For centuries, nervous investors have turned to gold for investment security during uncertain economic times. When the economy gets weak, the price of gold rises. In the late 1970's we watched gold peak in the $700+ per ounce range. That number eventually ebbed to roughly the $300 per ounce range where it held fairly steady until early 2002 when the price began to rise. By spring 2004, gold was $400 per ounce and by spring 2006 it was approaching $600 per ounce. By mid 2007 gold was over $700 per ounce when it spiked near $1000 per ounce in early 2008. In the past year, the price of gold dipped down as low as about $720 per ounce in mid November. Today, gold broke the $1000 per ounce price for the second time in history, although it did close just under $1000/ounce.
As in the past, the recent spikes in the price of gold again reflect consumer uncertainty over current economic conditions. Recently, however, there has been another force at work. For the last couple of years, several knowledgable individuals in the coin collecting and precious metals markets have been speculating that the U.S. has been secretly manipulating the world price of gold by selling it's supply of gold bullion.
Many experts believe that the Bush administration has been selling America's supply of gold bullion in order to "flood" the world market with gold and suppress the price. With nervous investors causing the price of gold to rise steadily, the Bush adminstration wanted to slow down the price rise and keep it from "getting out of hand".
Why would they want to suppress the price of gold? There are two reasons: One was that The Bush administration wanted to fool the American public into thinking that the economy was stronger than it really was. Had gold been allowed to surge to a market level, then the high gold prices would have been front page news during the election year. Team Bush was dedicated to making sure bad economic news would be suppressed. The second reason for the price suppression was that when the price of gold surges, people pull their money out of the stock market and buy gold in search of higher and safer returns.
Pull money out of the stock market and the price of stocks falls. That would be more bad economic news that Team Bush was desperate to avoid.
A falling stockmarket combined with surging gold prices would have been terrible news for the GOP during the past election year. That's why the Bush administration decided to sell OUR gold in order to further the political fortunes of their political party.
The market manipulation they have been accused of has artifically suppressed the price of gold while artifically inflating the value of dollar based securities. Now that Bush's team of crooks is out of power, the gold market manipulation has ended. The result? A falling stock market and rising gold prices!
Here's a link to some comments from an analyst at a coin collecting publication regarding this subject:
http://numismaster.com/ta/numis/Article.jsp?ad=article&ArticleId=4787"On Dec. 6, 2007, the Gold Anti-Trust Action Committee, Inc., (GATA) filed Freedom of Information Act (FOIA) requests with both the Federal Reserve and the U.S. Treasury. ...sought information about possible gold swaps that the U.S. government may have handled and any related information about policies for such swaps.
In mid-April, the Federal Reserve responded, releasing part or all of hundreds of pages of worthless information, but also claiming that it was withholding all or part of the information of about 400 pages of documents. The status of the withheld documents is currently under appeal...
...I personally find it hard to reconcile the Federal Reserve's acknowledgement that it found about a thousand pages of documents on gold swaps when the Treasury will only admit it involves two documents. To me, that smells like a carefully created cover-up...
...There is a lot of information hidden from the public. If this information were to become known, there is a good possibility that it could show that the U.S. government has sold or swapped gold. The president of the German central bank has already admitted that he has held discussions with other not-yet-identified central banks about gold swaps. The U.S. Treasury is an obvious candidate to be one of these central banks. Since the U.S. government so far is trying to claim it has never engaged in gold swaps or sales, any release of information that contradicts this position could lead to a sharp jump in the price of gold..."
http://www.coinlink.com/News/gold-silver-bullion/is-the-deep-financial-crisis-overwhelming-gold-price-manipulation/ - MAY 2008
"There has been a constant stream of terrible financial news over the past nine months. This news makes investors leery of owning US dollars or dollar-denominated paper assets like stocks or bonds. When investors try to protect themselves by switching to other assets or currencies, the result is a decline in the values of the dollar and American stocks and bonds
Apparently, the top priorities of the US Treasury and the Federal Reserve is that the US stock market must be supported and the price of gold held down, so as to avoid a massive exit from the dollar and American stocks and bonds. To accomplish this manipulation, the Federal Reserve trades short-term repurchase agreements with 20 approved primary government securities dealers.
...dealers on this approved list are Bank of America Securities, Bear Stearns, Cantor Fitzgerald, Countrywide Securities, Daiwa Securities America, Goldman Sachs, Greenwich Capital Markets, HSBC Securities (USA), JPMorgan Securities, Lehman Brothers, Merrill Lynch Government Securities, and Morgan Stanley. As long as these companies use the liquidity provided by the repurchase agreements to do the government's bidding, they will be allowed to make profits from the fees of the transactions.
When significant negative financial news is released... ...this could scare investors into selling their US dollars and stocks and bonds and buying gold and silver with the proceeds. To diminish this effect, the Federal Reserve and Treasury (who know the bad news before its public release) give orders to boost stocks in the Dow Jones Industrial Average (DJIA) and to knock down the price of gold.
Last Friday we saw a perfect example of this tactic. The previous day, American International Group, Inc. (AIG), the world's largest insurance company announced a $7.8 billion loss for the first quarter of 2008. This followed a $5.3 billion loss the previous quarter, when AIG officials suggested that the worst was over. As a result, when the U.S. markets were opening on Friday, the U.S. dollar and stocks were falling and the price of gold was rising. In mid-morning, the manipulators struck. Gold quickly fell almost 2%, the DJIA increased about 1%, and the US dollar index rose about 0.5%.
...then came the new bad news: Citigroup, one of the world's largest banks, announced a plan to dispose of about 20% of its assets over the next 2-3 years.
...over the past nine months, the pre-arranged manipulation of the DJIA and the gold price had the desired effect of persuading investors to sit tight. Last Friday, that didn't happen. After the manipulators struck, nervous investors continued to sell the dollar, sell U.S. stocks, and buy gold and silver. For the day, the DJIA was down about 1%, the US dollar index down 0.5%, and gold was up 1%. For the day, the stock of AIG dropped almost 9%; Citigroup lost over 2%...
...The gold price manipulators seem to be losing their clout. We could be in for some serious decline in the value of the US dollar, stocks, and bonds in the coming weeks, along with much higher gold prices. "
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