The Knives Are Out for Gold

November 23, 2015 | By | Reply More

If we believe all that we read, then we can have little hope that gold will recover any of the lustre it enjoyed between July 2012 and October 2013 in the foreseeable future.

Financial pundits of every hue are virtually unanimous in talking the yellow metal down to the delight of Western Banks, not least of which is the US Federal Bank, assorted brokers and highly leveraged speculators.
Right now, the possibility touted as a near certainty, of a rate rise in December is keeping the dollar buoyant adding to the doom and gloom surrounding precious metals.
All this in the face of poor economic news coming from the US and Europe plus Japan already back into recession. Apart from dollar strength can we also believe that the low to zero inflation figures touted to us by our masters account significantly for gold’s continuing decline.
I for one believe that the knives are out for gold for a far more significant reason.

No Gold, No Power

It is common knowledge in the precious metal community that China and Russia are continuing to add impressive amounts of gold to their already loaded reserves and are using the metal in a growing trade with nations mainly in the East.
China is gradually offloading its massive dollar reserves with a growing a school of thought that the yuan, backed by gold, will eventually surpass the dollar as the worldwide trading currency.
This eventuality is obviously anathema to the US bankers and politicians who believe that they should continue to be the worlds superpower, both militarily and economically.
Well the Romans, the Spanish and most recently the British have all thought that they could continue to dominate the world in the same way and have eventually been superseded. The common factor in their fall has primarily been the destruction of their currencies, currencies not backed by sufficient gold!
All Good Things Must Come To An End
The huge and highly leveraged futures trade in gold has been a godsend to the Fed who, in order to keep the dollar afloat and the stock markets reaching new highs has kept market forces at bay by creating an artificially low interest economy, in reality a negative rate.
The interest rate less the inflation rate, even though low, equates to a negative rate in the real economy. Suffice to say that the futures trade in gold bears no resemblance to the amount of gold in existence, it is even less substantial if that were possible, than the current paper currencies with insufficient asset backing, i.e. the dollar, etc.
Essentially, it is keeping the price of gold down for the benefit of the dollar and the stock markets. Incidentally, and in passing, the valuations of so many of the top 500 companies bear no resemblance to their worth, thanks again to the free rein given to speculators and wide awake short term investors taking advantage of the low rate scenario.

How long Can the US Stay a Credible Superpower?

We are seeing the early signs of a change in the US power base as of right now as the Fed tries its utmost to shore up an economy overloaded with massive debt attempting to keep up its military power base while the politicians promise more and more unaffordable handouts to the public in order to get elected.
So it has been up to Janet and her predecessor Helicopter Ben and their committees to keep up appearances for as long as possible. Even they must know that the longer they continue to avoid the harsh realities, the lesser the chances their successors will have to retain the credibility of the United States and its economic allies, the Western world.
The crash will come, don’t know when, but the natural successor is already waiting in the wings, and China loves gold!
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