A Continuing Eye on POG Suppression - Clawar

September 15, 2000

Those of you who have read my earlier articles, particularly "Measuring & Masking Economic Problems - A Parallel", are familiar with my attempts to put a huge problem, the Price of Gold (POG) suppression, in an even larger context. It is my thesis that POG suppression is but one of a number of areas in which the measurement of vital indicators has been purposely masked and distorted by government and its welfare state supporters in order to dampen irate citizen reaction.


In the educational sphere the government monopoly institutions hide and change the objective cognitive measures that would let citizens clearly see the destruction (a strong word for a disastrous situation) wrought by the "self-esteem" teaching movement. While the percentages of "A" grades and the numbers of "honor role" students mushroom most objective measures of cognitive strength collapse. Measures that show reading and mathematics skills in comparison to students in the 40' and 50's are very discouraging. When our students are compared to students internationally, not limited to advanced Western countries, they generally are in the bottom half to the very bottom. In fact, our most advanced students (Advanced Placement students) are even more deficient compared to international competition than our elementary school students are. When periodically, citizens discover the "grade inflation" hoax, i.e., high class grades but low actual accomplishment, the educational establishment misdirects their attention with calls for more money and smaller class size. Pupil teacher ratio has in fact steadily fallen from 27 to 1 in 1955 to 17 to 1 and per pupil expenditure has increased from $375 per pupil in 1960 to over $7000 today (in places like NYC it exceeds $10,000 per pupil). This occurs as student achievement has continues to fall. Trying to influence the measurements that do not relate to accomplishment will produce nothing of value to students!! Of course, when people finally see the lack of real learning, almost all who are not intellectuals, know that the answer to this problem is content-trained teachers who will apply rigorous instructional techniques.

I have also, in that same article indicated how measures of inflation have been modified so that they no longer reflect components that would be flashing warnings. One of my favorites is government mandated product changes, such as catalytic converters, that are not reflected in the CPI. It is as if we were standing in a room where the temperature is continually increasing but the thermometer is embedded in an invisible bucket of cool water. The temperature keeps increasing but the thermometer remains at a low reading. We're getting a little uncomfortable, but our actions are inhibited by the information that we're reading from the thermometer.

In order to remain in control government must use deception and eventually even force to prevent anyone from attacking their monopoly. In the educational realm it's superfluous inspections and credentials to try and suppress the growing home and alternative school movement. In the economic arena it's the legal tender laws which force citizens to accept the fiat currency for all financial transactions. They know that they cannot permit competition or both their educational system and their fiat currency will be destroyed.

To quote an earlier article, "I have focused on one aspect of gold price manipulation, That is, the selling of gold on the NY spot market to counteract any price spurts that appear overseas the night before. If the gold price can be controlled then this historical signal of currency/ stock market problems will not appear."

As illustrated by the data in Table's 1 & 2 the NY spot market puts consistent downward pressure on the spot gold price, which cancels out any overseas buying the prior evening. On trading days where both the NY market and most overseas markets are open, we see overseas gains 73.55% of the time, and NY losses 72.26% of the time. On only 8.39% of the trading days will you find the combination of an overseas loss and a NY gain. Evidently the NY market is not the place to find an immediate reversal of overseas selling.

In the period from January 25, 2000 through September 12, 2000, the overseas market spot price for gold went up a net total of $109.45 while the NY market showed a net loss of $112.60. Overseas markets produced a gain of about $.71 a day while the NY spot market price went down about $.73 a day. That's a difference of only $.02 per day as the NY losses almost exactly cancel out the overseas gains! The consistency is so formidable that, if you could take the January 25, 1999 NY spot closing and remove the subsequent NY trading, you would have a current gold price of $395.20 ($285.75 + $109.45). "It might even be higher since the psychological weight of the continual beating down of overseas gains would be removed." Various statistical tests performed show that most differences examined would occur by chance less than 1 time in 10,000,000. After eight months the price control is consistent and as strong as ever.

Despite all of the wonderfully informative historical precedents and parallels made clear by various writers, no one knows when this situation will end. I believe the end will take the form of a sudden and immense shock that is beyond the control of the government and its allied societal agents. It might be the current oil crisis that does it. Prices so far seem resistant to OPEC and government jawboning about increases in production, hanging out in the pre crisis $35 / barrel area. Various governments point the finger at oil companies and OPEC. In fact, the real culprits are the combination of extraordinary taxes and setting the major remaining oil reserve areas off limits. A full 75% of the fuel oil price in many European countries is tax. Even in the U.S. states like Connecticut add on about $.42 per gallon to the federal taxes. These factors disrupting oil supplies, could at some point, mean a quick death to earnings and the prolonged bull market that keep the U.S. dollar afloat.

It seems reasonable that this kind of an explosive ending will be the case. Never before has the welfare state held American Capitalism in such a condition of taxation & regulation. The citizens are distracted and ill informed. Mild disruptions will not dislodge this mammoth. We are at the point where not only production is being regulated, but the citizens themselves. The government in addition to manipulating the distributions of demographic characteristics of employees, e.g., how many of which color, which sex, which ethnic group etc., is also focusing on the Orwellian interpersonal aspects of what they cannot do and cannot say (i.e., speech codes). The government has massive control and power. They will not give it up easily.

India and the U.S. trump Italy as top gold jewelry exporters.