nononameo

The Fed Still Manipulates Gold and the Markets

Gold is the competition for fiat currency. It anchors the fiat. Therefore, if the price of gold is allowed to rise it represents a defacto devaluation of fiat vis a vis real things.It is also a defacto indicator of confidence in the fiat, and conversely the most widely watched indicator of panic and a flight out of fiat for the safety of real intrinsic value.

Therefore, the FED and central banks have simply opted to manage the price. That was possible until the math behind the fiat indicated an unpayable debt, as it does now.

I don't think that anyone knows for sure when or how high gold will go, but in order for the US to have a payable debt, and since fiat money is debt, a currency revaluation on the order of 10:1 is in order for the debt to again become payable.

Needless to say, for a 10:1 fiat revaluation in a vacuum, just add another zero to the current price of gold (as well as all other real assets).

Of course, they will probably just try to issue a new currency, which values gold at the same price in "new dollars", however your old dollars exchange at 10:1 for new dollars which has the same net effect.

Bullion Shortage and Spot Prices Tell Two Different Gold Stories

The answer is very simple. A rising gold price is an indicator that the central banks are printing too much money. It is also widely seen as a barometer for inflationary expectations and confidence in the financial system. Since the central banks find themselves in a crisis situation and a position where they need to create an unprecedented supply of new money, it is imperative for them at the same time to prevent a sustained rise in the price of gold, which is the only competitor to their fiat.

If the gold shortage moves to the institutional level however, then the price suppression scheme could fail.

Law of Supply & Demand Is Dead for Gold & Silver

I agree with what you are saying freetruth, but the thing you omitted is that in order for the FED to be in a position to reinflate, first they had to get rid of the baked in inflationary expectations, and they did that by collapsing commodities.

The FED has entered an era where brute force covert market management is required, at least at certain times.

If they had not taken these actions, they would not be in a position to reinflate, they would be hyperinflating...which I think is the ultimate outcome of all this fiat madness anyway.

Law of Supply & Demand Is Dead for Gold & Silver

not true notsosmart.

Assuming that you have wealth to protect, gold is the oldest, most time tested portable method of wealth storage and protection for the simple reason that it has a lot of intrinsic value in a compact storage volume, and it does not degrade or have any special storage or cost of carry requirements.

In other words, assuming you are trying to protect 2 million dollars, how many pallets of baked beans do you think that equals?

People buying gold for wealth storage aren't assuming they need to eat it, they are protecting their wealth from confiscation due to inflation.

Law of Supply & Demand Is Dead for Gold & Silver

One insight I have is the following. By artificially depressing the price via the futures markets, they are causing a surge in physical demand. If we get to a situation where there are no quantities of physical metal to be found, I would expect that large buyers would resort to standing for delivery of the metal via a long futures position. So this is the real risk of their price manipulation scheme...you can only sell what you don't have until the guy on the other side of the trade wants the real thing.

I think ultimately the Chinese and the Russians and all the other countries who have recently been burned buying US paper will wise up and decide they want gold, not dollars. If they start selling dollars for gold (the real thing) lookout above.

Law of Supply & Demand Is Dead for Gold & Silver

I don't think there is any gold in Ft Knox. If there is, it has been leased or loaned. the net position of the US government/Federal Reserve is a short position. Not only do they not have any, they are liable for gold they don't own. See the quote from Greenspan above. Fiat money has no tangible asset backing whatsoever.

Law of Supply & Demand Is Dead for Gold & Silver

I hope everyone in this thread is familiar with this quote. This is an open acknowledgment that the central banks manage the price of gold. It one of their most effective policy tools since gold is seen worldwide as an indicator of inflationary expectations.

"Central banks stand ready to lease gold in increasing quantities should the price rise." Alan Greenspan On July 24, 1998, before the House Banking Committee

Law of Supply & Demand Is Dead for Gold & Silver

They don't have any gold left. Anyone who thinks they do hasn't been following along. It's probably all sitting in the private vaults of the anonymous private shareholders of the private corporation called the Federal Reserve.

Law of Supply & Demand Is Dead for Gold & Silver

Well, they have the means, the motivation and the mechanism with which to manipulate the price.

If that weren't enough, we find them sitting with 20% of the open interest in the futures markets on the short side.

I guess some people just believe "the US Federal Reserve (a private corporation) would never do something like that". Those are the ones you can fool all the time.

Law of Supply & Demand Is Dead for Gold & Silver

There's always a premium of coinage above bullion, but the premium is increasing, as the price is falling.

The thing that a lot of people don't understand is that the physical dealing in gold is a small fraction of the notional value of the derivative trading. Therefore, it's almost trivial from a monetary standpoint for the FED to have a few of their banks short the futures to cap the price.

They were all saying a few months ago that the big problem was "inflation indicators" and that something needed to be done. They just took the direct approach. They shorted the market down to whatever price they chose.

What would blow their scheme out of the water? If a large player wanted physical delivery on the contract, then you can't deliver what you don't have and it would cause the mother of all short squeezes.

So when the Chinese of a few of the Saudis decide they want a lot of the real thing, if they just stood for delivery in the futures markets they would basically wipe out the western banking system because the price of gold would soar, indicating a complete loss of confidence in fiat money and the currencies would be defacto collapsing against intrinsic value.

Law of Supply & Demand Is Dead for Gold & Silver

You are right on. The fundamental problem is that they know they can't fix a problem of too much debt by creating more debt with the stroke of a pen. That is inflationary. So, if you use brute force on the inflation indicators, then you have a free lunch..for now at least. This story however, does not have a happy ending.

Jon Nadler Proves Precious Metals Manipulation

Futures market manipulation of metals prices is not only possible, it is documented in many past cases.

In the futures market there is a long for every short. It's a zero sum game. Some people have erroneously written that when someone is short, they have to cover. Not so. Futures traders (I am one of them) can roll over a long or short position indefinitely and this is routine procedure to maintain a position in the market.

Futures market selling can easily overwhelm a small market like silver and the only way that selling to artificially depress prices would fail is if the longs stand for delivery and the shorts don't have it to deliver. At that point there would be a short squeeze until the number of the shorts in the market with product to deliver matched the number of longs who wanted delivery.

In the futures markets, less than one percent of contracts are delivered, which is is so easy to manipulate the market.