PaulCraigRoberts March 31 2014
As we documented in previous articles, the gold price is driven down in the paper futures market by naked short selling by the Fed’s dependent bullion banks. Some people have a hard time accepting this fact even though it is known that the big banks have manipulated the LIBOR (London Interbank Overnight Rate – London’s equivalent of the Fed Funds rate) interest rate and the twice-daily London gold price fix.
Almost every week it is possible to illustrate the appearance of a large number of contracts shorting gold at times of day when trading is thin. The short-selling triggers stop-loss orders and margin calls and hammers down the gold price.
The Fed has resorted to this practice in order to protect the value of the US dollar from Quantitative Easing.
In order for the Fed to effectively support the reserve status of the U.S. dollar by pushing it higher when it starts to drop, the Fed has also to prevent the price of gold from rising. Intervention in the gold market has been occurring for a long time. However, in the last several years the intervention has become blatant and desperate, as rising concerns about the dollar are causing countries such as China and Russia to accumulate fewer dollars and more gold.
During the month of March the Fed and the big banks implemented aggressive intervention against the rising price of gold and the plunging value of the U.S. dollar. Events in Ukraine may have stimulated demand for physical gold and selling of the U.S. dollar, but it was mainly further erosion of the U.S. economy, as reflected in more deterioration of economic data released during March, that pushed gold up and the dollar down.
The dollar index is a “basket” of currencies used to measure the relative value of the U.S. dollar. The largest components of this basket are the euro and the yen (it also includes the British pound, Canadian dollar, Swedish krona and Swiss franc). During February and March, the dollar started to decline in response to increasingly negative U.S. economic reports, continued Fed money printing (QE) and the Ukraine crisis.
To those of you watching the price of silver rise thinking how exciting it is that the silver buyers are finally diving into the silver market and driving the price higher, unfortunately, you are living in a fantasy world. There is no “free market” in silver where supply and demand matters and drives the price movements. Silver is a “managed market” and has been since the early 1970’s. It is managed via computer programs run out of the Fed NY and the basement of the US Treasury. Computers trading back and forth with each other to SET the price…every day, every trade and every tick.