Old Gold Tricks Don't Work - Today's High Alert
Friday, June 22, 2007
A recent announcement that Switzerland is going to sell 250 tons of gold has not done much to move the gold market either way, yet one would assume the intention was to drive gold below US$600.
Here's the way it was reported by the AP:
"The Swiss National Bank said Thursday it will sell 276 US tons of gold reserves over the next two years. The sale would fetch about $5.2 billion (euro3.9 billion) at current prices. The proceeds will be used to increase Switzerland's foreign currency reserves, national bank directorate member Thomas Jordan told reporters. The share of gold in Switzerland's currency reserves has risen to 42 percent from 33 percent since mid-2005 due to the increase in gold prices. Jordan said the sale would return the share of gold in the currency reserves to their previous level. The sale will occur at regular intervals over period of two years to minimize the impact on the gold market."
Why are the Swiss selling gold? Because the price has gone up and thus, the value of the gold they hold is showing an imbalance compared to other assets. This sort of asset allocation approach to government asset classes would be comforting to witness if one believed that governments were fiscally prudent. In fact, they are not.
The Swiss are not selling gold to balance their books. Or if they are, it is a suspicious move during a decade in which the price of gold is up three fold. This is the same game, in my opinion, that has been played by the international gold cartel throughout the late 1990s and into the 2000s with less and less success.
During the late 1990s, when gold was starting to move higher, a round of gold selling by central banks suddenly appeared. Every month it seemed some central bank was announcing that gold was not worth holding on to and that it was unloading bullion. This did have some impact as the gold price eventually fell toward $US250 at bottom before beginning to turn up in the early 2000s.
But the good news for "gold bugs" is that central bank sales of gold are not having the impact that they used to have. Gold has actually gone up in price since the Swiss announced their sales. Meanwhile the Gold Anti-Trust Association (GATA) has launched a lawsuit aimed at finding out if the United States has as much gold as the Treasury claims it has.
If it doesn't - and chances are the information will be levered out of the powers-that-be one way or another, then "watch out below" because gold prices could move up hard and fast. The perception of scarcity will give way to reality.
What's changed in the gold manipulation game since the 1990s? Well, the Internet for one. Investors are far more savvy about the markets today than they were a few decades ago, or even a few years ago. The Internet concentrates a tremendous amount of real information in numerous gold and silver sites and - of course - information aggregators such as Free Market News itself.
The old standbys, the Wall Street Journal, the Financial Times, the New York Times are show every day to be unreliable witnesses as to what "great game" being played out between the money elite and the rest of us.
In the 20th century, the money elite had it all its way. Not so in the 21st. Yes, it's true that government hates gold because gold is "honest money" and not prone to manipulation. What the money elites did in the 20th century was to build a monetary architecture that relies less on gold and more on central banks. But in the 21st century the rationales that the money elite relied on are falling apart.
The Anglosphere's money and power elite can continue to justify central banking policies and pretend these policies are put in place to "fight inflation" when they are actually the cause of it. But more and more people are reading about the truth on the Internet, and they are just not falling for the "father knows best" routine. The 21st century may well be the century of commodities, especially money metals.
At the very least, the elites will have to come up with a whole new way of justifying the current system. That's going to be very hard to do.
A recent announcement that Switzerland is going to sell 250 tons of gold has not done much to move the gold market either way, yet one would assume the intention was to drive gold below US$600.
Here's the way it was reported by the AP:
"The Swiss National Bank said Thursday it will sell 276 US tons of gold reserves over the next two years. The sale would fetch about $5.2 billion (euro3.9 billion) at current prices. The proceeds will be used to increase Switzerland's foreign currency reserves, national bank directorate member Thomas Jordan told reporters. The share of gold in Switzerland's currency reserves has risen to 42 percent from 33 percent since mid-2005 due to the increase in gold prices. Jordan said the sale would return the share of gold in the currency reserves to their previous level. The sale will occur at regular intervals over period of two years to minimize the impact on the gold market."
Why are the Swiss selling gold? Because the price has gone up and thus, the value of the gold they hold is showing an imbalance compared to other assets. This sort of asset allocation approach to government asset classes would be comforting to witness if one believed that governments were fiscally prudent. In fact, they are not.
The Swiss are not selling gold to balance their books. Or if they are, it is a suspicious move during a decade in which the price of gold is up three fold. This is the same game, in my opinion, that has been played by the international gold cartel throughout the late 1990s and into the 2000s with less and less success.
During the late 1990s, when gold was starting to move higher, a round of gold selling by central banks suddenly appeared. Every month it seemed some central bank was announcing that gold was not worth holding on to and that it was unloading bullion. This did have some impact as the gold price eventually fell toward $US250 at bottom before beginning to turn up in the early 2000s.
But the good news for "gold bugs" is that central bank sales of gold are not having the impact that they used to have. Gold has actually gone up in price since the Swiss announced their sales. Meanwhile the Gold Anti-Trust Association (GATA) has launched a lawsuit aimed at finding out if the United States has as much gold as the Treasury claims it has.
If it doesn't - and chances are the information will be levered out of the powers-that-be one way or another, then "watch out below" because gold prices could move up hard and fast. The perception of scarcity will give way to reality.
What's changed in the gold manipulation game since the 1990s? Well, the Internet for one. Investors are far more savvy about the markets today than they were a few decades ago, or even a few years ago. The Internet concentrates a tremendous amount of real information in numerous gold and silver sites and - of course - information aggregators such as Free Market News itself.
The old standbys, the Wall Street Journal, the Financial Times, the New York Times are show every day to be unreliable witnesses as to what "great game" being played out between the money elite and the rest of us.
In the 20th century, the money elite had it all its way. Not so in the 21st. Yes, it's true that government hates gold because gold is "honest money" and not prone to manipulation. What the money elites did in the 20th century was to build a monetary architecture that relies less on gold and more on central banks. But in the 21st century the rationales that the money elite relied on are falling apart.
The Anglosphere's money and power elite can continue to justify central banking policies and pretend these policies are put in place to "fight inflation" when they are actually the cause of it. But more and more people are reading about the truth on the Internet, and they are just not falling for the "father knows best" routine. The 21st century may well be the century of commodities, especially money metals.
At the very least, the elites will have to come up with a whole new way of justifying the current system. That's going to be very hard to do.
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