Are the central banks so scared by accelerating inflation that they have to take down the gold price and dismantle gold as an inflation barometer so as to temporarily fool the market? Or do the central banks know that further market turmoil is imminent and need to take down the gold price so that when the gold price then rises, it will be from a lower level? – Ronan Manly, Bullion Star
The U.S. dollar index, our friend Dave Kranzler of Investment Research Dynamics writes today, “is back to where it was right before Federal Reserve Chairman Jerome Powell’s press conference yesterday. When Powell said ‘maybe in November we’ll have a taper schedule,’ the dollar shot up and paper gold was slammed. With the dollar back down to its pre-presser level today, gold is still down $36.” Indeed, yesterday the Fed essentially said that it isn’t “tapering” its bond purchases yet, though it might (or might not) do so soon, nor is it raising interest rates, though it might (or might not) do so some time next year.
That is, the Fed offered only a lot of temporizing for the umpteeth time.
But what if the Fed did begin “tapering”? Presumably that would diminish demand for bonds, weakening their prices and making other assets, even gold, more attractive. As for interest rates, real rates are already deeply negative as inflation increases and traditionally gold has risen in price even as interest rates rise when they lag inflation so much. So gold’s latest counterintuitive performance might raise questions about what is going on, and particularly about official but surreptitious intervention in the market.
People in the gold industry might ask certain agencies about the frequent anomalies involving the gold price — agencies like the Fed, U.S. Treasury, U.S. Commodity Futures Trading Commission, the Bank of England, and the Bank for International Settlements, as GATA often has done:
But the gold mining industry and the World Gold Council always refuse to ask about intervention, and it must be assumed that, at least for the time being, adversaries of the United States that long have taken a strong interest in gold — particularly China and Russia — are going along with price suppression, in spite of or maybe even because of the gradual implementation of the “Basel 3” banking regulations that seem likely to reduce the gold derivatives positions of bullion banks.
Gold and gold mining investors who would prefer not to wait for central banks to decide the fate of gold can always ask the companies in which they have invested, their elected officials, their investment houses, and news organizations to pursue the market manipulation issue. GATA has made it easy, compiling the major documentation here:
Of course most of the important participants in the markets and news media have been bought off. But even then you can embarrass them with the documents.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.