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Why The Rigging Of The Gold Market Matters
Submitted by Alasdair Macleod via The Cobden Centre,
In a radio interview recently I was asked a question to which I could not easily give a satisfactory reply: if the gold market is rigged, why does it matter?
I have no problem delivering a comprehensive answer based on a sound aprioristic analysis of how rigging markets distorts the basis of economic calculation and why a properly functioning gold market is central to all other financial prices. The difficulty is in answering the question in terms the listeners understand, bearing in mind I was told to assume they have very little comprehension of finance or economics.
I did not as they say, want to go there. But it behoves those of us who argue the economics of sound money to try to make the answer as intelligible as possible without sounding like a committed capitalist and a conspiracy theorist to boot, so here goes.
Manipulating the price of gold ultimately destabilises the financial system because it is the highest form of money. This is why nearly all central banks retain a holding. The fact we don’t use it as money in our daily business does not invalidate its status. Rather, gold is subject to Gresham’s Law, which famously states bad money drives out the good. We would rather pay for things in government-issue paper currency and hang on to gold for a rainy day.
As money, it is on the other side of all asset prices. In other words stocks, bonds and property prices can be expected to rise measured in gold when the gold price falls and vice-versa. This relationship is often muddled by other factors, the most obvious one being changing levels of confidence in paper currencies against which gold is normally priced. However, with bond yields today at record lows and equities at record highs this relationship is apparent today.
Another way to describe this relationship is in terms of risk. Banks which dominate asset markets become complacent about risk because they are greedy for profit. This leads to banks competing with one another until they end up ignoring risk entirely. It happened very obviously with the American banking crisis six years ago until house prices suddenly collapsed, threatening to take the whole financial system down. In common with all financial bubbles everyone ignored risk. History provides many other examples.
Therefore, gold is unlike other assets because a rising gold price reflects an increasing perception of general financial risk, ensuring downward pressure on other financial asset prices. So while the big banks are making easy money ignoring risks in equity and bond markets, they will not want their party spoiled by warning signs from a rising gold price.
This is a long way from proof that the gold market is manipulated. But the big banks, and we must include central banks which are obviously keen to maintain financial confidence, have the motive and the means. And if they have these they can be expected to take the opportunity.
So why does it matter if the gold price is rigged? A freely-determined gold price is central to ensuring that reality and not financial bubbles guides us in our financial and economic activities. Suppressing the gold price is rather like turning off a fire alarm because you can’t stand the noise.
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It doesnt matter really ... after the hyperinflation in Germany real estate was used NOT gold as basis for the new currency and it worked fine. All it matters how much is in circulation of anything ... who knows how much gold is out there ... it all depends on the people who control the markets how much they put out there and at what price ... all else doesnt matter.
Gibson's Paradox shows, based on centuries of data, that rising gold prices cause rising interest rates.
Rigging gold allows artificially low interest rate policy which is what has happened for a couple of decades now.
It is the central issue to the current landscape of bubbles everywhere and $200 trillion in global credit market debt.
Excellent article... terse and to the point.
One doesn't need "proof" of the manipulation of the gold and silver prices anymore than one needs proof that the sky is blue on a clear day. One can see it if their eyes are open.
Take away the Rothschild's power of "price setting" and let the free markets decide its true worth (in inflating dollars). That day is coming.
Why is that day coming?
Not trying to be trite, sarcastic, or whatever, by why?
The US FED has printed 15TRILLION Dollars and is bragging about how little inflation it has caused. That and the fractional lending multiplier allows for a lot of financial power.
Using even a little percentage of that amount in the derivatives markets can and has kept the PM prices Monkeyhammered to the levels that they want. PMs are viewed as a investment Joke not a store of value. They have achieved what they wanted.
Why is that going to change?
I ask that question owning a huge amount of PMs, paper and physical.
R-R-R-Rigged-R-US ...
Why Look At OUR Great Paper Fiat Asset... So Much Better Than
That BARBAROUS RELIC That Consistenly Never Can Rally Against OUR SOLID HardDrive Currency...
You're being given a gift to buy physical....keep stackin'
PS... Just Ask Yourselves...
IF GOLD Is Such A Bad Asset, Why Can't The GERMANS Get Their Demanded PHYSICAL GOLD Back ???
Where Is It Now?
Who Owns It?
WHY Do They Own It?
And More Importantly, WHY Did The GERMAN Politicos Shut Up About It, Whats The BIG Secret ???
Traditionally, rising interest rates and a rising gold price are the harbingers of too much govt debt and mismanagement. The financial system is far too unstable now to ever allow these two manipulations to be ceased. The system will be catastrophically collapsed and reset before rates and gold rise. Just ask Volker "my biggest mistake was letting the gold price rise" and Greenspan "central banks stand ready to lease gold in ever increasing quantities".
Golds price is suppressed by illiquid hour dumping of futures contracts,; interest rates are suppressed with bullion banks taking the variable side of rate swaps in a derivative market worth trillions.
There are no more markets, only interventions -Chris Powell, GATA
We will soon find if Harvey Organ is correct in his prediction of a huge move by December. He thinks the Sept. 22 opening of the Shanghai Gold exchange will be the start of a more true price discovery for gold, and silver is in a much stronger place than gold. He thinks the markets are so constrained of physical that there will be defaults by December.
The rigging of the gold market matters because,,
Hell, don’t ask me, ask Larry Summers and Chris Powell.
http://www.gata.org/node/11507
Of course they're printing themselves gazillions in GLD... Wouldn't you?.. Of course Russia and China know they can't go back to a Gold Standard until they bomb Wall St... And end the counterfeiters party... Question is will that happen in our lifetime?
"Question is will that happen in our lifetime?"
It all comes down to this - when? It's like watching a skyscraper being built. You along with a very small portion of people involved can see that it is actually made of scaffolding and duct tape - it's going to collapse. But the vast majority of people ignore the warning signs, and continue to buy units as the building continues to defy the odds, and grows higher and higher each year along with the value of those units. The value of all other real estate eventually plummets, as people continue to put everything toward owning a piece of the doomed skyscraper. This means that the few who saw the fragility of this new building, and as a result invested in other real estate, end up losing their shirts due to the falling prices. You just keep staring at the skyscaper, the top now obscured by clouds, thinking, "How the fuck is it still standing? Will it ever fall?"
Good analogy. The "will it ever fall" imapatience is because the association with money and wealth demands a return QUICKLY. We've been taught to get in and get out, flip a house, buy and IPO and dump it first week, on and on. The crowd loves this Get-in-Get-out quickly bullshit, because it works while it works.
But once this fake economy finally does start to crack under its own debt load, which it surely will, we'll all be too late to save what we have in paper and digital instruments.
"When" will it fall? Idk, and Idc because I'm prepared and, judging by the actions of other global nations, they too are aware of what will come to pass. I know that my neighbor simply can't support his debts if rates go to 6%, and I know .gov can't either. So a reset is guaranteed.
The only thing connecting the price of GLD to the price of Gold is people's belief that GLD... is... Gold. Once that belief is gone, no amount of paper will buy even one oz of Gold... Or anything else for that matter...
The value of gold is deep in our culture. But as its a barbaric relic, perhaps Yellen should conduct a campaign to get the olympics to swap 'gold medals' for paper. And re-educate children to use the phrase 'good as paper'. or, 'killed the goose that laid the paper egg'. Theres a lot of work to be done
I'm going to need a much larger safe when we enter the "paper age" of enlightenment
There are two markets for gold.
The market for central banks and players reflect the real market value.
The market for everyone else is rigged.
You'll never see the real market value much less receive it.
propaganda can only exist in a vacuum. the lie created
by the controllers of gold is that, federal reserve notes can
still stand with gold as a true store of value, fact they are
worthless and devalued daily along with the savings of anyone who
has traded the highest value FOR them, their time of life.
that gold is unstable at best and worthless at worst is the
bankers lie the vacuum they create, to steal our lives.
it is an evil force that created the creature from jekyll island,
are we the people strong enough to slay this evil?
I don't believe a word of this article. The FED keeps printing and printing and printing, and it still can't hit it's inflation targets. We are in for a deflationary abyss--similar to what is happening in Japan. Gold has peaked. Just put deflaiton in your pipes and smoke it.
Oh really?
Then give Germany it's gold back is it's so damn cheap.....pull it out of your ass and deliver it.
perhaps read a little of
http://fofoa.blogspot.com/
and relieve youself of that transparent ignorance.
Out of all the structures than man builds, sky scrapers are the weakest. That, however does not mean that they are going to fail. Some will eventually simply be buried in silt or settled dust over the centuries. Others will fall immediately if you excavate adjacent to their footings. Investing in assets valued in dollars benefits only an elite few, not because their investments will outpace inflation, but because they are simply using money that the printed instead of earned. All others will lose due to devalued fiat purchasing power when they try to cash out of the game. The winners are counting on their stupidity and greed.
most likely they will become "mines" for steel and glass when the iron ore is gone, or humans forget how to make iron into steel. The Roman columns were knocked down for the steel pins during the dark ages. No one know how to mine iron ore or to make iron.
The analogy I like goes like this: https://www.youtube.com/watch?v=VNtsVP42bOE
Your fiscal black swan event happens out of the blue (asteroid hits the Earth). It blows the derivatives all to hell (tidal wave). Markets are taken out (oil rigs destroyed). 99% of the sheeple get wiped out (wave wipes out sheep...whole cities) The stackers have what is needed and stand a chance at survival (two kids boogie up a hilll using their dirt bike and avoid the wave).
I thought that was "Urban Renewal?"
we had a building like that in the city i live. I worked next door. for years no one was ever allowed to tennant it, i mean over a decade! then around 2004 someone got a loan and fixed it up. or welll wrapped a loan into riskelss bags.
Harvey Organ's been predicting the imminent (eg 'next month' or 'next big delivery month') demise of the Comex for many years now. I think it's safe to say his predictions and analysis are of limited value and limited credibility. There will be a big problem someday, but that day will be when the general public, or at least the FIs, lose confidence in the current system and in the reliability of paper and electronic assets to act as valid forms of currency. Until then the Comex will most likely continue as a fully unregulated paper gold exchange, regardless of 'inventory issues'.
Yes, I agree. I think about this in terms of the price of milk. It used to be $1.99 for a half gallon and now it's up to $2.89 over the last 9 months. I think it can go to 10 dollars before people start behaving as though the dollar is toxic. Even then as long as the EBT cards work many people won't care. It looks to me like the system has a good two years or so left.
Pretty much got it there. If one is not paying the bill, nobody cares about the cost. I give you the prime example: health care.
I watched the same interview and felt his analysis was based on a gut feeling rather than anything concrete. One thing for sure though is there is no way China / India / Russia or the rest of the eastern world are going to settle in paper GLD.
The idea of the Shanghai Exchange was to have a larger role in determining the price of these precious metals (knowing the the cartel is suppressing these in the west)
What this means, we dont know yet, safe to say i dont think the paper and physical can keep in the same pricing market for much longer.
Harvey Organ, Sprott, King World News, and all of these "legendary newsletter writers" have been crying wolf for the last six years on PMs.
If anyone is going to "back up the truck" on anything, it should be on Magpul PMAGs.
With Klinton 2016, you know that Billy Bobs around the country will run up their payday loans to go out and buy standard capacity magazines to antcipate a new AWB.
I don't see firearms and accessories getting any cheaper than they are currently when priced in FRNs.
"Suppressing the gold price is rather like turning off a fire alarm because you can’t stand the noise."
Best line in ZH for three years!
The big secret is that since the Euro is also fiat, and Germany is still an occupied country and the German leadership is also manipulated by the thugs in power. If Merkel or one of the Bundesbanks heavies start making demands, they just have an oh so unfortunate accident.
Gold matter because...
Uh, when it's ground into a fine, monatomic powder, it can be suspended in the upper atmosphere of Nibiru, and thus keep out the annoying cosmic rays that fuck with the minds of the Annunaki?
Otherwise, I can't really see a good use for the stuff.
Are you saying that alone aint a good enough reason?..
Keep stackin.
:)
There are tens of thousands of American big secrets stationed permanently on German soil. They are not there for Oktoberfest.
Listen. Neither your "GOLD" or "SILVER" will hold up to the long term prospects of digital currency.
Wake up stackers!
hahahahahaha. Thanks for the laugh.
Listen. The price suppression will only increase on your 'SHINY' metals while investments in the digitals will soar!
I personally don't really care but WTF. Why not make a few extra "INVESTMENT SUCCESSES".
What happens when there is no more physical metal to be traded at current prices?
Fake it, till you make it. Paper and tungsten, baby. And rehypothecation.
I compare rigging the gold price to shaking a crying baby. "Stop crying! Stop it!"
Listen. You are one sick abusive redirectionalist.
You cannot shake Bitcoins.
...or you
"You cannot shake Bitcoins"
I think thery are taliking about the store of value and you keep wanting to talk about transactional currency. Big difference. What happens if the power goes out? What happens if the block chain gets hacked? Even a credit card is safer then Bitcoin.
Listen! What happens if the tooth "FAIRY" leaves $1000 Federal Reserve Notes under your pillow?
Wet "DREAMS" for all!
There isn't a $1000 fed bill.
Actually, there is. Supposedly, there are also $5K and $10K bills out there somewhere.
The Acting General Counsel for the International Bank for Reconstruction and Development says the Banksters owe the people of the world many thousands of trillions of Gold redeemable Dollars like these $100,000.00 notes. Neil Keenan agrees.
https://www.dropbox.com/s/5f8h2pylovwq961/_%2520JP_Morgan_Gold_Certifica...
Www.neilkeenan.com
Www.khudes.net
The Banksters are trying real hard to not pay, which is why we got 911.
https://www.dropbox.com/sh/gpe8e197ccurpdx/AAD0SHevpuAf3fwaGS03bPpaa?dl=0
Largest denomination bill I know of...
If the power goe out and stays out, the price of gold will PLUMMET to about 1 oz/per pound of bread. Have fun eating your gold! To be fair, if the power goes out, bitcoin will be less than worthless.
One ounce per pound, is still better than starving.
wow, that would imply mountains and mountains of gold bars lying around just waiting to be used in trade, and not hoarded in anyones vaults
how dumb of me to have thought it was a rare metal
Bitcoin - all variants that the masses *trust* (trust is inserted in the common mindset) will be absorbed into the official new digital currency. The ones that the masses don't trust will not buy much, as the new currency will be hyper controlled.
It's happening fast, see PayPal supporting bitcoin, and the Apple Wallet (which was built by VISA et al and will soon be available on all OS's) preparing a full digital economy, through the device that knows all about you.
The shock will come soon.
It's who you know, not what you know.
Greetings from Davos
Listen! Your "JEALOUSY" is very apparent.
.
Says you.
http://www.youtube.com/watch?v=kIptxlvhXfI&t=7s
Fuck you,, I'll shake it,,, power grid goes down you are sucking hind tit....See ya
My fucking gold STILL IN TACT!!! And will be traded, no power outage will collapse GOLD...
American power grid has a d+ rating...Muhhahahahahaha
Listen! Power to "THE PEOPLE". That's right. In good old USSA a personal generator is still "LAWFUL".
KillSwitch that bitchi!
Listen!
EMP Fuck the generator......
If you are concerned with emp, just keep a spare Blacklight Power generator in your faraday cage.
http://youtube.com/watch?v=8TKgrOjac6Y
You don't need to buy one. You can make one for personal use.
Personally, I don't need anywhere near that much electricity.
If there's only one generator for one computer, are you just trading with yourself?
Your an idiot.
Go worship a cow or something.
The only reason I can think of is supply and demand. We are supposedly running out of silver. I think it will take longer than they say, because granny has yet to melt her silverware, but, supposedly it's gonna happen.
well funny you claim that coz the current trajectory of the shanghai phyz delivery shows us running out in about a month at current rates - down from 1200 tonnes to 120 tonnes in the last year
read srsroccoreport
http://srsroccoreport.com/update-shanghai-silver-warehous-stocks-fall-24...
he's been tracking this for some time
The only reason there hasn't been hyperinflation yet is due to the fact that most of that 15t the Fed created ex-nihilo is parked in reserves and has yet to make it's way out of the banks and into the real economy. When that happens, there'll be hell to pay (for those who aren't prepared).
College grads make ten bucks an hour and a house costs ten million dollars. You may not call that hyperinflation but I do. Oh, and did I forget to mention the parking space outside your door will cost you an extra million bucks. Idiot.
WTF are you talking about?!? You must not understand what hyperinflation is or something. A house costing 10mil isn't hyperinflation. A snickers costing 10mil is. If you want to see an idiot, look in the mirror.
Why is that going to change?
Because the new money created with such largesse by the FED, comes as debt. Obligations on debt servicing will eventually become too onerous. Besides, there are only two options for the newly created money: either those 15 trillions make it into the real economy with immediate and devastating effect on purchasing power, or they stay hidden as reserves, in which case they are useless for growth.
Could they not serve out their life as a source for endless Monkeyhammers of the PMs? The free money and multipliers od derivatives are powerful.
No, and the reason is the SGE (among others...). Things in gold pricing are about to change...
http://online.wsj.com/articles/shanghai-gold-exchange-to-launch-internat...
Yes - you're right. Other signs are the re-organization away from the London gold "fix". As so many commenters have pointed out, the Fed can print forever, and the CB's can lease gold for sale - but they can't do that forever if the gold trades on the SGE stand for physical delivery. So the real answer to why gold can't be held down indefinitely to preserve the dollar's role as the reserve currency of the world is that the Chinese and the Indians aren't very much interested in holding dollars as savings, their interested in holding gold.
Race To The Bottom...
I guess my only answer to your angst-filled query (and I feel the same way sometimes) is that I am a firm believer in the Laws of Nature ALWAYS winning out against whatever unnatural feat or idea man contrives. Debt-based fractional-reserve currency is simply a lie when it comes to economic laws and cannot work forever. As long as there are suckers and nations willing to pay the interest for the usurers, this rotten system can operate (albeit unjustly).
Perhaps I am overly optimistic or even naive, but I do think that a tipping point in all this is coming soon... especially because the issuing-world-currency nation (U.S.) is quickly losing its status of invincibility in the eyes of the world.
Let the greedy grasshoppers who believe that "PMs are an investment joke" have their day. When the snow and ice come and they're kicked out of their McMansions and onto the Poor Farm by the banksters... maybe they'll get the point. Until then, stay the course of prudence with your true wealth.
"'Tis death to counterfeit!" It's not just a man-made law, it's a Natural Law as well. Mother Nature don't take no wooden nickels (for long!)
im glad someone seriously tried to answer Race's query
My answer is implied in my post above with the reference to the silver depletion in the shanghai vaults
if shanghai is emptied, China can publically announce a significant premium for anyone delivering physical. THAT will crack the COMEX as investors wake up. That will be the major defection from the global status quo in a manner that has very public, obvious motivations - the Chinese will be able to throw their hands up in the air and say to the oligarchy 'we didnt backstab you - its just time immemorial response to a demand overwhelming supply situation'
Gold will, of course, follow on silvers coattails
edit: -chain of events:
shanghai runs out of silver
china announces premium of double price for phyz delivery
comex open interest contracts are fulfilled for delivery to sell /ship to shanghai to gain the premium
comex delivery failure from insufficient stock
huge investment swings into all precious metals as other PM prices will be perceived as being on the cusp of monumental bull run
investment community loses all faith in comex pricing mechanism
miners /smelters abandon comex pricing and hold investors to ransom (to makle up for their losses on manipulation in recent years)
you see, the whole global financial cart can be upturned at china's whim
And is bragging how lit
E inflation has rosin my ass a perche 25 yrs ago 35,000 today 1000,000 litlle inflaion huh. Gas 50 cents today 3.25 no inflation and I am a monkeys uncle.
And is bragging how lit
E inflation has rosin my ass a porche 25 yrs ago 35,000 today 1000,000 litlle inflaion huh. Gas 50 cents today 3.25 no inflation and I am a monkeys uncle.
WHY?
Because the power to rig gold and print money is absolute (if not ultimate) financial power.
Now take your choice:
The FED has the power to control the PM Markets and print fiat. China and Russia want that power. That's WHY the day is coming.
The FED can control the PM markets. The day is coming when greater events will make the FED unable to control those markets. That's WHY the day is coming.
that day won't come, sorry
Yes it will.
If nothing rlse, digital currency is not ESD compliant. Nor is it Caldera compliant, or nuke strike compliant, or war compliant, or NSA intervention compliant....
That day is coming. You better hope it's in a benign enough form that you're not marched to a gallows or guillotine soon after.
The world mines about 2,200 tonnes a year and so since 1960 we have mined about 118800 tonnes plus all the gold in the history of the world that has been mined before that say is about 100,000 tonnes , as gold is not used that would give us a above ground tonnage of about 218,800 tonnes , so all the countrys in the world have about 50,000 tonnes at most this leaves us with a 168,800 tonnage that has gone missing? or am I missing something , anybody help out here?
http://www.numbersleuth.org/worlds-gold/
http://money.cnn.com/2013/08/15/investing/gold-demand-record/index.html
Where is the rest? This should help
Two (inter-related) reasons.
First, the reason they've been able to print without inflation is because monetary velocity is declining.
Only three things can happen long term: velocity hits zero (meaning the economy is completely locked up, no money is changing hands, period), velocity goes flat at some level (at which point they can't print without inflation) or velocity increases (at which point we have inflation with no printing, and indeed can have hyperinflation if velocity increases fast enough.) The fed has no out here, literally the best case scenario from the controlling inflation perspective is a locked economy.
So inflation will come back, it's simply unavoidable long term. Arguably it's been there all along and the CPI is just gamed to hide it. The Fed's next choice: they can control this inflation by reducing the monetary base by un-printing (this is called deflation and blows up banks) or by raising interest rates (this blows up the government because even a 4% interest rate will result in something on the order of half the taxes collected going towards debt service.) They're in a corner.
The second reason: mean reversion. You don't get to game all the numbers, all the time.A lot of the Fed's gold manipulation, I suspect, is about hiding the real inflation, just as the CPI is manipulated to do the same. Eventually you run out of data sets you can manipulate. The fact that the other lead story today is one about inflation just underscores that people are waking up to this situation.
Another way of saying all this is to use your own words with a minor correction: "Using even a little percentage of that amount in the derivatives markets can and has kept the PM prices Monkeyhammered to the levels that they want. PMs are viewed as a investment Joke not a store of value. They have achieved what they wanted." for now.
If you look at how this has played out, the Fed is playing its game for progressively shorter and shorter term goals. Eventually the time span goes to zero.
Well expressed, though, at the risk of being pedantic, I'd say that the velocity of money isn't declining – it has plummeted.
It's an interesting exercise comparing M1 velocity against M2 velocity against MZM velocity.
M2 includes time deposits and money market funds -- and velocity is at a record low with M2. M1 looks like a typical post-recession curve writ large. Both decline due to savings increasing, but M2 is expanding much faster than M1 -- my guess is it's a reach for yield combined with realized gains from stocks being stored in money markets -- the 1%'ers.
MZM velocity is worse still. Notice that M3 and M3 velocity isn't reported, and that includes institutional MMFs among others added to MZM -- and given the trend of lower and lower velocity for larger and larger measures of the money stock, M3 has to be utterly horrific, likely because of all the Fed QE shit stuffed into it.
Good parsing – thanks.
"If you look at how this has played out, the Fed is playing its game for progressively shorter and shorter term goals. Eventually the time span goes to zero."
That's the key metric. If you were to plot it out on a chart, you would see an expotential curve. So how close to going vertical is it?
RaceToTheBottom,
"The US FED has printed 15TRILLION Dollars and is bragging about how little inflation it has caused. That and the fractional lending multiplier allows for a lot of financial power. "
It has caused little inflation, so far, because money velocity is at insanely low levels due to a stunning lack of demand for products and services from those in the lower 80 percent of income earners. As for your second sentence surely you meant to say "financial plunder", other wise that sentence makes no sense.
Sorry, but your last statement regarding you personally "owning a huge amount of PM's..." is so incongruous in the context of what is stated prior in your comment, I actually laughed out loud when I read it.
Inflation/Deflation
1st, you can't talk about one without the other.
2nd, there are two definitions.
Def.A is that Infl/Defl is a rise or fall in prices
Def. B is that Infl/Defl is a rise or fall in the money supply
Inflation occurs when there is more money chasing goods and services. Deflation occurs when there is less money chasing goods and services.
In an inflationary dynamic (all other things being equal), prices of G&S rise until the money supply equals G&S supply. Vice vera for deflation, ALL OTHER THINGS BEING EQUAL.
But what if all other thing are NOT EQUAL? What if there is more debt and less energy? What happens to out neat definitions of inflation and deflation?
Fuckin' A! Everything gets distorted and out of whack, like a mutherfukin' Dali painting! That's what happens!
Energy supplies are at best flat, and most likely declining. A FUCKING ECONOMY NEEDS FIRE, BITCHES! No fire, no economy. Name me one thing you have that didn't need a fire to be produced. ONE. FUCKING. THING. You can't even jack off to porn without a fire burnin' somewhere other than in your johnson.
The second variable is debt. When everyone's broke and in debt, the money all goes to interest payments. If all you can do is pay the monthly minimum, and if there is no fire in the economy, the FED can print money with wild abandon, and at best, they stay even with the incipient ravaging wastage of the economy. It's like a guy with pancreatic cancer. No matter how much he eats, he's just going to get skinnier and skinneir until he fucking dies.
IF you have a job, (most people don't), after you pay taxes, the mortgage, the car payment, the credit card payment, the utilities, food, beer, weed, and the pussy tax to the wife, what is there left over to buy gold with? Maybe everyone on ZH is a hedge fund manager with extra cash to buy PM's, but most people aren't buying gold.
No energy, too much debt, means no velocity. That means that PM prices stay low, and that if the FED stopped printing, we'd be so totally fucked, you wouldn't even know which way was up.
Enjoy it while it lasts.
That day will only come when the fiat con becomes appearent to the person on the street. That is happening in Asia a lot more than in the West.
@Questan1913
You ask a valid question. As long as they can keep the free shit army FSA cowed, the party can roll on and on. But, you saw what happened in Ferguson. That scared the living daylights out of the TLAs. If Walmart ever starts showing empty shelves, the gig is up. ...and the foreign suppliers of crappy goods to the FSA all know they've got us by the balls. The manipulation of PMs by New York and London is over when owners of the stuff demand it back and they cannot deliver the physical...
The answer has to be in the basic princible of economics. Supply and Demand of the phsyicals. Once china, India and russia eat up all the phsyical available in the world how can you keep the price down?
If there was a surplus of metals it could be an unsubstantiated arguement but that is not the case.
The day is coing when a major buyer of paper gold will demand delivery . Judging by what I hear on the Internet by various sources , defult of the gold fixers is not far off .
i think eventually the USA is the only place accepting USD, although the rest of the world is still looking for an alternative. to store all that wealth.
Not enough people will actually understand the truth that underlies that.
However, Gibson's paradox focuses on a prices within a single economy.
Suppression of the gold price benefits multiple settlement currencies, allowing certain developed economies to both buy tangible goods and borrow money at a reduced cost vis-a-vis other (traditionally less developed) economies that aren't members of the club.
Gold price suppression benefits you and me, Bob, by allowing us to purchase more metal than we otherwise would be able to at artificially low prices. Assuming you believe - as I do - that this suppression cannot continue forever, you should thank your lucky stars and buy more as you're able. If, on the other hand, you believe government can manipulate markets forever, then by definition you've signed on to the narrative of central bankers' supposed omnipotence.
It allows Americans to purchase more of everything than they otherwise would be able to at artificially low prices.
However, the flip side of the coin is that many more people can only purchase less of everything than they otherwise would be able to because of artificially high prices and borrowing costs in their own currencies.
Gibson's paradox .... high gold prices are a reflection of higher demand for gold. Gold is the best means of holding wealth outside the system. High demand for gold occurs when people loose confidence in the system.
Interest rates must rise in order to attract wealth back into the financial sector. Consider what rates were in the late 1970's-early 1980's. Could you imagine how rates half that high would effect the economy?
Today gold prices are managed but there is also an endless river of propaganda that makes those who seek gold look like they are playing with half a deck or something.
Your knowledge is above mine on this issue, I totally agree with the interest rate tie. The policy of manipulated low interest rates is one of their most important central planning programs. If keeping them low has a gold component, then they will manipulate all hell out of gold if it means another driver of low interest rates. They believe that the economic problem steems from lack of leverage in the system. Consumers and business need to lever up, that is what they want but can't seem to get more of.
Gibson's Paradox does not prove that rising gold prices cause interest rates to rise. Rather, Gibson's Paradox simply notes that there is a positive correlation between real things (gold being one such real thing) and interest rates.
See the difference, dufus?
Correct, and interest rates need to be very low because otherwise, Uncle Sam can not service the interest on its gigantic debt level without massive tax increases and as a consequence a crashing economy/obligation/stock market. But at present, we are at 0% ..... so, endgame. No more fuel to feed the bubble.
Right, good luck on that price discovery
As described in: http://en.wikipedia.org/wiki/German_Rentenmark
there was no gold available to back the currency.
The Rentenmark was introduced at a rate of one Rentenmark to equal one trillion old marks, with an exchange rate of one United States Dollar to equal 4.2 Rentenmarks.
Even then the fucking banksters scum used USD as the tool fo theft. As Rotschild told once, let me control the reserve currency and the world control will follow..
So your point is? Do you think the world ahould just continue using debt instrument through eternity?
When Rentenmark was introduced, Germany already lost part of their land (real estate) to France as payment for their debt. So we should do the same here in the USA pay off China with California and Hawaii; then, we can introduce "new dollar" in ratio to the amount of gold in the treasury. That's if we have any left in which case I guess the entire country is lost unless we go to war.
I do not believe that to be true. Hard assets retained value, but Gold's purchasing power--purchasing power even of hard assets--in Germany was very strong.
As long as the price of gold is kept artificially low and stable, the kleptocrats who run Wall Street and the USA are in the catbird seat. In real life, gold should be about $1,800 an ounce and the prime rate should be about 6%. Then again, in a real world, you would know about the secret meetings that Obama and his accomplices hold at different physical locations throughout the world, meetings that deal with following the guidelines set by what is commonly called the New World Order. These meetings deal primarily with gaining worldwide control of oil, still the key baseline energy resource. Fall afoul of the NWO and, in the USA, you end up like Michael Hastings or Aaron Swartz or Andrew Breitbart. R.I.P.
The kleptocrats also own most of the gold. They win either way.
The kleptocrats also own most of the gold. They win either way.
What the kleptos owned, they have leased out. What was owned by the others, the kleptos also leased out. Wait for the day when all the leases and sales must be settled.
Boom.
No one knows what the real gold price should be, Bob, so stating that "gold should be about $1,800" is sheer rubbish. In other words, price discovery is more complicated than a guy named Bob unilaterally declaring what gold's price should be.
You silly goose!
Price discovery is not complicated;It is easy,simple,honest and fair. Hence, it is now banned, everywhere.
"it worked fine."
Funny, I seem to remember them being utterly crushed and ground into dust.
Fact is, the Nazis ran out of GOLD to steal, and as a result, their war machine ground to a halt and they were overrun.
what i am referring to is the period from 1924 and on ... the nazis came into power in 1933-34 and they started their wars in 1939.
just check it out on google ...
Right, so it worked SOOOOO well that the public elected a radical bunch of crazy people who had to institute a new (also idiotic) currency scheme to restore confidence.
Assignats didn't work either. The only currency that lasts is based on precious metals. Digital currencies MIGHT work, but only because they have similar characteristics to PMs.
so what do you think about Scots are they finally going to be free?
it seems the english are getting scared now ... the whole country might collapse
So true. But it is quite remarkable what they accomplished, as evil as it was, they almost took over all of europe and russia with their north africa holdings till it all crashed around them....they didn't have enough bodies left to continue after the 6th army froze their asses off and then got knocked out at Stalingrad
"The Rentenmark replaced the Papiermark. Because of the economic crisis in Germany after World War I, there was no gold available to back the currency. Therefore the Deutschen Rentenbank, which issued the Rentenmark, mortgaged land and industrial goods worth 3.2 billion Rentenmark to back the new currency."
http://en.wikipedia.org/wiki/German_Rentenmark
"It doesnt matter really ..."
Yes, it does matter.
Honest money, gold or silver can be APPROXIMATED. As you state BY LIMITING ITS SUPPLY.
Now, realistically, what nation, in all of mankind's history, has ever kept its FIAT MONEY SUPPLY LIMITED?
For example, the United States here and now!!
"...it worked fine."
And you know this from personal experience?
DURING the German hyperinflation of 1923, the German middle class was wiped out. Citizens buy gold to protect themselves against getting wiped out that way.
Germany didn't get back onto its feet after the hyperinflation until it voted in a pro-industry government, and started policies that were favourable to industry. Valuing money in terms of real estate was fairly useless and created a decade of austerity and poverty.
Germany used land as a basis for their currency not because it was necessarily a good idea, but because OLIGARCHS owned all the land. A "gold standard" would have delivered essentially the same consequence, utter financial power centralized in the hands of plunderers. Germany "chose" land over gold not due to any economic consequence, but because the occult nature of Nazism and the modified Theosophy of eugenicists like Guido von List and Jorg Lans quite literally worshipped farmland, as did most people in Germany at the time. It was a deeply religious, deeply "spiritual" asset with which to back your currency. Not only did it justify the seizure of half of Western Europe, but supply and demand are of little consequence when all that "human action" is driven by the literal deification of your currency.
http://onestepbeyond.me/one-step-beyond-podcast-3-an-anglo-american-blas...
Man, they have Sunday night futures strapped tight as a drum. Such a chirade! Such theatre!! Tomorrow will see a fast dash to green. But, the big KAHOONA move will come when the NO vote from Scotland hits the tape. Expect the Fed to throw a 100 Billion at the market when that door opens. Then, short the pop!!
Germany used real estate because they didn't gold. At that time world currencies are based on gold or silver. Beside when Germany used real estate they lost parcel or part of their country to France. Would you like to loss California to the Chinese for our debt since we don't have the gold?
8 words: "Because it masks the effect of monetary inflation."
John and Jane Q. Public don't understand such concepts.
Recommended explanation next time one is asked to address gold price irregularities to a bovine audience:
1. Orphans and widows have their money invested in mutual funds
2. Mutual funds own shares of gold miners such as ABX, NEM and so forth
3. Rigging gold prices to the downside adversely impacts gold miners
4. Ergo, orphans and widows are adversely impacted
Q.E.D.
Separate thought: why haven't gold miners been screaming bloody murder if their market is indeed being manipulated?
Look at the owners of the gold mines: Rockefellers and friends... the same guys who control central banks, NGOs, press etc. Seems like they using gold as asset for their games, not as a final risk hedge strategy.
i wondered that until a year ago ZH had a thread on the beginnings of gold corp and things began to fall into place.
PM's get cheaper then I just buy more. Everything will sort itself out......eventually.
Easier said than done. It takes some major intestinal fortitude. I’ve been buying as a percentage of my average purchase price, increasing those purchase prices by any raises I get. Currently I am buying about 15k a year in precious metals and am still in the black. If I continue to follow my formula and the silver price drops another 5 bucks I will be throwing over 24k a year at an asset class that has lost money. I will certainly continue but it will certainly be a gut check time.
The new normal traders mantra works for physical as well. The "markets" can stay rigged far longer than you can stay solvent. We might not live to see the return to sound money... But hey, our grand kids might.
I didn't really see the light until 2009 and started buying at pretty close to the bottom, at under 10 bucks. I have continued to follow my plan and bought at high as 42. I have an average at just over 18 bucks now. I have plenty of dry powder but was hoping to find some people in the red, or close to it, and have courage in their convictions to help out my backbone. People that bought their fill at an average of 5 bucks and were out at 8, we are all very impressed but there is no need to post and make me feel worse about only seeing the light after the crisis.
If you really want to test your guts, or nerves, or brain, buy junior miners.
I went all in in 2009 for 25%. A little late at around $1050, sold some at $1800 when it was over 35% and bought some back at $1270 to $1450. I'm at around 22% right now, made some money in stocks and real estates, and am waiting for $1100 to bring the balance back to 25%.
Don't think of your PMs as an investment. Think of them as insurance. You pay a premium and theoretically, it pays you back when you need it...and you will need it when the bottom falls out.
Just remember Volcker had to raise rates above 20% to get everyone back on the dollar bandwagon... the economy could take the beating at the time. Now they can't pull that trick again and it is essential for the corruptors to kill PM sentiment... they have no other tools in their arsenal except to selectively destroy national economies when those govts' dare to threaten their game
Volcker didn't save the dollar. It was the US taking over Saudi Arabia, as well as the adoption of fuel injection in cars that did.
So true bwh... "eventually" can be a long, long time. Dollar cost averaging works until it doesn't - that's why I prefer to employ a formula that hedges against major down drafts without taking ones eye off the prize.
http://longtermtrendmonitor.elliottwavetechnology.com/
In more simpler terms..... Just keep stacking!
"Suppressing the gold price is rather like turning off a fire alarm because you can’t stand the noise."...
"."
Perfect!
That gold is managed is a given. We know it is a fact in the recent past and certainly is now.
the important thing to see now is that it can only be managed successfully if there is enough gold flowing to major producers....and there is not.
Soon it will happen that gold price management fails and gold prices rise,
In 1971 to 1980 it broke from the gold management of the 60s and grew about 24 fold. It is due to do that again.
This is one of the 2 topics fofoa has been reviewing for the past 6+ years. If you need convincing that this is true...and have some spare time....read fofoa.
Exactly how does naked shorting without limit ever "fail"?
Somebody will call them out to deliver phyzz *in size*, and the paper shorts can't. That's how it'll blow up in their faces big time. Waiting for a major default is the name of the game now.
Germany already did and were told sit to fuck down shut the fuck up and you aint getting it, you stupid shit bags... they have since waved the request So stop dreaming no one is calling the Masters out on gold ever.
"Germany already did and were told sit to ..."
Yes, because their physical gold is gone to the East.
Eventually there will not be enough physical gold to settle long contracts in the CME.
That's when the price goes up.
I'm not sure what the buyers on the CME want counts for much...they never stand for delivery.
It will be the failure of major producers to receive gold that precipitates change.
As Rob Kirby has said...it ends when China does not get it's gold.
Germany calling for their Gold was a politcal ploy by Merkel and it worked for her, afterwards the request was rescinded.
Tuco
I don't own any real estate or gold. I'm hooped.
Also, we put in a new fire alarm system that is much quieter. It has a higher frequency.
it matters most of all because the rule of value is backwards: gold should be the measure of all value, not dollars. how on earth the bankers got everyone to buy their backwards logic is astounding.
Gunbarrels and propaganda.
Or, Mass murder and mass deceit. Let's call a spade a spade!