"Damn it - Gold should be going UP!"
"What happened today, Gold got 'hammered'?"
"Gold S*#$$%KS!"
"When's it going above $US 300?".
These are not actually exact quotes. They are paraphrases. They are a sampling of the email which has been arriving on an increasing basis at The Privateer. They reflect a phenomenon which anyone who has given even a cursory glance at the situation, and especially anyone who has lurked at and/or participated in the many Gold discussion groups, would recognise easily. Gold "SHOULD" be going up. It ISN'T going up. WHY THE HELL NOT!
Of course, Gold "should" be going up. There are any number of reasons why it should be going up. Here are just a few of them
There are other reasons, but you get the picture. And please note this carefully. Gold IS going up. It is in an uptrend. It established this uptrend at its April 2001 lows and has been going up ever since.
Granted, it hasn't been going up very fast. And after the 9/11 spurt, it hasn't done much of anything. Above all - IT HASN'T GONE OVER $US 300. Why not?
The fundamental reason why Gold has NOT gone over $US 300 is that those who run the global financial system do not want it to go over $US 300. The mechanism they have used to accomplish their goal is the substitution of trading in physical Gold by trading in paper claims to Gold.
This is old news to anyone who follows Gold. The mechanisms are explained in more detail elsewhere on the Gold pages at this website. Central Banks have come a long way since the 1960s and 1970s, when they resorted to literally dumping physical Gold on the market to contain the price. They failed then, of course. They have not failed - YET - this time.
Leverage works both ways. Leverage was used to keep stock markets, and currencies, much higher than they would have been in the absence of the derivative markets used to apply the leverage. Leverage has been used to keep the $US price of Gold much lower than it would have been in the absence of the derivative markets used to apply the leverage. Note this carefully. Governments have a vested interest in pushing the markets in paper investments based on the currencies they issue UP. They have an equal and opposite vested interest in pushing Gold DOWN. That is because, ultimately, Gold and paper investments based on government created "currencies" cannot co-exist. It's as simple as that.
Gold cannot be "undiscovered". It cannot cease to exist. Nor can the discovery of its premium utility as a medium of exchange, a money, be expunged from human knowledge. All that can be done is to give it as low a profile as possible by keeping its value as low as possible. That is what has been done, is being done, and will continue to be done as long as it is possible to do it.
Calm, forthright examination of the global financial and economic situation can lead to only one conclusion. The world is on the brink of an economic implosion. Governments say they are slashing interest rates to re-ignite "growth". In reality, they are slashing rates to allow debtors to continue to service existing debt. They are pushing on a string. This has been obvious in Japan for a decade. It is obvious in the U.S. now to anyone who examines the situation. So far, not enough people are examining the situation. That will change.
The problem that most people who make comments about Gold similar to those which began this analysis have is that Gold is not going up "fast enough" for them. Gold will only go up "fast" when the monetary powers that be lose control of the situation. And "control" is the one thing that the powers that be in the U.S. and elsewhere are adding to most tenaciously in the wake of 9/11.
Two weeks ago in this section, we wrote a piece called Patience Is A Virtue - Sometimes". Patience is NEVER a virtue at a market top, as those who didn't sell out of the Nasdaq last year or the Dow this year will testify. But patience is ALWAYS a virtue at a market BOTTOM. The more tenaciously one holds on, the greater the virtue it is.
As for the question - "WHEN is Gold going to go up?" - we will answer in all candour: "It IS going up".
When will Gold go up FAST - when will it get above $US 300? We will answer with equal candour: We don't know - and neither does anybody else. We know that Gold has formed a two-year bottom. We know that it has been in an uptrend since April. We know that as long as that uptrend is not broken, it will go higher. We know that an unbroken uptrend will inexorably take Gold above $US 300
When it happens, we'll know it has happened. Before it has happened, neither we nor anyone else, by the nature of reality in which the future is uncertain, can know WHEN it will happen. That's the way it is.