-- Posted Monday, 22 December 2003 | Digg This Article
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And thus started the Fed.’s War on Gold. But has it won?
Right now we are celebrating as Gold keeps making new highs while the Dollar gets pummeled into the ground and every gold bugs dream appears to be finally coming true. Now I ask this question. What if this dream is an actual nightmare where we have been tricked into believing that we are winning, while we are instead being fleeced?
I am going to state for the record that this is a theory that just popped into my head while I was sitting down by the water letting my mind float away. So I have no way of proving this or evidence to support it. If some other writer or anyone out there reading this has information to substantiate this theory, please email me.
Before I get into my theory. I would like to state this; while it may appear many times that I am actually attacking Gold, all I am really doing is questioning what is going on. I believe that in the end there is some serious money to be made investing in Gold and that it will ultimately prevail.
What if the Central Bankers actually shorted the dollar, and went long the rand, and Australian dollar and all the other currencies that have been appreciating since the end of last year. That means they have made a fortune in every transaction.
A fortune on the dollar short, a fortune of the rand long and all the other currencies longs. Add this to the picture what if they shorted gold bullion in South African Rands, Australian and new Zealand dollars the euro dollar etc, that is yet another transaction they might have won on.
Now assume that they start to buy Gold bullion with profits they made by going long the Rand and short the dollar at a price that is 125 dollars cheaper than it was in Feb 20003. Have they lost or are they laughing all the way to the bank.
Think of the implications in terms of servicing the US Debt, and on allowing the major houses to cover their shorts under the guise of an increasing price in Gold. While in reality its really depreciating, did any of you care when Gold went up 5 times its original value when the Argentinean peso collapsed. No you did not, because it did not mater. Beware we have entered the new stage in this game. It is the insidious stage of the silent currency wars.
Lets expand on this by just focusing on the South African Rand. Gold is approx 125 dollars cheaper now than it was in Feb 2003. If they went long the rand in November last year they have made approx 100% on a simple currency exchange, changing Rands for dollars. If they went long via the futures markets they have made 10 times that. Then figure how much they have made if they shorted the US dollar also. Take it one more step; lets assume that the House of Morgan also did this. Now they have made a ton of money on all these transactions and the worst part or the best part for them is that they can buy bullion now in South African Rands at a price that is 125 dollars less.
Just look at how insidious this play is. The feds are evil and while working under the guise of being blithering idiots they are actually evil geniuses. However when you fight against the markets you can only win so long, they have to dedicate all their resources to try to keep wining and history has shown that in the end that those who challenge natural market forces will ultimately lose. However will they lose during our lifetime or someone else’s? What do you or I care if they lose 200 years from now.
I covered this topic in more detail with 8 other commentators in the latest Contrarian Round Table. When I talk about winning and losing I am talking about on a global scale level and not to wins that are localized to certain countries. While Gold is appreciating tremendously in US dollars and those that took positions in it early have done very well. The fact of the matter is that on a global level the price of Gold has not appreciated as much as it has in terms of the US dollar. It has in fact lost much of its value in many of the strong currencies.
With their devilish minds, they have actually started a Global currency war. This war has to first play out before we can start to focus on Gold. Even though Gold is the Ultimate currency most individuals do not look at gold in terms of a currency.
The devious feds have added one more stage in this battle. They have now set the stage where country after country will compete with each other in attempt to gain a trading advantage. Those that don’t will see their currencies appreciate tremendously.
My main aim in writing this article was not so much to deal with the war on Gold but more to look at what tools they are employing to keep the price of Gold suppressed.
Technically until the world fully embraces Gold, they could keep inflating the price of Gold in several currencies, while at the same time deflating it in other currencies and taking long positions in the currencies that they deflate, while taking short positions in the currencies they inflate. So while the individuals in the countries whose currencies are being inflated benefit, the net effect is that the Feds still have the upper hand. This becomes a bittersweet victory.
The only sure way to defeat them is through education. The world has to understand and accept that gold is not an ancient relic but has always been the Ultimate currency. Until we get to that stage every victory will be localized to a group of countries . The only sad part is that now that they have precipitated a global currency war; the consequences are going to be simply terrible once the world eventually embraces Gold. The longer they are kept from embracing Gold the worse the consequences will be.
John Tyler’s Comments www.infognome.com
More fortunes are made playing golf than in the boardroom, and as Robert Jackson said in the case United Staes v. Wunderlich, “Men are more often bribed by their loyalties and ambitions than money”
The Fed’s franchise on money is shared by a bevy of banks, and there’s no friendship like bankmanship and a few billion profit. What is possible and highly profitable is usually done. The question then just becomes one of means.
Do the mums, dads, widows and orphans matter to these engineers of the financial machinery? Don’t look too hard in the machinery shed, you’d be surprised as to who have fingers on the buttons.
The problem is that the Fed thinks that the levers and buttons of the machine they have created are still able to control it. However it has become a Frankenstein, soon to lurch through the economy and crush their creators.
“ A government { or a FED} that robs Peter to pay Paul, can always rely on the support of Paul”- George Bernard Shaw.
-- Posted Monday, 22 December 2003 | Digg This Article
