The Truth About The Silver Squeeze

Fractional Reserves and Unallocated Metal

The videos also allege fraud, in the form of fractional reserve selling of metal. This crime is apparently not just for banks anymore, as the conspiracy theorists widen their net to accuse refiners, dealers, and depositories.

Fractional reserve is a banking concept when a bank lends most of its deposits. Banks lend because it is their business to lend, and it’s how they pay their depositors interest (or how they used to before the War on Interest was won). Fractional reserve has nothing to do with selling anything.

As an aside, it is not a fraud. Banks get into trouble, not because they lend deposits, but because those loans are often long-term while the deposit is short-term. In other words, banks mismatch the durations of their deposits and their loans. The depositor has the right to withdraw his deposit, but the bank does not have the right to call its loan.

Anyways, let’s be clear. Vault operators and gold refiners have nothing to do with lending metal. Unallocated metal accounts are not bank accounts, and the metal is not lent out to businesses, homebuyers, or consumers.

So if gold refiners don’t lend out the unallocated gold held on account, what do they do with it?

The Purpose of Unallocated Gold Accounts

The unallocated gold is the gold dissolved in aqua regia, it is the gold accumulating on electrical plates, it is the gold formed into shot, it is the melted gold in their crucibles, it is the gold being stamped into blanks.  It is also the gold in their inventory of bars and coins and wire and whatever products they have ready for sale.

This is Keith’s fourth article commenting on the silver squeeze story. To read his previous commentary, click the links below. 

What Will Reddit Do with Silver? Jan 29, 2021

Ruh Roh Silver, Feb 2, 2021

Reddit Silver Residue, Feb 3, 2021

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Disclaimer: The content in this article is provided as general information and for educational purposes only and should not be taken as investment advice. We do not guarantee the accuracy ...

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