Chapter 85 6. Gold: The king of currency under house arrest

Gold has many unstable factors, and the governments of several major countries have been trying to shake the price of gold is one of them.If you look at government policy on gold over the past two decades, no government sold gold when it was $800 an ounce (in 1980).Selling at that time should be a good deal and stabilize the price of gold.But the government sold (in 1999) gold at the lowest price, as did the British government.The government's practice of selling gold at the lowest price is one of the factors causing the instability of gold prices.In 1999 Robert.Mundell The destabilizing factor of gold mentioned by Mundell is an important part of the overall strategy of demonizing gold by international bankers since 1980.However, the manipulation of the gold price is a well-arranged, sophisticated, and imperceptible genius plan. It is the first time in human history that it has been able to successfully suppress the price of gold for more than 20 years.

The most incomprehensible thing is the Bank of England's blatant announcement on May 7, 1999 to sell half of its gold reserves (415 tons).It was Britain's largest gold sell-off since the Napoleonic Wars.This earth-shattering news caused the already weak international gold price to plummet to $280 an ounce. People can't help wondering, what is the Bank of England doing?invest?not like.If you had invested in it and sold it for $850 an ounce in 1980, and then bought the 30-year U.S. Treasury bonds with a return rate as high as 13%, you would have made a lot of money.As a result, the Bank of England insisted on selling gold at a record low price of US$280 in 1999, and then invested in US treasury bonds, which returned less than 5% at that time. No wonder Mundell couldn't understand it.

Is it because the Bank of England doesn't know how to do business?of course not.Counting from its establishment in 1694, the Bank of England has dominated the international financial market for nearly 300 years. It can be called the ancestor of the modern financial industry. What kind of storms and waves have never been seen before. The Federal Reserve is just a primary school student in front of it. If you don't understand the principle of buying low and selling high, it is simply a fantasy. The Bank of England is acting against the basic laws of business because of one thing and that is fear!What it fears is not that the gold price will continue to fall and the gold reserves will depreciate. On the contrary, what it fears is that gold will continue to rise!Because the gold recorded in the accounts of the Bank of England has long since disappeared, the gold marked as gold receivable accounts may never be recovered.

Swiss banker Ferdinand.Lipps once said an intriguing remark that if the British people knew how their central bank had crazily and recklessly disposed of the real wealth that the people had accumulated for hundreds of years—gold, the guillotine would be full of heads.In fact, it is more accurate to say that if the people of the world finally know how central bankers manipulate the price of gold, the greatest financial crime in human history will be exposed. Where did the Bank of England's gold go?It turned out that it had already been leased to gold bullion bankers. The whole story is like this, when in the early 1990s, the London-Wall Street axis successfully defeated the Japanese economy and curbed the process of European unified currency. Never dare to take it lightly.You must know that for the London-Wall Street axis, the euro and the yen are just a disease of scabies, and gold is a serious problem.If gold turns over, all fiat currency systems will surrender.Although gold is no longer the world currency, gold has always been the biggest obstacle restricting international bankers from plundering the wealth of people around the world through inflation.Although it has been silently imprisoned outside the monetary system, its historical status and as a symbol of real wealth radiate a strong attraction all the time.If there is any disturbance in the world, people will involuntarily rush to gold and accept its solid protection.To completely dethrone the king of currency, even international bankers who overwhelm the sky with one hand do not dare to hope, they can only try to put gold under house arrest forever.

To achieve house arrest of gold, the world must see how incompetent and weak gold, the king of currency, is. It can neither protect people's savings, nor provide stable indicators, nor even attract the interest of speculators. So the price of gold must be strictly controlled. After learning the lesson of the disastrous failure of the gold mutual fund in 1968, international bankers learned from the painful experience and would never make such a stupid mistake of using physical gold to counter the huge market demand again.After the extreme 20% interest rate was adopted in 1980 to temporarily suppress the price of gold and restore confidence in the US dollar, they began to use a large number of new weapons such as financial derivatives.

According to the art of war, attacking the heart is the top, and attacking the city is the bottom.International bankers are well on their way.Whether it is gold, dollars, or stocks, bonds, real estate, to the highest level, it is all about confidence!And financial derivatives are super confidence weapons.After the financial derivative nuclear bomb was successfully tested in the stock market crash in 1987, this high-efficiency weapon was used again in the Tokyo stock market in 1990, and its lethality surprised international bankers.However, the use of nuclear explosions has short-term and strong effects. For the chronic and long-term threat of gold, it is necessary to use a variety of weapons of confidence and attack in a cocktail-style mixture.

The central bank, which is controlled by private banks, leases out the nation's gold reserves for one of these.In the early 1990s, international bankers began to promote a saying that gold is stored in the warehouse of the central bank without any interest income. In addition to being covered with dust, storage requires another expense. It is better to rent out gold ingots with good reputation For bankers, the interest rate can be as low as 1%, but at least it is a stable income. Sure enough, this method quickly became popular in Europe. Who are the so-called bullion bankers? The international bankers headed by JP Morgan did their part.With their good reputation, they borrow gold from the central bank at an ultra-low interest rate of 1%, sell it on the gold market, and then buy U.S. Treasury bonds with a 5% rate of return when they get the money, and enjoy a 4% interest rate difference. , which is known as the gold carry trade.In this way, the selling of the central bank's gold not only suppressed the price of gold, but also got a good meal from the interest rate difference, and at the same time stimulated the demand for US treasury bonds and lowered long-term interest rates.

However, there is a risk here.Most of the gold that bullion bankers borrow from the central bank are short-term contracts of about six months, but the investment is likely to be long-term bonds. If the central bank expires and asks for gold, or the price of gold continues to rise, the situation of gold bullion bankers It's dangerous. In order to hedge this risk, the financial geniuses on Wall Street turned to gold producers.They have repeatedly instilled in gold producers the historical inevitability that the price of gold will inevitably go down in the long run. Only by locking in the future selling price now can future losses be avoided.In addition, international bankers can also provide low-interest loans of about 4% for gold producers to continue their exploration and development. Such interest is really hard to refuse. Waiting to sell at a reduced price in the future, it is better to sell the future gold production that is still underground to be mined at a good price now.This is called a gold forward contract.

The gold bullion bankers then had the future output of the gold producers as collateral to repay the central bank's gold lease.In addition, the central banker and the gold bullion banker are originally a family, so the lease contract can be extended almost indefinitely.Thus, gold bullion bankers have double insurance. Soon after this initial idea was put into operation, genius Wall Street bankers continued to introduce new derivative products, such as deferred spot contracts, conditional forward contracts, variable forward contracts, delta hedges, and various options contracts. With the help of investment banks, gold producers have been caught up in this unprecedented financial speculation.Gold producers from all over the world have overdrawn their future and converted all possible underground reserves into existing production for pre-sale.Gold producers in Australia are even selling off their gold production for the next seven years.Ashanti, an important gold producer in Ghana in West Africa, even purchased a total of 2,500 financial derivative contracts under the advice of Goldman Sachs and 16 banks. The financial assets are as high as 290 million US dollars.Critics have pointed out that contemporary gold producers are not so much mining gold as dangerous financial speculation using gold mining as a gimmick.

In the wave of hedging revolution set off by gold producers, Barrick Gold Company can be regarded as a veritable big brother.Barrick's hedging scale has already exceeded the reasonable scope of risk control. It is no exaggeration to say that its strategy is a financial gamble.In its massive one-way short selling of gold, Barrick has invisibly created a situation where peers compete to lower prices, and the result is bound to self-destruct the market.In its annual report, Barrick systematically misled investors, boasting that its sophisticated hedging strategy enabled it to always sell gold at a premium to the market.In fact, a considerable part of the gold that Barrick sells to the market is the gold borrowed from the central banks of various countries at low interest rates through gold bullion bankers. Part of the bond, the spread yield, is the real source of the magic effect of the so-called complex hedging tool.This constitutes typical financial fraud.

Under the joint efforts of several parties, the price of gold has been falling, which is in the interest of all parties involved.Since gold producers have already locked in the selling price, when the price of gold falls, their various financial assets that short gold on their books will appreciate in value.Gold producers, then, are strangely accomplices in the fall in the price of gold.What manufacturers get is only short-term sweetness, but what they lose is long-term benefits. Gold Antitrust Action Committee Chairman Bill.Murphy called this special interest group that planned to hit the price of gold the gold cartel. Its core members include: JP Morgan, the Bank of England, Deutsche Bank, Citibank, Goldman Sachs, the Bank for International Settlements, the US Treasury and the Federal Reserve. . When the price of gold is constantly pushed up by strong market demand, the central bank will rush to the front line and sell a large amount of gold publicly until it scares off investors. Greenspan declared at the hearing of the House Banking Committee in July 1998: Gold is another commodity with a large number of financial derivatives for over-the-counter transactions. Investors cannot control the supply of gold. If the price of gold rises, Central banks are always ready to lease out their gold reserves to increase the supply.In other words, Greenspan openly admitted that the price of gold was completely under the control of central bankers if necessary. When the Kosovo war broke out in March 1999, the situation changed subtly.NATO's air strikes have been unable to work for a long time, and the price of gold has begun to accumulate explosive power under the support of strong purchasing power.If the price of gold continues to rise once it gets out of control, the gold bullion bankers must buy back gold from the market at a high price and return it to the central bankers.If there is not so much spot in the market, or if the gold producer who used the underground gold production as a mortgage goes bankrupt, or there is not enough gold underground, not only the international bankers will suffer huge losses, but the gold reserve accounts of the central bankers will also suffer huge losses. There will also be a huge deficit. If the matter is exposed and the people learn the truth, I am afraid that someone will really be guillotined.In desperation, the Bank of England finally rushed to the front line on May 7, 1999.If investors can be scared off and the price of gold continues to fall, everyone will be happy. Even if they miss it, the gold with bad debts is simply sold, and there will be no proof at that time.As the so-called gold bad debts are sold.That's why when central bankers sell gold, people never know who the buyers are. Although the war in Kosovo ended on June 10, 1999, the central bankers who were in a cold sweat felt that they had gone too far, and investors in the international gold market had begun to claim that they would sue the central bankers for manipulation The price of gold, politicians from various countries have also begun to pay attention to the price of gold.Things looked like they were going to blow up. In this context, in September 1999 European central bankers reached a Washington agreement to limit the total amount of gold that countries could sell or lease over the next five years.On the news, the gold lease rate jumped from one percent to nine percent in a matter of hours.Producers and speculators shorting gold suffered heavy losses on financial derivatives. Gold's nearly two-decade bear market has finally come to an end, and it heralds the arrival of a big bull market in the commodity market. 1999 was an important strategic turning point in the Golden Battlefield, and its significance was equivalent to the Battle of Stalingrad in World War II.Since then, the attempt to suppress the price of gold has never been able to gain the strategic initiative on the gold battlefield.The fiat currency system headed by the U.S. dollar will continue to retreat in the face of the strong offensive of gold until it finally collapses. In addition to the main battlefield of controlling the price of gold, international bankers have also opened up a second battlefield, which is the war of public opinion and academic warfare.The most successful part of the international bankers lies in their systematic brainwashing of the economics circle, leading the hot spots in the academic circles into a game of mathematical formulas that is seriously disconnected from the actual world economy.While most modern economists wonder what gold is good for, international bankers should be very relieved that things are still under control. People will naturally ask, what is wrong with the fiat currency system?Haven't we been living under the fiat currency system for more than 30 years?Isn't the economy still developing? Former Federal Reserve Bank of New York Vice President and Citigroup Vice President John.Exeter's answer was: Under such a system, no country needs to pay another country a currency that is truly a store of value.Because they don't have the discipline to exchange (gold coins).We can buy oil with paper money, no matter how many paper money we print.They (economists) choose to ignore people's desire for a solid currency that can store wealth.In fact, they refused to recognize gold as money, arbitrarily arguing that gold was just a common commodity that, like lead and zinc, had no place in the monetary system.They even suggested that there is no need for the Ministry of Finance to continue to store gold, and it should be gradually sold in the market.After removing the gold, they arbitrarily define the paper currency value.They never told us how this kind of IOU (I owe you) IOU, which is always increasing at a magical speed, can realize the function of currency preservation.They seem completely unaware that paper money being issued at this miraculous rate will one day create a debt problem. Keynes and Friedman are just twentieth-century John.Lowe's copy.They choose to disregard the iron law of exchanging paper money for gold, and deliberately print paper money at the speed of some economist or politician's mindset. They believe that in this way, they can cheat the laws of nature, create wealth out of nothing, and eliminate business cycles. Ensure employment for all and prosperity forever.This means that some economists formulate policies for specific political leanings, without risking their own money in the market.Law-like wisdom, omniscient in economic affairs, arbitrarily decides on monetary, fiscal, tax, trade, price, income, etc. policies, and tells us that it is best for us.So they fine-tuned our economy. Most of today's economists are trained by the disciples of Keynes, including those Nobel Prize winners, such as the famous textbook "Economics" author Paul.Samuelson.His textbooks are full of mathematical formulas and various colorful charts.But when reading his views on gold, his views have almost no historical depth and seem very superficial.He is a classic example of twentieth-century academia where economists completely ignored the study of the history of money, or chose to do so for some reason. In his famous review of the dual-track gold price after 1968, Samuelson said: Gold was eventually completely demonetized outside of the IMF.Its price is determined entirely by supply and demand, just like copper, wheat, silver or salt. A sheik in the Middle East who bought gold at $55 an ounce and sold it at $68 must have made a lot of money.However, if he bought at fifty-five dollars, and thirty-eight.He would lose his shirt at five or even thirty-three dollars. Samuelson firmly believed that once gold was kicked out of the monetary system, the demand for gold was limited to a few industrial needs, such as jewelry.Therefore, after Nixon closed the gold window on August 15, 1971, and the Bretton system collapsed, gold was no longer a currency. Who would need gold?By 1973, when the great professor published this grand theory, he believed that the price of gold at $75 an ounce in 1972 would definitely not be maintained, and gold might eventually fall below $35.What dislocated the professor's jaw was that seven years later, the price of gold hit $850 an ounce. Fortunately, Samuelson is not a Wall Street hedge fund manager, otherwise he would lose more than just his shirt.