Gold Suppression At Any Cost

As gold reached toward the $2000 mark back in August one could see the nervous twitches and shifty eyes of central bankers and treasury officials round the globe.

After a decade long bull run from under $300, the precious metal was taking aim at the inflation adjusted 1981 high of $2600.

But the psychologically important $2000 level was too much for the central bankers and their bullion bank co-conspirators to bear.

To break that barrier would mean admitting that all their interference in the market through interest rate reductions and bond buying (QE) was to no avail.

So they hatched a little plan similar to the one done in 1999.
"We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded. Sir Eddie George, Bank of England, September 1999
Yes, central bankers hate gold.

How can that be you ask, as they hold the majority of the world's bullion?

Gold measure two things.

Stress in the financial system and the degree of accommodation in monetary policy.

What gold does is proclaim the truth to what central bankers are doing to their respective currencies.

In a fiat currency world, there is great temptation to borrow money for government projects and then debase the currency to pay them back in smaller dollars.
Commonly this is known as fraud.

Yet that is how western democracies have operated for at least the past 40 years under the US dollar as the global reserve currency, and fractional reserve banking.

Governments need greater and greater amounts of dollars to accomplish their pathological projects of war and income redistribution.

The only way to accomplish this is to keep the supply of credit (debt) growing to boost a slumping economy.

Yet the plan has not worked very well.

Europe is in crisis with over indebted nations that can't repay their debts.

Banks are over-leveraged and many have tangible equity levels of only 1% to 3%.

America has political and economic turmoil as the extremely wealthy become wealthier, and the rest of us take a financial licking.

So to keep the masses from turning away from the dollar and other fiat currencies to the long term store of value that is gold, the central bankers have embarked on an active suppression campaign.

Jesse's Cafe American has an excellent article on this topic which involves central banks leasing gold to bullion banks to drop the spot price of gold. Link here.

So we can expect that there will be active suppression of bullion prices for some time as desperate central bankers attempt to keep the current banking system alive.

For me, I will continue to hold gold and even increase my positions as the price stabilizes at a lower level for now.

Central bankers won't be able to continue their lies and suppression for ever.