Here are the intraday highs on the spot future (December) Comex Gold contract for the past eight days
Close - for eight consecutive trading days - but no cigar thus far. The "cigar" in this context is, of course, a spot future price, intraday and especially close, that starts with a $US FOUR. Gold did manage to poke its head above $US 400 in Asian trading this week, but it has yet to do so in New York. US stock markets are languishing. The US Dollar index hit a new 2003 low on November 18 and confirmed another downleg in its post January 2002 BEAR market. US government policy, both domestic and foreign, is in disarray and is SEEN to be in disarray (more on this in the Late November issue of The Privateer). Still, after eight straight days of assaults, the $US 400 level is holding - for now.
Here's the chart we included in this commentary last week:
Gold closed up $US 6.80 at $US 395.00 on November 12 - the first date on the list above. That caused this chart to climb two "Xs" above its previous high. A third "X" above and a confirmed breakout on the chart will come with a spot future Gold close of $US 400.00 or higher. It hasn't happened yet, simply because it WOULD be a confirmed breakout.
Many analysts have (rightly) pointed with accusing fingers to rampant Gold "price" manipulation from the mid 1990s to date. Many were pointing in the early '90s, the 80's and the 1970s too. They were equally correct. The only difference in recent years has been the advent of more and more sophisticated derivatives procedures made possible by the quantum leap in cheap computer power since the world wide web took off in 1995-96.
What has always bemused us is that the outrage over the manipulation of the Gold price is not accompainied by outrage over the manipulation of almost EVERY other aspect of financial and economic life. There is no equivalent outcry about legal tender laws, or Unconstitutional money, or fractional reserve banking, or interest rate manipulation, or blatant interference with both domestic and international trade, or income "redistribution" via taxation, or ponzi schemes masquerading as "social security", or any of the other manipulations whose sum is the present interventionist economic system based on fiat "money" under which the world has been suffering for many decades.
The point which makes the Gold price unique amongst all the obvious symptoms of the potentially fatal disease afflicting the present system is that it is THE symptom which, when it flares up, is IMPOSSIBLE to ignore. There are many symptoms of a heart attack but THE symptom is a sudden crushing pain in the centre of the chest. A sudden surge in the price of Gold, especially if and when that surge coincides with a break through a MAJOR resistance area is a "crushing pain" in the chest of the global monetary system. It is galvanising, it cannot be ignored, it makes denial of a MAJOR malfunction impossible. That was the state of affairs when the Roman Emperors diluted their coinage nearly two millenium ago. It is equally true today.
Every government, of whatever makeup, is composed of individuals. When those individuals, for whatever reason and under whatever pretext, choose to attempt to gain power over their fellows, their means is to control exchage between their fellows. Since the advent of coined Gold money nearly three thousand years ago, their means has ALWAYS been to gain control of what is used as money.
Gold is the preferred monetary medium of all those who do NOT covet power over their fellow men. It is the biggest stumbling block placed in the way of those who do. Men who seek power always confiscate as much Gold as they can and seek to "regulate" the circulation of that which remains outside their control. Then they seek to replace Gold with a medium of exchange which they control in general circulation. In extremis, they seek to separate Gold and the monetary system entirely. In extremis, FDR confiscated all privately held Gold. Many rulers have gone further than that, making the mere possession of Gold a capital offence without appeal.
Gold is important because it is a medium of exchange which has evolved by the free choice of individuals seeking to make exchange easier, hence its emergence as money. It is even more important as one of the most important of all the "stumbling blocks" that stand between those who would gain power over their fellow men and the actual gaining of that power. It has NEVER been an historical accident that despotic inroads increase as the role of Gold in exchange decreases. None of the interventionist inroads which have transformed the United States over the past seventy years would have been sustainable without the confiscation of Gold and its banning as a circulating medium of exchange.
There is NO doubt whatsoever that Gold will exceed $US 400. There is little doubt that once it does so, its climb against the $US will accelerate. In this context, it is well to remember that Gold was trading above $US 390 in Asia nearly a year ago, in early February. But whatever level Gold reaches against the US Dollar - or any other present currency - it will not "cure" the present fatally flawed system.
The monetary system will be cured if and when a "price" of Gold once again becomes an absurdity because the Gold IS the money. In a rational monetary system, one does not "buy" Gold with "money". One uses money (Gold) to buy everything else. In a rational system, one troy ounce of Gold buys 100 McDonalds meals or 10 DVDs or 1 washing machine or 1/10 used car or 1/100 new car or 1/1000 new house or 1/10000 Gulfstream jet.
Gold stays the same, everything else develops, improves, evolves around it. Because everyone is free to exchange as they see fit and is assured of the invoilability of what they have earned, there are no impediments on improving existing economic goods or developing new ones. Gold stays the same, so savings are encouraged and a loss of purchasing power is not a factor in assessing the viability of a loan, especially a long-term loan. Gold stays the same, tools are improved, production processes are improved, new goods are introduced, so prices FALL. The same one troy ounce of Gold now buys 150 McDonalds meals or 2 washing machines or 1/10 of a new car.
All of this actually happened throughout the early history of the US and especially from the end of the Civil War until the imposition of the Fed and the income tax in 1913. Economically, Gold stayed the same. Economically, everything else changed around it.
