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Gold Commentary - July 21, 2006


A Minor Manipulation - The Gold Price

Here's a quote from the veteran Middle East reporter Robert Fisk: "These great warships had been sent here by Western leaders (Jacques Chirac excepted) too craven, too gutless, too immoral, to utter a single word of compassion for Lebanon's suffering."

Now, please go on and read the rest of Mr Fisk's article from which that quote was taken: This is not Dunkirk. This is Munich. It appeared on July 21 on the Information Clearing House website - a site you should visit regularly if you don't already do so.

The present carnage in Lebanon, which the morally depraved call Israeli "self defense", has been going on without let or hindrance ever since July 12 when Hezbullah captured two Israeli soldiers and killed eight others. The G-8 nations meeting last weekend tried to call a cease fire. They were blocked by George Bush and Tony Blair. On Monday, July 17, the European Union tried to call a cease fire. They were blocked by Tony Blair. Then the United Nations tried to call a cease fire. It has been told by US Ambassador to the UN John Bolton to wait until US Secretary of State Rice flies to the Middle East next week to "talk to" the antagonists.

In the meantime, roads, ports, bridges, airports, electric grids, communication grids, hospitals, private businesses and private homes in Lebanon have been callously and ruthlessly reduced to rubble and hundreds of innocent men, women and children have been killed. All this in the name of the "war against terrorism", Israeli style. And all this while the US and Britain "sandbag" any and every attempt to stop the carnage and while most of the rest of the world looks on in dumb incomprehension, while their governments frantically "evacuate" their citizens from the path of the Israeli destruction.

In the US House of Representatives, a motion was carried (with eight dissenters including Ron Paul - R, Texas) in praise of Israel's act of "heroic self defense". A similar motion was carried UNANIMOUSLY in the US Senate. Ask yourself what the reaction in these august halls of government would have been if it had been the Lebanese raining this destruction on the Israelis. Truly, this is a murderous hypocricy which "passeth all understanding", not to mention forgiveness.

But oh, what a lovely DISTRACTION!!

The G-8 Summit last weekend was supposed to be a gathering of the world's most powerful and influential Heads of State for the purpose of discussing the world's economy. The Israeli invasion of Lebanon turned it into a sideshow most notable for an "open microphone" incident between Bush and Blair and a performance by Mr Bush which would hardly have been tolerated had he been a fractious pre-schooler and not the President of the United States and the most powerful man in the world.

The study of the collapse of any empire in world history is not a very edifying task. Again and again, one is apalled by three aspects common to almost all of them. One is the appalling smallness (the lack of mental and even more of moral stature) of those tasked with trying to forestall the crumbling of the empire. Another is the depths of depravity which are often plumbed in the attempt. And the third is the moral catatonia of most of those who have the misfortune of watching the process unfold.

Long before an empire actually crumbles, it becomes evident to the discerning that the economic means necessary to sustain them are not equal to the task. Once the financial rot has set in, and it is always the "financial rot" which is the root cause of the final collapse, then ever more desperate measures are resorted to. In every historical case, the financial rot sets in when the money which glued the empire together begins to be debauched. It becomes irreversible when the money becomes the plaything of the ruling elite, who can create it, force people to accept it, and decree its "value", at their whim. In the US, the rot began with the introduction of the Fed in 1913. After that, it took the financial powers that be only 20 years to outlaw the circulation of Gold as money. And it took them only 38 years more to sever the final tie between what circulated as money and Gold. With that move, in August 1971, the rot indeed became irreversible.

How bad the rot has become is easily measured. It is measured by the "stature" of the President of the United States and the Prime Minister of Great Britain. It is measured by the depravity of their reaction to Israel's attack on an all but defenceless Lebanon. And it is measured by the depressing fact that many if not most of the people in the "developed" world are far more concerned about the possibility that their countrymen and women being rescued from Lebanon might actually have to pay for their return trip home than they are about the slaughter and destruction being rained on Lebanon.

And this week, while all eyes and ears were on the events in Lebanon, Ben Bernanke of the Federal Reserve "testified" to the US Senate that he and his colleagues on the FOMC were "confident" that "inflationary pressures" in the US were in the process of easing. This was, of course, immediately interpreted as meaning that, at worst, a pause in the Fed's rate tightening regime was imminent. The US stock market turned on a dime and stormed upward, as did the US bond market. This is where both the US empire and the global financial system which rests on the US Dollar get their fuel.

Meanwhile, over at the US futures exchanges, the "funds" have been hard at work battering the Gold price. Almost ALL of the almost $US 50 fall in the spot future Gold price this week has taken place in the US futures markets. And almost all of it has taken place after all other paper Gold markets have closed for the day. Gold is honest money, and honest money and empire building don't mix.

Yes, the manipulation of the Gold "price" this week has been BLATANT in the extreme, as blatant as has been seen at any time in the last decade plus. This is abhorrent, it is true. But is it more abhorrent than what has gone on in Lebanon, at the G-8 meeting, or in the US Congress since the Israeli attack of July 12?

In actual fact, of course, all of these things are part and parcel of the same desperate quest. This is the quest to perpetuate the current global financial system as an absolutely necessary pre-requisite for the power exercised by those who control it. The actual state of the system is best measured by the means chosen to perpetuate it. The situation in Lebanon is a new low in this regard. The depravity is numbing, much more numbing than the mere manipulation of Gold.

Two things all self-respecting people should do. One is to speak out at any level available to them in condemnation of what is going on in Lebanon and the reasons behind it. The other is to become as independent as possible from the debauched global financial system. One thing that can be done now is to own honest money. The other thing is to press for its return AS MONEY. As all of history proves, that is ultimately the only way to prevent the depravity we are currently witnessing in Lebanon, in Iraq, in the White House, and in the US Congress. It is time and past time to "take away the punch bowl" altogether so that those who control the "dipper" no longer have the means to take the actions which are dripping off the front pages today.

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©2006 The Privateer Market Letter

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