Dollar Strength From Gold Manipulation

September 25, 2000

The popular press would have you believe that gold has remained weak because the dollar is strong. In other words, people simply prefer dollars for money rather than gold, even though gold in fact contains intrinsic value while paper is virtually worthless. In an article last week in the "Financial Times", Andrew Ward said, "Recent sales of gold reserves by the central banks of the UK, Switzerland and the Netherlands, in favor of dollars, euros and yen has been cited as evidence of the yellow metal's declining importance."

With all due respect to Mr. Ward, I must say quite frankly that I do believe he is in urgent need of a bowel movement. I say that for at least two reasons. First, he fails to tell us WHO has cited central bank sales as evidence for gold's declining importance. For the sake of his credibility, I should think he should tell us who is making such an assertion so the reader might judge his/her qualifications to draw that conclusion and so that the public might have the opportunity to challenge such an assertion. For all we know, the one who is making those claims may be a drunk on the streets of London. More likely it is someone with a deeply conflicted viewpoint who would rather remain anonymous.

Secondly, and more to the point, how could a tiny number of super rich bankers pretend to know better than the markets whether or not gold is of declining importance as money? Would that decision not be best left to the market place rather than in the hands of a few elite central bankers who are so far removed from the common folks that they could not possibly understand or know what is happening in the markets of "Main Street." Hopefully we in the West not moving more toward central planning than a market economy, now that the Evil Empire has fallen?

It appears absurd to willingly, without question, accept the notion that the actions of a few powerful central bankers are not severely conflicted by their desire to retain power which they enjoy by virtue of laws granted specifically to them to run a monopoly money printing business. Like any good monopolist, central bankers try to eliminate competition. Gold, unlike paper money, does in fact contain intrinsic value. Accordingly, gold has always been the money of choice over paper whenever the public has been given that option. But this presents a problem for central bankers because it restricts their ability to re-allocate wealth in their favor from the working classes by printing money. Thus gold as money is and always will be a great threat to the ability of central bankers to enrich themselves at the expense of the working classes by printing money. Given this natural bias against gold by central bankers, why should we trust their statements and actions with respect to gold any more than a farmer would trust a fox to watch over his chickens? Yet that is exactly what Mr. Ward of the "Financial Times" is telling us we should do.

What in fact is happening now as for most all of the past 100 years is that central bankers are controlling the discussion with respect to monetary issues. Contrary to our Constitution, the people have no say in these matters. As pointed out at www.GATA.org the central bankers are almost certainly rigging the gold price at lower and lower levels with the objective of keeping the public disinterested in using gold as a store of value, despite (or perhaps because of) gold's proven superiority as a store of value.

Is Gold Weak Because the dollar is strong? No Way! The dollar is Strong Because Gold is Weak.

Most everyone in the press suggests these days that the price of gold is down because the dollar is strong. That is 100% wrong. The dollar is strong because gold has not, psychologically speaking, been permitted to compete with the dollar. Having eliminated gold as competition, by rigging the market price ever downward, there is no place to go so far as the public is concerned, but into the world's lone reserve currency, namely the dollar. In other words, the price of gold is not down because as Mr. Ward asserts it is "of declining importance." Rather, it is down because it has been slammed time and time again with outright sales and more significantly, with leased gold which by now represents a major portion of total reserves listed on central bank balance sheets, though a major portion of it is no longer in its possession. Gold remains listed on central bank balance sheets as gold owned by them. But, in fact much of it is long gone, having been leased and sold into the market to be spun into jewelry or gold coins hoarded now by the private sector.

When this Game of Deceit Ends, Gold's Price Will Explode to New Highs.

Though as pointed out at www.GATA.org. the price of gold has been plunged to lower and lower levels by the Anglo-American central bank alliance, which has also convinced or coerced other central banks to also dump their gold on to the markets either in outright sales or leases. But one would think this kind of coercion and dishonesty can only continue for so long. When the time arrives that gold lent out by the central banks must be repaid there should be a gigantic short covering scramble that could send the price of gold upward by hundreds of dollars before you can say "greed is good." As pointed out in the lead article for my October issue, (scheduled to go to press on October 11, 2000) central banks may indeed be setting themselves up for a very big fall. When the day arrives that they are no longer able to manipulate the gold price to lower levels and thereby retain confidence in paper where will people transfer their wealth other than gold and perhaps silver?

The recent oil and currency issues on the global scene are the kinds of events that could trigger a loss of confidence in the dollar and a rush into gold. Since only a few buyers can "get through the door" at the same time, subscribers are urged to allocate gold and gold shares to their portfolios now while gold can still be had at decade low prices.

18 karat gold is 75% pure gold.

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