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Jim Rickards: Gold price manipulation is now a global effort to appease China
3:28p ET Tuesday, January 20, 2015
Dear Friend of GATA and Gold:
In May 2006 the economist R. Peter W. Millar of Value-Trac Research in Scotland published a study, "The Relevance and Importance of Gold in the World Monetary System," arguing that central banks would need to revalue gold upward by from seven to 20 times "to raise the monetary value of the world monetary base and hence reduce the burden of debt" and avert a deflationary depression. GATA published that study here:
In May 2012 the U.S. economists and fund managers Paul Brodsky and Lee Quaintance postulated that central banks were suppressing the gold price while surreptitously redistributing the world's gold among themselves in preparation for a resetting of the world financial system and a substantial upward revaluation of the monetary metal.
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Brodsky and Quaintance wrote: "The key to a successful transition is a credible monetary reset. Gold is the default collateral for money because it has a long and established precedent in this role.
"All that would be needed would be a fairly equitable distribution of gold among global monetary authorities (taking place now?), and an agreed-upon exchange rate vis-a-vis baseless paper. It would have to be an exchange rate at which central banks could successfully monetize assets by tendering for physical gold with newly manufactured paper money, an exchange rate high enough to attract enough gold to cover unreserved credit held in the banking system. It's a high figure.
"The relative cost of holding physical gold today is minimal (above-ground bullion or in-ground bullion through mining shares), against the negative real returns offered by the preponderance of financial assets in float.
"We suggest that one keep identities straight; invest with central banks, not against them; and consider as a gift the hollow rhetoric of the establishment that may temporarily suppress gold's paper price. They are working for physical gold holders, not against them."
GATA published the Brodsky-Quaintance study here:
http://www.gata.org/node/11373
In November 2013 your secretary/treasurer speculated that China and the United States were probably working together to control the gold price so China could gradually hedge its insane U.S. dollar surplus against the dollar's inevitable devaluation, and that China was almost certainly complicit in the gold price smash of April 2013:
http://www.gata.org/node/13256
Now investment banker and geopolitical strategist James G. Rickards, writing for the Daily Reckoning, comes to a similar conclusion as he promotes his new financial letter, "Strategic Intelligence."
Rickards writes: "If you took the lid off and ended the gold price manipulation and let gold find its level, China would be left in the dust. It wouldn't have enough gold relative to the other countries, and because their economy is growing faster and because the price of gold would be skyrocketing, they could never acquire it fast enough. They could never catch up. All the other countries would be on the bus. The Chinese would be off the bus. ...
"So the global effort is to keep the lid on the price through manipulation, which is very obvious. I tell people, if I were running the manipulation, I'd be embarrassed because it's so obvious at this point.
"So the price is being suppressed until China gets the gold they need. Once China gets the right amount of gold, then you can take the cap off. It doesn't matter where gold is because all the countries will be in the same boat. But right now they're not, so China has this catch-up."
Rickards' commentary is headlined "Gold Price Manipulation Is Now a Global Effort" and it's posted at the Daily Reckoning here:
http://dailyreckoning.com/fix-gold-price-manipulation-now-global-effort/
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
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