Many people including myself believe that the bullion banks have colluded to keep the price of gold low so as continue the profitability of the gold-carry trade. Scruffy in his recent post gives an excellent rendition of this idea which we have all shared over the past many years.
Notice that this idea is predicated on the fact that the primary players in the conspiracy share some combination of the attributes listed below:
1) They have let greed get in the way of common sense.
2) They have gotten themselves into a corner that they cannot get out of.
3) They have a disdain for the monetary value of gold.
4) They are led by the most powerful men in the world.
5) They consider the opposition to be of little concern.
6) They believe themselves to be above the law.
Zelotes (a.k.a. Adam Hamilton) perhaps says it best when he talks about the inevitable short squeeze that will come, as a result of fighting the natural behavior of free market forces. If this tenet is to be believed, as many of us do, then many of the players on the short side of this game will be crushed. Thus we need to add a few more attributes to the list above:
7) They are short sighted.
8) They are playing a game that they are destined to lose.
When you add up all of the attributes, there appears a seeming contradiction. If indeed, the price of gold explodes, then the most savvy international investors and big money players in the world have set themselves up for the biggest fall in financial history. We all have rationalized that their greed explains away this seeming contradiction.
I submit that this latter proposition is tenuous. First, we apply our cultural understanding of greed and its effect on a human being, to this class of people. Unless, some on this forum have been billionaires for centuries, I believe it is a mistake to suppose that our culture gives us any insight into theirs. I submit that their greed may be as alien to us, as is our intellect to the common house pet. I have heard it said that the Rothschild's have patience that spans generations in the fulfillment of their desires. This then gives us a context upon which to evaluate their greed. We see then the arrival of another contradiction. The progenitors of this conspiracy are short sighted and yet not.
So, is there no hope for the gold long? Will our own understanding of greed be our downfall? Are we deluding ourselves that this game will end badly for the shorts because of their human failings? I submit that the current beliefs about why gold will rally (in particular the idea that the true "players" will lose) are simply pipe dreams. However, there is another explanation which is completely consistent with a gold rally and is in fact a much more sturdy pole upon which to hang your hat.
Did you ever consider that the attributes of the players in the true conspiracy comprise a somewhat different list?
1) They have used their patient greed to develop a plan to capture more of the worlds wealth.
2) They have gotten others into a corner that the others cannot get out of.
3) They respect completely the monetary value of gold.
4) They are the most powerful men in the world.
5) They consider the opposition to be of little concern.
6) They believe themselves to be above the law. and;
7) They are very long sighted.
8) They are playing a game that they are destined to win.
It seems completely obvious to me that the second list that I have proposed is the more logical. So why is there hope for the gold longs? Because the most powerful men in the world are conspiring to capture more of the wealth of the world and they are long gold.
I might add one more thought in closing. Did you ever consider that the "gold swap" statement in the FOMC minutes was purposely placed? Did you ever consider the magnificent and inexorable pressure being built in the international press against the gold-carry trade was supported by more powerful forces than GATA? Did you ever consider that a cunning group of individuals understood human psychology well enough to understand that a group like GATA was bound to surface? Do you doubt in the least that the creators of the true conspiracy are orders of magnitude more subtle than what is implied by the clumsy machinations of these gold-carry pawns?
Yes, the gold longs have great hope ... not because of the disdain for gold by short sighted greedy people ... rather, because of the respect for gold as wealth by the most powerful, long sighted men in the world.
"PMtrader"
28 May 2001