- Question: Why do Central Banks and Governments hate gold?
- Answer: Because they can’t print it
“An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense – perhaps more clearly and subtly than many consistent defenders of laissez-faire – that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.” – Alan Greenspan, “Gold and Economic Freedom”
Just like everything else in the western financial system, the paper trading markets are leveraged beyond redemption. The amount of paper “claims” on actual physical gold was estimated to be 100:1 in 2010. We can assure you that ratio is much higher now. On the Comex alone, for instance, if more than 9% of the April open interest in gold futures were to stand for delivery – based on the currently declared 1.4 million ounces of gold reported as being “available for delivery” (registered) – the Comex would default. The entire open interest in gold futures is 60x greater than the amount of gold available for delivery.
This is just the publicly traded paper gold derivatives. There’s also the shady world of OTC gold derivatives. We have no idea what kind of leverage is embedded in these contracts. But the total notional amount of OTC “precious metals” derivatives according to the OCC’s latest quarterly report on OTC derivatives (Office of the Comptroller of the Currency) is over $28 billion. Just to highlight the degree to which the Government goes in order to hide the facts about the gold and silver market, the OCC used to break out OTC precious metals derivatives into the categories of “gold” and “silver and other.” Now the OCC reports just “precious metals.” What is it that the Government and banks are hiding?
The amount of leverage embedded in a Comex futures contract, based on the current amount of margin required, is about 25:1. There’s no telling how much leverage is embedded in the OTC derivatives agreements. All we know is that the disclosure requirements are becoming increasingly more opaque.
Silver futures began trading on the CBOT in 1969. But gold futures were not around until 1974, three years after the U.S. closed the gold window, completely disconnecting the dollar from gold. Gold futures were developed to enable the Fed and the U.S. Treasury to control the price of gold as a means of reinforcing the legitimacy of the dollar as a fiat currency used as the world’s reserve currency.
While the price of gold has been heavily manipulated since at least the 1960’s, when the U.S. was running out of enough gold to fulfill its obligations under Bretton Woods, the manipulation and “shock and awe” price attacks are used as a form of propaganda that is designed to discourage investors from converting fiat dollars into gold and silver. It’s a powerful weapon used by the Deep State against gold and economic freedom.
In today’s episode of the Shadow of Truth we discuss the manipulation of gold and silver and how it’s used by the Deep State to increase the Government’s control over the population: