Posts Tagged ‘Gold’

One of the largest frauds in the history of the world is happening right now. And make no mistake about it, like all other frauds this, too, will come to light. It will make the housing crisis seem insignificant. It will shake the financial markets to the core. It will likely cause the dollar to lose immense value and may even lose its reserve currency status. Simply put, this is the mother of all crises and it has yet come to pass. It’s the brainchild of Robert Rubin. And no one gets to be Treasury Secretary or Fed Chairman without understanding how and why it works. And when the shit hits the fan, your tax dollars will be used to bail out the banks that, right now, are making billions hand-over-fist by manipulating markets. Like all great frauds, this one started with a simple, moneymaking scheme that eventually became institutionalized corruption.

Back when Robert Rubin was in London overseeing Goldman Sachs’ gold trades, he figured out a very clever way to finance operations. He borrowed gold from central banks at 1% interest, virtually free money, and then sold that gold at market value, investing the revenue into US Treasuries, which during this time had interest rates between 6-12%. That may not seem like a big deal, but bear in mind that it is illegal for the Federal Reserve to sell its gold without congressional approval as its technically “our” gold. But a legal loophole allows them to swap and lease that gold, running on the assumption that the gold it leases will be returned. But therein lies the rub.

How do you sell something you have leased and must now return? Simple. As with any fungible commodity, you just buy it back. But in order to make it a profitable endeavor, it’s best if you buy it back at the same price that you sold it. So after selling the gold, Goldman Sachs hedged its bet by going long on the gold futures market, opting to repurchase the gold at a later date, at a predetermined price. This allowed Goldman to buy back the gold and return it to the central banks while making a big profit in process. All the while, the central banks never counted the gold as having left their books, as is the case with a lease. This created a “double booking” of gold, a situation where real gold was sold on the market, increasing supply, while the same amount was also being counted as if it were still in the central banks’ vaults. The illusion of more gold was created, which suppressed the price. Thus allowing the game to continue. The only problem was the limits of supply.

In order to understand what’s happening now and what the fraud really is, one must understand the Gold ETF market. Think back to a time when the dollar was still redeemable for gold. Each bank was required to keep a minimum amount of gold in reserve, a fraction of the paper money in supply. The concept worked on the assumption that not everyone will demand gold at any one time so it only needed a fraction of the wealth it claimed to possess. This allowed for banks to lend out and create out of thin air more paper money than gold it actually had. So long as confidence remained and there was no run on the banks, the system worked. Eventually, any pretense of having a commodity-backed currency was eliminated and the US switched to full fiat money. In truth, the gold-backed paper was fiat too. It just operated on the false notion that the paper could, theoretically, be redeemed for real gold and silver. But having a fractional reserve system makes that unsustainable in times of crisis, which is the only time people would want their gold. Getting off the gold standard ended the charade completely. But that’s currency. (more…)

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Yesterday I was in H&M—guilty—and a familiar tune came through the sound system.  It was obviously a holiday-themed lineup and what to my wondering eyes ears should appear, but Starflyer 59’s “A Holiday Song (Happy Holidays)” to bring me great cheer.  This track is rather an oddball off of 1998’s The Fashion Focus and what starflyer59-030911struck me most about hearing this song in public is that Starflyer really hasn’t gained much notoriety over the past fifteen years that they (or rather “he,” referring to Jason Martin, the only consistent member of the group) have been making music.

Starflyer is fairly prolific, having released eleven albums to date, and even with that under their belt, they remain under the radar.  They’ve a sound somewhat difficult to pin down (what if The Pixies, Dinosaur Jr., New Order, and David Bazan produced magical offspring…), though characteristically shoegazing indie rock.  Maybe I’m a sucker for music that requires patience, but if you’ve not given Starflyer 59 a significant listen I’d encourage you to change that.  To perhaps help change that, here is a quick guide I’ve made to briefly describe each of their studio albums:

Silver (1994) – Shoegaze/dream pop, highly-distorted/effected, rock.

Gold (1995) – Slightly more pop than Silver.

Americana (1997) – More of the same shoegazing rock, though less engaging than Gold and Silver.

The Fashion Focus (1998) – Less My Bloody Valentine-esque, more keys.

Everybody Makes Mistakes (1999) – Moving in the same direction as The Fashion Focus, (except “A Dethroned King,” perhaps the thickest track on the album).  Excellent songwriting.

Leave Here A Stranger (2001) – Similar to Everybody Makes Mistakes, though a little darker (lyrically) and recorded in mono (as opposed to stereo).

Old (2003) – Back to the harder rock/shoegaze style.  Perhaps their best release to date.

I Am the Portuguese Blues (2004) – Loud guitars, straightforward rock n’ roll.  Jason Martin is Portuguese.

Talking Voice vs. Singing Voice (2005) – Resembles a lot of 80s pop and new wave music (even some synth bass), with some very dancy/catchy tracks.  A very fun listen.

My Island (2006) – I actually don’t own this album yet, but from what I’ve heard it’s pretty fun pop rock.  The music video for the single, “I Win,” features actors instead of the actual band.

Dial M (2008) – I also don’t own this album, but it just came out this past October and from what I’ve heard it’s pretty fun rock.  There are currently a few tracks from the album on Starflyer’s Myspace page.  The album artwork is pretty bitchen’ too.

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