The Secret War against Gold
Posted by slowsmile September 10, 2009
From DNA India
By Jeff Nielson
There are many changing dynamics in the precious metals market which suggest that we are about to witness exponential, upward moves in prices for gold and silver — which dwarf the gains these metals made when they more-than-tripled in value.
For silver, it is a relatively straightforward issue of supply and demand: demand is surging in numerous areas, while decades of price-suppression has resulted in the evaporation of global stockpiles.
In the case of gold, however, the normal fundamentals of supply and demand do not apply. As a commodity which is never consumed, total stockpiles of gold grow every year. Conversely, even with a tripling in price, the supply of gold remains flat — despite the huge surge in Chinese gold production — suggesting that “peak gold” has arrived.
As a result of these different dynamics, what will fuel the explosion in the future price of gold are not supply and demand principles, but radical changes in behaviour amongst the major “players” in the gold market.
The gold market typically experiences seasonal weakness from roughly mid-Spring until September or October. This cyclical pattern was based on the buying habits of the Indian gold market — where cultural gold-buying during “wedding season” has dominated retail gold demand, since India has been the world’s largest gold market, historically.
In 2009, Indian gold-buying has completely evaporated. Overall, India’s gold imports were 75% lower for the first half of 2009, and this trend appears to be continuing — with imports 67% lower in July of this year compared to last.
Total gold demand actually fell by 9% in the second quarter versus a year ago, according to data from the World Gold Council.
In addition, the International Monetary Fund has finally received approval to sell some of its gold from the US Congress, and thus now appears poised to sell over 400 tonnes of gold.
Given this context, the natural assumption is that the price of gold would have a worse-than-usual performance in this period of seasonal weakness. Instead, gold has traded in a (relatively) tight 10% range, and as of this moment is little more than 5% below its all-time, nominal high.
What happened?
Part of the explanation for the unexpected resiliency of the gold market is the emergence of large-scale, retail buying by the Chinese. Chinese retail demand is currently only 2% less than Indian gold demand.
However, with Chinese growth in demand not quite offsetting Indian weakness, and with many less-informed commentators predicting that the IMF gold-sale would depress the gold market, clearly this does not account for gold’s better-than-usual performance during its period of seasonal weakness.
Instead, the primary support mechanism for the gold market at this time appears to be central bank purchases of gold. While the fall in Indian gold demand, and the rise in Chinese gold demand are both big stories in this market, they pale in significance to the fact that the world’s central banks have switched from being the largest sellers of gold to become net buyers.
In the first half of 2009, the world’s central banks bought 14 tonnes more in gold than they sold. This is the first time this has happened this decade. However, it would hardly be over-dramatic to say that this represents the biggest development in the global gold market in several decades.
Since the time when gold hit its all-time record-high roughly 30 years ago (when measured in inflation-adjusted dollars), the cabal of Western central banks has waged an unofficial ‘war’ against gold — doing everything in their power to depress the price of gold (and silver), since allowing gold to rise to its actual fair-market-value would expose their campaign of lies regarding inflation.
US president Richard Nixon effectively abolished the world’s “gold standard” as a backing for its “reserve currency” (the US dollar), when he announced that the US was defaulting on its gold obligations to the rest of the world, in 1971. A gold standard acts as a powerful “leash” on the world’s bankers by creating finite limits on the amount of new “money” (i.e. debt) which they can create.
Indeed, the US’s gold-default in 1971 proves this point with stunning clarity. It was specifically due to the vast creation of (then) unprecedented amounts of debt to fund the Vietnam war which made the US’s gold-default inevitable. This also illustrates the ‘unholy alliance’ between the world’s bankers and war-monger governments such as the US — since (as history has demonstrated) a gold standard prevents the exact sort of massive deficits required to stage large-scale warfare in our modern world.
Thus, for three decades, the US government and the anti-gold cabal of bankers have secretly waged war on gold — undermining the price of gold not only to lie about inflation, but also to undermine its obvious necessity as the only pillar of a stable, global monetary system.
However, there is a second, equally-evil reason why these actors have attacked gold to hide their inflation-lies. Inflation has often been called a “hidden tax”, since it decreases actual spending power even where there is no decline in nominal wealth. Historically, inflation has always hurt the poor and middle-class much more than the wealthy.
In other words, lying about inflation is a stealthy way of engaging in a massive transfer of wealth from the poor and middle-classes to the wealthy. This partially explains how Western “democracies” — who claim to have “progressive” tax systems, and “progressive” social programmes — are experiencing a rapid increase in the already huge wealth-gap between the rich and poor. This is a complete reversal of a trend during most of the 20th century, where (for one of the few times in history) the wealth-gap was actually narrowing.
For a quarter of a century, their campaign was based on simple, brute force. With roughly 20,000 tonnes of gold at their disposal, any and every time that the price of gold showed any upward momentum, these bankers would “bomb” the gold market with their huge gold reserves.
This campaign was so ruthless that by the 1990’s this cabal had driven the price of gold well below the cost of production for most of the world’s gold mines — causing shut-downs of mines all over the world, and the bankruptcies of numerous gold-mining companies. This can be considered the first step in their own downfall, as they had depressed mine-supply to the point where it was well below annual demand.
While the once-huge stockpiles of Western central banks could absorb this supply/ demand imbalance for many years, the cost of such a strategy was to steadily deplete their own reserves (or “ammunition”) which would be available to continue depressing the gold market in the future.
Beginning this decade, the “future” has now caught up with this cabal. The moment of transition can now be clearly identified, in hindsight.
It occurred in May 1999, when then UK finance minister (and now prime minister) Gordon Brown dumped roughly half of his countries gold reserves at essentially the all-time low for the price of gold. The rumoured motive for this panic-sale was to rescue Goldman Sachs — who was sitting on a huge “short” position just as the gold market was showing signs of staging a big rally. This move has cost UK taxpayers in excess of $1 billion.
The increasing failure of these bankers to control the gold market can be illustrated in two ways. The most obvious indicator is that the price of gold has more than tripled this decade. Even given the low standards for performance which these bankers set for themselves, this represents a dismal failure.
The other way in which the inevitable defeat of this cabal can be revealed is through their own declining gold sales. A decade ago, these central bankers embarked on an official gold-sales strategy: an agreement to set an annual ceiling on gold sales.
At the time, with gold dismissed as a “barbarous relic” by these propagandists, selling gold was fashionable among these bankers.
Thus, during the first five-year term of the central bank sales agreement (which expired in 2004), all was well in the world of gold-manipulation.
However, as the second of these five-year agreements approaches its conclusion, the imminent defeat of the anti-gold cabal is now plain for all to see.
September 30th, 2009 at 6:55 pm
We can reasonably interpret the American Psychiatric Associations definition of the word INSANITY as senselessly holding any belief, opinion and or system that is not supported by FACT and not knowing the differences between fantasy and reality.
If we agree to accept the APA’s definitive meaning of the word, then what does our knowledge of insanity signify to us as it relates to our belief based political and economic institutions, are those of us who uphold these mythical traditions insane?
And if we are not insane then how can we reasonable justify our collective willingness to continuously dupe ourselves into believing that our individual NET WORTH must only be determined by the opinions of politicians, economists and the amount of faith based money and or gold that they allow us to have?
Hmmm!
October 1st, 2009 at 5:52 am
Kenwood…The trick is to get out of their clutches, move off the radar. I deliberately moved to live in the Philippines in 2006 because I saw this financial mess coming, I knew what was going to happen. Essentially I didn’t do what the average expat would do. I didn’t move to a nice, modern, clean Asian country with plenty of order etc. I deliberately moved to a country where conditions are fairly primitive but where everything is so astonishingly cheap, where the government is run by corrupt business warlods and is therefore over-bureaucratic and inefficient beyond anyone’s understanding.
But, you know what? I have honestly never felt freedom like this before.
October 1st, 2009 at 9:17 am
I thought about moving to the Philippines, I listen to the Art Bell show for entertainment, and got the idea from him, your not Art Bell are you? Ha! Just kidding, although I did get a sense they were tracking me when one of my articles popped up on a web-site that had Art Bell type information on it, a web-wite that comes from that general region of the world. I’ll post that same article here once I figure out how to do it, again, I’m not that bright so it my take me some time.
Tell me about the Philippines, what inspired you to leave this sinking ship, how did you figure out the score here in the US, so to speak.
October 1st, 2009 at 11:24 am
Kenwood…Well, I can’t speak for every individual, as I’m sure it wouldn’t suit every individual, but for me the Phils is a wonderful place. Primitive, beautiful beaches, wonderful people, annoyingly bureaucracy, inefficient, corrupt government — its all this. But, the benefits more than outweigh these disadvantages. Perhaps rather than going into so much more detail, I have just started a travel site mainly about the Philippines to help others. The site is at:
http://travelandleisureabroad.com/2009/02/20/philippines-expat-an-alternative-lifestyle/
Also, at the top left of this page is a list of helpful expat sites, including mine. These links are a mine of information and very helpful.
I must also confess something else. I am not American — I’m British and therefore European. My mother, though, was from Arkansas and I was born in the Far-East and part-educated in the US before being dragged off to the UK.So I’m a bit of a mongrel, I guess. I’ve also worked for a time in the US. That’s my background.
I have been an Asian investor for some time and because of this I realized that I had to learn about economics. So, over quite a number of years I investigated most of the economic schools and theories. In 2005 I realized something was wrong with both the UK and US economies, something very serious. I also realized that I hated the lifestyle, had to do something — there’s nothing worse in my mind than having a boring, predictable life. Here, I am reminded of a favourite quote by Carl Jung which just about sums it all up:
“Nothing has a stronger influence psychologically on their environment and especially on their children than the unlived life of the parent.”
In all honesty I have to say that I now have a greater feeling of freedom in the Philipines than in the UK. It’s strange, but true. The UK is a very retrictive, expensive place now. I have two grown-up boys living working there, not a fun place anymore.
So, in 2006, I sold up everything, left for the Phils on my own and settled in San Fernando, La Union in Luzon, living next to a lovely white beach.
When the financial crisis finally hit with such a vengeance — August 2007, My God I remember it so well — the markets went crazy. On pure gut instinct, I pulled out of all my Asian investments — which contained ALL my savings, in early October 2007. I got really lucky and came out with 50% profit after only one year’s investment in a new portfolio. Since then, I haven’t invested a single bean. To me — from a purely economic point of view — the global markets are still very weird, with much more economic dirge to come in my opinion.
I now spend my time living and travelling throughout the Philippines and Asia, as well as writing on this and other blogs. Lots of hobbies. I’ve started to write a fictional action-thriller about China invading the Philippines in the future. Not content with that, I have also learnt how to write film scripts and I’m now busy converting my story into a film(the story is to damn long, though !!).
My only intention in blogging is to reveal how the US govt is not working economically for the benefit of the US citizen. And I am very concerned about the US economy falling with the dollar because if America falls, everyone else falls. And there lies both my interest and fascination with the subject.
Hey!! I’m writing a book here !!
October 1st, 2009 at 1:57 pm
And I would love to read your book when you’re finsished with it, from what I know of you, you come off as being a pretty well informed writer with a great technique.
I knew the economy was going to collapse back in 2000, or so, I kept on top of things with the information I was receiving from a very bright Technocrat-Mensa member. I’ve pretty dropped out of the entire scene, there was simply no sense to any of it. And yes, I’m with you, who wants “a boring predictable lifestyle” I’m a bit of a hippie at heart, and my motto comes out of the beat generation, you know, the guy who said to turn on, tune in and opt out. I’ve pretty much lived my entire adult life that way, but now, I’m a little unsure of myself, my girlfriend is pregnant, with our baby daughter due the end of January. And I don’t have a clue as to what to do for money, it never occured to me that I would be in this situation, I’m in my early 40’s and I’m still wondering how to get my life back on track.
I’ve never invested in the markets, and that makes me laugh because I’m usually right when I tell people to invest in this, that, or the other thing… My advise will always make people money, if they listen to me, but they often don’t because I don’t have the credentials from some reputable Ivy league school. I actually flunked out of school, and still owe money on an old student loan debt, just making the interest payments on it, without touching the principal… What a scam that was, that was the biggest financial mistake I’ve made in my life, I knew better not to accept a loan from the government, but I allowed myself to be suckered in, set up and pushed around, by another woman….
Where in the UK were you from? When I was living in NYC as a starving actor, I dated a girl I wanted to marry and she was from the UK, she was from Kingston on Thames. Do you know it? I guess it’s a rather well to do part of London, her father was loaded, old money, the problem was, I wasn’t Jewish, just a catholic German-Norweigan American from Minnesota.
I will probably have some questions about the Phils, I’m really looking to improve the quality of my life, and I hope I can convince my girlfriend to at least consider a viable alternative to our life in an ice-box. Where did you go to school?
October 2nd, 2009 at 9:30 pm
And some of us might think that things will get better if we just get back to the Gold Standard, don’t you see the humor in this thinking? All the gold is gone, it’s been looted by the pirates, you know, the venerable Rothschilds of the world. Did you ever hear this statement, ( those who own the gold, make the rules)?
Come on, they already own the fiat money system, now you want the peasents to buy the Rothschilds gold with the Rothschild own fiat money supply? Tell me, what will change, and how will we finally be FREE?
October 2nd, 2009 at 11:12 pm
“Give me control of a nation’s money and I care not who makes her laws.
Mayer Amschel Rothschild”
There is no such thing as being free if you are totally dependent on your wage, family or your country’s welfare system. This bondage is sometimes mistaken or is simply excused as patriotism. Right now, and for a while now, countries like the US and UK have not looked after their own with their policies. Therefore people continually complain, but they refuse to change their social and economic condition or habit, always the easy predictable route instead — still part of the herd. So they are, perhaps, trapped in their own dilemma and condition.
The real struggle is for happiness and fulfillment, each individual is different, each must find his own nirvahna. So I can give no honest advice here.
The fact that I have found some sort of peace, happiness, freedom and fulfillment here in the Phils has nothing to do with my homeland government, but is entirely due to me taking risks, refusing to accept this bondage, always living as an individual with free choice. I have also found that there is no such thing as the perfect life, but that self-improvement with self-effort through experience and compromise are the bare, self-evident realities.
In this respect I therefore depend and expect very little from my homeland. We owe each other nothing.
October 2nd, 2009 at 11:54 pm
Yes we owe each other nothing so lets capitalize and screw everyone! Skull and bones baby, no one gets out of here alive, so screw the suckers blind, the stupid people are worthless anyway, who needs the peasant class, they are our slaves, right???? Through our hard work in the creation of value, we shall rule the world, lets create econoimc numbers in our concerted effort to manufacture lies, lets call our game government, and lets create our own money, and lets buy our own military and police force to protect our interests, lets loot and piledge for the sake of sport… and have our lawyers create over 100,000 laws and call these laws fee will and free choice… . Let the gun rule and dictate how our lives will be free in the phils… ha, ha. I love you fellow hypocrite.