|
STAGE 3: The price of gold is subject to increasing highs and lows and large investment funds move in and
out of gold as global uncertainties wax and wane, a sign that gold is increasingly a haven in uncertain times.
pp. 151-152, Time of the Vulture: How to Survive the Crisis
and Prosper in the Process, DRS, 3rd ed., 2012
In How to Survive the Crisis
and Prosper in the Process (3rd ed.,
2012) I describe the five stages of gold. When I began writing the book in 2006, gold was in Stage 2. In 2007, gold entered Stage 3 where speculators and investment funds become a factor the increasingly volatile price of
gold.
On October 19th, Commerzbank attributed the day’s 1.3
% fall in the price of
gold to speculative financial investors: “The
Dollar Gold Price fell to $1732 per ounce Friday …We hold selling by speculative financial investors responsible for the price slide…In recent weeks they had strongly
built up their positions
and may now be seeing themselves
forced to take profits given the faltering upswing."
http://goldnews.bullionvault.com/gold-price-1...121#DC-20121019
While speculators
and investment funds may have indeed driven last week’s sell-off, they had sufficient incentive to do so. The paper-money cartel, concerned a
two-month rise in the price of gold was evidence of growing momentum, had moved on September 27th
to force the price of gold lower.
WHAT YOU
DON’T KNOW EXPLAINS WHAT YOU DON’T UNDERSTAND
Gold had begun moving
up August 2012. Beginning at
$1600, it finished August
at $1650; but gold’s
August advance would more
than double in September with gold ending at $1780. Gold was on the move
and the paper-money cartel had
noticed.
On September 27, the cartel acted against gold by sharply lowering one-month gold lease rates, incentivizing bullion banks to borrow then sell
gold on the open market; increasing
the supply and thereby driving down the price of gold.
Chart 1
It worked. In October gold fell from a high of $1790, culminating in the $22 drop on October
19th, a drop Commerzbank attributed to financial speculators. The
attribution is only partially correct.
Chart 2
The selling had been earlier set in motion by increased
gold supplies from the bullion
banks. The banks had taken advantage
of now lower one-month gold lease rates already at negative
levels to borrow gold then sell it
on the open market and reinvest
the funds elsewhere.
TIME AND TIME
AGAIN
Last year, the paper-money cartel had also lowered
gold lease rates for the same
reasons. In target="_blank" Gold’s Coming Rise, I
noted how the paper-money
cartel capped gold’s
rise in the summer of
2011 by manipulating gold-lease
rates that September.
When gold rose from
$1500 to $1900 between July and September,
the bullion banks cut the one-month, two-month, three-month, six-month and one-year lease rates for gold; flooding
the markets with enough gold to reverse gold’s
then powerful upward trend.
As a consequence, during September gold dropped from an intraday high of $1920
on September 3rd down to $1620 on September 30th and when
gold began moving higher again in October and November, the paper-money cartel again responded with even lower lease
rates in December.
Chart 3
Chart 4
Lowering the gold lease
rates in September and December
2011 forced the gold bear
back into his cave to lick his wounds
until August 2012 when
gold began to move upwards;
and then, on September 27th,
the paper-money cartel attacked
gold again.
WHAT A
DIFFERENCE A YEAR MAKES
No one knows how long gold will remain in Stage 3. What is certain is that we are closer
to Stage 4 by a year than
in September 2011 when
gold-lease rates were lowered; and there is a critically important difference between this year and 2011.
In September 2011, the paper-money
cartel attacked gold by collectively
lowering the one-month, two-month, three-month, six-month and one-year lease rates (see Chart 4). This year the cartel only lowered the one-month lease rate (see Chart 1).
In 2011, the paper-money
cartel believed their attack on gold would keep gold prices low for up to a year and were willing to offer and take 12-month bets on that possibility. Today, in 2012, the paper-money cartel
is willing to risk only 30 days on that very same bet;
and, someday—and perhaps
soon—even 30 days will be
too long.
GOLD: STAGE 4
– WHEN GOLD EXPLODES UPWARDS
An explosive ascent in the price of gold. A crisis results in a monetary
breakdown which drives the price
of gold to never-before-seen highs.
Investment capital floods
towards the safety of
gold. Central banks capitulate.
p.
152, Time of the Vulture: How
to Survive the Crisis and Prosper in the Process,
DRS, 3rd ed.,
2012
Stage 4 is what the paper-money
cartel fears most of all.
This is the stage when
panic-stricken investors realize too late
that the bankers’ game of leveraged debt is over. Stage 1 began with the bankers’ suppression of the price
of gold and the current stage, Stage 3, will end in Stage 4 when the bankers’ decades-long
suppression of market forces explodes
in a cataclysmic rendering
of credit and debt-based paper instruments and the collapse of financial
markets.
There’s
a bull in the bear’s cave
In the end, only gold and silver will be left
standing on a field littered
with the piles of now worthless paper coupons that once passed for money. My current youtube video, target="_blank" Why Gold? Why Debt?, is now available
on my
website at www.drschoon.com.
Buy gold, buy silver, have faith.
|
