Addison Wiggin: The 'zero hour' scenario


9:20p ET Tuesday, June 4, 2013

Dear Friend of GATA and Gold:

The Daily Reckoning's Addison Wiggin shows again tonight that he understands Western central banking's racket in the gold market.

"Remember," Wiggin writes, "the main reason central banks are in business -- to benefit their biggest and most powerful member banks. And what's beneficial to U.S. and European banks is gold leasing. Commercial and investment banks lease gold from a central bank at bargain rates -- usually less than 1 percent a year. Then they sell that gold into the private market and plow the proceeds into. ... well, anything that yields more than 1 percent. It's a sweet deal if you're a banker.

"'But then the gold is gone, right?' Yes. If the central bank wants its gold back from the commercial and investment banks, those banks would have to buy gold on the open market -- driving up the price. That's a bad deal if you're a banker.

"So usually there's a tacit understanding: Central banks don't ask for their gold back, and the commercial and investment banks roll over their gold leases. As long as they're earning more than 1 percent, the debt service is easy-peasy.

... Dispatch continues below ...


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"But if a central bank asks for its gold back, it's game over."

Wiggin even notes the deceptive accounting used by Western central banks to conceal their gold leasing. He doesn't quite explain why gold leasing is concealed -- to facilitate secret intervention in the currency and gold markets -- but you already have gotten the answer from GATA (and the International Monetary Fund) here:

Wiggin's commentary is headlined "The 'Zero Hour' Scenario" and it's posted at the Daily Reckoning here:

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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