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Goldman Sachs and Gold

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A couple of weeks ago, I came across a wonderful blog post which provided a fascinating and informative account of the evolution of the gold and oil markets, as a consequence of eliminating the gold standard – and thus creating an entire monetary system where all the world's currencies were backed by nothing. [April 10th, “Gold and Money: more than meets the eye”]

I didn't do a write-up on it at the time, as there was nothing “current” about the material – despite the fact that many precious metals investors will find the content of great interest (it was posted on our bulletin board). However, in an ironic twist of fate, a reader submitted a 'new' news item to me, which was also based on material over a decade old – and in putting the two items together, it's clear that there are (now) many things to say about “Goldman Sachs and gold”.

The two dynamics which will be discussed here are the reaction and counter-measures of the oil-producing nations (most notably the OPEC producers) to the U.S. gold-default in 1971, and the subsequent campaign by multinational bankers to enslave the world's major gold miners – as part of their fraud/deception to fool the world into thinking that the (now) worthless paper which they called “money” still had some value.

With respect to the first half of this 'equation', the “FOFOA” blog did a superb job of summarizing this:

    Upon the 1971 declaration by the United States that redemption of dollars for gold would be terminated, the entities in receipt of dollars for balance of trade settlements [for example, oil producers] had no difficulty recognizing this as an outright default on payment of contracts [emphasis mine]. The scramble was on to make sense of this new payment system in which the dollar was no longer a THING of value (a small amount of gold), but was now reduced to a CONCEPT of value...

In other words, Arab oil producers had few qualms about pumping out their oil, as fast as possible, and at a “low” price – as long as the currency used in these contracts was redeemable in gold, which was also fixed at a low price. However, selling their oil cheap and only getting paper in return was something which the OPEC nations would not tolerate, given that most of their own advisors had learned about economics and markets at Western universities.

Quoting from the “FOFOA” blog again, what OPEC essentially did in setting their own “price quotas” for oil was to change our system of payment so that instead of a barrel of oil being “defined” by a measure of dollars, that essentially the dollar was re-defined as representing a fixed quantity of oil. It was simply a variation of “The Golden Rule”: he who has the 'gold' makes the rules – except now the rule-makers were holding “black gold”.

Naturally, the West in general, and Western bankers in particular, were horrified by these developments, for two reasons. First, the economic sophistication of the Arab OPEC producers was making it very difficult to engage in the 'economic rape' which was the modus operandi toward developing nations by Western capitalists. Even more horrifying to the bankers was the fact that these OPEC oil producers were creating a grave risk of exposing their entire “fiat currency” Ponzi-scheme: where worthless banker-paper is exchanged for valuable, “hard” assets – ultimately ending with the bankers holding all the hard assets, while the masses held nothing but their worthless paper.

Thus began two long-term initiatives by the Western banking cabal. First, OPEC nations were suddenly flooded with new “branches” of Western banks. While these OPEC Arabs may have been well-schooled in “economics”, they (and the rest of the world) were unacquainted with the bankers' world of “high finance”. Western bankers began to 'help' the OPEC Arabs to “finance” all sorts of grandiose projects – and once again the economic rape of the oil-producing nations could continue. But that is another story...

The second initiative of the Western bankers was to preserve the illusion – at all costs – that their worthless paper did have “value”. They had only just achieved the ultimate banker-fantasy: a world where they could exchange completely “un-backed”, completely worthless paper for the wealth of the masses. They were not about to let a handful of oil-producing 'upstarts' expose their scam, through demonstrating that their paper had no value – through establishing their own exchange rate for the paper, and continuing to devalue that paper (by raising the price of oil).

Thus, the multi-decade campaign to suppress the price of precious metals (and especially gold) was born. The reason why the bankers' Ponzi-scheme (and the deception which came with it) centered upon suppressing the price of precious metals is that for close to 5,000 years precious metals have been the ultimate “stores of value”: perfectly preserving the wealth of the holder.

I have explained this concept on many previous occasions, and lack the space to go into detail about this again. Let it suffice to say that the words of a young Alan Greenspan explain both why gold is the best store of value and why the bankers are obsessed with demeaning it in the eyes of the masses (see “Young Greenspan and Gold”).

In more general terms, what the banksters were desperate to hide was “inflation”, which essentially measures the rate at which their worthless paper is losing value – and thus the speed with which their currency Ponzi-schemes were evolving toward their ending...the same “ending” which awaits all Ponzi-schemes: a sickening plunge to “zero” of paper debts/obligations.

But there was a second major ingredient to this mass-deception to hide inflation – a dynamic which has been overlooked by all other commentators. This most-despicable of all economic policies was articulated (in a foolish blunder) by former Bank of Canada governor, Gerald Bouey, who stated during an interview in the 1980's that “we are fighting inflation with high-unemployment”.

The connection between inflation and high unemployment is not immediately apparent, so I'll explain it to readers briefly, and point you toward a previous commentary – which goes into this topic in detail (“Why lying about unemployment is so important).

The “Energy Crisis” of the 1970's set-off the most crippling wave of global inflation the world has ever seen. As always, it was the poor and middle-classes who suffered the most harm from this currency debauching – and so workers, most notably unionized workers became “militant” in the eyes of the bankers (and all the wealthy elites): they had the audacity to demand that their wages be increased as fast as their “money” was losing its value.

To counter this “militancy”, the elites did three things. First, using their corporate-controlled media, they “demonized” unions, in the most-intense propaganda-campaign which the Western world had seen (up until that time). Suddenly, “inflation” wasn't caused by soaring oil prices, and the infinite economic repercussions of higher energy prices, instead we were brainwashed to believe that inflation was “caused” by “greedy unions”. The term “wage/price spiral” was coined: a piece of bogus economic theory which proposed that the ultimate economic “evil” was for the real wages of the average worker to ever increase.

Unions were “smashed”. “Structural unemployment” (i.e. permanent unemployment) has been allowed to soar to the highest level in history. And lying about unemployment has become a way of life for Western governments.

It still may not be apparent to some how unemployment and inflation are connected, so I'll make the final “connection”. There was a 'kernel' of truth in the propaganda of the “wage/price spiral”. If Western governments could permanently suppress the wages of the average worker, then “inflation” (i.e. the falling value of the bankers' worthless paper) could be hidden. Instead of inflation being visible through steadily rising prices, it became invisible: through the steadily falling real wages of the average worker.

As of today, somewhere in the neighbourhood of 50 million Western workers are permanently unemployed due to “structural unemployment”, while those who manage to cling to jobs have seen their wages (in “real” dollars) steadily shrink for the last three decades. This intentionally-inflicted misery has been entirely dedicated to preserving the worthless paper empire of the bankers, and more generally, it has resulted in the largest (involuntary) transfer of wealth from the working class to the wealthy since the days of Louis XIV – where such “imbalances” were solved by pulling out a few guillotines, in order to “redistribute” all the wealth that had been stolen from the masses.

I have mentioned why the price of gold (and silver) has been ruthlessly suppressed for the last thirty years, now it's time to explain how the price of precious metals has been suppressed. Regular readers will be familiar with many previous commentaries which have dealt with various aspects of this price-fixing.

More generally, the entire precious metals community has learned a great deal about precious metals manipulation just in the last few weeks – thanks to the twin revelations by “whistle-blower” metals-trader Andrew Maguire, and the loose-lipped Jeffrey Christian of the CPM Group (during the recent CFTC hearings). Readers can refer to previous commentaries for more information on these issues. For the purposes of this commentary, let it suffice to say that in order for the anti-gold banking cabal to successfully manipulate the gold market over the long term, the bullion-banks needed vast quantities of bullion which they controlled.

They started with the gold-hoards of Western central banks. However, the longer that their price-fixing continued (and the more under-valued that gold became), the more bullion they required to manipulate the market. It became clear to the bankers that they would soon exhaust every ounce of gold they could extract from central bank vaults. At that point, it was obvious to them that they needed another huge source of bullion: the gold miners, themselves.

The spike in the price of gold at the end of the 1970's resulted in the greatest “boom” in gold mining of the last century. However, when that market suddenly “peaked” - and then reversed – this set-off a meltdown in the sector, which was (naturally) greatly exacerbated by the gold-dumping of the bullion banks. Even the world's largest and (previously) most profitable mines were facing certain destruction, as the banksters pushed the price of gold steadily lower, and below the cost of production for most of the world's gold mines.

Obviously no company can stay in business producing a good which they could only sell for a loss. Knowing their vulnerability, and even knowing who was responsible for their destruction, nonetheless, one-by-one the world's largest gold miners were forced to make “a Deal with the Devil” (or in this case: “devils”). They succumbed to the “hedging agreements” put forth by the banksters. While these contracts themselves are enormously complex, the intent and “mechanics” of this banker-scam are very straightforward.

The miners agreed to “forward-sell” or “hedge” virtually all of their production – at exactly the price dictated by the banksters. This allowed the anti-gold banking cabal to not only dump all their existing bullion onto the market, but to also dump onto the market gold which had not even been dug out of the ground. In return, the banksters structured the hedges to be just “profitable” enough to allow the gold miners to survive, but not profitable enough for them to ever shake-off the “choke hold” of the banksters.

Over these thirty years, the primary purpose of this manipulation has remained the preservation of the banksters' “fiat currency” Ponzi-scheme, and their entire paper-empires. However, being bankers they could never resist the other scamming opportunities which presented themselves once they had enslaved the gold miners. Enter Goldman Sachs.

CEO Lloyd Blankfein and an army of propagandists are attempting to portray the SEC's current law-suit against Goldman Sachs as an “isolated act by one individual” from a corporation which supposedly has an “unblemished” reputation. While I let regular readers recover from their laughter, I'll remind newer readers that Goldman Sachs has also been busy desperately trying to cover-up its multi-billion dollar fleecing of AIG.

While there are hundreds (thousands?) of other “skeletons” which Goldman Sachs is likely hiding in its closet – merely with respect to its recent scamming – another news item just surfaced, reminding people that scamming clients is an old “game” for Goldman Sachs.

In 1998, Ashanti Gold (based in the African country of Ghana) was the world's 3rd largest gold miner. However, in the spring of 1999, when Gordon Brown was dumping 415 tons of the UK's gold onto the market (purportedly to bail-out the massive “short” position held by none-other than Goldman Sachs), the price of gold collapsed to a post-Energy Crisis low: to $252/ounce.

According to an article which recounts these events, Ashanti Gold approached its “financial advisor” - Goldman Sachs – for “help” in coping with this ultra-low price for gold, and (surprise, surprise) Goldman Sachs “advised” Ashanti to enter into massive “hedging” agreements to forward-sell all their gold. Of course, they didn't think it necessary to inform the management of Ashanti Gold that not only was Goldman Sachs making profits for itself in selling these hedges, but it was making much bigger profits shorting gold.

Apparently, merely being a Goldman Sachs banker means never concerning yourself with the words “conflict of interest”. This also explains why former Goldman Sachs CEO, Hank “Bazooka” Paulson was genuinely mystified when people severely criticized him for using taxpayer dollar to make full pay-outs on all of Goldman Sachs' multi-billion dollar scams against AIG. He was merely acting the way Goldman Sachs bankers always behave: purely in self-interest, and without disclosing material information to partners and/or clients.

Thus, while the banksters (in general) were suppressing the price of gold, and while the banksters had already coerced the full 'cooperation' of the world's largest gold-miners, this didn't prevent them from occasionally 'whip-sawing' these “clients”.

In September 1999, shortly after Goldman Sachs had “instructed” Ashanti Gold to enter into massive “hedging” agreements – which were bets on a falling gold-price – 15 large European banks (all of whom had extensive “business” relationships with Goldman Sachs) surprised the gold market, and the world in general, by announcing that were ceasing all gold-dumping.

That announcement caused an immediate surge in the price of gold to $307/oz (a 20% rise), and in just a few weeks, the price of gold had risen to $362/oz – nearly a 40% rise. To quote the article: “Ashanti was in trouble”. In just a few weeks, the whip-sawing which Goldman Sachs had inflicted on the company had generated $570 million in losses (and that was back in the days when $570 million was a lot of money).

It had to “beg” the 17 banks which were holding the other side of these hedging contracts not to “execute” the terms of the contract – which would have instantly bankrupted the company. Thus, it essentially entered into a bankruptcy negotiation. At that point, Ashanti's “financial advisor”, Goldman Sachs was given the task of “negotiating” the terms of bankruptcy on behalf of Ashanti.

This was not a case of “the fox guarding the hen-house”. Rather, it was a case of a “fox” being allowed to blindfold and tie-up the hens, and then being put in charge of “guarding” the hen-house. Ashanti's share price (and market-cap) plummeted by almost 80% - despite the 40% rise in the price of gold. Ultimately, Ashanti Gold (the first “black” company ever listed on the London Stock Exchange), was sold in 2003, purchased by London-based Anglo Gold – at a mere fraction of its real value. Naturally, the “negotiator” of this deal (this time officially representing Anglo Gold) was Goldman Sachs.

Goldman Sachs has scammed and exploited so many, for so long, that it confuses its ability to have escaped punishment for its prior misdeeds with engaging in “legitimate business”. Much like a serial-rapist has no understanding of the concept of “consensual sex”, Goldman Sachs appears to be capable of engaging in only one kind of “relationship”. It is time for these bankers to be held accountable.

Comments (7)Add Comment
Jeff Nielson
written by Jeff Nielson, April 26, 2010
Yes, ultimately derivatives have simply been a quick means for bankers to increase their scamming on an EXPONENTIAL basis.

Given how successful these thieves have been, it would seem that if you want to commit a robbery that you are much more likely to be successful if you wear a REALLY expensive suit while you are committing your crime.
written by swsprime, April 26, 2010
The more I look at Goldman Sachs, the uglier they become.

Over the past five to ten years Greek Politicians have hidden the real extent of their fiscal profligacy with so-called Currency Swaps. What are these Swaps? Well they are things like future profits on the Greek Lottery and future landing fees at Greek Airports. In a bid to retain political power, Greek Politicians have not only hocked most of the current assets of Greece, but also any bits of Greece's future income that they could identify and pawn.

And who made it possible for these dirt bag politicians sell their countries future by advising, assisting and creating these so called 'currency swaps'? Yep, you guessed right - Goldman Sachs.

Jeff Nielson
written by Jeff Nielson, April 25, 2010
Thanks for the comment, Swsprime.

Humanity seems doomed to repeating many of the same mistakes, endlessly. First, it's the "class consciousness" (which seems to be built into our genes) which ALLOWS the inequalities in our society to grow larger and larger.

Those on top think they DESERVE more than everyone else, while those on the bottom tend to (strangely) think they too "deserve" to be where they are. This emboldens the fat cats to keep taking more and more and more - until their hollowed-out economy implodes.

More particularly, ANY kind of "fractional reserve" banking is INHERENTLY fraudulent - and yet we allow these "businessmen" to create such banking systems again and again...until THEY also implode due to the excessive greed of the bankers.

Anyone who hasn't read about the "Kondratieff Winter" needs to also have a look at that - for further proof of our own collective stupidity.
written by swsprime, April 25, 2010
Thanks Jeff for hitting this particular nail squarely on the head. I don't believe in a great conspiracy theory, but if I did then this article would have just confirm my suspicions.

Did you know there's group who believe we are all Gold Slaves working for Extraterrestrials? – This idea is contained in The Lost Book of Enki: Memoirs and Prophecies of an Extraterrestrial, and a South African called Michael Tellinger has written a book about it.

Anyway back to the Banksters and Gold - your article made me think about the time line of Gold; five thousand years (at least) of Mankind using Gold as the ultimate exchange currency and where do the Bankers come in? Well no more than nine hundred years ago when the Knights Templar started providing letters of credit to Pilgrims who wanted to arrive in Jerusalem with their Purse of Gold still intact – (I'm not criticizing the Templars here, many of my friends are Masons and they are certainly the direct spiritual descendants of the Templars who were persecuted out of history by a combination of Kings and Church.

Anyway regarding Bankers, sorry, I mean Banksters, they are then very recent arrivals on the scene and they seem to me to have piggy backed on Gold - decided it was an excellent vehicle for their own dynasty's growth and prosperity. In his wonderfully compelling book about the rape of Africa - ‘The King Incorporated’ Neal Ascherson points out that a common drive linking all the Royal Families of Europe was a craving desire to see all their children (both legitimate and illegitimate) well founded to succeed in the future. They cared little for the benefit of all, just the benefit of ‘theirs’. I think that this is what is happening here, we have a Banking Dynasty founded on Gold manipulation warping the commerce of the free world in order to pass on this huge wealth and political influence to its’ progeny.

I hope we can refrain from bringing out the Guillotines again and settle this within the framework of the American Constitution, which I believe in its’ pristine state forms the foundation of a workable society….but perhaps we need to keep that guillotine technology available too.
written by JsJ, April 24, 2010
Physical, physical, physical.

Possession is 9/10ths of the law. smilies/grin.gif
Jeff Nielson
written by Jeff Nielson, April 23, 2010
Yes, Paxjds, the days when the precious metals community had to rely upon mere "suspicions" and circumstantial evidence with respect to precious metals manipulation (and fraud) are gone forever.

Instead, we seem to be steadily moving toward the "he who laughs last..." phase of this 'melodrama'.
written by paxjds, April 23, 2010
When you add this great article to recent expose's:
1 Mr.Christians 100:1 leverage of PM's by banksters at recent CFTC public hearings on the suppression of gold & silver pricing
2. Mr. McGuires statements in the King Press interview on the shorting in London Futures Market and the Gold and silver is just paper Gold
3. The apparent attempt on Mr. McGuire and his wife the following day.
4. The rich Canadian family that finally got into the Canadian Bullion Bank of Nova Scotia and found their precious metals were no there, even though they had been paying storage and insurance that was not there. Then it took the Bank 6-8 weeks to get their precious metals. Talk about a true shortage in Precious Metals, and from a Bullion Bank! Go to show you that a Gold or Silver Certificate from a Bullion Bank is just Hot Air! Buyer Beware. GLD and SLV no doubt are also leveraged 100-1. Apparently paper gold and silver is like musical chairs, for every 100 owners, there is one chair. Not a nice game when the music stops.
Sell your paper Gold and silver ASAP, and buy real Gold and Silver from a reputable bullion dealer, and take possession.

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