Propaganda and Rigged Markets

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Johnny Oxygen
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Propaganda and Rigged Markets

Propaganda and Rigged Markets - Jeff Nielson

http://www.bullionbullscanada.com/index.php?option=com_content&view=article&id=16919:propaganda-and-rigged-markets&catid=48:gold-commentary&Itemid=131

Upon awaking and discovering that gold and silver had dropped a couple of percent overnight, I do what I always do. I immediately went to Kitco.com – for all of the anti-precious metals propaganda which would be put out to “explain” this move in markets. I was particularly well-rewarded today, as the gold bears at Kitco had furnished no less than four anti-gold headlines, telling all the sheep why gold and silver should be moving lower today.

...First, what the propagandists are saying is that higher economic growth in China will cause increased demand for commodities and higher inflation (both very gold-bullish), but that China will react to this bullish development with a bearish response. Not only is that indirect reasoning, but it assumes that (automatically) China will respond by raising interest rates, when there are many arguments that they would not (see below). However, that immediately illustrates the second assumption here: that any response by China’s government would negate the upward pressure on commodities (and gold and silver).

In fact, we have two full years of empirical evidence which shows us commodity prices steadily rising despite weak demand from anemic Western economies – because the insane money-printing of Western bankers has meant that the speed with which they are destroying our currencies has overwhelmed all other economic fundamentals.

...Why is Brazil increasing interest rates? Because the reckless money-printing of Western bankers is causing horrible inflationary pressures on its economy (sound familiar?). Two observations must be made here.

First of all, the Brazilian government hated the idea of raising interest rates. Doing so causes its currency to rise versus the other fiat paper – reducing the competitiveness of its economy, while simultaneously drawing in dangerous amounts of capital into its debt and asset markets. It only engaged in this move as a desperation-measure, indicative of how extremely strong are such inflationary pressures (hardly “bearish” for commodities or bullion). This means that not only is Brazil unlikely to repeat today’s move, but if there is any significant softening of inflationary pressures (i.e. lower commodity prices) it would seek to reverse this policy at the first opportunity.

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