A Money Matrix Addendum: Citigroup and GATA Call for an End to the Suppression of the Gold Market
The Suppression of the Gold Market Goes Mainstream, Thanks to Citigroup. And a few interesting back-of-envelope calculations about where the price of gold could go. by Jake Towne, the Champion of the Constitution
Monday, September 22, 2008
I want to share some information on gold and a few calculations with you all. First my simple premise in case you have missed it in prior articles.
Fiat currency is a scheme perpetrated by central banks and the tacit (or is it helpless?) permission from their governments. Fiat currency is almost completely worthless and has no intrinsic value. Ultimately (no predictions as to when) electronic and paper fiat money will be worthless. All of the world's fiat money is actually a form of debt, and it results in never-ending currency debasement, of which one way is expanding the money supply, aka "printing more money," aka inflation. To make their scheme work, they intervene in the precious metal markets to manipulate the prices of silver and especially gold. By keeping the prices of real honest money suppressed, they try to make their fiat currency look stronger.
It gets quite a bit more complicated with derivatives (especially!), fractional reserve banking, central banking, currency exchange rates, low-cost exploitation of resource-rich regions, politics, and governmental and nongovernmental stock market manipulations but the above is the heart of it.
Here is a calculation I did recently. Although many Americans still have a vague idea that the value of their dollar is tied to the US gold reserves, nothing could be further from the truth. These days there is no tie. But what if there were? Well, per the Federal Reserve's M1 calculations, which is more or less all of the US-dollar-denominated physical paper cash and metallic coin in circulation, as of September 8, there was $777.0 billion in currency outside the US Treasury, Federal Reserve, and the vaults of depository institutions (banks). The amount of gold (unaudited) reported by the US government as Deep Storage Gold is more or less unchanged from its 2005 levels (found here), at approximately 8100 tonnes of gold, or 8,100,000 KG. If you take the $777 billion and divide by the number of ounces of gold (1 troy ounce = 31.1 grams), you will get $2,983.30 per ounce.
Is this the true price of gold? Of course not, the price of gold is what people are willing to pay for it, which is currently around $870 per ounce. But it is food for thought.
If I divide by America's total M2 figure of $7,716.1 billion, which counts all of the electronic-blip money that are in bank accounts $100,000 and smaller, I get $29,626/oz
The number divided by the Federal Reserves' M3, which is the best estimate of the total dollars in the financial system, would be far more higher. I will keep my estimated calculation private. Why won't I share my calculation? I'll do it for the same reason the Federal Reserve stopped reporting M3 in 2006. It might scare the living daylights out of you, but I encourage you to research it yourself. Try www.shadowstats.com.
"Gold undoubtedly faced headwinds this year from resurgent central bank selling, which was clearly timed to cap the Gold price. Our sense is that central banks have been forced to choose between global recession or sacrificing control of Gold, and have chosen the perceived lesser of two evils."
Why do I herald this as a revelation? Well it's the first missive I've ever read from a reputed banking and financial company that affirms the GATA stance that the price of gold is being actively suppressed by the central banks. Despite all of the evidence GATA has collected (see summary here), to have this confirmed by a second source is monumental since if the public realizes this, the price suppression scheme would likely end. as private citizens will buy up the suppressed and limited gold supply available, driving the price up and making the nature of the central bank suppression clear for the whole world to see.
[Also from the same report is a useful supply/demand tabulation on page 8 that more or less agrees with other sources I have read. On page 6, the precious metals do stand out as noticeably lagging the other commodity metals. Although gold has continued its relentless overall rise since this report, silver is below its 2007E price used. Silver, being a critical industrial metal, should at least have matched copper, lead, and nickel.]
What is John Hill of Citigroup saying in 2008? He writes that gold bugs (I suppose that is me too, although I prefer fiscal conservative) have been proven correct in the contention that "an overwhelmingly vast and complex pool of nested financial derivatives would ultimately result in cascading defaults and ruin for major portions of the banking system... frankly, we're surprised that gold is not already at $2,000 per ounce."
Is the Suppression of the Gold price significant? I argue it is, extremely so. The bailouts and actions of the past thirty years are leading towards a strong possibility of hyperinflation which I write about in a couple of my articles below. Fiat currency debasement (inflation) will of course continue.
Does your Government want you to own Gold? No.
Do people like Dr. Ron Paul and I think it is of utmost importance for all Americans to own physical Gold and Silver? Yes, and we mean the actual ownership of the physical metal itself, not that GLD and SLV ETF junk. Actually the most fervent common people with gold are Indian women. They buy gold before they marry for one reason - it will always have value. You see, gold can never cheat its owner, unlike a groom, unlike a government, who is humanly fallible.
As the financial tsunami rips closer to our shores, to the doors of our homes, to our children's futures due to the massive Debt in our homes, banks, stock markets, derivatives markets, heck the biggest Debt is really the Dollar! remember what I write here. To wring your hands, moan about the powers that be that bailout our system without believing and possessing honest money, primarily gold but also silver, is the hypocrisy of the weak. Gold and silver are even enshrined in our constitution as the very definition of money in Article 1, Section 10.
A few closing quotations to mull over as the battle continues. None, I believe, are taken out of context.
"I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the world . . . no longer a government of free opinion, no longer a government by conviction and vote of the majority, but a government by opinion and duress of small groups of dominant men." Woodrow Wilson (He was the President that signed the creation of the Federal Reserve into law in 1913.)
"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. The one aim of these financiers is world control by the creation of inextinguishable debt." Henry Ford
"Fifty men run America, and that's a high figure." Joseph Kennedy, 1936
"The real truth of the matter is, as you and I know, that a financial element in the large centers has owned the Government ever since the days of Andrew Jackson." Franklin Delano Roosevelt, 1933
"The real rulers in Washington are invisible, [and] exercise power from behind the scenes." Felix Frankfurter, U.S. Supreme Court Justice, 1952
"The case for government by elites is irrefutable." William Fulbright, U.S. Senator, 1963
"The Trilateral Commission is intended to be the vehicle for multinational consolidation of the commercial and banking interests by seizing control of the political government of the United States... They will rule the future." Barry Goldwater, U.S. Senator, 1964
"We are grateful to The Washington Post, The New York Times, Time magazine, and other great publications whose directors have attended our meetings and respected their promises of discretion for almost forty years. It would have been impossible for us to develop our plan for the world if we had been subject to bright lights and publicity during those years. But the work is now much more sophisticated and prepared to march towards a world government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national auto determination practiced in past centuries." David Rockefeller (Trilateral Commission Founder), 1991
"Today, America would be outraged if UN troops entered Los Angeles to restore order. Tomorrow, they will be grateful! This would especially be true if they were told that there were an outside threat from beyond, whether real or promulgated, that threatened our very existence. It is then that all peoples of the world will plead to deliver them from this evil. The one thing man fears is the unknown. When presented with this scenario, individual rights will be willingly relinquished for the guarantee of their well-being granted to them by a World Government." Henry Kissinger, 1991
"We are not going to achieve a new world order without paying for it in blood as well as words and money." Arthur Schlesinger, Pulitzer Prize recipient, American historian, special assistant and "court historian" to the President in John F. Kennedy's administration
For the Restoration of the Republic and the Return of Honest Money!
Note to Money Matrix readers: I plan to dedicate my spare time to finish most of the series next week. Of key note will be the articles on derivatives. Recent events, unfortunate for the American financial system, continue to solidify that my world view is, alas, correct. For those who have not read the series yet, please see the links below.
As a disclaimer of sorts, I am a supporter of owning physical gold, physical silver, www.gata.org and www.goldmoney.com. Any investment or financial views expressed in the article are mine and mine alone, so make your own financial decisions by educating yourself. All I am doing is sharing my views to help you decide, even if its just to become aware that you do have a decision to make. You can even say its a charitable but niave act, given the historical tendency of the US government to oppress and then confiscate the gold of its population. Any questions, feel free to email me. [Reach the Author Here!]
We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.
As always, unlike the NFL, the author grants full permission to allow any accounts of, rebroadcasts, retransmissions, repostings in part or full of this article to your blog or anywhere else in order to promote the Restoration of our Republic.
Veritas numquam perit. Veritas odit moras. Veritas vincit. Truth never perishes. Truth hates delay. Truth conquers.
Save Ron Paul's Voice - A Money Matrix Addendum Published: September 28, 2008 Learn how by reading. Article is intended as a poke-in-the-eye for members of the Ron Paul Revolution who complain about the bailouts and the financial, banking, and housing crises and do not realize that they may in fact be hypocrites.
Henry Paulson - A Quick Look at the Man Published: September 27, 2008 Everyone in the country is talking about the Paulson Plan, wherein one clause would make Paulson de-facto financial dictator of the United States, accountable to no one. The article is a summary of my brief investigation and asks for help in finding out WHO IS THIS GUY?
Spill a Soda, Go to Jail for a Year Published: September 27, 2008 The latest strange-but-true antics of oppression from our dear Police State. Check out the story of the infamous soda-spiller at a Veteran's Affairs Hospital in Idaho.
WaMu Gets the FDIC WHAM-O! Published: September 26, 2008 The Seattle-based Washington Mutual Bank is shut down by the FDIC. The Raiders from the last Great Depression, JP Morgan, Strike Again. Have you protected yourself?
US Treasury Seizes Fannie Mae and Freddie Mac! And What It Means Published: September 8, 2008 "You poor kid, there have been centuries of philosophers plotting to turn the world into just that - to destroy people's minds by making them believe that that's what they are seeing. But you don't have to accept it. You don't have to see through the eyes of others, hold on to yours, stand on your own judgment, you know what that is, IS - say it aloud, like the holiest of prayers, and don't let anyone tell you otherwise." - Ayn Rand
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Posted By: Jake, the champion of the constitution
Date: 2008-09-23 07:17:17
No need to be so formal. Sure would be funny if my article about suppression was being suppressed! The html is below. If that doesn't work you can email me here and I will email you my original version in word. Or you can copy the above and paste into Word yourself. Either way, let me know if you need further help, and thanks for the interest by the way! - Jake
I am doing some backreading now (am shocked to find out you've only written 7/15 articles in your series....i am so heart broken (but why does it go from 6-10?). maybe i'm not counting properly.
anyway, i will tell you that I've seen some pretty interesting debates re: the Wilson quote above and it seems that no one i've seen has been able to provide accurate source material for the first sentence. again, i hear it debated so much. i'm curious to know if your research skills may be able to fill the gap. From what I understand (and lean toward, conservatively) the rest of the quote is accurate, but the unwittingly ruined my country is in significant dispute.
always great stuff jake, and thanks for your perspectives on medicine and china. and I think it's very important, albeit slightly tangential, to understand how other countries are operating, especially for those who've never been outside of the US and have an unintentionally limited or slightly ethnocentric viewpoint (i've lived outside for 2 years in Israel and still think that being in the US too long skews my perspective :) ).