Gold, The Yen And U.S. Bonds

gold_theyen_and_usbonds

The Bank for International Settlements (BIS) in Basle, Switzerland is the Central Bank's central bank. It is the outfit John Kennedy referred to as the “Gnomes of Zurich”. Among its members are the central banks of the world, the G-7, such as the Bank of England, the Bundesbank, the Federal Reserve Bank, and the Bank of Japan. The Bretton Woods Conference established the gold-backed dollar as the world’s reserve currency. The US, however, did everything it could to take power from the BIS and give it to the IMF. In the end, the Europeans and Japanese never trusted the Americans and rightly so. The US has abused its role by creating unbacked dollars. American banks led by Chase and Citibank acquired control of the world’s businesses with these dollars .

In 1971 the dollar left the gold standard, and began to float. The US debt began to increase and it now stands at about $5.6 trillion. While we had abandoned gold, the BIS was buying it. Today the BIS is the single largest owner of gold with 350 billion dollars worth. The BIS’s goal of bringing down the dollar as a reserve currency, has not been reached, but it will be. To derail the dollar and the wall street miracle takes a lot of money. In August 1995 when bad loans and scandals threatened the Japanese financial markets. The BIS instructed the Japanese to lower their loan rates to 1/2%. The rate of 6 1/2% on US Bonds created an opportunity for speculators, centered around the BIS, to borrow Japanese yen, sell the yen for dollars and buy US T-Bonds, thereby yielding a tidy profit. This has been the strategy for 3 years now with mind-boggling volume. It has created a demand for US bonds, which has rolled over into stocks. The same thing has been done with BIS gold. The speculators borrow gold from the BIS at about 1%interest and sell the gold using the dollars they receive to buy 6% T-Bonds. This scheme has created a potential nightmare. Sooner or later these positions must be unwound.

The gold and the yen which were borrowed and sold will have to be bought back, and the bonds that were bought with the borrowed money will have to be sold. The totals are well over a trillion dollars, almost 20% of the total US debt. As long as gold and the yen keep going down and bonds keep going up all is well. But any one of a number of things could make gold or the yen start to rise; or US bonds start to fall and then the other shoe will drop. The frenzy will feed upon itself. Margin calls would ruin the leveraged speculator in short order. There would be no way to stop the carnage. If the Japanese Prime Minister decides to, in his words, “sell off treasury bills and switch our funds to gold", then the bond market will collapse. If the Japanese cannot resist selling bonds near these highs, or buying gold near its lows , why should you? Do you think bonds will stay up or that the gold will stay down? Not very likely. Pay attention and be prepared. One year early is better than one day late

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