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Over the past decade
there has been a growing controversy over whether or not the precious metals
markets are being manipulated. As time has moved forward to the present,
those studying this subject intensively and continuously have little doubt
that this is indeed so. The brilliant and meticulous studies and reports
issued by the likes of Ted Butler, Bill Murphy, David Morgan, John Embry, and
more recently Jason Hommel, leave little doubt that the evidence supports
overwhelmingly that the markets that trade gold and silver are not free
markets. Letter writing campaigns to the regulators of these markets may have
resulted in at best, a toning down in the blatant, against all odds price
movements in these “markets?”, as well as a withdrawal of some of
the savviest and most instrumental participants. American International Group
has withdrawn from its activities in the silver market while the investment
bank, NM Rothschild has withdrawn from its participation in the twice daily London gold price fix.
The original idea of
manipulating the precious metals markets has been attributed to Lawrence
Summers with the support of Robert Rubin. The theory that keeping the gold
market in check would contribute to the legitimacy of government financial
policies by helping to subvert an ongoing inflation has proven remarkably
successful in fooling the masses. In addition, it has led to a cancerous form
of manipulation that has metastasized to the bond market, the stock market,
government statistics, and corporate financial statements. Paul Volcker even
went so far as to say the one big mistake he made was in not capping the gold
price. What this, in effect, has done was to provide a long period of time in
which to accumulate real money, gold and silver, at below market prices.
While in no way
condoning Greenspan’s policies and realizing they will result in an
economic disaster eventually, I must admit one can’t help being
impressed with his mastery of the press, Wall Street, and the common man to
perpetuate this fraud. I, for one have been amazed at how long this has gone
on. It has been over five years since the stock market bubble burst yet he
has managed to float the economy on a sea of debt while not only convincing
the masses that everything is all right, but also that they were getting rich
on real estate. The hollowing of the economy through the loss of the
country’s industrial base went unnoticed largely through the silencing
of the traditional alarm system – gold. The foundation of the economy
described by Wall Street “experts” as resilient and flexible is a
house of cards held together by artificially low interest rates, inflationary
money expansion, and borrowed funds. Retail stores increasingly give away
items today for payment several years from now. Auto manufacturers sell cars
with below market interest rates, 0% interest rates, and now employee
discounts for everyone. The economy is so consumption dependent, extreme
measures are taken to keep it going.
A wide range of
commodities are hitting multi-decade and all-time highs including oil,
natural gas, copper, uranium, and now gold among many others. The inflation
induced economy hit industrial commodities first as the ever increasing
expansions sucked up the normalized supply levels. Gold has lagged many of
these since the big demand for gold materializes once the inflation is widely
recognized. A dumbed down public easily fooled by bogus economic statistics
and hedonic measurements are only now awakening to accelerating inflation. Gold
is close to record low levels in terms of many other commodities such as oil.
With only a reasonable amount of economic understanding one should have
identified the unsustainable nature of the last few years’ expansion. Thanks
to Alan Greenspan’s skillful manipulations not many have identified the
opportunity at hand. For those of us that have, the apparency of a healthy
economy has prolonged our opportunity to accumulate gold and silver at
bargain levels. In due time this, will be seen as Greenspan’s greatest
gift.
Richard J. Greene
Managing Partner, Portfolio
Manager
Thunder Capital Management
More articles by the author can be accessed by the
"Research Articles" choice at: www.thundercapital.com
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