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Natural law and economic law are with gold, but laws no longer apply

By: Chris Powell, Secretary/Treasurer, GATA

 -- Published: Thursday, 28 August 2014 | Print  | Disqus 

Dear Friend of GATA and Gold:

Examining the astounding and continuing downward trend of interest rates that has brought some rates into negative territory, the TF Metals Report's Turd Ferguson postulates today that gold and silver prices won't be going any lower, regardless of the charting done by technical analysts. Ferguson's commentary is headlined "ZIRP Morphs to NIRP" and it's posted at the TF Metals Report here:

http://www.tfmetalsreport.com/blog/6077/zirp-morphes-nirp

Of course Ferguson is right about what ordinarily has been the inverse relationship of gold prices and real interest rates. That relationship was described by the 1988 academic study by Harvard University economics professor Lawrence Summers and University of Michigan economics professor Robert Barsky, "Gibson's Paradox and the Gold Standard":

http://www.gata.org/node/1373

(Yes, Summers went on to run the U.S. Treasury Department, where his knowledge of gold pricing seems to have come in handy.)

But then Western central bank policy long has been to defeat ordinary market forces -- indeed, in recent years Western central bank policy has been to prevent any markets from happening at all:

http://www.gata.org/node/6241

This policy is what even some central bankers themselves now call "financial repression":

http://www.gata.org/node/10839

So while negative real interest rates may tend to support gold prices and asset prices generally, they also may be accompanied by still more "financial repression," particularly against the monetary metals, currencies that compete with and threaten government currencies and bonds.

Central bank gold sales and leasing, the underpinnings of the world's fractional-reserve gold banking system, whereby huge amounts of imaginary "paper" gold are created to nullify gold's scarcity and suppress its price, were always plainly mechanisms of "financial repression" to defend currencies and government bond prices. So amid the descent into negative real interest rates, what is to prevent central banks from underwriting still more "paper" gold for price suppression?

Such a policy probably could be defeated only by 1) mass exposure, which would require the mainstream financial news media to stop averting its gaze and to resolve to hold government to account; 2) a major sovereign foreign-exchange surplus holder's decision to switch its surplus heavily and abruptly into gold to strike a political blow; or 3) by the simple exhaustion of the gold reserves of the nations participating in gold price suppression, the circumstances that collapsed the last acknowledged mechanism of price suppression, the London Gold Pool, in March 1968:

http://en.wikipedia.org/wiki/London_Gold_Pool

The point here is that natural, economic, and even societal laws are disintegrating throughout the world under the pressure of what is essentially totalitarianism, the totalitarianism of central banking, which thrives only because, like the new clothes of the emperor in the fairy tale, it cannot be acknowledged for what it is -- cannot even be examined and questioned.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

Join GATA here:

Casey Research 2014 Summit
Hill Country Resort and Spa
San Antonio, Texas
Friday-Sunday, September 19-21, 2014

http://www.caseyresearch.com/summit/2014-fall

Canadian Investor Conference
Sheraton Centre Toronto Hotel
Toronto, Ontario, Canada
Thursday-Friday, September 25-26, 2014

http://cambridgehouse.com/event/31/canadian-investor-conference-toronto-...

New Orleans Investment Conference
Hilton New Orleans Riverside Hotel
New Orleans, Louisiana
Wednesday-Saturday, October 22-25, 2014

https://jeffersoncompanies.com/landing/noic2014?IDPromotion=614011014520...

Mines and Money London
Business Design Centre
London, England, U.K.
Monday-Friday, December 1-5, 2014

http://www.minesandmoney.com/london/

* * *

Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006:

http://www.goldrush21.com/order.html

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16


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 -- Published: Thursday, 28 August 2014 | E-Mail  | Print  | Source: GoldSeek.com

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