Is it really so preposterous to believe the United States and Europe would conspire to keep pole position in the global financial system?
I don't think so - and neither does China.
That much was revealed in a diplomatic cable recently uncovered by Wikileaks.
According to the 2009 cable from the U.S. embassy, China believes the United States and Europe have, as a matter of policy, suppressed the price of gold to discourage its use as a reserve currency.
And there's a pretty compelling case to be made for a gold price conspiracy.
"The U.S. and Europe have always suppressed the rising price of gold," it reads. "They intend to weaken gold's function as an international reserve currency. They don't want to see other countries turning to gold reserves instead of the U.S. dollar or Euro. Therefore, suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar's role as the international reserve currency."
According to the cable, China believes that by building its gold reserves, it can not only safeguard itself against the declining value of the dollar, but encourage central banks around the world to expand their gold purchases, as well.
"China's increased gold reserves will thus act as a model and lead other countries towards reserving more gold," the cable said. "Large gold reserves are also beneficial in promoting the internationalization of the RMB."
Now, if all we had were the Chinese claiming the U.S. and Europe were suppressing gold prices, it would be easy to disregard as superficial propaganda.
But in fact, there's evidence that supports this claim.
In the decade between 1999 and 2009, central banks - dominated by the West - were net sellers of gold in every single year. And that's despite the fact that gold in that time soared from $250 an ounce to $1,200 per ounce - a nearly 400% gain.
Then there's the infamous "Brown Bottom."
Between 1999 and 2002, Gordon Brown, then U.K. Chancellor of the Exchequer (and later Prime Minister), decided to sell nearly half of his nation's gold reserves. At the time, just the advance notice of these substantial sales drove gold's price down from $282.40 an ounce to $252.80.
Those gold sales yielded an average price of $275 an ounce, raising a total of $3.5 billion. Today, those 395 tons of gold would be valued more than $19 billion.
You have to admit, it doesn't make a whole lot of sense to sell a solid asset whose price is moving steadily higher each year - especially when the United Kingdom's debt problem then wasn't nearly as bad as it is today.
The answer: Because there's a conspiracy afoot.
I don't think so - and neither does China.
That much was revealed in a diplomatic cable recently uncovered by Wikileaks.
According to the 2009 cable from the U.S. embassy, China believes the United States and Europe have, as a matter of policy, suppressed the price of gold to discourage its use as a reserve currency.
And there's a pretty compelling case to be made for a gold price conspiracy.
The Gold Price Conspiracy
The cable summarized several commentaries in Chinese news media sources on April 28, 2009."The U.S. and Europe have always suppressed the rising price of gold," it reads. "They intend to weaken gold's function as an international reserve currency. They don't want to see other countries turning to gold reserves instead of the U.S. dollar or Euro. Therefore, suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar's role as the international reserve currency."
According to the cable, China believes that by building its gold reserves, it can not only safeguard itself against the declining value of the dollar, but encourage central banks around the world to expand their gold purchases, as well.
"China's increased gold reserves will thus act as a model and lead other countries towards reserving more gold," the cable said. "Large gold reserves are also beneficial in promoting the internationalization of the RMB."
Now, if all we had were the Chinese claiming the U.S. and Europe were suppressing gold prices, it would be easy to disregard as superficial propaganda.
But in fact, there's evidence that supports this claim.
In the decade between 1999 and 2009, central banks - dominated by the West - were net sellers of gold in every single year. And that's despite the fact that gold in that time soared from $250 an ounce to $1,200 per ounce - a nearly 400% gain.
Then there's the infamous "Brown Bottom."
Between 1999 and 2002, Gordon Brown, then U.K. Chancellor of the Exchequer (and later Prime Minister), decided to sell nearly half of his nation's gold reserves. At the time, just the advance notice of these substantial sales drove gold's price down from $282.40 an ounce to $252.80.
Those gold sales yielded an average price of $275 an ounce, raising a total of $3.5 billion. Today, those 395 tons of gold would be valued more than $19 billion.
You have to admit, it doesn't make a whole lot of sense to sell a solid asset whose price is moving steadily higher each year - especially when the United Kingdom's debt problem then wasn't nearly as bad as it is today.
The answer: Because there's a conspiracy afoot.
Gold Dust on The Fed's Hands
Here's more damning evidence.A U.S. District Court this year ordered the U.S. Federal Reserve to disclose to the Gold Anti-Trust Action Committee (GATA) the minutes of an April 1997 meeting of the G-10 Gold and Foreign Exchange Committee, as compiled by an official Federal Reserve Bank of New York.
And it's a bombshell. The minutes suggest that officials from the G-10 governments and their central banks were, in fact, conspired to synchronize their policies to affect the gold market.
It turns out that U.S. policymakers aren't just worried about preserving the dollar's role as the world's main currency reserve. They're also worried about the effects higher gold prices could have on the nation's debt burden.
The minutes include comments by a U.S. delegate identified only as "Fisher," which is likely Peter. R. Fisher, head of open market operations and foreign exchange trading for the New York Fed.
Fisher, the minutes say, made the case that rising gold prices would increase U.S. debt.
Fisher "explained that U.S. gold belongs to the Treasury. However, the Treasury had issued gold certificates to the Reserve Banks, and so gold also appears on the Federal Reserve balance sheet," the minutes say. "If there were to be a revaluation of gold, the certificates would also be revalued upwards; however [to prevent the Fed's balance sheet from expanding] this would lead to sales of government securities. So the net benefit to Treasury would need to be carefully calculated, since sales of government securities would expand the public portfolio of government securities and hence also expand the Treasury's debt-servicing burden."
Indeed, Fisher's remarks are an open acknowledgement that the United States has an interest in suppressing the price of gold.
So, clearly, there is a growing body of evidence that Western governments, central banks, and even some of the largest investment banks have a vested interest to subdue the price of gold. Furthermore, they've already acted on behalf of that interest.
But now the tide is turning. The dollar and the euro are on the ropes and emerging markets have been steadily increasing their gold purchases.
While authorities in developed countries are making it more difficult for investors to build gold holdings, large China and other developing markets are doing just the opposite. They're actually encouraging their populations to adopt physical gold and gold investments like futures and exchange-traded funds (ETFs).
So I think it's high time the average Westerner looked to the East for cues on wealth preservation and their attitude towards gold.
News and Related Story Links:
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Gold Anit-trust Action Committee:
FLASH: China knows about gold price suppression, and U.S. knows China knows -
GATA:
As gold price suppression grows more brazen, maybe Asia will defeat it -
GATA:
G-10 minutes from 1997 show central bankers conspiring about gold -
Money Morning:
China Seeks to Dethrone the Dollar, Transforming the Yuan into the Dominant Global Currency -
Money Morning:
China Continues to Push for Global Currency Overhaul -
Money Morning:
Why Gold Will Replace U.S. Treasuries as the World's Last Risk-Free Investment
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Money Morning:
Three Ways to Profit as China Causes Gold Prices to Spike -
Money Morning:
Gold Will Hit $5,000 an Ounce Long Term ... But the Near-Term Profit Prospects Are Even Bigger -
Money Morning:
Chinese Investors Drive Gold Imports Five Times Higher on Inflation Fears
The sheep continue to get fleeced by their governments. They can hold gold and silver that the governments cannot print.A good supply of bullets to back up the gold holdings would be in order too, I think!
who wants worthless paper when times are gettin bad, sad,be glad you can turn to gold
Gold Prices being manipulated would not supprise anyone, do you trust anyone in Government or Wall street. They are all crooks in suits, everyone knows also that oil prices are manipulated up to create inflation for the fat recieving wallets of Government Banks Insurers Corporates etc. At the cost to the public at large.
Conspiracy? Don't you think that word is a little harsh? Here's the definition:
con·spir·a·cy
? ?[kuhn-spir-uh-see] Show IPA
noun, plural -cies.
1.
the act of conspiring.
2.
an evil, unlawful, treacherous, or surreptitious plan formulated in secret by two or more persons; plot.
3.
a combination of persons for a secret, unlawful, or evil purpose: He joined the conspiracy to overthrow the government.
4.
Law . an agreement by two or more persons to commit a crime, fraud, or other wrongful act.
5.
any concurrence in action; combination in bringing about a given result.
Don't you mean #5…..any concurrence in action? Or are you really saying that our leaders are unlawful and evil in this situation? If so, please explain more fully…….
Be careful of the words you use…………I'd call it a 'concurrence in action' to be precise!
Seriously? Get over the semantics.
I thought your post was a brilliant bit of ironic satire at first- I just didn't get the last line LOL
Are you buying now or are you hoping that the price will drop below $1500 and buy then? I have an order at $1550 and I will be also buying silver at $25 or $33 if the trend reverses before falling below $25. Last week I missed it by $1.
Those seem like low entry levels. What is your source of information for setting your strike price?
Tim, please advisewhere you buy from. I'm new in this and would like to buy but I don't trust myself to make good trusting cold contacts in this.
At the end of the day, what would you trust to be in your investments? Hopelessly devalued US dollars and marked down US treasuries? Or physical gold (OK it pays no interest) or gold equivalents? We do not believe in the demise of any country (Greece included), but it does not mean we have to hold the Greek drachmas to prove our point. US dollars have been on its decline and the trouble is we do not see it raising its head again until we see drastic belt tightening moves to right the painfully sad state of the economy. Printing money is not going to solve any problems. Genuinely creating wealth and only by turning around the budget and trade deficits will we see the end of the tunnel. Blaming the problems on someone else, like the GFC, or Chinese RMB, etc., means the US has yet to understand and grapple with its real problems. Over-spending what belongs to the future generations have got us all in trouble and the only right approach is to recognize that we have a real problem at hand and the earlier we can tackle the issues, the sooner will be the turnaround.
Common sense, a rare "commodity" in today's world, tells us the price of gold is being manipulated by the central banks. The Fed has been allowing the price of the dollar to rise as a way to encourage investors to stay out of gold while all other indicators are sending the opposite message.
It has always been that the elite carve and manipulate everything they could at the cost of the little guy at the bottom. Problem is that in letting them get away with that we have compromised our own freedoms. What do we do? SIMPLE!! Buy Silver and Gold. Let us take these opportunities to arm ourselves with the weapon that is the only weapon that can truly hurt those vultures. If we start taking to the streets like in Egypt or Libya or Greece or whatever other country is next on the chopping block then all manage on doing is to play right into their hands. Like John Lennon said do whatever you must to protest the system but do it through PEACE.
Oscar
I believe the propoganda to have people "shed" their gold is a prelude to the next manufactured
market crash and depression.
My real concern is that governments will legislate its citizens to give up their gold (as the FDR administration did in 1932 or 33.) Then citizens will have no protection as countries devalue their currencies.
I mean why keep gold (which has real value) when we could have pieces of paper with the picture to George Washington to wipe our butts with?
If worse comes to worse, I'd rather be poor on paper holding gold than paper.
PLUS,IF WE BUY MORE GOLD AND SILVER,IT SOAKS UP "THEIR" PAPER DEBT,ISNT THAT BETTER FOR THEM?,AFTER ALL,IT ALLOWS THEM TO "CHURN" THE BOND MARKET(creating commisions along the way)WHAT IS "THEIR" PROBLEM?…………………………………………………………………………………………………………All rights reserved whithout prejudice or accomedation
If the british government wants to discourage the buying of gold,why is there no vat?
Is it possible the world is simply moving into a phase of deflation? All $$$$ are tied to insurmountable debt, if the debt cannot be paid do all those $$$$ get wiped out? If this is the case who will be able to purchase 2000/oz gold?
Another ridiculous conspiracy theory. The conspiracists can't seem to grasp the fact that gold is – after sea shells, wampum, and the like – the original "fiat" money. Its intrinsic worth is negligible. It is imbued with magic powers by those who need a shiny metal to have magic powers. And when you mention the Chinese and the word conspiracy in the same breath, or sentence, you are practically delivering the lead in to a stand up comedian's joke about currency manipulation and money conspiracy.
What the Chinese don't like is the fact that they have been buying up gold as a hedge against losses in the U.S. currency markets. So, naturally, backwards, self-serving state-owned economy that they are, the bitch and moan when governments sell off gold. Boo hoo. Put your big boy pants on, all of you.
The trick is staying on the right side of the gold behemoth. Long or short. Ladies and gentlemen, place your bets!
There is so much money to be made whether gold is on the uptick or downtick. Just have to know when to get in and get out.
For the longest time I was in the gold markets but not really OF them. I eventually, through a recommendation of an older friend of mine, found this forecast. Like everyone else, I was skeptical of ANY forecaster, but Gary Wagner is shockingly accurate.
I'm not a millionaire or retired at 44, but I'm doing very, very nicely, so I suggest giving it a look: http://tinyurl.com/3wvd2mz
FUNNY!,When you mentioned "backwards,self serving state owned economy" I THOUGHT YOU WERE TALKING ABOUT THE STATE OF CALIFORNIA……………………………..HA!..HA!
What's ridiculous is blindly believing that governments and central banks DON'T conspire to manipulate the price.
The case is very well documented for those who care to look. Have you bothered or is this just your uninformed opinion?
Please feel free to rebut the evidence piece by piece and the charges point by point if you care to.
If you're not willing or able to, I suggest you keep your trap shut.
Fallingman:
I just happened across your comment while doing a bit of research. May I compliment you on another well-worded argument — one that's clearly comes from a person who's well-read, and well-informed.
I typically agree with your posts. But even when I don't — and even when you disagree with one of our pieces — I almost always come away believing that you put time and careful thought into your comments. You're definitely one of the readers who helps elevate the value of what we do. We appreciate it, and respect it, and look forward to your continued participation.
Hope this finds you well.
Respectfully yours;
William (Bill) Patalon III
Executive Editor
Money Morning & Private Briefing
The incompetent fools are not capable of running a well conspired concpiracy.
The dollar has steadily gone down in value while Gold has steadily gone up. One question only needs to be answered, which would you rather have ?? Simple answer isn't it.
The concern that the government would outlaw the owning of gold, suggests the need to also own ammo. Let's face it, when it gets down to that kind of gov't oppression, do you really want to live as a slave to government?
US CITIZENS ARE ALLREADY SLAVES TO THE GOVERNMENT
Ok forget the the ammo, just "live and let die".
I'm seriosly concerned at the prospect of buying gold as a protective measure in a chaotic economy and then having to purchase a gun to protect the gold from thieves or governmental consfiscation. Aren't we becoming paranoid? Are we just a half inch away from the jungle in our thinking? Does our government have the power to create such situations by fiat? Have constitutional rights fallen by the wayside? These are questions I'd like explored before everyone empties their bank accounts in favor of precious metals.
To answer your most pressing questions…
Yes, our government has the power to create such situations by fiat.
Yes, our constitutional rights have fallen by the wayside.
Where have you been for the last 50 years? We the people have systematically given up our rights and allowed the government to obtain more and more power over time. We elect leaders who regulate, make laws, create authorities, and otherwise expand government…and we re-elect them time and again. The Constitution has become powerless and void. Our courts have been making a mockery of it for decades.
Errosion. That's the best analogy. One day we wake up and find that there is nothing left. And we did it to ourselves.
Study FDR. Worst political disaster in our nation's history. He set us on the road to decimation as a country. If you have any question about the power of our government or the impotence of our Constitution, study FDR. Look at what he and his administration did. It will shock you. It will answer the questions you asked once and for all.
111005 There might be no VAT on Gold in the UK at the moment, but when you buy, you are required to register with your National Insurance Number. That simple requirement means that the Government knows who hold what and where. Hypothetically then, if the UK government then decides to make the private holding of physical Gold ‘illegal’, as did Roosevelt’s lot to the US in the 30’s, the market would tumble. The government would then scoop up millions of £££’s worth of Gold at rock bottom prices. As there was no VAT when buying physical Gold (as good a incentive as any to BUY), there would be no obligation to repay any VAT, as none was paid. The government might just end up holding even more Gold than before that twit Brown sold off half the Nations assets at the turn into the new millennium.
Fast forward a few years when the markets are again being artificially depressed, the manipulating non-productive goons in parliament pass another Bill allowing investors to buy Gold again. This time however, VAT must be paid on all Gold transactions.
I suppose that would be one good way of helping Westminster square its unsustainable debts. Another temporary solution. Make the productive Joe public pay again.
And don’t think the time scale of that hypothesis is too far fetched to be untrue. Governments come and governments go, but the un-elected non-productive Whitehall bureaucrats have long-term plans.
All hypothetical of course!
THEY WOULDNT………………….WOULD THEY?
Let me see if I get this straight. If the West articulates monetary policy to help its balance sheet by strengthning the Euro and the dollar, it's called a conspiracy. But if the Chinese formulate populist monetary policy trying to involve their population in a maddening gold rush, it's called good governance.
I guess the autocratic dictatorship of the mind and the body, China, can do no wrong. They exploit Africa's natural wealth without regard for safety and African people, but it is excused. Let the Chinese be Chinese. So are the Russians. Some people see no parallel between the invasion of Iraq and the invasion of Georgia by the Russians. Dictatorships are given the benefit of the doubt. The West is simply cruel.
Seems to me the proponents of this theory are like the Hunt brothers, metal hoarders. But for what? What did silver hoarding do except made a few rich and most of us poorer? Did it help industry? Production of material wealth?
Western society realised decades ago that gold does not produce corn, wheat and meat for food. You cannot eat gold. And that gold is the ultimate tool of speculation. Western people prefer to invest in fashion, leather and entertainment. The East still lives in eras gone by, buying shark fins and rhinoceros horns.
Let China buy all the gold it can hoard and see who's going to buy it back from them. Let gold go to $5000 and see who's going to protect your life and your holdings carrying all that gold. We're moving towards a moneyless society of electric transfers. Gold is a thing of the past. The sooner you accept it, the better. Bling is out!
So do I bail out and sell my gold coins or hang on to it?
What about my silver coins, keep or sell?
Bottom line is, how far do we fall?
Do you think all shiny metal stocks are at risk when the dollar collapses and the government panics?
Louis: In response to your question about constitutional rights falling by the wayside. Answer: yes.
Another topic: If Roosevelt took away the gold, why can't the present government. I was there. Perhaps the financial world rumbled, but to a little guy like me, in the middle of a depression, I didn't feel a tremble.
As an American, your only chance to survival is to place your metals, if over $25K, in a foreign vault in a country that you can visit easily and then sell your metal to as your need arises! There are plenty! When silver dropped in March, it did so because it was manipulated by the Chicao Mercantile Exchange. There was no other reason that it should have happened. Anybody remember when hillarious bought 10K in pork bellies on Friday and sold for $100K on Monday? Need I say more?