JIM RICKARDS: GOLD SKYROCKETS When This Happens!

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Jim Rickards gives this extensive interview on the gold price, how it’s being manipulated and exactly when that manipulation will end. Everything you want to know about the gold price is in this interview. 

Jim Rickards says, on the low gold price now, “Keep your eye on the long term. It looks like a good entry point to buy. The dollar price of gold is the inverse of the dollar. If you have a strong dollar the price of gold is down. Can it last? Absolutely not. 

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

And when you’re worried about deflation, you’ve cut interest rates to zero and printed trillions of dollars, and done everything you can, the only way left to get inflation into the economy is to cheapen your currency.

 

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 it’s own,  then that’s when the manipulation comes in. In August 2011 when it was rapidly approaching $2000,  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 England’s 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:
 

 

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, you can’t do it anymore. 

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 Sepember of 2011, the price of gold was skyrocketing. The Fed did manipulate the price lower.

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

Where the manipulation ends, is when…..Read the rest of the story here….