RE: check this out willis... because rising gold prices tell the story the fiat currencies are in trouble.
A strong gold price eventually encourages people to start questioning what is going on with the economy and paper assets in general.
The other reason they prefer a weak gold price is due to the "Gold Carry Trade" positions that are on the books. GATA has done some extensive analysis and basis their work, it appears Central Banks have lent out their gold reserves at very low lease rates. The borrower then shorted gold and put the proceeds into real estate, equities, currencies ... whatever the thought could generate a positive spread over the lease rate they paid to borrow the gold in the first place. Now, with the sub-prime mess and lack of confidence that's brewing in currencies and paper assets altogether, people start buying gold. The gold carry trades now have to be unwound so those that borrowed Central Bank Gold and shorted it have to pay it back. The shorts are going to have to pay higher and higher prices to replace the gold that was lent from Central Bank vaults. The gold that is above ground keeps going into stronger and stronger hands. In order to pry it loose, gold prices are going to have to go higher (possibly exponentially higher) in order to cover the shorts and replenish Central Bank gold vaults.
I am not very good at articulating my thoughts on this ... but bottom line is ... a rising gold price is not a good thing for Central Bankers. They have every reason to cap gold's advances. They are trying to protect the shorts from an unwiding gold carry trade.
Hopefully this makes a little sense. My feelings are the longer they hold the price down, the higher it's going to rally when the $hit hits the fan.
Got gold?
Do your own due diligence first. And remember, don't listen to me. I'm a novice investor.
rise1