Why is Gold not rising?
As we have discussed time and again, the main driver for Gold’s rise in the last decade has not been fear of inflation (mainly because there isn’t any) but uneasiness with the prospects of the Dollar and the Empire and ‘speculation’ Gold would be money again. But if this is the correct analysis, why has Gold stopped rising for 18 months now?
While this question is impossible to answer, there are a number of issues worth discussing to get a better picture.
The reports pointing in the direction of a Gold Standard have been mounting massively over the last months. Here’s yet another from last September by Business Insider on a paper by Deutsche Bank, that made some waves in the Gold community. It contains some interesting points, most notably Deutsche Bank addresses the most important Mainstream argument against a Gold Standard: that the economy grows quicker than the World’s Gold supply. Meaning that there is a structural decline in the amount of Gold compared to total economic activity, which is deflation. Deutsche Bank says the problem is real, but smaller than thought: part of the economic growth of the last decades was due to unmerited credit expansion and that would not happen under a Gold Standard.
According to Deutsche, Gold supplies grow at 1.6% per annum, while the economy, corrected for artificial credit induced growth, grows at about 2,2%. Deutsche considers this manageable.
However: this is true of the US economy, the World economy at large grew much quicker over the last decades and since the move to Gold is clearly global, Deutsche seems to be doing what vampires usually do: spin reality into oblivion.
Another interesting point in the paper is that Deutsche Bank says the market is wrong to handle Gold as a normal commodity. Gold is already money, says Deutsche, because it is held by Central Banks as part of their reserves.
Obviously, Interest-Free Economics has another definition of money: that which is agreed upon to be a means of exchange.
Gold is not money. Until we agree it is, of course.
But it is quite typical, the way wealth and store of wealth is automatically mistaken for money.
Gold is wealth. Like every other commodity. It represents value, because people want it. The amazing thing about Gold is, it is good at only two things: looking pretty and being expensive. This fact is even used as a rationale why it should be money. But in this regard it is quite similar to diamonds. And we don’t consider diamonds money, do we?
Very few people consider Gold money. But clearly we are being ‘educated’.
Gold is being sold as a solution to debt. The narrative goes: we’re all crack whores wanting ever more easy credit. But alas, reality is reality and that’s why it’s good to have Gold, because it cannot be printed and thus there can be no more debt than money.
Forget all that. The problem is not debt, it’s interest. Should we stop paying interest on the debts and use that ‘debt-service’ to pay off the principal instead there would be no debt left in 20 years.
But let’s not get into that now. Because the whole idea of ‘steady volume’ (of money) when on a Gold Standard is so…
There are a few issues to keep in mind, when considering the volume of Gold and thus the volume of the money supply when under a Gold Standard.
In the first place, the official numbers about volume. You hear these numbers: 150 thousand Tonnes. Wiki mentions 171 thousand.
Forget about that too.
Nobody knows how much Gold there is, but I’ll tell you this: there is much, much more than that. In fact: this is one other way Gold resembles diamonds. It is well known that De Beers and the Russians share only a small fraction of what they’ve got. For obvious reasons.
Remember Peak Oil? They do everything they can to create ‘artificial scarcity’. That’s what monopoly does.
As a reminder, here’s how the Protocols put it:
22. YOU ARE AWARE THAT THE GOLD STANDARD HAS BEEN THE RUIN OF THE STATES WHICH ADOPTED IT, FOR IT HAS NOT BEEN ABLE TO SATISFY THE DEMANDS FOR MONEY, THE MORE SO THAT WE HAVE REMOVED GOLD FROM CIRCULATION AS FAR AS POSSIBLE.
Recently National Geographic reported on 150 Trillion in Gold in deposits in the sea. Imagine the inflation that 150 trillion worth of Gold would bring!
These will not be mined, or reach the market. Not in time to stop the long term deflation that we face with resurgence of Gold as currency, anyway.
The role of mining is not very important. Sure, some Gold enters the market. But the world’s acknowledged Gold supplies grow only a little each year and the price is based on the inventory that we have.
Perhaps this is one reason why Gold mining shares have not been doing quite as well as many expected. Losses of 30% have been reported. Many have been burnt while buying Gold mining stocks, automatically assuming high Gold prices would be good for them. But other dynamics in Gold mining might be much more important than its impact on Gold prices, or vice versa. Nonetheless: the Rothschilds are getting back in mining again, so perhaps a new dawn arises for Gold mining after all. Or is it yet another of their diversions, suckering even more investors? That’s the problem with market gazing: they will fool you all of the time.
The other thing about volume is, that because of paper Gold, which is the standard at the current Gold market, there is much more ‘Gold’ in circulation than these 171,000 Tonnes wiki mentions. So we have a double bind: real Gold is artificially scarce, but paper Gold is artificially plentiful.
How much more paper than Gold is there outstanding?
I don’t know, but it’ll be much more.
As we know, paper Gold is manipulated to the core. One of the early Internet heroes was Bill Murphy, still going strong today with http://www.gata.org, exposing how the big banks rule the paper metal market and keep bullion down. To prevent exposure of their fiat empire through Gold appreciation. Or so the story goes. Conveniently.
For the time being, everybody is still holding their breath and playing along in the paper Gold scheme. Meaning paper Gold is still priced the same as physical Gold. But at some point the landlord always comes and the rent is due. So it is with all that paper. People at some point are going to want to know who’s who. And this is a moment of truth that the Gold community has been waiting for for quite some time now.
Notwithstanding its suppression, Gold rose, from $250, to $1800. And now it has been stuck at that level for about 18 months. What drove its rise to begin with? Mainly speculation it would be money again.
We’ve seen how the money supply is tanking and that we are in deflation. Many say prices are rising, especially for the basics, but we’ve pointed at Money Power managed speculation in the primary sector (commodities, mining, agriculture), forcing prices up, which is not the same thing as an increasing money supply, which is inflation. We have stagflation, not inflation. Clear proof of that are not only the money supply statistics, but also tanking housing- and paper assets. The Dow should be at 5,000, this 14,000 nonsense is entirely a Fed fabrication. The Fed has only been fighting deflation in the financial economy, not in the real one. Just look at the pressure on wages and the massive unemployment because wages are not going down quickly enough to match supply and demand. Should the rising prices for basics that we see be a result of monetary inflation, wages would be rising too.
So it’s not inflation that is driving Gold and deflation normally speaking leads to automatic Gold suppression too. No, the growing monetary role of Gold is what is driving it. It seems Gold needs to be at $40,000 per ounce to mop up all fiat currency. That is the promised land of Austrian Economics and Gold buggery.
But the Powers that Be managed to suppress Gold for so long, was it just ‘investors’ making it go up? I guess not. The involvement of ‘small investors’ is just a whitewash. The rise of Gold has been a carefully orchestrated affair. And its current stagnation is undoubtedly also a part of that. Perhaps it was going too fast. Or there are tactical reason. There are all sorts of dynamics behind the scene that we simply cannot know of.
But all the believers have their eyes on the ball and it’s coming. No doubt.
The paper Gold empire is built on the dollar. It’s built on the credibility of the US Empire and it is a cornerstone of the US Empire. The fall of Comex, the paper Gold bourse ‘par excellence’, will coincide with the rest.
‘Fiat’ has nothing to do with it
It has little to do with ‘fiat’ money as such. The Euro, for instance, will live. Here’s a cute stat courtesy of FOFOA.
Blue represents Euro Gold reserves, red paper assets. As you can see,they more or less balance each other. Everything the reserves lose to paper ‘inflation’, is compensated by the rise in their Gold assets.
Meaning Frankfurt is ready to back the Euro by Gold at any time. The Euro will not have many problems in the coming transition. This is no coincidence of course: the Euro cannot fail. If the Euro fails, there can be no World Currency. FOFOA rightly maintains Gold backing was always the plan for the Euro.
There is no such graph for the Dollar. There are two reasons for this. Officially, it is because all Gold the Fed holds is still priced at $45, because the Fed’s accountancy rules ‘force’ it to book it at the price it was bought. The Euro reserves are ‘marked to market’: they are booked at current market prices.
The real reason, as we know, is that there is no Gold at Fort Knox. It is not for nothing that Nixon ended convertibility. And what was left then, has been pledged a thousand times since.
This does remind of another glaringly obvious fact of life. Most of the known Gold reserves are held by Central Banks. Maybe not the Fed, but the others do hold much gold. This is reported every day by the ‘Alternative Media’. So why would these banks hate Gold?
This is just one of those many cognitive dissonances that we are continuously bombarded with. Of course the (Central) Banks don’t hate Gold. The reason they own it all (that we know of) is because they love it so much.
I’m not worried about the prospects of Gold. I don’t have any, but those that do needn’t lose sleep over their investments. Gold is becoming money and the whole rise of it has been painstakingly planned and executed over decades. The wealth transfer from the have nots to the haves will be legendary. It will further the deflation the Money Power wants. It is easily combined with supranational units like the Euro and what is being developed elsewhere. In fact, Gold IS World Currency. If everybody uses Gold to back their units, what difference does it make whether they call it a Yuan or a Yen?
If you are looking to ‘preserve wealth’ and strike it rich in the process, get as much Gold as you humanly can.
Why Gold is so strongly deflationary
Phoenix Rising, the Return of the Gold Standard
The US Empire is Not the Money Power!
Bloomberg, the dying Fed and the birth pangs of the new Gold Standard
Germany, the Money Power’s Golem in Europe