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Those of you who have followed LeMetropole Café for the last decade will be familiar with this line of reasoning.

Outspoken Hong Kong hedge fund manager William Kaye spoke with KWN about the missing Fed and German gold, where it has gone, and how much gold the People’s Bank of China (PBOC) really owns.  This interview is going to stun readers around the world.

Eric King:  “Bill, you say China has over 4,000 tons of gold already, possibly as high as 8,000 tons.  Where do you see them heading in terms of their overall ownership of gold?”

Kaye:  “Well, they’re not done yet.  Gold has been leased out, and we do know this (takes place) because it’s been admitted to by the major central banks.  The Fed has admitted it, the European Central Bank has admitted it, the Bank of England has admitted it.  They’ve all admitted that they engage in wholesale leasing of gold to the market.  

In practice how that (leasing) works is the Fed would contact their agent, typically JP Morgan, sometimes Goldman Sachs, and they would say, ‘OK, the gold price needs to be capped, so here is 20, 30, 40, 50 tons (of gold) that we’re going to lease out to you as our agent.  But in theory we can call it back.’ 

That’s a great theory, but in reality it’s nonsense because once JP Morgan and Goldman Sachs get the gold they sell it into the market.  So these bullion banks then become net-short gold.  And the Fed says, ‘Well, we still have a contract where in theory we can claim the gold.  So we’re going to report that we still own it in the official documents.’

But in reality the gold has been sold into the market.  That gold winds up in places like Beijing.  But before it gets to Beijing it frequently goes through Hong Kong.  And when it goes to Hong Kong, it goes to our refiner, the same people we use.  And by the way, Eric, we may own some of the gold that Germany thinks that they own.  But Germany will never see that gold because it’s safely stored in my account (and) for our investors at the Hong Kong International Airport.

Regarding that gold, which could have had the symbol of the Bundesbank on it when it arrived in Hong Kong, a leading refiner, one of the biggest in the world that deals with the People’s Bank of China (PBOC), certified that, ‘Yes, we’ve got gold available that we can deliver.  We’ve melted it down, we’ve tested it.  It may have had the Bundesbank symbol on it when it arrived, but now it’s melted down .9999 (fine) gold.’ 

That’s how it works in practice.  So the Fed gold, that Americans think is theirs, is gone.  The gold that the Germans have been told they will get back in 7 years, they’ll never get back because it doesn’t exist anymore (at the Fed).  I own it.  The People’s Bank of China owns it.  The Reserve Bank of India owns it.  The central bank of Russia owns it.  But the people of Germany (and America) don’t own it.”

IMPORTANT – This is part I of a series of remarkable interviews with William Kaye that will be released today.  Kaye discusses everything from gold, to the end game, and it will have King World News listeners on the edge of their seats.  The written portion above is just a small part of this extraordinary interview.  The KWN audio with William Kay is available now and you can listen to it by CLICKING HERE.

King World News, July 9, 2013

This has enormous implications on the future price of gold and the “value” of the “gold backed” dollar.  One will rise dramatically and the other will fall hard.  Which do you think is which?

Lest you think that the fall in gold and silver was a “natural” event, just a normal market correction, I quote from Bill Murphy:

Gold and silver have been mauled in the most egregious manner since the first week in October by the Gold Cartel.  Their attack in Mid-April was a one in four thousand year gold event highlighting their efforts.  Gold dropped something like $230 in 36 hours in that assault.  There were no outside market factors to account for the selling.  The corrupt and inept CFTC never even bothered to get into it.  Corrupt is too kind an adjective for them.

Le Metropole Cafe, July 12, 2013

Those who try and predict the direction and timing of the gold and silver markets by using time-tested charts and moving averages, assume that the markets are acting freely and rationally.  Are they really, now?  A one in four thousand year event is hardly “normal.”  And if it wasn’t a “normal” event that cut the legs off of the precious metals 11-year bull market, then how can anyone predict what these markets are about to do?  You really can’t have it both ways.  If that was “normal,” then the charts offer hope of future direction.  If it wasn’t then we are all wandering in the dark until a “black swan” event appears and jolts the precious metals markets back to “reality.”  When that happens, you really want to be very long gold and silver!