- Former U.S. Congressman blasts Fed’s role in markets- Gives scathing
analysis of modern economics and markets- Highlights complete disregard of
economic fundamentals in investment decisions today- As will be the case with
Greece, U.S. will eventually be forced to liquidate debt- Attempts to
forecast day of reckoning are futile as it is a function of psychology- “They
can’t print money forever”- Gold
and silver will weather and thrive in currency devaluation
Ron Paul, former congressman for Texas, laid plain the absurdity of
central policy towards the markets in a recent interview with Amanda Diaz on
CNBC. He believes a day of reckoning is in the cards because the central
banks “can’t print money forever.”
Dr. Paul blasted the role of the Federal Reserve in markets where
superficial pronouncements herd speculators to and fro: “I am utterly amazed
at how these Federal Reserve Chairman reports can play havoc with the market:
one word – what they say and what they don’t say and who’s going to interpret
it,” he said.
He believes this manipulation of markets by the Fed is having very
negative consequences for the economy. Speculators are chasing Fed-induced
momentum rather than making investment decisions based on analysis of what is
happening in the real world. Savings, once the bedrock of American
capitalism, have been replaced by easy credit leading to “a lot of
malinvestment and a pyramiding of gigantic debt”, adding“People don’t depend
on savings for their capital – they depend on the Fed!”
He states that at some point the financial elites are going to have to
admit that Greece’s debt is unpayable and will have to be liquidated. He sees
the same thing eventually unfolding in the U.S. also, saying “there will be
an unwinding of this pyramiding of debt and all this malinvestment that has
occurred for a good many years.”
The interviewer – abandoning any pretence that the markets are in
anyway independent – states “This is a Fed that has held this market up for
quite some time now” and then asks Dr. Paul to indicate when he thinks the
crisis will unfold.
He states that it could happen any time – maybe tomorrow, maybe two
years from now. “It all depends on a psychological acceptance of this
system. So, a lot of people who are still making a lot of money know that it
is not going to last but they figure ‘well, everybody else thinks it’s going
to last…’ and they just keep owning bonds and buying stocks.”
He therefore believes that it is impossible to gauge when the day of
reckoning will come.
“So no, I don’t think there is anyway to know what the time is but
after thirty five years of a gigantic bull market in bonds: believe me, they
cannot reverse history and you cannot print money forever and deceive the
markets forever. Eventually, the markets will rule and that’s only a question
of when that will happen and of course I’m running a little bit scared
because I think there will be a day of reckoning.”
In the event of currency devaluations, physical gold and silver – which
cannot be printed and devalued by central banks with reckless abandon – will
not only survive but thrive.
Must Read Guide: 7
Key Gold Must Haves
MARKET UPDATE
Today’s AM LBMA Gold Price was USD 1,174.60, EUR 1,052.51 and GBP
748.80 per ounce.
Yesterday’s AM LBMA Gold Price was USD 1,175.75, EUR 1,048.93 and GBP
744.71 per ounce.
Gold fell $3.20 or 0.27 percent yesterday to $1,174.40 an ounce. Silver
climbed $0.07 or 0.44% percent to $15.90 an ounce.
Gold in U.S. Dollars – 5 Years
Gold
in Singapore for immediate delivery was up 0.2 percent to $1,176.80 an
ounce.
Gold’s move lower is counter intuitive as the poor GDP number, while
expected, allied to lower stock markets on continuing Greek concerns should
have provided a boost to gold.
It suggests that the gold market is still largely controlled by
speculative, fast trading money going long and short and trading the range
between $1,150 per ounce and $1,225 per ounce. Passive allocations to
physical gold and global physical demand is not impacting prices at this
time.
Even the introduction of a gold dinar as currency by the ISIS fanatics
has been greeted with a huge yawn as traders hold sway for now.
Gold in U.S. Dollars – 5 Years
China’s Industrial and Commercial Bank of China (ICBC) is making a move
to be part of the London gold price benchmarking process, the bank said
during the LBMA bullion market forum.
Only last week, the Bank of China (BOC) became the first Chinese bank
to participate in the LBMA Gold Price, which formally replaced the 100 year
old London Gold Fix on March 20th.
Standard Chartered and Morgan Stanley will join present members
JPMorgan Chase Bank, Scotiabank, HSBC, Société Générale, UBS, Barclays and Goldman
Sachs including the two Chinese banks.
The ICE Benchmark Administration (IBA), was established in April 2013
to administer benchmarks, and currently provides the price platform,
methodology and overall administration and governance for the LBMA gold
price after a price fixing scandal.
Chinese banks are ramping up their commodities business while some
western banks are exiting them.
In late morning European trading gold is U.S. dollars is down 0.01
percent at $1,175.23 an ounce. Silver is down 0.30 percent at $15.85 an ounce
and platinum is up 0.21 percent at $1,076.44 an ounce.
