If you believe that gold no longer plays a role, think again. In effect, if you know what to look for, the world is on a gold standard now.
In 1971 the US ‘closed the gold window’ starting an era of global
fiat money reference pricing that has been unprecedented in
history. Never has the world operated on the basis of no country
having a currency tied to something with intrinsic value like
Gold. The ‘petro-dollar’ - a US dollar exchange rate based on the
deal struck between Saudi Arabia and America - for the US to buy
their oil and for the Saudis to buy US dollars and bonds in
return - started a period of oil companies (with the military
machinery in their pocket) bullying the world into buying US
dollars or getting cut off from oil and dollar supplies led to
our current political situation with the US now involved in
multiple wars in various oil dependent economies and their
satellites - and this lulled many into believing that Gold no
longer played a role, but recent events prove these assumptions
wrong.
Leading up the news that the Federal Reserve would not ‘taper’
their bond buying (QE) program we saw a precipitous drop in the
price of Gold. Since I knew (like others including Peter
Schiff, Bill Fleckenstein, Michael Pento and even James Rickards
who stated as much on “Keiser Report”) that the Fed cannot
‘taper’ at any point going forward without throwing their entire
Ponzi scheme into the ditch (causing every major bank in the
world to instantly collapse) it was interesting to see the price
of Gold trade down - unless you know the Fed, working alongside
bankers on Wall St. and the City of London - are actively
managing the price of Gold (along with stocks, bonds and
currencies). Knowing that the Fed (who is implicated in every
recent major market rigging scandal covering Forex, energy
markets and credit default swaps) knew that it would make an
announcement that would cause a buying panic in Gold (that they
were going to debase the currency some more) - it had to go into
the market and drive the price of Gold down ahead of the
announcement or risk seeing Gold pop to new all-time highs of
$2,000 or more.
I commented a few weeks ago that to understand the Fed you have
to understand that it, along with JP Morgan and other TBTF banks,
are one giant hedge fund. And this is a huge negative for
supporters of free markets who believe prices should be
determined by the market - not the Fed. Surprisingly, a few days
later Warren Buffett made the same observation. He said the ‘Fed
is the most successful hedge fund in history.’ For Warren this is
true. He is on the receiving end of the biggest transfer of
wealth in history from workers and savers to borrowers and
speculators. But for those not on the Fed’s list of
recipients of hundreds of billions worth of interest free loans
that never have to be paid back the fact that the Fed is a giant
hedge fund is devastating. It’s no coincidence that the day after
the ‘no tapering’ of ‘food stamps for bankers’ aka QE was
announced the government announced that food stamps for the
non-recipients of the Fed’s free money were told that they can
expect a ‘taper’ in the form of a cutback.
The huge price drop in Gold before the taper announcement is
‘smoking gun’ proof the Fed does exactly what Warren Buffett says
they do: operate like an enormous hedge fund; making free loans
to ‘friends,’ manipulating markets with impunity, disrupting
price discovery with high powered algo trading fraud and
pressuring governments to submit to various extortion schemes
like TARP (created by Goldman Sachs alum and Treasury Secretary
Hank Paulson.
In effect, if you know what to look for, the world is on a gold
standard now. The price of gold is telling you that the Fed Ponzi
is running at full tilt and that the ravages of having such a
destructive mechanism at the heart of the economy are
unraveling. Because even with all that effort, the trend of
the price of Gold is still higher and at some point the ability
to keep it down will fail and then; as Warren Buffett also said;
‘You can see who’s not wearing a bathing suit when the tide goes
out.’
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.