Written by Avery B. Goodman
If natural market forces were permitted to run free, naive folks would win the game. Insiders would lose a fortune, and independent gambling speculators would make a killing at the expense of well-connected casino operators (a/k/a derivative-issuing bankers). What possesses otherwise intelligent people to believe that this would ever be allowed? Was anyone naive enough to expect anything other than a major intervention by central planners to support the Euro?
There are always ridiculous excuses given. From technical analysis, to astrology to Elliott waves, it is all nonsense. What we saw was pure market manipulation and nothing but that. When you see the Euro rise when it should fall, you can bet that two institutions are involved. I am talking about the European Central Bank (ECB) and the Bank of International Settlements (BIS). I didn’t mention the U.S. Treasury or the Federal Reserve. No doubt, they had some peripheral involvement as they always do, but mostly, they were probably observers.
European institutions have the kind of open, obvious and blatant disregard for honest markets that no equally corrupt American institution could ever get away with. In fact, the BIS has gone as far as touting its gold and currency manipulation prowess! For example, back in 2008, it issued a brochure for consumption by central bank policy-makers, and on page 17, it advertised that “our products” include “Gold & Forex Services — Interventions”! In other words, they blatantly offered to rig gold and currencies upon request! This document came to light only by virtue of the hardworking and ever-watchful sleuths at GATA.
That was a long time ago. Let’s fast forward to now. The Euro’s exchange value has moved upward in direct opposition to the real market forces that should be weighing it down. The “no” vote in Italy has serious ramifications on the continued existence of the Euro currency, and its exchange value should have dropped like a stone. Instead, it went up. In contrast, the exchange value of the US dollar and gold, to the amazement of some (but not my readers) went down.
The reason is simple, and it has nothing to do with a sudden increase in confidence or desire to hold Euros. Just the opposite. However, a group of bureaucrats want the public to think otherwise. They want to bury the Euro on a schedule they create, not on the one that is determined by market forces. In order to do that, they hired some banksters, probably through BIS, paid them a lot of money, and watched as market “magic” was done. The exchange value of important non-Euro currencies, like the dollar and gold, suddenly came under attack. The now-zombie Euro, in contrast, rose against all odds.
This situation is a little more complicated than the usual manipulation. The same bankers are (were) engaged in inducing a dollar short squeeze not too long ago. The upward dollar manipulation has probably not quite run its course. It doesn’t matter. The juicy profits stemming from a day to a few days of government subsidies combined with an opportunity to front-run a sure-thing more than makes up for any delay. There is nothing like big covert private profits to go along with a fat payment for services rendered.
None of it should worry gold investors in the medium to longer term. Brussels does not wield the kind of market power that Washington D.C. does. It is a host of different nations, often jealous of one another. Each has its own, often conflicting economic view, and each has separate control over separate gold reserves. The European globalists don’t need to be as powerful or ambitious as their American counterparts. They don’t need to control the gold or dollar currency markets for very long.
Brussels’ bureaucrats simply want to keep their zombie currency going even in death, just a little longer. If they can just keep things moving long enough, the transition into what is coming will be smoother, and can occur at a time when well-connected players are ready for it. The banksters are those well-connected players, and a day or two respite from their dollar short squeeze activities doesn’t harm them. In fact, it gives short position holders a respite to make the mistakes that will soften them up for more attacks.
In a month or two, the dollar really will fall against the Euro. You may think that’s an amazing statement, given that I just called the Euro a zombie currency. But, none of it really matters until the very end. A zombie can still attack a living human and eat his brain. It doesn’t matter that the zombie is dead. These interventions are significant because they will convince folks that the Euro isn’t going away (even though it is). The Euro will disappear from the world in 2 – 4 years, but that doesn’t mean it can’t rise against the dollar beforehand. We’ll discuss that another day. For now, let’s just say there will be a lot of rising and falling before the zombie is buried.
What matters most now is market rigging. I don’t have space to describe how it’s done. If you are interested, read “The Synod” and find out. Recommend it to friends and family. Lend your copy to others. Express your enthusiasm by leaving a review on the book’s Amazon.com and other book retailer sales pages, as well as by writing on blogs, Facebook, Twitter, etc. Word of mouth and the power of the pen all help to popularize ideas. A lot more people read fast-moving thrillers than intense financial articles like this one. Yet, everyone will be critical when it comes time to broaden the discussion of honest money and markets.
In any event, the recent “no” vote in Italy should have pounded the last nail into the Euro coffin. That hasn’t happened. The ECB will now distribute sufficient new cash to keep most Italian banks from failing. However, it doesn’t have the resources to mount attacks on the yellow metal for long periods of time. Unlike in the USA, the constituent central banks of Europe are separate. Many are acutely aware that gold reserves will be critical to insure public confidence. European governments will not willingly sell their reserves. Financial Eurocrats, thinking about supporting the Euro by pissing away national gold reserves, should remember that Europe is the birthplace of the guillotine.
At any rate, the market manipulation of the euro’s exchange rate has been a success. The intervention was designed to prevent a sudden and complete collapse. It was not designed to make a long term impact on the propensity of investors to choose gold or even the U.S. dollar. The main factor in gold pricing, going forward, is going to be the closure of the US gold reserve as I discussed in my prior article. Gold prices should begin to rise by late December, 2016 or before, as the cutoff of US government gold draws near.
Going forward, remember that it is easier to manipulate the paper gold market upward than downward. That is because of the physical delivery that comes into play when you manipulate it below the equilibrium between supply and demand. Therefore, watch carefully as government-subsidized downward manipulation is replaced with privately financed upward manipulation. For example, if bullion banks know that supply/demand meets at $1,600 (a guesstimate), they may push prices to a $1,700 floor (where no deficit will exist) and then on to $2,100. Then, they can take short positions, letting prices plummet back to $1,700. Rinse and repeat, over and over, upping the floor and the top, depending on what their algorithms suggest, as the willingness to buy at higher prices deepens with time.
What should a person who is concerned about saving for the future of himself and his family do? We live in an uncertain world, and unless you are tightly connected to the powers that make big financial decisions, you should not engage in leveraged speculation in anything. Yet, amid the confusion, one certainty stands out. In the very long run, fiat currencies always devalue. Thus, a certain percentage of your savings should be in gold, silver and platinum, rather than in Euros or dollars. These assets should be bought after big price declines, not big price increases. Now is a good time to pick them up on the cheap.
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