Friday Rant: Goldfoil Hat Conspiracy — Or is “Someone” Stealthily Dumping Gold in the USA?

A close friend of mine who is enamored with the shiny stuff for personal investment purposes has pointed me to an interesting story around possible gold price manipulation here in the US. The gist of the analysis is that even though the price of gold has increased dramatically worldwide after a fairly boring flatline around the $400 mark for 25 years straight, in 2005, it broke and has climbed in an unusually straight line to its current mid-$1,600 mark). This peculiarly steady climb raises suspicions.

Adding substance to the suspicions, despite the nearly rock-steady increase in gold prices, the open and close prices in the US gold market have consistently fallen over the past 11 years! It's hard to believe until you see the charts. From a worldwide perspective, gold is traded around the clock, which means all the increases are outside the US. The prices increase overseas, and then someone starts to sell off gold (or takes positions to that effect) during the US market hours, and then the gold price increases during overseas market hours, and so the cycle continues. For over a decade! See more detailed analysis here. Do we have anyone among our readership who can chime in and provide further information?

On a related note, although I'm not saying that Fort Knox is empty these days, the US Mint states that Fort Knox currently holds a little over 147 million ounces of gold, which is a reduction from almost 650 million ounces during WWII. The Mint also states that the current amount has not changed for many years. Interestingly, the Mint does not mark to market -- being the government, they can exempt themselves from their own rules, I suppose -- so on the government's books, the reserves are valued at right over $42 per ounce. That means that the Mint carries $6 billion on its books whereas the market value is currently around $240 billion -- a slight understatement.

Seriously, why does Fort Knox sit on any gold at all? The dollar hasn't been exchangeable for gold in many years. Recall the old dollar bills with the "redeemable in gold on demand" print -- private citizens enjoyed this before FDR outlawed private possession of various forms of gold currency about 80 years ago. Finally, Nixon did away with the last aspects of dollar-gold links early in his administration. So, assuming we actually still have gold in there -- why? It's a total mystery. It would be better to either sell it off to pay off the national debt, or allow US taxpayers to buy back the gold at its book value. Hey, I'll even pay $50 per ounce!

- Thomas Kase

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First Voice

  1. ????????:

    "So, assuming we actually still have gold in there — why? It’s a total mystery."

    It’s only a mystery if one "assumes" Professor Bernanke is correct when he asserts that gold is merely a "barbarous relic" formerly used as a medium of exchange i.e. money. Many years ago during his training in detective work this humble commenter was advised: "Assume makes an ass out of you and me." The vast percentage of the US trading in gold does not involve physical delivery of the metal. It mostly only changes ownership on paper. This does not include the trading in the futures markets where both long and short positions are taken by speculators. We have all heard of "counterfeiting". It is only defined as a crime when "unauthorized" entities engage in it.

    Commodities have served as money throughout recorded history and history does not auger well for the survival of fiat currencies.

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