19 Oct 2009


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MercedesRules passes along this article discussing central bank machinations to suppress not only the gold price, but the “gold basis.” I have not delved into this stuff enough to tell if this is legit or crankish, but I do know that the author–Antal Fekete–has many fans. This paragraph is striking (if true):

Reports are circulating that similar audits of certain Asian depositories have already produced “good” delivery bars (400 oz or 12.5 kg gold bricks) that have been gutted and stuffed with tungsten – a metal whose specific weight approximates that of gold, so that the famous test of Archimedes (fl. 287-212 B.C.) based on the Law of Buoyancy, designed to expose fraudulent goldsmiths, would be inapplicable. Isn’t it strange that criminal law punishes the fraudulent stuffing of gold bars, but allows the stuffing of gold assets in the balance sheet with paper gold? After all, the specific value of tungsten is much higher than that of paper!

As I say, I can’t confirm the validity of these fears, but MercedesRules (who is a huge gold bug) tells me the chatter is really up, that this isn’t just the standard “the government is screwing us, gold will zoom up, I just feel it!” talk.

On the other hand, I did find it funny that Fekete basically starts his article off by admitting he didn’t know what he was talking about 12 months ago…

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