BLIPS FOR THEE; GOLD FOR ME
This story - also shared by E.E. with our gratitude - caught my eye because it is one of those little indicators that tend to confirm the hypothesis that the whole digital "currency"/central bank digital currency/sovereign wealth fund is simply the latest scam in a bid to soak up the world's hard assets, and leave the vast majority of its population holding nothing of any real tangible value except computer blips. The whole scheme of tokenized assets resembles nothing so much as the old Soviet ruble: a tokenized asset representing a fraction of the hard assets of the country, which under the Marxist doctrine, "the People" owned. Thus it could be claimed that the money was "backed." You as an individual were a "part" of "the people", and your rubles represented your "part" of the assets of the country, tokenized as pretty pieces of paper with pictures of Lenin and other notables of the whole goofy system.
In this case, the confirmation comes from a story in Zero Hedge about the klepto-currency Tether, which, as it turns out, not surprisingly holds a substantial amount of physical gold:
Tether's 116-Ton Gold Hoard Rivals Reserves Of Korea And Hungary: Jefferies
So note: this klepto-currency "stablecoin" issuer now, for some "indecipherable" reason, owns more gold than the central banks of Hungary, Greece, or South Korea:
Stablecoin issuer Tether holds 116 tons of physical gold, placing it on par with central banks such as those in South Korea, Hungary and Greece.
And that's not all: the amount of physical gold it holds runs over a one hundred tons:
Tether is “the largest holder of gold outside central banks,” Jefferies wrote in a recent analysis, per a report by the Financial Times. The investment bank added that Tether’s growing appetite for gold may be playing a larger role in the metal’s recent surge than previously assumed.
According to Jefferies, Tether’s gold purchases last quarter accounted for nearly 2% of total global gold demand and almost 12% of central bank purchases. The company said that Tether’s aggressive accumulation over the past two months “is likely to have tightened supply in the short term and influenced sentiment,” potentially driving speculative inflows into gold markets.
Not only that, but the klepto-currency issuer is buying not only gold, but gold producers:
Tether has also spent more than $300 million this year buying stakes in precious-metal producers. In June, it acquired a 32% stake in Canada’s public gold royalty firm Elemental Altus Royalties.
In September, the FT reported that Tether is exploring investments across the gold supply chain, including mining, refining, trading and royalty companies, as part of a broader push to diversify its reserves.
And then there's this tibit that gives away the game:
Jefferies said Tether is betting that tokenized gold will finally find traction. Physical gold is cumbersome for retail investors, futures carry roll costs and gold ETFs charge relatively high fees. Tether argues that tokenization solves these frictions.
As Cointelegraph reported, Tether’s day-to-day operations mirror several core functions traditionally associated with central banks. It mints and redeems USDt directly for verified customers, effectively expanding or contracting supply through its primary market pipeline.
So what's the game? (1) You give us your money/cash by using it to buy our blips; (2) We then use the cash to buy gold and gold producers' equities (or other hard assets that we can claim as "backing" for our klepto-currency; (3) we thereby drive up the price of gold and gold producers' stock, and can then (4) report profits on your computer blips which represent the physical gold as "tokenized assets", (5) you can then sell your computer blips for cash, but we'll hang on to the actual gold for you and just move it from vault to vault like a central bank does (or, at least, is supposed to do. Don't forget that little episode that Hjalmar Schacht, president of Germany's Reichsbank, recounted in his memoirs when he asked to see Germany's gold in the Federal Reserve of New York's vaults, and they could not find it.)
It's amazing how the game really has not changed all that much since the banksters set up shop in the Venetian lagoon a some centuries ago. The only thing that has changed is the technology. Now, rather than large and cumbersome ledger books and analogue pen-and-ink entries, we now have computers to do all that accounting for us (which we'll increasingly forget how to do, as a result).
So here's where my high octane speculation comes into play: what happens to these tokenized assets when they are not only being managed by computers, but by computerized artificial intelligence agents? As I blogged about last Monday, insurers are already refusing to insure such A.I. "agents" for precisely the reason that it is too risky, and that said agents not only can but already have committed their corporations to crazy transactions which they have to honour. Just for the sake of simplistically illustrating what might happen if a hypothetical klepto-currency chatbot A.I. makes such an offer. Let's supposed our klepto-currency "Swagcoin", and our artificial intelligence chatbot agent "Swagbot", have made such an offer. Swagbot, in order to gain new customers for Swagcoin, comes up with an offer that it "thinks" will generate more customers for for the Unstablecoin. It offers one free 99% pure troy ounce of silver for every $75.00 of Swagcoin the customer invests in. It then uses that money to purchase more gold. The price of everything goes up, including Swagcoins. As the price of all Swagcoin-related things goes up, its insurer cancels all policies, as it has learned that one of its investors, Ronald J. Grump, has made millions of dollars playing the silver futures, driving up the price of silver, and suddenly shows up demanding the real physical silver for the $750 million in Swagcoins he bought when the Swagbot proposed the "deal". "You can send the 10,000,000 ounces of silver to my residence at Mars-a-Largo", reads the post card.
One can imagine the ripple effects on the financial system, especially if Swagbot did not limit its transactional schemes to silver, but expanded them to all commodities. With "stability" like this, who needs central banks? or insurance? or an economy? or a functioning society? And what are the points of failure? In this case, I see two principal ones (though there are many if one scrutinizes the steps in "the game"): (1) the potential use of artificial intelligence in such a system, with all the risks that entails as I outlined in last Monday's blog, and, to a certain extent, in the above over-simplified scenario; and (2) the breakdown of such a system when physical delivery of the hard assets is insisted upon, as inevitably will happen in cases where the amount of assets to be delivered represents a physical quantity that can be delivered, i.e., so many ounces, or pounds, or tons, and not a mere nano-fraction of an ounce in a "tokenized asset".
In short, this is a game that only the very wealthy can play. And the goal of the game is to strip-mine the assets of the middle class. Time to walk away from the game.
See you on the flip side...
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