Opinion

Gold manipulation backfiring on West

J. Keith Johnson Senior Writer, The Gold Informant
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Is it possible that Western central bankers have been attempting to suppress the value of gold? For many years the Gold Anti-Trust Action Committee (GATA) has been attempting to expose manipulation in the gold (and silver) market.

It’s really not a matter of whether or not it’s happening. That’s been pretty much made clear. It’s more a matter of whether anything will ever be done about it. It’s apparent that the powers that be aren’t going to address this anytime soon.

The history of gold’s suppression goes back to the plan to sever the umbilical cord between gold and the dollar back in ’71. Since gold is a direct competitor with what then became the greenback, its rise against the dollar signified the dollar’s failure to hold value. With this in mind, the price of gold has been manipulated, to a certain degree, since it dropped from its 1980 highs. Much of the history, with associated documentation, can be found on GATA’s website. This recent article from James Turk is helpful as well.

Such efforts have resulted in many Western central banks dumping gold onto the markets. It’s well known that England’s central bank sold off half of its gold reserves over a decade ago, at very low prices. Speculators continue to question whether gold, gold-coated tungsten or simply empty space is being guarded in Fort Knox.

For the central bankers and their malleable fiat currency, gold was the enemy. In recent years, however, there’s been a shifting of sentiment. Germany has been inventorying its gold. Venezuela recalled all but 10% of its gold from central banks. Switzerland has been examining its gold reserves.

In the meantime, Eastern nations have been accumulating gold. Russia hasn’t made it a secret that it’s increasing its gold reserves. China’s gold reserves grow with each passing year, even as the percentage of its reserves devoted to U.S. dollars diminishes. In fact, China is a net importer of gold, even though it mines much of the world’s current production. And now we read of Iran taking gold as payment in order to allow countries to circumvent the sanctions levied against the Islamic Republic.

Perhaps the irony of what Western banks have accomplished is finally settling in. As they suppress the price of gold, they’re helping Eastern nations accumulate at their manipulated prices. This is happening even as Western currencies are dropping in value, threatening massive inflation in coming years. If this trend progresses, gold’s price won’t only go up; the yellow metal will shift to Eastern shores, strengthening Eastern currencies in the process.

Make no mistake: This is a shift of wealth from West to East. The only recourse Western bankers have is to begin accumulating. But to do so will mean they must allow gold to run its course — a course that very well may be straight up in value. It’s a catch-22. Suppress gold and watch it flow eastward, guaranteeing the ultimate demise of Western economies; or accumulate, which will necessitate greater drops in the value of Western currencies. Either way, gold’s going up.

J. Keith Johnson’s Austrian and libertarian perspectives on current socioeconomic and geopolitical affairs are fueled by his insatiable desire to both discover and share the truth. A Goldco Direct affiliate, you’ll find his commentary on The Gold Informant website, as well as various Internet financial and news sites.