What would it really mean if gold and silver actually are and have been manipulated for years? More and more stories on this topic have been coming out and there are more “dots” to connect and prove manipulation than ever before. It seems as if there is a new story each week and the “protests” that there is no manipulation are louder, less logical and more far-fetched. If you don’t believe that gold is a manipulated and completely managed market then please, stop reading now as I must be an “idiot” with faulty logic, it is obvious to me that gold prices are in fact manipulated. For those of you with the common sense to understand the why’s and how’s of precious metals price manipulation, what does it really mean? Assuming manipulation (I surely do), I want to look at this question from both a “macro” economic/financial standpoint and from the most important standpoint, YOURS!
From the macro point of view first, what does a suppressed gold price mean? It first and foremost means that the currency (itself) is overvalued. It means that the currency “buys” more than it should. Another way of expressing this is that “inflation” is understated. A “tame” price of gold can be and is pointed to, then followed by “see, gold is not going up so there must not be any serious inflation problem.” Logically following, an overvalued currency allows its owner to make purchases they otherwise would not be entitled to.
In our fiat system, the currency is joined at the hip with “debt,” Treasury debt. In reality, the way our monetary system works is that the only way to create “new dollars” is through the “creation” of new debt. Debt (in the aggregate) can never be paid off, nor can its growth rate of creation ever be slowed or else the money supply itself will shrink. The money supply can never shrink because if it ever did then the debt itself would be defaulted on …because of the lack of money to pay the debt service. This is simply a “merry go ’round” of paper that by definition can never shrink…or else! So how does a suppressed gold price fit into the Treasury’s debt situation? In a truly free market, a high and rising gold price would argue for high and rising interest rates (like the late 1970’s). The problem now is that interest rates can never ever rise in the future without bankrupting the Treasury because they could not afford to pay even the interest alone.
It is from here that the value of everything else “financial” is derived from or “priced by.” What I mean is those stocks, real estate and every sort of loan that you can think of is “priced” off of Treasury rates. Mathematically speaking, lower interest rates mean higher “asset” values or prices…a good thing right? If a free market gold price were to exist (which I believe to be multiples of where gold is priced currently), wouldn’t that also mean much higher interest rates and thus much lower asset values? If gold prices were not suppressed then from a macro standpoint this would mean that “wealth” would have built up slower and asset prices would be lower than they are now. This would be a bad thing for those who “bought” years ago but a good thing for those just entering now… (Think housing prices here as an example).
To wrap up from a macro standpoint, low gold prices mean a currency valued “higher” than it otherwise would be, interest rates lower and “asset” values higher. This combination adds to the “standard of living” because the currency buys more, lower rates allow borrowers to “carry more” and higher asset prices allow for a larger collateral base…in other words, everything that is needed to live “larger” than we should be living.
Now we discuss from the “you” standpoint. If gold and silver prices are manipulated then it follows that the gold and silver already purchased is valued at less than what it should be. It also means that your past purchases were “subsidized” and that current purchases are also subsidized. It would also logically mean that your present currency (savings) are overvalued, your stocks, bonds and real estate are also overvalued. If these “assets” that you own are overvalued and you don’t have any margin debt or loans against the assets then you will lose “value” but not be forced into a liquidation situation. If you do have debt against these types of assets you might be forced into liquidating the assets to settle your debts…assets that have or are declining (possibly overnight in a reset scenario) in value.
If you do not understand that your savings, stocks, bonds, home and even money in your pocket are “overvalued” then you are set up to be blindsided. If you do understand this then you can or already have prepared yourself. The point is this, the question, “Is there manipulation or not?” is a very very important one. One in which the answer will affect the asset valuations of everything that you own…and unless it is gold, silver or some other hard asset the affect will be “negative.” The “answer” or the truth is of utmost importance whether you ignore it or not. I have said many times that “the greatest wealth transfer in the history of history” is just ahead, it is and you need to position yourself on the “receiving end rather than the losing end!
Some say “who cares?” if gold prices are manipulated. Some feel that it is a “good thing” that the plunge protection team bids into the equity markets to hold up prices. That it’s a good thing for the Federal Reserve to keep the lid on interest rates and liberally create “money.” There is an inherent problem to all of this though. The problem being “what will happen” when it all becomes known or common knowledge? Obviously gold and silver will be cleaned off the shelves. We will also see foreigners no longer buying Treasuries and probably not accepting dollars.
You see, “manipulation” is not a big deal until it is a big deal. It’s not a big deal until it is discovered or uncovered but once it is then “confidence” will change overnight. You could probably ask the average man on the street if it would make any difference if Ft. Knox was completely empty or not, his answer would probably be “not really.” Maybe an hour or so later though it might dawn on him that “no gold=broke.”
In the next month we will be 5 years out from the last time that China updated and reported on their official holdings of gold. I believe that they will announce their holdings again by the end of April. If this does happen then simple math can be applied. “Simple math” as in “where did their reported gold come from?” If they were to announce holding 5,000 metric tons or anything even close to this number then it will be known for a fact that this gold has come from the U.S. (or the Fed as in Germany’s gold). How can I say this? Because logically it is THE only place that gold in these amounts could have been sourced from as there are no other hordes on the planet large enough to have supplied this much gold.
The manipulation argument will then be put to rest and will in reality be a moot point because the “reset” will have already occurred. The ONLY thing that will matter is whether or not you have any physical metal and how much, period! Once confidence breaks it will not be restored except by a currency that has some sort of real backing. If you question this, all you need to do is look to history.
For me enough evidence already exists regarding manipulation. The regulators know it is so, but the governments are behind the act and will never willingly stop manipulating. The moment of truth you mention will be reached only when the demand for physical metal overwhelms the ability of governments to continue to manipulate. I believe that could well happen.
“The moment of truth you mention will be reached only when the demand for physical metal overwhelms the ability of governments to continue to manipulate.”
This will happen…
“If they were to announce holding 5,000 metric tons or anything even close to this number then it will be known for a fact that this gold has come from the U.S. (or the Fed as in Germany’s gold). How can I say this? Because logically it is THE only place that gold in these amounts could have been sourced from as there are no other hordes on the planet large enough to have supplied this much gold.”
What is your opinion of ex-IMF Karen Hudes and her statement of 170,00 tons of gold secretly held in Bank of Hawaii?..Also what is your opinion of Yamashita’s Gold?
I greatly appreciate your input as always.
please go to the archives and read my piece “Yamashita’s Gold” about a month ago. She chimed in to the comments section commentary and links to which I responded. My personal opinion is that she is a whack job. Just because some certificates say that they represent gold does not make it so, if I recall I did the math to disprove it based on the gold price in 1986. Get back to me after reading the piece.
“If this was true and “we” did have this amount of gold in Hawaii it would have to be stored somewhere right? This “somewhere” would have to be pretty big since it’s almost 40 times what is supposedly in Ft. Knox and it would have to be guarded?” Good point..As a retired geophysical contractor having worked in Nevada, Alaska and Peru, I also
agree with your point of 170,000 tons of gold (give or take 50,000 tons) as being as good a guess as any of all the gold having been mined in the past…
“Is there still some in the Philippines that has not yet been recovered? Most likely there is. My point is this, whatever the “haul” was has already been used up. Over the years it has hit the market and either been hoarded, turned into jewelry or “used” as in electronics…or stolen by politicians.”
Although I have not read the book ‘Gold Warriors’ this totally makes sense to me also..I have also read of a possible nice sized hoard of Aztec gold that was found in a cave in Nevada which happened to be on Nellis Air Force base property and was spirited away by the gov..Of course, if there ever were 170,000 tons or more of gold in the past, the Aliens probably made off with that too..
Holter said: ” I did the math to disprove it based on the gold price in 1986″
Thanks for the reference. I will read your Yamasita article immediately. I agree in advance that this hidden gold did not enter into any dollar/gold price calculations or effect thereof. Why? It was hidden so as to not have that effect.
…or did not exist?
Agree with much of this. But you make a big and unsubstantiated leap. If gold has been manipulated it does not mean the generally currency buys more than it should, it means that it buys more gold than it should. Two different things. Inflation takes off if money velocity takes off, not if gold takes off.
Sorry Mike, I disagree and do not believe it to be a giant leap. If the dollar is overvalued to gold then it is also overvalued to other real goods. You will find this out when Russia or someone else demands rubles or gold or another currency OTHER THAN dollars for oil or nat gas. How exactly will we pay? Your own argument states that the dollar has retained value because of low velocity…which could turn over night for any myriad of causes.
China does not have to announce the total amount of their gold hoard in their treasury. Why should they? You do not announce your gold hoard.
All that the Chinese needs to do is announce that their Yuan is totally convertible with gold, and also announce that they have exclusively fixed the future price of gold with their Yuan on a “Cash and Carry” basis.
Since 2002 the Chinese PBOC has established the Shanghai Gold Exchange (SGE), and since 2009 the SGE has sold over 8,000 tonnes of gold on a cash basis. The Chinese are very long-term planners, and I believe that the cash price that they fix will remain fixed for a very long time. This would make Comex and LBMA both irrelevant.
With reference to David’s comment: Ms Hudes statement about 170,000 tonnes of Chinese gold in Hawaii is total misinformation. If there was that amount of gold, China would have bought Hawaii. Also there is no Yamashita’s Gold that is total misinformation. Many individuals make up these stories for their own claim to fame.
Hi Victor, of course China does not “need” to announce but they often do things in “5 yr plans”. Simply by announcing they could torpedo the dollar as the world would do 2+2 math wondering “where” the gold came from. They last announced their holdings 5 yrs ago next month. As you implied, they could also “bid” convertible to Yuan at a much higher number than current and sweep the streets clean of whatever sellers are left…making COMEX and LBMA irrelevant.
Sorry, I do disagree about Yamashita’s gold. It has been documented that the Japanese plundered vast riches from neighbors during wars and invasions prior to WWII. It would have only made sense to scatter it and hide it…Philippines being one logical destination. That said, Karen Hudes is a whack job in my opinion and her number of 170,000 tons is dream world.
If they were to announce holding 5,000 metric tons or anything even close to this number then it will be known for a fact that this gold has come from the U.S. (or the Fed as in Germany’s gold). How can I say this? Because logically it is THE only place that gold in these amounts could have been sourced from as there are no other hordes on the planet large enough to have supplied this much gold. [Not true. Please contact Karen Hudes and Wolfgang Struck for details. http://kahudes.net/contact-us/ ]
I agree about the manipulation.
I disagree about where the gold may have come from.
really…? And where could it have come from other than the West?…which holds much of their gold where? Ft. Knox, West Point, NY and London? Where Elaisa? Please read my piece and the comment section from “Yamashita’s gold”. Karen Hudes responded to the article, I disagree with much that she wrote and has said. Especially the part about how this “gold will save the planet and the wealth will be spread around”. Fat chance! Kumbayah!!!
I understand the existence of the Global Collateral Accounts is hard to accept. We have been lied to about how much gold there is for more than 100 years.
Some are trying to blow the cover on this big lie.
You will know when it happens.
Have you seen the Green Hilton Agreement?
I saw copies of the certificates that she says is proof of existence. I responded to her at the time, the link is now changed and no longer even shows the certs.
The so-called “Global Collateral Accounts” contains no cash. A Collateral Account is like a Letter of Credit that is based on a hoard of funds, which the owners will never offer for sale. Like a Letter of Credit, the administrator of the Collateral authorization is required to borrow funds from a lending agency, which has to be repaid from the use of the loan. Therefore, the wide distribution of funds is pure unadulterated fantasy, and will never happen.
I agree Karen does not make the world’s greatest oral presentation. However, if you go to her web site and read extensively, you will learn she is a very competent attorney and offers effective written arguments.
Obama gives persuasive oral TelePrompter presentations, if you are prepared to ignore the fact that it’s all lies.
I would rather listen to Hudes tell hard truth than listen to Obama lie.
I would rather not listen to either of them.
Jim Willie asserts the Chinese are being sent gold from Saudi allocated accounts held in the West as you say, and that they have received about 1,000 MT per month for the last 20 months.
The Saudi’s have been demanding physical gold for oil (under the table) for 60 years. (read FOFOA) At some point they had no choice but to begin accepting paper gold, since we ran out of the real stuff to send them. The Global Collateral Account gold was off limits, and still is. Could be one or the other is being raided, or as you say Ft. Knox.
surely you meant 100 MT per month right?
Listen to his audio. Jim Willie.
I read your Yamasita post.
I posted a few comments there.
You acknowledge the Seagraves work was through.
When McAuther said “I shall return,” ostensibly to free the Philippine people from Japanese occupation, I think we actually went back to free the gold. At that time the US Gov. knew about the massive amount of gold stored there, as did the BIS. Some of it was put there before WWII started as part of the Global Collateral Accounts.
Regarding your question: The problem being “what will happen” when it all becomes known or common knowledge?
Leads me to ask (and I know you don’t understand this either): Why isn’t it clear to anyone with half-a-brain already? The government of this country is paying a high percentage of its citizens (or are they subjects?) not to work. Where are they getting the “money” to finance all this largess?
Confidence is all the Federal Government has. They can pay all their bills (interest and obligations) only because they can create all the currency they need to do so out of thin air; but the fact is they couldn’t meet these obligations next week if they did not have this “money” out of thin air creation ability. What a deal! Imagine if your creditors were so confident in your ability to pay your debts they just kept accepting your IOU(es) without question. But like Bernie Madoff, eventually no matter how much confidence your creditors have in you, the fact you are bankrupt cannot hidden forever. Manipulating the price of gold may work for a time to deceive, but it will not work to maintain confidence in the financial state of the union indefinitely.
I challenge anyone to explain to me how this ruse (paying for things with money you don’t actually have) can go on without a day of reckoning?
On the subject of velocity: Just look at how much “money” the government is pumping into the economy each month in Social Security, Welfare, Unemployment, Food Stamps, Disability Payments, Etc. It would seem to me there’s a lot of velocity (currency out of thin air) being put into circulation with these checks alone.
velocity is in fact quite low, you can see this as there is “no money on the streets”.
Yes, that’s true now, but as the government checks keep coming in the mail [each month] this will change. It is my view these check alone are going to increase velocity.
Your article leaves out one glaring point. Namely the general investor population has already lost confidence in gold and silver, and its seems will continue to do so for a long time. The dull minded still see the American dollar as “safe”. Even when they no longer see it as sure bet, the media will be sure to highlight how much silver and gold are manipulated, and that will keep the common joe/jane out of precious metals.
How can one have confidence in gold/silver? We are all hedging here by taking the logically better choice of two evils to hide our savings in. Unfortunately we are not the majority nor the people with influence.
I have a bad feeling that in the long run all of us with the sense to follow logical paths are going to get screwed by the sheep that follow the voice of the wolf. History shows this is often the case. I hope I am wrong about that. But I doubt I am.
Ironically China taking over the economic world with a return to the gold standard may be what all of us have to hope happens at this point. Else our precious metal holdings will only continue to sink in value.
your opinion, I disagree with much of it.
I also disagree with Mr. Greene’s view. There is no way gold and silver are going to decrease in value compared to gold and silver over the long haul. Yes there will be peaks and valleys if you chart the rise in value of precious metals, but the long term graph will be up-up-up – as it has been ever since we went off the gold standard. This will continue until the dollar is nothing more than a piece of paper.
“This will continue until the dollar is nothing more than a piece of paper.” It already is “just a piece of paper”, the key point in time is when confidence breaks.
Point well taken. A better choice of words on my part would have been, “This will continue until the dollar is realized to be nothing more than a piece of paper.” As you and I have agreed in the past, confidence is all props its value up.
“logically it is THE only place that gold in these amounts could have been sourced………”
Assumptions, careless assumptions.
I suspect there could easily exist large stocks of metal in private OPEC possession. Eric Sprott may be closest in his calculations, because he looked for Arab accumulation in records and couldn’t find any references. Billions of oil revenue and no gold purchases? Now, that’s suspicious!
When Mr.Sprott spoke in Dubai, noting the lack of Arab gold purchases, he glimpsed meaningful nods and looks between members of the audience in screaming silence!
The London Gold Pool sold lots of metal for years, so who was the steady buyer? Some agency must have been hoarding for years on end!
Then there is the vatican. If the son of god was a carpenter, why does the pope wear such large gold ring? That sucker is at least an ounce or more. Two thousand years of hoarding Europe’s wealth, then adding a smidgen of America’s golden tears, there could hide a few thousand tons of real wealth.
so what you are saying is that the Arabs and the Vatican have supplied China? I highly doubt it. I stand by what I wrote, the huge amounts that we are talking about could only be sourced from the West.