***WOW! Banks paid to lease GOLD – Short term lease rates have gone negative

I was browsing KITCO and noticed this chart. I’ve been following the gold market for over 10 years and have never before seen a NEGATIVE LEASE RATE.

A negative rate means that the bullion banks are being PAID to lease GOLD.

[atsimg]http://files.abovetopsecret.com/images/member/f9dbcb04f09f.png[/atsimg]

A mind-boggling development to say the least.

reply to post by Gold_Bug


The paper-bugs and their masters will stop at nothing to keep the lid on gold it seems.

Something is going to give sooner or later!

Could someone please explain what this means?

Thanks

reply to post by METACOMET


It's a bit too complicated for me to explain succinctly, but I'd like to think it is bullish for gold. If anything it just shows how messed up our financal system is.

edit: Just to suggest one simple take, ignoring how the lease rates are derived...it is in the interests of many to keep a lid on the gold price, and to do that the bullion banks and others sell gold into the market place (but it has been proven many are naked short selling, or selling gold they do not have).

Entities lease gold to sell, hoping to bring the price down, so they can buy back at a cheaper price and then give back the gold to the bullion banks. The banks who lease the gold, are effectively creating the illusion of more gold being brought into the marketplace, as they still keep the gold that is leased on their books.

However, negative lease rates would suggest there is less entities willing to lease and sell gold short, because fundamentals are too bullish, and they would end up having to pay back that bullion at a higher price.

So, it could be deemed that negative rates are a cash incentive for people to take on a lease and sell that gold, to supress the price of gold.

This is rather a simple take, I might add, but it is one basic gist of how it could be viewed.

[edit on 30-6-2010 by cloudbreak]

[edit on 30-6-2010 by cloudbreak]

reply to post by Gold_Bug


I had never heard of leasing gold before.

Everything about this is just wrong. Absolutely wrong.

We are screwed.


How do you "lease" gold? I know that your conspiracy is the next step, the low rates....but how do you even get that far?

Cloudbreak is on the money.

Gold is leased from central banks, and also from bullion banks. Generally it is leased to commercial banks - pick from the usual list of suspects; JP Morgan, Citi, Goldman, Scum Inc etc ..

These guys then dump the gold into the market at strategic times to depress the gold price - it is purely a strategy to manipulate the price of gold DOWN.

Now, the other side of this coin is, that theoretically - the gold they sold needs to be returned to said bullion banks, and central banks. However - due to the volumes sold - it is more than unlikely that any gold repayment will happen.

Instead the commercial bank will either simply 'roll over' its loan, continuing to collect the interest (as its negative) - or if they are tired of gaming and manipulating the system, they simply default and offer a cash settlement.

This is among the reasons why serious gold bugs feel there is little to no gold left in central banks and bullion banks that claim great stores of the metal.

Yes, this is weird and strange, yes it mean something -but it is a positive for the long term gold price, not a negative. It is however not great for countries who believe their currency is strongly gold backed - chances are - the gold just ain't there.

Oh, one more thing I should note - because this practice of leasing gold may potentially harm a currency - the central banks use obfuscation when entering ledger entries for these leases. The ledgers for gold leases is the same for other sell and buy transactions - so if someone pays back in cash - it is impossible to tell, and the total gold is not adjusted down - so the total amount of gold in these banks is basically unknown.

Fort Knox has not been audited for over 50 yrs, although there are some first hand accounts indicating the gold, some or all of it is actually there - it is not possible to determine unless it is audited - which is well over due.

[edit on 30-6-2010 by Amagnon]

reply to post by Amagnon


Thanks man - let's just hope people wake up to the difference between paper and gold one day.

Goes to show the power of the MSM and keynesian curriculum. The amount of times I have seen comments that you 'can't eat gold' or that gold is 'in a bubble'...it's like being in hell, or at best a d-grade pantomine act where you scream out that the big bad monster is right next to you, but...true to form...denial and/or selective focus dominates.