Is massive gold short-selling the fundamental backdrop behind America’s financial revolution of the late 20th century? Read GATA’s latest letter and you might conclude that gold was THE funding currency of the 1980s, 1990s and 2000s.
As an executive at Goldman Sachs in London, Robert Rubin developed an idea to borrow gold from central banks at minimal interest rates (around 1 percent), sell the bullion for cash, and use the cash to fund Goldman Sachs’ operations. Rubin was confident that central banks would control the gold price with ever-more leasing or outright sales of their gold reserves and that consequently the borrowed gold could be bought back without difficulty. This was the beginning of the gold carry trade.
