- Gold manipulation so obvious it’s embarrassing, says Rickards
- Keeping gold down for the benefit of China
- The recession the Fed still refuses to see
- Hiker finds gold coin so rare there’s only one other like it
- What’s wrong with 2% growth, a reader wonders
- Account closed: Frontline report from the war on cash
Aaaaand… gold’s been knocked back to a three-week low.
It didn’t follow the usual pattern, though. There wasn’t a flood of sell orders just before Comex trading closed at 1:30 p.m. EDT — a manipulation called “banging the close.” Instead, a big drop coincided with the open of the stock market at 9:30 a.m. And another big drop came after the Comex close during electronic trading hours.
“The manipulation of the gold market is not something that’s really debatable any longer,” said Jim Rickards two years ago.
“If I were running the manipulation, I would actually be embarrassed at this point because it’s so blatant.”
Jim described the purpose of the manipulation in detail in his second book, The Death of Money. On the surface, it sounds ridiculous — the United States facilitating a steady flow of gold from the West to China, to make sure China has the proverbial “seat at the table” whenever the global monetary system collapses and a new system has to be devised.
But Jim had the documentary evidence — a 42-page paper published by the International Monetary Fund in January 2011.
“The United States is letting China manipulate the market so China can buy gold more cheaply,” Jim writs in his follow-up book, The New Case for Gold — set for publication three weeks from today.
The fact is, for now, both the U.S. and Chinese governments need a suppressed gold price.
The U.S. government doesn’t mind if the price goes up — as long as it’s an “orderly” increase. If it turns into $100-a-day spurts, that’s “disorderly” — a sign of confidence evaporating from the markets — and the manipulators lower the boom. That’s what happened in September 2011; a conscious decision was made that gold would not race past the round number of $2,000.
China, meanwhile, wants to buy as much gold as it can, as cheaply as it can, for as long as it can… to get that seat at the table.
Now consider another asset class held by the Chinese government in mass quantities — $1.25 trillion worth of U.S. Treasuries. China’s the biggest foreign holder.
And consider the interaction between these two asset classes. “If inflation is low,” Jim writes in The New Case for Gold, “China’s gold won’t go up much, but the value of its paper Treasury reserves is preserved.
“If the United States gets the inflation it wants, China’s Treasuries will be worth less, but its gold will be worth much more. Having Treasuries and gold is a hedged position that protects China’s wealth even as the Treasury tries to destroy U.S. savers’ wealth with inflation.”
At this time, China still doesn’t have enough gold to protect itself against the onset of inflation.
Officially, China’s gold reserves total 1,762 metric tons. Unofficially, the total is likely north of 4,000 metric tons. What Chinese leaders ultimately want is a gold reserve that totals roughly 2.7% of GDP — the same ratio as that of the United States.
Since the U.S. and Chinese economies are roughly the same size these days, that means the ultimate goal is a gold stash equivalent to America’s — 8,134 metric tons. They’re only halfway there.
“If inflation and the gold price skyrocketed right now, China would be left in the dust,” Jim says. “It doesn’t have enough gold to hedge the portfolio losses on its Treasury holdings.
“With the price of gold soaring and the Chinese economy growing faster than that of the United States, China would never catch up in hitting a gold-to-GDP target.
“Gold manipulation is not new,” Jim adds. “You can go back to the 1960s London Gold Pool, or the U.S. and IMF dumping of gold in the late 1970s.”
The mechanics of the manipulation are fascinating… and a lot simpler than you might think.
There’s no shortage of Internet screamers with mind-numbing analyses of the weekly Commitments of Traders report from the Commodity Futures Trading Commission.
But in The New Case for Gold, Jim exposes the whole manipulation scheme in 11 easy-to-read pages. You’ll understand exactly how it works and who’s pulling the strings. You can impress friends at parties with your newfound knowledge — heh.
The book is packed with practical information, too. There’s nuts-and-bolts advice about online sellers, home storage, overseas storage — and a not-to-be-missed discussion of the only “paper gold” instruments that you should give the time of day. It’s everything you ever wanted to know about buying gold but were afraid to ask.
Again, publication is set for three weeks from today. We’d love to get it to you sooner, but we’re not the publisher, so that’s out of our hands. What we can do, though, is send you a signed hard-bound copy of the book once it’s released with a bonus chapter exclusively for Agora Financial readers like you.
You’ll also get a 60-day trial of Rickards’ Strategic Intelligence… and you’ll get access to a live online briefing with Jim in which he reveals exclusive new information about how the gold manipulators’ schemes might fall apart sooner rather than later — sending the price sharply higher for good.
We’ll give you all that free — as long as you can spot us the $4.95 shipping and handling costs for the book. Sound fair? Go here to claim your copy of The New Case for Gold.
To the markets… which are quiet as the Federal Reserve begins its two-day March meeting.
The major U.S. indexes are in the red, but not by much: The S&P 500 has shed seven points, to 2,012. Gold has drifted down to $1,228. Hey, it’s spent a whole month above $1,200 now.
Crude slid yesterday, and that slide continues today. At last check, a barrel of West Texas Intermediate fetches $36.16.
The data gods have delivered a mixed bag of economic numbers this morning — not that any of it will change the Fed’s mind about standing pat with the fed funds rate:
- Wholesale prices: Down 0.2% in February according to the producer price index, and flat year over year. But the “core” rate excluding food and energy continues to tick up — it’s now 0.9% year over year
- Retail sales: Down 0.1% in February. Throw out auto and gasoline sales and you get a 0.3% increase. But the January figures were revised big to the downside
- New York State manufacturing: The Fed’s Empire State survey moved into positive territory — barely — for the first time in eight months.
“The U.S. is probably heading into a recession later this year,” Jim Rickards tells us. “Fed rate hikes make no sense in this environment and will make the recession more likely.
“The Fed wants to hike anyway because they don’t see the recession (they see ‘Fed World’ through the lens of obsolete models). The Fed has never correctly forecast a recession, in any case. They are always the last to know.”
But as Jim explained here on Friday, the Fed will hold off raising rates anyway, simply to avoid a market freakout.
“The Fed will acquiesce this time,” he adds, “but will spend the next several months getting markets ready for a June rate hike. (A September rate hike is off the table because of its proximity to the U.S. election. The Fed is in enough hot water with politicians and does not need the attention of seeming to favor one political party over another). If the Fed does not hike in June, they can forget about ever having enough dry powder for the next recession. So they will hike in June.
“Getting market expectations aligned with the intended FOMC policy path will not be pretty. Expect higher volatility and stock market drawdowns in April and May as markets reprice. A further stock market correction has been postponed, but not avoided.”
As long as we have gold on the brain today, we can’t ignore this rare find…
Laurie Rimon lives on a kibbutz in northern Israel. While hiking recently in eastern Galilee, she discovered the coin. It depicts Augustus, the first Roman emperor and heir to Julius Caesar.
In 107 CE, about a century after Augustus died, the emperor Trajan ordered a series of coins minted to honor the emperors who came before him. This one of Augustus is one of only two known to exist; the other is housed at the British Museum in London.
“The coin would have been too valuable for everyday use,” says a CNN story, “like using a $100 bill to buy a pack of chewing gum.” The top coin guy at the Israel Antiquities Authority speculates it might have been payment to a Roman soldier stationed in the area at that time to put down a Jewish revolt.
Rimon turned over her find to the Israel Antiquities Authority. “It was not easy parting with the coin,” she said. “After all, it is not every day one discovers such an amazing object, but I hope I will see it displayed in a museum in the near future.”
“The biggest KISS (keep it simple, stupid) question today could simply be what’s so bad with 2% growth?” A reader writes after our where’s-the-collapse-already episode yesterday.
“Nothing seems to be helping the global economy get out of its funk, yet is it really the low growth or is it more complex (duh?) when we consider how much time, effort and dollars are spent trying to persuade people that if we don’t have 5% growth, we must be doing something wrong?
“Nonsense. If there were a consistent 2% growth, we would likely never have to worry about inflation, and the fears surrounding whether to invest or save could be put to rest. People are so fearful of making the long-term commitments because of the inherent anxiety of rates going up/down/up/down and the potential losses from big-ticket items like housing. It’s as if the global elite are waiting for the public to respond as directed. Clearly, the public at this point doesn’t know whether to s*** or go blind trying to follow the potential for ZIRP/NIRP — thus no spending.
“Jim’s suggestion that WWII allowed the U.S. government to force strict controls — why not a similar scenario today whereby 2% is not only the acceptable platform for growth but the target. Allow all government programs to evolve/revolve around 2% growth and begin a process of assuring confidence in the markets and global business and economies.
“Obviously, the manic/panic/buy now before the crisis hyperbole from the media might have a bit of a deflation (in rhetoric) to deal with, but wouldn’t the world be a bit better place without all the stress???”
The 5: Look, your editor has nothing but contempt for the pointless statistical abstraction known as GDP. The global elite is obsessed with GDP and the vague term “economic growth” — which is not the same thing as you and your family experiencing a rising standard of living.
But there’s a reason the elites have that obsession, and Jim touched on it yesterday — that’s the kind of growth Washington needs to generate enough tax revenue to reliably service the national debt long term.
Last summer, when Jeb Bush was still a semiviable candidate for president, he gave a fatuous speech in which he got a lot of flak for saying, “People need to work longer hours.”
The quotation in context was even more revealing, though:
“My aspiration for the country — and I believe we can achieve it — is 4% growth as far as the eye can see. Which means we have to be a lot more productive, workforce participation has to rise from its all-time modern lows. It means that people need to work longer hours and, through their productivity, gain more income for their families. That’s the only way we’re going to get out of this rut that we’re in.”
Yep. Work longer hours not so your family can live better, but to generate more “growth”… and, by extension, keep the Treasury solvent.
Bush’s campaign is history, but this still animates the establishment class.
“Well, it seems that regulations are no longer affecting just overseas banking customers!” A reader writes with new development in the war on cash. “Our bank sent us a closure notice.
“My wife is Chinese. Naturalized two years ago. We have accounts at three separate banks, one of which is (was) the one that’s closing our account. We had that one because it was convenient to transfer funds either to or from my wife’s family in China.
“This past Saturday, we received a letter from the bank stating that after careful review, they were closing our account and asking us to come in to a branch and close it out by April 14, after which they will automatically close it out and mail us a cashier’s check for the balance.
“We went letter in hand to the local branch, where they could find no notes or anything else in the system, but told us we were not the first to receive such a letter. We were told that due to new regulations that the bank needs to comply with, corporate was auditing all accounts and flagging any accounts that met certain criteria for closure. Specific criteria were not disclosed, but I can probably guess.
“In the past 12 months, we had a few cash deposits and withdrawals under $5,000 and one wire inbound transfer for $8,900 from China. I’m guessing that is the activity that got us flagged, but I can’t know for certain.
“So here we sit with a cashier’s check for just under $20,000 trying to decide whether to open a new account elsewhere or just deposit it in another account we already have. I am also left wondering if by closing this account I triggered some kind of required IRS reporting on the bank’s part and that if depositing or opening a new account with this amount will trigger a second IRS reporting requirement.
“Paranoia is making me lean toward opening a new account at a new bank. Last thing I want is to be the next person whom the IRS decides to just seize the account of for no reason! At least if I open a new account with this money, it might be the only one at risk. That’s the hope at least.
“I am becoming more and more concerned with each passing day about keeping even a moderate amount of money in a bank!”
The 5: As is anyone with any sense…
The 5 Min. Forecast
P.S. On Page 137 of The New Case for Gold, Jim Rickards identifies the No. 1 way to avoid banks legally stealing your money.
“This isn’t common knowledge,” says Jim, “but after the crash of Cyprus in 2013, a number of banking regulators, including those in the U.S., said that bail-ins (when bank depositors do not get all their money back when a bank fails) are now a template that will be used in future bank crises.
“Yes, U.S. banks can now legally do this! In my book, I reveal the No. 1 foolproof way to squash any attempt by any bank to steal YOUR hard-earned money. Anyone can do this.”
Today you can claim your copy of The New Case for Gold at a fraction of the price Amazon is charging. Your copy will be signed, and it will have a bonus chapter only for Agora Financial readers. And you’ll be privy to Jim’s exclusive online briefing three weeks from today, in which he identifies a major catalyst about to move the gold market.
All we ask is $4.95 to cover our shipping and handling. This package isn’t available anywhere else. Get yours at this link.
“Truth is many areas of the market won’t experience change,” Zach Scheidt says… regardless of who occupies the Oval Office. Read More
On the eve of the first 2020 presidential debate, The 5 takes on potential changes to the tax code. Read More
By and large, MAGA stocks plus Facebook have been taking a September breather before resuming their epic run-up. Here’s why… Read More
Since the Fed swooped into the corporate bond market six months ago, it’s purchased the debt of about 800 companies. So who are the real beneficiaries? Read More
Being first with a vaccine isn’t the key. It’s being first and being right. Whoever does that stands to make its investors immense fortunes. Read More
If “economic recovery” depends on the development of a vaccine for the coronavirus, the pace of recovery might be slower than expected. Read More
“The dollar has now started its final journey to ZERO,” says Egon von Greyerz of Matterhorn Asset Management. So with inflation knocking on the door: “Gold stands as the guardian.” Read More
Good thing Elon Musk doesn’t follow the dictum of never reading his own press… He reveals clues ahead of Tesla’s Battery Day event. Read More
We’re four days away from “Battery Day” — an event Tesla founder Elon Musk has successfully hyped… So what’s Musk got up his sleeve? Read More
The ugly reality for savers? Rock-bottom interest rates for at least the next three years. That’s where the Wall Street acronym TINA comes into play… Read More