Richard, GATA's grievances will ultimately be drowned out by the pain of millions of 401k's, the end of some major industries (e.g., mutual funds, CNBC and other financial reporting networks, all essentially began with this bull market) and massive impairment of bank and insurance capital.
Is it hard to understand why CB's and the G-7 manipulate gold, much in the way the yen, mark and dollar are alternately supported and devalued? The only difference is that in the case of gold, a) we are told it is not money and b) an industry is involved. So more double talk is needed.
The way I see it the Euro heralds huge dollar losses and gold gains (wea re on the edge of a a 10 year gold bull). If you look past the weakness of the Euro currency, and look at the widening spreads between Euro bond yields and American bond yields, you realize that perhaps the Euro is working after all.
As Central Banks begin in earnest to diversify out of treasuries and into eurobonds, u.s. bonds will necessarily enter a prolonged, severe bear market. Eventually, this will take U.S. currency with it.
For some of the (often over-leveraged) gold carry traders/gold shorts, this spells disaster for one end of the gold carry (the long treasury part of the transaction). We perhaps are beginning to see this now, and if so, the process should accelerate because of this leverage.
As many have noted, this should mean that gold goes up as interest rates go up (one reason is that carry traders are forced to cover). The fact that gold hasn't moved up in the face of this is where the manipulation (BOE, IMF gold sales) has to come in. Naturally, Britain, which is closest to this via its regulation of the gold market, is leader of the pack.
But as this plays out, there is no way the U.S./Britain can defend the gold short position in the face of a dramatically weaker dollar resulting from foreign moves out of U.S. assets. Even were it possible, the price of everything else will be going up, so there will be little point in keeping a low gold price. To the contrary, gold and silver will benefit especially because of the short position and because they are among the few potential real stores of value.
Perhaps this is why three key U.S. economic officials have resigned in recent weeks?
The public has to be prepared for all this, just as they have to be prepared for everything. Look for Greenspan to make positive statements about gold. Perhaps his recent suggestion that gold is sold by central banks "who know they can buy it lower" is the beginning.
|
