JIM RICKARDS: We are RUNNING Out of GOLD - Trouble Ahead!

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As physical gold is needed to cause the manipulation, and the West is running out of gold, the manipulation is close to an end. 

Rickards says, “The reason gold has gone down is because the dollar is so strong. The reason it’s so strong is because we’ve let the Euro and the Yen cheapen. That cycle is near an end and the dollar is going to get weaker because the Fed is going to need some inflation. That means a stronger gold price ahead. 

With the prices being as low as they are…

 

… if you don’t have any gold, or if you want to add more, now it looks like a good entry point. The dollar and the price of gold is the inverse. If you have a strong dollar the price of gold is down. The dollar is high right now. Can it last? Absolutely not.

The Japanese and European economies are doing terrible. The US is the one who ultimately is going to need help. We have a very weak economy, we had a lousy employment report – the CPI report shows that deflation is more of a concern than inflation. 
 

If the gold price is going down on its own, you don’t need to manipulate it to keep the price down. But when it’s going higher on its own, then that’s when the manipulation comes in. In August 2011 it was rapidly approaching $2000, and it could have gone up a lot higher from there. Central banks really did have to pull out all the stops to drive the price down. 

The first and easiest technique is just to dump physical gold. That was done for decades . You can go back to the 1970s, at $35 an ounce, then they abandoned the official price in which it ascended to $800 an ounce in January 1980. 

On that path, the US tried desperately and secretly to suppress the price of gold with gold sales. The US sold about 1,000 tons and prevailed upon the IMF to sell 700 tons.

 So they dumped 1,700 tons of gold, and it didn’t work. So, at the end of the day, they just gave up and let the price of gold just go where it was going to go, and we had that super spike to $800 ounce in January 1980.

If you look at the period 76-78, I’ve looked at private documents , all describing this physical gold manipulation. In 1999, the famous “Brown’s bottom” Gordon Brown dumped about 2/3 of Englands gold on the market . Switzerland was a major seller of gold in early 2000s, so a long time they manipulated the price was by dumping the physical gold.

There’s a problem with that. You run out of gold. England doesn’t have much left…so now the physical dumping has stopped. The easiest way is through paper manipulation. The most obvious way is through COMEX futures prices. Rigging futures market is child’s play. You wait before the close, you put in a massive sell order and scare the other side of the market. The price is slammed. They get scared and it drives the price down. We’ve seen it time and time again.

It’s not the only way. The other way is through gold leasing and unallocated forwards. When people want to buy gold, they call a dealer and say they want to buy, but the contract says they own unallocated gold, which means that you don’t have specific bars for yourself. It’s no different than fractional reserve banking. They sell the gold bars many times over to different people. A central bank can lease gold to a LBMA bank.  They sell at least 10 times as much as they want.

The ETFS are another way. When you buy gold through an ETF, you are not buying gold, but buying shares. You have no access to any gold.

You can play those games for a wild, but you need some physical gold to do it. Once the GLD gets depleted, and it’s now down significantly. When you see through it all.

The only comfort I can give investors is that - 

The Fed wants a weaker dollar because they are desperate to get inflation. They have a 2% target for inflation, maybe even 3 ½%. The most recent figures are negative. We’ve got deflation in this country. One way you get it by a cheaper dollar. Here’s the catch. They want this process to be orderly. They want gold to go up a little bit at a time. In sept 2011, the price of gold was skyrocketing. The Fed did maniupulate the price lower, because they were 

They are ok with an orderly increase, as long as it doesn’t go up too far too fast.

Where it ends, is when China feels it has bought enough gold. I’ve discussed this with the IMF and they agree that this global rebalance of gold from West to East has got to take place.