Massacre In Gold and Silver
There's been a massacre in gold and silver last week. Gold is down over $60 at $1568 as of this writing and silver down $2 at $28.78 on December 14, 2011.
If gold and silver is the protection against inflation and excessive money printing. Why are gold and silver prices being hammered?
Here's my theory.
I think what we're seeing is similar to what happened in 2008 when the financial crisis hit. Everyone had to raise cash to keep their company afloat. Since most if not all paper assets are down, the only one left to sell is gold and silver which the only asset class that's been up in the last 3 years.
Of course there are those who say that the paper markets in gold and silver are manipulated by JP Morgan and HSBC. There's that to.
There's another one I've been thinking about. I'm reading a book called "Currency Wars" by Jim Rickards, a book about the currency markets and had a part on how President Franklin D. Roosevelt made it illegal for US citizens to own gold back in the 1930's.
Basically, what happened was, back then, the US is suffering from a depression and there was very high unemployment. then was that on April 5, 1933, FDR made it illegal for US citizens to own gold. Gold at the time was priced at $20.67 an oz. If they revalue when all the citizens still owned the gold, it won't benefit the government. So when they made it illegal to own gold and illegal for miners to export gold. They exchanged the gold with paper money for $20.67/oz. You can only own $100 worth of gold which is at that time was around 5 oz.
Once the US government has confiscated most of the gold, FDR was buying more gold in the open market in Oct 1933 slowly driving up the price of gold. Gold eventually ended up $35/oz at which point, they decided to stabilize the price.
The effect of that, the US dollar lost 70% of it's value against gold.
Today, because the market is more open and global, we're seeing a different kind of gold confiscation. It's more like manipulation and speculation.
When the people who bought gold as an investment at a higher price and are now suffering losses because of the drop in prices. They would have no option but to cut their losses and sell their gold. Then the central banks around the world would then buy up the gold and silver at a very low price.
The central banks may be manipulating the gold and silver prices to bring them down so they can buy them up cheaply. After which, they will reprice or shall we say, stop interfering with the market price of precious metals and let them go up in nominal value to say $2,000 or even $5,000 an oz in gold. This way, when everybody has sold off their precious metals because of the losses they incur, it's the governments who hold the gold and make all the gains.
At least that's my theory. Because fundamentally, it's weird that gold and silver prices are going down when demand is so high in the physical bullion or jewelry market. It doesn't make any sense.
If gold and silver is the protection against inflation and excessive money printing. Why are gold and silver prices being hammered?
Here's my theory.
I think what we're seeing is similar to what happened in 2008 when the financial crisis hit. Everyone had to raise cash to keep their company afloat. Since most if not all paper assets are down, the only one left to sell is gold and silver which the only asset class that's been up in the last 3 years.
Of course there are those who say that the paper markets in gold and silver are manipulated by JP Morgan and HSBC. There's that to.
There's another one I've been thinking about. I'm reading a book called "Currency Wars" by Jim Rickards, a book about the currency markets and had a part on how President Franklin D. Roosevelt made it illegal for US citizens to own gold back in the 1930's.
Basically, what happened was, back then, the US is suffering from a depression and there was very high unemployment. then was that on April 5, 1933, FDR made it illegal for US citizens to own gold. Gold at the time was priced at $20.67 an oz. If they revalue when all the citizens still owned the gold, it won't benefit the government. So when they made it illegal to own gold and illegal for miners to export gold. They exchanged the gold with paper money for $20.67/oz. You can only own $100 worth of gold which is at that time was around 5 oz.
Once the US government has confiscated most of the gold, FDR was buying more gold in the open market in Oct 1933 slowly driving up the price of gold. Gold eventually ended up $35/oz at which point, they decided to stabilize the price.
The effect of that, the US dollar lost 70% of it's value against gold.
Today, because the market is more open and global, we're seeing a different kind of gold confiscation. It's more like manipulation and speculation.
When the people who bought gold as an investment at a higher price and are now suffering losses because of the drop in prices. They would have no option but to cut their losses and sell their gold. Then the central banks around the world would then buy up the gold and silver at a very low price.
The central banks may be manipulating the gold and silver prices to bring them down so they can buy them up cheaply. After which, they will reprice or shall we say, stop interfering with the market price of precious metals and let them go up in nominal value to say $2,000 or even $5,000 an oz in gold. This way, when everybody has sold off their precious metals because of the losses they incur, it's the governments who hold the gold and make all the gains.
At least that's my theory. Because fundamentally, it's weird that gold and silver prices are going down when demand is so high in the physical bullion or jewelry market. It doesn't make any sense.
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