Why Gold Bugs Can't Beat The Conspirators (Even If They Exist)

April 23, 2009

Everyone is a player when it comes to gold. Investors, speculators, doomsday merchants, scholars, traders, governments, central banks, coin collectors and scrap metal dealers. All these groups are motivated by different considerations but obviously all want to profit from dealing in and holding gold.

Governments and big banks are obviously the most powerful group both in terms of financial resources as well as being holders of information and misinformation. In addition, they are connected to each other at the hip and share a central nervous system through their national banks, the IMF and other such bodies.

The problem for everyone else is that they are a loose confederation of people who understand the historical and financial significance of gold but who do not have a synchronised strategy or central nervous system other than web sites such as Gold Eagle. This is tantamount to attending church once a week in the hope of achieving salvation but without sticking to the sermon's message during the week.

These sites provide an important forum for people and ideas, news and speculation about what might be afoot. They are not however trading entities that can take the lead or a position. This situation is made worse by the gold enthusiasts who are all too often composed of individuals who fidget, who are impatient and prone to acting impulsively on even the slightest bit of information.

No doubt the wild and unexpected swings in the price of gold provide much fodder for the conspiracy theorists who maintain that governments try to control and subdue the price of gold so as to maintain faith in the fiat money system.

Personally, I think the big boys have all of us little people figured out. By putting out some well timed, well worded press releases and by making a few clever sales here and there, as well as playing the paper game, they make the little people stampede in the direction of their choice. The choice to stampede though is ours.

In other words, it would in my estimation appear that governments and big banks are engaged on a profit making exercise rather than a price subversion strategy. By using the abovementioned tactics to constantly manipulate the psychology of gold owners, they make money on the way up and money on the way down. The little people are panicked out of the market and sucked into the market at precisely the right times.

For the time being, we all wax lyrical about how the sale of gold eagles has gone through the roof, but the reality is that the per head consumption of these coins is miniscule. Gold still has not entered the common investment psyche and whilst people are in denial about fiat currencies eventually crashing, they instead cling to paper wealth and prefer to slowly boil to death like the proverbial frog in the pot. And this is where the problem lies.

Gold enthusiasts take great courage from big upward movements and become suicidal by sizeable drops. The real crux of the problem however, is that they lose sight of the overall pattern and general trend of what has been happening.

Gold enthusiasts need to stay firm in their belief that the present fiscal and monetary trajectories of various governments are both unsustainable and inevitably cataclysmic to the long term health of any nation's pocket. The sooner this is realised and believed the better. People still cling to the hope that President Obama will lead the world back to the Promised Land by spending big. As in the case of Moses they are guaranteed lots of desert sand and as a Jewish acquaintance once said, "Moses took the wrong turn and we missed out on the oil fields." Good luck to both him and to those of you that are following. The consumers of the world have already tried this strategy by mortgaging their tomorrows so as to consume today and look where it has got us.

With gold you only need three managers - time, patience and a historical perspective. Do you have them?

The total world's holdings of gold could be transported by a single solitary oil tanker.

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