Anyone who wants to get to the truth behind the inflationary threats to their wealth should ignore everything the Central Banks say about inflation and look instead at their actions.
Worldwide gold demand in 2012 was another record high of $236.4 billion in the World Gold Council’s latest report. This was up 6% in value terms in the fourth quarter to $66.2 billion, the highest fourth quarter on record. Global gold demand in the fourth quarter of 2012 was up 4% to 1,195.9 tonnes.
Central bank buying for 2012 rose by 17% over 2011 to some 534.6 tonnes. As far as central bank gold buying, this was the highest level since 1964. Central bank purchases stood at 145 tonnes in the fourth quarter. That is up 9% from the fourth quarter of 2011, and the eighth consecutive quarter in which central banks were net purchasers of gol
Note… Central Banks, while talking down money printing and denying the presence of inflation, bought more Gold in 2012 that any year dating back to 1964. Indeed, However, since becoming net buyers of Gold in 2010, the Central Banks have been increasing their Gold purchases rapidly.
In 2010, Governments worldwide bought 77 tonnes of Gold. In 2011 it was 457 tonnes. And last year it was a whopping 535 tonnes. All told, they’ve accumulated 1,000 tonnes of Gold since 2Q09. At today’s price of $1600 per ounce, this stash is valued at over $56 billion.
The key issue here is not the amount ($56 billion in Gold purchases is nothing compared to the over $10 trillion in new money Central banks have printed since 2007), but the trend: Central Banks were net sellers of Gold for decades until 2010.
Other major investors are looking to get their hands on Gold… not the promise of Gold, but the actual metal.
Germany has the second largest Gold reserves in the world behind the US. Since the early ’80s, it has stored the majority of these reserves with the NY Fed (45% vs. 13% in London, 11% in Paris and the remaining 31% in Frankfurt).
With that in mind, everyone needs to be aware that last Monday Germany’s Bundesbank announced it will be moving a major portion of its reserves from the US and all of its reserves from France back to Frankfurt.
Nearly half of Germany’s gold reserves are held in a vault at the Federal Reserve Bank of New York — billions of dollars worth of postwar geopolitical history squirreled away for safe keeping below the streets of Lower Manhattan.
Now the German central bank wants to make a big withdrawal — 300 tons in all.
On Wednesday, the Bundesbank said that it would begin moving some of the reserves, the second-largest stock in the world after that of the United States. The goal is to house more than 50 percent of German gold in Bundesbank vaults in Frankfurt by 2020, up from a little less than a third today, the bank said…
The new policy will include the complete withdrawal of 374 tons of German gold stored at the Banque de France in Paris, about 11 percent of the total. Bundesbank officials were quick to note that the decision was not a reflection of French trustworthiness. Rather, because France and Germany now share the euro, there is no need for reserves as insurance against currency crises.
This announcement came with the usual political statements that the decision had nothing to do with a lack of trust between the Bundesbank and the US Fed or Bank of France, but the message is obvious: Germany sees the writing on the wall and is moving to secure its Gold reserves.
The same goes for Texas:
Texas Republican State Representative Giovanni Capriglione authored the bill demanding state owned gold bars be returned to the Lone Star State. The legislation to pull $1 billion in gold reserves from a Federal Reserve vault in New York is supported by Governor Rick Perry.
The financial crisis in Cyprus which prompted a run on the bank and ultimately a closure of the financial institutions reportedly bolstered support for the Texas gold bar return bill. State Representative Capriglione had this to say about why he penned the bill:
“For us to have our own gold, a lot of the runs on the bank and those types of things, they happen because people are worried that there’s nothing there to back it up.”
Governor Perry stated that if Texas owns the gold, then no one else should be able to determine if the state can reclaim possession of the bars of precious metal. Representative Capriglione also noted that Texas is not interested in implementing its own gold standard. According to the Republican’s statements about the gold bars bill, he simply wants to bolster the state’s fiscally secure reputation. The Texas public servant also feels that such a solid financial persona would be beneficial in case an international of national fiscal crisis occurred.
The legislation notes the state does not merely want gold certificates from the Federal Reserve, they want the actual gold bars to store inside a planned Texas Bullion Depository. Moving $1 billion in gold bars from New York to Texas would be a huge task, one some are calling impractical. State Representative Capriglione suggested selling the gold currently housed inside the New York vault and then repurchasing the same amount in Texas.
Investors forget that the single most important role played by Central Banks is to maintain confidence in the system. For that reason they will NEVER admit inflation is a problem. But if inflation isn’t a problem, WHY ARE CENTRAL BANKS LOADING UP ON GOLD?
Watch what they do, not what they say.
Read more at http://investmentwatchblog.com/why-are-central-banks-buying-gold/#AD11VJB1LRmRodrl.99
The Trans-Pacific Partnership (TPP) is an international treaty negotiated in secret – hidden even from congressmen who oversee such treaties – which threatens to destroy national sovereignty.
More and more states are considering launching their own public banks.
A 2011 study from Demos – a non-partisan public policy organization – in conjunction with the Center for State Innovation, analyzed the potential for “partnership banks” across the country, including numerous states already considering such legislation. The study found:
Across the country, states are considering proposals to move general revenue deposits out of the Wall Street banks that dominate the banking business today, and use them to capitalize a new local public structure with a mission to grow the local economy. A “Main Street Partnership Bank” would be modeled on the nearly 100-year-old public Bank of North Dakota (BND). This public policy innovation—also known as a Public Bank or State Bank—could contribute to the health of local community banks, state budgets and small business job growth in an era of rapid banking concentration, budget deficits and disinvestment on Main Street.
Partnership Banks can raise revenue for states without raising taxes, and increase loans to small businesses precisely when Wall Street banks have cut back on lending and raised public borrowing costs. A Partnership Bank would act as a “banker’s bank” to in-state community banks and provide the state government with both banking services at fair terms and an annual multi-million dollar dividend.
If modeled on the successful Bank of North Dakota, Partnership Banks in other states would:
- Create new jobs and spur economic growth. Partnership Banks are participation lenders, meaning they partner—never compete—with local banks to drive lending through local banks to small businesses. If Washington State had a fully-operational Partnership Bank capitalized at $100 million during the Great Recession, it would have supported $2.6 billion in new lending and helped to create 8,212 new small business jobs. A proposed Oregon bank could help community banks expand lending by $1.3 billion and help small business create 5,391 new Oregon jobs in its first three to five years. All of this would be accom- plished at a profit, which Partnership Banks should share with the state.
- Generate new revenues for states directly, through annual bank dividend payments, and indirectly by creating jobs and spurring local economic growth…
- Lower debt costs for local governments. Like the Bank of North Dakota, Partnership Banks can get access to low-cost funds from the regional Federal Home Loan Banks. The banks can pass savings on to local governments when they buy debt for infrastructure investments. The banks can also provide Letters of Credit for tax-exempt bonds at lower interest rates.
- Strengthen local banks even out credit cycles, and preserve real competition in local credit markets. There have been no bank failures in North Dakota during the financial crisis. BND’s charter is clear that its goal is to “be helpful to and to assist in the development of [North Dakota banks]… and not, in any manner, to destroy or to be harmful to existing financial institutions.” By purchasing local bank stock, partnering with them on large loans and providing other sup- port, Partnership Banks would strengthen small banks in an era when federal policy encourages bank consolidation.
- Build up small businesses. Surveys by the Main Street Alliance in Oregon and Washington show at least 75 percent support among small business owners. In markets increasingly dominated by large corporations and the banks that fund them, Partnership Banks would increase lending capabilities at the smaller banks that provide the majority of small business loans in America.
These various proposals would “move general revenue deposits out of the Wall Street banks that dominate the banking business today, and use them to capitalize a new local public structure with a mission to grow the local economy.”
This would obviously cut into the big banks’ profits. Indeed, the big banks have engaged in mafia-style big-rigging fraud against local governments (see this, this and this), scalped local governments by manipulating interest rates, and engaged in all sorts of other shenanigans to fleece governments, businesses and citizens.
And the big banks are using dirty tricks to try to kill the growing public banking movement, so as to protect their racket.
Les Leopold writes:
Clearly, from Wall Street’s perspective, the North Dakota bank must go, and all other state efforts to replicate it must be thwarted. Wall Street’s stealth weapon may be lodged within the latest corporate trade agreement called the Trans-Pacific Partnership (TPP), which currently is being negotiated in secret. We already know that Wall Street is seeking to remove all tariff restrictions that prevent the U.S. financial services industry from doing business in countries like Brunei, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The biggest banks also want the treaty to eliminate “non-tariff” barriers including regulations that create “unfair” competition with state-owned financial enterprises.
Depending on the final language, it is possible that the activities of the Bank of North Dakota could be ruled illegal because “foreign bankers could claim the BND stops them from lending to commercial banks throughout the state” …. How perfect for Wall Street: a foreign bank can be used as a shill to knock out the BND.
Legislators around the world are being kept in the dark about what they’re voting on until the deal [on TPP] is hammered out; it’s expected to be completed this year. When it’s finished, if the experience of Congress here is any indication, legislators will be feeling extraordinary pressure from corporate lobbyists and their heads of state to accept the deal without a fuss. [Indeed, lawmakers often vote on legislation without ever reading it.]
Publicly owned enterprises, for example, are being targeted by negotiators. One such entity in the United States that has been the subject of considerable interest in recent years is the Bank of North Dakota (BND) – the only fully publicly owned financial institution in the country. The BND, which is only allowed to lend wholesale, was a stabilizing force that helped keep the already energy-rich state insulated from the shock of the financial crisis (Alaska, for example, didn’t fare as well). It has also brought a small fortune to the state’s treasury – $340 million in net tax gain between 1997 and 2009. Legislators in at least 13 different states have proposed studying or emulating the North Dakota model – state-owned development of central-bank style institutions guaranteed by tax revenue. But if the TPP is passed, that option might not be available. [Barbara Weisel, the top American government negotiator for TPP] said that State Owned Enterprises (SOE) are routinely “competing directly with private enterprises, and often in a way that is considered unfair.”
“Some of the advantages that can be conferred on State Owned Enterprises are things like preferential financing,” Weisel said. “Those are things that wouldn’t be provided to private companies – preferential provision of goods and services provided by a government.”
She said that “State Owned Enterprises – which in some cases can comprise a significant percentage of an economy – can be used to undermine what we’re otherwise trying to gain from this free trade agreement.”
A spokesperson for the BND declined to comment on whether or not this outlook was perceived by the bank to be an institutional threat. But, depending on the report’s language, foreign bankers could claim that the BND stops them from lending to commercial banks throughout the state.
Citigroup’s Johnston [Rick Johnston is a a senior vice president and director for international government affairs at Citigroup], in response to another question from the audience, said that corporations weren’t exactly enamored of competition with publicly owned enterprises – and that they are prodding TPP delegates into doing something about it.
“The companies that are running up against the problem and the challenges of the state-owned enterprises, they obviously feel strongly enough about it that the problem is being addressed within the negotiations,” he said.
There can be no guarantee, until the draft is finally released, that the TPP will protect entities like the BND, especially when considering, as critics have contended, that the deal’s boosters are pushing an agreement that more firmly entrenches capital flow as a form of trade.
“When you hear the word ‘trade‘ in today’s business world, it doesn’t just mean goods moving across borders,” Johnston said. “It doesn’t even mean just services moving across borders. It also means investment. And that’s something where the TPP is really gonna make a big difference.”
Trade, according to Black’s Law dictionary, is defined as “Traffic; commerce, exchangeof goods for other goods, or for money.” Yet this trade pact could usher in a rash of reforms, with minimal oversight and virtually no public hearings, treating investment rules as a trade issue, even though they haven’t traditionally been dealt with as such.
A lobbyist’s world-view on this issue is instructive. As Michael Wendell told the Congressional Subcommittee on Trade:
SOEs [state-owned enterprises], by definition, are interested in promoting the interests of their home country, and are all too often guided by state interests, rather than commercial interests.
Why does this matter? Let’s consider a Chinese SOE. Chinese SOEs benefit enormously from below-market-rate financing by state-owned banks at rates well below what American companies pay. Many of these loans may not have to be repaid at all. How does a commercial entity here in the U.S. compete with the U.S.-based operations of an SOE that sets up shop here?
There are many ways that disciplines on SOEs can be developed as part of the TPP talks. The best approach would be to ensure that all transactions are based on commercial considerations.
Basing all transactions on “commercial considerations” may sound okay initially. But that would – in essence – mean that the interests of the banks in making high-interest rate loans are more important than the interests of the people in obtaining cheap loans.
And remember, the Founding Fathers’ vision of prosperity was largely based around public banking.
However we decide to treat foreign state-owned enterprises, banks owned by the American people will help to create prosperity for we the people and our small businesses.
Don’t trust the federal government? That’s fine … we’re not talking about state – not federal – banks. Don’t trust your state? Then support a county-level bank.
As Deputy Secretary of the State Department, I actively promoted the United States’ entry into the Trans-Pacific Partnership negotiations.