someone explain to me why the government cares enough about the price gold/silver to manipulate it
secondrepublic
Posts: 2,619 ✭✭✭
I agree with Mike Shedlock that:
Gold and silver is the least of governmental concerns. LINK.
Someone explain to me why the government would care so much about gold/silver prices when all around them there are far more important things happening (death of Lehman, massive stock market swings, huge decline in the value of the dollar, etc.). I just don't see any rationale for them to care what gold does.
Edited to add: The government doesn't even seem to have the ability to control the prices of things that far more people (and politicians) care about. It strikes me that a government that can't keep housing prices up (though the public, politicians and bankers would love them to do so) or keep fuel prices down (ditto) wouldn't have much more luck controlling precious metal prices. Nor, more importantly, do I see WHY they would care about PMs enough to try to control them while failing to control the prices of everything else that people/politicians/bankers care so much more about. Frankly I doubt that 1% of Americans care about PM prices while everyone cares about home prices, gas prices, etc. Explain to me what I'm missing here, please.
Gold and silver is the least of governmental concerns. LINK.
Someone explain to me why the government would care so much about gold/silver prices when all around them there are far more important things happening (death of Lehman, massive stock market swings, huge decline in the value of the dollar, etc.). I just don't see any rationale for them to care what gold does.
Edited to add: The government doesn't even seem to have the ability to control the prices of things that far more people (and politicians) care about. It strikes me that a government that can't keep housing prices up (though the public, politicians and bankers would love them to do so) or keep fuel prices down (ditto) wouldn't have much more luck controlling precious metal prices. Nor, more importantly, do I see WHY they would care about PMs enough to try to control them while failing to control the prices of everything else that people/politicians/bankers care so much more about. Frankly I doubt that 1% of Americans care about PM prices while everyone cares about home prices, gas prices, etc. Explain to me what I'm missing here, please.
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
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<< <i>Explain to me what I'm missing here, please. >>
Nothing.
CG
price of gold as a benchmark to help set interest rates. It was
a powerful psychologogical tool as well to keep gold in a narrow
range and imply that inflation was a non-event.
I doubt they've ever cared much about silver except to protect
users from upward price manipulation.
<< <i>Back when markets were free Volcker and Greenspan used the
price of gold as a benchmark to help set interest rates. It was
a powerful psychologogical tool as well to keep gold in a narrow
range and imply that inflation was a non-event.
I doubt they've ever cared much about silver except to protect
users from upward price manipulation. >>
This explanation makes some sense. But I still don't think it provides grounds for them to actively manipulate the price. Almost no one, outside of maybe 1% of the population, has any idea of how gold's price has changed over time. Gold being "higher" doesn't signal inflation to most people in the way that higher gas or milk or egg prices signals inflation to them, for the simple reason that almost everyone buys the latter products all the time, and they "know" what the prices have been historically. By contrast who, outside of a small percentage of people, has any idea of the prices for gold over time? Gold being "higher" doesn't mean much to 99% of the public because they don't know what price it's been or what price it's supposed to be.
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THE GOVERNMENT CARES
(the government is full of self serving individuals) These people are there for a check/benefits/paid holidays and vacations... and nothing else. (oh, except to legislate YOUR life)
Hummmmmmm Only 1% own PM maybe?
"Fifteen of the world's largest holders of gold agreed in September to limit gold sales to a maximum of 400 tons per year and a total of 2,000 tons over the fiveyear duration of the agreement.The "Washington Agreement"of September 26 brought together a group of 10 central bank governors, as well as US treasury secretary Lawrence Summers and Alan Greenspan, chairman of the Federal Reserve.This unique coordination exercise is testament to the importance of gold as a store of value and guarantees that it will remain a central feature of global monetary reserves.The agreement stipulates that only sales that have already been decided can go ahead. Switzerland will be allowed to sell the most: 1,300 tons and the United Kingdom 365 tons.The remaining 335 tons have been allocated to countries that have already decided to sell some gold reserves but have not as yet made a formal announcement.The group of 10 central banks holds 15,998 tons of gold-nearly half the world's official holdings.The United States and Japan have not signed the agreement, as officials in these countries have announced they do not intend either to sell or lend gold. Australian officials say they, too, will not sell any more gold, and South Africa, which opposed the LTK government on its gold sales, is unlikely to sell.The countries included in the agreement, together with those that do not intend to sell, cover about 85% of the world's official gold holdings, according to the World Gold Council. The intention of the 75 countries that control the remaining 15% of the world's official gold, about 4,500 tons, is still unclear.
Copyright Global Finance Media Inc. Feb 2000
Provided by ProQuest Information and Learning Company. All rights Reserved"
They don't care about "most" people, but only the 1% that controls the vast majority of the money. Gold and currencies have always been linked. During inflationary times they just happen to link up a lot better (as the inverse of one another). What's easier for the PPT to move: a $3 TRILLION per day Forex market or a few billions per day Gold market? Which one can they naked short with impunity and complete political approval? Dollar = 1/Gold. That's as simple as it gets. The average guy is not part of the equation other than to keep J6P in the dark, and apparently it's working quite well.
The fact that the govt has readjusted stats like CPI, GDP, unemployment a number of times beginning in 1983 only underscores the need to paint a different picture than really exists. As recently as 2006 you can toss out the use of M3 because the FED wanted to save the BLS a million bucks per year on an "barbarous" statistic (lol). The numerous correcections done to CPI first in 1983, then throughout the Bush 1 and Clinton years is truly bad mathematics, but still outdone by the GDP deflator that all but assures us of having a positive GDP in a typical recession. The govt clearly cares about the numbers and making them as positive as they can. Gold is the inflation barometer. Keeing that price in check is crucial to keeping sniffs of inflation away from as many people as possible so that they don't shift assets from their banks and the stock markets into hard assets like gold, collectibles, antiques, art, etc. If gold is not sounding an alarm, the currency presses are free to do their destruction without any interference or concern from J6P who continues to invest willy nilly in the nation's currency and it's dollar denominated stock market. Reagan created the PPT back in 1987 for the very reason of manipulating...I mean "healing" the markets when they needed a nudge. They now manipulate markets on a global as well as daily scale. Their tracks are everywhere. To assist in the manipulation the SEC eliminated the uptick selling rule (to assist legal and illegal short sellers) and gave the financial sector the ability to somehow "legally" naked short sell selected stocks "as needed." Apparently precious metal stocks fall into the "selected" category.
The governments of the world care so "little" about gold that they have set up detailed schedules to sell it over the past 10 years or so....but with no concern in strenthening currencies (lol). We thought so little of it that we delinked from it entirely in 1971 to set up the first huge stagflation cycle. Central Banks care so little about that they don't allow their books to be audited, they double count leases/sales, and don't do detailed physical audits of their nation's gold (and publish the results).
In summary why manipulate gold? Because it works and falls into the schemes and goals of the FED / govt / PPT.
Some years ago I worked for a Government agency, and I was disturbed by the lack
of desire to be efficient and very productive. As time went by and nothing changed,
a person of some stature made the comment " aren't we all just here to retire".
Immeadiately a light went off and it all made sense. The lack of desire to make the agency
perform at A+ was secondary at best and more probably about seventh.
<< <i>... Almost no one, outside of maybe 1% of the population, has any idea of how gold's price has changed over time. Gold being "higher" doesn't signal inflation to most people in the way that higher gas or milk or egg prices signals inflation to them, for the simple reason that almost everyone buys the latter products all the time, and they "know" what the prices have been historically. By contrast who, outside of a small percentage of people, has any idea of the prices for gold over time? Gold being "higher" doesn't mean much to 99% of the public because they don't know what price it's been or what price it's supposed to be. >>
Gold has lost a lot of alure and attention after being effectively
held in a narrow band for so many years. Many more people
were concerned about it in the old days and the price was rout-
inely reported right along with stocks and bonds.
More importantly is that gold used to be considered an important
part of peoples' investment portfolio. Most people had 5 or 10%
of their eggs in this basket.
Now days about 60% of people just live paycheck to paycheck
and if they have anything beyond it will be in a 401K or such.
While most of the actions of government in holding the price of
gold low were passive and incidental it did appear that sometimes
it became more active. When higher interest rates were harmful
there were suddenly gold sales announced.
Today this pendulum is glued, nailed and caulked to the wall but
it grows heavier simply because they've been so effective at pre-
venting the swing. There are huge numbers of potential buyers
who won't be advised to buy until the price crosses $5000 or more.
When they're all in the price will crash.
And they will do all to prevent that perception. If they fail they know the consequences....