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The Root of Gold Conspiracy Theories
The Root of Gold Conspiracy Theories
Written by Keith Weiner (CLICK FOR ORIGINAL)
Most people who own or trade gold have a higher price in mind, a price determined by what they think the metal is worth in dollar terms. That’s normal. However, some make a leap from the fact that gold doesn’t trade at this price today, to belief in manipulation. Short sellers—who are sometimes supposed to be illegally profiting, and sometimes said to be not-for-profit—come in to the market and sell the metal down. Or so the theory claims.
This theory is not true, and I plan to show the data to prove it in a future article. For now, I want to discuss the fallacy at the core of it.
The error is dollar thinking.
What do I mean? Simply, most people assess the value of something based on its price in dollars. If nefarious parties could somehow suppress the price of gold, then they could undermine its value. That would be an evil act. How could one not feel something, at such a crime against the natural order? It’s personal too, an attack on your very wealth. You buy gold to protect yourself from a likely dollar collapse, and instead find you are losing your wealth. You’re forfeiting it to the very monetary planners from whom you thought gold would protect you from in the first place: the central banks.
Let me suggest that this is the wrong way to think about it. Gold does not go down (or up). Gold cannot be properly measured in dollars.
Let’s start with an example of measurement. Suppose you’re cutting some boards to build a house. You use a meter stick to tell you the length. For example, a board is 3 meters long. You would never wonder how many boards long a meter is. That’s because a board is not a good measure of length. The length of one board is not the same as the length of another. And, the length can change, for example by cutting it with a saw. The meter doesn’t change, but boards do. Therefore, boards are measured in meters.
The same applies to economic value. The value of the dollar varies from one day to the next and, of course, it falls over long periods of time.
So the question is not: how many dollars is an ounce of gold worth? The question is: how many ounces is a dollar worth? Far less than an ounce, it’s about 27 milligrams.
When you look at this way, things becomes clearer. It’s the dollar that goes down, not gold that goes up (the dollar can also go up, as it has since 2011, due to pressure on debtors).
One implication of this is that a rising gold price does not provide a profit to gold owners. Sure you have more dollars, but each dollar is worth proportionally less. For example, if the price of gold in dollars goes from $1,110 to $2,220, then that’s just the mirror image of the dollar going from 28 to 14 mg gold.
Conversely, if the price of gold falls, it’s just an increase in the dollar. So what? If the dollar goes up, it is not important (or permanent). Why worry if the price of something you don’t own goes up? I didn’t own bitcoin when it went up from a few dollars to $1,200. I didn’t worry about it, either.
Many gold owners do worry about a rising dollar, which they think of as a falling price. Why? They say the dollar will soon be worthless (it will be worthless one day, but not as soon as many say), so they buy gold. And then they get upset when the collapse doesn’t happen, and the dollar strengthens.
The dollar collapse is just their backstory. The real reason they buy gold is to sell it. They want more dollars, no matter what they say about hyperinflation. They want profits, which they think of in dollar terms. As I said above, you can’t profit from a rising gold price (unless you use leverage).
So cheer up. Most people do have a dollar income and assets. A dollar collapse will be a disaster, but a flat or falling price of gold supports the dollar, and hence, most people.
If you have a dollar denominated income or assets, then here is a simple step you can take. Measure it in gold. For example, suppose you have real estate and stocks totaling $1,100,000. Divide that by the current price of gold—about $1100—and you are worth 1,000 ounces. If it goes down next year, despite hard work and risk, then you have become poorer. You would actually have been better off simply holding gold—even if your net worth goes up in dollar terms.
There’s no reason to sweat a drop in the gold price or cheer a rise.
Please email with any questions about this article or precious metals HERE
The Root of Gold Conspiracy Theories
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Explain the part about the COMEX shorting millions of tons of gold it doesn't have.
Let them short millions of tons of gold. Who cares. For me, precious metals are a long term insurance policy.
If a financial collapse does or doesn't occur, the real winners over the long term will be the people that are holding the real deal.
Doesn't matter whether it's silver, gold or platinum.
i am so fucking sick of seeing gold painted rocks pictured online in articles pertaining to gold.
Some of them are bubble gum.
Stocks, bonds, etc are a legal form of gambling. They used to be (at times) a safe way to bet and make some money. Now, the markets are rigged and if you ain't on the inside... yer a muppet. Phyz don't change. Its perceived value does but it is still real. No one on ZH knows where the short term future is headed. We know it will suck for the 99% is about all. Will AU/AG really save us during the apocalypse? Gut level tells me it is better to have than not but who da fuck really knows. If things keep heading the way they are my stacks won't be worth squat for oh, what's the half life of Cobalt?
Black Jack Shellac...
https://www.youtube.com/watch?v=FKXOevtekJI
Fuck off Wiener.
Half shill, half academic obfuscating wiennie
http://www.plata.com.mx/mplata/articulos/articlesFilt.asp?offset=40&fiid...
gold prices are manipulated just like piece of paper prices
Painful Fact Number One.
PAPER gold prices are manipulated just like pieces of paper prices.
There, I fixed it for ya.
If you don't hold it in physical, you don't own it, you got nothing, sweet fuck all, diddly squat, unicorn farts and paper promises.
Time for some Lateral Thinking, boys & girls: I'm intrigued by the fact that...
PM is priced on the Futures of Paper Gold, but Oil is not. Rather, Oil is priced on Futures DELIVERY of real Crude.
When GS & Friends stop shorting Paper Gold on behalf of the Chinese, so that those MFers can buy it dirt cheap, and the supply lines slow way down, then and only then will you see it rise close to its natural value.
Agreed unless its true value is shown by trading it for real valuables.
The true value is current price.
True value dont change much even on a year to year basis.
I'll say this again. An oz of gold bought a steer 300 years ago. An oz of gold buys a steer today. An oz of gold will buy a steer 300 years from now. You think 1400 U.S. dollars will buy a steer 300 years from now?
To compare gold to fiat is an embarrasement to the indestructable metal. It's like comparing a fresh apple pie to dogshit.
I don't want no steers for my gold. I want fiat money.
I used to value my gold holdings in Zimbabwe Dollars. Huge profits, but now that currency is obsolete. Now I value my gold in Venezuelan Bolivars, and again I have huge profits.
When the Bolivar goes obsolete I am going to value my gold in US Dollars.
Gold is always the same value. The dollar price deviation from the gold constant equals the debasement of the dollar.
Seems a bit simplistic.
There are a handful of asset classes. At times some are more attractive than others in terms of growth potential and risk. When equities have a lot of upside, gold will loose its short term appeal. It would seem that equities dont have much gas left except in a krugmanesce fantasy way where we all go japanese.
As is frequently staed: the only money you make is what you keep.
I suspect the banks support crashing the market because they can make money on the way down and on the way up but they fear a low volume flat complacent market where loses are not allowed - entropy death to the ponzi scheme.
Just wanted to say that if you are stacking, focus on smaller, easily traded units. Forget bars and high-value coins, it will be hard for regular folks to trade those on a day-to-day basis.
Go for small size items. I've been amassing tons of little gold and silver charms, like for a bracelet. Some are ADORABLE! Maybe 2-5 grams apiece...a nice size for trade. And much more 'marketable' due to their form...Whenever I bring out the box 'o charms, people go through it..."Look at that one!"..."Ooooo, look at THAT one!"..."This one opens! Cool!"
They're all sterling, 10, 14 or 18k. Got most at estate sales for 50 cents to a buck apiece.
Chains are good too, and tend to be easier to sell than larger, more elaborate pieces.
If they have stones, of course you'd remove them before selling for weight. But good stones also have their market, so put them aside.
Don't forget...gold in jewelry form has never been confiscated as it has in other forms. Take a lesson from your Indian sisters on this. :-)
"Don't forget...gold in jewelry form has never been confiscated as it has in other forms. Take a lesson from your Indian sisters on this. :-)"
Tell that to the NAZIs...
Spoctor Din
In the United States Gold was not confiscated in Jewelry form.
But if they ever made a law that declared it to be confiscated then I would refine.
Do you know what refined Gold looks like after it has been dropped out of Aqua Regia and before it is placed under the torch?
Red Dirt. It is so easy to hide.
God I hope that they illegalize it. I will make a killing trading in it during the Black Market Phase of collapse.
There are no Gold Sniffing Dogs nor will there ever be as Gold is inert to most chemical interactions...and the Dog's neural receptors will ot change due to its presense.
Yeah. Bring that illegalization on. Pleeeeeeze!!!
Hey Tom, Interesting post, thanks!!!
Good point on the jewlery aspect.
"Gold does not go down (or up). Gold cannot be properly measured in dollars."
Thank you! And that, children, is your lesson for the day.
What a silly attempt by the author to portray that he is "onto something new", a 'something' that everybody in the world is too blind to see, except himself.
"If nefarious parties could somehow suppress the price of gold, then they could undermine its value. That would be an evil act."
Perhaps this is news to the author, but JP Morgan has been tried, found guilty, and fined for suppressing the precious metals markets 375 times already. Of course they can, and continue to suppress on a daily basis, the gold market. WTF is wrong with your head?
This weiner dude is a trip.
The entire GLD ETF and the so-called futures market is manipulative, and was from the beginning.
We don't have a futures market for onions, yet we can buy onions all day long at a fair price.
Dont sweat the dollar value of an asset you intend to hold. You already won the second you turned the fiat over for a true asset. The same goes for my tools. I like tools because they are a working asset. Real gold is a static asset that happens to hold the top spot in bartering. A very solid place to be long term.
If you are buying gold to kill fiat start bartering with it. Its going to preform very well in real trade all day long. So long as you are trading with real producers like a farmer or a plumber. For goods or service it is the top of the barter asset stack. So kick bankster ass with it all day long.
And yea whats up with the painted rocks?
"And yea whats up with the painted rocks?"
Metaphor?
A bird in hand.....
I don't like gold. It is the wrong color.
I like gold because it is a useful metal, but not at the current and even historical price. As a result of the price of gold being too high relative to people's ability to pay to use it for its properties, it is used for very little. It is collected in a permanent inventory that gets passed around the world from fiat creator to fiat creator. Fiat creators trade nothing for gold. Fiat is a figment whose use is dictated by force.
JMHO, unless gold has utility it is of little value... to me and my guess, most people. Collect it if you must, but it will always be valued relative to the fiat-du-jour.
Did you know that gold can come in many colors? Depending on the alloy you blend it with. Rose gold, white gold, green gold, blue gold...yes, blue gold. Not very popular, but possible.
Don't forget chocolate gold and my favourite, tungsten gold.
Gold is an excellent shield against radiation... Good for lining bunkers, it is more re-usable than titanium and less toxic than lead. It can also be hammered very thin.
"Gold is an excellent shield against radiation... Good for lining bunkers"
How apropos...
Yup, very conductive and resistant to oxidation. When combined with tin it makes a very good high temp and relatively high strength soldering material.
... just a tad on the expensive side and there are alternatives with slightly poorer properties that do well enough.
Well explain why at times gold moves WITH the dollar. Your logic would make that impossible, but, but....
Price is controlled. End of story.
... But all asset prices are controlled. In the largest sense, the free market is a lie told to people to manipulate them to act in a way that benefits those who control price.
Call me when the regimes allow gold to be a legal currency.
Texas needs to hurry up.
Gilnut said it, "...gold will be worth what it can be bartered for, no more and no less."
In 1900, a nice suit cost an ounce of gold. Today, the same is true. Of course the price of a nice suit has gone up quite a bit in the meantime because the dollar has lost 90% of its value... in terms of gold.
Besides, Sprott are bought and paid for and cannot be trusted. Even the nuggets in the above image are fake!
Also, if you look at new cars, the price has actually fallen over the last 30, 50, or 100 years. Right now a new car is ~30-35 ounces (~33k-38k). In 1970, when we were still on Bretton Woods @ $35/ounce, a new car was about $3,500, or 100 ounces.
Gasoline is another great one. One ounce of silver is roughly 5.5 silver quarters, so divide the price by 5.5 and you'll see that the silver price of gas really hasn't changed much. The number of hours you have to work to buy 10 gallons, however, has changed quite a bit. 15 years ago 2 hours at Chick-fil-A at just over minimum wage would fill the tank on my old Acura. It would take 3 hours to do the same now.
What about 200:1 paper/phys? What about COMEX warehouse inventories? Don't think a rising gold price reflects diminishing faith in fiat, and TPTB will just sit idly by, smoking their stogies and let it be? Other markets are demonstrably manipulated with far less incentive than exists to suppress gold. And NO, I don't hold it to sell it. I hold it so that my kids will have SOMETHING of value when that cesspool in DC does a swirly and millions of unemployed fascist b'crats are no longer able to make my life miserable.
Fool!
So let us test his theory that a rising dollar means a falling price for gold. In one sense it does because you can buy more gold for the same amount of dollars but ......
What if everyone or even 10% of the people buying gold asked for physical delivery? If the 200+ to 1 paper to physical were hit with 20 of those deciding they wanted physical would that not affect the price?
There are 2 gold markets. Paper and physical. Until they are separated you can't say that there isn't manipulation. It might be legal but it is still manipulation of price to sell more of something than you have.
I'm no trader, just a run-of-the-mill stacker, but even I can (admittedly, dimly) see what's happening. All one has to do is watch the price of PMs fall as the sun rises on the North American continent to see the in-your-face beat-down of the price when PMs should be at all-time highs due to scarcity. Scarcity caused by the beat-down making mining unprofitable, and making the remaining lot more valuable. Points which the author gingerly tip-toes around.
GLD is nothing but the equivalent of Federal Reserve notes you actually have to buy. The only other difference being the GLD is 'backed' by a teeny-tiney bit of something. But at 300-1 paper to metal ratio, that bit of something won't satisfy the 299 who don't get theirs when the music stops. To say a lot of people would be angry is to engage in British understatement.
I'm not holding in anticipation of dollar profit; I'm holding in anticipation for the day when people put signs in their shop windows saying they won't accept Fed Reserve notes. The day the GLD farce is shown to be the economic Potemkin Village that it is.
A while back I had lunch with a gentleman who was president of a portion of a country's government owned metal industry. He was essentially a political appointee and he was looking to sell some valuable tailings (concentrates of minor metals, not the primary metals they refine) before the next elections (ultimately we could not help him).
I asked him how his country could make public statement about how they were getting very close to the cost of production and even created their own market to protect the price (this will tel you which country) when about 7 years prior they were very happy and profitable when the price was less than 1/2 of its current level.
He smiled, took a sip of coffee and said something that I will not repeat because I had to have it translated later by one of the guys I was with.
Not knowing what he said, I made the statement: "whenever I cannot explain things such as this, I just blame the banks" ... we both laughed.
Well then explain "Naked Shorting" especially on spiked days when it has caused mini downward implosions of price within minutes you Dumbfuck.
LOL. Another "trader" focused goldie. The only reason to own gold, other than to use it to make more fiat money, is as a hedge against fiat failure. If you buy gold as a hedge then the paper price is meaningless, gold will be worth what it can be bartered for, no more and no less. If you buy gold to make more fiat money, then you are playing in an arena where "it's a big club, and you ain't in it". Which makes you, in your own words a......
;)
Gold doemt protect in this digital age because the utility of money has been gone.
There is another digital form of money which is taking over this role.
Bitcoin, the JP Morgan wet dream.
What a bunch of BS. Gold is priced in dollars and not the other way areound, because everything else is priced in dollars. When houses, cars, dinner and everything else are priced in gold then dollars will be too.
And as long as the above is true, if gold goes up in dollars, you DO make a profit..