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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