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

24 thoughts on “The Price Of Gold Gets “Curiouser And Curiouser!”

  1. It should come as no small surprise that bankers are big on the idea of liquidity and that price level or trade value takes a back seat. Would it surprise anyone that circulating debt-free liquidity in the form of digital gold mass (fully backed) would be a watershed event and a win-win-win-win for all ? The trick is the practical implementation, which looks to require the marketplace as an organic instrument of introduction. No crashes please.

    In consideration of the above, could it be likely or plausible that banks are waiting for signs of liquidity from bullion based currency before taking their foot off the gold price ? I think we get one shot at this and considering that people are creatures of habit, a rising gold price without evidence of bullion based liquidity that’s noticeably circulating might actually be alarming to the ole boys. I understand !

    It’s possible that we’ll see more honest fundamental pricing as the social proof of bullion monetization and circulation gains traction . Move it or lose it, you might say. Gold will find its true value on that basis and the market will be able to deal with the price on the basis of a whole new need and new real-time application.

    You cannot pour new wine into old wineskins. Everything has its time.

  2. Thanks for the post.

    The media are price followers. Gold rises in dollar terms then gold to the moon and vice-versa.

    I don’t think there is a long-term correlation between the monetary base and gold
    see http://tsi-blog.com/2014/10/does-the-monetary-base-drive-the-gold-price/ look at past 45 years.

    Also, think about QE. The Fed electronically creates bank reserve money to buy assets from non-financial firms so those firms or individuals sell bonds to the Fed, so now the Fed credits their bank with reserves so the bank then offsets that asset with a bank deposit of their customer who sold their bond to the Fed. Now the non-financial institution that sold the bonds can save the money in their deposit account, buy goods or buy another financial asset (the reach for yield) like junk bonds or stocks.

    QE suppressed interest rates while changing people’s risk preferences. Why not own stocks, the Fed has our back, etc. Gold yields nothing, etc.

    Perhaps gold will go up when the Fed tries to shrink its balance sheet and the world sees the mal-investment for what it is. Be thankful the price of gold is going down–your dollars buy more bullion! I have been a holder of gold since 1990 and hope to add.

    Also, gold is acting great. The REAL price is going up relative to oil, euros, yen, commodities. check it out on long-term charts. Commodities are back to 1982 levels.
    Yes, the dollar is rising against gold, but gold is rising against commodities. Gold is money afterall.

    1. gold and usd rising together is a precursor to bullion monetization ……. so says the voice in the wilderness

      1. You know rooster I’ve been wondering about that thank you. It’s funny cause about 12 or so years back THE Queen announced she had only invested in gold so was going broke. But I always took it as a message. Seriously she is a gold bug!! It was one of my main reasons for getting into metal. All theories a side I think she is highly unamused by all the shenanigans.

  3. Hey Dave! Long time reader here. Even though I may not agree with you 100% on every subject I appreciate your writings. They are very eye opening….. If only I could get my dad to read your blog.
    While reading this article about gold It got me thinking… Before I started investing in PM’s and mining companies I thought of gold as just another commodity mainly for jewelry purposes and such. Not as money and definitely not as an economic indicator for the health of the dollar.(I think the clueless general public has the same thoughts) AND that was with having a good family (on my mom’s side) who saw all this coming down the pipe back in the early 2000’s and heavily invested in gold silver and mining companies. My mother even cashed out her teachers retirement account and converted it all into monster boxes of silver eagles. So even with that background up until a couple years ago I never looked at gold like you described here,
    “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.”
    What I think is that the western world likes to invest in anything that’s rising in price and that the Fed and Bullion Banks smashed the price and killed sentiment to deter people from buying the PM’s mainly because they don’t have it and gold is the anti-dollar. Only people in the investment world will look at a rising gold price as a sign of something wrong in the financial world and as a signal of loss of confidence.
    It all comes down to confidence. Once that confidence in the system is broken it’s game over!

  4. while your article is spot on about Bernays, I must take exception to your mention of Mr. Chomsky.

    “say, is history…anyone remember 9/11?”

    Noam Chomsky surely does not. Just look him up on this subject, please.
    His “reputation”, if we can call it this, is by now very much in question.

  5. The low paper prices are/were needed so that fizzical metal can be distributed to where it needs go (BRICS and western elites that are in the know). They were not ready to revalue gold in 2011 at the last high. It may be that simple. The fed and western CBs will just buy back all their leased gold at much higher prices and this will re-liquifiy the whole system. Time will tell. Good work Dave, keep it up, it is much appreciated

  6. Naked short selling paper Gold and Paper Silver is a low risk and low cost way for the big players to make big money …. as there’s hardly any risk or cost in creating hundreds of tons of Paper Gold every month and dumping it all onto the market – of course when theres a massive increase in the Gold supply (even though the increase in supply is all fake Gold) it’s obviously going to drive price down.

      1. If you want to try something with serious risk – try actual Gold mining sometime.

        The cost to create 60 tons of real Gold (if your a really really good miner with a really really good world class property) costs aprox. $1.8 billion dollars in cash (not credit) if everything goes really really well (there’s always delays and incompetence somewhere)… reality is; not many properties on the planet with infrastructure that will create this type of tonnage – count them on your fingers.

        The cost to create 60 tons Paper Gold – about 5% of the actual cost … and it can be done in minutes with a few keystrokes on a computer by one or 2 people – not hundreds of people over years like real mining.

        Selling Paper Gold is not risky compared to actually producing the real metal.

      2. Why do you think most of these Gold mining companies have been loosing money for the past couple years or re drowning in debt – because very very very few can produce at under $1,000 per/oz all costs in… some of their stated production costs of aprox. $700 per oz is all BS that they use to sell their shares to idiots … all in costs are much much higher.

  7. What normal ordinary market participant (person or entity) would dump 2.7 billion of anything after a market closed when there are no buyers anywhere, unless they didn’t care about price? What seller sells without regard to price?

    Answer: A seller that is getting rid of something they stole, or a seller that knows they are selling a forgery.

    When a seller illegally hawks something they don’t own they usually try to move it on the black market (aka, Comex, in the case of gold) taking whatever price they can get for it. Or if the seller is selling a fraud or a fake; something artificial that has no real value, then they sell it for whatever they can get for it because they know it is worthless. If you are selling someone else’s property or if you are selling a fake then you sell without regard to price.

    In the gold market there are only two types of thieves with the brawn and balls to do such a thing: Big banks selling synthetic paper IOU’s (fake gold) for a short term profit, and big sovereign governments looking to delegitimize physical gold as a way of legitimizing their own printed (fake money) currency.

    When criminals are running scared they become increasingly erratic and carless in their behaviors. This is what we were witness to on Sunday morning — desperate criminals on the run and a brazen smash and grab job. It has all the hallmarks of a last act of desperate men. We must be getting very close to the end …

  8. I’m a fan Dave…but the inescapable fact remains that the only ones who have been by a 4×2 since 2010 are PM investors…ie most of us…the sheeple have the SP500 at all time highs and good bond returns…
    I’m holding till they bring in a stretcher…closer than I thought

    Still, love the work! Keep it up

  9. It’s NOT a mere coincidence that the recent intensification of the war against gold – a war against objective reality – has been simultaneous with the intensification of propagandising “gay marriage” and “transgenderism”. The state religion underlying ALL of those, is the enforced doctrine that there is no objective reality. Reality is defined only by those who have the power to do so.

    They hate gold because gold is a refutation of fiat currency. And fiat currency is like Caitlyn Jenner, essentially masturbatory and sterile. Like this: https://www.youtube.com/watch?v=03FIqPk_rBM

  10. Mike Moloney just did a great piece on the gold price breakdown.
    I reckon pretty much nails it.
    Supply is the big one going forward sooner or later the producers start walking away.

  11. Buy US $ ! Buy US $ ! Buy US $ ! Don’t buy Gold !
    US $ is backed by the Government ! Gold is not backed by anything…,

    A “respected” US media bimbo !

  12. I still believe in this:
    “If you had a 30 ft. long timeline of the monetary history of the planet from 4000 B.C. to today and you wanted to make a mark on it that the fiat dollar was used, you would have
    to use a .05mm pen at the very end of the 30 ft. wall. And for that small amount of time the world used fiat dollars. The rest of the 5,933 years the world counted it’s wealth in ounces.”

    “nuff said.”

  13. I wish someone could explain to me why the precious metals are tied to the futures market and if this is how it should be so the miners can hedge their bets, then tell me why there is such a discrepancy in the HUGE amount of contracts they can use to control the price vs. the total amount of metals that are available to purchase. I don’t think this is true of other markets or is it?

  14. JMK This one is easy .Gov first declares Gold is not money but a commodity. Then bankers using their monopoly on credit creation can counterfeit gold as much as they like. Cause its’ not money didn’t you know. But this also means dummies like me can buy it at basement bargain prices. Only because it looks so pretty of course.

    1. The real-time measure for finite gold mass (floating fiat currency) had to be developed BEFORE bullion’s mass could be re-monetized where mass becomes the new unit of account, debt free and with real-time usability by the market.

      Now go back and review the facts of Bretton Woods and you’ll see the two essential “leftovers” that we still have , one being the USD price measure , set at the beginning (1944) and then the floating relationship from 1971.

      The stage is set.

  15. I further answer your question, JMK, it’s not that the futures determine physical price…but rather supply and demand. We already know about the negative propaganda against the metals, but the question about where this physical is coming from remains much of a mystery to many of us. The best answer so far is that it’s coming from deposits (without their consent) and sold by weak hands (who must be very few at this point).

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