Ambrose Evens-Prichard Makes False Gold Claims About Fed Reserve And Bank of Japan

Mt. Fuji side crater covered with minerals

Mount Fuji secondary volcanic eruption on flank of the volcano is covered with metals of various sorts.

I may annoy people by talking about things they don’t want to hear but at least I don’t go off the mental cliff like many do.  Explaining things and how these work is tricky as all hell.  We have to be careful to not make up stuff or ignore facts.  One favorite game played by online explainers is to suggest something is causing something else to happen…while producing zero evidence backing this.  The drastic fall in gold prices has driven nuts all the guys who claimed gold has something to do with the floating fiat currency game.  It does not.

 

Gold is a commodity like wheat or raw steel.  It has the exact same market dynamics as these things and is international so forces are greater overseas than in the US since the US is NOT the world’s biggest gold market, far from it.  This doesn’t stop dopes from claiming otherwise and here is a British example that dredges up zero proof of his headline contention:  Fed and Bank of Japan caused gold crash – Telegraph

 

By 

The central banks of China and the emerging powers bought 535 tonnes last year to escape dollars and euros, the biggest wave of state purchases since 1964. Their strategy is to buy the dips, and they are no fools. The head of China’s reserve manager “SAFE” used to run a US hedge fund.
They won’t try to catch a “falling knife”, prefering to wait until the dust settles. The upward trend of the great bull market has been broken. The technical damage is brutal. Bank of America expects a further drop to $1,200. Be patient.
My view is that the US Federal Reserve and the Bank of Japan “caused” the gold crash. The rest is noise. The Fed assault began in February when it published a paper warning that the longer quantitative easing continues, the harder it will be for the bank to extricate itself.
The report was co-written by former Fed governor Frederic Mishkin, often deemed Ben Bernanke’s “alter ego”. It said the Fed’s capital base could be wiped out “several times” once borrowing costs climb. The window will start shutting by 2014, with trouble then compounding at a “dramatic” pace.

 

Cause and effect are hard to see especially when someone is delusional.  If China or Japan were fearful the US dollar would be debased further, they would have bought gold with US dollars they gain via trade.  Instead, the opposite happened.  So why is that?

 

Mishkin wrote his report because he accurately understood the trap Japan is in: perpetual ZIRP lending forcing the government to run huge deficits that cannot endure high interest rates in the future so they have to keep a depression going and this depression is in worker’s wages and above all, the immense number of retired Japanese who are a huge proportion of the population.

 

The Fed isn’t ‘assaulting’ gold by publishing a study that compares the Japanese trap with the trap we are in today!  This is an analysis of the dangers of the floating fiat currency regime when there is huge trade imbalances.  Even now, Mishkin dares not attack the ideology of free trade!

 

The price of gold has zero to do with the value of a dollar.  It does have a lot to do with the availability of capital!  When speculators hold gold, it is in anticipation of SELLING IT, not holding it.  It is dead weight unless one uses it as capital for borrowing money.  Many a speculator bought gold hoping it would go up and up and up.  When it shuddered at the top of the market curve and then became a bear market several months ago, the speculators all began dumping gold simultaneously.

 

Since this is a buyer/seller market with hourly changes in value depending on the BIDS for the gold, it is prey to all the speculative dips and surges that all speculative commodities have.  And these change all the time depending on gossip, the weather, herd instincts of the most primitive sort and security concerns.  When gold surged fastest in value compared to the US dollar (but NOT the euro!!!!) this was no different than housing shooting up in value when banks lend easily.

Barrick gold has been falling for the last two years

 

Note that Barrick Gold has been falling for about 2 years after jumping up and down at the peak for 5 years.

 

The same thing happened with housing: when the bubble popped, everyone who was speculating rushed to sell their holdings and this flooded the market suddenly with excess houses and so everyone’s home value dropped like a rock.  The Fed helped create the bubble via below-inflation lending to the bankers.  The gold rush was fueled by the same cheap loans, too.

Gold:  A classic Hockey Stick curve

London Fix Historical gold – result: It is obvious this is a HUGE hockey stick curve and any normal bettor in this game sees that for the last four months, gold has begun to waver in value and was ripe for a collapse as all hockey stick games end with the puck in the net.

 

But when gold goes retrograde, all the creeps who bought gold shares with borrowed money are very, very hasty to sell and desperate to sell before their margins are called and this fear is causing the crash, not the Fed.

 

As for the Bank of Japan, it had been assumed that the colossal monetary stimulus of Haruhiko Kuroda would revive the yen-carry trade, leaking $1 trillion into world asset markets. But the early evidence is the opposite. Japanese investors brought money home last week.
“Mrs Watanabe” is selling her Kiwi and Aussie bonds to bet on stocks and property at home. And she is selling gold like never before. That too is a shock.

 

And why are the Japanese selling gold?  What are they buying?  Evans-Prichard doesn’t say.  I see things quite differently due to reading the Japanese news a lot.  Japan Gets Calls From U.S. to Europe Not to Drive Down Yen as even the US political goofballs figure out that Japan is performing a hostile action.

 

And the Japanese who have the real loot aren’t brining it home, either:  Dish Network to make $25.5 billion Sprint bid as Softbank of Japan tries to buy Sprint Nextel with $20 billion much of which is borrowed from the ZIRP Bank of Japan.  This would have been the biggest foreign takeover by a Japanese group.  No, the Japanese are NOT bringing the loot home, they are on a rapid buying spree and to pay for this, they sell gold converting this to DOLLARS, not yen.

 

And then buying things far more useful than inert gold: other countries’ industries!  Duh!

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23 Comments

Filed under .money matters, gold

23 responses to “Ambrose Evens-Prichard Makes False Gold Claims About Fed Reserve And Bank of Japan

  1. vengeur

    Hey Elaine, remember that post you did on the White Aryan Brotherhood or whatever they are called killing that Texas Prosecutor? You REALLY got your jollies off on that one. Well it turns out you were TOTALLY wrong. Wife of ex-judge confesses in Texas DA slayings http://www.breitbart.com/system/wire/DA5NDVTO4
    I guess it doesn’t matter that you and the rest of the Media put out a lot of false bullshit. You know, how you love to put the words “white’ and “racist” together ina sentence. You are a smart Lady but your BIAS and prejudices make you look foolish.

    ΩΩΩ

    ELAINE: Um, hate to point this out but the POLICE claimed it was the Brotherhood. Instead it was WHITE MIDDLE CLASS judge who was prosecuted for stealing!!! HAHAHA. Sheesh.

  2. vengeur

    If I am right , and you are wrong about gold, we will be revisiting $1500 faster than anyone expects. Of course, from certain quarters, I fully expect the usual mocking and derision for making that statement.

    ΩΩΩ

    ELAINE: It will probably decline a bit and then sag for a couple of years or so. The Big Boy Investors will dump it as a poor investment by then.

  3. Peter C.

    Well there was that 500 ton paper gold dump in one selling that lost the seller over a trillion dollars that might of had something to do with it.
    Think of it ..some one was willing to lose a trillion paper dollars to drive gold down temporarily.
    Big difference between paper gold bought on margin and the real stuff smart central banks are now buying thru all of this.India is going crazy buying gold at this prices.
    I think future currencies will be backed by gold like in the past.

    ΩΩΩ
    ELAINE: It sounds incredible because it is stupid. Why spend a trillion to make gold cheaper…by selling gold???? Who is that looney? Makes zero rational sense and shows hysteria of gold diggers who want gold to always go up and up to infinity.

  4. Peter C.

    I guess it says something for gold that Japan can sell theirs.If it wasn’t worth anything no one would buy it,esp at market prices,eh?
    Gold is the ultimate money ,you can take it anywhere in the world and get anything you want for it.(you might have to trade it for some local paper but so what?If I take my Canadian dollars into let’s say Cambodia would I get anywhere?

    ΩΩΩ

    ELAINE: go to any third world country with a stash of gold and you will be instantly robbed. This is why credit is so wonderful and is why traders in Italy around 1300 AD kept their gold at home while using LETTERS OF CREDIT for foreign trade.

  5. lucky13

    Elaine, others: where is the US dollar headed?

    [Gold is the ultimate money..until the Govt takes it from you].

    ΩΩΩ

    ELAINE: Well….today in the news in Asia, Japan announced that the US is its #1 trade victim with its best one way trade business compared to any other country so…the dollar will live onwards as a top currency and will buy lots and lots of Japanese imports!!!

  6. Just Ice

    Who cares what the price of gold is as long as gas is still affordable, which brings me to my observation. I agree gold is mostly like any commodity these days, but with two relatively important distinctions:

    1) Central banks still hold gold (even if they’ve secretly sold or lent it on paper 10 times over), but not so much other commodities.

    2) Who knows how much anything is worth in any absolute sense, but Arabs do have a historical sense that 8 to 15 barrels of oil should be worth about an ounce of gold.

    When that ratio goes far out of whack, they start to rattle the ATM, or the euro-dollar, or the derivatives-beast.

  7. Peter C…

    BILLION not Trillion

  8. Jim R

    The London Fix and the Comex futures market have exactly as much to do with gold, as the LIBOR has to do with interbank lending.

    ΩΩΩ
    ELAINE: You can sell your gold any way you wish but most buyers look at these markets to see what it is worth in currency valuations.

  9. ziff house

    If China or Japan were fearful the US dollar would be debased further, they would have bought gold with US dollars they gain via trade. Instead, the opposite happened. ”’
    Eh? where is your evidence of that?

    ΩΩΩ

    ELAINE: Every day without fail I read a number of Japanese and Chinese newspapers so I get lots and lots of information that way.

  10. ziff house

    Since this is a buyer/seller market with hourly changes in value depending on the BIDS for the gold, it is prey to all the speculative dips and surges that all speculative commodities have. ”

    o right, normal market’s, supply and demand,just like days of old, except both are fabricated out of thin air now.
    I’d say you have a gold bee in your bonnet.

    ΩΩΩ
    ELAINE: And you can make up any price you want for your gold but finding buyers willing to pay more than the international rates is nearly impossible unless you find some really dumb fool.

  11. ziff house

    O and barrick is getting hit over enviro problems in chile.

  12. ziff house

    And i’d say the value of the dlloar has everything to do with all the other defacto dollar currencies, especially the Euro , its a neat system, $ can’t fall cause the E is crap too.

  13. John

    vengeur,

    One of the hardest things is to consciously correct for and neutralize one’s own biases when assessing and analyzing events. Elaine is certainly intelligent and educated enough to try a bit harder in this regard, but until she decides it’s important to her to do so, all we can do is be aware of those biases and step around them as we read.

    ΩΩΩ
    ELAINE: Sorry for telling the truth. You want fantasy? Go to the ‘Gold is a great investment!’ web sites while gold drops like a rock. When it bottoms out and that won’t be for a while, it is a money losing purchase.

  14. Joseppi

    Is Elaine’s assumed bias based on someone’s perception of her bias that is actually an assumption based on….bias?

    Oh, the Japanese citizens are selling their gold because of desperation due to deflation and wage stagnation. Just like Americans selling gold baubles at “Gold for Cash” stores on every corner across the country. Where is that gold going?

    Don’t you think that if interest rates can be manipulated, and markets can be controlled by huge dark pools of leveraged margin, as international capital (digital notations) flows daily through porous borders, while opaque currency swaps are routinely conducted….then cannot prices in the small gold market be influenced by forces other than supply and demand?

    ΩΩΩ
    ELAINE: Good lord!!!

    Depression=money getting stronger, not weaker. The Japanese are selling their gold because they bet on the yen rising when suddenly the government had it collapse in value so they can flood the US with imports!!!!

    So MARGINS on BETS are being called in and they have to give CAPITAL and yes, gold like many assets, has value but this fluctuates constantly due to the same market forces that cause housing to change up and down in value.

    Lesson here: NOTHING ever goes up and up and up.

  15. John

    I understand the rationale behind having a lot of small gold coins hoarded to use for buying things when the USD is finally admitted by all to be a hyperinflated hot mess of nothingness. However, in my gut, I’ve always felt this to not be a viable plan for the future. Never mind confiscation; it seems to me that when the dollar finaly collapses, the orderly transaction of selling a gold coin for a wheelbarrow full of cash, to then trundle down the street to buy a loaf of bread, doesn’t strike me as a realistic expectation.

  16. Ziff house

    John, gold might protect savings baring seizure , rather than be used as coin.

  17. emsnews

    NOTHING is protected when societies collapse. Nothing. All is up for grabs and usually, as we see today in many countries ravaged by the US, ethnic hatred and religious animosity shoots through the roof and we have endless bombs, attacks, riots and terrorism.

  18. Jeff22

    EMS, you were told long ago that the Chinese want to RUIN the US Greenback and US economy, Yes?
    And they will have a gold backed ‘reserve currency’?

  19. Ziff house

    The CBC had a wonderful doc. On gold this evening, when you see how gold has/is regarded you would never in your right mind liken it to a commodity. That’s a new invention of the west the other half of the world does not share.

  20. Jim R

    Just as I said: LIBOR has little to do with actual deals between banks, but is used as a reference.

    And, no gold is touched in the futures market or London fix. The size of the “trades” frequently claim more gold than is mined in several years, and almost certainly claim more gold than any party to the trades can ever lay their hands on.

  21. John

    Elaine,

    My comment about bias had nothing to do with gold. I’m referring to your propensity to blame everything on “white right wing American Tea Party males.”

    And you still haven’t answered my question about partial birth abortion/infanticide. Does cutting a newborn’s cervical spine with scissors and leaving it to die on a cold table count as “women’s reproductive health services”? Is it the exact same thing as taking the “morning after pill,” or is there a line we should not cross, regardless of our belief (or lack thereof) in some sort of Deity?

  22. emsnews

    The killing of living children bother me MUCH more. And in the case of my sister who nearly died because of a bad fetus situation, it was still ‘alive’ when removed. But it had zero hope of surviving as a human.

    I used to raise sheep and some babies would come out bad or worse, I had to reach inside and remove the fetus causing the mother distress.

  23. Jim R

    John,
    Yes. Yes it does count as women’s health service.
    Until siuch time as it can be implanted in YOUR belly with advances in medical science. So you can just sit down and shut up and stop the histrionics.

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