All that Glitters is Paper Gold

Guest Article Written by Phil Gibson (@MrPseu on Twitter)

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All that Glitters is Paper Gold

The recent lawsuit against the former previous metal traders at JPMorgan demonstrated the geopolitical and economic battle in front of us. This has been the most aggressive case to date targeting a manipulative futures trading tactic known as spoofing, a futures trading tactic (in gold’s case, usually to the downside).

Given that the defendants were acquitted, (former JPM former global precious metals desk head Michael Nowak, precious metals trader Gregg Smith and salesperson Jeffrey Ruffo) this case exemplifies the desperation Davos is facing. Before continuing our dissection of this event, let’s get one thing clear: the central banks of the world don’t work as one team. They are more like a bunch of teams competing against each. The bankers and traders struggling to make money can be incentivized to try every filthy trick in the book to make ends meet. With that understanding, the US commercial banking sector and the Regional Federal Reserve banks, are the shareholders of the Fed. The Fed is off the global reservation of being the lender of only resort to global capital markets. They are up against what I refer to as Davos (communist/globalists Malthusian oligarchs out of Europe who control a vast majority of the US political establishment). 

Davos wants to destroy the American economy by forcing Congress and the Fed to deficit spend US into oblivion. The replacement would be a new globalist one based on an IMF-backed CBDC. Europe wants this model to be put into place because the ECB can, (and will eventually) go bankrupt. This is intended by Davos, but they want to destroy America’s economy beforehand in order to prevent capital flight out of Europe and cause that capital flight out of America instead and back into Europe. 

Now, back to gold. Davos needs gold prices to be high so they can use their manipulated paper gold holdings as collateral. One could argue that the gold traders at JPM (and perhaps other at other banks), were manipulating the price of gold to the downside to keep confidence in the dollar dominant financial system. Davos needs gold prices to be high so that individual countries literally within Europe become more solvent, which takes some pressure off their government bonds. A recent ECB report from July 31st demonstrated how fragile the European financial system is between sovereigns as LaGarde and ilk had to sell off German debt in order to support Italy and Greece. 

To keep a float and as solvent as possible, the ECB may have to look to Basel III for their salvation if they’re going to win this battle of central banks between them and the Fed.  The new rules of Basel III would basically let the ECB compensate for their lack of gold with their paper gold. Their paper gold would substitute for the gold they don’t have as an asset on their central bank balance sheet. They need this because they’re insolvent and (unlike the Fed), can go bankrupt. The Fed is fighting them and WANTS them to go bankrupt. That’s why they (JP Morgan and team Fed) fought to manipulate the price of gold lower to bankrupt Europe.

In layman’s terms, under Basel III, Europe’s unallocated gold reserves would be replaced by paper holdings, which is what Davos mostly has via the ability to print infinite money via the offshore dollar market. Meaning, “Oh, you don't have enough gold, ECB? No worries! Those paper holdings you have will count for your balance sheet collateral.” 

Davos needs this to happen because they’re bankrupt (specifically the ECB) otherwise Europe simply needs a higher gold price to bailout the ECB. On the flip side, a high gold price would undermine the Fed’s power and credibility. So that’s why JP Morgan (team Fed), manipulated the gold price to be low so Davos couldn’t undermine the Fed and the US bank’s power. So, if the US banks get away with trading scandals like this to manipulate the price of gold to be lower, and the only consequences are small fines and low-rank traders going to jail, then the whole episode is an illustration of their power rather than a harbinger of their power ending. However, it’s crucial to understand that their power is a threat to Davos and then will fight to the bitter end to maintain what control and stability they have.

They say “never let a good crisis go to waste”. For Davos, they are running out of options, and as midterm elections approach us this November, that good crisis could be sooner rather than later. This latest JP Morgan gold trading scandal is just a Davos hit-piece, demonstrating their desperation. It’s merely another Davos attempt to smear the Fed and the banks and blame them on the financial hardship and inequality in the world. Safe haven assets, sound fiscal and monetary policy, and capital flight to the US are America’s only hope to preserve capitalism as we know it for the generations.

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Have a great week everyone, 

Brandon & Phil

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Disclosure: The authors of this writing hold positions in cryptocurrency mentioned in this article. That cryptocurrency is Bitcoin. The article was written by Brandon Keys and occasionally a guest writer; it expresses the author's own opinions. They are not receiving compensation for it. The information presented in this article is for informational purposes only and in no way should be construed as financial advice or recommendation to buy or sell any stock or cryptocurrency. None of the authors of this article are financial advisors. I encourage all readers to do further research and do your own due diligence before making any investments.