Are the Central Banks Manipulating the Price of Gold?
I was in a panic. I was living off the interest from our Certificates of Deposit (CDs). The government passed the Troubled Asset Relief Program (TARP), and interest rates tanked. My world went topsy-turvy as the banks redeemed my CDs. The new, lower rates won’t pay the bills. Not even close!
Isn’t high inflation caused by increasing the currency supply resulting in the value of each dollar (or currency unit) rapidly losing buying power?
I had two problems. How do I generate enough income to pay the bills? How do I protect our nest egg from inflation? I saw my parents lose a lot of buying power during the high-inflation Carter years.
My friends agreed; the inflation risk is high and gold is probably the best hedge. I signed up for Ed Steer’s Gold and Silver Digest. I recommend everyone read it daily.
I bought some gold. When the price hit all time highs, I congratulated myself on my profound wisdom. The TARP bill was followed with even more money creation. Despite the government flooding the banks with trillions of dollars the gold price dropped almost 50%.
How could this happen? Ed Steer recently referenced an article by Peter Warburton, written in 2001. Here’s what caught my attention:
“What we see at present is a battle between the central banks and the collapse of the financial system fought on two fronts. On one front, the central banks preside over the creation of additional liquidity for the financial system in order to hold back the tide of debt defaults that would otherwise occur. On the other, they incite investment banks and other willing parties to bet against a rise in the prices of gold, oil, base metals, soft commodities or anything else that might be deemed an indicator of inherent value.
Their objective is to deprive the independent observer of any reliable benchmark against which to measure the eroding value, not only of the US dollar, but of all fiat currencies. Equally, they seek to deny the investor the opportunity to hedge against the fragility of the financial system by switching into a freely traded market for non-financial assets.” (Emphasis mine)
The central banks around the world continue to create money at an unprecedented pace, yet gold has not come close to it’s 2011 high.
It’s time to call Ed and ask for help.
DENNIS: Ed, on behalf of our readers, thank you for your time. Let’s get right to it.
For years you’ve presented compelling evidence of gold price manipulation. You show that “8 or less” large banks control the market. You’ve supplied dozens of graphs showing sharp, radical price declines like the following from your August 6th issue.
How do they pull this off? Who are the culprits? What are they trying to accomplish?
ED: First of all, Dennis, thanks for inviting me. You started with a three question barrage. I’ll take one at a time.
First, the price of gold is set in the COMEX futures market, nowhere else. The large U.S bullion banks, (JPMorgan is the ringleader) uses a combination of illegal bid-pulling, spoofing and high-frequency trading to manipulate technical fund traders into selling out their futures contracts, even if they don’t want to. This causes prices to decline. Most technical fund traders follow their black boxes. The bullion banks use techniques that automatically trigger their black boxes, effectively manipulating market prices.
As to the second question; along with JPMorgan, there’s HSBC USA, Citigroup – and probably Morgan Stanley and Goldman Sachs as well. I suspect that Canada’s Scotiabank is heavily involved, plus a few others.
The Peter Warburton quote answers the third part of your question thoroughly.
Price manipulation pays very well. About 40 banks and investment houses in total have figured out how to scam the brain-dead/black-box traders, while managing the price in the process. Silver analyst Ted Butler figures that the bullion banks and other commercial traders have made many billions from this scam over the years.
Let’s face it. If they got investigated and fined, the fines would be a pittance in comparison to the billions they have scammed.
DENNIS: You regularly tell readers that a mere handful of investment banks are holding huge short positions. Please elaborate on that.
ED: Four commercial traders, working in collusion – and most likely all U.S. Banks and/or investment houses – are short 36 percent of the total open interest in gold in the COMEX futures market at the moment.
| The eight largest commercial traders are short more than 50 percent of the COMEX futures market in gold on a net basis – and that’s against several thousand other traders who are holding the opposite long positions. When eight traders collude to keep prices in check, hold more than 50 percent of any market, they ARE the market. |
DENNIS: If I held gold in an account with one of them, I’d want the price to go up, yet they’re suppressing the price. Why would anyone do business with them?
ED: The price management scheme by JPMorgan et al was not widely known for quite a while. Kyle Bass first mentioned it years ago. Today the top investors and big fund managers are catching on to the scheme; you can tell by what they write.
Any smart investor wouldn’t buy COMEX futures contracts through any of these firms, unless they were prepared to take physical delivery.
DENNIS: This is illegal, right? We have seen manipulation in the currency markets and the government has cracked down. Why not gold and silver?
ED: Absolutely, it’s illegal! Both the CME Group, (which owns and ‘regulates’ the COMEX) and the CFTC (Commodity Futures Trading Commission) ignore it even though they are both fully aware of what’s going on.
As J.P. Morgan himself said back in 1912 – “Gold is money, everything else is credit.” That applies to silver as well.
The reason the U.S. government, or any other government, won’t touch the precious metals price manipulation scheme is because the world’s bankers know that gold really is money – and that’s why they own most of it.
As Peter Warburton said, as long as you control the price of precious metals, you keep the price of all other commodities in check; you are making it easier to hide inflation and currency debasement.
| They want to hide that fact from the general population so they can continue with their fiat money, created from nothing. If fiat money fails, they lose their power. It’s a battle between the banks that produce money for nothing, pitted against those who produce the real wealth in the world. |
GATA’s (Gold Anti-Trust Action Committee) Chris Powell calls it, “the secret knowledge of the universe“. It’s become another form of imperialism that the United States and her close allies have used to suppress all commodity prices – and the aspirations of the countries that produce them.
At the moment, the banks and governments are running the show. However, this financial paper money Ponzi scheme is getting very long in the tooth since Nixon closed the gold window. Its days are numbered.
DENNIS: If the price is being manipulated, what do you say to readers asking about investing in gold?
ED: There are two good reasons why you should buy gold today. This manipulation is keeping the price artificially low. This scheme has about run its course and those holding fiat money could suffer catastrophic consequences.
When price management schemes end, they do so violently – in the opposite direction of the price suppression. Prices of gold and silver will be shockingly higher, while the buying power of the currency drops accordingly.
Personally, I am buying as much as I can and I’m not alone. Both the Swiss National Bank and Germany’s Deutschebank recently announced they hold multi-billion dollar portfolios in precious metal stocks; all purchased this year. Lord Rothschild has just announced nearly 8% of his family’s investment portfolio is now in gold bullion.
DENNIS: One final question. The Federal Reserve is trying to create inflation with a target of 2%. Why not let the free market take over? Wouldn’t it help them reach their inflation target?
ED: I agree, higher precious metal prices would do the trick nicely – and then some. If the powers-that-be wants higher inflation, then let commodity prices run; they’ll have all the inflation they could ever want.
But playing the “Gold Card” as I call it is also fraught with danger. Along with the guaranteed higher inflation comes the strong possibility that the entire world’s economic, financial and monetary system will go down the drain.
Jim Rickards has said on many occasions; this event is coming soon – be prepared.
Playing the ‘gold card’ could do it.
Nietzsche had it right when he said, “that which is about to fall deserves to be pushed.”
DENNIS: Thanks again for your time. I appreciate it.
ED: My pleasure, thank you.
————————————–
I believe gold should be part of a well-diversified portfolio. It is the best way to protect your wealth. Precious metals are the safety net providing insurance against inflation. Don’t let a manipulated market scare you away from reaching your personal “comfort level”.
Our government has over $20 trillion in debt and $100+ trillion in unfunded liabilities; the risk of high inflation is real. What happens when the bills come due? We can hope for the best, but must prepare for the worst. I hope I never have to sell my gold!
On the Lighter Side
Last month we drove from Chicago to Phoenix paralleling old US Route 66 to Flagstaff.
Friend, Judy H. posted something neat on Facebook:
“Leave anxiety in the dust. Studies show that driving on the open road may help to relieve stress. Take that theory for a test drive on Route 66.”
While most people despise rush hour traffic, driving the open road with no timetable is a lot of fun. One of the most stress free years of our lives was when Jo and I sold our home (furnished). We put our personal belongings in storage and spent a year in a motor home traveling on the open road.
The book “First We Quit Our Jobs” motivated Jo and I to give it a try. It compares the rat race and the open road. It’s a great read!
When we got home, we put our phones and I-Pads back in their familiar places with cords everywhere. Amazon offers a better way, a 7-Port USB Charging Station Dock.
Thanks again to our many readers who have ordered through our Amazon Link. Their small commission helps to offset some of our costs and keep this site free.
And finally…
While discussing the open road, let’s remember some of the famous Burma Shave signs:
DON’T LOSE YOUR HEAD
TO GAIN A MINUTE
YOU NEED YOUR HEAD
YOUR BRAINS ARE IN IT.
Burma Shave
THE ONE WHO DRIVES
WHEN HE’S BEEN DRINKING
DEPENDS ON YOU
TO DO HIS THINKING.
Burma Shave
NO MATTER THE PRICE
NO MATTER HOW NEW
THE BEST SAFETY DEVICE
IN THE CAR IS YOU.
Burma Shave
Until next time…
Thank you both. An entire library’s worth of study, shrink-wrapped and packed into a nut-shell for the benefit of uninitiated, honest, upright working people everywhere! I have spent, since 2008, thousands of hours reading, watching and listening, trying to wrap my head around the sheer magnitude of this sociopathic scam. I’ve tried to explain it to anyone who’ll listen but my exasperation betrays me. I start pounding the table and raising my voice and, naturally enough, I unsettle people who’re simply trying to get by and feel they can do without yet more bad news; especially from a ranting, 6 foot, 18 stone, not very pretty lunatic. But lunacy is the name of the game! That’s the beauty of it, from a “Master of the Universe” point of view: Honest, regular people are incapable of perceiving the height, breadth and depth of a global scheme designed to split them from whatever wealth they’ve managed, against all odds, to accumulate. So again, thanks gentlemen, for your brilliant exercise in accurate, informed brevity.
Kind regards, NH.
Dear NH,
Thanks for the feedback.
I feel the real frustration comes from the fact all the evidence is circumstantial.
While the lawyers may call it a preponderance of evidence, if it only gets presented in the court of public opinion, people are going to become angry and frustrated.
The real question we all ask is when will the correction take place?
Regards,
Dennis Miller
The recent failure to deliver physical by a subsidiary (or related entity) of DeutscheBank may be the start of the process leading to true price discovery. Previous delivery defaults, in the Netherlands and by Swiss Banks, are still in litigation and have been largely ignored by the thoroughly corrupt and captured financial media. But this latest is a biggie. Other professional commenters on the PM market have noted the current scarcity of gold bars in volume and the suspicion that major London and US vaults are echo chambers. I would imagine that soon gold will be unavailable at any price.
Hi,
Germany tried to repatriate their gold from the US also: http://www.zerohedge.com/news/2014-06-23/germany-gives-trying-repatriate-its-gold-will-leave-it-feds-safe-hands
That too sent up a huge red flag with me.
Best regards,
Dennis Miller
“The real question we all ask is when will the correction take place?”
Certainly that’s one of the questions, but perhaps an even more poignant question, one that should make us pause and reflect on the fact that no matter how much we hope for that “correction” to come SOON we also most assuredly have to be careful about what we wish for, is “what will that ‘correction’ look like once it happens?” We “know” from history that all fiat / ponzi schemes come to an end sometime. But what we can’t know from history is what it will look like this time since never before in the history of the world has the scheme been on such a pervasive and global scale.
And IMO this is going to be true especially for those living in the USSA who have become habituated to and for the most part feel entitled to a lifestyle WAY beyond their means (or rights) simply because of the present reserve status of their currency. They, through their govt proxies, have robbed the working classes of the rest of the world (and future generations) to live a life of leisure, and don’t even know or recognize it. But the govt upon whom so many put their CONfidence (that they will wake up tomorrow and it will be just like today) is broke so far beyond what can be described in any real terms and has made promises to them that depend for their payment on multiple generations to come that will not be able to pay.
So when the end comes…the “correction”…most won’t have a clue what has happened or what to do. Scream as loud as they want, tweet, post all over FB, text everyone on their iPhone, get mad, charge DC or fedl bldgs or local govt bldgs or the closest authority figures with pitchforks or worse, it will be too late. All they will know is that everything that was reasonably simple to have or get or buy yesterday has become much more difficult today…and probably excessively. They will be at the mercy of their sociopathic overlords, who by definition have none. And again, who knows what else has been planned for that moment…martial law?, militarized cops?, detention camps?, worse?
Bottom line: best to be preparing as best you can and know how NOW, even without necessarily knowing exactly what it will look like, since you can’t know the WHEN until it happens…and by that point it will likely be too late to prepare. Just know though that the WHEN is all but inevitable. Got gold / silver (the real stuff, not an ETF)?…got some spare cash?…got some food to eat (those market shelves will get emptied out in the blink of an eye)?…got a place to go to be safe and live and grow stuff?…got any plan at all? What are you waiting for????
Dear JT,
You make some good points. I have an article coming out in a few weeks where I have concluded that there is a difference between predicting and preparation. The adverse consequences of not being prepared, particularly for those who are close to retirement are horrendous.
Focus, as you suggested, on what you can control and hope for the best.
Best regards,
Dennis Miller
What about forecaster Mr. Dent who is predicting that gold will go down to $ 700 per ounce in mid 2017?
Hi,
I subscribe to his material also and see his predictions. He may be right.
You have to be the judge. I am looking long term.
Check out this link: http://www.usdebtclock.org/
According to the US debt clock, in 1913 the dollar to gold ratio was $29.24. Today it is $8,124/oz.
Those who believe the market is manipulated have a ton of evidence but no smoking gun.
My bottom line is this. Maybe Dent is right and I stand to lose some money. If however the price is manipulated and Ed is right, the price of gold will skyrocket and my USD holdings will tumble due to inflation. At this point in life that risk is much too large; I personally prefer to hedge.
That is one beauty of the internet. Read all points of view and decide what you feel is best for you.
Regards,
Dennis Miller
so when will the suppression end? the ‘Ruling Class’ uses this fiat system as the basis for all it’s power. it’s human nature that people in power won’t give it up and just walk away; they’ll fight to keep it. this leads me to the conclusion that the present system and the ‘value suppression’ of all things real will continue until they can’t do it anymore. the only scenario they won’t be able to continue it is when they precipitate a hot ‘shooting’ war [nuclear?]. this will happen probably when the RClass realizes it’s about to lose control, and they’ll start the hot war in their bid to keep power. this will also entail a ban on the PM’s in general, as the ‘patriotic’ thing to do to support the war [along with Martial Law and all the rest of the bullshit they do during wartime.] this will lead gold / silver markets being ‘cash only’, with much higher prices [anything illegal commands a much higher price than if it were legal]. so PM markets will be transformed into the same thing as drug dealing is now: need to carry weapons, have backup, large amounts of cash on your person, and you won’t be able to call the pigs in case you get ripped off.
a bit of a pessimistic view for sure, but you gotta know the RC won’t allow us to win in a ‘normal’ environment. to do so would mean the end of their power base…..and that ain’t happenin’ without them putting up a serious fight first…….. 🙁
Hi Scott,
Thanks for the response, I appreciate it.
I wish I could answer your question, but I don’t know the answer.
One possibility is the dollar eventually collapses. When that happens there is chaos and normally the government either falls or there is a huge overhaul.
I am an optimist and a believer in the Constitution. Hopefully the public will get so fed up they throw them all out and start over. I have often wondered what would happen if Congressional Term Limits had happened as part of the Contract with America.
Regardless of the outcome, we can hope for the best, prepare as best we can, and survive. Having travelled the world I believe that mainstream Americans are an independent, and a creative group of problem solvers. There is much to be said about American Spirit and I saw it alive and well this summer in rural America.
Unfortunately I fear the Russian scholar I mentioned in my 9/8 article has outlined Plan B. I recall an article of long ago that discussed Texas seceding from the union and going back to the values of our forefathers. It said something like “it will be easily spotted from the air as the line of cars for people migrating there will stretch to the Canadian border.” Let’s hope it does not come to that.
Best regards,
Dennis Miller
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Dear Kelly,
Thank you for writing, I am glad you found us. We are trying to grow our readership by word of mouth so please feel free to forward our material to your friends.
I have vowed to keep the website free and want to get big enough where I can put some advertising on the site so I can cover my costs.
Best regards,
Dennis Miller
Thanks for the article. A few questions come to mind.
1) While a lot of people recommend gold, I have found very few people who talk about when the right time to sell would be on the other side. I’m not asking for predictions, I’m talking about strategy. I’ve heard one person say to look for a 20x increase in value, and others look for a ratio between silver and gold. My point is that any investment/hedge strategy has to be a strategy, and we should know before going in what this could look like. Any insights?
2) When a private investor sells, what is the best way to sell and to who? Yes, I could go to my local coin and bullion dealer, but they are only going to give me their wholesale price. I don’t think Craigslist would be a good idea. What other options are there?
Thanks!
Hi Glen,
You ask some good questions. There are two different situations.
I hold gold as insurance, calling it core holdings. It’s insurance against armageddon, more than likely high inflation. I hope to never have to sell from my core holdings because, if I do, something bad happened. Where and how you sell it depends on several things.
1. If you own the metal and store it yourself, you can generally sell it to a local dealer. I agree, it can get expensive if you want to sell.
2. There are several firms where you can buy gold and they store it for you. Check out GoldSilver.com or Hard Assets Alliance who both offer offshore locations. You are charged storage fees, but have the option of having the physical metal delivered to you when you ask, or they will liquidate your account and send you the proceeds. There is always a buy and sell price for metals and the dealer makes a profit on top of it. The on line business is very competitive and so are their fees. As an aside, I would suggest calling a couple online dealers for a quote. There is a good chance their prices will be more competitive than the local shop. Personally, I would not call the firms you see advertising on television. Their fees would also have to include massive marketing costs.
The second question you ask is about strategy, 20x etc. This is speculative investing, buying with the intention of selling for a profit in the future. This is not core holdings for insurance. Most every expert in this field (and I am not one of them) issues warnings about limiting your risk because it is so speculative. My feeling is look at it the same way you would any type of speculative investment. It is high risk, high reward potential. One popular theory is when you double your money, sell half so your remaining risk is your profit; playing on the house’s money if you will.
If you speculate, one of the first issues I would ask is this. Are you buying physical metal, mining stocks, or Exchange Traded Funds that track the metal prices? Each has their own characteristics. They are sold in the market like stocks. Some of the junior mining stocks offer good potential, but they are so thinly traded liquidity can be a real problem. Your hope is the company finds gold and gets bought by a larger company that has the resources to turn the field into a producing mine.
If you look toward ETF’s that (theoretically) follow the price of gold, I’d suggest some research. GLD is a popular one; however they are moving gold in an out of warehouses all the time. Some people fear that it is not fully backed by metal they own. I’d check out the Sprott funds. They put gold into a Canadian Bank and have a fixed number of shares. You may pay a premium for their shares but it is backed by metal. A lot of investors wait for the price to drop and buy at a discount.
I would think the most important thing is to be on top of the market as opposed to some math formula. Understanding cause and effect is the key because the swings can be large and quick. In speculation, you have to be ahead of the market which is very difficult.
If one is investing money earmarked for retirement, I would caution them to be very careful. Buying gold for core holdings is a MUST. It’s insurance and you hope you never have to sell it. With retirement money, preservation of capital takes precedence. You are no longer trying to get rich quick; but rather trying to avoid getting poor.
One last thought. I know what Craigslist is but have never used it. If the price of metals goes through the roof, I doubt I would want the world to know I am sitting on gold in my home. I’d be concerned about safety.
Best regards,
Dennis Miller