Trying to decipher the manipulation mechanism
I am a lurker who occasionally posts. GOLD-EAGLE, a really outstanding site, and this forum have greatly contributed to extend my knowledge of the gold market and its ramifications and I wish to thank all the site participants and share my observations as a small contribution. Thank you Dr. Vronsky and your colleagues for letting free access to your site to the entire planet, for providing a space of truth to counter the misinformation of the jungle of rigged financial markets and for having created a meeting point of great quality to the world gold bugs.
In former posts, I tried to explain my vision of the massive devaluation of monies taking place presently, i.e. devaluation against gold as in the early 30s. A recent trip to the US provided the missing piece of the puzzle, especially the reason of the high and abnormal value of the US Dollar versus the Euro. I gather from reading various posts that it is widely believed the Euro is a weak currency and will remain as such as long as Europe will be burdened by its social heavy mechanisms. For my part, I believe this is of little effect and a almost equal parity, or a parity slightly in favor of the Euro, has already been decided or decreed by the CBs in spite of the differences of economies. The present wide disparity is, I believe, part of the devaluation scheme and of the present and temporary gold price suppression.
For all of us gold bugs it is obvious that there is a gold manipulation. Did it ever occur to you that there is also a currency manipulation? Probably not, as the amount of money involved in daily exchanges is by far too large to permit such a manipulation; this is what a banker recently told me. Think twice and make a simple calculation: divide the present Euro price of an ounce of gold by its price in US $ and you get the exact rate of exchange!! Example as per Kitco.com on June 8, 2001:
Euro 313.85 divided by US $ 266.70 = 1.1742
You can do that every day and you will obtain the Euro daily exchange rate against the US $ showing on all money sites. Now, if you believe in the gold manipulation, this small demonstration proving the gold connection to the mentioned currencies should lead you to think that currencies are also manipulated.
Why is the US $ so over valued? Here is my explanation following observations made during my recent US visit. Having not been there for 18 months, I could not believe the level of inflation reached in the meantime. Gas I used to pay $ 1.35 was at $ 1,899, a tunnel fee that was $ 1.50 is now $ 2.00 and the same price increases were valid for groceries, restaurant and hotel prices. The price difference between my visits only 18 months apart must be around 25-30%. This prompted me to include this data in my TA.
For memory, I should point out that when the Euro bottomed at 1.2230 against the US $ on October 26, 2000 the gold price was at US $ 266.00. Everyone noticed that when the gold price goes "astray" it is soon pulled back to US $ 266.00 which happens to be the point of convergence of gold with regard to currencies involved in the mentioned massive devaluation. It was there last week and the Euro/Dollar rate happened to make a double top closing slightly over 1.19 and it seems now to be heading down again. Does that explain the recent spike in gold? In my opinion it could; here is why:
If we admit that parity or a small advantage to the Euro has been decreed, the gold price for both should be close or almost the same. Last week the Euro was devaluated by 27 % against its lowest gold price (Euro 246), which means it has already been devaluated by that amount. The US $ instead was overvalued by approx. 19% against the Euro and devalued around 6% to gold lowest price ($ 252) giving a total of inflation of 19 + 6 that is 25%.
At this point, the Euro zone has already registered a de facto devaluation or inflation of 27% and the US $ is overvalued by approx. 25%, but its hidden or unrecognized inflation is 25-30% as per my observations during my recent trip. Therefore, both have almost the same inflation, but since the gold price is in US $ a move by the latter affects both currencies in opposite directions. In other words, when the US $ gold price increases the US $ devalues and the Euro revalues. In the end, that is when both currencies reach equilibrium, gold price will be at US $ 332 – 333 and the devaluation cycle will be completed, that is equal to a55-60% devaluation against gold. Both currencies seem now ready for this convergence.
In my humble opinion, the gold bugs live the last moments of truth with regard to this massive devaluation and it might be the deadline for the one occasion in a lifetime. Please weigh these observations, but do not take this as an investment suggestion.
Would Mr. Greenspan and his peers be tempted to decree a new gold price equal to US $ 332-333 per ounce before letting things go out of hands, that is when the street man discovers the gold/currencies manipulation scheme? The open positions of the BB must be covered to this level by now. This decree could happen for example a Sunday; the manipulation is obvious and has been revealed anyway, so another bit of the same medicine will not alter the picture much more! The World Gold Counsel could probably help the man of the street understand the sudden revival of demand brought by new fashionable gold jewelry! I hope I don't give the cabal an idea.
"alpinegb"
13 June 2001
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