Gold Daily and Silver Weekly Charts - Word for the Day: Rehypothecation

"The commercial world is very frequently put into confusion by the bankruptcy of merchants that assumed the splendour of wealth, only to obtain the privilege of trading with the stock of other men, and of contracting debts which nothing but lucky casualties could enable them to pay; till after having supported their appearance a while by tumultuary magnificence of boundless traffic, they sink at once, and drag down into poverty those whom their equipages had induced to trust them."

Samuel Johnson, Rambler #189, January 7, 1752

This is not a technically precise description of rehypothecation, but the terminology has been simplified a bit for the sake of understanding by the lay person.  But the risks described herein are real, and need to be understood.

I thought of this when I read a question that a reader had about how fractional reserve bullion banking works.  Like so many other things financial, it can seem almost foolproof on paper.  Somewhat like the efficient markets hypothesis, or the trickle down, supply side, recovery boogie woogie.

But one might ask, how is it that occasionally things in bullion banking seem to go awry, so that even the great monetary power and experience of the Governor of the Bank of England might find himself 'staring into the abyss.' 

Where are the risks in this, and in any other type of fractional assets arrangement?

And that brings us to our word for the day:

Rehypothecation: The practice by banks and brokers of using, for their own purposes, assets that have been posted as collateral by their clients. Clients who permit rehypothecation of their collateral may be compensated either through a lower cost of borrowing or a rebate on fees.

An example of rehypothecation might be used in any fractional asset system. One example might be a bullion bank, or mint, that offers the sale and storage of unallocated gold and silver.  You may buy the bullion from them, but you agree to leave it there in an unallocated pool of assets.

The advantage for the customer is that they are given a significant break on storage fees for not demanding the delivery of specific bullion.  

It does not even have to be a bank or mint, but a larger dealer in metal.  Any entity that offers unallocated bullion storage can use that unallocated bullion to smooth the delivery process to retail and wholesale customers that prefer to take delivery of their bullion.  For the sake of clarity I will refer to the bank, mint or dealer offering unallocated storage as Dealer.

As in the case of the more familiar commercial banking, the 'deposit' of the customer, with cash left 'on deposit,' makes them a creditor of the bank.  The return which the customer receives for this loan of their asset is interest, or some other value such as a reduction in fees.  In the old days they used to even kick in toasters and TVs, but those were other times when deposits seems to matter more.

In the case of metals, typically the unallocated bullion is rehypothecated by the dealer to some degree.  It is often used as a classic 'float' in support of their own operations.

It is a way for the dealer to obtain short term bullion to supply their day to day transactions with people to whom they take and deliver bullion in various forms, such as delivering title of a certain amount of refined gold in return for the delivery of intermediate stage material, in the form of doré bars from a mine for example.  And generally the dealer would receive some fees in return for this service to the miner. 

The reason that the dealer might not charge the unallocated owner a storage fee is because the customer has agreed, even if in the fine print, to allow that entity to use their bullion as collateral in unspecified third party transactions.

 The customer has deposited their asset to the dealer, in return for some form of reimbursement.  And in turn the dealer may rehypothecate, or use, that asset for their own purposes.

The same asset can be rehypothecated many times, so that a single ounce of gold and silver, or any piece of property, may be encumbered by a chain of ownership claims, some of them downstream from the original dealer.   Practices may vary, but rehypothecation has become commonplace in our modern financial system.  Leverage pays off well when it works.

This is all very well and good, as long as the different parties in the chain do not overdo the leverage, or number of claims, applied towards that particular asset.  And of course if there are no untoward counterparty risks or failures in the chain, or disruptions in expected supplies either in terms of availability or price.  If that happens we can see a domino like effect.

So when you are given a nice textbook example of how fractional ownership of anything works, keep in mind that there is never a free lunch. If you are receiving some sort of benefit for keeping your assets at a particular place, chances are quite decent that they are being utilized for the advantage of someone else.

And if there is a disruption somewhere in the markets, and  the chain of rehypothecation is broken, difficulties may most certainly arise.  Often a dealer will be in a position to offer some sort of guarantee, as in the case of FDIC insurance for monetary bank deposits.  Results may vary.

Although I have not discussed it, it is also possible that an asset held specifically without any prior agreement for reuse, such as the case of allocated bullion being held through a broker, might be subject to cross claims of ownership, as in the sad case of MF Global.  In that case the customers had to lawyer up against other counterparties and wait for some sort of settlement.  This does not happen very often, but it can and does as we have seen.

Sometimes the leverage in a vehicle is not always easily seen.  Is GLD fractional?  Does all their gold hold clear title to some specified percentage of an investment unit?  I don't know.  How much 'leverage' is there in a particular bullion bank at any given time?  We have seen them occasionally seen them get 'over their skis' as in the case of Scotia Mocatta some time ago, but it is hard to tell because audited results are not frequently available.   We know they are running floats, unless they are otherworldly saints, or just fools.  The question is, how much?

I wonder under what auspices central banks lend out the gold of their people to bullion banks?  Do they realize that their gold is being rehypothecated, often by third parties?  Have they ever agreed to it?  Do the central banks even have to disclose such arrangements?  What oversight is there from the civil authorities?

And what happens if the central bank asks for the return of their bullion, and it was not there?  One can only wonder. Perhaps Germany offers a contemporary example of how to manage such a situation.

Speaking of the movement of bullion, there was a whopping warrant issued by JPM on 109,856 ounces of gold bullion in its storage yesterday, adjusting it over to the registered (deliverable) category.  And there was a lesser amount of 11,056 adjusted over to registered at Scotia Mocatta.

So now the total deliverable category is back up to 616,519 ounces, which is a good thing, since one might have wondered how they were going to fulfill those contracts that have already stood for delivery.  I expect that they will be posting the drawdowns in the foreseeable future.

Also at Scotia there was a withdrawal of 40,395 ounces of gold from the warehouse altogether.  All the transactions and totals are included in the report below.

As a reminder, tomorrow is a Non-Farm Payrolls day, and shenanigans are often in fashion.

Have a pleasant evening.

Inside London: 'Demand Delivery For the True Price of Gold'

Buba is the nickname for Deutsche Bundesbank, the central bank of Germany.

I nearly fell out of my chair when I read a description of the divergence between the paper and physical gold markets from the Inside London column of the Financial Times.

"But one day the ties that bind this pixelated gold may break, with potentially catastrophic results. So if you fancy gold at today’s depressed price, learn from Buba and demand delivery."

And this in the prince of mainstream financial publications.   Quick, alert the spinmeisters for Davos man that the natives are growing restless.  

As the fellow says, one day the ties that bind the actual and the traded commodity will snap. So if you fancy gold at today's depressed price,  take delivery.

"In June last year the average volume of gold cleared in London hit 29m ounces per day. The world’s mines are producing 90m ounces per year. The traded volume was many times the cleared volume.

The paper gold in the London Bullion Market takes the familiar forms that bankers have turned into profit machines: futures, options, leveraged trades, collateralised obligations, ETFs . . . a storm of exotic instruments, each of which is carefully logged, cross-checked and audited.

Or perhaps not. High-flying traders find such backroom work tedious, and prefer to let some drone do it, just as they did with those money-market instruments that fuelled the banking crisis. The drones will have full control of the paper trail, won’t they?

There’s surely no chance that the Fed’s little delivery difficulty has anything to do with the cat’s-cradle of pledges based on the gold in its vaults?

 

...But one day the ties that bind this pixelated gold may break, with potentially catastrophic results. So if you fancy gold at today’s depressed price, learn from Buba and demand delivery."

Read the entire article in the Financial Times here.

Stand and Deliver: How Germany Disrupted the World's Gold Market

Someone asked, 'why would there be a desire to do a stealth confiscation of gold from the public holdings in ETFs and private stores through price manipulation?' Who could have been assigned the task of prying bullion out of the hands of the people, and for what conceivable reason? It appears to be happening, but why?

There are any number of possible reasons. Concerns that an innovative new round of QE and money creation might create a run on the gold price is one possibility. There should be little doubt in those who look into the evidence that central bankers are quite sensitive to gold and silver as alternative currencies and reflections of their own policy initiatives.

And that is quite possible. As I have pointed out, there is some precedent for it. In 1933 Franklin Roosevelt pulled back much of the publicly held gold in the US. And after this was done, the government revalued the gold from $20 to $35 overnight, and then used the gains to recapitalize the banking system.

Although this could happen again, it does not seem likely because it flies in the face of everything the central bank has achieved by putting the US on a purely fiat money regime, the last gold ties being severed by Nixon in the 1970s. They prefer to denigrate gold, even though they still hold it, and certainly speak about it quite a bit often through their intermediaries.

There is definitely a movement to revisit the Bretton Woods Agreement that established the dollar as the world's reserve currency. The BRICs, whose economic power is ascendant, are seeking to establish a new currency for global trade that is owned by no single central bank or entangled in the domestic policies of no single country. And they wish to add gold and possibly silver to that mix. And they are in the process of acquiring substantial reserves to accomplish it.

The Anglo-American banking cartel is resisting this movement with all their diplomatic and political might. One of the sensitivities of the recent spying scandal leaks is the concern that they may be trying to obtain intelligence that could be used in these negotiations which are ongoing, very quietly behind the scenes.

But one has to ask, 'what set off the firestorm of price manipulation against gold that started at the beginning of this year?' Unless one is a shill, or naïve about markets, the market operation to knock the price of gold, and also silver, down is fairly obvious and heavy handed. They are not even trying to hide it. Traders do not dump hundreds or even thousands of contracts at market in quiet periods with any other objective than to take the price down. It really is that simple.

My initial take on this was that this was part of the 'price-setting' negotiation for gold and silver in the basket of currencies that the BRICs are developing. But that seemed a bit thin, unless it was seen as a 'last stand' against including gold and silver by making the argument that they were too volatile.

So I looked back on the chart for what I saw was the pivotal moment, and then checked the news and tried to find some event that may have served as the impetus for it. And the truth of it was staring me right in the face.

How remarkable is it that Germany, at the urging of their citizens and despite the objections of their central banks, has requested the return of its sovereign gold from its custodial storage in New York? And that the Feds said, no. You can't have it, but we will be in position to return your own property in seven years time.

What was up with that? Venezuela had recently requested its gold to be returned, and that helped to push the price of gold up to its all time high, because the request had obviously been floated before it became public knowledge.

So why couldn't Germany have the return of its own property for seven years?

Think about this. And perhaps what is happening now will become more clear. It is all a part of the credibility trap, wherein past actions of officials must be hidden in order to protect careers and ensure the orderly functioning of the status quo, even to its own eventual detriment.

Oh this is wrong? This is some weird theory? Well I admit that part of the problem is that we are left to guess what the central banks and the markets are doing with our money and property far in excess of what might be expected in democratic societies. This is the failure of regulation and oversight, and the corrupting power of big money in politics.

But, ok. If this is just some distraction, then give Germany back its gold, in full, this year.

If you wish to prove your word is good and facts are straight, give Germany back its gold.

And if you wish to restore some level of confidence in the markets, make them more transparent and open so people can conduct their business efficiently and safely without fear of being cheated and defrauded at every turn.

If you wish the trust and respect of the world, redeem what you have pledged to hold in trust.   If you have taken some actions in the past that were made in good faith and for good reasons, but may have gone too far or turned out badly in retrospect, make good on them now.   The way to stem a scandal is to bring the truth to light.  It is never the initial act that brings down government, but the subsequent attempt at coverup that obtains a life of its own.

Do the right thing even if it is not convenient, because it is the right thing to do. 

Prove your full faith and credit to be worthy.  Fulfill your oaths.  Tear down the wall of secrecy that divides the people from their government. End this before it can go any further.

Stand and deliver.

"Oh what a tangled web we weave when first we practice to device."

Sir Walter Scott

"We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it."

Sir Eddie George, Bank of England, in private conversation, September 1999

Gold Premiums in Vietnam Hit $217 Over Spot In Heavy Demand

I think you have had to experience a collapsing currency first hand in order to truly appreciate the fundamentals of monetary value, and how these things can take on what seems like a force of nature.

I was doing business in Moscow during the 1990's, and saw the slow motion collapse of the rouble. Or at least it seemed like a slow motion collapse at first, until it gained quite a bit of momentum despite the measures the State took to maintain their 'official rates.'

Russia had a sovereign currency, right?  And so does Vietnam, and many of the other countries that experienced extraordinary currency depreciation, otherwise known as monetary inflation, since WW II.  Perhaps they just needed some better monetary theorists, or official enforcers with hairier knuckles. Their financial elite seems to have had plenty of false bravado.

But then again, they were not us. We are different. We are unique. We are the masters of all that we survey and purvey, the beauty of the world, the paragon of animals.  London and New York are where the elite meet to eat.

Here is what is happening with gold prices in southeast Asia now.  Ding dong.

This from Goldcore:

The Vietnamese Central Bank sold another 25,700 taels (1 tael = 37.5 grams or 1.2 troy ounces) at a gold bar auction on Friday in order to try and satiate the massive public demand for gold in Vietnam.

The Central Bank hopes that the sale of gold into the market will reduce the very high premiums paid by gold buyers in Vietnam, the largest buyer of gold in Southeast Asia after Thailand and one of the largest physical buyers of gold per capita in the world.

Vietnamese people hold gold as a store of wealth for protection against war, inflation and currency depreciation. In recent months, the bursting of bubbles in the stock market (see chart) and property market and the continuing devaluation of the dong has led to record demand in Vietnam and a surging premium over the spot price of gold.

Today, the premium was close to 5.5 million dong which is the equivalent of a very high premium of $217 per ounce over spot.

Comex Gold Registered Ounces Available Nearing All Time Low - The Risk of Rehypothecation

'What has been will be, what has been done will be done; there is nothing new under the sun.'

Ecclesiastes 1:9


"The commercial world is very frequently put into confusion by the bankruptcy of merchants that assumed the splendour of wealth only to obtain the privilege of trading with the stock of other men, and of contracting debts which nothing but lucky casualties could enable them to pay; till after having supported their appearance a while by tumultuary magnificence of boundless traffic, they sink at once, and drag down into poverty those whom their equipages had induced to trust them."

Samuel Johnson, Rambler #189, January 7, 1752

'Registered gold' is bullion in the Comex warehouse that is available to futures contracts standing for delivery.  There is also  a much larger category of ounces stored, at least according to reports by some organizations, that are 'eligible' to be sold,  if the owners of the bullion should decide to place them in the 'registered' category.

According to the chart below the number of registered ounces at the Comex are approaching a record low.  That in itself has some significance, but I think the point of this chart is that the registered category typically reaches these low levels at major market bottoms.

Simply put, owners of bullion are not willing to put their bullion up for sale at the paper gold market price set by Comex. They would rather let it sit in storage and pay fees.

Now, in addition to this, there is quite a bit of controversy and speculation that the bullion banks have been leasing out that customer gold that is being held in storage. That is what is known as rehypothecating.

Rehypothecating simply means that a financial institution uses an asset that is pledged as collateral for another transaction of their own. And these days these rehypothecation schemes tend to go to multiple stages like a daisy chain, or dominos.  Bank A takes a customer asset and lends it out to Bank B.  Bank B uses that same asset as collateral to Bank C.  And Bank C uses that same asset once again. 

We saw this first level rehypothecation in the collapse of MF Global. That company was using customer assets, whether they be cash, financial paper, and even actual bullion, as collateral with other banks, including JP Morgan it appears, to back their own private speculation in the markets. When the markets turned against them, the collateral was 'called' and the scheme collapsed.

What made that rehypothecation particularly odious is that such assets held by a clearing broker are considered untouchable and 'sacred.'   But as it came out in the aftermath of that scandal, we are indeed in different times with regards to oaths, pledges and obligations in finance.

This is not all that dissimilar in character to the Madoff scheme, which is why it is prohibited.  Customers provided the Madoff fund cash, the front men and Bernie Madoff took their fees, and then that money was committed to pay other fund obligations, notably the returns that investors holding paper obligations were owed if they chose to withdraw them. Madoff just cut to the chase and did not bother with the investment part of the deal.

So if there is a rehypothecation scheme going, and there is a run on the bullion banks at these prices, as customers refuse to voluntarily offer their bullion for sale, and other sources of supply become exhausted, eventually a 'market break' will occur and the scheme will be exposed.

And to complicate matters, it is likely that a significant quantity of gold has been leased out from central banks into these rehypothecation schemes that will not be easily returned.    This would be considered 'career affecting' and rather embarrassing to the governments.

Like the case of the Madoff fund, many people on the periphery of the transactions knew that there was a likelihood of fraud, and that at the very least, something was wrong.  But it is risky to say or do anything, and very lucrative to keep one's mouth shut and hope to plead ignorance of the scheme later on.  

Conspiracy is hard to prove unless one has 'smoking gun' admissions on tape, and too often not even then in this culture of fraud where the professional courtesy of moral hazard is more the rule than the exception.

I should note that even in the endgame stages of the exhaustion of a highly leveraged rehypothecation scheme, a more likely outcome would be to let the price of gold rise, and hope that this tempts new bullion supplies on to the market.  This would allow the cycle of this scheme can go along for another turn of paper selling and price manipulation. 

I do think that the spike in gold to $1900 was just such an instance.  And the opposite was tried in the recent price smackdown, because allowing the price to rise put some of the derivatives bets of the TBTF financiers at risk.  They have to work that short position down first before allowing gold to rise in price.

But I would not be surprised if they will try and frighten out holders of bullion with more price raids before this. That ploy eventually fails as the bullion passes into stronger, more sophisticated hands.  And the governments and people of the East are certainly doing their part to make it happen.

It will not be the registered inventory at the Comex going to zero that will break this scheme.  Rather the registered inventory at the Comex will fall to zero within the context of a general run on the bullion banks.  First one or two, and then a rush.  We may continue to see scattered shortages for some time first.  Confidence breaks over a long period of time, and then it collapses all at once.

This rehypothecation scheme has its roots in  the 1990's.  I think that the crucial turning point in this  occurred in 2000-2001 with the selling of England's gold in an act that became known as 'Brown's Bottom.'  It was likely done to rescue some bullion banks that had been caught on the wrong side of a bullion carry trade.

I do not think it is a question of if this rehypothecation scheme fails, but when.   I no longer doubt that there is a highly leveraged rehypothecation scheme in the precious metals markets, and probably others as well.  The circumstantial and direct evidence is just too persuasive. 

Since Germany apparently cannot have its 300 tonnes of sovereign gold back for almost seven years, one might conclude that only a relatively small amount of bullion is required to collapse this paper pyramid scheme.  We are likely in the endgame.

So let's see what happens. I think after the worst is exposed, people will remark how obvious it all was. It will be like the housing bubble, which really was the vehicle for the CDO pyramid scheme of mispricing of risk, abuse of collateral, and fraudulent representations of ownership and quality.

The western governments may try to impose some draconian settlement.  And I think most of the world, and a goodly portion of their own countries, will tell them 'to go shit in their hats,' as my old boss used to say.  And then the coverup will begin,  the small fry and scapegoats who were involved will be thrown to the wolves, and losses distributed to the innocent.  That is where we are now with the latest credit bubble.

The jokers who are behind these types of schemes are bad enough. They are despicable conmen, no matter how one wishes to cover up their schemes with sophisticated words and jargon.   Madoff was simply a thief.  And so were the responsible parties at Enron, MF Global, the LIBOR manipulation, the mortgage debt frauds, and so forth. 

These schemes of manipulating key prices and commodities is as old as markets, as old as the folly of greed.

The notion that markets are naturally virtuous and self-correcting are a ludicrous and harmful fallacy, generally nurtured by conmen who seek to corrupt them. 

But their enablers, those who facilitate the schemes and cons and who defend them too often for the rewards of position and pay, are just as bad.  And that net of culpability reaches further and wider, into the chambers of government and the halls of universities.

The perpetrators will be brought to account eventually. It is for us to see that justice is done in this world in accord with the law. And if the law is corrupt, it is our duty to work for its reform.

If you have your wealth secured in the right ways and places, you may not be overly affected by this scandal, except perhaps from some anxiety and scarcities of goods that will pass with time.  Life does go on.  These fellows are not necessary to the functioning of society. Quite the contrary, they are parasites.

I do think being prepared is a good idea.  But look at those who were ruined by Madoff and MF Global.  If you did not have your money with either of them, you were not affected all that badly.

I tend to think that this scheme too will be circumscribed a bit, through a coverup, and the printing of a virtual moat of paper.  And I think we all know how to deal with even a serious inflation whether we feel confident of it or not.   I still do not believe that a hyperinflation is likely. 

Those of us who lived through the serious inflation of the 1970's will remember what it was like.  Those on fixed incomes may suffer the most, and we need to make sure that the pigmen do not take advantage of them, or add to their misery.  And they will try. 

This latest crop of demi-gods knows no shame and has little self-restraint.  They are walking occasions of sin.  And they are always with us.  It is just that sometimes we let down our guard, and justice fails.

History repeats, and remarkably so, because we so easily forget what we and our forethers have learned, and succumb to the same old temptations and excesses of the few.

Net Asset Value Premiums of Certain Precious Metal Trusts and Funds - Rehypothecation Ponzi

Thin premiums remain the order of the day for the gold and silver holding trusts and funds.

Citi analyst Tom Fitzpatrick sees gold appreciating $2,000+ from here.  I think quite a bit of that sort of move could happen more quickly than most might imagine.

I think quite a bit of this recent gold action is taking place on the public stage, but is being driven by private talks amongst the monetary powers that be.

There should be little doubt that a replacement for the US dollar reserve currency is being seriously considered.  Especially after the manner in which a few doubtful words cast by Bernanke about QE was able to send world markets into a swoon overnight.

There are those who would discredit gold and silver as being too volatile for inclusion in a basket of currencies that would become the international trading unit of exchange.

And at the same time, there is a strong move by some countries to back their currencies in gold at least partially.  They have to proceed carefully because if the price is set too low, the Western banks would swoop in and arbitrage it heavily. 

One thing that is lacking today for gold and silver are reliable price setting mechanisms that are not subject to manipulation and fraud by those who hold little of the metal itself, or who have re-hypothecated it many times over.

"Hypothecation is the practice where a borrower pledges collateral to secure a debt or a borrower, as a condition precedent to a loan, has a third party (usually an affiliate) pledge collateral for the borrower. The borrower retains ownership of the collateral, but it is "hypothetically" controlled by the creditor in that he has the right to seize possession if the borrower defaults. A common example occurs when a consumer enters into a mortgage agreement, in which the consumer's house becomes collateral until the mortgage loan is paid off.

Rehypothecation is a practice that occurs principally in the financial markets, where a bank or other broker-dealer reuses the collateral pledged by its clients as collateral for its own borrowing.

You may find this article by modern monetarist Peter Stella to be interesting:   What Economists Need to Know About the Modern Money Creation Process

In it Mr. Stella describes how the banking system routinely pledges the same piece of collateral over and over again without a properly risk adjusted diminution of value. No wonder the housing market is in such a mess, with the concept of title to property having been reduced to a financialized abstraction.

"In the traditional money creation process, collateral consists of central bank reserves; in the modern private money creation process, collateral is in the eye of the beholder. Here is an example.

A Hong Kong hedge fund may get financing from UBS secured by collateral pledged to the UBS bank’s UK affiliate – say, Indonesian bonds. Naturally, there will be a haircut on the pledged collateral (i.e. each borrower, the hedge fund in this example, will have to pledge more than $1 of collateral for each $1 of credit).

These bonds are ‘pledged collateral’ as far as UBS is concerned and under modern legal practices, they can be ‘re-used’. This is the part that may strike non-specialists as novel; collateral that backs one loan can in turn be used as collateral against further loans, so the same underlying asset ends up as securing loans worth multiples of its value. Of course the re-pledging cannot go on forever as haircuts progressively reduce the credit-raising potential of the underlying asset, but ultimately, several lenders are counting on the underlying assets as backup in case things go wrong."

If you think that this has not been done in the gold market you are kidding yourself.  Rehypothecation is not an aberration but a fundamental principle of the modern money creation process. It is what attracts the 'hot money' because it offers the opportunity to keep levering up. And this is why gold and silver have found little favor, if not intense dislike, amongst the modern financiers, except in its most diluted paper form, because it resists their attempts at ponzification.

As an aside, the re-hypothecation of collateral is still a massive problem in the banking sector.  The same collateral has been pledged innumerable times.  If any of the collateral should fail, as we had recently seen in the housing sector, the domino effect becomes the great bank-killer as balance sheets turn to shredded paper. 

And this is why the entire banking system seized when Lehman failed, because they did not know whom they could trust, since they were caught up in a daisy chain of control fraud. 

One solution is for a non-profit oriented entity to come in and buy the dodgy paper with public money, to pledge to expose no crimes, and to provide cheap money to the banks to keep their game of musical chairs going.  But that still does not restore honesty and stability to the system.  Indeed, while the scheme continues to generate outsized easy profits for the participants, going slowly on reform is the order of the day.  No matter how one might choose to rationalize it as prudent caution.

How ironic that what had been called real money 'since the time of Alexander the Great' is shunned and denigrated by those in the modern money business.

“Gold has worked down from Alexander's time... When something holds good for two thousand years I do not believe it can be so because of prejudice or mistaken theory.”

Bernard M. Baruch

These are interesting times for those who enjoy studying money, aberrant human behaviour, the changing fashions of ideas, and incredible madness of crowds.

Note:  From time to time I do have positions of size in some of the instruments listed below.  I do not take positions in GLD and SLV.  That is a personal choice, and not an endorsement or advice.