India, Not US Or EU Bank Conspiracies, Is Causing Gold To Fall In Value

The Assault on Gold » Counterpunch: Tells the Facts, Names the Names Paul Craig Roberts shows us how far off a cliff even someone as bright as Roberts can fall once they go for the ‘continuous deliberate conspiracy’ belief systems.  That is, gold speculators in the US complain nonstop about the meanies at the Fed fiddling with gold prices…but only when it is falling!

 

Over and over again, I have easily discovered why gold goes down periodically.  It is laughably simple: India.  Yes, India is the driver of gold prices as well as availability.  The people there save their capital as gold.  And it has to be real gold and they don’t hoard it hidden, it is worn on the body.

 

The next driver of gold prices are the Chinese.  Other Asians do this too but China and India have a billion people doing it so they are the main drivers of gold prices and availability.  Why do Americans always assume something has to go up and up and up all the time?  Virtually nothing outside of black holes does this.  Black holes are the nearest thing to ‘forever’ in our limited Universe.

 

One other thing goes to infinity: numbers.  Which is why the bankers don’t like gold, they much prefer fast-moving computers causing numbers via derivatives to shoot to infinity. Gold is very limited by the fact that it is real.  This is why the super-rich don’t worry about gold.  A Picasso painting can shoot from $20 in 1915 to $190 million in just one century, for example.  Gold doesn’t even begin to match that at all.  Not even slightly.

 

So, contrary to the gold bugs and Paul Craig Roberts, the real reason gold stop shooting upwards is the Weak Rupee Takes Shine Off India’s Gold Buying – WSJ.com.  I am glad the WSJ figured this out, too.  So I am not entirely alone.  Of course, gold bug speculators will cling to their ideology rather than look coldly at the facts because this makes them feel super-human rather than the small victims at the edge of gold markets watching foreigners do the real deals.

 

Indians have zero faith in their currency which collapses constantly so they borrow based on the value not of their homes but their gold holdings.   Alas, when it falls suddenly, their debts are called in just like in the housing markets here:  Gold Price Drop Hits Indian Gold Lender | Gold News

 

Manappuram Finance, which offers loans that use gold as collateral, said this week that it may lose some of the interest owed on its loan book of more than Rs100 billion ($1.8billion) as falls in the gold price have lowered collateral value, Bloomberg reports.

 

This will slow down economic activity in India.  China has the opposite problem: the H7N9 flu will cause a contraction as everyone fears social contact and trade between China and other nations already is being shut down in places due to fear of contagion.

 

Aside from this, we have websites that like to be on top of conspiracy games going after this mysterious story: cryptogon.com » Italy: Police Find Unmarked Gold Bars Worth $7.5 Million Hidden in Car.  Well, well, at our own borders with Mexico wealth is smuggled across by drug dealers all the time, millions and millions at a pop.  Ditto in Europe.  There are plenty of illicit schemes which like to use gold that has no numbers on it like currencies, no ‘fingerprints’.

 

It can be anyone from drug dealers, human smugglers, sticky fingered bureaucrats, tax evaders, the list is long.  The main thing is, Europe is imploding so people are removing wealth in whatever form they can so that banks can’t have records and thus, be tracked by governments.  We will certainly see much more of this in the future certainly after Cyprus saw its foreign holders get a 60% haircut.

 

But then, they would have had a 100% haircut if Germany decided to dump everyone and not take up more obligations.  No gratitude for that was shown!  People wanted to bank in reckless bank cultures so they could harvest more wealth passively.  And the price you pay is in RISK.  Which no one wants.  Everyone is jealous of the US bankers who were entirely rescued by the Federal Reserve and took virtually no losses.

 

That is robbery!  Not the Germans demanding a haircut in Cyprus.  Remember, banks have zero obligation to pay back capital if they go bankrupt.  Only governments can enforce that.  And as the smugglers of gold to Switzerland discovered, governments can seize gold, too.  And is anarchy with everyone armed with guns and bombs better?

 

Syria!  Yes, chaos leads to destruction of most wealth.  Not to mention, lives.

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29 Comments

Filed under .money matters, gold

29 responses to “India, Not US Or EU Bank Conspiracies, Is Causing Gold To Fall In Value

  1. ziff house

    Hmmm no mention of the fake paper gold market, it seems and i would bet demand for physical is pretty strong, Russia & China

    ΩΩΩ

    ELAINE: I mention that periodically. It is one of the saddest things on earth watching gold bugs fall for that scam while decrying paper money.

  2. Just Ice

    That’s interesting. Let’s see if I follow: rupee tanks, tanking demand for gold jewelry in India, tanks gold price, tanking india’s banks primary collateral, tanking india’s economy.

    A hundred years ago, one fox pelt was worth more than a months salary on the railroad (a good paying job back then comparable to a $30 an hour union job nowadays), or so says my grandfather who used to trap them. Yet, today, one fox pelt goes for much, much less than a month’s union salary, even though there are less foxes and many more people. The green/animal rights movement has destroyed fur as a fashionable commodity, tanking demand faster than either supply fell or population rose.

    Gold has gone to fashion and then maybe will go the way of fox pelts.

    Of course, Roberts is also correct generally and historically about (many) games played by governments to keep gold prices from evidencing inflationary policies. (I know nothing of what happened in April.

  3. Just Ice

    Long before Nixon closed the gold window, plutonium supplanted gold as the most precious, the most immutable, and the most sovereign metal, by far. . .

    The derivatives market is on the plutonium standard now.

    ΩΩΩΩ

    ELAINE: I have pointed that out in the past. Not just platinum but other rare metals.

  4. Jim R

    Actually, the gold bugs I know, the ones I hang out with online, only gripe about the manipulation if they are trying to outguess the ‘paper gold’ market. The ones who are STACKING it are quietly saying “thank you” to whoever smacks the price down periodically. And the price DOES get smacked down now and then, in the wee hours when not even the Indian stock market is up. It generally happens about the time London comes online.
    And the silver market is probably more heavily manipulated than the gold market. It is currently about 1/50th the price per ounce of gold, while its abundance in nature is about 20:1 or less.

    But you are correct, India is a whole huge nation of gold bugs. I’ve seen an estimate that they have 18,000 tons of gold, more than the Federal Reserve, not locked away in a vault but on display around people’s necks. Interesting place, India. I’d like to see it some time.

  5. Ziff house

    Gold markets are totally opaque, some business guy I read said the trouble with gold is it makes no sense, I tend to agree. They are rigging the Dow right now so why not gold. I suspect gold will be the final bubble.

  6. lucky13

    I suspect gold will be the final bubble…what does that mean?
    That gold prices will go sky high after Dow, etc crash?

    Also ‘China + India’ by now may have 3 Billion peeps, not 1 or 2 billion.

    ΩΩΩ

    ELAINE: I figured you would realize each was at billion.

  7. IAmSpartacus

    If you really want to see PM market manipulation, just wait until the Fed starts to mint the 1 trillion dollar Barack Obama platinum coin! 🙂

  8. emsnews

    The trillion dollar coin was a capitalist joke. That is, they use NO capital now, they just print money and they know it.

  9. Being There

    Actually the fiat dollar is more about oil than precious metals.
    Here’s something I ran across on The Oil Drum and I just had to laugh, cuz the greenback is really based on WHA?!..

    Many of us have suspected for a long time that our petro dollar is based on shit, but never did I expect to get proof of this. From the Oil Drum, Hubbert’s Peak by Ken Deffeyes:

    Most massive and nonporous limestones contain textures made by invertebrate animals that ingest sediment and turn out fecal pellets. Usually, the pellets get squished into the mud. Rarely do the fecal pellets themselves form a porous sedimentary rock. In the 1970s, the first native-born Saudi to earn a doctorate in petroleum geology arrived for a year of work at Princeton.

    I used the occasion to twist Aramco’s collective arm for samples from the super-giant Ghawar field. As soon as the samples were ready, I made an appointment with our Saudi visitor to examine together the samples using petrographic microscopes. That morning, I was really excited. Examining the reservoir rock of the world’s biggest oil field was for me a thrill bigger than climbing Mount Everest. A small part of the reservoir was dolomite, but most of it turned out to be a fecal-pellet limestone.
    I had to go home that evening and explain to my family that the reservoir rock in the world’s biggest oil field was made of shit.

  10. Joe

    I wonder….how is it that there is more paper gold trading than there is physical gold above the ground? When Soro’s and friends sell paper gold derivatives they are in fact naked short selling and that has nothing to do with Indians. So, who is clinging to their ideology rather and missing the obvious cold numerical facts.

  11. ziff house

    Lucky, yes , but who knows ? what else would make a good bubble now.
    Re paper gold; there was a propaganda piece awhile back saying that nobody cared about physical anymore, paper was the best. har har,

  12. Joseppi

    I wouldn’t be so quick to dismiss Robert’s so called ‘continuous deliberate conspiracy’ belief systems, since gold is an international currency.

    Presently, all Central Banks have something in common – they are hoarding and buying gold – not selling it. Especially the BRICK central banks, who are fed up with the FED. This is perhaps because the western banking cartel (Euro, FED, BofJ, IMF who are all working in concert) are realizing that they are choking on debt and ZIRP is literally killing them, and that printing money is not stimulating world trade.

    Leveraged debt and the free cost of money has destroyed the true cost of all assets. The ongoing destruction of the fiat currency system will get mighty ugly with desperate acts of currency controls and more gold manipulation by all countries.

    There will be less security in the future. Realizing the domination and desperation of the power structure, one might still be tempted to ask – If the world’s central banks are destroying their currencies and hoarding gold, how should I store what savings I have?

    ΩΩΩ

    ELAINE: Even more, the BRICs are hoarding US debt and dollars! And gold is just one of many, many assets they are collecting.

  13. Jim R

    Joe and Joseppi have hit on the topic, but I didn’t have time until now to think about posting a response.
    As real as all that Indian gold is, the ‘paper gold’ market is what, 100? 1000? times as big. That is, there are more pieces of paper purporting to convey ownership than there are actual gold ounces above ground. Until and unless someone figures out how to mine asteroids, or to tap into the earth’s molten nickel-iron (with a trace of gold) core, the supply of actual metal will be limited.
    And, no one has said it yet, so I’ll say it now: that wsj article, and the title of your post here, is a monstrous load of jackalope dung.
    The “london gold fix” and the comex “futures” market are currently the trusted mechanisms for setting the “stable” price of gold. And that price has exactly as much to do with yellow gold as the LIBOR has to do with interbank lending rates.
    And the consensus is that the prices of gold and silver are systematically driven _down_ relative to what they would otherwise be. The reason: if the international money oligarchy allowed gold to shoot to infinity, it would plainly reveal, even to the most slackjawed village idiot, that the value of the money they are printing is shooting to ZERO.
    So the gold bugs I know are quietly chanting “thankyou thankyou thankyou” as they phone up their brokers and order more krugerrands or maple leafs or kangaroos made of gold. And the BRICS are quietly stockpiling tons of the stuff in their central banks, as insurance against the day that the fiat universe collapses. It does not get their knickers in a twist AT ALL. The only ones you hear griping on ZeroHedge or whatever, are trying to read technical charts and outguess the ‘paper gold’ game.

    ΩΩΩ

    ELAINE: Do you realize that the countries minting this gold money are charging MORE than the going rate per ounce???

  14. Jim R

    Yeah, I know I posted before, but I hadn’t said what I wanted to say. Jackalope dung.

    As for that Italy Switzerland border crossing, they ought to make a new reality TV show about it. It seems to attract lightly-scripted drama. No, I have no idea what that gold-bar-smuggling story was about. The bars they showed in the pictures are not standard bullion bars, which makes one wonder if they are fake? And remember a couple years ago when someone was arrested there with a satchel full of fake billion-dollar treasury bonds?

    ΩΩΩ

    ELAINE: I can remember the last time we had a gold bull market back in the 1970’s. Gold jewelry was stolen and melted down as well as silver coins. Then sold by weight. No controls on this. Gold is easy to melt, you know.

  15. vengeur

    As a long term , long time “gold bug”, I can tell you i don’t even look at daily gold prices. But the most amusing thing is how the Wall St. media rejoices every time gold does a pullback. And there have been several major pullbacks over the last few years. One of the ones I remember best was a few years ago when gold reached $780 or so, and pulled all the way back around 540 or so, a huge pullback percentagewise. Of course there was great rejoicing among the anti-gold wall st. crowd at the time. I was buying at 540. Physical gold is NOT for the impatient or the easily spooked. NOT a get rich overnite scheme. With patience, we will see $2000 dollar gold in the next couple of years.My confidence is NOT in gold, it is that I have SUPREME confidence in TPTB’s ability to fuck things up.

  16. Joseppi

    Now shall we all give a respectful tip of the hat to our most charming and cerebral hostess, Elaine, who has for years, and years, been driving home the mechanics of how a country that continuously runs a trade and account deficit, while doing so because of the privilege of it’s reserve currency status, and employing it’s fiat currency disconnected from the reality of cause and effect, will sooner or later come to a sorry end. This will happen no matter how much magical thinking of exceptionalism, and beliefs in entitlement the citizens shield themselves with.
    The really sorry part of this narrative is that the US Government will employ it’s only asset that it has invested in over the years – It’s military force – and it will be used to prolong it’s power hegemony.

  17. lucky13

    Chindia
    ‘ELAINE: I figured you would realize each was at billion….’

    While there is no 100% accurate count, online reports point to 1.3 BILLION
    per country, and growing.
    India increases by 80? million a year. 6-7 million a month.
    Keep in mind that people die, so when a country adds 80,000,000
    in a year, thats like 100,000,000 births minus 20? million deaths.
    yikes.

  18. lucky13

    Is ‘paper gold’ ://www.igolder.com/glossary/paper-gold/?

  19. larry, dfh

    A couple of weeks ago I was outside the U.S., and, relative to the $, prices were really high. In dollar terms, food was more expensive in the stores than it is in the U.S.; I’ve never seen this before. The ‘native’ population wasn’t the least bit perturbed (in fact, the average person seemed more relaxed and less stressed than in the U.S.) . Internationally, the dollar is tanking. A friend told me he had just taken his wife and 2 daughters on a shopping trip to NYC.
    My sister was just @ a mall in Wrentham, MA, and saw (foreign) people with new suitcases buying to fill them up. Pretty wild: people coming from Europe to the U.S. to buy shit made in China.
    Right now we’re seeing nearly $3/doz eggs; I imagine other prices will be soaring soon, too.

    ΩΩΩ

    ELAINE: Far from ‘tanking’ the dollar is TAKING OFF. Japan has deliberately begun rapidly doubling their money supply so the yen would be much weaker and China will do the same now that Japan is cheating on the money weakening game.

    Assumptions are dangerous if you don’t track the real news.

  20. lucky13

    Thanks Larry.
    Yes, food prices have tripled? in 20 years.

  21. Ziff house

    What I can’t figure, if the fed is the buyer of the Dow ( it sure as hell isn’t main street) , who is the looser when it blows up ? Do they have the power to keep it up indefinitely ?

  22. emsnews

    They can keep this up until the hour China decides to dump all of its US assets such as trillions of US dollars in FOREX accounts and a mountain of US debt. Then the dollar will be worthless and our country bankrupt.

  23. Jim R

    Not sure what that would mean for the price of gold in Rupees, but it would be quite bullish for gold in Dollars.

  24. emsnews

    Gold is ‘going up’ in price in India. Very high. This means fewer Indians in general can buy. So the international price in say, euros and also dollars is dropping because there are fewer bidders for gold.

    The value of gold is increasingly unstable due to relative values of currencies. This makes it harder, not easier, to use gold as ‘money’. What you do with your nifty gold coins is, selling them when you need money.

    Exactly like selling any commodity. If you do a swap with gold for something, it is trading it as a thing rather than as ‘money’. The ‘face value’ you see on your coins is wrong. The face value of ‘money’ changes all the time, too (we call this inflation and discounts) but at least you have a relative idea what the units are worth.

    This is why gold bugs boast about the monetary value of gold. My point is, many things like say, French impressionist paintings have risen far, far higher in value than gold so if you are collecting something to trade, that is the much better investment which is why rich people are buying these up.

  25. Jim R

    Just because India or Japan are debasing their currencies faster than the US does not make the dollar “strong”.
    And again, speaking for the advocates of gold, the idea is not necessarily to accumulate dollars. The idea is to have something of value with which to trade after the dollar stops being a “thing”.

    Like bitcoin, the dollar consists of blips in a computer base. And like everything, it has its time and place. Goldbugs think its time is just about over now; many macroeconomists expect it to last a few more years as a safe haven from Yen and Zlotys and Euros and whatnot, before it meets its inevitable fate.

  26. Joseppi

    Currencies have become Impressionistic works of commercial art.

    Impressionism was characterized by it’s “modernity, embodied in its rejection of established styles, its incorporation of new technology and ideas, and its depiction of modern life.”

    The Impressionistic Currencies Movement was also initiated by the French by insisting the US to pay it’s post Vietnam war debts in gold. In 1971, Nixon said, “No way Frenchie”, and removed the convertibility of the US dollar. Thereby, making it impossible to measure imbalances and price discovery.

    Post-Modern Currency Impressionism is a rejection of all international monetary laws of the past – it incorporates “financial innovation” in unprosecutable fraud and non-transparency with game changing crisis solutions – And with broad strokes captures it’s audience and artfully depicts the fluid state of confidence in the forgery of financial reality.

  27. Just Ice

    “Long before Nixon closed the gold window, plutonium supplanted gold as the most precious, the most immutable, and the most sovereign metal, by far. . .

    The derivatives market is on the plutonium standard now.

    ΩΩΩΩ

    ELAINE: I have pointed that out in the past. Not just platinum but other rare metals.”

    Reading platinum instead of plutonium changes the meaning quite a bit.

  28. Jim R

    There are some positive things to say about a Plutonium standard.

    If they’d keep the repository in the basement at Capitol Hill it would encourage term limits.

    And it would automatically discourage hoarding. Once the greedy bastards stash a critical mass in their vault, it would go off 🙂 🙂 🙂

  29. emsnews

    The plutonium standard was first used in 1945.

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