Quick Background of the last 78 years of currency vs. gold

Excerpts from Eric deCarbonnel of marketskeptics.com, Ron Paul, Bill Murphy of GATA video (Gold Market is admitted to be a Ponzi scheme –Utube)

Initially, the Glass -Steagal Banking act of 1933 was revoked by President Clinton and this allowed Franklin Raines (head of Fannie Mae) to initiate the massive subprime lending. In 1934 the Gold Reserve act was passed and private holdings in gold bullion became illegal in the US and citizens were given notes for their gold that was turned in. The Exchange Stabilization Fund was established and this gave immense power to the Secretary of the Treasury-there was no overseer by congress or anyone, no report of his dealings and this has had the final effect that he dominated the Federal Reserve. Often this position was filled by a person with no banking experience, and realistically no one person could ever realistically function in this capacity. Overnight in 1934 the monies from private citizens was changed from a pegged $20.00/ounce to $35.00/oz and this capital gains went not to the people but to the newly formed Exchange Stabilization Fund, some 2 million 0f seed money, and this also immediately caused the subsequent inflation. With inflation comes hunger, and in the US right now, one in 6 are on food stamps. With about a 30% rise in food prices in the last two years, with more inflation comes hunger and next comes a person stealing food, rising crime rates and next rioting as in Libya.

This Exchange Stabilization Fund fund, largely unknown to the people, is the channel for the treasury’s gold and currency dealings and is the world’s largest financial agency in the world. It is able to step in on Wall Street to prevent a too rapid decline (so Wall Street loves it); to do the same in the gold manipulation to protect the US dollar. Ron Paul likens this to a slush fund to interfere with the gold market, and probably with the financial market as well. Ron got a lot of attention when he asked Helicopter Ben if gold was money, and Ben (after an embarrassing pause) said “no”! It is common knowledge that after Roosevelt finished his morning breakfast egg, he would decide what the gold price would be for the day!

Last Thursday, the Commodity Futures Trading Commission held hearings on the possible imposition of commodity futures and options trading limits in the precious metals markets. There is a huge volume of trading levels in the London market (averaging $22 billion per day) and this could not possibly be settled by delivery of physical metals. Maguire (the gold whistle blower) whose car was struck by a hit-and –run driver causing both him and his wife to be taken to hospital) asked to be invited to speak at the CFTC hearings this past Thursday. When he was not invited, he contacted Adrian Douglas, another director of GATA, on March 23 to supply this information to be made public at the CFTC hearings. See “CFTC Gets Facts of Bullion Manipulation” by Patrick A. Heller

For many years, people assumed that the London Bullion Market Association (LBMA), the world’s largest gold market, was a simple bullion market- cash for gold. However, just in the past few months, more people are realizing that there is actually very little gold within the LBMA system.

Even long-time gold specialists like Maguire have been amazed to learn that there is no gold corresponding to the vast “gold deposits” at the major LBMA banks.

During the CFTC hearings, Jeffrey Christian of CPM Group apparently informed us that the LBMA banks actually have about a hundred times more gold deposits than actual gold bullion.

This means that there are thousands of clients — Asian and Middle Eastern governments and sovereign wealth funds among them — who think they own hundreds of billions and perhaps trillions of dollars of gold bullion, and are being charged storage fees on that fantasy bullion, but they really own unsecured gold loans to the banks at a negative interest rate.

There is nothing new about this. Morgan Stanley paid several million dollars in 2007 to settle claims that it had charged 22,000 clients for storage fees on silver bullion that didn’t exist.

Once the public realizes the extent of the manipulation, gold and silver prices are likely to skyrocket.

All this becomes important because on August 2nd congress (perhaps) has to raise the debt ceiling. One of the (semisecret) funding is the Exchange Stabilization Fund and in order for the US government to function until this deadline, this fund cannot be funded as the debt limit has been reached. Without funding, the fund loses power!

The short conclusion to all this is that the higher the price of gold, the more valuable Tesoro and the other properties become. IMO