This latest story whereby gold allocated accounts are being used unbeknown to its owners is not new. The sheer volume mentioned i.e. 60,000 tonnes claimed by Jim Willie’s source though is massive. The warning fits in with similar stories from Gerald Celente and Egon Von Greyez. Exerts from the interview Jim Willie gave to silverdoctors is below.

I call it the Great Paper Solution Delusion.  I was asked recently if the large banks are naked short gold, why don’t they just print some money and make the margin call go away?  I stated it’s not that simple, their margin calls aren’t fixable by cash.
My friend asked, why not, all margin calls are fixable by cash!  I replied then why are they off market?
These cases involve banks that must come up with gold to get out of margin calls in off-market transactions!

The banks have off-market transactions.  Why are they off-market?  If they’re just standard French gov’t bonds or Spanish bonds or short gold futures, why are they off-market?
My best gold source told me that since Feb 29th, 5,000 metric tons of gold have left NY and London banks and have been shipped East.  This was in early July.  5,000 metric tons of gold were lost from the cartel banks: I’m talking Royal Bank of Scotland, JP Morgan, Barclays, Citi, BOA, Goldman Sachs.  They’re losing their gold!
I kept asking my source, why do they need physical gold to settle their contracts!  He said, it’s the nature of the contracts.
These are not standard contracts.  When I asked who the counter-parties were, he responded the same entities in the East that have had the gold shipped to them.

What on earth is going on?  Why can cash not settle margin calls?  What is the nature of these off-market transactions?  Why can only gold be used to satisfy the margin call?
My conclusion is that these cartel banks have improperly used ALLOCATED gold, and the Eastern entity is pissed off!  The Eastern entity has the opportunity with their margin calls for the replacement of their improperly accessed gold from allocated segregated accounts.
It cannot be satisfied with cash because the original margin was placed with allocated gold improperly!

This contact of mine has updated this figure now that we’re into September, it’s up to 6,000 metric tons!  6,000 metric tons of gold have moved East, and I’m deducing that it’s largely allocated gold because cash could not be used to settle the margin call!  The fact that it’s off-market, and only gold can satisfy it means that gold was used in the setting of the margin!
If they want their gold back, I’m suspecting that it’s allocated accounts!

The LIBOR scandal opened the door to this latest scandal which may not be publically exposed.

My same source says that the LIBOR situation opens the door for lawyers and investigators to go in and examine the banks’ books during the discovery period, and as that happens, they’re getting access to other information.

The biggest scandal coming is not LIBOR, but the improper usage of allocated gold accounts.  If 6,000 tons from allocated accounts have been sent East to satisfy margin calls, it’s JUST THE BEGINNING!

The same source informed me in 2010 that over 20,000 tons of allocated gold have been improperly used!  In 2011 he informed me that the total had risen to 40,000 tons of allocated gold that have been improperly used from allocated, segregated accounts!   Now he’s telling me that perhaps 60,000 tons of allocated, segregated gold have been improperly used!

…and silver has been used also?

Jim Willie: Absolutely, there’s a tremendous amount of allocated silver gone.  What makes silver more acutely a problem is that the above ground supplies have been depleted for 3-4 years.  The major 6 billion ounce silver stockpile that Teddy Roosevelt ordered back in 1910 that was used by both the military and the US Mint was depleted in 2006 or 2007.

If you look at the annual output you’ll see that silver production is in decline.  I see big problems with steady ongoing output declines going forward.

Jim Sinclair has been predicting $10,000/oz gold based on money printing.  Based on the fact that you can’t expand the money supply without seeing the price of gold go up hand and hand!  It’s a function of how much new money they’re pumping into the system.

If it’s 40,000 tons of allocated gold have been used improperly by the cartel banks.  If the event comes that the cartel has to replace that under pressure of prosecution or worse, if some of the banksters disappear thanks to the Eastern enforcer, the Eastern coalition may force the cartel banks to replace their gold.
I believe we will see $5,000/oz gold not from the public entering the market, but I believe we will see $5,000/oz gold from the cartel banks replacing what they improperly used in their leveraged games from allocated gold accounts.  We will get to high prices in gold from bankers replacing the gold that they improperly took from allocated accounts so that they avoid jail time.  I’m talking about 40,000 tones- that is an order of magnitude larger than the coming public purchases.

 

Source: silverdoctors.com

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