<body><script type="text/javascript"> function setAttributeOnload(object, attribute, val) { if(window.addEventListener) { window.addEventListener('load', function(){ object[attribute] = val; }, false); } else { window.attachEvent('onload', function(){ object[attribute] = val; }); } } </script> <div id="navbar-iframe-container"></div> <script type="text/javascript" src="https://apis.google.com/js/plusone.js"></script> <script type="text/javascript"> gapi.load("gapi.iframes:gapi.iframes.style.bubble", function() { if (gapi.iframes && gapi.iframes.getContext) { gapi.iframes.getContext().openChild({ url: 'https://www.blogger.com/navbar.g?targetBlogID\x3d6667958\x26blogName\x3dJust+Shoot+Me\x26publishMode\x3dPUBLISH_MODE_BLOGSPOT\x26navbarType\x3dBLUE\x26layoutType\x3dCLASSIC\x26searchRoot\x3dhttps://sodabottle.blogspot.com/search\x26blogLocale\x3den_US\x26v\x3d2\x26homepageUrl\x3dhttp://sodabottle.blogspot.com/\x26vt\x3d4708453063962082507', where: document.getElementById("navbar-iframe-container"), id: "navbar-iframe" }); } }); </script>

Just Shoot Me

Bala, 28, Gordon Gekko in the making, pseudo-intellectual, cynic, bibliophile, obsessive compulsive ranter...

The Mother of all cartels

June 07, 2007

There are a lot of idiots in India (they usually tend to be middle class or female or both) who think that the price of gold is determined by retail demand for gold jewelery. This is the group which buys gold jewelery and then destroys a huge proportion of it by remaking it constantly over the years. Except for those who breed beyond their capacity to feed (and who consequently need something to pawn) gold jewelery is useless to anyone as an investment. Please note that i am saying "gold jewelery" and not "gold". There is a huge difference between these two.

Who controls the price of the gold?. Apparently, according to some conspiracy theorists (who make a convincing argument), there is a great cartel of western central banks which wants to keep the price of gold under control. They have a vested interest in keeping the value (and demand) of their own paper currencies. With their deficit spending and fiscal indiscipline, their currencies become more and more unattractive as investment avenues. In the natural course of things money would flow out of the fiat currencies to their competitor - gold. So it is in the central bankers' interest to keep the value (and attractiveness) of gold down. This, they achieve by selling heavy quantities of gold in the international bullion markets whenever Gold appears to be gaining in value. They started with huge reserves of gold - by some accounts around 1/5 of the existing above-ground gold (around 30 kilotons)- and are selling it every time a bull run in gold seems out of control. The conspiracy theorists say that there is actually much less physical gold in the central banks' vaults than what the banks claim to possess. Lax auditing standards and futures trading in bullion (where actual physical delivery is not required till the settlement date) help the alleged cartel manipulate the gold market. The GATA website is full of articles on gold market manipulation by the central banks.

I don't know how accurate this theory of a gold cartel manipulating the bullion market is. But it sure is a fascinating (and frightening) read. If you are among those who think gold prices go up when people buy jewelery during akshaya thrithiyai , i suggest you head over to the GATA site and have a look.


posted by Bala, 7:37 PM


Add a comment