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Gold/Mining/Energy : GOLD-XAU
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To: philv who wrote (893)12/30/1997 7:48:00 PM
From: philv  Read Replies (2) of 1756
 
Review of THEORIES REGARDING PRICE OF GOLD

It seems to me there are three main theories, and most people ascribe to one of these.

1.) Gold's price is a reflection of normal market forces.

This is the majority conventional wisdom. Main points are: Gold has lost its monetary significance (therefore banks are selling), Gold's shine has been replaced by modern alloys and plastics, its usefulness is limited to jewellery which is itself not useful.

2.) Gold is being manipulated - suppressed by Central Banks

a) To give Banks complete freedom to print money without restriction or discipline which Gold demands.
b) To give Banks a monopoly of exchange medium - no alternative to paper.
c) To allow Banks to sell or lease their gold so they can earn interest.
d) To help with creation of EMU by lowering standards so that member countries can qualify.
e) To cover short positions.

3.) Gold is held down while being accumulated at low prices

a) By Central Banks
- to build up reserves for eventual monetary collapse
b) By large Private Investor(s)
- Many names associated with LBMA , (European & American)
- Secret deal with Arab oil producer in exchange for cheap oil

I think I have covered most of the theories here. Interestingly you must logically belong to only one of the three camps, not a combination, if you have made up your mind.

Cheers
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