DC has left a new comment on your post "Dueling Hearings":
It seems that it is all about tricks!This comment deserves its own separate post. I heard multiple people cite this story, so I should explain this scam.
Hey, did you notice that JP Morgan is now accepting gold as transaction collateral. Article here: http://www.businessinsider.com/crossing-the-golden-rubicon-2011-2
What do you make of that?
(I've discontinued "Reader Mail". Most of my blogging time is spent on my cellphone on the subway. My crappy LG envTouch doesn't support that sophisticated editing. Also, I get more comments now.)
You couldn't figure out the scam? A pro-State troll says "Wow! JP Morgan Chase sure are super-nice guys, accepting gold as collateral!" Do you really not see the scam? It's totally obvious. I'll give you one last chance to figure it out on your own.
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
Hint: fractional reserve banking
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
SPOILER SPACE
If you post gold as collateral, JP Morgan Chase *GETS TO SELL YOUR GOLD*. JP Morgan Chase has no obligation to keep physical custody of your gold. They can lend it out to short sellers.
Each ounce of physical gold can back many ounces of paper gold. Allegedly, the paper-to-physical gold leverage is 10x, 100x, or more.
It's the usual fractional reserve banking scam.
From JP Morgan Chase's point of view, it's a great deal. You're giving them physical gold and they're giving you a piece of paper. (bonds or stock or cash)
When you try to reclaim your collateral, you may not be able to get your gold back! Besides, everyone who posts gold as collateral won't try to reclaim it at the same time!
Suppose the margin interest fee is 2% and you use it to buy stocks that crash. Now, JP Morgan Chase gets to keep your gold! Also, JP Morgan Chase is borrowing at the Fed Funds Rate (0.25%) and lending to you at a higher margin rate (1%-2% or more). It's riskless income for JP Morgan Chase.
JP Morgan Chase will sell lots of paper gold. This might push down the price of gold. This would force a margin call. Then, JP Morgan Chase gets to keep your gold!
This is entirely a scam to push down the gold price. If you post gold as collateral, JP Morgan Chase has no obligation to leave the gold in their vault. They're lending it out to short sellers. One ounce of physical gold backs many ounces of paper gold.
You're an idiot if you trade tangible assets (gold) for a bunch of pieces of paper.
This is the usual fractional reserve banking scam, cloaked in the language of a margin collateral trade.
This is just a clever ploy to get some physical gold so they can create lots of paper gold and suppress the price of gold. I can't believe that some people will be dumb enough to fall for it.
3 comments:
Thank you for the analysis.
My first thought after reading about this was "Why does JP Morgan now want to steal physical gold?"
If this were just a profit strategy they could have been doing this all along.Why start now?
As you point out they could drive the price of gold down and then purchase even more physical gold at an artificially lowered price.
I am thinking along the lines that they want/need physical gold for some special reason.
Of course it is probably just standard bank theft as you outlined above.
-DC
The end game has begun. JPMC is in the game as well. They too, want to con you and I, and in the end be the ones with gold.
I agree with FSK on this, one is an idiot if he surrenders real gold in exchange for mere paper that JPMC has no shortage of.
steamroller says:
JP Morgan has been a manipulator in both gold and silver for quite some time. I suspect their market dalliances are at least partially orchestrated by the Fed who is desperate to remain the origin of currency even after they burn down the dollar. They will probably claim ownership of some of the gold and silver bullion through shorting, merely to satisfy the trumpets heralding their demise after the congress-ordered audit which is sure to show how little else they have. But with their "paper profits" they will again demonstrate the axiom" ....Paper will ultimately return to its intrinsic value...
Post a Comment