Gold is the new climate change.

Gold is the new climate change, I’m beginning to think.  By which I mean that the version of events you read in the mainstream media is so different from the one you read on the net it’s like travelling between parallel universes.

Just now I was reading an article in one of the papers listing all the reasons why the gold price has plummeted of late. There’s the line about how the US treasury is going to rein in on QE; the line about Cyprus selling off its gold reserves to pay off its debt; the line about Goldman Sachs’s lowered price target; the lines from Warren Buffett about what a totally useless commodity gold is and how he’d rather have the farmland and the Exxon Mobils…..

I call them “lines” because that’s what they are. Lines. In the same way most of the MSM gets its environment features dictated directly from the headquarters of Greenpeace and Friends of the Earth, so they seem to get their gold stories straight from the Federal Reserve’s Department of Helpful Rumors. “Diss those goldbugs! Make John Paulson look like a loser schmuck! Lend plausible credence to this price drop we’ve deliberately engineered, so we can top up our reserves and hide what’s really going on…”

If I sound like a swivel-eyed conspiracy theorist then it’s OK, I’m used to it. I’ve been called the same and worse for over a decade now for my once-suicidally-contrarian but now-damned-near-mainstream views on man-made global warming. And while it doesn’t necessarily follow that just because I was right on AGW I’m right on gold too, I think there are definitely enough similarities between the two subjects to suspect I could be.

The Great Climate Scam was created by vested interests in the scientific, corporate and political establishment, aided and abetted by a credulous media and a gullible public, in order to shore up their power base and enrich themselves by market manipulation. This is roughly what is happening now with gold, only the main vested interests this time are the US treasury and other Western government agencies trying desperately to plug the holes in their physical holdings.

But the only place you get to read about what’s really going on is in the blogosphere, at sites like Zero Hedge, at King World News http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/4/15_Maguire_-_LBMA_Default_Triggered_Gold_%26_Silver_Takedown.html and in the blog earlier this week http://blogs.telegraph.co.uk/finance/thomaspascoe/100024081/the-gold-price-crash-is-further-evidence-of-market-rigging/ from the Telegraph’s superb Thomas Pascoe.

Pascoe smells market rigging. I agree. To which you might reasonably say: “Well what do you know? You’re not an expert. How are we to trust you – or even an ex-trader like Pascoe – over the brightest and best of Goldman Sachs, or over the world’s most successful investor Warren Buffett?”

Again this is something I’m more than used to. I’ve come up against exactly this argument re climate change. The short answer is that this isn’t so much an honest question as an Appeal to Authority – the rhetorical fallacy known as the Argumentum ad Verecundiam. What it means is that even the most experty of experts can be wrong about stuff; even more so, potentially, if they have a vested interest in hiding the truth.

But the less glib answer is, yes, of course I could be wrong. It nevertheless seems to me that the best way to decide one’s position in this debate – just as it was with the global warming one – is to try to examine the two opposing positions as carefully and objectively as possible and then to decide which one has the most integrity.

As we’ve seen at the beginning, the reasons being offered by the establishment for the fall in gold are perfectly plausible. But then, so too, is the counter-argument presented by the likes of Thomas Pascoe. Here is his reasoning as to why the gold price drop doesn’t add up:

“In any market, price is determined by the confluence of demand and supply. In many respects  supply of gold is relatively fixed. We know the extent of discovered gold reserves and the rate of production. While Cyprus is being forced to dump “excess” gold in order to meet the ever escalating bank bail-out bill, its whole holdings are worth only $750m, hardly enough to move one of the worlds deepest and most liquid markets to this degree.

In fact, most of the selling pressure has come from ETFs dumping holdings. A record $9.2bn of net outflows from gold ETFs in the first three months of 2013 are indicative of a loss of faith on the part of investors, as well as of a structural change in a market which has been opened up to electronic trading by the invention of these instruments.

But why would investors wish to sell their gold holdings? As an alternative store of value, it is easiest to think of demand for gold in terms of demand and supply of fiat money. When demand for fiat money falls or supply rises, people decide to hold less and move their cash into alternative stores (gold, silver and now Bitcoins being the most common). Likewise, when people are optimistic about the state of the economy, they demand more cash because they believe they will be able to invest it in dynamic assets like stocks which will generate better returns.

A surge in demand for money over gold (and hence a fall in the demand for/price of gold) can, therefore, be very broadly justified by either a contraction in the supply of money or a more general optimism about the economy.  Are there grounds to believe either of these has happened?

Well, the world’s stock of fiat money is not contracting. Quite the opposite, in fact. Japan has just launched stimulus on steroids which will see the developed world’s most indebted economy create a proposed $1.4 trillion in Yen in a bid to break free from depression. Nor is money creation in the West likely to subside. Earlier this month the Fed hinted it would continue buying bonds for the foreseeable future, while there is an expectation in London that Mark Carney’s arrival at the Bank of England will see more activist monetary policy here, too.”

To me this all rings truer than the official US Treasury/GoldmanSachs/mainstream media version of events. A) because, so far, I have seen no convincing refutation of these points b) because it gels perfectly what has been happening in the banking sector, in the economy, in the energy sector, in the stock market, in the bond markets since at least 2008 – everything else is rigged so why wouldn’t gold be, too?

Of all things I have learned on the path to adulthood, the biggest shock and revelation to me has been this: that the trusted authorities you were taught to trust as a child are no longer to be trusted – and quite possibly never did deserve to be trusted in the first place. God knows I’ve seen this often enough with those institutions implicated in the Climate Change scam, from the Royal Society to the RSPB to the Royal Institute of Chartered Surveyors to the Met Office to Deutsche Bank to the Climatic Research Unit at the University of East Anglia. If a conspiracy can exist on so vast a scale on the environment, there’s no reason that something similar isn’t happening with gold.

You sell your gold holdings if you want to. This goldbug’s in it for the long haul.

10 comments on “Gold is the new climate change.

  1. Peter
    April 19, 2013 at 5:30 pm #

    Sorry James, but the reason was quite simple, the market was long & wrong. Investors late to the party saw the big rise in equities, especially in Japan.

    The market was to heavy and could not make new highs r re-test recent highs. The fact it never wen higher on more QE or North Korea saw sod selling by professionals, who will buy the dip, probably around 1,250.

    This was a shake- out of weak longs, late comers & profit taking from stale longs. In fact a perfect market ripe for the picking that fed on kits own downward momentum

  2. John Richardson
    April 19, 2013 at 7:52 pm #

    Oh no!
    Not another internet conspiracy loon.
    Honestly; these are the kind of people who see a mass conspiracy between all the political parties. The state corporate media. The nursing unions. The BMA. The Hospital Managment and the civil service and all the rest in the recent Staff Hospital so called ‘scandal’.
    Bizzare.
    The world just doesn’t work that way.
    So a few hundren or thousand or something died in agony in their own filth. So no-one went to jail or lost their jobs or their bonuses.
    Lessons have been lerned.That’s what we have Official Enquiries for! That’s what makes us a civilised country.
    Really, this internet conspiracy nonsense is an insult to our hard working Caring Professions.

    The American Corporate media are right about the insane internet Sandy Hook Conspiracy loons as well….they should all be arrested and their children handed over to Child Protected Services…then we can have some peace.

    • Carl Wilson
      April 19, 2013 at 8:45 pm #

      I don’t believe in a deliberate conspiracy between the parties but there are bound to be unspoken assumptions among politicians about what works and what’s best – namely that they know best and have a right to tell the rest of us how to live.

      • John Richardson
        April 19, 2013 at 9:08 pm #

        Marx said a conspiracy does not have to be conscious for it to be a conspiracy.
        Regardless, it WAS a conscious conspiracy.
        Ask your friends or family who may work in the NHS.

  3. klovax
    April 20, 2013 at 4:22 am #

    Gotta love how impossible it is to get accurate information on anything these days. I find it difficult to determine things either way most of the time, as you never know what is propaganda, and what is fact. Thanks for sharing this post.

  4. Unconvincing Pseudonym
    April 20, 2013 at 5:46 am #

    The three most dishonest or deluded orthodoxies: climate change; the history and purpose of the European Union; and Shakespearian biography.

    If you were nodding until you got to the third item and then thought that it was the turd in the punch bowl, you’ll be surprised when you read people such as Charlton Ogburn.

    See also Alfred Wegener, and ulcers.

  5. dr
    April 21, 2013 at 10:29 am #

    Was this article written by David Icke?

  6. Count Prosper
    April 21, 2013 at 8:52 pm #

    The US economy is recovering, so QE will eventually stop. That is enough to drive gold down.

    • GAI
      April 24, 2013 at 11:33 am #

      The US economy is RECOVERING? -ha ha Ha Ha HA HA – Roars with laughter….

      You have to be kidding. The US economy is so WEAK we have managed to meet the Kyoto Protocol goals! U.S. Meets Kyoto Emissions Targets Without Trying: Emissions from energy consumption at lowest level since 1994

      The governmwent outright LIES about inemployment and economic recovery. Take a look at Shadow Statistics some time. The REAL unemployment rate has been steadily increasing since 2009. graph

      No. 508: Employment and Unemployment, Money Supply, Consumer Credit

      March 8th, 2013

      Reflecting Ongoing, Seriously-Flawed Reporting, Neither the Jobs Gain Nor the Unemployment-Rate Decline Was Meaningful
      February Unemployment: 7.7% (U.3), 14.3% (U.6), 23.0% (ShadowStats)
      • Consumer Credit Outstanding Remained Stagnant, Net of Federally-Held Student Loans
      Slowing Growth in M3 Suggests Mounting Systemic Stress, As Monetary Base Continues to Soar

      Rest only available to SGS subscribers.
      http://www.shadowstats.com/article/no-508-employment-and-unemployment-money-supply-consumer-credit

      … the quality of government reporting has deteriorated sharply in the last couple of decades. Reporting problems have included methodological changes to economic reporting that have pushed headline economic and inflation results out of the realm of real-world or common experience…..

      http://www.shadowstats.com/

      Consumer Price Index Has Been Reconfigured Since Early-1980s
      * So As to Understate Inflation versus Common Experience
      *CPI no longer measures the cost of maintaining a constant standard of living.
      *CPI no longer measures full inflation for out-of-pocket expenditures.
      *With the misused cover of academic theory, politicians forced significant underreporting of official inflation, so as to cut annual cost-of-living adjustments to Social Security, etc…..
      http://www.shadowstats.com/article/no-438-public-comment-on-inflation-measurement

      … there was and still is good reason for the gap between common perceptions and government reporting: government data are biased in politically correct directions and increasingly have diverged from common experience…

      …During the Kennedy administration, unemployment was redefined with the concept of “discouraged workers” so as to reduce the popularly followed unemployment rate.

      · If Lyndon Johnson didn’t like the growth that was going to be reported in the GNP, he sent it back to the Commerce Department, and he kept doing so until Commerce got it right. The Johnson administration also was responsible for gimmicking the accounting that hides most of the federal deficit.

      · Richard Nixon had a highly publicized war with the Bureau of Labor Statistics on the unemployment data. Nixon wanted to report the unemployment rate as the lower of the seasonally adjusted or unadjusted number, at any given time, but not specify same to the public. While that approach was unconscionable at the time and never used, basically the same methodology was introduced in 2004 as “state-of-the-art” by the current Bush administration.

      · The Carter administration was caught deliberately understating inflation.

      · Systemic changes were introduced during the Reagan administration to boost reported GNP/GDP growth on a regular basis. The wildest manipulations, however, happened at the time of the 1987 liquidity panic. In addition to intervention in the futures markets by the New York Fed to help prop the stock market after the October 19th crash, direct and heavy manipulation of the trade deficit data, under the direction of the Federal Reserve and U.S. Treasury, was used in conjunction with massive currency intervention to help bottom the dollar and to contain the currency panic at year-end 1987…..
      http://www.shadowstats.com/article/primers_intro

  7. Mutton Dressed as Lamb
    April 26, 2013 at 9:45 am #

    Everything is clearly rigged in the financials but I do think it is for altruistic if misguided reasons. Ever since the Bailout of Long-term Capital Management there has been a belief in State intervention from the “Economic hierarchy” to avoid damaging busts. The dot com bubble bust in the early 2000s should have been a much bigger bust, followed by proper re-allocation of resources into an area of higher productivity and greater yield. This is when the real stimulus started and I think it is now widely known that the dot com bust nearly downed Goldman Sachs and that Gordon Browns Gold sell off helped them to set up a massive short position and plug the gap when they bought back gold at a much lower price.

    I think this is what Brown meant when he came out with that Freudian slip about saving the world.

    So what the politicians are doing is trying to save the world form the coming monetary collapse and kicking the can down the road so the other party gets blamed must be part of their calculations (the’re not exactly saints). And the banks don’t want to go bust and probably do believe that they are really important and serve a valuable function to the man in the street. To be honest, if Goldman went down then it would take many with it and it would be really messy for a while. It is alright for us with reserves in place but for others it would not be nice. Remember that any major city is only nine meals away from anarchy.

    Ultimately pay day will come and it wont be pretty. While you can’t eat gold or silver, you can take it with you which you can’t do with land. I have my land sorted and I’m buying real money while the price is depressed.

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