Gold price rises on monetary stimulus hopes

i am far from clear why on earth the Fed would want to see gold rise 500+% within the clearly defined channel you mention. That it is part of some strategy to protect the dollar's reserve status makes little sense to me IF the manipulators can make the price reflect their desires, as you suggest they can and if they actually exist. Having gold go up like that would only serve to make gold seem the better store of value, would it not?

It would seem more likely that if the Fed is indeed in the gold manipulation business again (Plaza Accord), their desire would be to keep the price from really taking off and they would do so by getting those you mentioned to do them a favour. Not that those banks need any encouragement from the Fed to short gold when they have been making big piles of cash doing just that time and time again.

For the Fed, if they even give gold a second thought, it has to do with psychology. They would not want it to appear that there is a better store of value out there that was used as money not all that long ago. But that is it. The gold market is way too tiny to keep the governors awake at night; accounting for a mere 0.2% of the world's annual economy.

IF there is anything to keep them as well as the folks at Treasury awake at night, it is the CPI. That is the largest factor in controlling their costs and it is that and other metrics which they constantly fiddle with to screw you and me. i mean, if inflation really is running near as high as John Williams says, by putting out the phony numbers that they are, they are saving a sum nearly equal to or greater than the value of the annual world gold production.

IF there is some plan for a new monetary system, you can be 100% certain that gold is not a part of it. If such plans are being discussed, they would focus entirely around going digital. America has become a police state and what they are really looking for is not terrorists, but money. Digital would give them the ability to grab their pound of flesh from every transaction that takes place. Gold will take its place, as it always has, in the underground economy. Now China, with their very favourable balance sheet, is a different story. i could see them going with a gold backed yuan; say at 10%. But America owes $7 trillion to foreigners (annual world gold production amounts to about $125 billion at today's price), so switching to gold for them would be too stupid for any words to convey. If not for that very reason, why do you suppose Nixon closed the gold window in '71?

Changing the monetary system would be a default. No way around that. Every contract, every Treasury, every everything is denominated in dollars.... The reserve status that the dollar currently enjoys cannot be given up without America going through the worst upheaval it has ever witnessed. America will lose the reserve status for its dollar and along with it the privelege of exporting its debt, but not without a fight. It is beyond belief to think that losing that is part of their master plan.

While i maintain that the system is irretrievably broken, i am quite certain that the Fed and Treasury have some tools still left in their tool belt that they have not yet told us about. For one, should foreigners show a stronger distaste for buying U.S. debt, do not be surprised if they move to force savers to convert a portion of their savings into government debt. Capitol controls may be introduced to limit your ability to transfer money out of the country. And if a run on the banks seems imminent, expect them to either limit how much you can withdraw at any one time or make you wait 30 days to get the funds, or both. That is what is coming. They will attempt to sell it as a painful but controlled management of the crisis in order to prevent the catastrophy that a disorderly default would cause. These are the strategies of those who have totally lost control of the situation. Endless money printing, ZIRP forever and a new accounting practice (FASB 157) designed to hide trillions in toxic assets all scream of a broken system. (And that is to say nothing of them preparing for war with their own citizens!)

You indicated that the aim of the Fed is to weaken the dollar (to make paying off the debt easier) and i would agree with that. Yet armed with a printing press and resolve, the dollar sits on its index precisely where it did in the summer of '07. Worse still, it is rising! (Look for that trend to continue as smart money floods out of Europe and Japan. The gold market will absorb some of it, but the bond and stock markets will get the lion's share of it for the near term.) What sort of control does that speak of if not a loss of control? No, they just dash madly about from one crisis to the next, trying to insure that this will not be the one that crashes the whole system.

None of this should suggest that the precious metals markets are not manipulated. They certainly appear to be. But i suspect most all of it originates with the big trading and bullion banks, not the Fed. And they do it because they always have and it has always been a money maker for them. And as Mr. Holder has informed us, (as the unintended consequences of bringing them to justice could be so catostrophic, no action will be taken) they have a green light to keep on robbing us blind. So we would be naive to believe that they will not return to do it again and again. They will. And let them. It is to my advantage in that i operate with the firm conviction that the system is broken beyond repair and will die one day. i do not sell when the price goes down and will not until the system has died and a new one has taken its place. If they knock the price down, i just look at it as an opportunity to go out and buy more at a cheaper price. As it were, i measure my wealth in ounces, not dollars.