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2.12.2011

Gold Don't Care


The fact that gold’s price performance in the last 40 days or so digresses thoroughly from its normal course during times of mid-east instability amid severe monetary and price inflation is pure evidence that either the price of gold is directly manipulated by banks, or that the coordinated campaign of disinformation by the Big 6 media division of the U.S. Treasury has finally become so fine tuned as to hypnotize recipients of its message. In either case, $2 billion in redemptions of Gold ETF GLD makes one wonder what has changed fundamentally to justify such a sell-off in a month where global instability and inflation are robust?

Or have those with a vested interest in the appearance of a stable dollar realized that they could use the billions of dollars in quantitative easing to directly influence demand for and thereby price of gold by incrementally building large holdings in gold ETF’s and then dumping them in compressed timelines to help generate severe price swings?

How very ingenuous to use the strength of gold’s demand and price metrics to undermine those very same dynamics! Buy up ETF shares with dollars fabricated out of thin air, then dump the built-up position in a single month to drive superficial dollar demand and coincident gold aversion. Whoever dreamed that up should get the congressional medal of honour and go straight to jail

These short term machinations aren’t relevant in the long run however, and only provide buying opportunities for those building a store of value in precious metals. Pundits speculate on an impending day of default for the U.S. dollar, when to sovereign bond holders, that day has come and gone, and the big players are tip-toeing to the exits accumulating gold as they go. When we finally shine the light on them an acknowledge the default has already occurred, the gold and silver price explosion to the upside beyond $2,000 will begin in earnest.

James West
The Midas Letter