muses of the moment

January 12, 2011

Does the Fed own gold?

Filed under: Gold and Silver Investing, Precious metals, The Federal Reserve, US Government Debt — totallygroovygirlfriday @ 1:49 am

And this is why Ron Paul wants more transparency of the Fed. Click here for the latest development in the GATA legal battle for more transparency at the Fed level. Looks like a win, if they actually comply.

Both Bernanke and Greenspan have testified that there have been no transactions in gold. Yet the Fed refuses to disclose documents that suggest circumstantially that there have been.

Even moreso, since the US bullion reserves belong to the people and not to a private banking cartel, there should be no records of any transactions by the Fed. Any transactions should have been handled by Treasury.

If the Fed comes back and argues that it is not able to disclose its records of any gold transactions including sales, loans, and swaps because it was acting as agent for another party, whether it be the Treasury, BOJ, ECB, or the Bundesbank, then its time to audit the reserves by a third party answerable to the people.

Just like Ben keeps saying he doesn’t print money, uh, yes he does. He also claims that the Fed is a private institution that doesn’t have to disclose its financial books. He doesn’t want to disclose, because then everyone will know all he has is a bunch of double entry accounting.

The question GATA is trying to find out: do they have double entries or any gold holdings or worse, double entries in gold? And whose name are they in: the Fed or the Treasury or another banking institution?

Side musing: check out Harvey Organ’s post from Monday. Hedge funds are forcing the Silver Comex to settle in higher and higher cash settlements. Comex can’t deliver the physical because they don’t have it. Sprott Fund is still waiting for the full amount of physical paid for back in November 2010. And who wouldn’t go for this: it is a 30% return in 4 weeks. If they get a lot of investors involved, it could be a really interesting 6 months. $50 per oz would not be out of the question at all, with major ups and downs on the way there. Harvey suggests that this procedure is what caused silver to spike the last 3 months of 2010.

We are now in the phase of the silver bull market where hedge funds and large institutions (and large investors, like Carlos Slim) are getting into the physical market en masse. In the meantime, they are making money on the whole cash settlement thing, taking advantage of the Comex’s lack of physical silver.

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