The Golden Conspiracy
There is gold price manipulation going on, and China is the main suspect.
China wants to remain on a paper currency standard, but also wants to make that currency important enough in world finance and trade to give China leverage over the behaviour of other countries. So it increased its voting power at the IMF, and had the yuan included in the IMF basket for determining the value of the special drawing right (SDR).
The rules of the game also say you need a lot of gold to play, but you don’t recognize the gold or discuss it publicly. Above all, you do not treat gold as money, even though gold has always been money.
The members of the club keep their gold handy just in case, but otherwise, they publicly disparage it and pretend it has no role in the international monetary system. China is expected to do the same.
Gold serves as political chips on the world’s financial stage. It doesn’t mean that you automatically have a gold standard, but that the gold you have will give you a voice among major national players sitting at the table.
Here’s the problem: If you ended the price manipulation now and let gold find its level, China would be left in the dust. It wouldn’t have enough gold relative to other countries, and because the price of gold would be skyrocketing, they could never acquire it fast enough.
There is so much instability in the system with derivatives and leverage that we’re not going to have a happy ending. The system’s going to collapse before we get there. At that point, it’s going to be a mad scramble to get gold.
The gold price will be significantly higher in the years ahead, but not because China is confronting the US or launching a gold-backed currency. It will go higher when all central banks confront the next global liquidity crisis, worse than that of 2008, and individual citizens rush to gold to preserve wealth in a world that has lost confidence in all central banks.
When that happens, physical gold may not be available at all. The time to build your personal gold reserve is now.