Central bankers for the buffoons they are – hence, today’s primary topic – let’s give a shout out to one of the few sane decisions they’ve ever made. Recall 1999, when gold made a generational bottom at $250/oz. following then British Exchequer Gordon Brown’s historically foolish decision to not only sell most of the UK’s gold but announce such intentions beforehand.
According to the “Speck-tacular Analysis” in Dmitri Speck’s fabulous new book, “The Gold Cartel” – which I am already two-thirds through – this event marked the beginning of the end of the “second phase” of post-1980 gold suppression. The “third phase” commenced in 2001, but it was 1999 when Central bankers, by and large, decided overt sales and covert leases were no longer prudent as not only were prices too low but U.S. dollar dominance clearly peaking. And thus, the “Washington Agreement” was signed in September 1999 by 14 European nations setting cumulative annual quotas for government gold sales. The Fed was noticeably absent from said agreement; as clearly, its “strong dollar policy” – of covertly dishoarding gold – was not consistent with this agreement’s goals.
When the Washington Agreement was announced, gold prices initially surged prompting the most blatant suppression scheme in history per the below, infamous quote from then Bank of England governor Eddie George.
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.
–The Market Oracle, September 14, 2013
Irrespective, gold’s “inverse bubble” – as Speck calls it – had played itself out. And thus, said Central banks were prescient enough to sign this agreement – even if, in truth, political factors had as much to do with it as economic ones. In the subsequent decade, the Washington Agreement governed European gold sales – including massive dishoarding by the once-conservative Swiss; which ironically, may be mandated to repurchase it in the coming years – until 2009, when said Central banks became net buyers. Yes, leave it to bankers to sell their gold whilst the bubbles they fostered with foolish, self-serving policies inflate only to scramble to get it back once they pop.
Of course, the status quo fighting “financial leaders” in Washington and London continued to sell hand over fist, as blatantly depicted by the infamous “gold sale headline of December 2011” (launching “Operation PM Annihilation II”)…
Market sources report BIS, BOE, and Federal Reserve were selling gold after it popped to session high at GMT 1335 – MNI News via Bloomberg
–Zero Hedge, December 8, 2011
…and of course, the blatantly obvious leases, swaps, and other surreptitious dis-hoardings of what’s left at Fort Knox which fortunately for them is not required to be disclosed under the IMF’s archaic gold reserve accounting standards. And why does the IMF of all organizations make such rules? That’s an easy one, as they are currently holding the world’s largest phantom, double-counted gold hoard on the planet! But heck, if the Financial Accounting Standards Board can allow banks to value toxic mortgage bonds at par why shouldn’t Central banks double count their gold?
Anyhow, its 15 years since the original Washington Agreement was signed and most Central banks – outside China and Russia, of course – have dramatically lower gold balances with gold more than $1,000/oz. higher. As the global economy – and currency markets – is in historically turbulent times, you can bet they won’t be selling any gold in the foreseeable future. And thus, the fact that the agreement – now called the CBGA or Central Bank Gold Agreement – was renewed yesterday for another five years, will be no more than a footnote in history; as highlighted by the subsequent press release stating “the participants currently have no plans to sell any substantial amounts of gold.”
Back then, the world was amidst an oasis of “good times” created by 12 years of fraudulent money printing by Maestro Greenspan. Moreover, the Cold War’s end caused a temporary decline in global commodity prices as the Eastern Bloc endured a painful retrenching and reorganization. Consequently, in perhaps the greatest cumulative financial hubris in history – culminating in the ill-fated creation of the Euro currency – Central bankers believed they had solved the world’s problems with Keynesian policy; and thus, kept the party going full swing “Irrational Exuberance” and all. Of course, when the turn of the century occurred payback was a b**** as the global economy peaked and the long, drawn out process of “correction” commenced.
In 2000, China and Russia were economic pariahs, whilst the U.S. was the undisputed global superpower. And thus, it’s quite ironic that just 14 years later, as Western Central banks implode “evil communists” are taking over the world; as evidenced by today’s Sino-Russian agreements to transact outside the dollar and the upcoming “holy grail” natural gas agreement, which may or may not exclude the dollar entirely. As always, the great Richard Russell describes the situation perfectly whilst continuing to remind readers to “follow the money” as “he who has the gold, makes the rules.”
Do you remember how Reagan challenged the Soviets? The Soviets fell apart in trying to keep up with the US. Now I hear talk of war as a supposed attempt to bail the US out of its current economic predicament.
I see China and Russia in a joint effort to unseat the US as a world power. They don’t need a war. With idle threats, they will force the US to continue its military empire and its giant military spending program until the US is so heavily in debt that nobody will buy our debt. The China-Russian alliance will do to the US what the US did to the Soviet empire.
–Dow Theory Letters, May 19, 2014
Unfortunately, Central bankers become more brainwashed as their serial fiat schemes fail; and thus, make successive blunders in their efforts to sustain a status quo enabling personal wealth and power – essentially, inflating bubbles further until, like all Ponzi schemes they spectacularly collapse.
The post September 2011 PM suppressions, (after “dollar-priced gold” achieved an all-time high) – have been the crowning achievement of their cumulative foolishness to the point that even their henchman are starting to get it. I mean, how much more obvious could yesterday be as the “mysterious spikes” we predicted the Fed would utilize to protect 2.50% on the benchmark 10-year Treasury yield repeated Friday’s performance perfectly – “Hail Mary” rally at day’s end, et al.
Speaking of “Hail Mary” rallies, it appears the “dead ringer” algorithm is being used more than ever to support the “Dow Jones Propaganda Average” – particularly on the lowest volume day of the year. And thus, regardless of whether one believes the Fed is “tapering” rest assured, the PPT is decidedly not.
Nor is the gold Cartel which both yesterday and today attacked gold at exactly the 8:20 AM COMEX open – in today’s case, by entering a “market order” to sell a ridiculous $520 million of paper gold before it turned right back around, as it inches closer to its inevitable upside victory at the ten-month “line in the sand” at $1,300/oz.; not to mention, the inevitable, permanent breach of “battlefield $20 silver.”
And thus, on to today, dominated by “horrible headlines” such as the Thai government declaring Martial Law, Italian bad loans up for the 59th straight month to a new all-time high, ECB governors stepping up rhetoric regarding the likelihood of enacting negative interest rates at their June meeting, miserable earnings reports from consumer discretionary companies Home Depot, Staples, and Dick’s Sporting Goods, and last but not least, manufacturing bellwether Caterpillar announcing a 13% year-over-year decline in sales representing its 17th straight monthly decline.
It’s also a “key attack event” day as the Fed publishes the meaningless, likely doctored “minutes” of its April 30th meeting at 2:00 PM EST. And thus, with markets initially going in the “wrong direction” (according to TPTB), I thought it would be a good time to reassure readers that they literally can’t lose – if they simply ignore the propaganda and continue to not invest but save in the only assets proven to maintain their purchasing power throughout history.
To wit, comments from two of the Fed governors PM holders are “up against” – given their mandate to suppress gold and silver whilst printing as many “dollars” as possible. One, John Williams of the San Francisco Fed (NOT to be confused with John Williams of ShadowStats.com) is considered a “dove” whilst the other, Richard Fisher of the Dallas Fed is known as a “hawk.” Not that it matters either way, as essentially all FOMC members vote year in and year out for “ZIRP to Infinity.”
Anyhow, both gave speeches yesterday and in both cases demonstrated just how clueless they are. First, Williams claimed “soft landings in monetary policy never happen.” That’s right; John because monetary policy under fiat Ponzi regimes invariably involves the exponential printing of money until the massive capital misallocation, debt, inflation, and wealth inequality it engenders causes them to implode. Better yet, he claims the Fed “needs to continue to be wary of excessive risk.” LOL, you mean by telling the markets you intend to maintain zero bound interest rates until at least mid-2015 – even when the so-called “recovery” has enabled the Fed to “taper” its QE program? And the coup de grace, as the best was saved for last, is his soon-to-be infamous pronouncement that “our extraordinary policies could have adverse consequences down the road.” Gee, I wonder how to quantify “down the road” in his “kick the can world” given the dollar has already lost 98% of its purchasing power since the Fed was created.
As for “hawk” Fisher, you gotta love the irony of being concerned “there’s almost no volatility in markets” when your own policies were what caused it. Yes, amidst the most universally weak global economy of our lifetimes featuring exploding debt, inflation, and social unrest, the “Greenspan/Bernanke/Yellen put” – plus similar promises from all major Central banks have pushed equity volatility to essentially all-time lows. Nota bene, Richard; this is why even your “partners” – the “TBTF” banks – are laying off personnel left and right leaving the entirety of their operations to criminal insider trading, high frequency front-running, and toxic derivatives dealing.
Yes, Richard Fisher is on the record that the Fed “must be wary of markets’ potential to overshoot.” Do you mean, for instance, like record P/E multiples when utilizing true GAAP measures or record low interest rates, amidst the most debt and inflation-infested environment in history or real estate echo bubbles fueled by free Fed money handed to Wall Street? Or how about said “inverse bubble” in the suppressed gold and silver markets?
Thus, gold and silver owners – relax, as you are in good hands. And for those that still don’t own real money – but instead, follow the advice of said fools, we can only say one thing which is…
Hurry up and protect yourself with the historical safety of physical gold and silver before it’s too late! And if you do, we humbly ask you to give Miles Franklin a chance to earn your business.
As a stacker I think I can say there is nary a more resilient creature. We’re the cockroach of the financial industry.
After the financial apocalypse we’ll be the only ones left.
What is going to be funny is what the supposed sages and oracles say when things finally head to where they belong.
Andy, I am sticking with you and will go down swinging if that’s what it takes. In my travels I have seen nobody and I mean nobody who has protected themselves as you recommend. If things end up as predicted the despiration amongst the masses could be more than the average American can handle. I hope the events unfolding will be controlled but like a storm sometimes they come with some mighty strong winds and rain that blow the house down. I hope to be a strong base for my extended family when assistance is needed but I can only do what I can do. I appreciate your consistent explanations that detail the truth and my only suggestion is don’t ever hold back, I am a big boy just give it to me straight.
Look forward to your daily blogs.
Thanks William; but rest assured, you won’t go down swinging. Holding REAL MONEY – below the cost of production, to boot – your “downside” is extremely minimal, IMO.
Yet another column where the ball hits the sweet spot on Andy Hoffman’s bat…
Thanks for another great piece. I remember the quote from Eddie George, the former governor of the bank of England, very well and was so struck by it that I actually saved it in my archive of infamous quotes.
Here is the rest of what Eddie stated immediately succeeding what you already included in your article:
…”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.”
When I read this I was just struck by the blatant admission to Gold price suppression as if it was the most natural thing in the world.
Thanks for all you do Andy to reveal the truth!