Gold price manipulation – The how and the why

Gold price manipulation – The how and the why, by Lawrie Williams. Today gold is almost irrelevant financially — the current value of all above-ground (i.e. mined) gold is about US $7 trillion, compared to a world GDP of US$70 trillion and the total amount of money of about US$220 trillion. But gold is interesting because it is the only debt-free form of money, it is the only asset hoarded by central banks, and it was money for thousands of years up to 1971.

All that US$220 trillion of money in bank accounts and cash has a matching debt somewhere, because money is created by lending in our current system. In a world awash with debt and crippled by an historically unprecedented debt load, debt-free money is potentially important. To restore global financial health, most of the debt has to be forgiven — either by default and Jubilee (too obviously unfair) or by inflation (the stealthier and politically easier option) — whereupon gold is likely to regain a larger role.

Manipulation is a somewhat contentious word in financial markets, yet in truth virtually everything is manipulated by those who have the political need and/or the financial clout to do so. The whole capitalist system is set up for this to take place – and arguably a socialist system even more so. Governments manipulate statistics and financiers manipulate prices – all usually to their advantage, and sometimes the two work in concert with one another.

The gist of the article is that central bankers hate gold because they cannot print it, because gold gives people independence of central banks, and because sometimes gold is compared favorably to their product — modern cash and electronic money.

The central banks are moving to ban cash, and force all commerce onto electronic transfers between bank accounts. Imagine the power of big government if it can monitor and control all of your spending! What if they don’t like you views on say climate change, then prevent you from spending in certain ways, or from being paid by others? George Orwell never thought of that one. In Europe and Japan there are now negative interest rates — your money shrinks at 1% a year in the bank (and remember, with cash being phased out it has to stay there).

Williams argues  that the central banks have been pushing downwards on the price of gold downwards for the past two decades, and forcing it down since 2011, to prevent public interest in gold and to prevent a higher gold price signalling lack of confidence in their debt-based money system.

By the way:

If one studies economic history, all [paper] currency systems have ended in financial disaster and tears – why should this time be any different?