt: margin debt and private credit. Both have hit new highs.

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Unbelievable! Government to Retry Bundy Ranch Defendants a Third Time!


by Tim Brown, Freedom Outpost:

These tyrants just can’t let it go.  They can’t make their case to the jury to find these men guilty so they are going to try them a third time and push other defendants’ court date back further into the future!

After the jury acquitted two defendants in the Bundy Ranch case of all charges against them, they were deadlocked on two others, O. Scott Drexler and Eric Parker, both of Idaho.

Still, they were released from prison on Tuesday evening, but discovered on Wednesday that the government, who could not make their case to the jury, want to try them again.

“Surprised? No. Disappointed? Yes,” said Parker’s lawyer, Jess Marchese. “It’s clear at this point the prosecution is taking this personally now.”

 Marchese said Acting Nevada U.S. Attorney Steven Myhre twice called Parker a coward during a court hearing Wednesday.

Marchese said it was unprofessional and unnecessary. “This is a business,” he said. “And there’s no need for emotion in a business.”

It’s actually pretty cowardly what Mr. Myhre has been involved in, in attempts to bring in situation and conduct that occurred well after Bundy Ranch against defendants to make his case, as well as being just fine with holding defendants up to five years without worrying about violating their right to a speedy trial.

Consider that Mr. Myhre is the same man who would not include the men found guilty in the first trial in the retrial for the charges they were not found guilty on because of time and expenses, but he will not let these men go to save money and time and actually give the other men their day in court in a timely manner.

AZ Central reports:

The U.S. Attorney’s Office in Las Vegas confirmed Wednesday it will go back to court for the third time in an attempt to convict two men accused of taking up arms against  federal agents.

Less than 24 hours earlier, a jury had acquitted two standoff defendants and dismissed the most serious charges against two others. Now federal prosecutors say they will retry the men next month on outstanding weapons and assault charges.

The move pushes back the trials for 11 other defendants in the 2014 Bundy Ranch standoff, including Nevada rancher Cliven Bundy and his sons Ammon and Ryan Bundy, who have spent 18 months in prison while awaiting their court date.

Parker and Drexler face one count each of assaulting a federal officer and carrying a firearm in the commission of a crime. Parker faces two additional counts of using a firearm to threaten a federal officer.

Nevermind that the keeping and bearing of arms is a right protected under the Second Amendment.

Nevermind that the position of the men and their weapons was a defensive position in the face of hundreds of armed, tactically trained federal agents and snipers with their weapons targeting innocent Americans who were simply engaged in protesting the lawless actions of the Bureau of Land Management.

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Did the FBI just try to recruit a mentally ill man to carry out a right-wing terrorist plot?


by Isabella Z., Natural News:

When the FBI announces that they have foiled a terrorist plot, many of us heave a huge sigh of relief and feel thankful that they are working so hard to keep all of us safe. However, some people are concerned that entrapment plays a role in some of these arrests, and a recent case involving a mentally ill man is raising a lot of questions.

Jerry Drake Varnell is a 23-year-old schizophrenic who was accused of plotting to bomb a bank. FBI documents show that he subscribed to a type of right-wing ideology known as “Three Percenter,” which is devoted to exposing injustice and corruption. According to journalist Matt Agorist, federal documents show that the young man drove what he thought was a stolen van that was carrying a 1,000-pound bomb of ammonium nitrate to blow up a bank in Oklahoma City.

While no sane person would ever condone bombing a bank for any reason or defend someone for doing so, Varnell’s parents have called out the FBI for continuing to groom him despite knowing he was a paranoid schizophrenic. According to his family, he had been declared unfit mentally to live on his own. They feel that the FBI’s mind game tactics led him to commit an act that he otherwise would not have.

They say their son did not have a job, a car, or money; he didn’t even have a driver’s license. They report that he has been in and out of mental hospitals since the age of 16 and has had several “serious full-blown schizophrenic delusional episodes.” Had the FBI not picked him up from his home and given him a vehicle and a fake bomb, they feel there is no way he would have had the means to commit such an act.

Moreover, they allege that they suspected something was amiss with the informant who had been contacting their son and asked him to leave their son alone, but he continued sneaking into their home. They suspect the informant persisted in hopes of having his criminal record cleared.

They feel the FBI should have noticed how mentally ill their son was and sought hospitalization and conspiracy charges rather than pushing to see if he would go through with the plot. They say there are other facts about the case they do not wish to publicize that support their son.

It’s becoming a recurring theme

According to former CIA case officer and Marine Corps intelligence officer David Steele, such actions are not uncommon. He is quoted by the Activist Post as saying that many terrorists are actually “false flag terrorists” who are created by our security services.

A report from Business Insider last year outlined how the FBI had been ramping up its usage of sting operations for terrorism cases using tactics like having undercover agents pose as jihadists in order to ensnare people who they suspect support the Islamic State. They said that agents often sought out people who had shown radical views and encouraged them to plot terrorist acts, giving them money and the weapons needed to pull it off and then arresting them before they can see it through.

We all want potential terrorists to be stopped in their tracks, but critics of the approach feel that this only entraps people who would not have committed such an act had the government not instigated it. Project Salam Attorney Stephen Downs told Business Insiderthat the FBI often targets people with mental disabilities, particularly those who are psychotic and on medication.

This was also the case with Sami Osmakac, a mentally ill 25-year-old who was given a car bomb and taxi money in an FBI sting.

In another famous case, U.S. District Judge Colleen McMahon raised concerns about the “Newburgh Four” men who were arrested for trying to launch a missile at two synagogues and an air base, saying: “I believe beyond a shadow of a doubt that there would have been no crime here, except the government instigated it, planned it and brought it to fruition.” One of the men, Laguerre Payen, had been diagnosed with schizophrenia and had a past riddled with psychiatric problems.

In light of all this, it is not surprising that Varnell’s parents believe he is simply the latest mentally ill young man to get caught up in the FBI’s quest to justify its budget and existence.

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Gold – crossing the Rubicon


by Alasdair Macleod, GoldMoney:

Gold is challenging the $1300 level for the third time this year. If it breaks upwards out of this consolidation phase convincingly, it could be an important event, signalling a dollar that will continue to weaken.

The factors driving the dollar lower are several and disparate. The US economy is sluggish relative to the rest of the world, the rise of Asia from which America is excluded is unstoppable, geopolitics are shifting away from US global dominance, and the end is in sight for monopolistic payment for oil in US dollars.

These subjects have been covered in some detail in my recent articles, which will be referred to for further clarification where appropriate. This article summarises these trends, and explains why the consequence appear certain to drive gold, priced in dollars, much higher.

The importance of gold and reasons for its suppression

The post-war Bretton Woods Agreement confirmed the US dollar to be fixed to gold at $35 per ounce. All other national currencies were linked to gold through the dollar at the central bank level. Ordinary civilians, businesses and commercial banks were not permitted to exchange their currencies for gold through central banks, so this was simply a high-level arrangement designed to maintain control of gold priced in dollars.

A few years after Bretton Woods, in 1949 and when the newly-fledged IMF began to collate statistics on national gold reserves, the US Treasury was recorded owning 21,828.25 tonnes of gold, 74.5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of all central bank reserves, and 43.6{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of estimated above-ground gold stocks. However, over the years the proportions changed, and by 1960, US gold reserves had declined to 15,821.9 tonnes, 47{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of central bank reserves, and 24.9{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of above ground stocks.

Clearly, American control of gold had weakened considerably in the two decades following Bretton Woods. This weakening continued until the failure of the London gold pool, the arrangement dating from 1961 whereby the major American and European central banks collaborated to defend the $35 peg. The Americans had abused the gold discipline by financing foreign ventures, notably the Korean and Vietnam wars, not out of taxation, but by printing dollars for export, and it began to put pressure on the dollar. The London gold pool effectively spread the cost of maintaining the dollar peg among the Europeans. Unsurprisingly, France withdrew from the gold pool in June 1967, and the pool collapsed. By the end of that year, the US Treasury was down to 10,721.6 tonnes, 30{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of total central bank gold reserves, and 15{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of above-ground stocks.

Inevitably the decline continued, and by the time of the Nixon shock (August 1971 – the abandonment of the gold exchange commitment) it was clear the US Government had lost control of the market. She had only 9,069.7 tonnes left, representing 28.3{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of central bank gold, and 11.9{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of above ground stocks. Monetary policy switched from the fixed parity arrangements centred on gold through the medium of the dollar, to a propaganda effort aimed at removing gold from the monetary system altogether, replacing it with an unbacked dollar as the international reserve standard.

The result was the purchasing power of the dollar and the other major currencies measured in gold has all but collapsed, as shown in the chart below.

Between 1969 and today, the dollar’s purchasing power relative to gold declined by 97.3{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} (the blue line). By banning gold from having any monetary role, the US removed price stability from the dollar. More recently, since the great financial crisis the quantity of fiat money in the global currency system has expanded dramatically relative to the long-term average growth rate of money and bank credit. This is illustrated in our second chart, which records the growth in the total amount of fiat dollars in the US banking system.

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