Hs the Fed lost control of the gold market?

 

It's been no secret the the Fed and the bullion banks that own the Fed have kept on lid on the gold market for the last 40 years as the value of the dollar has been inflated away.  

It's easy for them to do this simply by dropping thousands of sell orders on the futures market late in the off hours, running everyone's stops, and setting off a flight out of speculative long positions by small investors which generally follows through into the opening and right through the next trading session.  Then when everyone has sold the bullion banks cover their shorts and go long, making money both ways.

They've done with with clockwork-like regularity for the last 40 years.  Everyone sees it.  And even the regulators (SEC and CFTC) have slapped JP Morgan with nearly a billion dollars worth of fines for manipulating the gold market, yet the trades are so luctrative the billion in fines is like a gentle slap on the wrist.

But a funny thing has happened.  Not so funny maybe to the Fed and JP Morgan but really funny to those of us that have longed for the day that a big enough player enters the market that everytime the bullion banks pull a raid, this new Big Player steps in and hands them their heads by simply taking the other side and buying after gold drops a bit.

And then as gold starts to rise, JP Morgan has to cover and gold ends up rising 40 dollars instead of dropping 40 dollars.

This is the Chinese Central Bank.  They are buying hand over fist.  But they have company: the Turkish Central Bank, and the Polish Central Bank and the Czech Central Bank and the Jordanian Central Bank and many others.  

But the Chinese have decided it is time to take control of the price.  You can speculate as to why.  Perhaps they will eventually launch a gold backed currency.  Perhaps they simply want out of the US dollar/swift system before they are kicked out by an agressive anti Chinese regiem.  So they are replacing US Treasury reserves with gold.

It really doesn't matter why.  It will eventually.  But right now what matters is that they've taken over.  Which means that every time the Fed wants to knock down the gold price in order to solidify their claim that inflation is essentially under control and the US banking sysemt is essentially sound, and the US economy is on firm footing - there's a buyer on the other side waiting to take advantage of every artificial dip.

And all this is happening without any significatnt US retail participation.

Nobody in the US is in this gold trade. Institutions here don't support it, because they can't monetize this trade.  The government doesn't support it because it is difficult to tax and regulate and it sends the wrong message.

Other countries are encouraging their populations to buy gold.  The Eastern and Mid Eastern countries all have a long tradition of gold buying and preserving wealth through gold.  Europe has a tradition of protecting private wealth through gold as the two world wars were fought there.  And only those with gold were able to preserve their wealth.

But the US public seems to have become the very last to realize what's going on,

Eventually they'll catch on.

Or not.

It doesn't really matter to this global market anymore.