It’s like an episode of the Twlight Zone. Real fundamentals for the gold market are stronger than ever. Yet the vacuous rhetoric from the mainstream media continues to warn investors away. Headlines such as these are seen every day.
Gold Weaker As Risk Aversion Remains Dampened
Gold Hunkers Down In "Wait And See Mode"
Pure nonsense.
“Risk aversion remains dampened”? Really. The U.S. is
threatening (nuclear power) North Korea on virtually a daily basis. It is threatening (nuclear power) Russia on virtually a daily basis. It is threatening (nuclear power) China on virtually a daily basis. When will the market supposedly become “risk averse”? When The Donald actually
pushes The Button?
Why is gold “hunkering down”? It has supposedly “shifted into a neutral wait and see mode ahead of a number of key macro events.” Too funny.
The “key macro event” alluded to is the U.S. Bureau of Labor Statistics “non-farm payrolls report”. Every month, the BLS reports that the U.S. economy has created lots of new jobs. Yet
no one ever goes to work. Since the start of the imaginary U.S. recovery, there are 3 million
less Americans
with jobs.
So, according to the mainstream media, the gold market is “hunkering down” to wait and see how many imaginary “new U.S. jobs” the Bureau of Labor Statistics will conjure into existence this month. How does that make sense?
“Higher interest rates are bad for gold.” The bankers tell us this all the time. Yes, so with interest rates across the West frozen at the lowest rates in history, why is the price of gold not at the highest level in history instead of being 35% below a medium-term high (in USD’s)?
Gold bashers can answer that question. The Federal Reserve
is going to raise interest rates. Yes for eight-and-a-half years, we’ve heard “the Fed is going to raise interest rates.” During that time, we have had a total of three ¼% increases – and U.S. interest rates are still lower than at any other time in history.
Higher interest rates are bad for equity markets too. Yet for the last 8 ½ years that the Federal Reserve has
talked about raising U.S. interest rates, U.S. equity markets have continued to go higher and higher and higher, to all-time records. The price of gold falls every time some Fed-head belches out the phrase “higher interest rates” but U.S. equity markets never stop rising.
According to gold prices, U.S. interest rates should already be close to their highest level in history. According to U.S. equities prices, the Federal Reserve will never raise U.S. interest rates again.
Why has no one in the mainstream media spotted this obvious and dramatic disconnect between equities markets, the gold market, and U.S. interest rates? It’s hard to see anything with your eyes closed.
Even on the three occasions that the Fed has actually raised rates, U.S. equity markets experienced a one-day hiccup – and then immediately started going higher again. Meanwhile, on those (very) rare occasions that the Federal Reserve has raised U.S. interest rates, mainstream rhetoric has suggested that it was virtually the end of the world for gold.
Given the extremely robust fundamentals for gold in the real world, what is the explanation for persistent weakness in gold prices over the past six years. That can be answered in one word: manipulation.
The Federal Reserve’s confession on gold market manipulation has been a matter of record for nearly twenty years.
…
central banks stand ready to lease gold in increasing quantities should the price rise.
- Testimony of Federal Reserve Chairman Alan Greenspan,
July 24th 1998
Further explanation is in order. The Federal Reserve “leases” U.S. gold reserves so that gold can be sold and dumped onto the market while the Fed keeps the gold listed on its balance sheet – even though that gold is gone forever. It’s pure fraud, as explained by esteemed precious metals commentator James Turk, back
in 1999.
A bullion bank leases Gold from a central bank, but the bullion bank does not let this Gold sit in its vault. With the full knowledge – and usually even with the full cooperation – of the central bank that owns the metal, the leased Gold is sold into the market by the bullion bank. Are you shocked? Well, it is very understandable that you might be because the lessee is selling the asset of the lessor. It is a fraud, but the lessor condones this practice because the deception serves his purpose. As Alan Greenspan so clearly stated in testimony before Congress last year: “Central banks stand ready to lease gold in increasing quantities should the price rise.”
As bad as the fraud may be, there is even more dishonesty in this scheme – the double counting. Gold that is leased by a central bank shows up in two places. It is still reported as an asset of the central bank. But it is also an asset of the person that eventually buys the central bank’s Gold.
So, the gold market has been openly and fraudulently manipulated by (for starters) the Federal Reserve, going back to at least 1998. Why has no one in the mainstream media noticed this…in the 18 years since? It’s hard to see anything with your eyes closed.
Western Big Banks have also
confessed to manipulating the gold fix. Deutsche Bank, the first bank to confess has promised to name the other Big Bank conspirators who were involved with this criminal conspiracy. We’re still waiting for that information to become public.
Then we have Jeffrey Christian, managing partner for the CPM Group, and (self) proclaimed as an expert on the gold market. In testimony to the Commodity Futures Trading Commission (CFTC) in March 2010; Christian blurted out the Big Secret of Western big banks in the gold market.
For each ounce of gold that actually trades in the bankers’ “gold” markets, there is 100 times that quantity of paper trading.
What the Big Banks call “the gold market” is actually 99% paper – more, extreme Big Bank fraud.
Back in the real world, there has also been a 1,000 tonne per year swing in physical supply/demand, in a market with only 3,000 tonnes per year of new supply. Western central banks used to (officially) dump 500 tonnes of gold per year onto the market in order to suppress the price.
Then, virtually overnight, in 2009 these same central banks stopped all official gold sales and began exclusively engaging in (fraudulent) bullion “leasing”. This strongly suggests that these central banks
have no more gold. Meanwhile, central banks in the Rest of the World have begun
buying roughly 500 tonnes per year of gold, something which is historically unprecedented.
Equities prices are currently at all-time bubble levels. Real estate prices are at all-time bubble levels. Bond market prices (in the West) are currently at all-time bubble levels. Meanwhile the price of gold is perpetually suppressed.
Gold is presently one of the most undervalued asset classes on the planet. This is despite a 4,000+ year reputation as our premier “safe haven” asset, at a time when economic and geopolitical uncertainty has never been greater.
Buy low; sell high. Buy gold. Sell (U.S.) stocks, bonds, and real estate.
FULL DISCLOSURE: I hold physical gold bullion as well as gold mining stocks.