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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.