From two-tier gold backwardation to goldscam!
This article takes a closer look at the Gold Forward Rate (GOFO) going negative and how this “could be the precursor to financial catastrophe affecting us all”. The author, Professor Antal Fekete, argues that gold leasing has been used to effectively record the gold on double books.
Click here to read the article and let us know what you think.
Discussion
3 Comments
Aug 26, 2013 26:29 PM
Aug 27, 2013 27:21 AM
You are right Chico, the banks are not holding enough gold to even come close to covering if people make a run on them. This leasing of gold sounds like it would be a big problem when someone can actually get some real numbers.
I think if there is a run on gold people would be handed cash not the metal.
Cory
Aug 27, 2013 27:32 AM
Force majeure, Cory!
Essentially, fractional reserve banking has been operating in the gold market for a long time unbeknownst to many. THere is a run on the bank, so to speak. They don’t have enough gold in reserve, or, if they do, they don’t know how the leased gold comes back because that same gold has been re-hypothecated over and over again. Adding injury to insult, you can’t print gold so you can’t stop the run except through higher gold prices. Is that what the author is telling us?