Central Bankers Cannot Prevail in War Against Gold


"The name of the game in gold, as far as the monetary authorities are concerned, is deception."

The vast majority of those who read this site are fully aware of the shenanigans of the bullion banks over at the Comex and how they continue to bamboozle the hedge funds whose automaton-like response to momentum trading prevents them from beating this group at the paper game by standing for delivery in size. Additionally, their allegiance to system-trading and computer algorithms prevents them from thinking creatively and learning to take advantage of their enemies' tactics against them. Good traders learn to adapt to changing market conditions and modify their strategies when confronted by successive losses; however, when it comes to gold, the hedge funds do no such thing.

The name of the game in gold, as far as the monetary authorities are concerned, is deception. By artificially suppressing the price of gold, for much the same reason as the Fed has been artificially attempting to suppress long-term interest rates by a deliberate policy of quantitative easing, the money lords hope to cloud the signals that free market prices would generate to the investing public.

Remember when gold prices first spiked above $1,000 and all the coverage that was received on both the financial cable shows and the Internet news sites? That is the last thing any Western Central Banker wants to see because it is in effect a condemnation of the policies and practices that they have embarked upon. So what to do? Simple, confuse the issue and distort the signal by working over the gold price to dampen down any potential excitement.

There is one thing that no amount of market intervention and price manipulation can succeed in doing and that is changing the basic structure of the futures market.

While nothing is foolproof in this day and age of managed markets and official sector shenanigans, the timeless spread charts are telling us a story that even the best efforts (or worst efforts, if you prefer) of the Western Central Bankers and their unending war on gold is drawing to a close in which their policies have all but ensured their defeat at the hands of the "barbarous relic." Short term, they can win many battles but long term they cannot prevail in the war against gold.

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