Central Bank Manipulations?
The reason Gold has not exploded yet, is because Gold as a physical asset, is undervalued in the West (in general), and highly valued in the East for historical reasons. (Partly as a result of Western Central Banks, having too much power, and thus ensuring regulation gets passed to limit Gold’s usefulness as a store of wealth and partly, because the Chinese had their education in paper currency back in the 11th Century, and others in the Far-East had their education more recently, with the currency crises of the late 1990s.)
As Gold heads east, it is in the interests of those who wish to accumulate it, to play devil’s advocate and allow the manipulations to continue. As I stated in my last post, both Russia and China, are unimpressed that when they sell goods on International Markets, they receive a depreciating currency, that can be conjured up out of thin-air [or to be more accurate – digits on a computer] by its manipulators…
When the Tide goes out (to borrow a phrase used by Warren Buffet) i.e. When Gold becomes part of the process for settling International Trade again, then we will see who is wearing no shorts – (i.e. a fast-reversal back to Bretton-Woods) i.e. which countries, are spending more than they earn – Internationally speaking – and who is managing their economy well, by exchanging physical goods, for physical goods (in the form of physical Gold, or a gold backed currency which can be exchanged for Gold)
China’s approach is therefore like an aeroplane coming into land, and on the approach path to forcing the world’s trading nations to stop using currency inflation to buy up scarce natural resources, and Gold will at that time achieve its real value.
That time will happen when the first country breaks ranks, and demands Gold for its goods, and has enough Gold to withstand a draw of its currency for International Trade, and the only country that comes even close to that is China (and perhaps Russia) and therefore when China finally – officially – releases its Gold holdings – which Pravda in a recent article suggested was 30,000 tonnes, (because they have re-smelted their Gold, and re-cast it into 1Kg bars) then the value of Gold will achieve the exponential rise we have all been expecting.
By end 2015, China, has to float its currency, (WTO regulations) so perhaps is hedging its bets, by holding huge Gold reserves to act as a floor under the value of their currency. Reference – http://english.pravda.ru/news/business/21-05-2015/130683-china-0/
That to me makes perfect sense. It will also mean those countries of Africa, South America and other developing nations, who sell raw materials, will experience rapid rises in living standards, and many will end up paying their political masters huge sums, unless the corruption that has been endemic in some of those countries, suddenly vanishes. (Just as happened during the 1970s which may in itself cause other problems as it did, during the decade and the one following.)
Of course, the poor westerner, will experience rapid price inflation for all their most important needs. And those countries who use the American Dollar as their currency system, would be well advised to consider a replacement.
Food, and raw materials, such as oil, gas, copper, tin, lead, zinc, and precious metals, too will all be more highly valued.
Those with good stores of these commodities, will flourish, those who depend on government largesse for their income, will not fare so well.
And paying for things internationally, will require some form of internationally accepted money – one I have been reading quite a bit about in recent weeks is BitGold.
This manages to marry the best of both crypto-currencies, and precious metals.
To widen your reading and viewing material, you might like to visit these channels on You-tube, and search terms and web-sites.
Recommended YouTube Channels:
Ron Gibson – WhatReallyHappened 2015 (Mike Rivero),
Mike Maloney – GoldSilver.com – WealthCycles,
YouTube Search Key Words:
Dr. Paul Craig Roberts,
Jim Murphy (GATA),
G. Edward Griffin,
John Williams, (or Shadowstats.com)
Catherine Austin Fitts,
As the Philippines begins receiving Aid, from around the world, yet another disaster occurs, this time on the other side of the planet, in the U.S., as a Tornado hits Tornado Alley – unusual for mid November (apparently). A number of deaths have been reported. Once again we watch from the sidelines, and furrow our collective brows, seemingly unable to do anything except show our sorrow, and pass on our good wishes to those involved, and our condolences to those who have lost loved ones.
Is it just better communications, and thus we’re hearing about these things more frequently, or are there simply more of these natural disasters? We can only speculate at this time.
The implications for money though should be obvious. Someone has to pay for the reconstruction and the damage.
In the absence of Insurance, those buildings will probably never be replaced, The land holders will maybe invest money, that either had been sitting on the sidelines waiting for investment opportunities, or was already scheduled for investment elsewhere, meaning that either the opportunity doesn’t get the investment dollars, or someone somewhere “prints” the necessary money, increasing the supply of dollars, and probably Philippine Pesos.
Back when I first started commenting about the Precious Metals marketplace, it was a little African Gold miner with a foothold in Zimbabwe and an influx of capital, as 5 Directors put up £100,000 each to re-start operations on a grander scale that first caught my eye.
I simply looked at the chart of the 70’s and multiplied by ten.
From the mid 1960’s, it was obvious that Gold was coming under pressure, from Britain, France and Italy who all remonstrated with the Fed (who were funding the Vietnam war effort at the time) for their profligacy and money printing.
The Gold price had gone from $25.00 in 1932, to $35.00/oz after the Federal Reserve got their hands on all the Gold, and there the price stayed until August 15th 1971.
However, maybe Gold was slightly overvalued back during the early 60’s and really the price should have been closer to $25.00…
Anyway, if you recall, the 2001/2 bottom in Gold was $254.00 and that was a near enough ten-fold price improvement on the theoretical 60’s price. Wages had gone up similar levels – I’m old enough to remember wages from that era, as I was already working back then, and remember the slogan £20.00 for all in 1971-72 here in the UK. and circa £30, was a grown working man’s wage.
The Silver price per ounce bought roughly one barrel of oil, and ten years later as it peaked at close to $50, it still did.
Of course since then Central Banks have been divesting themselves of silver – an even more barbarous relic than gold? And If I recall accurately, oil fell to $18/bbl during 2000/1 – I certainly remember paying between 99 cents/gallon and $1.06, in Austin Texas back in late 97 anyway, when I worked at Dell Headquarters in Roundrock, just 8 miles from the city centre…
So, where does this lead me? To the inevitable…
Gold will certainly rise, but to where? It is unlikely that a steady rise in the price is likely, because that would mean moth-balled mines would begin re-opening, and an increase in supply, which would counteract price rises.
At $2,000 almost all current Gold mines would be profitable, so the price has to (MUST) remain in the doldrums to choke off supply, It is imperative then that those who control the world’s money supply, target the alternative currency – just as we learn again the U.S. legislators are seeking to interfere in the market for Bitcoins, as the price has risen again to a new high as it peaked at just over $600, before dropping back in recent days.
I don’t know enough about the miners to know which of the dozens fall into that category, but Turquoise HIll (TRQ:TVX) is perhaps one, unless the Mongolian Government gets greedy again. (They used to be known as Ivanhoe Mines Ltd – until Rio-Tinto (RIO:L) increased its shareholding to 51% and re-named the Company)
BUT if my tenfold theory holds, then $8,500 would seem a likely zenith, as a move into five figure territory would be too horrific to contemplate for the Banksters, who would defend it to the last and throw everything they had at the price. One only has to look at the 3-Day Kitco Gold and Silver Price charts (http://www.kitco.com/images/live/gold.gif)(http://www.kitco.com/images/live/silver.gif), to see that outside the New York time period, the price oscillates as a result of High Frequency Trading to maintain price stability. We can only speculate as to WHY?
BUT a rise to the suggested figure is likely, and above is not outside the bounds of possibility given the reckless money printing in the last 5 years….
Incidentally, Peter Schiff, who is a major commentator on Gold, and the Fed’s mess, as he might call it, was on the Max Keiser show on RT late last week, and very interesting he was too. Though TBH, I think his timing is out by a couple of years, as the economy stutters along for a little while with QE-infinity still in evidence.
He feels that they won’t taper next year, because as soon as they announce they might, the markets will tumble, and bond prices will fall, raising yields (and thus interest rates) choking off any hint of growth, which is very likely.