Skip to comments.China: Gold Price Decline Premeditated; US Has Started a Currency War
Posted on 01/15/2014 7:33:03 PM PST by Publius
China National Gold Group Corporation General Manager Sun Zhaoxue has come out and told the world media that the US is suppressing the gold price. The reason for Americas manipulation of gold is to ensure US Dollar dominance on the world stage. America has by default ended up with the worlds reserve currency and therefore gets the world to work for them in exchange for an ever increasing supply of printed greenbacks. He also went on with an excellent analysis of Americas war against Europe and the Euro using their investment banks. Another good insight from Sun Zhaoxue is that while major players like Warren Buffet and Goldman Sachs talk about how they hate gold and forecast price declines, they have made large bets on gold and gold companies.
His comments from the Liujiazui economic forum were as follows:
The hottest topic at the moment is oil and gold. The ground war we are seeing around the world is, I think, war for oil, whereas gold is the currency war. Why? We observe that integrity was the driver for the US Dollar to become the world reserve currency. The US Dollar and gold decoupling from 1971 caused the US Dollar to depreciate massively. From 1990 onwards, the Eurozone was in consultation to form a strong Euro to counter the US Dollar in order to prevent the latter from stripping Europe of its wealth. The Euro was born in 1999, supported by its strong economy and 11,000 tons of gold.
"With the birth of the Euro, a competitor to the US Dollar was created, and so the US decided to lay a trap for the Eurozone as part of the currency war. Some countries in the Eurozone violated the Eurozones norms by issuing bonds. Which entities participated in the issuance? US investment banks. After the debt was issued, it was US ratings agencies that struck a blow to the Eurozone by saying that its economies had problems.
"Only gold remains on par with the US Dollar to benefit from the Eurozone and Euro's collapse. This is why the US began to suppress gold by issuing a statement two months ago that the Eurozone will sell its gold when it is unable to service its debt, then stating three days later that the news was false. Furthermore, Goldman Sachs made a forecast for the gold price at the beginning of the year but suddenly changed its course saying the gold price will fall to $1300. Buffet said that he would not buy gold even if its price fell to 800USD. Our research indicates that Buffet made a lot of money from four gold companies. So his statement is inconsistent with his personal action.
"Bernankes speech followed, saying that monetary easing will end, that the US economy is improving. This series of examples shows that the fall of the gold price is premeditated. So I say that this process is a genuine currency war.
"Many people say that gold is just a beautiful thing. Then we have to ask the US why they store so much gold, but instead of selling gold, they issue debt to other countries to rescue the financial market.
"The US owes Germany so much gold but instead of repaying immediately sets a 2020 deadline to return the gold. From this example and process as well as some typical factors, this is a downright currency war to maintain US Dollar hegemony by defeating all other currencies.
"I shall stop here."
If the US is depressing gold prices, it’s as much to discredit Glenn Beck as anything.
This is news?
Most of know what is going on, but it’s the first time a major power has spoken up about it publicly.
You give Beck too much credit.
Maybe, but a lot of people followed his advice.
Beck’s advice is good, but the major players in the financial world, to include the central banks, barely know he exists.
That's not a good sign, is it?
It means the scam is coming to an end. China is the one nation that could break it up, send the price of gold flying, and send the dollar into collapse.
What about silver, is the situation the same as with gold?
“Most of know what is going on, but its the first time a major power has spoken up about it publicly.”
You cannot be serious. We are in a recessionary/high debt situation/Deflationary state. Most commodities are down, gold included
It’s a commie plot, I tell ya.
Yes. Think of gold and silver as the inverse of the dollar.
The price of gold is rigged, and this article explains who and why.
I think the jig is up but I don’t know much about these things. How long do you think or guesstimate it will take before it starts getting ugly?
I don’t know. Gerald Celente and Jim Willie think it’s this year. Fabio Calvo thinks it’s 2015 and 2016.
It’s an idiotic article. The U.S. wants a weak Dollar, not a strong one.
Weak Dollars buy more domestic goods and fewer imports.
“...The US owes Germany so much gold but instead of repaying immediately sets a 2020 deadline to return the gold.....”
This assumes that the American banks are actually still in possession of all of Germany’s physical gold bullion. Some have questioned its physical presence or at least whether it is financially unencumbered as it should be.
The UK is buying water cannons and something else over in Europe that I forget now. Are they going to have a mess before us? I think they are preparing for a mess.
Of the names you listed, who is right more of the time and any idea of Peter Shiff (sp?) predictions?
Something is up.
Yeah, it seems they were hinting at that...
“Then we have to ask the US why they store so much gold, but instead of selling gold, they issue debt to other countries to rescue the financial market.”
There is a difference between a weak dollar, which is good in a world of fiat currencies, and a collapsed dollar, which would be refused in trade.
Everybody is preparing for a mess. Why else would the government buy billions of bullets and militarize their regulatory agencies? As to timing, I don’t know.
Thanks, looks like it’s still a good idea to have some old coins stuck away for a rainy day. :)
The long term value of gold is the cost to produce it, plus net profit (which should factor in the risk for market volatility), and overhead.
Even at $1300/oz or even less, there is plenty available in the long term.
How does this hurt us?
Why would I care about a collapse of foreign trade?
Such a sentiment, even if I had it, wouldn’t save the premise of the idiotic article.
If China mines a lot of gold, and buys a lot of gold, they are going to get killed financially on that investment at some point.
It helps us by making the dollar look better than it really is, which is why we’re doing it. As long as the game can go on. But if it ends, the price of gold skyrockets, and because gold is the inverse of the dollar, the dollar takes a big hit. That could destabilize the world’s financial markets.
One fact is that the US is printing more and more dollars while increasing the national debt; and the other is that the price of gold is essentially going down when that price should be going up thanks to the printing of more and more unbacked - by gold or silver - dollars.
One good indicator is that the price of gold stocks are not going up, and it's my opinion that the US government is actively selling gold stocks to prevent their stock prices from rising as they should be given the coverall price inflation we are seeing month after month.
The bubble will have to burst, and I don't think the market crash is far off.
Unless they work with the BRICS nations to issue a gold-backed yuan, which is the current plan. If there is a question to the stability of the dollar, this would become an alternative to the dollar for trade.
You aren’t grasping what a cheap Dollar means to foreign trade on the one hand, and to our domestic economy on the other.
No wonder you liked the idiotic article.
I think they are planning to kill off a ton of Americans. Remember that one home grown terrorist said 25 million Americans need to be killed off. They are awaiting their marching orders.
The investment banks that execute the policy of the Fed and Treasury have been naked shorting gold mining stocks so that certain privileged companies can acquire these gold companies at bargain basement prices, something called a “stink bid”. Yesterday a Chinese company acquired a significant junior gold miner with a stink bid.
The current strong Dollar harms the U.S. economy.
A weak Dollar will improve the economy by making domestic goods seem cheap while making imported goods look expensive.
We don't *want* the Dollar to be the world's reserve currency.
A strong Dollar props up the rest of the world at U.S. expense.
The fact that we have the reserve currency of the world permits us to behave in a profligate manner with respect to entitlements and war. To lose that status would mean that we would have to finally accept economic reality, something of which I approve. The problem is how people would react to strict financial discipline. It won’t be pretty.
Careful what you wish for, you just might get it!
Are you ready to wake up one morning soon in the future, stop to get gas on the way to work, and pay $14.00 a gallon?
Because that’s what it means!
You don’t understand the price mechanisms for fuel, then.
Well, then, I’m all ears!
Explain it to me!
You forgot to factor in the fact that there are lots of paper claims to gold not backed up by the real thing.
In COMEX alone it is 80+ paper claims to each real oz. of gold:
You might also want to ask Germany how their effort to repatriate their claim to 700 tons of gold:
When one factors these facts into the price of gold (and silver I would add) it is clearly undervalued on a historic basis. Smart investors are ignoring the propaganda and loading up on the physical gold/silver as well as the mining shares now.
I think it will be when a GOP is elected President....then they can blame him...
I call BS. This is reverse psyops.
The Chinese have been huge buyers of gold.
The writer of the article is voicing understandable confusion and frustration of Chinese gold bugs who were given to understand that the US dollar was in a death spiral because fed printing fiat dollars. Even the Chinese central bank stopped buying US bonds two years ago and then announced a month ago that they would stop buying US bonds in hopes that that would mean something. But it didn’t mean anything.
The US dollar has been going essentially sideways since 2008
and now all the talk is that the next direction for the dollar is up.
Why. Why is the dollar showing strength and why is the price of gold going down.
The reason is pretty simple. For the last three years, —every year—the USA has been pumping an additional 1 million barrels @ day of oil. The EIA expect that the USA will pump an additional 1 million barrels @ day in 2014 and 2015. Oil and natural gas have so far added an addition 400 billion to the US economy annually. In 3-4 years that number will rise to 1 trillion dollars annually. Oil is shrinking the US trade deficit and shrinking the federal budget deficit. The added inflow of revenue to the federal government is so significant that the if it continues at the rate it has between 2012-2013 when the federal deficit shrank from 1 trillion dollars to 650 billion dollars—in three years the federal budget will balance.
One last thing. The fed has been creating some 8 trillion dollars ex nihilo from nothing. Right? Now consider the fracking revolution has added something like 40 trillion dollars worth of oil and gas reserves to back the dollar. You better believe that oil acts just like gold as a backer of currency.
Oil exporters tend to have strong currencies.
The value of a currency is much like the value of a stock. A stocks value is principally based on its future earnings plus earning growth plus current assets. The value of a currency is based on similar considerations. Companies like Microsoft and Intel split their shares 10 times in 20 years. Highly dilutionary... right? The price of the stock stayed relatively stable while the number of shares increased exponentially. Why didn’t these stocks go to penny stocks? Because the companies experienced significant earnings growth in the years their stock prices split many times.
Right now the dollar is still going roughly sideways because the downward pressure of the federal reserve printing dollars is being met by the upward pressure of increased oil production.
When the fed stops printing money—the dollars natural direction will be upward because of the upward pressure on the dollar of increased oil production.
A rising dollar pushes down the price of gold.
A rising dollar also pushes up the value of the dollars held in the vaults of all the world’s central banks. Including China—which has some of the largest reserves of dollars.
Finally, the author of the article concentrates on Warren Buffet. But the billionaire who knows his currency is George Soros. He sold his gold position back in early 2012. Now he is bullish on the USA. Anyone who recalls how he screamed about the demise of the dollar back in 2008, should know what a profound turn around this guy has experienced to be bearish on gold and bullish on the US economy. Its not unreasonable to assume that he was seriously burned where it hurt. In his pocket book.
But of course while the legendary Warren Buffet has always hated gold as an investment vehicle ,maybe the Chinese gold bug has never heard of George Soros.
If its tough on US gold bugs, its even tougher on Chinese gold bugs. They’re still learning the ropes.
Has the Administration decided that oil shale gives them the money they need for all their utopian dreams?
Has the Administration decided that oil shale gives them the money they need for all their utopian dreams?
Its the pubbies that need convincing. They are not convinced.
Basically what’s happening is the same thing as happened in the late 90’s. At that time the booming stock market and low gas prices sent 100’s of billions of dollars worth of new revenues to the federal government while Newt’s congress kept the federal government from growing. New’t congress didn’t cut the budget. They just kept it from growing. But that was enough. The budget balanced. Clinton of course fought tooth and nail to grow the budget and creamed newt for curbing growth. But in the end Clinton took credit for the balanced budget and that became his legacy.
Something similar is in the works for Obama.
Hmm. Enjoy a buoyed economy, while Zero gets the credit? I think they will still screw the pooch with torrential spending that will overwhelm any oil boom over the long term.
Cherry-Picker. It was in the 200s as recently as 2001.