Iran Accuses America Of Purposefully Sending The Price Of Gold... Higher
That there are theories (and facts) blasting manipulation by various central banks to supress the price of gold over the years is not a secret to anyone (which incidentally is good for anyone who wishes to purchase gold at cheaper price, but that is the topic for another day). Yet one "conspiracy" we had not heard of until now is that America is actively doing what it can to send gold higher. That is no longer the case. A few days ago, none other than the capo di tutti Mexican cappi, Iran president Mahmoud Ahmedinejad, proclaimed that "Iran's enemies were deliberately causing the price of gold and foreign exchange to rise in a bid to undermine the Islamic Republic's economy. "The enemies and ill-wishers want to make a fuss and present wrong information to provoke and deviate the market." The plot thickens. From Reuters: "In order to disturb the market they buy a lot of gold coins with their huge amount of money ... they do the same in the foreign exchange market. But we have got enough reserves to meet all the country's needs." And there you have it: America is willing to risk the reserve status of its currency and send everyone chasing after gold simply so it can destabilize the Iranian economy... And now we've heard it all.
What exactly is Iran's issue? Why runaway inflation of course, which has forced locals to exchange their worthless local fiat and scramble after such stores of value as gold (where have we heard that before).
Iran's inflation rate has been rising steadily from a 25-year low of 8.8 percent hit in August 2010 and the International Monetary Fund has forecast it will reach 22 percent this year.
The main pressure on prices has come from Ahmadinejad's policy, introduced late last year, of slashing some of the $100 billion of annual subsidies the state had paid out for decades to keep prices of fuel and food artificially low.
A reduction in interest rates paid on bank savings has also prompted Iranians to withdraw their cash and place it elsewhere, while a new tax on gold coins has led many to favour foreign currencies over their traditional safe haven, gold.
The price of gold coins and foreign currency has risen sharply in recent months, a fact economists put down above all to fears that rising inflation is sapping the buying power of the Iranian currency, the rial.
So while Belarus is already suffering from hyperinflation following a collapse of its economy earlier in the year, it appears it is Iran's turn next:
While Iranians tend to think of the common green 10,000 rial -- or 1,000 toman -- note as equivalent to one dollar, the price of a dollar in exchange bureaus broke the 13,000 rial mark last week before the central bank took as yet unspecified measures to prop up the currency.
On Wednesday the official rate was 10,661 rials to the dollar, with the market price at 12,450, according to financial website Mesghal.ir .
And as always, the last word is Iran's:
"If this evil-doing and arrogance did not exist, the price of foreign exchange would come down. Right now one American dollar isn't worth even 900 tomans in our economy," Ahmadinejad said.
One wonder if alleged Mexican assassins prefer to be paid in rials or in bullion. We will probably find out soon.