The abolition of the gold standard has given at this metal the attribute of “free market”. However if we refer to the story and since the arrival of GATA on the world stage, everything suggest that the fundamental laws don’t regulate everything and the irrationality prevails more and more.
Behind the purchase desk of the company Orobel which I work for, the questions are going well on the price of the mysterious golden metal.
“How much is it per gram today”
even before getting out the junk.
“And do you think it will go up or down?”
If I knew Madam, I will probably be on my yacht off the Bahamas watching gold price and calculating how much will I earn per minute !
Since the abolition of the gold standard, the term open gold market appeared. But is it as much as we think ?
Answer is in the question: No !
Already at the time of the Roman Empire, emperors decided to devalue the currency – consisted essentially of gold coins – by reducing the weight of parts or their titration. The Emperor Caracalla in the year 215 instituted the antoninianus, which was actually a double silver coin weighting the weight of a penny and a half. This in order to finance its soldiers that it had increased the balance.
Under the reign of Valériens, the title of the antoninien was also down about 20% silver, and the government to improve the appearance of the coins and make them seemingly “finer” set up an enrichment process of the silver surface.
The system put in place by John Law in the XVIIth century was also a pure manipulation of the gold price. By promoting investment in paper money at the cost of monetary gold.
Law decides to break the French gold and silver hoarding, limiting the metal ownership to 500 pounds per household, on pain of sanctions. Gear go on and the new Comptroller General of public finances suspend the discharge value of gold. But bankruptcy is imminent, the rue Quincampoix in Paris is the seat of riots and general panic, lead by people claiming their gold from the general bank.
Similarly, Americans suffered the same fate. Roosevelt declared “rescue the banking system in national emergency” in his 1933’s decree requiring restitution to the Federal Reserve any form of gold in return for payment, at risk of penalty that could go up to $ 10,000 and 10 years imprisonment if violation of the decree.
The situation has not changed because none market through which millions of people are speculating is really open and free. All stocks markets are governed by robotic machines, realizing algorithms continuously.
The very important transaction are made by agents, best known under the term “Dark Pools“.
And that’s why the GATA (Gold Anti-Trust Action Committe) was created in 1988 ! To denounce these underlying facts on the market.
Ruthless, the agency faced to the Federal Reserve, to push them to admit that arranged exchanges were made with foreign banks. Around what is commonly called “round table” – but whose name “G-10” sounds better to our ears on TV – powerful treasurers and representatives of central bank discussed in order to organize coordinated policies with respect to the gold market, and so pull over to their profits.
Whatever I try to understand the fundamentals that govern financial markets, plunging me into graphic analysis and attempting to correlate indices with those of the gold price. It is not so ! Supply and demand are not the only factors governing the market today.
Gold spot is essentially made up of paper gold, a fictional gold which doesn’t reveal the real value of gold if paper gold was nonexistent. Our dear central banks therefore benefit from the incredible amount of funds available, flooding the market with short positions, so to encourage small investors to sell their assets in order to limit their losses.
And only a bank can afford to sell such quantities of gold that they don’t own and cash such a loss. Why ? Because it can create money as much as it want !
Indeed, a bank will never tell you to buy gold, and that’s why it does so. To protect the value of currencies !
These operations therefore have one single goal : destroy the warning signs of collapse of the currency markets or in the eyes of the public.
I will display in a next article bigwigs of the gold market. But just know that the big players on the world stage are the only ones able to counteract the trend, and know what we unfortunately never know.
The miser doesn’t own his gold, it’s his gold that own him.