Liberty Bliztkrieg, via Mike Krieger, via Tyler Durden, via Zerohedge, via Vox.
This is one of those stories about the gold market that almost seems too wild to be true since the numbers are so extraordinary. According to a Reuters article from earlier today, Australian bank Macquarie has reported that gold is flooding out of London and into Switzerland at a mind-boggling rate. Specifically, 240 tons were exported in May alone and 797 tons during the first half of 2013. That means gold is being exported at a annualized run rate of 17x the 92 tons exported for all of 2012. That’s insane.
Moreover, it seems a lot of that gold is being sent to Switzerland so that the 400oz bars can be melted down into different sizes that are more amenable to Asian sensibilities. So, as many of us suspected all along, what has happened is lobotomized Westerners have sent much of their gold to Asia just as the financial system prepares to melt down again.
The least that can be said is that this Autumn looks to be interesting, And indeed, this is what Vox has stated, ever the cautious sort of outsider.
But a pecuniary number of possible interpretations are clear to my indefatigable imagination. Can it be related to fiat monetary policy? No, because by definition fiat money is unrelated to metal reserves. Can it be due to unusual commodities trading? No, because the original writer has proven by exhaustion that the bullion has been moved from the national reserves. Can it be part of an international negotiation or large economic transaction? Well…yes, but not in the way you’re thinking.
See, the numbers are too high for this to be a good material choice for someone who’s planning to stay in the UK. Say you’re the minister of finance and you have no oversight, and you’re looking for a quick buck. You could print the money and spend it yourself (inflating the currency, but only after you’ve spent the money at the previous, higher value), but maybe that’s politically infeasible. So instead, you decide to sell all the gold reserves overseas in exchange for Euros. Now you have a bunch of Euros and no gold reserves. Aside from the volatility of your ill-gotten paper, you’re no better off than before. If you had wanted to buy assets you could have used gold in the first place. Gold is currency everywhere.
I think the gold is being embezzled. This is reminiscent of the crony capitalism exhibited by Soviet officials at the end of the Cold War, when they sold off all of the state-owned natural resources for a pittance on the international market. A few men made their fortunes this way on the backs of their already-starved comrades and, escaping the doomed edifice the misbegotten idealism known as Marxism, disappeared to the Caymans or wherever to live and die in peace and luxury. This is generally the fate of humanity’s greatest monsters, which ought to make you thankful that our lord and savior is also a vengeful judge.
To learn more about this, a good starting place is Steve Sailer’s Marc Rich and the Rape of Russia.
The other, less likely option is that this is a responsible move by national bankers (HAHAHAHAHA) to protect themselves in the event of near-future bank runs. After that little one-time, 4/10% “fee” on private bank accounts in Estonia and the reasonable expectation of similar taxes or fees in other doomed Eurozone countries to make up federal shortfalls, bank customers are in the blocks and waiting for the starting gun. But if the money isn’t there (and I don’t mean fractional reserve lending), bankers have an excuse to allow only small withdrawals each day, a trickle rather than a flood. I can imagine the masses being convinced that a “national emergency” has prompted $100 daily withdrawal limits on all accounts. You don’t really need more than $100 per day, do you comrade?
Something’s up at any rate, even if all of my speculation is bullshit. The only thing this is not is “business as usual”.