Gold is currently nearly $820/oz. and it's natural to look at the historical charts to see where this puts us. We did this yesterday.
But what use are the charts? The wiggly lines on them don't show the full context: the wild monetary inflation and cumulative trade and budget deficits of the past few years, which (if we believe the analysts) are unprecedented.
Instead of drawing conclusions from the graphs, we should be asking questions - especially, why hasn't gold zoomed more and earlier? After all, governments must feel that gold is at least a vestigial or potential measure of the worth of their currency; otherwise, they wouldn't be storing thousands of tons of the unproductive stuff in expensive facilities. So, why hasn't gold acted as the thermometer of this financial fever of the last, oh, seven years?
One answer is that the world gold market is small enough to be deliberately distorted. Frank Veneroso could be right: central banks may have been secretly drip-releasing portions of their bullion reserves. That would be to reassure us - or rather, kid us - that everything's under control. Since the gold price matters, it becomes important for officials to manipulate it, and so (according to this theory) the charts will actually tell us nothing.
Until the reserves get so low that the game can't continue. Central banks will suddenly get vertigo and freeze-cling to what they have left, and the gold market will explode, as confidence in the currency starts to collapse.
And Veneroso cottoned on early, simply because the scam worked too well. The smile was too bright, the walk a little too confident. If he's right - and I more than half suspect he is - we needn't bother with the past price data, or with worries about short-term corrections.
6 comments:
Sackers, I agree with this line of reasoning (and rather hope you are right, if you get my drift)
there is, however, one uncomfortable thought, provoked by Roosevelt's intervention: the buggers will do something outrageous !
I'm concerned with the why of it. When the currency collapses, unsupported by gold, those with gold, i.e. the hoarders with present cash, become more in the driving seat than ever and can effectively direct policy, e.g. with the EU.
ND: I assume you mean, confiscate gold. But the usual ending is either to replace the currency with a new one, or redefine the old one (e.g. 1 New Franc = 100 old Francs). Either way, the previous theft by inflation then goes uncompensated and unpunished.
I think Orwell was right about the nature of power - it has nothing to do with Left and Right. Maybe a better dimension is Up and Down (or In and Out).
Your Lordship: see my previous comment, which was partly addressed to you; but it's already clear that the politicians own us, gold or not, since the democratic system is horribly fudged. In all the places I have lived, I have never been represented by an MP I voted for. Where I am now (Roy Hattersley's old constituency), they don't even bother asking for your vote, since it's such a foregone conclusion.
The only time I ever heard Hattersley live was from the tannoy on his car when he retired, saying in effect (like the dolphins shortly before Earth's destruction in The Hitchhiker's Guide to the Galaxy), "So long, and thanks for all the fish". He still writes, though - in The Spectator. But then Manny Shinwell accepted a place in the Lords. My grandfather (a farmer) used to say, "The feeding-trough stays the same, only the oxen change".
Hattersley deserves a really brutal biography, if anyone could bear the burden of reading everything he's written. Including this, his entry-ticket to the 8th Circle of Hell (5th Bolgia)
"I cannot believe that a young girl would get pregnant in order to obtain a council flat. And even if I am wrong about this, it is to my credit that I do not believe it."
This is very interesting. Things are going to kick off soon.
I hadn't thought of the gold thing though. It's probably spot on though.
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