FYI | Sep 27 2010
Last week, Grand Private Equity's Wesley Legrand, sent the report below to his clientele. FNArena received permission to share it with readers and subscribers.
By Wesley Legrand
Gold is of course at the very centre of the world’s economic, financial and political systems, the fulcrum of truth if you like, and that is why gold is now being remonetised as the ‘ultimate currency’, as gold is a barometer of faith in the world’s fiat monetary system, and the system is clearly irreparably broken…gold is ‘honest’ money that is no one else’s liability…
We don’t know of anyone in Australia that has been on the public/media record as a gold bull for as long as us, and further to recent documents shared, please see below assorted factual and unbiased evidence, free of mainstream disinformation and propaganda. Any rational criticism is most welcome, and you really need to read/know all of this to be able to form a meaningful, qualified and enlightened view on gold and the global economy…
To begin with, please read from Alan Greenspan himself;
• “Greenspan vs Gold’s Anti-Salesman” – http://gata.org/node/9019
• “Atlas just shrugged” – http://www.gata.org/node/9022
Then see these further GATA (Gold Anti-Trust Action Committee) links;
• Ad that GATA placed in the Wall Street Journal in January 2008 – http://www.gata.org/node/wallstreetjournal
• Here is a note on the manipulation of the gold market – http://www.gata.org/node/11
• And here is a note on the recent CFTC hearings – http://www.gata.org/node/8478
Then see 2 charts below from Ed Steer…how can any rational person deny gold-price manipulation?!
This chart is titled "Intraday Average Gold Price Movements". This was obtained from four years of data… from March 2006 through March 2010… which is approximately 1,000 trading days. The price drops at the London fixes [especially the p.m. fix] stand out in stark contrast to the rest of the graph. They don't call them 'price fixes' for nothing!
If I had to pick just one chart to show how grotesque the bullion banks' short positions in silver and gold are… this is it. This would be "Exhibit A" at JPMorgan's trial for price fixing. It's prima facie evidence. It shows, in days of world production, the number of days that each Comex-traded commodity is held short by the '4 or less' or '8 or less' traders. In the case of gold and silver, it's exclusively held by the bullion banks… with JPMorgan as the ringleader.
Next some telling quotations from key sources…
• "In the absence of a gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good and thereafter decline to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as claims on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to be able to protect themselves. This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." — Alan Greenspan, 'Gold and Economic Freedom' in 1966.
• “Anyone that doesn’t understand [that] the Comex (Gold Market) is a manipulated illusion isn’t paying attention. More and more investors around the world are coming to understand this, which is why there is a movement into the physical. Real gold versus paper gold. Which do you own?” – Michael Krieger, zerohedge.com
• “The growth in foreign dollar holdings has placed upon the United States a special responsibility–that of maintaining the dollar as the principal reserve currency of the free world. This required that the dollar be considered by many countries to be as good as gold. It is our responsibility to sustain this confidence.” – President John F. Kennedy days after he took office in January, 1961
• "The modern mind dislikes gold because it blurts out unpleasant truths." – Joseph Schumpeter
• “The U.S. turned 234 years old yesterday, and yet over half of the nation's money supply was created since Helicopter Ben took over the flight controls four years ago. No wonder gold is in a full-fledged bull market.” – David A. Rosenberg, Chief Economist & Strategist, Gluskin Sheff & Associates Inc.
• “Betting against gold is the same as betting on governments. He who bets on governments and government money, bets against 6,000 years of recorded human history.” – Charles de Gaulle
• “Without a link between money and gold, there will never be a final bank bailout.” – Jim Dines
• "Nothing beats a little cash in a bear market, of course, and the oldest form of cash is gold." – James Grant
• “Governments lie; bankers lie; even auditors sometimes lie. Gold tells the truth.” – Lord Rees Moog, former editor of The Times of London
• “I want to repeat for what seems like the umpteenth time – those Elliot Wavers who keep calling for gold’s demise are misguided because their view of the metal is too “Dollar-priced” centered. This is the fatal flaw in their “analysis” and their incessant bearish gold calls. They treat the metal as if it was a common commodity not understanding its role as a CURRENCY. Any analysis that does not grasp this simple fact is doomed to failure for we are not talking about soybeans here or cocoa but a metal that has had an historic role as a currency and a store of value for thousands of years. The failure to see the price of gold in various other currency terms leads to erroneous conclusions. Any market that is going on to make all new lifetime highs is not bearish. It really is that simple and arguments to the contrary are based more on hope and wishing than solid, objective analysis.” – Dan Norcini
And the main reason for this longstanding gold price suppression…
Central banks are engaged in a desperate battle on two fronts (Excerpt from 2001 Essay)
What we see at present is a battle between the central banks and the collapse of the financial system fought on two fronts. On one front, the central banks preside over the creation of additional liquidity for the financial system in order to hold back the tide of debt defaults that would otherwise occur. On the other, they incite investment banks and other willing parties to bet against a rise in the prices of gold, oil, base metals, soft commodities or anything else that might be deemed an indicator of inherent value. Their objective is to deprive the independent observer of any reliable benchmark against which to measure the eroding value, not only of the US dollar, but of all fiat currencies. Equally, their actions seek to deny the investor the opportunity to hedge against the fragility of the financial system by switching into a freely traded market for non-financial assets.
It is important to recognize that the central banks have found the battle on the second front much easier to fight than the first. Last November, I estimated the size of the gross stock of global debt instruments at $90 trillion for mid-2000 (now around $800 trillion in 2010). How much capital would it take to control the combined gold, oil and commodity markets? Probably, no more than $200bn, using derivatives. Moreover, it is not necessary for the central banks to fight the battle themselves, although central bank gold sales and gold leasing have certainly contributed to the cause. Most of the world’s large investment banks have over-traded their capital so flagrantly that if the central banks were to lose the fight on the first front, then their stock would be worthless. Because their fate is intertwined with that of the central banks, investment banks are willing participants in the battle against rising gold, oil and commodity prices.
Central banks, and particularly the US Federal Reserve, are deploying their heavy artillery in the battle against a systemic collapse. This has been their primary concern for at least seven years. Their immediate objectives are to prevent the private sector bond market from closing its doors to new or refinancing borrowers and to forestall a technical break in the Dow Jones Industrials. Keeping the bond markets open is absolutely vital at a time when corporate profitability is on the ropes. Keeping the equity index on an even keel is essential to protect the wealth of the household sector and to maintain the expectation of future gains. For as long as these objectives can be achieved, the value of the US dollar can also be stabilized in relation to other currencies, despite the extraordinary imbalances in external trade.
All starts to make a lot more sense now doesn’t it…and see below some more charts for further interest…
Gold a Bubble? I think not…
The first graph below shows the CPI-Adjusted gold price going back 300 years. Of particular note is the devaluation of gold in 1933 by the Roosevelt administration after the gold confiscation in the United States. The second, is the price of gold once Nixon closed the gold window in 1971. From there it rose to a CPI-adjusted price of $2,391 in January of 1980. These inflation numbers are the ones that the U.S. government currently uses to calculate the Consumer Price Index. As you know, these inflation numbers have always grossly understated the true inflation rate.
The second gold graph below is one calculated by John Williams over at shadowstats.com. He uses the true CPI numbers that were in effect during the Carter administration way back when. This chart is quite a bit different, with the most outstanding feature being the peak gold price of January 1980 now coming in at $7,267. Even if you use an average of the two peak prices on each graph, it's not hard to see what the true price of gold might be if allowed to trade freely. Is it any wonder why the U.S. government is sitting on the gold price?
Any questions?
PS – Don’t buy gold ETF’s, it only aids gold-price suppression; only physical gold and gold mining shares count…
Disclaimer
This document has been prepared for the general information of investors and not having regard to any particular person’s financial situation, objectives or needs. Accordingly, in so far as any information may constitute advice (whether express or implied), it is general advice and no recipient should rely upon it without having obtained specific advice from their advisor at Grand Private Equities Pty Ltd. Grand Private Equities Pty Ltd makes no representation, gives no warranty and does not accept any responsibility for the accuracy or completeness of any recommendation, information or advice contained herein. To the extent permitted by law, Grand Private Equities Pty Ltd will not be liable to the recipient or any other persons in contract, in tort or otherwise for any loss or damage (including indirect or consequential loss) as a result of the recipient, or any other person acting or refraining from acting in reliance on any recommendation, information or advice herein. Grand Private Equities Pty Ltd or persons associated with it may have an interest in the securities or financial products mentioned in this document and may earn brokerage and other fees as a result of transactions in any such securities.
