CENTRAL BANKS CREATE PAPER & BUY GOLD

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I FOUND THE LATER PORTION OF THE REPORT RATHER INTERESTING AND ALSO WHY YEAR 2020 (7 YEARS {A LONG TIME}) MAY BE EITHER THE PEAK (OF THE MANIA) OR THE TIME WE FINALLY MAKE IT THROUGH THIS (GREAT) TRANSITION.

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The Bundesbank capitulates though why by 2020 and not y 2014? 7 years is a long time.
Following all the commotion the German central bank now intends to make a big withdrawal from the NY Fed— 300 tons in all. The new policy will include the complete withdrawal of 374 tons of German gold stored at the Banque de France in Paris, about 11% of the total. Bundesbank officials were quick to note that the decision was not a reflection of French trustworthiness. Rather, because France and Germany now share the euro, there is no need for reserves as insurance against currency crises. The goal is to house more than 50% of German gold in Bundesbank vaults in Frankfurt by 2020, up from a little less than a third today, the bank said. It remains the one currency that is accepted everywhere. In the event of a currency crisis, the gold could be quickly deployed in financial markets to help restore confidence. But as mentioned why are the reserves moved by 2020, that is seven years from today, a lot can happen in 7 years?
How much trust is there between central banks?
One has to wonder!!!! As Bill Gross of Pimco also stated, how much trust is there between Central Banks! In the end every country has it its own interest. As General De Gaulle said, “a country doesn’t have friends it has interests”.
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Gold and silver are the opposite of the US dollar.
The commotion surrounding the gold reserves has to be viewed in the light of the dynamic between the US dollar and gold. Real money with intrinsic value, with a true value of its own, it is commodity backed, such as physical gold and silver, is rapidly gaining popularity. The transformation between the two systems from intangible money to tangible money is clearly underway hence the stratospheric rise of the gold price since 2001! Precious metals can’t be manipulated contrary to paper money.
It is the constant manipulation of paper money, because it can easily, at will, be reproduced or printed, that undermines the credibility and value of the fiat currency whilst at the same time boosting the attractiveness and value of gold and silver. The US dollar is inversely correlated to the gold and silver price. In general under normal economic circumstances if the dollar is weak gold is strong and visa versa. Other currencies, not being the US dollar, of course first need to be exchanged into US dollars before they can be exchanged for gold. Gold and silver, as all other commodities, are expressed, valued in US dollars, the reserve currency. Gold and silver are thus the opposite of paper money and specifically the opposite of the US dollar. So if central banks prefer buying gold instead of the US dollar they are in fact buying the opposite of their own creation of paper money and the opposite of the world currency. Paper money has its nominal value printed on it to give it its value whilst gold doesn’t have a nominal value printed on it because it doesn’t need it, it has inherent value, in other words it has value of its own! That says it all. We would like to emphasize again it is like the butcher that doesn’t eat his own sausages because he knows what is in it. It therefore is so interesting that several Central Banks (Russia, Brazil and several Asian countries) are adding to their gold reserves. What does that tell you about their belief in the fiat money system and the anchor of that system: the US dollar?
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The US authorities can’t buy gold because it would void the US dollar, the anchor of the financial system.
It is important to understand that having the reserve currency also “doesn’t allow” the Treasury to buy gold. Gold is expressed in US dollars, the reserve currency or world currency, the crux of the financial system, and if the US would buy gold adding it to its reserves it would basically mean that it has lost its confidence and trust in its own creation: the US dollar and thus the whole financial system. The US dollar is the anchor of the financial system. Gold is the opposite of the US dollar, hence its inverse correlation. Moreover if you have the ability to print the reserve currency and buy all the gold, the only real currency with intrinsic value, sellers of gold would soon not accept the US dollar in return for gold. Why sell something that has real, intrinsic value for something that is worthless, paper, even if $2,000, $10,000, $100,000 or more is printed on the paper. In my point of view it is very important to understand this dynamic of paper currencies versus gold. Especially when the financial system is undermining itself with stimulus measures that don’t sort the desired effect. Remember the moment people won’t sell their gold anymore for currencies/paper the currencies will have lost their value.
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