The Bald-faced Manipulation


“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value.”

– Alan Greenspan

Addison WigginDear Reader,

We’ve been bemused by action in the Commodities Index in the face of historic inflation rates this week.

I’m sure you’re aware that on Tuesday data reports show inflation hit rates not seen since 1981, the same year gold hit its nominal high. The consumer price index itself rose over 11% in March. Our primary question for today is, why hasn’t the gold price reflected this rise yet?

We think we have a decent answer, if slightly conspiratorial (below) . But along the way we discovered a bizarre phenomenon.

Let’s begin with this tweet from Peter Spina, who styles himself a gold and silver maximalist:

Peter Tweet

Twitter only gives you 140 characters to make your point. You can retweet the idea, which we did here @AddisonWiggin.

140 characters don’t really tell the whole story, right?

Peter later tweeted “The Top 5 Reasons to Consider Gold in Inflationary Period.” They are:

  1. Store of Value
  2. Inflation Hedge
  3. Diversification
  4. Economic & Political Instability
  5. Rising Government Debts

All things, we have found ourselves concerned with at one time or another (sic, ahem, cough…) So, yeah, retweet because we agree. It’s like a thumbs up emoji.

But in the background is all this noise about Elon Musk buying a 9% share of Twitter… getting offered a board seat on Twitter… denying said board seat… then making a bid to buy the whole company for $45 billion dollars.

The statement Musk released with his offer states, among other things, this:

“I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy. However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form.”

We jammed with Jimmy Soni yesterday, who just released a book on Musk, Peter Thiel and the team that founded PayPal. There aren’t many industries this group has taken an interest in that they haven’t overhauled.

In response to this we tweeted ourselves:

Wiggin Sessions Tweet

Heh.

It’s still a new form of communication to our team, too. Mostly because we didn’t see a point in it. Maybe with Musk at the helm it’ll become a more useful tool than simply parroting the woke mob chastising everyone else on the planet for being less virtuous.

“I used to dive into those conversations wholeheartedly back when gold was so thoroughly manipulated,” our guest this week James West said, helping us to return to the question of the day:

If inflation is as rampant as it was back in 1981, why haven’t we seen the gold price jump accordingly?

“If you listen to anybody talking about commodities on any mainstream financial channel,” James responds, “they don’t talk about the actual price of commodities. They talk about the futures price.” James gives us a little technical description:

“…because big players in the commodities futures market can create contracts many times in excess of the available commodity to actually trade, they’re able to lead the price of commodities up and down and the price of commodities dutifully follow. For example, there’s 2,500 tons of gold produced in the world each year, but there’s over $1 billion dollars, or rather there’s billions and billions of ounces of gold traded in commodities futures contracts in gold. How can the price of gold on a paper derivative of the actual commodity lead the price of the commodity, which is in shorter and shorter supply with higher and higher cost of production? It makes no sense.”

And yet it does.

“The price of gold is widely viewed globally by all monetary system participants as the standard by which all currencies are measured. So the US dollar interests have a very vested interest in making sure that gold does not ever appear to be outperforming the US dollar or the US dollar indexes or any commodities or assets quoted in US dollars.

The bald-faced manipulation by the financial system mandarins to make sure that gold does not make the US dollar look bad.” Why? Because the US dollar looks like it’s going to collapse while everybody’s going to sell all the treasuries that are held around the world. But the whole system will collapse.

While we agree with Peter Spina’s 5 reasons to own gold in an inflationary environment (above) it’s also hard to get too excited when gold and the CRB index are not acting as favorably as we’d like.

Ahem.

James West has a lot to say about manipulation of the gold price and by extension “it’s drunk cousin” silver. You can catch it all here.

Follow your bliss,

Addison Wiggin

Addison Wiggin
Founder, The Financial Reserve

P.S. Of course, there’s always another way to make money for you and your family.

In an episode apt for the “eat the rich” files, both the New York Times and Vanity Fair took umbrage with the fact that Jared Kushner’s startup investment fund, Affinity, was awarded $2 billion dollars by the Saudi Prince Mohammed bin Salman despite the counsel of his advisors.

“Saudi Arabia Concluded Jared Kushner’s Investment Firm Was a Joke,” the headline in Vanity Fair reads “And Gave Him $2 Billion Anaway,” with the subhead “Saudi Arabia, which famously dismembered a man via bone saw, was worried Kushner was a P.R. risk to them.

The headline and subhead are usually written by the editor of the magazine, in this case, leaving little room for the imagination as to what the editor thinks of the Trump family or the Saudis as a whole monarchical entity. The article is entertaining. It’s a brilliant exhibit of political smarm. Take a look here.

Addison Wiggin

Addison Wiggin

Addison Wiggin is founder and executive publisher of Agora Financial LLC, an independent economic forecasting and financial research firm. He and Bill Bonner began writing the firm’s flagship Daily Reckoning in the midst of the tech boom and bust. It was one of the first widely distributed email newsletters on the Internet. The publication’s critical eye on finance and economics continues today. He’s also creator and editorial director of Agora Financial’s daily missive The 5 Min. Forecast.

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