While many cling to the disproven notion that gold is irrelevant to modern finance, mysterious dealings in the global gold market suggest that gold still matters to some very powerful entities.

According to former Federal Reserve Chairman Alan Greenspan, “gold still holds reign over the financial system as the ultimate source of payment.” World Bank President Robert Zoellick has advocated a new global currency regime that employs gold as “an international reference point of market expectations about inflation, deflation, and future currency values.” Central banks around the world, most notably China, are actively expanding their gold holdings, as the major fiat reserve currencies continue to signal long-term structural weakness.

Gold is like a pancreas: Few people seem to know what it does, yet it’s indispensible to a properly functioning system. So just imagine that your doctor told you your pancreas could not be examined.

That’s precisely where gold is today. The global financial system isn’t exactly known for its transparency, but gold may be its most shrouded and secret aspect.

Chris Wood, of brokerage firm CLSA Asia-Pacific Markets, broke a significant story recently when he reported that Belgium’s central bank admitted to having loaned out 41% of bank’s gold reserves as of the end of 2010. The bank reportedly earned only 0.3% on those loans — which also raises legitimate questions about why it made them. More importantly, we now have proof that at least one central bank practices what many gold market observers like the Gold Anti-Trust Action Committee (GATA) have long suspected.

To read full article click on Source