I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.- Thomas Jefferson.

debt clock

Monday, April 12, 2010

Could $5500 gold save the US?

Jim Rickards thinks revaluation of gold to $5500 per oz could save the US.  Mr. Rickards is quite knowledgeable about the gold market  Of course it would take more than that.  Govt fiscal restraint going forward would be necessary. Chris Powell at GATA also has these questions-

Of course Rickards' suggestion presumes 1) that the U.S. government really still has all the gold it claims to have and that there are no foreign encumbrances on it; and 2) that the U.S. government has the ability to control the gold price.

The former presumption is increasingly in doubt, what with the Federal Reserve acknowledging that it has secret gold swap agreements with foreign banks and insisting that these agreements remain concealed from the American people, to whom the gold is supposed to belong:


The latter presumption -- about the ability of the U.S. government to control the gold price -- is denied in many respectable quarters even as GATA has been complaining for 11 years that gold price control in fact long has been the first if largely surreptitious objective of U.S. government economic and foreign policy:


At its collapse in 1998 LTCM was suspected of being uncoverably short 300 or so tonnes of gold, and the risk of the gold price spike that might result from the firm's default on that gold was seen as another reason for the takeover of the firm that was frantically arranged by the Federal Reserve Bank of New York. Having been LTCM's counsel during the takeover, Rickards may know a lot more about gold than he's telling, which is why what he says about gold on business television programs and in written commentaries should be watched closely, and why his candid memoirs might make a best-seller -- or get him run over by the truck taking the latest load of shredded Federal Reserve records to the McLean dump.

Rickards' commentary is headlined "Debt Denial"

The sovereign debt crisis has crossed a threshold. It’s no longer about economics. It’s about math and a complex system whose dynamics tell us there is little time to avoid catastrophe and almost no exit. Going forward, elections and policies will matter less as the debt plague takes hold and dictates hard outcomes. read more

With regard to the govt's ability to set the price for gold, IMO, there is no need.  All it needs to do is enforce existing CFTC regulations, and perhaps set position limits in the futures markets, and gold will find an equilibrium price near or north of the $5500 mark.  (see many prior posts re CFTC and gold manipulation)

Gold/Silver manipulation has hit the mainstream press w the stories I've been peddling picked up by the New York Post.  JPM is suspisciously silent in this matter.  In fact, in the above article their spokesman claimed no one at JPM had ever heard of key whistleblower Andrew Maguire, which is either a blatant lie, or the spokesman was chosen specifically for his lack of knowledge of the PM trading side of JPM's business.

While I don't expect the banksters to go down w/o a fight, the exposure of their illegal behind the scenes activities to the mainstream press could spell the end of their ability to keep the gold/silver price depressed.  Both metals gapped up when far east trading began last night, but have since filled those gaps.  The gold charts look to be making an inverse head and shoulders base, any move up from here would be expected to take out old highs in gold, and at least challenge old highs in silver. 

For my sister Jennie, now would be a good time to switch out of your stock mutual funds and into gold and silver.  I wouldn't be surprised to see big moves this week, more likely to the upside, but don't discount another last ditch effort to make a bear raid.  The PM markets are very small and easy to manipulate compared to currencies.

That's all for this morning, I'm heading down to the Cardinals' home opener this afternoon.


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