I've been fascinated by the GATA's allegations of gold price rigging and all of the ramifications, especially since guys like Larry Kudlow keep pointng to its price stability is an indicator that the monetary supply situation is under control. If indeed gold shows signs of a melt up, would not the central banks attempt to flood the market with their bullion reserves ? .
If they do a massive flood of gold it will be seen as a sign of weakness and the markets will react to it(negatively for the long term) not to mention there are investors buying on the dips far more so than in the past. The smart investor knows something is up and we are headed for financial trouble. Secondly, there is not enough above ground gold or silver to meet demand should the stuff hit the fan including the central banks and if things where to get that bad, do you thing the gov. would allow the central banks to sell the gold when it may be the only thing that could save the dollar from a total collapse(worst case scenario)? Unlikely.
I host a daily talk show....this Friday at 7-8am and a rebroadcast from 6-8 pm mst I have Ferdinand Lips as my guest he has just written Gold Wars: The Battle Against Sound Money As Seen From A Swiss Perspective
Interesting fellow he may be able to answer your question.....Ferdinand Lips
Born in Switzerland in 1931, Ferdinand Lips, is a well-established and respected authority on gold and the gold market. His roots are in banking where he started his career, and became a co-founder and a managing director of Rothschild Bank AG in Zurich.
In 1987 he opened his own bank, Bank Lips AG, also in Zurich. He retired in 1998 when he sold his equity interest in the bank. Not being one to sit around idly, Mr. Lips continues to be very active in the banking, gold and financial fields. He is on the Board of various companies, among them African gold mining companies. He is also a Trustee of the Foundation for the Advancement of Monetary Education (FAME) in New York.
He has written two books previously (Das Buch der Geldanlage in 1981 and Geld, Gold und die Wahrheit in 1991). Gold Wars is his third book and expresses his views on gold, the gold standard and the gold exchange standard as well as the various attempts to manipulate gold and eventually push it aside. As a Swiss, he dedicates an important part of the book to the events leading up to the partial, but substantial, sale of Swiss gold reserves.
In his free time, Ferdinand Lips likes to spend time with his two daughters and the study of history, architecture and philosophy. Mr. Lips, a firm believer in the gold standard, lives outside of Zurich, Switzerland.
LINK TO AUDIO
I think there are several reasons why central banks won't flood the market with gold. The Washington Accord (1999) limits the amounts of gold central banks can sell. Secondly, central banks generally don't want to draw attention to themselves, and even more importantly don't want to lose credibility. Dumping gold into a rising market could make them look foolish. I think they will exert some downward pressure, but I don't think it will be a flood.