Thread: Germany Has A Generous Proposal To The Broke PIIGS: "Cash For Gold"

Germany Has A Generous Proposal To The Broke PIIGS: "Cash For Gold"


Submitted by Tyler Durden on 05/29/2012 14:44 -0400

Back in February, as part of the latest Greek bailout of European banks, we noted that the most subversive part of the German-led proposal was nothing short of a gold confiscation scheme.

the European bailout of Greece, is now formally a Greek bailout of Europe, funded by the country's already negative primary surplus, or better said - deficit (don't try to make mathematical sense of that - a scene out of Scanners is guaranteed). Hence, negative bailout. But the piece de resistance, and the reason why Greece is the in situ version of bankster heaven is the news from the NYT that Greece is also about to have negative gold.


Ms. Katseli, an economist who was labor minister in the government of George Papandreou until she left in a cabinet reshuffle last June, was also upset that Greece’s lenders will have the right to seize the gold reserves in the Bank of Greece under the terms of the new deal.

Well, they may be broke, and they may be bailing out Europe, but at least they'll have no gold: sounds like a sweet deal - it makes perfect sense that Greeks are taking every incremental humiliation from a syndicate of few fat, bald types who have access to a digital money printer, with the supine determination of an Oliver Twist.

Today, courtesy of The Telegraph, we learn that Germany is quietly reminding the world that the stealthy, but voluntary, accumulation of gold is what it is all about. As part of a renewed push for quasi-Federalism, whereby Germany would fund a "European Redemption Pact", in which Berlin would, in the form of Germany-backed joint bonds, be responsible for any sovereign debt over the 60% Maastrtich limit, but with a big catch. The catch is that "a key motive is to relieve the European Central Bank of its duties as chief fire-fighter. "We have got to get the ECB out of the game of distributing money, and separate fiscal and monetary policy. Germany has only two votes on the ECB Council and has no way to control consolidation," he said. Germany would have a lockhold over the fund, able to enforce discipline. Each state would have to pledge 20pc of their debt as collateral. "The assets could be taken from the country’s currency and gold reserves. The collateral nominated would only be used in the event that a country does not meet its payment obligations," said the proposal.

In other words: a perfectly legitimate, and fully voluntary scheme in which sovereign gold is pledged to a German "pawn broker" until such time as the joint bonds are extinguished, and if for some "unpredictable" reason, a country fails to meet its obligations, read defaults, all the pledged gold goes to Germany!

But why Gold? Why not spam. After all gold is selling off, spam is stable, and the dollar is soaring. Couldn't Germany merely demand that broke countries simply pledge all their USD reserves, and keep their worthless, stinking yellow metal?

Apparently not.

More from The Telegraph:

This demand could enflame opinion in Italy and Portugal. Both states have kept their bullion, resisting the rush to sell by Britain and others. Italy has 2,451 tonnes of gold, valued at €98bn in March.

Alessandro di Carpegna Brivio, a gold expert at Camperio Sim in Milan, said Italy should treat such proposals with care. "Everything being done at a European level is in the interests of Germany and France, to save their banks. It is not in the interest of Italy," he said.

"We should use our gold to take care of our own debt, collateralizing bonds above 100pc of GDP. That would be a far more targeted approach," he said.
David Marsh, author of books on the euro and the Bundesbank, said Germany is not yet ready for the redemption fund. "The Germans have to do something, but I don’t think it will happen before the elections next year. Spain will have to go through storm first," he said.

Ultimately, a sinking fund cannot tackle the root cause of the eurozone crisis. It may cap debt costs but it does not alter the intra-EMU currency misalignment between North and South, or help the Latin states close the chasm in labour competitiveness.

The South would still face the long grind of "internal devaluation" -- or wage deflation -- breaking societies on the wheel. Yet the Redemption Pact is at least a first step back from Purgatory.
All of this of course, leads us to another post from February, where we again correctly predicted, that it was all about the PIIGS gold holdings:


Projected PIIGS Pillage: 3233.5 Tons Of Gold To Be Confiscated By Insolvent European Banks

While hardly discussed broadly in the mainstream media, the top news of the past 24 hours without doubt is that in addition to losing its fiscal sovereignty, and numerous other things, the Greek population is about to lose its gold in a perfectly legitimate fashion, following amendments to the country's constitution by unelected banker technocrats, who will make it legal for Greek creditors - read insolvent European banks - to plunder the Greek gold which at last check amounts to 111.6 tonnes according to the WGC. And so we come full circle to what the ultimate goal of banker intervention in the European periphery is - nothing short of full gold confiscation.

So just how much gold will be pillaged by the banker oligarchy (it is amusing how many websites believe said gold is sacrosanct by regional national banks, and thus the EUR is such a stronger currency as it has all this 'gold backing' - hint: it doesn't, as all the gold is about to be transferred to non-extradition countries)? As the World Gold Council shows in its latest update, between all the PIIGS, who will with 100% certainty suffer the same fate as Greece (which has shown that unlike during World War 2, it is perfectly willing to turn over and do nothing) there is 3234 tonnes of gold to be plundered. And likely more as further constitutional amendments will likely make the confiscation of private gold the next big step. how much does this amount to? At today's prices this is just shy of $185 billion. Of course by the time the market grasps what is going on the spot price of the yellow metal will be far, far higher. Or, potentially far, far lower and totally fixed as the open gold market is eventually done away with entirely in a reversion to FDR gold confiscation and price fixing days.

The chart below shows total gold holdings for the top 40 countries. Little Ireland is off the chart with just 6 tonnes of gold.


So there you have it: Europe's broke countries may be broke, and may demand Germany bail them out, and Germany is even willing to do it... in exchange for one small thing: just over 3000 tons of gold.

Check to your broke European countries.

Or, actually, check to the world's biggest gold vault located 80 feet under Liberty 33, where all of the above gold is situated.

Germany Has A Generous Proposal To The Broke PIIGS: "Cash For Gold" | ZeroHedge

HAHAHAHAHAHAHAHAHA ... OML I can't breath ....

Dont be a Yokle

Dont do it ..... HAHAHAHAHAHAAHAHAHA

OOOOOOOOOOOOOOOOOOOOOOOOOOH Man is this getting Bizzare

If the PIIGS give up gold for worthless paper then they deserve to be as BROKE as humanly possible

OH DAMN I NEEDED A GOOD LAUGH

The top five gold commentators

Posted Mar 20 2012
by Will Bancroft
36 Comments

There are a range of commentators on the precious metals but there is a golden elite whose insights, opinions and research should not be missed by gold investors. These gold market luminaries can be found in a number of places, and come from a variety of backgrounds. We thought it a good moment to pay our respects, explain to others why these gold commentators are so notable and deserving of your attention, and talk a bit more about why we think they’re so great. Read on for a range of sources that are sure to help your gold investment knowledge.

We’ve compiled a list of our top 5 gold commentators, who are worth seeking out. This is by no means scientific or definitive, but it is a collection of bankers, investors, traders and entrepreneurs who have helped us develop our world view. We have only included commentators that are alive and thus highly accessible today, had we not the late Ferdinand Lips would have surely been included. We have also tried to keep it focused on the gold and silver markets; we would otherwise have been sure to mention the likes of wider forecasters and trend spotters such as Bill Bonner. Tell us if we’ve missed anyone off the list in the comments section below! And, while you’re at it recommend your favourite commentators or analysts.

Jim Sinclair – ‘Mr Gold’

Jim Sinclair is a legendary trader with decades of experience in the gold, silver, commodities, and foreign exchange markets. He is often known as Mr Gold because of his hugely deep knowledge of and association with the gold market. Jim grew up amongst trading royalty, his father being business partners with Jesse Livermore. He has built and sold a number of financial businesses, worked as a advisor to the Hunt brothers in the early 1980s to help run down their silver position, and has published numerous magazine articles and books about investment and the markets.

Back in 2000 Jim forecast a gold price of $1,760 in ten years’ time. His price target was hit in August 2011, rather poetically on the day of the August GATA conference in London. Can he correctly forecast the gold market again? We cannot say for sure, but Jim is better placed than almost anyone else to try. Gold investors will be greatly helped in their journey by this market heavyweight.

You can regularly hear Jim speak on King World News, and we also highly recommend his website that is a fantastic free resource for gold investors: www.jsmineset.com.

Ben Davies

Since founding his precious metals fund in 2007, Ben Davies has shot to prominence in the precious metals markets where he is one of the top commentators and investors. His place at number two in our list is all the more remarkable because he is many years (in some cases decades!) younger than the assembled company. His historical grasp of the gold and silver markets lacks precious little when compared to more senior others listed here.

Ben was previously a trader in the fixed income markets, and was previously head of trading at RBS Greenwich Capital in London. We had the pleasure of interviewing Ben earlier in 2012. Ben’s fund, Hinde Capital, produces some of the best research for gold and silver investors. Hinde’s research is deep, extensive and highly educational, but be warned it can sometimes be over 50 pages long. Ben’s reports cover a range of areas from the danger of gold ETFs, state intervention in markets, and even short term market updates with a specific market call. There are few, if any, who can call markets consistently over the short term, by Ben, like Jim Sinclair above, is one of the best placed to do so. His piece ‘Silver Criticality’ was one of the best short term calls in the volatile silver market. He told us he had to rush this out in 24 hours, in time with his suddenly building hunch about a drop in the silver price. Ben’s research will also direct you onto other great academics, analysts and traders, such as Peter Bernholz, Didier Sornette, Benoit Mandelbrot and others, whose research, books and insights will also help your investing and world view.

You can read reports from Hinde Capital here, and Ben also features regularly on King World News. You can enjoy Ben’s Tweetstream and personal insights into his business life via @HindeCapital.

Eric Sprott

Eric Sprott has many decades of experience in the investment industry and founded the now >$11bn Sprott Asset Management. Eric is one of the most eloquent speakers and writers in the precious metals markets, and another very popular conference speaker. His analyses of wider macro issues affecting currency wars, leverage and debt, and state induced imbalances is superb. Eric is a thought leader for investors, and savers might benefit from listening carefully to him on why keeping money in the bank is not necessarily a safe investment.

Eric is another investor not afraid to call individuals and institutions to account. He is an outspoken critique of the meddling of central bankers, and campaigns for greater fairness in the precious metals markets. Specifically Eric has a grievance with the price discovery process that sets the gold and silver prices. He believes the paper and derivatives markets set the gold price, when it is in fact the physical market that is the real and honest market investors should participate in. It was for this reason that Eric called on silver miners to think differently about the silver bullion product they produce.

Eric appears regularly on King World News, and he and others from Sprott AM write excellent monthly newsletters called ‘Markets at a Glance’.

James Turk

James Turk is another godfather of the gold market. He was a trained banker, with Chase Manhattan Bank, before moving into the investment and trading worlds. James also managed commodities for an Abu Dhabi Sovereign Wealth Fund, and has written “The Freemarket Gold & Money Report” since 1987. James’ analysis, and his ‘Fear Index’, have become greatly respected in the precious metals markets.

James is a great student of sound money and Austrian economics, and is now heavily focused on educating investors and voters. He co-authored ‘Dollar Collapse’ with John Rubino, a financial book about the demise of the dollar and how to profit from it. The book and the associated website (DollarCollapse.com) come highly recommended; you can also read our comment and analysis on this website. James’ GoldMoney Foundation does great work spreading the word about gold, silver, and the problems in the global financial system. The foundation’s interviews with academics, politicians, investors and traders may well aid your gold investment knowledge.

James is another regular on the financial news site, King World News.

Jim Rickards

Jim Rickards is an investment banker with over three decade’s experience in the markets. He is also a trained lawyer and has served as General Counsel at several financial institutions. Jim was the principal negotiator of the government-sponsored rescue of the LTCM hedge fund collapse of 1998, and also assists the Department of Defence in their understanding of financial warfare.

Jim has become a well-known figure in the precious metals markets due to his breadth and depth of financial knowledge, including monetary history and gold. He is another favourite on investment podcasts, financial news shows, and money websites. Jim’s book ‘Currency Wars: The Making of the Next Global Crisis’ became a New York Times bestseller, and is now a much read and cited financial book. During the promotion of this book economist Nouriel Roubini called out Jim via Twitter for his discussion of the gold standard. In our humble opinion Jim proved to be much better versed in the detail of this technical discussion than Mr Roubini, who continues to broad cast strong opinions of the direction of the gold price without much of a record.

You can regularly hear Jim talking gold, the markets and the economy on King World News, whilst his regular blogs on Seeking Alpha are also highly recommended. You can follow Jim on Twitter via @JamesGRickards, for an amusing and insightful Tweetstream.

The golden quintet

We hope you enjoy listening to and reading these commentators. We think you’ll find their analysis educational and even eye-opening. Sir Isaac Newton once quipped: “If I have seen further it is by standing on ye sholders of Giants [sic]”. You may well be able to use the individuals above to do similarly, and understand more about the future of the gold and silver prices. (As mentioned above do use the comments section below to add your opinions and favourite gold commentators.)

The top five gold commentators

EU Debtors Must Pawn Gold, National Assets To Germany

Europe’s debtors must pawn their gold for Eurobond Redemption

Southern Europe’s debtor states must pledge their gold reserves and national treasure as collateral under a €2.3 trillion stabilisation plan gaining momentum in Germany.

This demand could enflame opinion in Italy and Portugal. Both states have kept their bullion, resisting the rush to sell by Britain and others. Italy has 2,451 tonnes of gold, valued at €98bn in March.

By Ambrose Evans-Pritchard, International business editor
5:22PM BST 29 May 2012
886 Comments

The German scheme -- known as the European Redemption Pact -- offers a form of "Eurobonds Lite" that can be squared with the German constitution and breaks the political logjam. It is a highly creative way out of the debt crisis, but is not a soft option for Italy, Spain, Portugal, and other states in trouble.

The plan is drafted by the German Council of Economic Experts and inspired by Alexander Hamilton’s Sinking Fund in the United States -- created in 1790 to clean up the morass of debts left by the Revolutionary War. Flourishing Virginia was comparable to Germany today.

Chancellor Angela Merkel shot down the proposals last November as "completely impossible", but Europe’s crisis has since festered, and her Christian Democrat party has since suffered crushing defeats in regional elections.

The Social Democrat opposition supports the idea. The Greens say they will block ratification of the EU Fiscal Compact in the German Bundesrat -- or upper house -- unless Mrs Merkel relents.

"The Redemption Pact cleverly combines the advantages of lower interest rates through joint European borrowing with a reduction of debt," says Green leader Jürgen Trittin. "Joint liability would be limited in both time and scale."

The plan splits the public debts of EMU states. Anything up to the Maastricht limit of 60pc of GDP would remain sovereign. Anything over 60pc would be transfered gradually into the redemption fund. This would be covered by joint bonds.

Italy would switch €958bn, Germany €578bn, France €498bn, and so forth. The total was €2.326 trillion as of November but is rising fast as Europe’s slump corrupts debt dynamics. The sinking fund would slowly retire debt over twenty years, using designated tithes akin to Germany’s "Solidarity Surcharge".

In effect, Germany would share its credit card to slash debt costs for Italy, Spain and others. Yet it is the exact opposition of fiscal union. While eurobonds are a federalising catalyst, the fund would be temporary and self-extinguishing. "The fund is a return to the discipline of Maastricht with sovereign control over budgets," said Dr Benjamin Weigert, the Council of Experts’s general-secretary.

The ingenious design gets around the German constitutional court, which ruled in September that the budgetary powers of the Bundestag cannot be alienated to any EU body under the Basic Law -- the founding text of Germany’s vibrant post-War democracy.

The court warned that open-ended liabilities are unconstitutional. The Bundestag may not establish "permanent mechanisms which result in an assumption of liability for other states’ voluntary decisions, especially if they have consequences whose impact is difficult to calculate," it ruled. Chief Justice Andreas Vosskuhle said that any major step towards EU fiscal union would require "a new constitution" and a referendum.

The fund implies a big sacrifice for Germany. Its interest costs on joint debt would be much higher than today’s safe-haven rate of 1.37pc on 10-year Bunds. Jefferies Fixed Income says it would cost 0.6pc of German GDP annually. The Council of Experts -- or `Five Wise Men’ -- argue that this would be modest compared to the growth adrenaline of rescusitating monetary union.

Yet it is not charity either. One official said a key motive is to relieve the European Central Bank of its duties as chief fire-fighter. "We have got to get the ECB out of the game of distributing money, and separate fiscal and monetary policy. Germany has only two votes on the ECB Council and has no way to control consolidation," he said.

Germany would have a lockhold over the fund, able to enforce discipline. Each state would have to pledge 20pc of their debt as collateral. "The assets could be taken from the country’s currency and gold reserves. The collateral nominated would only be used in the event that a country does not meet its payment obligations," said the proposal.

This demand could enflame opinion in Italy and Portugal. Both states have kept their bullion, resisting the rush to sell by Britain and others. Italy has 2,451 tonnes of gold, valued at €98bn in March.

Alessandro di Carpegna Brivio, a gold expert at Camperio Sim in Milan, said Italy should treat such proposals with care. "Everything being done at a European level is in the interests of Germany and France, to save their banks. It is not in the interest of Italy," he said.

"We should use our gold to take care of our own debt, collateralizing bonds above 100pc of GDP. That would be a far more targeted approach," he said.

David Marsh, author of books on the euro and the Bundesbank, said Germany is not yet ready for the redemption fund. "The Germans have to do something, but I don’t think it will happen before the elections next year. Spain will have to go through storm first," he said.

Ultimately, a sinking fund cannot tackle the root cause of the eurozone crisis. It may cap debt costs but it does not alter the intra-EMU currency misalignment between North and South, or help the Latin states close the chasm in labour competitiveness.

The South would still face the long grind of "internal devaluation" -- or wage deflation -- breaking societies on the wheel. Yet the Redemption Pact is at least a first step back from Purgatory.

Europe’s debtors must pawn their gold for Eurobond Redemption - Telegraph

Greece Faces Electric Meltdown



Submitted by Tyler Durden on 06/01/2012 08:18 -0400

Maybe the electrician-in-chief can send them some of those unused Solyndra solar panels?

From Reuters:

Greece's power regulator RAE told Reuters on Friday it was calling an emergency meeting next week to avert a collapse of the debt-stricken country's electricity and natural gas system.

"RAE is taking crisis initiatives throughout next week to avert the collapse of the natural gas and electricity system," the regulator's chief Nikos Vasilakos told Reuters.

RAE took the decision after receiving a letter from Greece's natural gas company DEPA, which threatened to cut supplies to electricity producers if they failed to settle their arrears with the company

Or, as they call it in Greece, Friday.

Greece Faces Electric Meltdown | ZeroHedge