Gold Leasing & the April Plunge in Gold Prices

10 May

English: A picture from the gold vault of the ...

A picture from the gold vault of the Federal Reserve Bank of New York (Photo credit: Wikipedia)

Between Friday, April 12th and Monday, April 15th, the price of gold suddenly fell over $200 in the “April Plunge”.  That price decline was precipitated by some person or persons selling 300 tons of gold into the market in just one minute and was therefore the result of intentional manipulation.  The price decline was intended to cause those who own gold to panic, sell their gold at a reduced price, and abandon gold as an investment and as a hedge against the collapse of fiat currencies.

That price manipulation was made possible by “gold leasing”–an officially-approved accounting fraud.  “Gold leasing” allows a major holder of gold (say, the Federal Reserve) to “lease,” say, 100 tons of its gold to third parties who then sell or lease that gold to others.  By means of “gold leasing,” the Federal Reserve can claim to still own that 100 tons of gold that has been leased–but not sold–to third parties  The pretext of ownership is maintained under the fiction  that those third parties will one day restore the physical gold they’ve leased from the Federal Reserve back to the Federal Reserve.

By means of the fraud that the Fed still owns the 100 tons of gold it has leased–when, in fact, that hold has been sold into the market–the same 100 tons of gold can be multiplied to show up on the nation’s and market’s books as 200 or more tons of gold.  By means of this leasing fraud, the apparent supply of gold is so increased that the price of gold is suppressed or even made to decline.

For example, suppose I “leased”–rather than sold–100 one-ounce gold coins to you.  Since I only leased–but did not sell–the 100 gold coins to you, I can still report that I own 100 ounce of gold.  But, at the same time, suppose you sell those 100 gold coins to a third party and that third party will also claim to own those 100 gold coins.  Result?  On paper, there appears to be 200 gold coins when there are still only 100 actual gold coins.  By means of leasing, we’ve created an additional, but illusory, 100 ounces of “paper” gold.

Suppose, after I leased 100 gold coins to you–instead of selling them, you leased those same gold coins to a third party.  Then, you could also claim to still “own” the same 100 gold coins that I claim to own and that the third party claims to own.  Result?  Our accounting records would show 300 gold coins where there are still only 100.   And if the third person to whom you leased the 100  gold coins also leased those coins again to a fourth party, our accounting records could show that were 400 gold coins–when there are still only 100 actual gold coins.

By means of this leasing fraud, we could create the illusory supply of 400 gold coins where there were only 100.  If the world thought the supply of gold coins was 400 rather than 100, the price of gold coins would be significantly reduced.

There’s no telling how many times the same gold coins–or tons of gold–have been leased and released and perhaps leased, again.  Leasing may at least partially explain reports that, for every one ounce of physical gold that’s traded on COMEX, 99 ounces of “paper” (“leased”?) gold are traded.

The 99:1 ratio of paper gold to physical gold traded on COMEX raises the fantastic implication that, if the markets stopped trading in “paper/leased” gold and demand remained unchanged, the price of physical gold might increase by a factor of 99.  If so, an ounce of today’s gold priced at $1,500 per ounce might one day sell for $150,000.

Of course, no one predicts the price of physical gold to increase by 99 times. But when you look at the math, the market ratios, etc., it’s not hard to imagine that if the world lost faith in paper gold and removed paper gold from our markets, that the true price of physical gold could increase by five to ten times.


•  The gold leasing scheme is based on the pretext that the physical gold is leased rather than sold and will therefore be replaced to original owner at some point in the future.  Thus, if I leased 100 gold coins to you that were worth $150,000 today, you would restore those 100 gold coins (not $150,000 in fiat currency) to me at some time in the future.

And, therein, lies the problem with gold leasing.  I.e., what happens if I leased 100 gold coins to you in AD. 2009 when the price of gold was $1,000 per ounce and you agreed to return those coins to me five years later in A.D. 2014 when the price of gold was $2,000 per ounce?

Well, as long as you kept the 100 coins in a box in your closet for those five years, there’d be no problem.

But suppose you sold those coins to a third party for, say, $160,000 in A.D. 2009 and made a fast $10,000 profit.  If you no longer possessed the coins in A.D. 2014 (when the price of gold is $2,000/ounce), you’d have to buy 100 gold coins for $200,000 when the lease ends and then hand those coins over to me.  You’d lose $40,000–about 25% of your original investment.

If you’d leased the coins to a third party, and he leased them to a fourth party, etc., the cumulative losses to each party could be cataclysmic. If all of the leases came due at about the same time, the demand for gold coins would rise and the price might follow from, say, $2,000 an ounce  to maybe $3,000.  More, as the leases came due and it became apparent that there were only 100 gold coins available to satisfy lease obligations of, say, 500 gold coins, it would be recognized that the supply of gold coins was perhaps only 20% of what had previously been believed.  As the known supply of gold coins was reduced, the price of gold coins might increase from $3,000 to $5,000 per ounce.

Result?  Many of those who leased gold coins back in A.D. 2009 could be bankrupted when they had to return those physical coins in A.D. 2014.

•  The process described in relation to leasing coins applies when the Federal Reserve leases tons of gold.    I.e., suppose the Fed leased 100 tons of gold for five years to a bullion bank back in September, A.D. 2009 when the price of gold was $1,000/ounce.  Under the terms of the alleged “lease,” the bullion bank is scheduled to restore that physical gold to the Federal Reserve next year (A.D. 2014), when the price of gold could easily be $2,000 per ounce. But if the bullion bank no longer owns or has possession of that 100 tons of gold, the bullion bank will have to buy gold on the market (at twice the price it originally paid to “lease” that gold) in order to return 100 tons of gold to the Fed.  Repurchasing 100 tons of gold for $2,000 an ounce after first selling that gold for $1,000 per ounce could drive the bullion bank into bankruptcy.

In fact, I’d bet that the bullion banks that leased the gold from the Fed were, from the beginning, the designated “patsies”.  The original architect of the “gold leasing” scheme was probably the Federal Reserve and/or the world’s central banks.  They had to know that gold leasing is a kind of Ponzi scheme that would inevitably collapse.  Not wanting to be held responsible for that collapse, it seems reasonable that the Fed intended from the beginning that the bullion banks would be “sacrificed” into bankruptcy and perhaps even criminal liability when the gold leasing scheme inevitably failed.

I.e., the day may be coming when the Federal Reserve (which claims to have about 8,200 tons of gold held on behalf of the American people) will be shown to have much, much less gold than is claimed.  The American people will be angry and want their gold back.  The Fed will defend itself by claiming to have “innocently” leased the gold to the bullion banks which were supposed to return the physical gold to the Fed.  But, alas and OMG!, the bullion banks have been mismanaged, gone bankrupt and will be unable to return the gold to the Fed.  The Fed will claim to have acted in good faith, the bankrupted bullion banks will be blamed, Congress will be “shocked, shocked I tell you!” and hold hearings, wrists will be slapped, the loss of what may be several thousand tons of America’s gold will be excused–and the Federal Reserve will skate away, largely unscathed.

The truth, however, is that those who leased hundreds or even thousands of tons of gold never expected to see that gold again.  From the beginning, their real purpose was to create a falsely multiplied “supply” of paper gold to suppress the price of physical gold and thereby support the illusion that fiat dollars have value.

•  The following video was produced on April 12th (the first day of the April’s “Plunge” in the price of gold) and offers a brief explanation the relationship between gold leasing and the fall in the price of gold. 

The video is mistaken in one regard:  The speakers express their initial concern that the sudden fall in gold’s price would cause people to loose confidence in gold, sell their gold at reduced prices and even abandon gold as an prudent investment and/or hedge against a fiat currency collapse.  However, gold dealers later reported that after the “Plunge,” there were 50 buyers for every seller.  More, demand for gold increased dramatically around the world.

The net result of the April Plunge has been renewed confidence in gold and an increased demand–exactly opposite to what the architects of that “Plunge” had presumably intended.  If anyone has panicked after the April Plunge, it hasn’t been those who own gold–but it may have been those who caused the April Plunge.

In retrospect, we’re left to wonder whether the April Plunge was an expression of the world’s fiat-currency banking system’s power to  manipulate the gold markets–or if it was an expression of the system’s desperation over the need to somehow sustain fiat currencies in general, and the fiat dollar, in particular.

The answer to that question is not yet in.  However, where I first thought I saw “unbridled power,” I am beginning to see abject desperation.  If the fiat currency supporters have really become desperate, then the fiat currency’s collapse might be much closer than most suspect.

Here’s the 00:10:37 video:


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15 responses to “Gold Leasing & the April Plunge in Gold Prices

  1. Oliver Medaris

    May 10, 2013 at 9:41 PM

    I think that the mere fact that people notice the interaction between fiat and real money has occurred practically settles whether it is desperation. They had much rather control all of our “money” unnoticed. As long as the masses never know of their plight, all the better to do deeds that rob the general population of the riches of their labor.

  2. gary lee, [Russell], sui juris

    May 11, 2013 at 12:42 AM

    Again, Alfred, very astute observations, and better, more indications that people are becoming more aware of the scams and charades the “Government” is trying to use to manipulate them…..fool me once, shame on you. Foll me twice, shame on me…. “yeah, Yoji, gailin catching on” ( Tom Selleck in “Mr. Baseball”).

    It’s like the gun BS. Every time the Govco does some BS false flag event, people go out and buy more guns, not less! Govco has it’s head so far up its backside (or desperate, as you point out) that it can no longer see the “clear path” to tyranny, but has lost its way in its own bs.

    Thank you again, Alfred, for an excellent post!

  3. Yartap

    May 11, 2013 at 1:03 PM

    Alfred, I think that your “wonders” are right on target on both accounts. But, I also think that it is the Fed’s attempt to promote not only the bond market, but also, support the stock market because we are going to see more and more QE’s in the future.

    Yes – we have fiat gold. This is one reason why any commodity backed money should be backed based upon number of goods or weight, because we have seen what a dollar based commodity of gold and silver has done. It can be inflated, too. (Those in dollars are not protected, only those in the commodity are protected). Any fair dollar (warehouse receipt) should state the number or weight of the commodity on hand. It should not say that I have one dollar of silver or gold, because this can be inflated or devalued.

    Thanks Al, great writing.

    • Art Forster

      May 12, 2013 at 1:47 AM

      Yep, more QEs are a-comin’. The Fed has already said as much, in so many words.

      So look forward to more downward pushing on the price of gold by the free market gold cartel.

  4. Anthony Clifton

    May 12, 2013 at 11:42 AM

    Sorcery oooozes from the same source as the Bad Faith….”religion” that established the stool sculpture deity cult compound called the “JEWISH” state…

    The result, the planet a smoldering ruin, Israel ruling over the ashes and mass graves, is a foregone conclusion, at least to Netanyahu and his worldwide terrorist network.

    DEBKA openly admits plans to move Israeli troops into Syria and Iraq, to “con” Turkey, Jordan and the Arab and Gulf States into a war intended to, not just destroy Iran and Pakistan but China and Russia as well, pitting them against NATO in the fatal Armageddon they and their followers believe will ensure Satan’s dominion over man.

    Do people really think like that?

    Yes, they actually do, the Zionists, the Neocons, and the Dominionists, a vast worldwide network of financial criminals, corrupt politicians and power-mad tyrants. In America, those now seeking to stage a military coup in the United States, submit to full Israeli control and lead the world into a new “dark age.”

    Conspiracy theory?

    Of course, very much so, but not just a theory but plans long whispered now made clear, plans impossible to misconstrue.

  5. Carlton

    May 15, 2013 at 1:20 PM

    Leasing a quantity of gold which is then counted as an asset by both the lender and the borrower looks a lot like accounting fraud. This is very similar to “legitimate” fractional reserve lending where the same quantity of gold (or other money) is lent out 10 times while being counted as a separate asset in each case.

    Do you disagree that these two – the questionable leasing practices described in your article and fractional reserve lending – can have basically the same inflationary effect on the price of gold?

    Thanks for the article.

    • Adask

      May 15, 2013 at 1:53 PM

      I agree that by increasing the apparent supply of gold, the price of gold is artificially and fraudulently diminished.

  6. J.R.

    May 17, 2013 at 12:40 AM

    Gold is “useless”. Hard to sell, nobody will accept for payment, can’t buy a house with it, can’t buy a car with it, can’t buy groceries with it, you can’t even spend it unless you convert it into fiat money.

    You must time the market correctly or you will lose. Gold will never replace fiat money (they will never give up that power), can’t actually use it for anything (yourself), it must be disposed of to “spend”, it’s price is very easily manipulated as you have shown, and many other sound reasons why gold is really a very crappy investment.

    The recent price drop is a pretty good example of “why” gold should be avoided.

    The hype surrounding gold can be safely realized as a total fraud by the gold sellers and affiliates that get a percentage. Gold is USELESS. You can’t eat it, use it or even get rid of it except at limited locations that are willing to buy it. Then, they write you a CHECK. Can’t even exchange this for cash.

    Better to buy the things you actually need then buy gold (or silver). FOOD will be in short supply. Fuel, ammo, land, seeds, essential tools and supplies are FAR better then so-called “precious metals”. There is nothing “precious” about them unless you believe in their alleged “value”, which is worthless unless it is EXCHANGED, oops, SOLD FIRST, for something you can USE.

    You will wind up with fiat money ANYWAY when you dump your gold, to buy what you NEED.

    Forget the middle man, forget the premiums they charge you, forget having to sell this, or time the market — just go buy what you need NOW and save yourself a TON of hassle, headache and worry about the “price of gold”.

    What a scam this is.

  7. Cody

    May 19, 2013 at 12:57 PM

  8. robertsgt40

    September 26, 2013 at 3:47 PM

    Just curious when the Fed leases out the gold, does it physically leave(not to mention it may have been long gone)? And does that leaser transfer it again? Like playing a shell game(no pun)

    • Adask

      September 26, 2013 at 4:56 PM

      I’m not sure what happens when the gold is merely “leased”. It may or may not move from within the Fed’s vault. But if the gold is sold, it probably leaves the Fed’s vault.

  9. JohnPeebles

    September 27, 2013 at 12:43 PM

    The threat to the American quality of life is not a calamity or war as much as it us a decline in our purchasing power!

    I know many have been hoarding ammunition and food but neither of those is as useful as the ability to buy ammunition and food in the future. I have yet to find a bullet I could eat, nor 25 year food I want to! Gold is fungible, unlike the latter two.

    J.R. misses a key point with “useless” gold: in terms of trade, fiat money will be replaced by gold and gold will be a symbol of wealth around which trade will be conducted. The Chinese will want hard resources like they did under that agreement to send them scrap steel, a plan devised in the Chinese embassy in Washington. So the dollar’s already compromised at least with the Chinese. And who’s to blame them? Fiat money is just a shiny promissory note from a crumbling empire–worth less and less to an ascending one.

    Americans consume foreign goods; we’re dependent on them; and they’re going to go up in cost expressed in dollar terms (but not in gold.)

    Trade will continue but what won’t continue is the use of the dollar as the world’s reserve currency.
    Yes, we could go all the way to Mad Max II but chances are things will go on in many ways as they always have, with grades of erosion with the same eventual conclusion–total devaluation–arriving at some future point. The synthetic demand from QE can only delay that eventuality.

    Look also at the declining EROI–a fascinating concept that says the costs of natural resource extraction will climb prohibitively in direct proportion to the price of energy, which as we know has been on an up steadily in dollar terms due to monetary inflation.

  10. تداول ذهب

    January 5, 2014 at 5:20 AM

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    not in finding your e-mail subscription link or newsletter service.
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    • Adask

      January 5, 2014 at 12:43 PM

      There’s no RSS on this blog. You can find a link in the upper right hand corner of the homepage where you can sign up to be a “follower” of this blog. If you sign up, you’ll receive and email notice every time I post a new article.


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