“The exchange-traded fund, SPDR Gold Shares, that holds gold bullion was down 5% Friday afternoon on record trading volume as the gold price fell. More than 70 million shares have traded hands with an hour of trading to go. It’s the highest volume in its history. The gold ETF was launched in late 2004 and has assets of more than $40 billion”
Tag Archives: interest rate
Award Winning Research Proves that Fed Fiddled Us Into Disaster
A Distinguished Academic Research Award went to researchers who showed that Bernanke’s tinkering with the interest rate converted a minor recession in 2004 into a full-fledged implosion of the credit markets in 2008:
“In a correlative movement with the rise in the price of oil, the Federal Reserve moved from a low accommodative interest rate policy to one of a steady and consistent increase in interest rates between 2004 and 2007. The switch in policy, to higher interest rates, combined with the financially corrosive effects of low initial variable interest rates, between 2001 to 2004, converting to much higher indexed variable interest rates, between 2005-2008, became a prime cause of the financial services mortgage crisis of 2008. The study suggests that the Federal Reserve’s sustained manipulation of interest rates between 2000-2008 had a deleterious effect on financial lenders and individual borrowers.”
— “Federal Reserve Interest Rate Manipulation between 2000-2007 and the Housing Mortgage Crisis of 2008,” by Dr, Fred M. Carr and Dr. Jane A. Beese, August 8, 2008, of the University of Akron’s .K. Barker Center for Economic Education.
My Comment
(later)
The Gold Cartel’s End Game
James Turk of Gold Money is afraid that the gold cartel (Goldman Sachs, Deutsche Bank, JP Morgan Chase, and to a lesser extent, Citi) may not go down so easily:
“The gold borrowed from central banks would not be repaid because obtaining the physical gold to repay these loans would cause the gold price to soar. So beginning this decade, the gold cartel would conduct the government’s managed retreat, allowing the gold price to move generally higher in the hope that, basically, people wouldn’t notice. Given its ‘canary in a coalmine’ function, a rising gold price creates demand for gold, and a rapidly rising gold price would worsen the marked-to-market losses of the gold cartel.
So the objective is to allow the gold price to rise around 15% p.a., while at the same time enable the cartel members to intervene in the gold market with implicit government backing in order to earn profits to offset the growing losses on its gold liabilities. Its trading strategy to accomplish this task is clear. The gold cartel reverse engineers the black-box trend-following trading models.
Just look at the losses taken by some of the major commodity trading managers on their gold trading over the last decade. It is hundreds of millions of dollars of client money lost, and gained for the gold cartel to help offset their losses from the gold carry-trade. All to make the dollar look good by keeping the gold price lower than it should be and would be if it were allowed to trade in a market unfettered by government intervention.
There are only two outcomes as I see it. Either the gold cartel will fail in the end, or the US government will have destroyed what remains of the free market in America. I hope it is the former, but the continuing flow of events from Washington, D.C. and the actions of policymakers suggest it could be the latter.”
My Comment:
This is my fear. I see a growth in public awareness. I see people writing and talking. But at the top, the policies don’t reflect public opinion at all. That tells me the disconnect is complete. They don’t listen, because they don’t have to. They’re hearing their master’s masters’ voices.