Gold versus Paper

Here’s another ridiculous gold price prognostication. These bearish sentiments are coming thick and fast now with ignorant pundits jumping on the bearish bandwagon in the false hope that they will be able to claim how smart they have been when the price of gold reaches their asinine targets, which it won’t. They’ll be hiding under a rock when the price of the metal reaches new record highs, which it will. They are linear forecasters, seeing what is already in motion will continue in the same direction and using what they consider are clever analyses to reach their conclusions.

All you have to know is that the gold price and the value of paper money and assets valued in paper money are inversely correlated. Gold is the measure of paper currencies and assets valued in paper; in particular it is the measure of the dollar, which is the reserve currency. When the price of gold is high in dollar terms, it is effectively telling the world that the paper dollar should not be trusted as the reserve currency. That is why the US and its proxies, whenever gold has risen in price, have waged an unremitting war on the price of the precious metal.

The London Gold Pool (November 1961-March 1968) fiasco in which 8 countries led by the United States tried to hold the price of gold at $35 per ounce by selling gold in the London market. This failure, which led to the loss of a significant amount of the metal itself to all participants, but particularly the US, which was 50% of the pool. The failure of the Pool was followed by a two tier price system for gold, which itself couldn’t be maintained and led to the closing of the Gold Window by President Nixon in August 1971, whereby the dollar lost its tenuous tie to gold and became just another paper currency. Throughout the 1970s the US and IMF conducted overt gold sales in a futile effort to arrest the rising price which eventually reached $850.00 per ounce in January 1980.

Central bank selling during the 1990s amounted to 2000 tonnes (Source: World Gold Council). This amount was supplemented by the 400 tonnes of gold that Gordon Brown, the British Chancellor of the Exchequer sold through a series of 25 tonne quarterly auctions starting in July 1999. This was clearly aimed at doing the maximum damage to the gold price, but in that regard was not successful. The price of gold merely repeated a double bottom just above $250.00 per ounce in 2001 and from that point started its great bull run.

Prior to the 1990s the United States had been the most overt gold seller, in an effort to hold down rising prices, but thereafter other countries had stepped in to sell gold. This begs the question, ‘had the US run out of gold to sell?’

“Rumour has it that President Johnson sold all the US gold holdings in a bid to deflate the price of gold, which was rising against the dollar. The British government was said to be in collusion with the United States and was supposed to assist the US in repurchasing the gold at lower prices following the US gold sales.”The Long Wave Analyst, Special Edition September 1999, P. 20. May I encourage you to read this piece, just go to the website,; go to publications, special editions and scroll down to Four Kondratieff Cycles 1789-1999.

Supposedly it was because the US failed to buy back this gold, that President Johnson failed to seek a second presidential term.

“In support of this rumour, James Turk writing in his publication, Free Market and Gold Report, cites the following:-”

“The gold auctioned by the US during the 1970s was not in coin melt quality, because all the gold in ‘good delivery’ had already been sold.” According to Mr. Turk’s sources the gold sold at these auctions was all that was left in official US vaults and was the citizens’ gold confiscated by President Roosevelt in 1933.”

“W. Gordon Tether a long standing business and economics reporter of the esteemed Financial Times of London was inexplicably fired by the newspaper after he had reported that the US government had secretly sold its entire official gold reserve.” Turk, James. Free Market and Gold Report, 25th April, 1994

In May 2011, the International Monetary fund chief, Dominique Strauss -Kahn was in the United States apparently on a mission to have the United States deliver 191.3 tons of gold to the IMF, which had been pledged in April 1978 under the Second Amendment of the Articles of Agreement signed by the Executive Board. While there he apparently was informed by rogue elements within the CIA that all the gold reportedly held by the US was gone. Strauss-Kahn was, of course, framed and jailed for sex crimes and relieved of his position within the IMF, no doubt to stop him talking.

If indeed the U. S. has no gold, that in itself is more than enough reason to wage war on the price so as to keep the facts under cover.

To be continued

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