Foreign banks cut down gold bullion & gold lease supplies to India

November 6, 2008 by · Leave a Comment
Filed under: Commodities News 

Funny how everyone poo-poohs gold but now that we have this enormous financial crisis on our hands, banks are starting to let gold assert its historic role.  They know like others do, that we have way too much leveraged paper outstanding and too little real money to back it up.  What will most likely happen, they will create a new international currency for trade that will be valued based on the current gold price.  

This will serve the purpose to give you a mechanism to determine if someone is over-issuing their currency.  You solve many of these business cycle problems but not having floodgates on your currency.  Politically this is a difficult situation because our representatives don’t want to tax us for their spending.  They would rather borrow it from a convenient banking cartel partnership (ie: The Federal Reserve Act).  We will come back to gold in the end because it does not have any inherent debt attached to it.

News:

 With the credit crisis having a direct impact on funding costs and drying up of interbank credit lines, a few foreign banks have altogether stopped supplies of gold to Indian banks in a bid to reduce their exposure to Asian markets.

This comes at a time when global liquidity pressures have eased considerably and local demand for the yellow metal has picked up as prices have come off the highs witnessed in the early part of October. Dealers from many banks told ET that supplies have been squeezed with banks, such as Standard Bank of South Africa, one of the main suppliers, Commerzbank and UBS, stopping supplies altogether or reducing them on a consignment basis.

“Both Commerzbank and Standard Bank have stopped supplies on a consignment basis to Indian banks since October, while UBS has reduced its exposure,” said a bullion dealer from a public sector bank.

“Apart from the cost of funds having played a part in their decision to stop or go slow on supplies, the main reason is reluctance on part of these banks to take exposure to Asian banks for fear of defaults.”

Source: India Times

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