September 2011


In a two-part essay posted at 24hGold, the economist Antal Fekete provides a compelling interpretation of the gold price suppression scheme, which is also a scheme for the support of U.S. government bonds.
Fekete writes:

 “The government has the following desiderata: 
 1) To have a floor below the bond price
 2) To have a ceiling above the gold price
“Indeed, without such a floor and ceiling, the bluffing epitomized by check-kiting could be called, and the international monetary system would unravel. 
“To promote these desiderata, the bond and the gold markets are manipulated. It is true that the Treasury and the Federal Reserve prefer not to play a direct role in it. Speculators are induced to do it for them through the lure of risk-free profits
“Simply put, the role of the derivatives market is to make phantom bonds available to buy, and phantom gold available to sell, for the benefit of speculators. It is no problem to make speculators want to buy phantom bonds. They have the incentives. They know that the Federal Reserve is going to buy, rain or shine. This offers a risk-free opportunity for profits. All the speculators have to do is to pre-empt Federal Reserve purchases — that is, to buy beforehand. So let them. 
“The tricky part is how to make speculators want to sell phantom gold. This problem is solved by setting up a gold mine as a front, beefing it up as the world’s largest gold-mining concern, and letting it introduce a phony hedge plan.

Fekete adds:
Clandestine government policy to manipulate the bond and gold markets is revealed by statistics on the number of outstanding contracts in derivatives, showing an inordinate open interest in bonds on the long side and in gold on the short side. Neither has any rhyme or reason to exist, in view of the underlying economic reality. What is more, the long interest in bond and short interest in gold derivatives are increasing exponentially, far outpacing the amount of bonds in existence and the amount of gold available for delivery. 
Moreover, there is an extreme concentration of derivatives in the hands of three or four firms — namely, concentration of long bond and short gold positions.”

Part I is headlined “When Atlas Shrugged: The Lure and Lore of Risk-Free Profits” and it is at 24hGold HERE
 

Part II is headlined “When Atlas Shrugged: Gibson’s Paradox and the Gold Price” and it is at 24hGold HERE

The King World News weekly precious metals review finds Bill Haynes of CMI Gold and Silver reporting a quiet week on the retail front but futures market analyst Dan Norcini shaking his head at brazen intervention in the gold market by central banks. 
You can listen to their commentary at the King World News Internet site HERE
James Turk interviews Matterhorn Asset Management‘s Egon Von Greyerz (one of the most brilliant minds in precious metals today) on the importance of owning physical gold (and silver of course) OUTSIDE the banking system.