The Price of Gold and the Art of War, Part IV

by Darryl Schoon, Gold Seek If you wait by the river long enough, the bodies of your enemies will float by Sun Tzu, The Art of War, 5th century BC After the 1999 gold crisis, bankers could no longer force the price of gold lower by loaning central bank gold and selling it in the open market. In 2001, as demand—and the price of gold—rose, the bankers were forced to flood markets with discounted ‘paper gold’, gold futures, i.e. paper promises of future gold deliveries at lower prices, in order to contain gold’s rising price. GOLD’S CONTROLLED ASCENT: 2001 – 2011 The bankers sold their paper promises of cheaper gold on COMEX to contain gold’s rising price in an acceptable range for the next ten years, i.e. a controlled ascent, with two notable exceptions. The first was the 2008 global economic collapse. The second was the euro zone sovereign debt crisis in 2011. In both crises, the price of gold began to rapidly rise, breaking above the bankers’ control at A and B (see gold trendline chart); when increasingly fearful investors turned to gold signaling that a severe financial crisis was underway; a signal bankers’ feared could destroy confidence in their lucrative and long-running ponzi-scheme of credit and debt. gold Severe financial crises such as the 2008 global economic collapse and the 2011 eurozone crisis are an anathema to the bankers’ confidence game of credit and debt; a game where confidence is critical to keeping credit and debt circulating in increasing amounts and sufficient velocity, a monetary phenomena masquerading as growth necessary to pay down constantly compounding debts accrued when money is issued in the form of credit from central banks. If investors suddenly withdraw from stocks and bonds and buy gold and silver, the price of gold and silver will explode upwards triggering an exodus from stocks and bonds; and the bankers’ ponzi-scheme will collapse as the circulation of credit and debt will fall below the levels necessary for markets to effectively function—this is the raison d’être for the bankers’ war on gold. If you know the enemy and know yourself, your victory will not stand in doubt; if you know Heaven and know Earth, you may make your victory complete. Sun Tzu, The Art of War, 5th century BC GOLD’S ASCENT AND FALL: 2011 – 2015 It was the 2011 eurozone crisis (the second breach, B, of the gold trendline) that is responsible for gold’s present malaise, i.e. its fall from $1900 to $1200. In the summer of 2011, the EU sovereign debt crisis had rapidly worsened and the price of gold skyrocketed, rising from $1480 in July to $1900 by September. The explosive breach of the gold trendline in the summer of 2011 is responsible for gold’s subsequent fall and present low price. This is because gold’s near vertical ascent is what bankers feared most, a spectacular 28.4 % rise in two months; that, if allowed to continue, would signal to investors that it was time to trade their stocks and bonds for the safety and profits­ of gold and silver. Of the bankers’ reaction, I wrote: When Europe’s debt contagion spread in the summer of 2011, the price of gold began moving rapidly higher which bankers feared could itself turn into runaway contagion…Jesse’s Café Americain traced the planned ambush of gold by central banks during their September take-down…Gold had risen to a record high, $1900, on September 1st and on September 2nd, central banks then took corrective action, dropping their lease rates for gold sharply lower into negative territory. This meant that central bankers would actually pay bullion banks to borrow their gold and sell it on the open market. The new supplies of gold capped gold’s increasingly steep seven month rise and, by the end of September, the price of gold fell back to $1600. After Sept 2nd, gold lease rates still remained negative, insuring a continued low price for gold even as the European debt crisis accelerated and the global economy slowed. This is exactly what central bankers intended. Gold is a barometer of systemic distress and central bankers wanted to conceal the flames rising from their now burning house. Continue Reading>>>

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