The Fed has Sold Half of all US Gold to Suppress Gold Prices

I notice that the price ratios between the time spans of differing gold lease rates have been remarkably well behaved lately, almost as if they were locked together in precise bands. I think that this is interesting as hell, although I have no idea what it means, if indeed it means anything, which it probably doesn't, although I will say that those guys setting up spreads (to take advantage of volatility) in gold have gotten financially killed, which I figure in turn benefited the guys who are short all that gold, as that is who I figure is on the other side of the trade when you and I are trying to make a quick buck with some fancy day-trading of options and futures and, of course, the spreads, and they manage to clean us out pretty regularly, the lying, cheating, thieving bastards.

But being naturally suspicious and cynical, I obviously regard that this is just part of the plan on the part of 1: The guys who are short gold, whose total short position is in the range of billions and trillions and quadrillions and zillions and gajillions of dollars for all I know, and 2: central banks who foolishly lent out the nation's gold, at diddly interest rates, as their part of the scheme, and now the Fed has essentially sold (although they call it "leased") half of all our nation's gold, which I seem to recall is the estimate of the Gold Anti-Trust Action committee, who are probably best qualified to know (other than the government or Fed, who know for sure, but both of which refuse to even talk about it!).

In fact, Bill Murphy of GATA says, "The Gold Cartel is running out of available central bank gold to meet surging demand for physical gold. It is the opinion of the GATA camp that the central banks only have half the gold they say they have in their vaults - not the commonly bandied about 30,000 tonne number, but less than 15,000 tonnes."

He notes that there were many powerful people with many powerful friends who had many powerful reasons to keep the price of gold down, such as how "the gold price suppression scheme was the cornerstone of Secretary Treasury Robert Rubin's 'strong dollar' policy", and "Treasury Secretary Paulson, a key member of the President's Working Group on Financial Markets (popularly known as the Plunge Protection Team)" who chillingly said, "The United States will do what it takes to calm markets", which they think will be demonstrated by the price of gold not rising, because ordinarily it would be shooting to the freaking moon in response to economic conditions like today, and people would be alarmed, and perhaps singing the latest hit song by the Rocking Mogambo Quintet (RMQ) that has the famous line, "Look at gold shoot to the moon! The Mogambo was right! We're freaking doomed!"

Now, if you are like me, then you already suspect that all of these people are crooks and back-stabbing, traitorous thieves anyway, and all I want is just to make a lot of money so that I can move into a nice house in a gated community that has armed guards, a nice golf course and completely surrounded by sleazy strip clubs and pizza parlors where you can get any kind of pizza you ever heard of at discount prices.

Fortunately, everything except the cheaper prices is entirely possible as a result of all of this government meddling in the gold market (as they are advised to do by former Fed chairman Paul Volcker, who had to eliminate the 15% inflation of the '70s and who thinks that gold soaring to US$850 an ounce "looked bad" and undermined his efforts to stop runaway inflation), and Mr Murphy thinks that this means that "Fortunes have been made and there are more fortunes to come", and that may people think that gold prices "will go up three to five times again from present levels."

And as to the notion that the Fed has sold half of our nation's gold, I think that is being generous as hell, as I see no reason why the Fed would stop at only half, sort of like when I am starving and I sit down with a whole delicious pizza in front of me, and my wife thinks I am just going to eat half and leave the other half for her, and then she acts all surprised when I see no reason to stop at half, either!

So, assuming they still have some gold to sell into the market to keep the price down, you may have an opportunity to buy more gold cheaply for a while longer yet! Whee!

And don't get me started on how you can still buy silver so cheaply, as it will elicit another, yet bigger, squeal of glee from me along the lines of "Wheeeee!", wherein you notice that I used a few extra letters to indicate much higher amounts of glee, which only proves how deadly serious I am!

Richard Daughty is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the editor of The Mogambo Guru economic newsletter - an avocational exercise to heap disrespect on those who desperately deserve it.

(Republished with permission from The Daily Reckoning . Copyright 2008, The Daily Reckoning.)
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