Gold Manipulation

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JAG's picture
JAG
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Gold Manipulation

Dr. Martenson has recently voiced concern over the manipulation of the gold markets. Lets assume that the Fed, or some other entity, is manipulating the gold market. There are some obvious reasons that they might do this, but I would like to ask the forum members for speculations on their ultimate strategy and objectives. How do you think they intend to profit from their intervention? How do you see this situation playing out? Also, what do you feel is the least probable outcome of this intervention. I am interested in everyone's perspective on this matter, even if you feel it is not shared by the majority. Thank you for your time and input.

Jeff 

JAG's picture
JAG
Status: Diamond Member (Offline)
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Re: Gold Manipulation

A GATA related link:

http://www.gata.org/node/6873 

ckessel's picture
ckessel
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Posts: 486
Re: Gold Manipulation

Jeff,

I would say that the primary purpose would be to prevent gold from becoming a reserve currency. In this case, since it is not legal tender, they are maily interested in it from a confidence standpoint. 

Returning to a gold standard or any other"reserve" currency standard that limits their ability to print money out of thin air would be a problem for TPTB.

Coop

Thomas Hedin's picture
Thomas Hedin
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Re: Gold Manipulation

Here is another take on the gold standard.  It's a bit shocking to most, but this guy brings up some simple questions that most people simple forget to think about if we are to try to go to a gold standard.

 

Part 1

Part 2

Part 3

 

gyrogearloose's picture
gyrogearloose
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Re: Gold Manipulation
Thomas Hedin wrote:

Here is another take on the gold standard.  It's a bit shocking to most, but this guy brings up some simple questions that most people simple forget to think about if we are to try to go to a gold standard.

I have posted quite a few times pointing out that in the, every time a gold ( or other PM standard ) has been used, the guys with repository that are only supposed to print say for example, a pound stirling note for each pound of silver they hold, they have cheated and printed 20 of them. 

EVERY TIME.

more recently I have read about instances of debasing a gold coin currency

 

Thomas Hedin's picture
Thomas Hedin
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Re: Gold Manipulation

Yep!

ivoryjackal's picture
ivoryjackal
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Re: Gold Manipulation

I watched only the first of these and it seems frustratingly malinformed from a few perspectives.  first of all, the assumption that the mises institute blames everything on government and nothing on the bankers, I believe, is quite inaccurate.  the people working and speaking there are very well educated economists and aren't blind by any means to the problem of fractional reserve banking.

secondly, while his statistics about grains per person are interesting, he fails to consider that silver, platinum and palladium (just to name a few) could also be used to fill out the wealth supply.

I had to laugh when the titles pointed out with great excitement that if we minted coins based on the original congressional measure of gold per dollar that the 'new' dollar would be smaller than a dime.  this was clearly put together by someone without a whole lot of historical perspective.  I have gold coins from the 19th century that have been passed down through my family and the dollar is, in fact, very small.  i doubt it was a very common coin as you would have used silver for something that small.

his statement that the gold standard only lasted for 33 years is technically correct given the constitutional order, but only technically.  we were technically on a silver standard before then and the value of gold in dollars didn't change when we went to a gold standard, just the metal from which we'd base the relationship.  this is because, as amounts of metal in circulation fluctuated, it was necessary at times to change the ratio of gold to silver (and at the time we were reeling from the largest silver deposit discovery in comstock, which made the value of silver less stable).  this would still and always be a problem, but if you've ever travelled outside the united states you've already handled much more complex and unstable conversions than the gold to silver would ever be.  I think it's worth noting also that during the 33 years of the gold standard as well as the hundred and change years of the silver standard, the *value* of a dollar hardly changed.  this is even allowing a fractional reserve banking system (albeit much more tightly regulated and leashed than ours today).

the ideal of a gold standard is really having a medium that is ultimately in the hands of the people which keeps the government and the bankers power reigned in.  if you don't like the war in iraq and you think the government is spending debt and about to devalue your currency, you go to the bank and demand  gold for your paper (as is your right).  if enough people do this, the gold reserve of the treasury starts drying up and the emperors clothes are revealed.  we wouldn't be able to do things that we couldn't afford, as a nation.  your participation in your economy would be a constant vote.  this is how a congressman benefits from fiat currency and fractional reserve banking (the video states that congressmen can't benefit because they can't print money themselves and get no personal benefit from it.  kickbacks not withstanding, a congressman can buy votes by allocating millions to his home state for this or that program as well.  works better than advertising I'd imagine).

the most thought provoking aspect of the clip i watched was the idea of reconciling our trade deficit with a potential gold standard.  this I hadn't considered and it couldn't be done without bankrupting the country (which really indicates that we've already bankrupted the country).  I have no illusions, though, that a gold standard (or any highly disciplined monetary standard) is going to be worked out with our system as it is.   we'll have to suffer a default or something before having the opportunity to actually argue something meaninful to people who will listen.  in the meantime, the argument is academic but necessary as we're better off being informed than not informed.

I found the arguments in general to be hard to follow and/or refute (but not because of their incisiveness) - because the speaker keeps switching from a paradigm of pure academia to absolute to-the-letter adoption in the real world, neither of which are realistic.  his argument for reform of the money system seems ultimately to be removing fractional reserve powers from the bank but he doesn't address the fact that there is no better way that history has found to limit the power of the banker besides a hard asset standard.  I'm sure there are and will be a lot of problems with it, but I have a lot of faith that people (in the form of 'the market') will figure out solutions to them.  defeating the concept with broad ranging statements that assume and instant shift of monetary standard while maintaining current full-speed-ahead economics is a bit defeatist, I think.  one of the primary benefits of a gold standard system would be the fact that world economy would have to slow down considerably.  I've heard arguments that this will be bad for scientific discovery, medical advances and all the great things that an ever expanding system has brought us, but if you're at this site already, you've at least considered the possibility that maybe the ever expanding system isn't the best possible world...

 

Brainless's picture
Brainless
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Re: Gold Manipulation

Keep the dollar strong, whatever the cost. If it takes enormous amounts of money to do that they will, if it takes manipulation every instrument that can be manipulated, they will. If they need a war to do it, they will.

 

affert's picture
affert
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Posts: 100
Re: Gold Manipulation
Thomas Hedin wrote:

Here is another take on the gold standard.  It's a bit shocking to most, but this guy brings up some simple questions that most people simple forget to think about if we are to try to go to a gold standard.

 

Part 1

Part 2

Part 3

 

 I won't bother re-typing my rant.  Thomas, you seem mindless in your promotion of these videos.  What gives?

http://www.peakprosperity.com/comment/18001#comment-18001

SkylightMT's picture
SkylightMT
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Posts: 125
Re: Gold Manipulation

I would rather have the value of our currency be in the hands of the sometimes inept United States government rather than the South African gold miners.

While I agree that the drawbacks to a fiat currency outweigh the benefits, I don't think a gold standard is the answer. We need to have a representative currency but it needs to be one that doesn't allow one country to manipulate another's currency due to still having some natural resources left to mine.

I think it would be really interesting to have a representative currency that is based on something not only of real value, but also the pursuit and acquistion of this money leads to a better world and better lives for everyone. Such a currency would have to be global, I would think. What if the world's currency was a representative currency, and it was based on the amount of clean air, or the amount of technology produced per year, or health of its citizens, or inversely related to poverty, disease, starvation... such things might be hard to quantify but I'm sure we could come up with some standard.

Thomas Hedin's picture
Thomas Hedin
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Posts: 815
Re: Gold Manipulation

I belive that money, at the very least ought to be final payment. Our current money(bank credit) represents unpayable debts to the for profit, banking system.  If we can't borrow our way out of debt, how about we monetize the production of our infastructure?

 My problem with the austrians and the 'gold standard' is that if we switched to what they propose, all of our money would continue to to be bank credit, reguardless of what they claim to have in the vault.  We would still have to sign a promisary note in order to have any money in circulation.

 I may lack all of the answers, but one thing I do know is that we have to get some debt free money into our system so we can start servicing this interest, and eventually start paying down the debt (53 trillion and growing).

I'm a firm believer that people should start thinking about what money does, instead of what money is.  For instance, if you take a chair that has 4 legs and it's made out of solid silver, built really well, it would certainly be fit for anyone to sit on.  But if we take the 4 legs on the chair and moved them all to the middle, and didn't have a big circle underneath for those legs to plug into what would be the end result? 

 I would have to say we would have people falling all over the place every time they tried to sit down. 

 How about we start applying those common sense principles to our money system.  I think it matters less what that chair is made out of, and more of how it is designed, and our money system is no different.

ckessel's picture
ckessel
Status: Martenson Brigade Member (Offline)
Joined: Nov 12 2008
Posts: 486
Re: Gold Manipulation

The simplest and shortest way to solvency would seem to keep the dollar and then fire the Fed and pay them off by printing one 60T note and giving it to them with a thank you for all you have done.

Then, forgive all debt, make it illegal to charge interest on loaning money, nationalize the banking industry so it would simply provide funding and accounting for the distribution of currency and make it illegal for banks to be privately owned. Then make sure Gov't could not compete in commerce but rather establish policy that directed resources toward the general well being of the people.

In this case gold would remain a commodity that was fixed to the value of the dollar allowing for an international exchange rate.  My .02 cents worth!  maybe the value is too high!

Coop

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