Tag Archives: Fed balance sheet

The Price Of Gold Gets “Curiouser And Curiouser!”

I’m an atheist.   But if I’m wrong, God help this country.  –  Investment Research Dynamics

“Edward Bernays was Sigmund Freud’s nephew. He believed that the population had to be manipulated in a democracy to keep order. As I mentioned yesterday, Bernays was instrumental in getting women to smoke for his cigarette company client and to get the American people to support a CIA overthrow of a Guatemalan government that was uncooperative with United Fruit Company. Bernays uses the lowest instincts of humans and appeals to those “animal spirits” over their better judgement to influence mass viewpoints.”  This summary of the roots of modern U.S. propaganda techniques was sent to me by Jay Taylor, LINK.

Josef Goebbels implemented Bernays’ theories and techniques in crafting the infamous Nazi Germany  propaganda machine.  As Naom Chomsky chronicles in his preface to Bernays’ book, “Propaganda,” the U.S. Government and U.S. corporations hired Bernays in late 1920’s in order to utilize his techniques on the American public.  The rest, as they say, is history…anyone remember 9/11?

The propaganda effort against gold was ramped up starting in mid-December 2014. Around the same time, the blatantness of the effort to push down the price of gold and push up the S&P 500 and Dow intensified.  Both John Embry and I independently noticed both occurrences.  If it looks, walks and quacks like a duck…

The anti-gold propaganda took on extraordinary proportions last week as a prelude to Sunday nights vicious paper raid on the price of gold.  The media’s anti-gold media terrorism culminated with this silly, farcical article entitled, “Let’s Be Honest About Gold:  It’s a Pet Rock.”  Perhaps the most absurdly misleading article ever written about gold.

Paul Craig Roberts was at one time an editor and columnist for the Wall St. Journal.  He told me yesterday that he hasn’t been able to pick the WSJ to read for many years because of the high degree of fraudulent propaganda it now publishes.  I bet most of you were not aware that the WSJ is owned by the same propagandist who owns Fox News – Rupert Murdoch.

It was also around December that I started writing analysis of the economic data which showed that the U.S. economy was starting to hit a wall.  The most obvious signal was the fact that retail sales declined .9% in the month of December before the effect of inflation is removed.  I am convinced that the effort to push down the price of gold, and the corresponding media effort to publish highly misleading and negative reports about gold is directly related to an effort to cover-up the fact that the U.S. is systemically starting to collapse.

The elitists running the system know better than any of us what is really going on in the real economy as they have access to the unmanipulated, raw data – something to which they go to great lengths to prevent we plebeians from seeing.

The greatest amount of effort to cover up the truth about what is happening beneath the surface headlines is the effort being exerted to push the price of gold lower.  The truth is that the U.S. nothing a but gigantic bloated, debt-addicted Ponzi scheme that is quickly losing its global economic and military hegemony while the U.S. elitists steal everything in sight from the middle class.

If gold were allowed to trade freely, it would be priced at a significantly higher level than where it is now.  The problem is that a rising price of gold would signal to a large portion of the population that something is drastically wrong with the U.S. financial, economic and political system.

Perhaps the “poster child” for the propaganda and “thought control” behind the effort to drive the price of gold lower is this graphic which shows the price of gold in relation to the size of the Fed’s balance sheet (source:  Paul Mylchreest, Gold and the Silver Stand-off, edits are mine) – click to enlarge:

FedBalGold

As you can see, there was a high correlation between the directional movement in the price of gold and the growth in the size of the Fed’s balance sheet from “QE” (let’s be honest, “QE” is just a politically correct term for “money printing”).

However, and this is a key point, I would assert with confidence that, in fact, the price of gold began to rise at more rapid rate than the rise in the Fed’s balance sheet because of the leveraging effect of the high-powered banking reserves created by QE.

In other words,  every dollar printed enabled banks to extend leverage which has the unmitigated affect of creating even more money (most of this leverage has gone into the stock and bond markets).  Why?  Because every dollar of bank reserve “equity” can be leveraged in the form of debt.  Debt behaves like money until it is repaid, which means debt issuance has the outright effect of increasing the money supply. This is the fundamental principle underpinning “fractional reserve” banking.

Having said that, you can also see where the price of gold is pushed below the growth in the Fed’s balance sheet.  This is the unmitigated, unequivocal mark of outright official intervention in the gold market.  See my post yesterday for one of the primary ways in which this is implemented – LINK.

In one sense, the U.S. Government does not have a choice other than make an attempt to keep a lid on the price of gold in order to perpetuate the fraud it has created since 1971.  I said about 12 years ago that the elitists who control this country will hold up the system with printed money until they’ve swept every last crumb of middle class wealth off the table and into their own pockets.

If they were unable to control the price of gold, their scheme would fail.   It will ultimately fail anyway, as history has already spoken on this matter, but many of them will manage to escape this country with a significant amount of stolen wealth.  In fact, I would bet my last nickel that many of them, like Warren Buffet, the Rockefeller clan and the big banks, for instance, have amassed a large amount of gold that is being safekept in some remote area of the globe.  Certainly not in a U.S./UK/EU bank or Central Bank vault.  We know what happens to gold that disappears down those rabbit holes.

At some point this scheme to control the price of gold will fail – badly.  At that point it will be too late for most people to do anything about it because the price will shoot up vertically, in step-function.  Similar to the price of movement of the  tech stocks that are enjoying the collateral affects of the Fed’s money bubble.

That day (Feb 12, 1973) the United States announced that the dollar would be devalued by 10 percent. By switching the yen to a floating exchange rate, the Japanese currency appreciated, and a sufficient realignment in exchange rates was realized. Joint intervention in gold sales to prevent a steep rise in the price of gold, however, was not undertaken. That was a mistake.   – Paul Volker reflecting in November 2004 on the day the U.S. devalued the dollar vs. the yen source link