Posted on 01/15/2014 7:33:03 PM PST by Publius
China National Gold Group Corporation General Manager Sun Zhaoxue has come out and told the world media that the US is suppressing the gold price. The reason for America’s manipulation of gold is to ensure US Dollar dominance on the world stage. America has by default ended up with the world’s reserve currency and therefore gets the world to work for them in exchange for an ever increasing supply of printed greenbacks. He also went on with an excellent analysis of America’s war against Europe and the Euro using their investment banks. Another good insight from Sun Zhaoxue is that while major players like Warren Buffet and Goldman Sachs talk about how they hate gold and forecast price declines, they have made large bets on gold and gold companies.
His comments from the Liujiazui economic forum were as follows:
“The hottest topic at the moment is oil and gold. The ground war we are seeing around the world is, I think, war for oil, whereas gold is the currency war. Why? We observe that integrity was the driver for the US Dollar to become the world reserve currency. The US Dollar and gold decoupling from 1971 caused the US Dollar to depreciate massively. From 1990 onwards, the Eurozone was in consultation to form a strong Euro to counter the US Dollar in order to prevent the latter from stripping Europe of its wealth. The Euro was born in 1999, supported by its strong economy and 11,000 tons of gold.
"With the birth of the Euro, a competitor to the US Dollar was created, and so the US decided to lay a trap for the Eurozone as part of the currency war. Some countries in the Eurozone violated the Eurozone’s norms by issuing bonds. Which entities participated in the issuance? US investment banks. After the debt was issued, it was US ratings agencies that struck a blow to the Eurozone by saying that its economies had problems.
"Only gold remains on par with the US Dollar to benefit from the Eurozone and Euro's collapse. This is why the US began to suppress gold by issuing a statement two months ago that the Eurozone will sell its gold when it is unable to service its debt, then stating three days later that the news was false. Furthermore, Goldman Sachs made a forecast for the gold price at the beginning of the year but suddenly changed its course saying the gold price will fall to $1300. Buffet said that he would not buy gold even if its price fell to 800USD. Our research indicates that Buffet made a lot of money from four gold companies. So his statement is inconsistent with his personal action.
"Bernanke’s speech followed, saying that monetary easing will end, that the US economy is improving. This series of examples shows that the fall of the gold price is premeditated. So I say that this process is a genuine currency war.
"Many people say that gold is just a beautiful thing. Then we have to ask the US why they store so much gold, but instead of selling gold, they issue debt to other countries to rescue the financial market.
"The US owes Germany so much gold but instead of repaying immediately sets a 2020 deadline to return the gold. From this example and process as well as some typical factors, this is a downright currency war to maintain US Dollar hegemony by defeating all other currencies.
"I shall stop here."
Thanks for the ping!
The pubbies are not going to allow anything like “torrential spending”. They control the House so they control the purse strings.
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The House just approved a $1.1 trillion spending bill. How can that not be considered torrential spending? In effect, it was the un-sequester bill.
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Ok you got me. So let me amend that by saying that spending would relatively speaking be torrential if the dems controlled the house. Now its merely a lot. Still the republicans have succeeded in slowing the growth of federal outlays. If revenues to fed keep growing as they have in the last year or two, then merely slowing the growth in federal spending will have the effect of shrinking the budget deficit rather rapidly—as happened under Clinton.
The day the dollar stops being the world reserve currency is the day the current deficit gravy train collapses. Our debt IMMEDIATLY becomes toilet paper.
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Correct. But that possibility is no longer on the table.
Even though the deficit is shrinking (from extremely high levels), it is still a very substantial amount and is contributing to a steadily increasing debt load. Looking at the national debt clock and its inexorable march toward $18 trillion just makes me ill.
Democrats and Republicans have put us on a path toward a financial calamity.
Even though the deficit is shrinking (from extremely high levels), it is still a very substantial amount and is contributing to a steadily increasing debt load.
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agree.
Looking at the national debt clock and its inexorable march toward $18 trillion just makes me ill.
Democrats and Republicans have put us on a path toward a financial calamity.
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in this article by t boone pickens he declares that the USA has been in an energy wilderness for 40 years. We are now showing the first signs of coming out of it.
http://www.realclearpolitics.com/articles/2014/01/16/40_years_in_the_energy_desert_121230.html
The significance of becoming energy independence is huge in many ways including financial. ballooning federal deficits coincide with the loss of energy independence back in the 1970s. imho the restoration of energy independence will also restore the financial design margins. Which means practically speaking that the feds will have the money to pay for social security.
I agree with you about the importance of energy independence.
The problem with the feds is that increasing revenues typically lead to increased spending. They ALWAYS find more things to spend money on. If revenues rise by 10%, the feds will increase spending by 20%.
I have worked inside several federal bureaucracies. Every year their spending increases like clockwork. Its like an unstoppable tidal wave.
I’m not at all confident about the viability of social security so I’m making plans for other sources of income. Hope for the best, but plan for the worst. :)
Where I disagree with you is the in the strength of the correlation of the dollar price and gold. If you compare weekly charts of gold and the dollar it would be hard to see much of a statistical correlation unless you are on drugs.
That is not to say there is not SOME correlation, after all the dollar has lost more than 95% of its value compared to gold since 1913.
IMHO currently, the main driver in the price of gold(and silver) is the manipulation of paper contracts on COMEX in which there are 80+ claims of paper for every oz. of physical gold. Sooner or later the outrageous and criminal paper supply of Gold/silver will meet the reality of physical demand. Smart investors will be waiting for that.
Thus, IMHO the dollar vs. gold correlation is really not as strong as many believe. One would be better served to looking at paper supply vs. physical supply as the main price drivers at this point of time. I hate to say it but China is exactly right on this issue.
Thank you for your thoughtful post.
Precious Metals Manipulation Worse Than Libor Scandal, German Regulator Says
So?
One last thing. The fed has been creating some 8 trillion dollars ex nihilo from nothing. Right?
Your math overstates the impact of U.S. petroleum production.
Over the past three years, U.S. oil production has increased by a total of three million barrels per day and natural gas production has increased by 3-1/2 TCF per year. That doesn't come close to $400 billion per year. I think that you may be off by a decimal point.
The biggest relative impact of increased petroleum production is in a country like Canada, with an economy one-tenth the size of the U.S., where oil production is forecast to increase by 3.4 million barrels per day over the next eight years.
Also, the Fed's quantitative easing programs have purchased $2.6 trillion of U.S. Treasuries, not $8 trillion. You might call that 'printing', but most of those securities have been purchased by crediting a Fed liability account 'aggregate reserves of depository institutions'. So, as Bernanke responded when asked if he was printing, "not technically".
Also, the Fed’s quantitative easing programs have purchased $2.6 trillion of U.S. Treasuries, not $8 trillion. You might call that ‘printing’, but most of those securities have been purchased by crediting a Fed liability account ‘aggregate reserves of depository institutions’. So, as Bernanke responded when asked if he was printing, “not technically”.
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Ok, I’ll go with your numbers. The other thing is that 95% of that money that the fed “Printed” didn’t actually go into circulation. It just stayed on their ledgers. The 5% or so that did go into circulation went to the stock markets which pumped up the numbers there which jacked up revenue to federal coffers. The rich got richer under obama —so they paid more taxes. The federal deficit decreased by 350 billion between 2012 and 2013. My understanding was that roughly one third of that decrease came from higher taxes, one third came from increases in stock market related revenues and one third came from increases in oil patch related revenues. If you understand differently, I’d like to see your sources.
While the federal “printing” is inflationary the rapid deceleration of M2 since 2008 was considered to be deflationary. That’s what the fed was looking at. There wasn’t a lot of borrowing going on—which speeds up M2. It looks like M2 may have turned around recently.—which is why the fed would start to taper their buys. But maybe you understand this differently as well. If so I’d like to see your sources.
Oh nothing. Just the collapse of the US economy, hyperinflation and riots. no big deal.
Because why?
The day the dollar stops being the world reserve currency is the day the current deficit gravy train collapses. Our debt IMMEDIATLY becomes toilet paper.
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Correct. But that possibility is no longer on the table.
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Because why?
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because the dollar is not going down the toilet but rather holding its value—as it has for the last five years. All the talk lately is that for various reasons —not limited to large increases in US oil production—that the dollars next secular move is up. that means that all the central banks in the world—including China and Japan— with huge dollar reserves are incentivized to hold onto their dollar deposits and even increase them...and stop buying gold
In order for the dollar to stop being the world’s reserve currency—it has to stop being the store of value in the world. That’s a possibility if the dollar goes into a death spiral —as was feared 3-4 years ago. That’s not in the cards today.
I hope you’re right and it’s that simple. I don’t think it is. Not with the way we are larding up debt.
Agree. the debt is bad. however, unlike three years ago where the debt was bad and getting worse and the long term trend was bad.
now the debt is bad and getting worse less quickly and the long term trend is now getting better.
You've gone from “a collapse in gold prices” to “hyper-inflation” in two posts.
NEWSFLASH COWBOY: a collapse of prices is the **OPPOSITE** of inflation.
It's called: DEflation.
Read it and weep.
First I never mentioned a collapse of gold prices.
And my aren’t we an arrogant twit. I’m SO GLAD you are there to explain everything. Maybe you will get a Nobel in economics.
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