Precious metals are back on the march… Gold is flirting with $1800 and silver is rolling as well.
Amidst the surge in PM’s, Zero Hedge reported yesterday that beleaguered Greece is not only about to unveil a “negative salary” scheme where some 64,000 people will work without salary or be asked to return their salary this month, but that the country that brought us the “alphabet, philosophy, and plates with funny sexually ambiguous drawings on them” is also about to lose all of its gold as well.
This will never be reported in the MSM of course, but Greece has now allowed amendments to the country’s constitution by unelected banker oligarchs that will make it perfectly legal for Greece’s creditors (who as ZH accurately points out, are themselves “insolvent” European banks), to seize the country’s 111.6 tons of gold.
We thought we’d seen it all, but this latest twist in Greece’s painfully slow slide into inevitable bankruptcy is a doozy. Now that we’ve entered the realm when private bankers can seize the family jewels of a sovereign nation, things are going to get mighty interesting.
Remember last July when the Central Bankers’ Central Banker Ben Bernanke was asked by Ron Paul in a Congressional hearing whether gold was in fact money? If you don’t remember it, you can catch the vid here:
Congressman Paul ridiculed the Fed injection of $5.3 trillion into the economy, trashed Bernanke on the growth in the national debt to $5.1 trillion while GDP stalled at less than 1%, and challenged claims that inflation was low by pointing out at least one definition of inflation that showed price increases of 34% over the preceding three years.
But the gold question was the highlight of the hearing:
Paul: “When you wake up in the morning, do you care about the price of gold?”
Bernanke: “Well… I pay attention to the price of gold. But I think it reflects a lot of things. It reflects global uncertainties. I think the reason people hold gold is as protection against what we call tail risks… really, really, bad outcomes…”
Paul: “Do you think gold is money?”
Bernanke: [really awkwardly long pause] “No, it’s not money. It’s a precious metal…”
Paul: “Why do central banks hold it?”
Bernanke: “Well it’s a form of reserve.”
Paul: “Well why don’t they hold diamonds?”
Bernanke: “Well it’s tradition, long term tradition.”
So… There you have it. Central bankers don’t believe that gold is money. They hold it as a form of reserve based on little more than “long term tradition.”
Or then again, maybe not…
It’s always instructive to watch what banks actually do, rather than what they say. In Greece’s case, the country’s insolvent lenders made damn sure they had the right to seize the gold reserves in the Bank of Greece under the new terms of the country’s bailout package.
Oh, and what was it Bernanke said about the price of gold? It’s “protection against what we call tail risks… really, really, bad outcomes.”
Banks know better. They don’t want to be holding old euros or new drachmas or any other fiat currency when we enter the “tail risk” phase. They want to be holding gold… Shouldn’t you?
