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The Bankers’ India Gold Grab: An Update - Jeff Nielson

The Bankers’ India Gold Grab: An Update - Jeff Nielson
By Jeff Nielson 5 years ago 334032 Views 21 comments

Jeff Nielson is co-founder and managing partner of Bullion Bulls Canada; a website which provides precious metals commentary, economic analysis, and mining information to readers/investors. Jeff originally came to the precious metals sector as an investor around the middle of last decade, but soon decided this was where he wanted to make the focus of his career. His website is www.bullionbullscanada.com.

January 5, 2016

In previous commentaries , readers were warned that Western bankers were once again targeting the gold market of India with more of their fiendish plans. This time, they convinced (bribed?) India’s new, corrupt government – the Modi regime – into orchestrating a scheme to steal the gold from its own people.

The nexus of this scam was what was announced as “the gold deposit scheme.” Even the Conspirators themselves were unable to come up with a name to make this naked fraud sound legitimate. The fraud itself is simple, indeed utterly simplistic.

Indians “deposit” their gold into the clutches of their thieving government and are paid (paper) “interest” on those deposits. The fact that this was a naked fraud was immediately apparent. As the bankers tell us all the time, “gold generates no income.” How could India’s government pay the interest on the gold coins/bars/jewelry sitting in its vault supposedly held in trust for its depositors?

There was no immediate answer to that question, because there could be no (legitimate) answer to the question. Indeed, in legitimate bullion storage arrangements, depositors pay a fee to have their bullion safely stored for them, because while the gold generates no income, the costs of storing such gold are significantly greater than zero.

Finally, reluctantly, the Conspirators made explicit what was already totally obvious:

The deposited gold will be auctioned off from time to time to meet domestic demand for jewellery and coins. [emphasis mine]

The scam was now completely exposed.

a) Indians “deposit” their gold.

b) Indians receive (paper) “interest” on their gold while their deposited gold is sold off.

c) Indians end up with the paper interest – and no gold.

d) India’s jewellers and coin-makers then sell the gold they purchased at these auctions back to the same Chumps who originally deposited that gold.

In the eyes of Western bankers, it was the perfect “scheme” – hence their label for the plan. In the eyes of any sane, rational, human being, it was/is the most naked, clumsy fraud that one could possibly imagine. But the corporate media assured us there was considerable enthusiasm amongst India’s population for this scam.

With enormous media and government fanfare, the “scheme” was officially launched at the beginning of November. However, these same media and government mouthpieces were much, much quieter a couple of weeks later when they released details on the initial response to this obvious fraud.

A gold deposit scheme launched amid fanfare by Indian Prime Minister Narendra Modi two weeks ago has so far attracted only 400 grammes, an industry official said on Thursday, out of a national hoard estimated at 20,000 tonnes.

For those readers still less-than-comfortable with the metric system, let’s convert these numbers to the Imperial system of measurement. In two weeks, out of a population of more than one billion people, holding an estimated 40 million pounds of gold, the Conspirators only managed to net roughly one pound of gold from their intended victims.

Expressing these results in percentage terms, the Conspirators managed to steal less than 0.000002% of India’s privately held gold. At that rate, it would take India’s government (and the bankers) more than one million years to steal all of India’s gold.

The thieves were not daunted, at least not publicly. The media offered assorted excuses for the “slow” initial response to the scam. India’s government immediately added new inducements for the scam and pledged a “high-level meeting” to plot even more changes.

Last week, the government announced several steps to make the scheme more attractive for consumers, including measures such as eliminating capital gains and income taxes on the interest earned. The meeting on Tuesday is expected to focus on incentives for banks.

“Capital gains and income taxes”? Indians are having their gold stolen from them. They receive paper interest equal to a fraction of the value of that gold in return. And the media/government liars have the audacity to call this interest a “gain” or “income”? How magnanimous of India’s government to announce that it wouldn’t tax those “profits.”

With these new inducements in place, the Conspirators sat back and waited for the gold to start flowing into their vaults. Two weeks later, we got our next update :

The scheme has only attracted about one kilogramme [two pounds] in a month, prompting the government to nudge temples through banks to hand over their treasures

First we get news that the thieves managed to net another, whole pound of gold during the second half of the month, and were still on-pace to steal all of India’s gold in 1,000,000+ years. Then the language (and imagery) descends to surreal comedy.

We’re now told that India’s government sees “temple gold” as its best/easiest target for stealing. But then we’re told that India’s government isn’t going to approach the temples directly, despite its boasts of what a “great opportunity” the gold-deposit scam represented. Instead, we’re told that India’s government plans on sending in bankers to “nudge” the temples to “hand over their treasures.” Why?

Once upon a time, those individuals who could liberate the most wealth from institutions in the least amount of time were known as “bank robbers.” But those days are ancient history. This is the 21 st century, or as the corporate media likes to call it, all the time, “the New Normal.”

In the New Normal , the world’s premier wealth liberators are no longer bank robbers but rather bank er robbers. These wealth liberators of the 21 st century make the bank robbers of the 19 th and 20th century appear as nothing but rank amateurs.

Observe. First a banker (and bank) is given custody of (someone else’s) financial assets in order to “manage” those assets. Then, a blink of an eye later, the bank/banker proudly proclaims that the bank now owns those assets. The bankers call this method of wealth liberation “a bail-in.”

However, in this case, India’s new government was not calling upon its friends, the bankers, to engage in any direct wealth liberation. Rather, they were being sent in to engage in persuasion. Presumably the “bankers” assigned to that task had names like Butch and Knuckles, and instead of carrying briefcases, they were brandishing “implements of persuasion.”

A mere three days after India’s government sent in the bankers, the following announcement appeared:

Mumbai’s Siddhivinayak temple to deposit 40 kg of gold in monetization scheme

Here’s what is interesting about that announcement. First of all, the bankers had already invested many years of time and effort looking for some means to “gather” some of the thousands of tonnes of gold held by India’s temples – and failed. Meanwhile, just three days earlier, we had been told the following.

But Mumbai’s Shree Siddhivinayak temple, which is devoted to the Hindu elephant god Ganesha, said it remained unconvinced about the benefits.

What could have been said to (or done to) the leaders of this temple in order to get them to suddenly reverse themselves after years of resisting all efforts by the bankers to “gather” their gold? Only Butch and Knuckles can answer that question – but they probably won’t.

The strategy in strong-arming at least one of India’s temples out of a small portion of its gold is obvious. “Look!” hiss the bankers, “Your religious leaders are giving us their gold. That means that it must be a good idea.” Including the 40 kg of gold liberated from the Shree Siddhivinayak temple, this brings the total haul in the gold-deposit scam to 41 kg to date. Put in different terms, the total amount stolen has now risen from 0.000002% of the gold of India’s people all the way to 0.00008%.

Will the scheme by the One Bank and India’s government to steal some/most/all of the 20,000 tonnes of privately held gold in India be successful? If so, Butch and Knuckles will have to engage in a lot more persuading.

The views and opinions expressed in this material are those of the author as of the publication date, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.

fazsha 5 years ago at 3:30 AM
I hope that the Indian temple custodians go public with what means were employed to persuade them.

Meanwhile, the recent boom in the price of gold stocks is rather quietly observed. Barrick leads the pack on the NYSE, with an 18% gain in one week.
Jeff Nielson 5 years ago at 2:39 PM
Yes, Fazsha, I noticed the mainstream media recently blowing-the-horn about the "sudden rise" in gold stocks. Since this is all scripted, I don't know whether this is just another fake-out, or an actual indicator of any change in the current paradigm of corruption.
girish 5 years ago at 10:00 PM
As one of those billion+ Indians, I can offer another update on the ground reality.

The multiple twists and turns in policy over multiple decades on capital gains and wealth taxes regards gold have left most people deeply suspicious of government intent.

No individual trusts any banker or government word here. Individual gold holdings exist as jewelry in 22karat purity and are passed on from one generation to another. Since the gold deposit scheme intends to melt the deposited gold, there is strong reluctance to participate

The temple trusts though are governed predominantly by politicians and are vulnerable to corruption.
Jeff Nielson 5 years ago at 1:44 PM
Indeed, Girish, getting some firsthand feedback on India's market is very helpful. In particular; I wasn't previously aware of the "politics" which surround these temple gold trusts.

Presumably, the endemic corruption which exists in India's PAPER-based commerce is one of the drivers which maintains the attachment of the Indian people to precious metals.

The antidote for dishonest governments is "honest money." Hopefully people in the WEST will learn/adopt that principle in the near future.
John Doe 5 years ago at 5:49 PM
What an absolutely fantastic article. Well written. Can't wait for the next one. The bankers have run out of human gold to steal, now they're going after Ganesh's stack?... Escalation indeed.
wdg 5 years ago at 4:14 PM
They are getting desperate having sold or leased most of the gold in central banks. Now they are trying to steal gold from religious temples. How long will it be before they try to extract gold fillings in teeth?
Jeff Nielson 5 years ago at 1:54 PM
Wdg, you don't want to go giving the banksters any ideas...
Manav Saraf 5 years ago at 1:53 PM
Hi I don't see how this is a scam... Maybe you can help me understand better. The govt is issuing paper bonds against physical gold, which can be redeemed a few years down the line to get money equivalent to the price of gold at the time. Plus, the annual interest payout is an added bonus. Are you suggesting that the govt would refuse to us our the bonds in the future at the time of redemption?
Jeff Nielson 5 years ago at 1:53 PM
Manav, I didn't actually have space in this piece to address the "gold bond" scam, so I'll be happy to add a few remarks now.

The "gold bond" scam is, in some ways, more absurd and outrageous than the "gold deposit scheme", because there is absolutely no GOLD involved.

These are PAPER bonds, which pay PAPER interest. The claim that the bonds are "backed by gold" is laughable, since it has no relevance. It's no different than the U.S. government suddenly deciding to call its own bonds "Golden Treasuries", and CLAIM they were "backed by gold".

The U.S. government previously claimed that the U.S. dollar was "backed by gold", and we all saw how that worked out. As soon as one government (France) decided to TEST that "backing", all of a sudden the USD was no longer "backed by gold".

Same scam.
Manav Saraf 5 years ago at 3:42 PM
Thanks for taking the time. It is still not quite clear how this is a "scam" unless the govt fails to honour the deposits and bonds on redemption day? Aren't we getting a little ahead of ourselves here and calling it a scam when we don't necessarily know that the govt plans to eventually default? With that line of thinking, every financial product which carries credit risk is a potential scam.
I'm all ears now.
Jeff Nielson 5 years ago at 6:44 PM
Manav, I suppose it's all a matter of what one considers to be a scam. If you think that enticing gold-loving Indians into purchasing PAPER bonds, which pay PAPER interest by calling them "gold bonds" is not a scam, then perhaps you have a better word for a fraud of this nature?
Manav Saraf 5 years ago at 1:54 PM
Hi I don't see how this is a scam... Maybe you can help me understand better. The govt is issuing paper bonds against physical gold, which can be redeemed a few years down the line to get money equivalent to the price of gold at the time. Plus, the annual interest payout is an added bonus. Are you suggesting that the govt would refuse to honor the bonds in the future at the time of redemption?
girish 5 years ago at 9:29 PM
Manav, history has consistently showed that governments tax and /or confiscate their populations wealth with little recourse. Physical gold was the ONLY option individuals had to preserve their wealth and their capital. Hence the hatred of the establishment against physical gold.

The US has introduced laws where the seller has to maintain details of the buyer if amount involved is greater than $1000( Patriot Act ). Similarly, in India, the seller needs PAN card if purchaser buys gold worth more than approx $800. Why would you think the government needs this ? Terrorism/Black money are good answers but NOT the real reason.

To directly reply to your question, gold bonds make it easy for government to tax the returns at a later point ( since the return is in paper money AND they know you got that return ). How do you know what would be capital gains tax at bond maturity ? That would be controlled by government. In a world that has seen 90%++ tax rates, what makes you think you get anything back at maturity ? Offering a 2-3% additional interest rate to bondholders is just a lollipop inducement.... but as you see, majority Indians are not falling for it. Physical gold on the other hand is not easy to detect and be taxed.

So IMHO, Jeff's usage of the word "SCAM" is appropriate. Rather, I'd say "SCAM" is the only word applicable. And who is bringing/formulating this law in India ? It is Jaitley ... a lawyer ( read: crooked brain ) and an absolute insider in Lutyens Delhi.
Manav Saraf 5 years ago at 12:32 PM
Indian govt doesn't have the clout to control international gold prices, so there is no way they can artificially reduce your capital gains, beyond a point. Taxation on redemption is a definite possibility, which is probably going to happen. Jaitley, crooked though he might be, did not introduce the scheme. The scheme has been around for a while, this govt merely increased the annual interest amount to try to attract deposits.

IMHO, the scheme failed because people are necessarily emotionally attached to their jewelry, being handed down from generations and as wedding gifts and what not. If they removed the PAN number requirement and made the deposit certificates anonymous and transferable, they can mop up a lot of good from the people. I am just giving this govt the benefit of the doubt (for now) and hoping that the gold deposits would ultimately reduce our import bill and bring liquidity to the markets.
Jeff Nielson 5 years ago at 1:40 PM
Manav, here we certainly find some points of agreement.

In following this subject (in its latest incarnation), I became aware that such "schemes" have been tossed around for years. I also learned (via an Indian contact) that the Indian government's TAXATION of gold has long been a bone of contention with the Indian people. It was for this reason that (at least at first) there was considerable interest expressed from a significant component of India's population.

But as I've been trying to illustrate here; it's the old adage of "trying to get blood out of a stone."

Gold "generates no income." The bankers themselves have recited this mantra, millions of times. Thus deposited gold CANNOT "pay interest" in any kind of legitimate scheme. The only way to PAY the interest is by SELLING the gold supposedly "held on deposit".

It's a pure Ponzi scheme, and there is a very simple word for this: fraud.
girish 5 years ago at 11:44 PM

1. If I recall correctly, this is only the fourth time that a gold bond scheme has been launched in independent India. The previous ones in 1965, 1993 and 1999 were essentially black money amnesty schemes. The one today is NOT a black money amnesty scheme since nobody can purchase more than $800 worth gold and participate into the scheme due to restrictions on usage of cash. So the current gold bond scheme is unique and has "OTHER" intentions. Jaitley is an honest individual but is being a pawn in the game played by governments and
central banks of the west who want to replenish their depleted gold warehouses.

2. The Indian government today simply cannot be seen as being soft on black money primarily because it was a major pre-election BJP rhetoric. So making gold bond deposit certificate anonymous and transferable will be political suicide.

3. Coming to taxation. Consider the gold bond scheme statement :"capital gains tax treatment will be the same as for physical gold for an 'individual' investor. The department of revenue has said that they will consider indexation benefit if bond is transferred before maturity and complete capital gains tax exemption at the time of redemption." Forget a chartered accountant... even a clerk at his office will not trust the intention of the government. I'm old enough to remember 93%-98% taxation rates in India during the Indira Gandhi regime just about 30 years ago. If you've paid taxes through your nose, it is a lesson one can never forget in a lifetime.
K.V.Sadasivan 5 years ago at 7:03 PM
This is Fractional Reserve Gold Scheme and some may not get their Gold back.The PM is one of the Trustees of Somnath temple from where 35 Kg has been offered.
The point is LBMA has a shortage of 2200 MT of refinery Gold,from 2013,as per reports.The Commercial and Reserve Bank OF India may swap this Physical Gold with other Central banks or even LBMA via Western banks,India swapped about 68 MT Gold[48 with BoE and 20 with UBS],which is reported to be with these Banks.The aim is to keep the US Dollar strong.

Please google for:-
1. F rational Reserve Banking
2.Reported Gold frauds in LBMA and Comex
3.Rehypothecation of Physical Gold in paper futures
Jeff Nielson 5 years ago at 10:38 AM
Thank you for the informative comment! You've certainly provided some additional "clues" to pursue, in attempting to piece-together this jigsaw puzzle of corruption.

Yes, ALL of the various bullion scams and precious metals manipulation center on the imperative of propping up the bankers' paper world of fraud.
Lila Rajiva 4 years ago at 11:39 AM
This article deserves the widest dissemination, especially now that the stooge-in-chief has banned larger currency notes, ostensibly to fight corruption and terrorism. It's a sham of course but it has spiked gold prices seriously. There are all sorts of leaks that the news of the stealth ban had actually been divulged ahead of time to help Modi's friends leverage the information. So you can tie the currency ban and the plot to force the population into banking to the gold-stealing scams. Don't blame the population. They are subjected to relentless propaganda by the controlled media. This is a huge story, with hundreds of subplots.
Bruce -an honest man 5 years ago at 5:27 PM
Dear Manav,
I am going to treat you as a real person -an honest soul.
I hope you are not (and please do not be insulted) a shill or disinformation agent. Indeed there are many such evil people, if not most on forums.
You should read American History, about the Indians on Manhattan Island and how they sold there land for a box of trinkets.
In the case of your government, they (the banksters and politicians and the minions in their pockets) know that less than 1 in 100 people will ever want their gold back. Because the people will buy homes, cars and consumables. They will never reacquire the ability to buy back the gold.
The banksters will leverage at least 100 to 1 on that gold and make huge profits issuing debt based on that gold colateral. The end result is Indians who used to own something extremely rare will be enslaved by consumerism, overtaxed on their new assets, falling deeply into debt, and oppressed as a people. India itself will no longer be India as you know it but a clone of the western banking powers -lets call you then "NewIndia" )or perhaps better yet "AmeriIndia" or "EurIndia". It is the plan of western Goldman-Sachs based central banks to enslave and dominate the entire world. Don't be a stupid man. And if you are a shill, may God have mercy on your soul -you work for the synagog of Satan.
K.V.Sadasivan 5 years ago at 7:08 PM
It is astonishing that a Government which taxes by rising excise duty of petroleum fuels when the price of Crude has fallen so much,with no "corresponding" cut in the prices of the said fuels,would offer "interest" just like that.Crude has fallen from about $ 100 to about 30 and the price of petroleum fuels are very high even now.
The aim is to keep the US Dollar strong on the diktat of the "One bank".

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