An interesting article from Ron Kirby. Ron says the Fed has either repatriated to other countries their gold held by us for custodial reasons, and/or sold gold in the past two years for an amount totalling 5,000 tonnes. Our gold inventory is offically listed at 8,100± tonnes. The dollar value of this exported tonnage was at current gold market values and was officially added to our export totals in what appears to be an obvious attempt to show the US financial condition is improving.
Ron concludes "The value of these bullion exports significantly “skew” the doctored U.S. Trade numbers [coincidentally, also prepared by the U.S. Census Bureau] in an attempt to convey a picture that the U.S. financial position is improving."
Mr. Kirby's article is as follows:
Ron's article addresses pumping up our GDP using gold exports. But then there is the import side of the ledger. Robert F. Dieli, Ph.D., a longtime observer of Wall Street and the Economy, analyzed the first quarter 2009 real GDP and the impact of weaker imports on final GDP numbers. Mr. Dieli reports the following:
“As you know, imports are subtracted from GDP. Because imports are declining in absolute terms, you get a positive effect from a negative-negative. Just to be clear as to what this chart is telling us: the drop in imports contributed 6.05 percentage points to the GDP growth rate. What this means is that without the contribution from imports, GDP declined at 12.15% annual rate in Q1.
In other words, all of the domestic activity was, as the employment numbers suggested, in free fall! Now, this has some important implications for the profile of growth going forward. When imports stop dropping, and they likely will in the near future, the sign on this term will go back to its normal negative, and when it does, it will expose the true growth rate of the domestic economy. We had best hope that GPD has gotten back on track by the time the positive effect of negative import growth wears off.”
The bad news is that the trade balance shift from imports is actually bad for the economy and signifies extreme weakness yet it shows up as a positive contributor to GDP due to how the math works.
Robert's article is here:
What this means is our government is using phony gold export numbers, which in actuality is likely repatriations of other countries' gold back to their country. Because if they were actual US gold sales, we would have virtually no gold left here in the US. The Census Bureaus then officially adds this $128 billion repatriation to our GDP. On the import side of the ledger, the government subtracts the 6.05% decline in imports and this amount is also added to our official GDP.
In other words, our economy has actually contracted far far more than has been let on.
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