On the cusp

[ndoa18]

I believe that the train has already left the rails. The wreck lies scattered in reality but the smoke and mirrors of our complex unraveling financial system hides this reality.

The first global financial collapse was triggered by bad banking practice by a greedy, unregulated financial system in the private sector. To save the financial system from imploding major sovereign nations like the US and the UK stepped in with guarantees and loans while the banks in a few smaller nations, like Iceland, simply folded.

The difference between the financial collapse of 2008/9 and the coming sovereign debt crisis is that there is no one left to prop up highly indebted nations from their growing financial woes. Greece, followed by Spain and Portugal, are starting to pull the Euro apart at the seams as speculators sell it short – expecting the currency to implode in the near future. Greece has been supported by the IMF (which has been forced to sell half its gold reserves in the last 12 months to raise money). India bought 200 tonnes of gold from the IMF in late 2009.

The only question I have in my mind is whether the impending collapse of the fiat financial system will trigger deflation or hyper-inflation. (The fiat system is a country’s currency valued only on what speculators and traders dictate it is worth against a basket of other currencies – there is nothing in reality supporting the value of any country’s financial system; including the money you use day to day).

The fiat system is preferred by governments because they can simply print money to overcome debt and budgetary problems. There is no regulation on how much money they print. To maintain some sort of integrity in the value of a nation’s currency one solution is creating deflation which will result in massive unemployment and banks dramatically tightening up on loans. To do this the amount of money in circulation has to be dramatically reduced. This option has already been discarded by the US and other major nations who see the resulting turmoil as too hard.

The other option, currently being practiced, is opening up the printing presses and just printing money to meet the needs of the people and the government. Obviously if you double the number of shares in a company without increasing its value you halve the value of each share. Likewise, if you double the amount of money in circulation you halve the real value of the currency. Simple mathematics. But creating money creates debt and inflation.

What is happening now is that there is so much debt in a growing number of sovereign nations (unlike private banks and companies) that they cannot support the interest on this debt through raising taxes.

The smoke and mirrors come in because there are a large number of major economies facing this nightmare scenario right now. Greece is the most visible example of this today but many, including the US, are standing on a knife’s edge but like lemmings continue to speed towards the edge.

When major currencies like the US dollar are short sold out of existence by speculators hyper inflation will create chaos – like in Zimbabwe. It is only the active printing presses in most of the nations of the world printing more money that has kept the deflating value of currencies in balance. (One of the few exceptions is the Australian dollar which has risen in just a few years from about fifty cents in the US dollar to almost parity today. Even here in Australia there are growing concerns about the government's ability to pay the interest on its exploding sovereign debt and we are, compared to other nations, "in a strong position"!).

While all this is going on gold and silver (which have real tangible value) have lagged well behind the inflation that has already resulted in the currencies of sovereign nations. Even today gold and silver reflect only a fraction of their real value when compared to earlier times. There is clear evidence of the troubled banking system manipulating their values - even today.

This is all about to change. I believe that, right now, we stand on the cusp of a major implosion led by a collapse in the Euro as more European nations are unable to pay their debt. The immediate result of this will be banks increasing the cost (interest rates) of “fiat” money in an attempt to reign in an impossible situation. Because we live in a "global economy" rising interest rates will impact on everyone around the world whether it be a business or home loan, or government debt.

I believe that when the collapse comes it will happen overnight like a heavy weight falling over a cliff. For example, in January 1980 the silver price, which Bunker Hunt tried to manipulate, fell from over US$50 to about US$3 in a matter of a few hours.

That was then, this is now. Following hard on the heels on the collapse of the Euro will be the US dollar which is in an untenable debt laden position. Speculators will flee the fiat system leaving global currencies in disarray and valueless. Retirement funds will have no value and stock markets will quickly collapse.

When this nightmare scenario happens the price of gold and silver (in coin and bullion) will sky rocket to levels you could never imagine against the US dollar as money markets try to find some form of value backing a new system.

I am aware that right now investors holding silver and gold certificates are endeavouring to acquire the promised gold and silver represented by this paper but are having problems doing so. It has been reported that even the well respected Perth Mint is having problems filling the current demand of its paper holders requesting the physical gold and silver. Clearly there are more paper certificates in private hands than real gold and silver they purport to represent.

When one considers that the spot traders in gold and silver hold a lot more paper than the physical gold and silver they are supposed to represent you can see the need to hold the physical commodity rather than a paper promise (this used to be the basis of our paper money).

In recent years my strategy, as I look over the abyss, has been to acquire and hold physical gold and silver. Coins is one of the easiest ways of doing this and regardless of their mix with other metals the precious metal value they represent will always be at a premium in years to come as the spot market collapses (which I believe it will when the financial system collapses).

Ironically I believe that, apart from buying gold and silver, the best strategy for your financial future right now is to reduce debt and exposure to a fickle global banking system that will look at any strategy to protect its own asset base.

PS I also believe that a few areas such as popular collectables like rare books, maps, documents, stamps and documents will hold their value in a world of dramatic change.

Kind regards

Scott Balson

[ECONOZONE]

Not a very rosy picture.

[MsPlod]

Ironically I believe that, apart from buying gold and silver, the best strategy for your financial future right now is to reduce debt and exposure to a fickle global banking system that will look at any strategy to protect its own asset base.

PS I also believe that a few areas such as popular collectables like rare books, maps, documents, stamps and documents will hold their value in a world of dramatic change.

What do you think about the gemstone collectors?

[alloway65]

What do you think about the gemstone collectors?

Not Much!!!;)

Only a fun hobby uless you are collecting/holding certified investment diamonds over one ct.:p

Re coloured Gemtones as found on BoB, for example "retail" value R60 000.00, possible price realized on BoB R1000.00.......if one is very lucky!

I reiterate Scott's views, I have been a gold and silver bull for decades and am presently hoarding!

I also have some "paper" Silver offshore and I also am trying to convert it into silver bullion.

I luckily saw the collapse coming in 2007 and liquidated all my share holdings except my gold investments.......and my bank was kind enough to and still is paying me just under14% per Annum...until later this year!!!:D

Timing is everything....if you get it right!!!!

David

[ndoa18]

Since posting my comments a couple of days ago a few factors have moved the crisis to a perfect storm.

First is the chaos in Europe right now because of the volcanic ash grounding all planes (ironicaly a volcano in "bankrupt" Iceland!) Europe's toursim industry is a major revenue earner - especially in the poorer countries like Greece and Portugal. The tourism tap has been turned off by the grounding of these planes and, as a result, govt revenues and related employment has been badly impacted.

Second is the Goldman Sachs fiasco in the subprime loan industry. This company in many ways represents the scams that the greed-based banking industry pull. The fraud allegations against Goldman Sachs are well grounded and WILL have major repercussions, As a banking industry leader the pack of cards (banks) below them is set for a fall.

In this coming week watch the global stock markets as the impact of both these events starts filtering through to other areas.

Although these dramatic events might appear unrelated they are, in my view, like big shock waves clashing together and bringing forward the timeline of the collapse of the old financial system.

Interesting times!

Kind regards


Scott Balson

[MsPlod]

Fascinating synthesis Scott, have presumed this will happen for some years, too many houses of cards, too interlinked, for it not to happen. The energy, climate and natural disaster crises simply edge the timelines that much nearer.

Re coloured Gemtones as found on BoB, for example "retail" value R60 000.00, possible price realized on BoB R1000.00.......if one is very lucky!

I also have some "paper" Silver offshore and I also am trying to convert it into silver bullion.

:D Have NEVER believed any of the hysterically funny 'retail' gem values - and am a bit of a metals hoarder meself. Some of the coloured gems sellers enter the realms of fantasy and other true fiction with their estimated retail values don't they?

Keep it coming Scott...

And have a look at: http://www.leap2020.eu/GEAB-N-43-is-...ank_a4531.html

[ndoa18]

Fascinating article by Greg Canavan on the historical manipulation of the gold and silver prices by banks... and why this time it will be different (see piece highlighted in red below).

Gold and the Coming Short Squeeze
By Greg Canavan

Greg Canavan is the editor of Sound Money. Sound Investments, a weekly report on the best value investment ideas in the Australia share market, with a commentary on the global economy and economics.

A few weeks ago a momentous event occurred in the precious metals market. As we detailed in a report to paying subscribers, a London metals trader by the name of Andrew Maguire recently blew the whistle on gold and silver price manipulation orchestrated by JP Morgan.

He provided exact details of the fraudulent trading to officials at the Commodity Futures and Trading Commission (CFTC) before and during the manipulation episodes. Unbelievably, the CFTC ignored these claims. Even further, they did not allow him to give evidence at the recently held CFTC hearings into position limits in the commodities markets.

(The hearing was in part designed to investigate whether allowing market players to hold large positions would lead to price distortions or manipulations).

So Mr Maguire went public and told his story to Gold Anti-Trust Action Committee (GATA) member Adrian Douglas. GATA have been claiming for years that the precious metals prices are manipulated in order to boost confidence in fiat currencies. Without the manipulation, gold prices would be much, much higher.

There are many who dispute this claim. But to be honest their reasons are flimsy. It's far easier to reject something out of hand than to be labelled a 'conspiracy theorist', as GATA and their supporters are. But if you take the time to actually think about the claims and study a bit of history, you'll see that government manipulation of the gold price is nothing new.

Let's take just a few examples.

Roosevelt's Attempts to Manage Gold

Soon after Franklin Roosevelt's inauguration in 1933, he set about the highly controversial policy of 'inflationism'. Funnily enough, the same policy is accepted wisdom today.

His first step was to 'temporarily' - which actually meant permanently - end the export and hoarding of gold. The next step was to announce that the US was off the gold standard.

The impetus for this was, as always, political. Roosevelt's primary motivation was to appease the farmers, who were groaning under the size of their mortgage debt and were demanding higher prices for their product. His aim was therefore to raise the price level for commodities, agricultural commodities in particular.

He became wedded to the theories of a Professor Warren from Cornell University. Warren believed that if the price of gold was increased, commodity prices would follow. Even the inflationist Keynes thought the theory was 'rubbish'.

But it didn't stop Roosevelt. He arranged for the Reconstruction Finance Corporation (RFC) to purchase gold on the US Treasury's behalf. Each day for weeks on end, the RFC would announce the price it was willing to pay for gold, a price that was always higher than the prevailing free-market price.

Needless to say the plan did not work, commodity prices did not benefit but the policy was causing grief in other parts of the economy. And faith in the value of the US dollar was at rock bottom.

Roosevelt convened a meeting to halt the experiment. With some of his advisers fearful of the effect of a weak dollar, Roosevelt said: '...if at any time the dollar should get too weak, the RFC could always reverse itself and sell some gold to the world markets'.*

And a few days later, that's just what they did. But it wasn't long before the period known as the 'gold standard on the booze' came to an end. In January 1934, Roosevelt announced the return of the US to gold at the prevailing market rate of $35 an ounce. In nine months the US dollar had lost 40% of it value against gold.

The London Gold Pool

Fast forwarding a few decades and we come to the second example of blatant government manipulation of the gold price. It concerns the London Gold Pool, established in 1961 to maintain the price of gold at $US35 an ounce. The paragraphs below are taken straight from Wikipedia. 'The London Gold Pool was the pooling of gold reserves by a group of eight central banks in the United States and seven European countries that agreed on 1 November 1961 to cooperate in maintaining the Bretton Woods system of fixed-rate convertible currencies and defending a gold price of US$35 per troy ounce by interventions in the London gold market.

The central banks coordinated concerted methods of gold sales to balance spikes in the market price of gold as determined by the London morning gold fixing while buying gold on price weaknesses. The United States provided 50% of the required gold supply for sale. The price controls were successful for six years when the system became no longer workable because the world's supply of gold was insufficient, runs on gold, the British pound, and the US dollar occurred, and France decided to withdraw from the pool. The pool collapsed in March 1968.'
Once again, this method of controlling the price of gold to maintain faith in the value of paper currencies (or in Roosevelt's case, to placate special interest groups) proved to be useless. A few years after the London Gold Pool collapsed, the US refused to exchange dollars for gold and the dollar price of gold went from US$35 and ounce of over US$800. It took a decade to get there but the gains, even if you participated in some of the move, were sensational.

Today's Gold Market

A similar situation is unfolding today. Andrew Maguire's revelations and subsequent testimony at the CFTC hearing, which basically conceded that 100 times more gold is traded than actually exists, will eventually produce a massive short squeeze in physical gold. A short squeeze means that players who are 'short', i.e. those that owe gold to someone else but don't actually have any, will be forced to buy gold on the spot market to honour their contracts. Either that or default.

We think there will at some point be a scramble for physical metal and the price will surge higher.

This will happen because gold is like no other asset. The whole reason you own it is to avoid counterparty risk. Gold is a store of wealth and by owning physical gold (or silver) you are not relying on the solvency of any other party.

So while some might think that $100 of outstanding claims on gold versus $1 of actual gold availability is ok because that's how other markets operate miss the point completely. They say the leverage inherent in the gold market is ok because if short sellers cannot deliver, 'cash' settlement is always available.

But gold is the ultimate form of cash, and those owning physical gold do so because they want to diversify away from paper currencies. Why would they settle for a paper cash settlement?

Up until now, hedge funds have been predominant in the gold futures market and they have been willing to settle for cash. They have simply been playing the theme that increasing monetary disorder will be good for gold. In other words they have participated in the gold bull market without actually owning bullion itself.

But that might be about to change. Recent revelations have highlighted a weakness in the market structure. In financial markets, weaknesses eventually get exploited.

We believe more and more large gold investors will begin to take delivery of their bullion to ensure that they actually possess what they own. The benefits of having 'exposure' to gold (via the futures markets or in unallocated accounts) without the costs of storage, insurance etc will soon be outweighed by the risk of not actually owning gold when its most needed.

This move to take possession or have gold securely stored has already begun on a small scale but it will intensify. Physical gold will slowly diminish in circulation, producing the short squeeze discussed above.

This process is known as Gresham's Law, named after 16th century English financier Sir Thomas Gresham. Its basic premise is that bad money drives out good money. It's happening right now and will continue to do so.

-------------------------------

[ndoa18]

On the supply side of the equation, it is worth noting that central- banks have now become net buyers of gold. After years of selling bullion, the public sector has done an about-face and this is very positive for the yellow metal. Currently, the creditor nations in Asia are sitting on mountains of foreign exchange reserves and in an effort to diversify out of paper, they will surely add to their gold holdings. Recently, we have seen China and India buy huge amounts of gold and you can bet your bottom dollar that they will continue to add to their tiny positions.

Gold is in a secular bull-market and every investor should own some bullion as an insurance policy. At present, gold mining stocks are undervalued relative to gold bullion, so those seeking extra leverage should consider investing in dominant gold producers. Finally, in our view, the high-cost South African gold producers, who do not hedge their production, offer the maximum leverage to gold. And at current (share) prices, these companies are being given away.

Source: Australian Financial Market News | The Daily Reckoning Australia

-----------------------

Kind regards

Scott Balson

[ndoa18]

Interesting perspective from Kitco... how fragile has the bankers hold on precious metal commodity prices become?

Montreal (Kitco News) -- With the world’s largest sporting event occurring in South Africa in June, many analysts are certain that the FIFA World Cup will curtail the nation’s limited power supply and push up prices of the platinum group metals.

South Africa is the world's largest producer of PGMs and a rash of power supply problems during the past few years have had an impact on mining, and the same thing could happen this summer, said Shamim Mansoor, Head of Precious Metals Sales for ETF Securities.

With an increased demand in power supply, there could be a real shortage of electricity to the mining sector, in turn limiting production, Mansoor said. More than 400,000 people are expected to descend on South Africa for the event and Mansoor does not see how a strain on the country’s limited electricity supply can be avoided.

The country’s state-owned company, Eskom, generates 95% of South Africa’s electricity as well as two-thirds of the electricity for the African continent. Mansoor said that Eskom has 36 200 megawatts (MW) of net generating capacity, of which 32 100MW is coal-fired (90%). In 2008, due to the unavailability of coal and to a delay in new power stations being built, Eskom declared force majeure in turn affecting the mining industry and causing a spike in the price of PGMs.

During the load shedding of 2008, platinum went from $1700 to $2100, palladium from $390 to $560, and rhodium hit $10,000 an ounce, said Mansoor. “All of these are impacted because 75% or more of all commodities are produced in South Africa,” she said.

Mansoor said that Eskom did not have sufficient supply to meet demand in 2008 and emphasized that occurred in the South African summer. "The demand peaks in the winter, in the months of June and July, which is when the World Cup is being held,” said Mansoor, a native South African. “The last estimate I saw was that 475,000 people would be descending on the country and that is most likely going to push up electricity demand during a period that is already at its peak,” she said.

Even though the World Cup is only one month, Mansoor thinks the repercussions will be felt early on. “The players come down early for practices, the journalists come beforehand, and many visitors will take an extended holiday; the impact will be felt a lot longer than the four weeks,” she said.

Mansoor noted that the high demand of power will not only come from the stadiums but from broadcasting centers, FIFA’s headquarters, hotels, and restaurants.
In order to meet the increased demand, Eskom may need to once again declare force majeure, freeing itself from any liability, and may have to introduce load shedding. Metals prices are likely to spike in such a scenario, said Mansoor. However, she does not feel the impact will be felt on gold prices, since only 10% of production comes from South Africa.

A spokesman for Eskom told Kitco News the company is not concerned about a lack of power supply. “We are confident that Eskom will be able to deliver sufficient bulk electricity supplies, ensuring reliable power supply during the World Cup," said Eskom spokesman Sibusiso Duma. "According to the FIFA requirements, each stadium will be powered by dedicated on-site generators - the load for Eskom would therefore be reduced by this action.”

In early April, the World Bank approved South Africa’s request for a US$3.75 billion loan to co-finance a new power plant in Lephalale, Limpopo Province. Mansoor said, however, the loan comes too late. “All the power stations they had planned to build for World Cup have not been built,” she said.

Recently, South Africa’s Energy Minister Buyelwa Sonjica warned that the country was continuing to suffer from a perilously low electricity reserve margin, and reiterated the government’s call for power savings of 10%.

[ndoa18]

There is a very interesting online CNN article that reflects on the Greece Sovereign Debt crisis.. See this link: Q&A: Greece's financial crisis explained - CNN.com

The financial slippery slope reflected in this article encompases most of the countries of the world, including Australia which is supposed (according to the latest IMF reports) to be the country weathering the "storm" the best.

I read in the last few days an article which states that over 50% of the British workforce today is employed by government related organisations. That is over half the working force employed in some way through taxation on the general population.

Through the farce that is FIAT money we have created a growing monster that has no lungs with which to breathe or grow, but the balls of a million bulls spewing out costly bureaucracies which are impoverishing the tax payer through growing sovereign debt. The ease of printing money has been a perfect fit for the big egos that drive the men and women around the world who we elect into "government".

There is now talk in some circles of the banks enforcing deflation (on the general population) to prevent hyperinflation and the collapse of the Fiat currency system.

In my view:

Why would they do this?

To further impoverish the man in the street and make him even more beholden to the faceless people behind the Fiat monetary system.

What impact will this move have on our children?

Make them even more enslaved by the money men.

Is there an answer?

Yes.

1) Standing up to the banks and bringing back a financial system which is just and fair with the people reclaiming the gold and silver bullion that many banks run by faceless people have accumulated through deception, theft, blatant fraud and extortion.

2) Establishing a financial system which has commodity values (like gold and silver) backing it rather than greed and corruption which has been the hallmark of the Fiat system.

We need to show that the emperor has no clothes and stop being the fool.

As sovereign debt becomes more of an issue watch the gold and silver prices start exploding. This shows that the peasants know the answers but do the bankers have the power to stamp out the revolution?

Interesting times ahead - I go with the people.

Kind regards


Scott Balson

[jwither]

I have already responded to this many times so I will not repeat myself here again. The OVERWHELMING evidence supports the DEFLATIONARY outcome in countries such as the United States. Not only do I not expect the USD to immenently collapse, I expect it to soar. As usual, the consensus opinion always assumes that the financial government "wizards" are in control when in actuality, they are not. Anyone who is interested in my prior responses can do a search on my user name here or on the NGC message boards under "world colonial".

As for the "lack of regulation" causing the financial collapase, that is a logical fallacy which I have also refuted on numerous occassions.

It is one thing to blame "capitalism" for the "market failures" but the truth of the matter is that the REGULATED financial system which exists today is DESIGNED TO FAIL. It is not a matter of whether it will fail but WHEN and this is true no matter how much regulation there is because there is no free lunch in life.

Since I live in the United States, I will summarize the absurd distortions which exist in this country but the same situation exists for the most part in every other developed and to some degree other country. NONE of them have anything to do with the private economy whatsoever.

The first contributor to this historic mania was and is the fiat money monopoly. Without the fiat money monopoly, there is no way that the historic build-up of credit and debt could have occurred. Prior to the abandonment of the gold standard, there were periodic bubbles and manias but all of them collapsed before they reached the size of this one because of the discipline imposed by sound money. This was one of the criticisms of the gold standard and why it was abandoned. In a real private economy, the fiat money monopoly would not exist. Money is no different than any other good or service (contrary to what almost everyone believes) and if money competition existed, government fiat currencies would either have to be managed responsibly or they would collapse in no time.

The second proximate cause was and is central bank monetary policy and the distortion of interest rates. Whether someone is in favor of it or not, contrary to what most people believe, central banks should not exist in a free society. That's why Karl Marx included them in his Ten Planks of the Communist Manisfesto.

As I have said before, there is no more reason to attempt to fix the price of money than there is the price of popcorn or peanuts. Moreover, contrary to what almost everyone believes, no central bank has a clue what the correct level of interest rates should be either. Its simply a disguised form of income redistribution which has been exercised in the US over the last century entirely for the benefit of debtors, spenders and consumers at the expense of savers, creditors and producers.

The third contributing factor was government regulation or should I say misregulation which combined with the above two elements, greatly contributed to moral hazard. In addition to the Federal Reserve Bank (FRB or US central bank), this includes other agencies such as the FDIC (deposit insurance), the PBGC (pension insurance), SIPC (broker dealer customer insurance), OPIC (direct foreign investment insurance) and the alphabet soup of mortgage credit backing entities such as the FHLB system, HUD, GNMA, FRE and FNMA. Since it is the most obvious one, I will use the FDIC as an example.

In a sound banking environment, there would be no deposit insurance though there could be regulatory supervision of bank health. But without deposit insurance, people would most likely be just a little bit more concerned with the safety of their money and what their bank did with it. (We cannot know for sure because people invested in all kinds of toxic assets until recently though I would claim that this was due to factors such as the "Greenspan" put and financial intermediation which I will cover shortly.)

Instead, no one gives a fig what the bank does with their money. They just simply look for the highest yield on their deposits among other variables. This is what enabled First Plus Financial Freedom Mortgage to offer CD's at 5% back in 1998 even as its stock crashed from $58 to 25 cents in a matter of months. We also saw this recently with other banks such as IndyMac.

If the government were really interested in protecting depositors and a safe banking system, they would get rid of deposit insurance and institute other reforms that might actually make a difference. Or at the least, they would reduce the insurance limit to a nominal amount such as $5,000 which is more than most people have in any bank anyway and is sufficient to pay immediate expenses. But the reason this is not the case is because deposit insurance is actually a subsidy for bank shareholders and bank management.

One reform that has been proposed by others is changing the legal definition of a bank deposit. This is actually a misnomer because today a bank deposit is actually a loan to the bank. The second that I have not seen elsewhere but which I think is an option is depositor representation on the bank board of directors.

The fourth factor on my list which contributed to this disaster is financial intermediation. I do not consider this an inherent negative but the fact remains that it has greatly contributed to the public abdicating their financial responsibilities to the financial services industry. But since this isn't their money, they do not really care what happens because in good times they make a killing and in bad times, they can just claim they were prudent by acting as recklessly as everyone else did.

[ndoa18]

Extracts from an interesting article....

Hong Kong (Kitco News) -- Gold will most likely double from its current $1150 an ounce during the course of the bull market, according to Puru Saxena, founder of Puru Saxena Wealth Management.

In an exclusive interview with Kitco News, Saxena said one major factor in gold’s favor "is that central banks have now become net buyers of gold. So that reduces supply from the market,” said Saxena.

Investment demand will appreciate over time as people become more dubious over currencies and they transfer assets into gold as a hedge, said the investment adviser from his Hong Kong office.

I believe that when this happens silver will hit over US$50 per ounce.

and...

Market Manipulation?
Regarding rumored gold market manipulation by the major banking powers, Saxena has some suspicions and would not be surprised if some paper selling was occurring to keep the gold price down.

“The central and private banks make their money by promoting the fiat money system –if the price of gold suddenly jumps fivefold, that is a red flag that there is something seriously wrong with the system," he said. "It would not be surprising for me to hear that they are suppressing the price of gold – we had the biggest financial crisis in decades and rather than increasing in value, the price of gold actually fell.”

Saxena said he has been following the work of GATA for a long time and "they make a reasonable case for that, but my argument is; what market is not manipulated? Everything is manipulated,” he added.

I believe that when gold and silver break out (as they soon will) their sudden rise in value against fiat money will be astounding and shocking to most people. When have you ever read about this stuff (eg flawed Fiat money) in your mainstream media?

Source: Kitco News

For those who are interested this is where I follow live gold and silver prices on the net:
http://www.goldprice.org/live-gold-price.html
http://goldprice.org/silver-price.html

Kind regards

Scott Balson

[jwither]

I suppose it depends upon one's definition of market manipulation, but I have never been a believer in it Even the Hunt brothers did not manipulate the silver market in 1979. What they attempted to do was corner it by causing a "short squeeze" on all the commodity futures traders that were betting on a price decline through short positions. They did this by buying and taking delivery of the physical metal.

I agree that central banks do not want the price of gold to rise but I disagree that they are in a position to stop it. They only appear to be able to because the psychological environment accomodates them. Gold finally ended its (fibonnacci) 21 year bear market in 2001 at $252 per ounce. Its first leg of its new bull market ended in 2008 at $1100+. I believe it will fallback toward the $700 level or below in a correction before it takes off again. I expect this even though it may rally somewhat more from here.

The fact that gold has risen almost five times since its $252 low proves that this manipulation cannot be successful. And even assuming for the sake of discusison that it is, knowing this would provide no useful benefit that I can see. There have been many such claims since 1980. When market psychology is ready to accomodate a resumption of the bull market like it did in 2001, that is when the price will take off, whether now or later, and not before.

Its the same story with oil prices. When oil soars, it is the "evil" oil majors (such as Exxon and Shell) and OPEC who cause it to happen. But there is no explanation for the price crash which occurred when it fell to about $10 in both the late 1980's and 1990's, unless that is, someone wants to make the claim that it was all part of a brilliant conspiracy to drive their competitors out of business.

I do not buy that. It is far more realistic that it was time for the price rise to end, and so it did.

[ndoa18]

Hi

I guess what sets gold and silver aside from oil is that you don't want to put barrels of oil in your safe as an investment. What is happening is that more and more investors are no longer accepting the paper promise of ownership of precious commodities - but demanding the physical possession. Gold and silver are real assets in their own right without the dependence of others "doing the right thing" - like having fixed deposits with a bank. Gone are the days of letting someone else store the metal for you (like the history of early banking).. we know where that led us!

Greece and many other countries (including the US) are currently falling into a whirlpool of all embracing and smothering black hole of (fiat) debt. They are all in an invidious position with citizens from all walks of life preparing to storm the walls if the government try to reign in their budget v mounting pressure from the pariah, the banks, who fiddled while Rome burned and who now want to take their pound of flesh by imposing destitution on the people.

Morally the banks and the bond holders are in default and I cannot see any government dragging its people into poverty and forced bankruptcy by creating deflation.

The only other scenario in these uncertain times is hyper inflation which (to me) seems far more likely. The reason many wise investors are getting into precious metals is because they can secure a level of wealth when the currency wheels fall off and have something tangible with which to trade when the you-know-what hits the fan. I see the price of gold remaining high and (at least) doubling in US$ terms by year end.

Interesting that the biggest investor of them all, Warren Buffet, has just bought a coal powered railway line for top dollar - with no dependence on electricity. Rumours are that his short position here is that when the economy in the US collapses together with the electricity grid he will hold all the aces when people are forced to depend on the form of transport that once won the Wild West. Wonder how those super-expensive Penthouses at the top of skyrises will go ... if it come to this and no lifts!

Apart from precious metals maybe a little patch of turf on which to grow some fruit and veg and raise a few cattle may be the best financial investment!

Interesting article from CNBC (listen to thevideo clip): http://www.cnbc.com//id/36792634

Kind regards

Scott Balson

[ndoa18]

Look at these remarkably contradictory Business reports...

1) Gold futures on the COMEX Division of the New York Mercantile Exchange ended a tad higher on Monday, benefited from continued worries about Greek debt woes. Silver and platinum both rose.

Source: Gold inches higher amid lingering anxiety over Greek debt crisis

and....

2) New York spot gold prices softened Monday as the euro lost ground on renewed Greek debt worries.

Source: Spot Gold Prices Fall on Greece Worries | Metals and Mining | Financial Articles & Investing News | TheStreet.com

Bottom line in my view? Market manipulation by the banks... like the little Dutch boy with his finger in the hole in the dyke before they get caught out and it bursts!

Scott Balson