I find it kinda funny how people complain that hedge funds shorted gold in a manipulative manner.
Is it not the same when people borrow money "on margin" to buy gold??
Is this not price distortion and manipulation?? You call shorter's "thieves" but in their eyes you guys are "scam-artists" who proport that somehow "gold is special" when in essence you're selling the sale snake oil, except that gold standards have even less flexibility to maintain price equilibriums. If gold was so good, then why do countries waiver from Gold-backed to Fiat, and then back to gold as they undergo economic stresses.
What has happened over the past decade is speculators took EXTREME advantage of an inordinate price for gold... (who's to say that gold was fairly valued 3 years ago?? Fair value is relative and based upon the price each person paid for his gold).
The lack of transparency in the trading of gold by various institutions has led to a situation where, in the light of day shown by LTCM's debacle, that THIS IS SERIOUS and reflects a failure of the CB/Federal Reserve system.
Sure it was about power and control.. just like those willing to stick their necks out on a long margined position are into power and control. Sometimes one side has an advantage over another (or more money to play with) and things get out of hand.
But just like the East/West confrontation in the cold war, neither side was willing to permit the situation to get so out of hand that it would destroy both parties.
And I have no little doubt that if Gold suddenly jerks above $300-350/ounce the shockwave it would send throughout the financial world would cause it to run to $500-600/ounce within 6-12 months or possibly faster.
Economic activity and growth would quite likely SEIZE UP, causing commoditiy prices to head EVEN LOWER increasing the speed of deflationary pressures and economic contraction/bankruptcies. All of this would be occurring in an environment where the reserve currencies were forced to defend their paper, distracting assets from elsewhere.
IMO this behavior by CBs and Hedge fund types should not be allowed to unwind gradually lest it be seen as no big deal and forgotten. I think it should end suddenly so history will not forget and it will not be repeated.
I think the "disease" is far more palatable than the proposed "cure" you have in mind..... <VBG>
Btw, Brain... what are we going to do tomorrow?? "The same thing we do everyday, Pinky... TAKE OVER THE WORLD!!!"
And don't tell us that only your daughter watches that cartoon. I and the Mrs. happen to love it... (Must be in my blood... <VBG>)
Regards,
Ron |
