The government really shut down? If (when) the Treasury does actually default, will the value of the dollar increase and thus the value of gold in dollars decrease? Not that the government shutdown is a default, it’s not but it does point out how poor our finances are and does illustrate that we cannot go forward without borrowing more. So why then is gold down $40 today? Is it because China is opening up their banking system to allow them to trade gold for their nearly 2 billion customers? Does going from allowing 7 banks to all 23 banks decrease demand or somehow increase supply? Could it be that gold is down because after only 2 days the amount of gold standing for Oct. delivery is 1/3 of what all bullion banks combined purport to have? Could it be because France and Italy announced that they have no plans to sell their gold? Or as Zero Hedge quipped this morning, are all of the furloughed government workers at home today with nothing better to do than sell “all of their gold?”
All the way back in the middle 1990’s, I noticed the strange trading in gold. Whenever anything “bad” happened or was announced, gold would go down. In almost perfect fashion, any negative financial news would be reacted to by a drop in the gold price. Anytime the President, Treasury secretary or Federal Reserve chairman spoke the price of gold would drop. This has changed somewhat over the last 5 years or so as occasionally gold will rise when either of these 3 is speaking…but not often.
“Games” have been played and price has been “made” with these waterfall incidents. Ask yourself, who would be selling gold today in panic fashion? It can’t be margin calls in other markets as stocks are just fine and dandy. Could it be that traders believe a budget deal will be done…that actually fixes something? Anything? Is it because the economy will do so much better now that higher interest rates are here or because Obamacare will suck the last remaining life out of the economy? Is it anything other than outright and blatant manipulation?
Don’t ask the CFTC about this because it is pointless as the silver whitewash has already proved. Don’t ask “good cop” Bart Chilton because he has nothing to say. We thought that he’d say something in Sept. because HE SAID HE WOULD! He didn’t and I doubt he will EVER say anything about silver again. Do I think he lied to us? Actually no I don’t. I think that he now fully understands that it is not illegal for the “presidents working group on financial markets” (the President and Secretary of the Treasury) to “manage” markets. They can legally (though not morally) do anything they’d like with any market they’d like…whenever they’d like. Why? Because it is law and in the “best interest of National Security.” So, don’t expect anything out of Bart Chilton as I believe he has been “silenced” and cannot say boo one way or the other.
Out of curiosity I turned on CNBC to hear whether even a convoluted explanation for gold’s drop in price was being offered. Nope, nothing…other than “it was reported that a large trader sold on the market open and sort of got things going to the downside.” Imagine that? “A large trader.” Umm, if this “large trader” has such a large “stash” to sell, why wouldn’t they go directly to Asia to sell? This “large trader” could sell at a premium price and all in one lot without shooting himself in the foot by depressing price. There is an answer to this question…and it’s a simple one! Because Asia, when they “buy gold”…they want GOLD not some piece of paper saying that “we’ll send it to you!”
So this is what we have to deal with, fundamentals won’t matter, technical won’t matter, nothing will matter…until it does. It doesn’t matter that supply is already decreasing. It doesn’t matter that just between China and India alone nearly ALL global production is spoken for. JP Morgan’s “long corner,” sovereign nations repatriating their gold…nothing. Nothing will matter until it matters the most. The only course of action is to sit tight and purchase more metal whenever you have funds available to do so. If you know for a fact that something is undervalued or that the price is artificially suppressed, buy it and sit on it because the day will come when the “rig” finally fails. I would not have imagined that the “rig” could have lasted nearly as long as it has. I guess that was naive on my part as I never believed the government would divest all of its gold in an effort to prolong a system (power) that is mathematically flawed.
RE: “…an effort to prolong a system that is mathematically flawed.”
It is amazing! They will, “kick the can down the road” to the bitter end / they will won’t face the facts so long as they can avoid doing so. The math is irrefutable; they must borrow to pay their bills. They clearly intend to keep up this farce as long as they can – irregardless of what the math says.
Also of note is the way the media portrays it, i.e., as if those politicians who even pretend to want to cut spending are the irresponsible ones. They vilify those who advocate discontinuing the addition of more debt; they portray them as heartless monsters.
It’s the new norm, borrow to finance your way through life. It is as if the entire Nation has become so use to the method they aren’t even aware there’s any other way… and indeed, at this point there isn’t, at least not for this Government. It’s doomed to fall; the only question now is what the date on the calendar will be.
I have been saying this all along.
Today there is strong evidence that the Treasury has sold American gold. I uncovered a law that allows Treasury to sell US gold and not report it. That 8300 tons we reportedly had? BS. It no longer sits on our shores. I am convinced of it.
The Presidents working group on financial markets- has always had the power to interfere and rig markets. That they assign banks, such as JPM, to do it for them matters not. This group was formed by Reagan after the Oct collapse in 87. Who is on it? The FED Chairsatan (who doesn’t know anything about gold) our Treasury head, and a couple others.
Of course they rig markets. Precious metals are the anti-christ to the dollar. If they allowed precious metal to run- prices would be through the roof by now and you couldn’t buy a loaf of bread with a C note.
The absolute smartest move you could make? Have about 10 credit cards, carry zero balance on them, and when the time is right max every one out buying precious metals and take the cure. Give them a taste of what they have been so freely giving us.
Face it; we are doomed.
Bill,
What if the Chinese have asked the U.S. to redeem their $1.2 Trillion in Treasuries? Would the U.S. Treasury along with the Fed / Bullion Banks not have an incentive to hammer the price of gold / silver so that they could buy it on the cheap and deliver it to China so that they could secretly keep these Treasuries off the market?
Wasn’t the Fed. counting on the Pasqua mine of Barrick Gold to replensish their coffers before Chile pulled the plug. Could the Fed. now be so desparate that they are driving down the fiat price of gold below the cost of production so that they can hold various mining companies hostage by secretly offering a premium above manipulated spot for all the PM they can deliver? Why are the mining companies not up in arms over the manipulation? And if you are a mining company CEO wouldn’t you curtail operations with gold below cost and just buy COMEX futures, take delivery and sell the physical on the Shanghai exchange for an arbitrage profit?
Also where does all of the hidden and scattered remains of the Yamashita gold holdings play in all of this?
$1.2 trillion worth of gold at today’s price is over 10,000 tons, it does not exist to be purchased.
I like Frankenstein Government’s idea !!!!!!!
Bill, Some really good thoughts today. I like things that are simple to read and understand. I for one believe in cycles. I believe that if you left earth in a space ship and traveled in a straight line for 5,000 years and on and on and on, you would finally end up right back on earth. So the cycle we are now in will finally take us back to real money. It might be too long of a time for some of to see happen but it will happen and the sooner the better!
” I think that he now fully understands that it is not illegal for the “presidents working group on financial markets” (the President and Secretary of the Treasury) to “manage” markets. They can legally (though not morally) do anything they’d like with any market they’d like…whenever they’d like. Why? Because it is law and in the “best interest of National Security.” I do NOT agree with this statement at all. Yes, there are undoubtedly “laws” that say this stuff is “allowed” but does anyone really believe that such “laws” are consistent with and authorized by the Constitution? Do you really think that if a few of the founding fathers showed up and were asked if such laws were constitutional they would say “of course?” Well in my college days I actually read the journals of the proceedings at the constitutional convention, the ones based on the notes maintained by Madison, and I for one have no doubt at all that all we are seeing is might makes right and nothing about it is “legal” no matter what the US Code might say to the contrary.
I do not disagree at all with what you write which is why I wrote “though not morally”. We could debate that I did not go far enough and say that an illegal law is still illegal, yes correct but I only have so much space to write and this concept surely is not what Bart Chilton is thinking about.
I agree wholeheartedly with your article especially the point you make in your last paragraph. If something is obviously undervalued get as much as you can and hold it until it’s true value is realized,after all that’s how wealth has historically been obtained.