Bill Murphy and James Turk discuss gold price manipulation
"What do I get if I own gold or silver today?" What you get is the fact that you own a tangible asset that's historically always been money, and there's no counterparty risk, which is increasingly important when you're in a financial bust like we've been in the past few years. When you have no counterparty risk, you own a tangible asset. The value of that asset is in the asset itself. It's not based on someone's promise.
I remember as a kid, growing up in the 1950s, that my parents could go into the gas station and with two silver dollars fill up the family car. And today, with two silver dollars, you can still do that, but only when you look at silver at the face value of the silver itself, not with the dollar amount on the coin. So it's a good example that silver does have usefulness because it preserves purchasing power over long periods of time. And that to a large extent, this rise in the price of silver is really just a decline in the purchasing power of the dollar. Maybe we're going to see more and more people moving into the precious metals for that simple reason that you alluded to, the fear factor, that people want to preserve what they have.
What's going to have to happen is understanding that Americans just can't afford what we've been told we were entitled to all these decades. We're broke. If we are just going to keep kidding ourselves and printing money, keeping interest rates down... The bankers love it. Wall Street loves it. The politicians love it. But as we get broker and broker and broker, we're probably looking at another flash crash, except that will be real, out of nowhere. Things are just going to tank at some point. A collapsing dollar and soaring inflation is not good for our markets. As it is already, the real estate market, with all that's been done, is a total disaster. And even now, the jobless claims, the employment situation in the United States, instead of showing signs of improving, it's starting to tank again. This is after all this quantitative easing and stimulative measures. The standard of living, I'm afraid, I hate to say this, is just going to fall apart in the US
Bill Murphy (GATA)
I wholeheartedly agree with the topics discussed in this interview. While I disagree on some timing issues, like the collapse of the US dollar, the general trend is very clear, debasement of the dollar and the rise of gold despite manipulative forces.
In my view, the dollar is likely to rise short term in response to the trouble in Europe which will result in commodity prices dropping. Soon afterward, in my view, we will see the flight from the dollar as QE3 unfolds and debasement continues. As always, timing of these events is difficult or impossible to predict, but this autumn looks ripe for the final US dollar rebound, or if you prefer, dead cat bounce.