Did Gordon Brown Sell UK's Gold To Keep AIG And Rothschild Solvent; More Disclosures On How The NY Fed Manipulates Gold Prices

Tyler Durden's picture

In the neverending saga of new disclosure of gold price manipulation, here is the most recent pearl, courtesy of Jesse's Cafe Americain:"In front of 3 witnesses, Bank of England Governor Eddie George spoke to Nicholas J. Morrell (CEO of Lonmin Plc) after the Washington Agreement gold price explosion in Sept/Oct 1999. Mr. George said "We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded. The US Fed was very active in getting the gold price down. So was the U.K." Makes one wonder just how much the gold price was pushed down today alone to make Gordon Brown's most recent budget reception a little more palatable. It also confirms yet again, that there is no such thing as an unmanipulated gold market. Lastly, it demands the question: on how many other occasions has the UK's massively unpopular prime minister sacrificed his people's interest merely to make criminal organizations such as AIG whole?

Jesse also speculates that Gordon Brown sold UK's gold at the lowest price in the past 20 years, a thorny topic touched upon earlier by the Telegraph, simply to bail out mega banking empire Rothschild and, surprise, AIG, as well as who knows how many other members of the LBMA:

There is also a credible speculation that the sale was designed to
benefit a few of the London based bullion banks which were heavily
short the precious metals, and were looking for a push down in price
and a boost in supply to cover their positions and avoid a default. The
unlikely names mentioned were AIG, which was trading heavily in
precious metals, and the House of Rothschild. The terms of the bailout
was that once their positions were covered, they were to leave the
LBMA, the largest physical bullion market in the world.

June 1, 2004 (Reuters) -- AIG International Ltd., part of American
International Group Inc., will no longer be a London Bullion Market
Association (LBMA) market maker in gold and silver, the LBMA said on

LONDON, April 14, 2004 (Reuters) —
NM Rothschild & Sons Ltd., the London-based unit of investment bank
Rothschild, will withdraw from trading commodities, including gold, in
London as it reviews its operations, it said on Wednesday.

The manner in which the sale was conducted, and the speed at which it
was undertaken, without consultation of the Bank of England, made many
of the City of London's financiers a bit uneasy.

While this had been reported previously on many times, most notably by Ron Paul back in 2002, it does beg the question under what circumstances will the Federal Reserve finally acknowledge that it is constantly manipulating gold prices lower to benefit JPM and other members of the LBMA whose short positions will likely blow them if the fair price of gold is attained, but also when will "gold bugs" finally stop being ridiculed for their assertions that the gold market is manipulated in light of glaring evidence on a day to day basis. Lastly, when will the people of the UK demand some justice from their Prime Minister, whose borderline act of treason merely to bailout a few financial institutions, set the precedent which Paulson and Geithner, not to mention the Fed, but they have always been there, have so well immitated.

As for Brown, the Telegraph says it all:

The decision to sell the gold – taken by Mr Brown when he was
Chancellor – is regarded as one of the Treasury's worst financial
mistakes and has cost taxpayers almost £7 billion.

Brown and the Treasury have repeatedly refused to disclose information
about the gold sale amid allegations that warnings were ignored.

a series of freedom of information requests from The Daily Telegraph
over the past four years, the Information Commissioner has ordered the
Treasury to release some details. The Treasury must publish the
information demanded within 35 calendar days – by the end of April.

The sale is expected to be become a major election issue, casting light on Mr Brown's decisions while at the Treasury.

Hopefully once Brown has been dethroned, the American people follow suit and get rid of all those in charge of the Fed, the Treasury, the Congress, the Senate, and White House, and the one who runs it all - our very own Wall Street.

And just because it bears bringing back to the fore, now that it is without a trace of doubt, that the NY Fed will manipulate any and every market it can get its hands on, here is Ron Paul's seminal 2002 Valentine's Day speech:

Congressman Ron Paul
U.S. House of Representatives
February 14, 2002

Mr. Speaker, I rise to introduce the Monetary Freedom and Accountability Act.
This simple bill takes a step toward restoring Congress' constitutional
authority over U.S. monetary policy by requiring congressional approval before
the President or the Treasury secretary buys or sells gold.

Federal dealings in the gold market have the potential to seriously disrupt
the free market by either artificially inflating or deflating the price of gold.
Given gold's importance to America's (and the world's) monetary system, any
federal interference in the gold market will have ripple effects through the
entire economy. For example, if the government were to intervene to artificially
lower the price of gold, the result would be to hide the true effects of an
inflationary policy until the damage was too severe to remain out of the public

By artificially deflating the price of gold, federal intervention in the gold
market can reduce the values of private gold holdings, adversely affecting
millions of investors. These investors rely on their gold holdings to protect
them from the effects of our misguided fiat currency system. Federal dealings in
gold can also adversely affect those countries with large gold mines, many of
which are currently ravished by extreme poverty. Mr. Speaker, restoring a
vibrant gold market could do more than any foreign aid program to restore
economic growth to those areas.

While the Treasury denies it is dealing in gold, the Gold Anti-Trust Action
Committee (GATA) has uncovered evidence suggesting that the Federal Reserve and
the Treasury, operating through the Exchange-Stabilization Fund and in
cooperation with major banks and the International Monetary Fund, have been
interfering in the gold market with the goal of lowering the price of gold. The
purpose of this policy has been to disguise the true effects of the monetary
bubble responsible for the artificial prosperity of the 1990s, and to protect
the politically-powerful banks that are heavy invested in gold derivatives. GATA
believes federal actions to drive down the price of gold help protect the
profits of these banks at the expense of investors, consumers, and taxpayers
around the world.

GATA has also produced evidence that American officials are involved in gold
transactions. Alan Greenspan himself referred to the federal government's power
to manipulate the price of gold at hearings before the House Banking Committee
and the Senate Agricultural Committee in July, 1998: "Nor can private
counterparts restrict supplies of gold, another commodity whose derivatives are
often traded over-the-counter, where central banks stand ready to lease gold
in increasing quantities should the price rise
." [Emphasis added].

Mr. Speaker, in order to allow my colleagues to learn more about this issue,
I am enclosing "All that Glitters is Not Gold" by Kelly Patricia
O'Meara, an investigative reporter from Insight magazine. This article
explains in detail GATA's allegations of federal involvement in the gold market.

Mr. Speaker, while I certainly share GATA's concerns over the effects of
federal dealings in the gold market, my bill in no way interferes with the
ability of the federal government to buy or sell gold. It simply requires that
before the executive branch engages in such transactions, Congress has the
chance to review it, debate it, and approve it.

Given the tremendous effects on the American economy from federal dealings in
the gold market, it certainly is reasonable that the people's representatives
have a role in approving these transactions, especially since Congress has a
neglected but vital constitutional role in overseeing monetary policy.
Therefore, I urge all my colleagues to stand up for sound economics, open
government, and Congress' constitutional role in monetary policy by cosponsoring
the Monetary Freedom and Accountability Act.

All That Glitters Is Not Gold
By Kelly Patricia O'Meara
Insight Magazine
March 4, 2002, edition

Even though Enron employees and the company's accounting firm, Arthur
Andersen, have destroyed mountains of documents, enough information remains in
the ruins of the nation's largest corporate bankruptcy to provide a clear
picture of what happened to wreck what once was the seventh-largest U.S.

Obfuscation, secrecy, and accounting tricks appear to have catapulted the
Houston-based trader of oil and gas to the top of the Fortune 100, only to be
brought down by the same corporate chicanery. Meanwhile, Wall Street analysts
and the federal government's top bean counters struggle to convince the nation
that the Enron crash is an isolated case, not in the least reflective of how
business is done in corporate America.

But there are many in the world of high finance who aren't buying the
official line and warn that Enron is just the first to fall from a shaky house
of cards.

Many analysts believe that this problem is nowhere more evident than at the
nation's bullion banks, and particularly at the House of Morgan (J.P. Morgan
Chase). One of the world's leading banking institutions and a major
international bullion bank, Morgan Chase has received heavy media attention in
recent weeks both for its financial relationships with bankrupts Enron and
Global Crossing Ltd. as well as the financial collapse of Argentina.

It is no secret that Morgan Chase was one of Enron's biggest lenders,
reportedly losing at least $600 million and, perhaps, billions. The banking
giant's stock has gone south, and management has been called before its
shareholders to explain substantial investments in highly speculative
derivatives C hidden speculation of
the sort that overheated and blew up on Enron.

In recent years Morgan Chase has invested much of its capital in derivatives,
including gold and interest-rate derivatives, about which very little
information is provided to shareholders. Among the information that has been
made available, however, is that as of June 2000, J.P. Morgan reported nearly
$30 billion of gold derivatives and Chase Manhattan Corp., although merged with
J.P. Morgan, still reported separately in 2000 that it had $35 billion in gold
derivatives. Analysts agree that the derivatives have exploded at this bank and
that both positions are enormous relative to the capital of the bank and the
size of the gold market.

It gets worse. J.P. Morgan's total derivatives position reportedly now stands
at nearly $29 trillion, or three times the U.S. annual gross domestic product.
Wall Street insiders speculate that if the gold market were to rise, Morgan
Chase could be in serious financial difficulty because of its "short
positions" in gold. In other words, if the price of

gold were to increase substantially, Morgan Chase and other bullion banks
that are highly leveraged in gold would have trouble covering their liabilities.
One financial analyst, who asked not to be identified, explained the situation
this way: "Gold is borrowed by Morgan Chase from the Bank of England at 1
percent interest and then Morgan Chase sells the gold on the open market, then
reinvests the proceeds into interest-bearing vehicles at maybe 6 percent.

At some point, though, Morgan Chase must return the borrowed gold to the Bank
of England, and if the price of gold were significantly to increase during any
point in this process, it would make it prohibitive and potentially ruinous to
repay the gold."

Bill Murphy, chairman of the Gold Anti-Trust Action Committee, a nonprofit
organization that researches and studies what he calls the "gold
cartel" (J.P. Morgan Chase, Deutsche Bank, Citigroup, Goldman Sachs, Bank
for International Settlements (BIS), the U.S. Treasury, and the Federal
Reserve), and owner of www.LeMetropoleCafe.com, tells Insight that "Morgan
Chase and other bullion banks are another Enron waiting to happen." Murphy
says, "Enron occurred because the nature of their business was obscured,
there was no oversight and someone was cooking the books. Enron was deceiving
everyone about their business operations C
and the same thing is happening with the gold and bullion banks."

According to Murphy, "The price of gold always has been a barometer used
by many to determine the financial health of the United States. A steady gold
price usually is associated by the public and economic analysts as an indication
or a reflection of the stability of the financial system. Steady gold; steady
dollar. Enron structured a financial system that put the company at risk and
eventually took it down. The same structure now exists at Morgan Chase with
their own interest-rate/gold-derivatives position. There is very little
information available about its position in the gold market and, as with the
case of Enron, it could easily bring them down."

In December 2000, attorney Reginald H. Howe, a private investor and
proprietor of the Website www.goldensextant.com, which reports on gold, filed a
lawsuit in the U.S. District Court in Boston. Named as defendants were J.P.
Morgan & Co., Chase Manhattan Corp., Citigroup Inc., Goldman Sachs Group
Inc., Deutsche Bank, Lawrence Summers (former secretary of the Treasury),
William McDonough (president of the Federal Reserve Bank of New York), Alan
Greenspan (chairman of the Board of Governors of the Federal Reserve System),
and the BIS.

Howe's claim contends that the price of gold has been manipulated since 1994
"by conspiracy of public officials and major bullion banks, with three
objectives: 1) to prevent rising gold prices from sounding a warning on U.S.
inflation; 2) to prevent rising gold prices from signaling weakness in the
international value of the dollar; and 3) to prevent banks and others who have
funded themselves through borrowing gold at low interest rates and are thus
short physical gold from suffering huge losses as a consequence of rising gold

While all the defendants flatly deny participation in such a scheme, Howe's
case is being heard. Howe tells Insight he has provided the court with very
compelling evidence to support his claim, including sworn testimony by Greenspan
before the House Banking Committee in July 1998. Greenspan assured the
committee, "Nor can private counterparties restrict supply of gold, another
commodity whose derivatives are often traded over the counter, where central
banks stand ready to lease gold in increasing quantities should the price
rise." Howe and other "gold bugs" cite this as a virtual public
announcement "that the price of gold had been and would continue to be
controlled if necessary."

According to Howe, "There is a great deal of evidence, but this is a
very complicated issue. The key, though, is the short position of the banks and
their gold derivatives. The central banks have 'leased' gold for low returns to
the bullion banks for the purpose of keeping the price of gold low. Greenspan's
remarks in 1998 explain how the price of gold has been suppressed at times when
it looked like the price of gold was increasing."

Furthermore, Howe's complaint also cites remarks made privately by Edward
George, governor of the Bank of England and a director of the BIS, to Nicholas
J. Morrell, chief executive of Lonmin Plc: "We looked into the abyss if the
gold price rose further. A further rise would have taken down one or several
trading houses, which might have

taken down all the rest in their wake. Therefore, at any price, at any cost,
the central banks had to quell the gold price, manage it. It was very difficult
to get the gold price under control, but we have now succeeded. The U.S. Fed was
very active in getting the gold price down. So was the U.K. [United

Whether the Fed and others in the alleged "gold cartel" have
conspired to suppress the price of gold may, in the end, be secondary to the
growing need for financial transparency. Wall Street insiders agree that as long
as regulators, analysts, accountants, and politicians can be lobbied and
"corrupted" to permit special privileges, there will be more
Enron-size failures.

Securities and Exchange Commission Chairman Harvey L. Pitt, well aware of the
seriousness of these problems, recently testified before the House Financial
Services Committee that "it is my hope there are not other Enrons out
there, but I'm not willing to rely on hope."

Robert Maltbie, chief executive officer of www.stockjock.com and an
independent analyst, long has followed Morgan Chase. He tells Insight that
"there are a lot of things going on in these companies, but we don't know
for sure because much of what they're doing is off the balance sheet. The market
is scared and crying out to see what's under the hood. Like Enron, much of what
the banks are doing is off the balance sheet, and it's a time bomb ticking as we

Just what would happen if a bank the size of Morgan Chase were unable to meet
its financial obligations? "It's tough to go there," Maltbie says,
"because it could shake the financial markets to the core."

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Apocalypse Now's picture

Yes, a financial "mistake" benefiting AIG and Rothschild later results in political gain as Brown later became the Prime Minister - most likely with the help of those he bailed out. 

This was most likely calculated and not a mistake.  This is exactly the type of widespread corruption we see today with treasury give aways to entities that later repay the favor.

Hephasteus's picture

Ya unfortantely they can't give him all the tools to stop his inevitable meltdown.


bidwhacker's picture

CFTC hearings tomorrow on position limits etc in precious metals:


Gold...Bitches's picture

I dont expect any real changes to limit concentration.  If they do impose some limits, I will be pleasantly surprised. 

Ripped Chunk's picture

"Hopefully once Brown has been dethroned, the American people follow suit and get rid of all those in charge of the Fed, the Treasury, the Congress, the Senate, and White House, and the one who runs it all - our very owen Wall Street."

Man! Put down the pipe! Please!


Johnny Dangereaux's picture

You mean the Lead Pipe.......to knock some sense into G Brown and his ILK?

faustian bargain's picture

ooooh...Rothschild makes the ZH headlines.

Stuart's picture

Eddie George's admission is nothing short of a confession.   Argument's over.  GATA wins. 

Thisson's picture

Has MISH seen this?

VegasBD's picture

Is he relevant anymore?

(at least when it comes to gold/inflation/deflation)

Stuart's picture

Mish is too deep on the side that this stuff is nonsense to reverse...Even if he is given a sworn affidavit, he won't change.

Rick64's picture

So unless we have a financial meltdown then the price of gold will continue to be manipulated.

Robert Maltbie, chief executive officer of www.stockjock.com and an independent analyst, long has followed Morgan Chase. He tells Insight that "there are a lot of things going on in these companies, but we don't know for sure because much of what they're doing is off the balance sheet.

CFTC -If its off the books then it won't matter what position limits they put on it if any.

Harbourcity's picture

That quote from Robert that off balance sheet transactions take place endorces any and all conspiracy theories out there.  What can't you fund off balance sheet...

faustian bargain's picture

Following a series of freedom of information requests from The Daily Telegraph over the past four years, the Information Commissioner has ordered the Treasury to release some details. The Treasury must fabricate the information demanded within 35 calendar days – by the end of April.

fixed it.

asotavb's picture

i dont know......

TooBearish's picture

Agreed - the show tomorrow will only focus only on long position resriction there will be no talk of shorts....nothing to see here move along....status quo.  I really appreciate the likes of GATA and their intent. I have seen the gold derivatitives operation in action at DB...but the odds of GATA or anyone else having any success at all theatening the fiat system and the enablers is really quite low.

THE DORK OF CORK's picture

How about Gordon Browns decision to give interest rate making power to the BOI one week after becoming chancellor - correct me if I am wrong but I believe the cabinet was not even consulted with this monumental decision.

Brown is truly a creature of the banks and no more - whatever the morality of going to war he as chancellor voted for that conflict and then systematically underfunded his troops in the field so that he could enrich his corporate masters just a little bit more.

He is not a leader of men but a craven servant of moneyed interests



Gordon_Gekko's picture

Just what would happen if a bank the size of Morgan Chase were unable to meet its financial obligations? "It's tough to go there," Maltbie says, "because it could shake the financial markets to the core."

It would be actually really, really FUN to go there, if you are prepared i.e.

Miles Kendig's picture

Sure beats General Hospital 2010 EU style Luke & Laura, reruns of Gilligan's Island or The Hills.

THE DORK OF CORK's picture

Just before that point Gordon they would instruct their servants to initiate a global war and that ain't my idea of a fun thing to do on a Sunday. 

Dirtt's picture

You are twisted Gordon.  Who gets to pull the pin?

Marley's picture

Oh me please, me, me, me, let me say it......."i.e. Gold Bitches."

Master Bates's picture

Gold is only "manipulated" when it is down.  Has anybody else here noticed that?

When it's up... "it's the world's best investment since tulip bulbs in Holland"

When it's down... "Gold is manipulated... sound the alarms!"

Where was all the crying about manipulation when it was up for the last ten years?

tmosley's picture

Anyone notice that Cronic Master Bater here doesn't even botherto read the content of the posts he's replying to?

Give up.  You've lost.  The truth is out, and it has shown you to be an idiot.

Master Bates's picture

What's there to read?


Yeah, I haven't heard that before.

You can keep calling me an idiot, or you can listen to what I say about gold not going any higher.
I don't care, it's your money that you lost today.

merehuman's picture

MB you are the only one here crying about gold. Most of us have some , so there not much need to talk about it. What is it you are trying to work out?

Master Bates's picture

All I see is a bunch of OLD articles from people saying that "JPM and MS won't let the price of gold rise"

Yet, since the 2002 article, the gold price has TRIPLED.

Now, if these people were successful in manipulating the price, would they allow it to triple?

If gold going up (as the article claimed) would put JPM and MS out of business, why aren't they out of business?
If they were successful manipulators, how come the price has went up for EIGHT YEARS since the 2002 article?

How has the price tripled since the "last" manipulation eight years ago or whatever, if it is in fact manipulated?

"Oh... ummm.... uhhh.... yeah, ummm... it was down twenty bucks today, it's manipulated!"

DoChenRollingBearing's picture

Actually, even though MB (aka The Wanker to the English babes) is not a goldbug, I see lots of value in his remarks, he keeps us gold folks on our toes.  And he studies his field.  Bravo, keep posting MB!  Consider changing your name though...  I DO like your black swan avatar...

Lucky me that I bought some gold today that gold was down (luck only)!  Also picked up my 9mm stainless Berretta and my Saiga AK-47 today..., JUST on the day after I return here to the USSA (United Socialist States of America).

I was in Peru for 16 days, if anyone has the desire to see something different and very different, check out Peru!  Peru's economy at least is now is doing well.  I even met the girl who became my wife (our 25th anniversary is this year) there in Peru (met 'mi peruana' in 1981).

"As income comes in, a good part of it goes to physical gold, so I can give it away quietly to those I love."

All the best & good luck!

TheGoodDoctor's picture

Yeah he is back posting in a gold thread again. *yawn* Must have ran out of lube.

Al Gorerhythm's picture

Shhhhh now MB. It's all a dream. Just yawn, scratch your itch and it will all be fine in yhe morning. Nasty tin foilers.

Narcolepzzzzzz's picture

There were rumours of giant squid involvement at the time:




lsbumblebee's picture

"The astounding idea that the Federal Reserve System of the United States is actually operated from London will probably be rejected at first hearing by most Americans. However, Minsky has become famous for his theory of the "dominant frame". He states that in any particular situation, there is a 'dominant frame' to which everything in that situation is related and through which it can be interpreted. The 'dominant frame' in the monetary policy decisions of the Federal Reserve System is that these decisions are made by those who stand to benefit most from them. At first glance, this would seem to be the principal stockholders of the Federal Reserve Bank of New York. However, we have seen that these stockholders all have a 'London Connection'. The 'London Connection' becomes more obvious as the dominant power when we find...that only seventeen firms are allowed to operate as merchant bankers in the City of London, England’s financial district. All of them must be approved by the Bank of England. In fact, most of the Governors of the Bank of England come from the partners of these seventeen firms. Clarke ranks the seventeen in order of their capitalization. Number 2 is the Schroder Bank. Number 6 is Morgan Grenfell, the London branch of the House of Morgan and actually its dominant branch. Lazard Brothers is Number 8. N.M. Rothschild is Number 9. Brown Shipley Company, the London branch of Brown Brothers Harriman, is Number 14. These five merchant banking firms of London actually control the New York banks which own the controlling interest in the Federal Reserve Bank of New York.  

The control over Federal Reserve System decisions is also founded in another unique situation. Each day, representatives of four other London banking firms meet in the offices of N.M. Rothschild Company in London to fix the price of gold for that day. The other four bankers are from Samuel Montagu Company, which ranks Number 5 on the list of seventeen London merchant banking firms, Sharps Pixley, Johnson Matheson, and Mocatta and Goldsmid. Despite the huge tide of paper pyramided currency and notes which are now flooding the world, at some point, every credit extension must return to be based, in however minuscule a fashion, on some deposit of gold in some bank somewhere in the world. Because of this factor, the London merchant bankers, with their power to set the price of gold each day, become the final arbiters of the volume of money and the price of money in those countries which must bow to their power. Not the least of these is the United States. No official of the Federal Reserve Bank of New York, or of the Federal Reserve Board of Governors, can command the power over the money of the world which is held by these London merchant bankers. Great Britain, while waning in political and military power, today exercises the greatest financial power. It is for this reason that London is the present financial center of the world."

Eustace Mullins, The Secrets of the Federal Reserve, p.67-68

Johnny Dangereaux's picture

Which can be found here....IN TOTO (not the Dog)....


I read it.....have you??


dumpster's picture

gold and its meanings and values obscured for years , promlagated by various poster here on zero hedge


speaking with nauseating regularity ,, speaking with no understanding .. like flying zit faced nincompoops they swallow hook line and sinker ..sound bites of various keynesian bards .. learned after a 1/2 year study in economic fairy land  

and try as they might ,, as they open their mouths to flame gold ,, they again proceed to shallow thinking , shallow DNA .. raised on the gruel of Pavlovian double think.

Never every reading  and studying the works of Austrian economics , thinking their few years of experience can trump the works of mises ,, and fellows who have spent multiply years ,, analysing the problems

and these quick dip thinkers and shallow pools of water,,, become more foolish as the time uncovers golds manipulation .. yadda  yadda   


Master Bates's picture

The only people manipulating the price of gold are the tin-foil hatters that buy it every month and send the price higher.  The price is kept artificially high so the suckers... I mean investors... pay top dollar for it when their "sky is falling" rhetoric gets the best of them.

The dollar went from 120 to 80 since 2000, and gold increased almost five-fold.  Surely there's a disconnect in that price?  Oh wait, going up five times while the asset it is pinned to goes down by 50% is surely normal...

And yet, every time it goes down 20 bucks, "WAHHHH... GOLDMAN SACHS"

Is this an investment site, or Glenn Beck?

Shameful's picture

Ah isn't the USDX comparing against other fiat currencies?  If I have 5 rocks that are falling can I measure them against each other and show that they are not really falling?  "See Rock A has not lost any distance in relation to Rock B.  They must be in the same place"

It's a frame of reference.  Tell me have priced moved up?  I know I used to get into the movies for $4, I can't do that anymore.  I know tuition prices are rising as if there is a rocket on them.  Look around, are things as "cheap" as they were when you were a kid?  Even with cheap good from China flowing in?

Master Bates's picture

Yeah, the movies used to be 4 bucks, the dollar got cut in half, and now it's eight bucks.

Gas used to be in the .99 to 1.49 range, the dollar got cut in half, and now it's 3.00.

Yes, I have noticed the inflation.  Yet, during the time that everything else DOUBLED, gold went up 500%.  And here's "intelligent people" like dumpster telling me that it's manipulated down?

The price of gold went up far faster than inflation.  The premium of future inflation and more is baked in.

And all the sad losers that keep investing in it can do is junk me.  They sure can't show me a bullish chart or uptick in the gold price.

Shameful's picture

Right you noticed the price increase but what about gains in productivity and outsourcing to cheaper labor?  This has further obfuscated the true inflation.  After all the claim is we are getting more and more productive.  And I know with software I personally have made has speed up work processes considerably, and increased productivity.  But with all these cost cutting measures we have seen massive inflation.  So it's entirely likely that there has been more then a cut in half of the dollar in real terms.  With stable hard money money increases purchasing power as productivity increases.

Also because you recognize this massive drop in purchasing power, where should we be with out money to preserve it?  Stocks have not gained in nominal terms for about a decade.  Bond yields do not meet real inflation.  How does one beat inflation and not have it clawed away with taxes on "gains"?

Master Bates's picture

If anything, the gains in productivity and the outsourcing of labor would be directly related to CURBING inflation, and not extending it.

As far as where to put your money... not gold.  That's all I can say.  I play ETFs based on technicals and also will buy stocks for longer term holds from time to time when the tangible book value (liquidation price) of the stock is higher than the actual price.

I'm not a financial advisor, but you can see all the warning signs in gold, like I've been saying again and again.

Yet, every time it's down, people would rather believe some article from 2002 that it's manipulated, rather than seeing the true picture.
If it was manipulated since 2002, it wouldn't have been allowed to triple since then.
It wasn't manipulated then, and its not now.

You only see these articles on down days.  Then on the days when it's up, you get some idiotic goldbug article saying it'll be 2000 by April or 5000 even later.

People need to get their heads back into reality, and see what's really happening with the asset, rather than believing these ill-founded and weak conspiracy theories from sources I've hardly heard of, if at all.

Shameful's picture

Ok so we agree that inflation is high.  And the productivity should be depressing prices and fighting price inflation.  So the printing has overwhelmed that productivity gain, thereby making the CPI calculation at best a joke.

So lets look at gold historically.  Now if we use the official CPI numbers then the inflation adjusted price of gold is over 2000.  It's had a what 50% increase since the 80's highs?  I can't see it as a bubble till it gets near it's "inflation adjusted" high.  Now if we use the shadow stat numbers for inflation then we are a long way to go for a gold top.  So I'll go into gold because it flat out is no where near a top when looking at it with inflation.  Sure it was a mania in the 80s but if it is as you say a mania now should it not at least be better then 50% to the all time "inflation adjusted" high?

defender's picture

Shameful, using inflation adjusted highs will get you burnt bad if your high is an obvious bubble.  You would be better off using standard deviations of an inflation adjusted average price with shadow stats numbers for inflation where possible. 

My personal theory is that gold will go higher after some black swan event forces JPM et al to cover their shorts, but otherwise is slightly over valued when looking at a snapshot of the current economy.  Unfortunately, my gut says that it will take a dollar that is one tenth of its current value to service our debt load, so the big question in my mind is what will be at a premium after that large of a devaluation.  Holding the same value is only helpful as long as necessities aren't scarce.

Shameful's picture

I used the 80's cpi adjusted high as an example. In reality the inflation is much, much greater to the point where I will not be concerned with a bubble till at least $2,000. Also I will point out that I may have not been around but I understand why there was a gold bubble.

People like the Hunts thought the dollar would collapse, and they might have been right if not for Volker.  And they raced in along with some of other people and bought.  But Volker pulled the dollar back to life and gold crashed.  Now I doubt that a Volker situation of those kind of interest rates can shock the dollar back to super star status...as the shock would kill us because of the debt load.  The dollar will die within the next 10 year, math tells us this.  If there is deflation then the debt and unfunded liabilities becomes unplayable and we default and confidence is lost in the dollar.  If they print money eventually confidence will erode and interest rates will go up making the debt unplayable.  If they hyper inflate then the dollar dies anyway.  There is no way out where the dollar will survive with anything resembling it's current purchasing power.  And there is no will to get spending under control.  Betting that the dollar will lose purchasing power seems a sure bet to me.

Now when the confidence is lost I expect a panic buy into gold.  And when I start seeing people lined up to buy gold, when waitresses are talking about it and other late comers show up to the party then I'll know it's time to start selling my positions and moving into something else.  I'm more than happy to wait for the bubble to build and exit while the stupid money stampedes in.  And I do expect a bubble to form in gold, I just don't see it yet.  Not enough dumb money.  The dumb money is selling gold via scrap jewelry.  So I feel great buying as long as they are selling.

To the value of gold, sure the dollar may die, but America is not the whole world.  There is a whole world of people out there who would like to own gold.  There are quite a few in India and China that would like to increase their positions.  America has nothing to offer the world.  We do 3 things better then the rest of the world. 1. Pizza 2. Movies. 3. Computer Code.  That's it, though we are damn good at financial fraud but so are the Brits.

And if I'm lucky and I'm wrong and the dollar will gain value and remain the cornerstone for world finance for decades to come, that's great!  I get paid in dollars!  I would be pleased as punch to sit on my gold stash and never sell it.  It's not like I'm leveraged, except for some student loans, which are laughably small compared to my peers.  Doing this on a massive savings kick.  To me gold is an insurance policy.  I know it will be worth something when this ponzi explodes. Might not be the smartest play, but it's something I can take out of country with me and if need be to sell to keep my sorry ass alive.

Hephasteus's picture

We're a fringe group of tin foil hatters that 99 percent of the smart people pay no attention too.

We're a dominant group of people herding everyone else with our dominance.

What you are failing to realize with your shotgun approach of taking every side of the arguement in an attempt to turn circular reasoning into wisdom is that yes gold went up 500% while inflation only doubled. This indicates that inflation has 3x more to go. Enjoy your 20 dollar movie and your 7.50 gas.

Master Bates's picture

Or, inflation isn't going to go that high, and gold is overvalued based on the lack of a real justification for it's 500% gain.

That's what I believe.

That's why I say it's in a bubble.

Have a nice day, Hephasteus.

Womb Service's picture

In 1980 a gold price of $600 was enough for the US to back its base money. Today that price would have to be at least 10 times as much. That's assuming the 8000 tonnes supposedly held by the US hasn't been leased swapped or physically removed. 

Gold may have more than tripled since 2000, but that is not enough. True price discovery is not being allowed. That is the point that you are (intentionally) missing.

Also, I agree somewhat with what you have been saying about rampant near term deflation, but this is about solvency and counterparty risk. Gold is money. It is the ONLY money. The criminal bankers seem to understand that better than a lot of people on these financial blogs.


Augustus's picture

Some natural gas was selling for above $6 in 1991.  It is now near $4.  Use NG, not oil, and save the difference to pay for the unlimited minutes cell phone plan that was then $0.50 a minute.  Rent that movie for $1.50 and invite any friends you have to watch with you.  The two of you will only be out $0.75 each, about the cost of 1965.  And you can have as much popcorn as you wish for less than $2.

If you bought a health insurance policy today that restricted the treatments to those available in 1965 it would not cost a great deal more than it did then.

merehuman's picture

There are many in the room. You are the only one raising your arms clamoring for attention. I love your enthusiasm, your attitude not so much

dumpster's picture

zit head ,, did you read the articles ,, \\

the only glen beck character in this one act dance ,]is provided by the out of work actor ,

i the bates shuffle in to relative obscurity , as a result of trying to act like some one who has a clue,

so jesse , murphy, et all ,, with so many years of understanding the gold market are upstaged by someone who if he looked in an shoe ,, and found pizz would hardly know to drink up, or water the lawn .