Jim Sinclair: German Gold Repatriation a Reaction to Geithner’s Take-Down of Gold at $1800 Via the ESF

imagesLegendary gold trader Jim Sinclair has sent an email alert to subscribers today stating that the Bundesbank’s announcement that they will repatriate 300 tons of gold from the NY Fed and 374 tons from the Bank of Paris is in direct response to outgoing Treasury Secretary Timothy Geithner’s take-down of gold at $1800 in October via the ESF

Sinclair states that a Central Bank would not insult another major central bank unless it is an act of financial war, and that a full blown financial gold war is coming as soon as 2015-2017.

Sinclair also states that Geithner’s parting shot to break gold’s back by the Exchange Stabilization Fund was considered a direct attack on the Euro strategy for what the end game recovery will look like. The Free Gold thesis requires significantly higher gold prices to work and to elevate the euro back in reserve by choice category.

Have we seen the initial shot in a full blown global currency war?

Sinclair’s full alert is below:

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From Jim Sinclair:

I respectfully disagree with most of the explanations given today on the why of German actions in gold. My understanding is that the causal event of this notification actually came from the actions of the US Exchange Stabilization Fund and the long term plans to strengthen the euro.

 

I have published a chart from Patrick showing the extreme change in the ratio of gold to fiat currency presently being held in reserve by Euroland.

 

First you need to understand what the Exchange Stabilization Fund is and is not. It is an account at a major gold bank in the name of the Exchange Stabilization Fund. This fund can legally trade in gold and does. The President of the USA and the Secretary of the US Treasury run this fund. Those two managers by law are permitted to designate another manager if they wish. The fund can trade long or short, borrow or lend anything. Basically this is a an account that can legally do anything it wants whenever it wants in secret as the year end statement can easily be brought to only benign activates by warehousing all the trades.

 

Their broker is quite an expert in that strategy to wash year-end positions for clients.

 

What occurred as I am told is an act in Germany in reaction to a parting shot from the retiring Secretary of the US Treasury via the Exchange Stabilization Fund.

 

When gold traded at $1918 it was setting up for a challenge of a very important round number, $2000. The sell off was a product of long liquidation in an anticipation of $2000 in a fast market. Gold did fall on its own weight into the $1800 area, however the body block at $1800, $1775 and $1750 was a product of the Exchange Stabilization Fund operating as an account of a major Gold Bank. Seeing that, this gold bank went to the short side for the account of its hedge funds and not wholly owned trading arm. This gold bank issued a public statement that the gold market was dead as a doornail, finished and completed.

 

On the level of central banking there are no secrets. The long term plan for the currency war between the euro and the dollar is a derivation of the Free Gold Thesis. That means a significant change in the percentage of fiat currency versus gold at market value held by Euroland as reserves. This thesis has a target for cooperating Asian central banks for gold holdings at no less than 15% at market value. I question some of the thesis of Free Gold thinkers, but much of it has been in my writing for more than a decade on what the end game recovery will look like.

 

I am told that the parting shot to break gold’s back by the Exchange Stabilization Fund was considered a direct attack on the Euro strategy for what the end game recovery will look like. The Free Gold thesis requires significantly higher gold prices to work and to elevate the euro back in reserve by choice category.

 

The German reaction was not political but rather a direct warning that they could demand return of their gold just like DeGaulle of France did in the 60s by making a direct and immediate demand for conversion of the US dollar holdings into Gold.

 

A major central bank will not insult another major central bank unless it is an act of financial war. It has not come to that yet, but it is not that far away. It is 2015 to 2017 and not 2020.

 

The reason that gold is relatively firm after the media leak and release on the night of the 14th is that I am not the only person who knows the real story. The price of gold will go to and beyond $3500. Gold will be market to market by the majority, if not all, major central banks. This will balance the balance sheet of the many and major debtor nations and will provide the platform for recovery after unwinding.

 

Respectfully,
Jim

 

 

Exchange Stabilization Fund

From Wikipedia, the free encyclopedia

 

 

The Exchange Stabilization Fund (ESF) is an emergency reserve fund of the United States Treasury Department, normally used for foreign exchange intervention. This arrangement (as opposed to having the central bank intervene directly) allows the US government to influence currency exchange rates without affecting domestic money supply.

 

As of October 2009, the fund held assets worth $105 billion, including $58.1 billion in special drawing rights (SDR) from the International Monetary Fund.[1]

 

Background

 

The U.S. Exchange Stabilization Fund was established at the Treasury Department by a provision in the Gold Reserve Act of January 31, 1934. 31 U.S.C. § 5117. It was intended as a response to Britain’s Exchange Equalisation Account.[2] The fund began operations in April 1934, financed by $2 billion of the $2.8 billion paper profit the government realized from raising the price of gold to $35 an ounce from $20.67. The act authorized the ESF to use its capital to deal in gold and foreign exchange to stabilize the exchange value of the dollar. The ESF as originally designed was part of the executive branch not subject to legislative oversight.

 

The Gold Reserve Act authorized the ESF to use such assets as were not needed for exchange market stabilization to deal in government securities. The Fund had no statutory authority, however, to engage in other activities that it began to undertake.[citation needed] The principal such extraneous activity it devoted itself to was lending dollars to politically favored governments.

 

In 1938-40, the director of the Division of Monetary Research, Harry Dexter White, worked on a proposal for loans to Latin America and participated in plans for an Inter-American Bank, which did not materialize. The plan for an Inter-American Bank, however, inspired White’s first draft of the subsequent plans for the International Monetary Fund and the World Bank that White prepared in 1941 at Secretary of the U.S. Treasury Henry Morgenthau’s direction.

 

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Comments

  1. “Free Gold”.  Now there are two words that one would not expect to see in the same breath.  ;-)
     

    • We’re a long way from FoFoA’s ‘Freegold’ as I understand it. Before the revaluation – the paper price (including miners) will crash – think $500- but physical will be next to impossible to obtain. Not saying I adhere to this thinking, or fully understand FreeGold – but have read FoA quite a bit. It is an interesting theory…

  2. I tend to agree that JS and FOFOA might in fact be right that we’ll enter a “Free Gold” society at some point in the future, but for now I still see the best thing to invest as silver and lead.  Careful research for years has led to this conclusion …  

  3. I LOVE IT A BANKSTERS WAR DESTROY EACH OTHER.
     
     

    • Nice one Charlie
      Havent they learned there is no honor ……amoung theives….LMAO
      also they still havent learned “If you dont hold it – you dont own it “……ROTFLMAO
      bankers are dummies
       
       

  4. Personally I don’t give a Rats Ass for the Banksters. What I do give a Rats Ass about is that any forceable gains are
    most likely  two to four years away. Am I missing something? 

  5. TURBO TAX TIMMY

  6. HOW’S HILLARYS HEAD???

  7. ESF biggest slush fund ever for the Anglo-American world power!!  If they are worried about the Fiscal Cliff why don’t they take a look here, oh wait, nobody knows about it, least of all the American people.

  8. I believe we got a full-blown mess on our hands with this gold repatriation issue.  Now, the Fed has every reason in the world to hold the price of gold down.  They have managed to negotiate a 7 year time frame for getting the agreed apon gold back to Germany.  Obviously Germany’s gold is long gone.  The US does not pay back bills.  It only pays the interest on its debt.  How is the US going to come up with Germany’s gold, especially if gold goes up in value over time?  Its not going to happen.  Germany isn’t going to accept a bunch of printed fiat as payment in full.  This is a huge mess.  I don’t think this is going to turn out well.  What do you guys think?  If we do have any gold in Ft Knox left I have a feeling it will have to be used to repay Germany.  Then, every other country who has entrusted our corrupt Federal banking system is going to want their gold back because of distrust.  And, rightfully so.

    • the U.S. Treasury is going to stamp a trillion dollar coin and deposit it with the Fed Reserve, the Fed in turns gives it to Germany for payment of the missing gold  ….. problem solved

    • US gives Germany a piece of paper saying”You forgot the fine print giving us the right to loan, sell, or otherwise use you gold without replacing it” it was in that period at the bottom of the page.

  9. Do you think that the Fed will keep low prices of gold at all next seven years?
    And so the Fed will provide for all country of the world cheap gold? I do not think so.
    The Fed will not allow such a gift for China, India, Russia, Brazil and so on.

    You overestimate the possibility of the Fed and the ESF. If they had full control over the pricing of gold, then the price of gold today would be $ 300 per ounce, but not $ 1680.

    • I like JS’s term body blocks.   That’s all it is.  Gold is the irresistable force, and the body blocks are not immovable objects.   Just speed bumps on the road.

    • Silvermail.  I don’t believe that the Feds can hold down gold forever.  This is just the beginning of this drama.  Part of me wants to just laugh at our Federal Reserve and the pickle it has gotten itself into.  On the other hand, if we lose our reserve currency status as a result of this we are in for a dose of reality check.  

  10. @Pollokeeper 
    I think, that the main problem for the Fed is that the traditional main centers of formation of the price of gold is gradually moving from the West to the East. They follow the movement of physical gold.
     

    • Silvermail.  You are right.  As we have seen, keeping the price low just happens to be good for the US at the moment and definitely good for China.  However, gold is a global currency.  Not all country’s want low gold prices.  Evidently Germany is pissed off on account of low gold prices.  Eventually China will have their fill of cheap gold and then they will want gold to rise to its fair market value.  Just a matter of when not if.  At this point, it appears that when gold goes into manic phase our nation’s gold vaults will be holding IOU’s only and China will be ready to party like it’s 1999.  Banana Republic time for the US of A.

  11. Watch for the Netherlands to be the next to repatriate their gold.

  12. Eric deCarbonnel
     
    http://www.marketskeptics.com/2011/06/the-esf-and-its-history.html
    It is impossible to understand the world today without knowing what the ESF is and what it has been doing. Officially in charge of defending the dollar, the ESF is the government agency which controls the New York Fed, runs the CIA’s black budget, and is the architect of the world’s monetary system (IMF, World Bank, etc). ESF financing (through the OSS and then the CIA) built up the worldwide propaganda network which has so badly distorted history today (including erasing awareness of its existence from popular consciousness). It has been directly involved in virtually every major US fraud/scandal since its creation in 1934: the London gold pool, the Kennedy assassinations, Iran-Contra, CIA drug trafficking, HIV, and worse…
     
    Watch those series of videos about the ESF.  It’s worth it, believe me.
     
    Here is another good little video about the ESF.


    • @Duckvision That was an eye opener DV now I know all about the ESF and what it means for this Country and the World. Thanks Again. Brother  Folks check these videos out.

    • Marchas45-your welcome and thank you for all the positive posts.  This really goes to everyone.  Please provide links and videos if you find good information on any of these topics.  It will really cut down time to  research good information.  As for the links and videos that I provide, read and watch but come up with your own conclusion.  Don’t be persuaded by others opinions.  Dig and find the truth of what you believe.  This ESF is one of these kinds of topics.  Most websites talk about the Fed controlling monetary policy but misses one of the biggest stories which is the ESF.  I could go into many more topics about the ESF but it goes into that “conspiracy” area which makes people upset.  911 attacks, Iran Contra, Russian Ruble, Mexican Bailout, Yamashita’s gold and many other covert topics that the ESF has funded.  If anyone is interested read E.P. Heidner’s work about the 240 billion dollar bonds that crushed the Russian economy.  Oh hell, here is the link.  I can’t help myself.
      http://www.wanttoknow.info/911/black_eagle_trust_fund
      http://911scholars.ning.com/profiles/blogs/check-these-out-a-fascinating-analysis-of-9-11-by-ep-heidner

  13. http://www.treasury.gov/resource-center/international/ESF/Pages/esf-index.aspx
    The Exchange Stabilization Fund (ESF) consists of three types of assets:  U.S. dollars, foreign currencies, and Special Drawing Rights (SDRs), which is an international reserve asset created by the International Monetary Fund.  The financial statement of the ESF can be accessed at “Reports” or “Finances and Operations.”
    The ESF can be used to purchase or sell foreign currencies, to hold U.S. foreign exchange and Special Drawing Rights (SDR) assets, and to provide financing to foreign governments. All operations of the ESF require the explicit authorization of the Secretary of the Treasury (“the Secretary”).
    The Secretary is responsible for the formulation and implementation of U.S. international monetary and financial policy, including exchange market intervention policy. The ESF helps the Secretary to carry out these responsibilities. By law, the Secretary has considerable discretion in the use of ESF resources.
    The legal basis of the ESF is the Gold Reserve Act of 1934. As amended in the late 1970s, the Act provides in part that “the Department of the Treasury has a stabilization fund …Consistent with the obligations of the Government in the International Monetary Fund (IMF) on orderly exchange arrangements and an orderly system of exchange rates, the Secretary …, with the approval of the President, may deal in gold, foreign exchange, and other instruments of credit and securities.
     
    http://en.wikipedia.org/wiki/Exchange_Stabilization_Fund
    A change in the law, in 1970, allows the Secretary of the Treasury, with the approval of the President, to use money in the ESF to “deal in gold, foreign exchange, and other instruments of credit and securities.”[5]
    The U.S. government used the fund to provide $20 billion in currency swaps and loan guarantees to Mexico following the 1994 economic crisis in Mexico. This was somewhat controversial at the time, because President Clinton had tried and failed to pass the Mexican Stabilization Act through Congress. Use of the ESF circumvented the need for approval of the legislative branch. In response, Congress passed and President Clinton signed the Mexican Debt Disclosure Act of 1995, which implicitly accepted the use of the ESF, but required reports to Congress every six months on the status of the loans.[6] At the end of the crisis, the U.S. made a $500 million profit on the loans.[7]
    On September 19, 2008, U.S. Treasury Department announced that up to $50 billion in the ESF would temporarily be made available to guarantee deposits in certain money market funds.[8]
     
    What this doesn’t say is that the ESF financed the World Bank and IMF.  Basically, the ESF made the world a global economy. The ESF runs the IMF and the World Bank because they funded both operations.  People really need to do there homework on this fund.  It’s so under reported and talked about.  The Fed gets all the attention but the ESF is the hidden secret of the foreign exchange markets and the gold price manipulation.  It’s all off balance sheet with no congressional oversight.  The fund is beyond the rule of law.  Old Timmy had his hands on this fund for years.  He ran the New York Fed and was in control of the ESF when he became Treasury Secretary.  Geithner isn’t a low level guy. 

  14. It is still amazing to me that FDR essentially stole private citizen’s gold and then revalued it to establish a secret government fund.  Once again the people get screwed.  It’s just my small minded way of saying that when the government says we’re here and we want to help, the best thing to do is run.  Ask the hurricane Sandy folks still suffering from the FEMANAZIS.

    • What is amazing to me is that I have spent the majority of my life asleep to all this corruption.  I really trusted the government up until about 10 years ago.  I am a stubborn person I guess.  And, I had to go thru a very hard time accepting the fact that my government is the most corrupt government in the world today.  Hard to swallow.  I am thru that now and I accept it.  Now I just try and deal with it and just forget about it.  The ESF.  Sounds like something out of a spy novel.

    • Pollokeeper-  I understand where you are coming from.  I also believed into this fantasy land that we were taught.  This is kinda embarrassing but I voted for Obama for his first term.  I actually believed his bullshit.  Man was I totally wrong.  I never read or did any homework on any of these topics.  My life has changed after this awakening.  It’s for the best.  I’m glad I finally woke up to this stuff.  I feel guilty in many ways because I feel like I supported many of these covert operations indirectly by my personal actions.  I still remember a moment that I became speechless and couldn’t move after the information sank in my head that this life we have been living is a lie.  Things became more clear and in focus.  When you realize that the economy is mathematically screwed and is really held together by smoke and mirrors, it a huge realization that your life can change at any moment.  That was hard to take at first.  The last 2+ years have been dedicated towards re-educating myself in this new awakening.  Thanks to this site and all the people who follow it. 

    • Pollo that is why millions of Americans are buying guns in record numbers, same for ammo, try to find any of the common calibers.

  15. DuckVision
    Exceptionally studley for you to own up to that.  Let’s hope a few others awaken too.
    Kind of like Neo in the Matrix.

  16. Roger that duckvision.
    What does majority of one’s life mean?  50%  75%.  I really don’t know for sure   But 97% is probably past that tipping point.  Mea Culpa.    2 years waking up;  58 asleep.  And I was a banker and finance person for 32 years.   Hmmm Shoulda known better.  Being very well compensated to keep my head down and flog the loan monkeys I guess there was no rush to ‘wake up’  I watched the Matrix again last night and translated the words in the movie to the reality and unreality of today. Holy Batcrap Robin.  It was spooky.

  17. Matrix is awesome.  Well, the first Matrix movie is the best.  I remember going to the theater to watch the Matrix and I didn’t understand it like I do now.  It went way past my comprehension level at the time.  The special effects were cool but I didn’t get the meaning or idea.  I think I have watch it 20 times now.  I come away just thinking how I used to think and how I think currently.  Great flick.  Best Keanu Reeves movie is still……..wait for it……..Point Break. 

    • Duck Vision.  I took the time out to watch that Eric Decarbonnel video on the ESF.  That video should be required viewing for everyone.  I knew a little about the ESF but that video fills in a lot of the gaps.  Thanx for sharing that.

    • Pollokeeper- Good for you.  We should all thank Eric Decarbonnel for doing the research and making the videos.  I’m not sure about all the information but its worth the time and discussion to talk about the ESF.  I have watched those videos multiply times.  He also made a video about the June 2003 FOMC transcripts about how the Fed manipulated interest rates using put options.  This video is great.  Another must watch.


      http://www.federalreserve.gov/monetarypolicy/files/FOMC20030625meeting.pdf
      I don’t expect anyone to read the transcripts of this meeting by the Fed.  It’s 200+ pages long but it has some explosive information in it.  They talk about operation twist, QE, and all the policies that they have implemented currently.  They talked about this back in 2003.  Most of the Fed chairmen were hesitant of doing these moves because they were afraid of the ramifications and the exit strategy of extending the balance sheet of the Fed.  It was a wake up call that these people really don’t know the outcomes of these actions.  It’s all monetary theory and belief that they can control the yield curve forever.  They understood that a major deflationary period was going to happen if they didn’t rig the interest rates.  They need to extend the money supply and create a bubble into some sector.  They decided to drive down the yield curve by using swaps, put options, and other derivatives.  This forced rates down synthetically.  Sub prime was born and the housing market bubble exploded.  Really interesting stuff.

  18. As the fighting starts over the carcass of the western banking system.

  19. Right there DV  And Patrick Swayze (RIP) in Point Break was BA. 
    An interesting thing happened on the way to the silver and gold price explosions.  All of you who have been stocking up  on lead futures, you’ve not only seen a 200-300% increase in price over the last 2 months but the PM shortages we’ve talked about for 2 years hit lead  first.  Crikey,   What a world, what a world.  And I’m not selling the lead either. Not for any price.

  20. The ESF videos should be required viewing. Does anyone know what happened to Eric de Carbonnel? I can’t seem to find anything he has posted after Feb 2012.

    • I think I read that he moved to Russia. 

    • Yeah, de Carbonnel moved to Russia and became a farmer.  Raved about the depth of the fertile black soil there in some posts.  Seemed a bit odd that he dropped out of sight because he was starting to be really being recognized for his outstanding work.

  21. Fictionalized account of the US government management of the gold market (too long to post here in its entirety). It does give a nod to the possibility of repatriations but sets out a more planned approach to managing the market than Santa suggests.
     
    http://tyrannyofthepresent.wordpress.com

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