12 April 2007

Calvin J. Bear - On Gold

When you look at people's analysis of the price movements of gold you should take into account some factors to do with how the international supervisory committees on banking and national accounts enforce standards onto banks and participating governments.

Yes it's true there are international treaty obligations but these in their own right need not FORCE governments into line. Take Zimbabwe for one good example. Mugabe has had no interest of any kind to preserve the integrity of his economy and the currency of Zimbabwe. But he takes comfort in the examples of Singapore and China as countries that have claimed the right and the power to step outside of global co-operation in economics standards and banking. These have claimed special status for certain reasons and tell their own public that they are also economically competitive enough to DESERVE to hold to their own ideas about central banking and fiscal policy and not be dictated to by any treaty or banking supervisory groups.

When you understand the mechanics of how Luxemburg Treaty Supervisory Committees enforce rules onto governments, you will see a feature of gold holdings and gold price dynamics that all the expert commentators never talk about.

If a country fails to use its tax base to operate in the repurchase market and ‘make' its bond issuance reliable and liquefiable along the annualized average-of-yield curve to maturity (in other words that each year the bond trades close to what its yield SHOULD be for that year number divided over the years to maturity) then supervisory bodies ‘arrange' pressures that force the hand of the government involved. Either ratings agencies mark down the rating of the country involved, or the work as a cartel to push down the currency involved; this latter thing they do in absolute secret but they do it all the same. Sometimes they employ proxies in the form of huge investment banks. It isn't very transparent where they get the ‘money' from to enforce their wishes; bluntly you might as well know they just print it.

But the effect is that if a country takes its tax collections and spends these for purposes like infrastructure or fundamental corruption – as has happened in Zimbabwe and some Asian countries over the years – instead of the sovereign debt (obligation) market, then a global system operates to penalize these regimes. Eventually such penalization can totally cripple a country and lay siege to its government.

Where countries like Burma, North Korea, Thailand, Indonesia – or even places such as India and Iran – use their gold holdings to try to defeat these currency penalizations
THEN YOU WILL SEE THE SAME PRINTING MECHANISMS APPLIED BY THE GLOBAL BANKING TREATY SUPERVISORS TO AFFECT THE GOLD PRICE IN THE SHORT TERM. Or in the short-ish term, as it were.

China has a major problem on its hands and that is the question of whether or not private purchasing of gold inside China is a de facto dual Chinese currency factor!

If businesses inside China have vast gold holdings, and the gold price goes up, is that the same as a Chinese economy-originating ‘currency' going UP versus the USD?

The Chinese Politburo want the Yuan itself to stay down so that their exports stay high. But Chinese business people can artificially hold a rising currency via gold.
Or let's more accurately say – NOT-SO-ARTIFICIALLY!

The outcome of all these dynamic forces working for and against the gold price, and the virtual inexhaustibility of money to enforce central banks to do what the global banking cartel wants them to do, is uncertain at this moment.

Gold denies absolute control to central banks and a global fiat currency banking structure. But almost because this is so, some people constantly act against the gold price to assert their own power and obsession about ‘control.'

That is why the price of gold doesn't just go up on a straight line to reflect inflation and the blowing out of debt and the quantity of currency-on-issue in trade deficit countries in the first world.

The upside risk for gold has a lot to do with catastrophic damage to the actual money system itself.

No comments: