Tuesday, November 26, 2013

Gold Suppression Plays Into China's Hands

The move is relentless and has been going on for years. The news reports it lightly, and never draws conclusions about what it says about the global financial system. It is the great west to east gold flow. Some commentators note that China doesn't want to see gold drop with their recent purchases. That is smart thinking if you're an American media moron who looks only at today and the EPS of the next quarter. The Chinese are playing for the post-dollar hegemony setting. The Chinese are playing a bookend game on gold, taking advantage of American bankster greed.

1. China has been importing inflation from the US for over a decade, but has a giant domestic market that the US commercial banks want to penetrate. China buddies up with US banks that are suppressing the gold price. JPMorgan employed the last prime minister's daughter in what looks like an obvious buying influence racket. China can help the big banks now because their survival keeps the current US power structure in place. The current power structure is based on the petrodollar and low interest rates. JPM had the famous precious metals short and has been accused of metals market manipulation for years. Even though, per the commitment of traders, the big commercial banks are now long precious metals (JPM included), the game is set where other late to the game copycat players are scalping gold whenever possible. This has the secondary public relations effect of making the dollar appear healthy. Because the commercial and investment banks need the USG and the USG needs the banks (both need low % rates), the dollar's supremacy must be protected from any challenger (see gold, silver, bitcoin) by whatever means handy. Gold must be kept down with a slow, controlled march upward. JPM setting up long gold like the Chinese seems like a sign that the copycat traders will get crushed by the rise up while JPM profits with the Chinese.

2. This capping of gold allows the Chinese to buy gold at manipulated prices, which allows the Shanghai gold exchange (which delivers on contracts) to execute on gold contracts at a low price for Chinese authorities and investors. The Shanghai Gold Exchange has a high delivery percentage of all contracts traded. The Comex has a delivery percent of less than 2%. The New York centric financial world can trade paper, amassing whatever paper profits they want to scalp for the Wall Street brain trust. In keeping gold down, the Chinese who want to take physical get a deal. They are not playing for silly $30 swings up and down at openings; they are positioning for the long term. They get to use the masters of the universe to set up the "buy low" portion of their investment. Watch gold daily to see the monkeyhammer move early in the day, and then look at the delivery numbers later in the day in Shanghai. Brilliant.

China needs a slow bleed out of the US. They can't have the dollar go to the can too soon as they hold so many USTs, and they have not set the yuan up in position to benefit yet. China needs the dollar to stay in place for as long as possible while they accumulate gold, hard assets, legal claims to tangible minerals and prepare for the next phase. The current system works for them and allows them to amass tons of 'true' wealth. They only want this to stop when they say so. Using $1 trillion of their $3.5 trillion of reserves for loans to African development is an example of putting the dollars to work while they have value. The Chinese are setting up an oil futures exchange as they are now the top oil importer and have a strategic oil reserve to build.

They are playing the "consume with fictitious dollars" game that America has played for decades except they are buying hard assets not consumer goods with those printing press dollars. The Chinese are printing even worse than the FED is printing, but their printing snaps up assets. America's financial kings aid them in getting the most for their dollars. They have willing partners in JPMorgan and/or whomever because what loyalty does the upper management of those firms have to America anyway? If they truly are buying into the Chinese market by employing Wen Jibao's daughter for influence in service contracts in China now while their home nation sinks into third world serfdom, they are dumb enough to think that the Chinese will let them run the financial show for China in ten years. Let the Wall Street boys manipulate gold down in the paper market. The Shanghai physical buyers market will only enjoy a cheaper delivery price.


peterike said...

This is an extremely complicated yet extremely important story: really, the most important political story of our age.

China is playing the long game, patiently hording real wealth, steadily growing their military capabilities, continually stealing manufacturing secrets from the West (the few things they aren't just handed by globalist traitors).

In the West, a cabal of rootless traitorous elites can't sell out their own nations quickly enough, flooding them with Third World riff-raff, to say nothing of filling many of the science/math/engineering seats in what are still the best universities in the world with Asian students who will happily take that knowledge back with them. It's worse then a brain drain: it's a brain blockage. Americans lose out on thousands of critical classroom seats to Asians every year.

Multiculturalism is truly a suicide cult when the beneficiaries are stridently nationalist and uni-cultural, such as Chinese and Indians.

China is not without it's own massive problems, but in China the elites work for the benefit of China (while enriching themselves). In America, the elites work against America.

Portlander said...

I think China's a tough one. There are so many paradoxes coming from that country:

* billionaire elites buying everything outside the country that's not nailed down (IMO very akin to Japan in the late 80's)
* thrown-together ghost cities, ghost malls, ghost factories, ghost production
* a banking sector rife with bad debt
* environmental rape & pillage
* corrupt public sector
* a collapsing demographic pyramid

and yet,

* gargantuan foreign reserves
* enormous stockpiles of hard assets
* huge purchases of foreign properties

I suppose one explanation is they are buying insurance against a world-wide hyper-inflation.

Or... are they preparing for one now, that they intend to touch off at some point when the timing is right? In other words, it's not insurance.

Wouldn't it be ironic if they, not the Fed(!) or JPM et al, were the source of the gold smack-downs and manipulations. If that were the case, would the Fed or USG really have any recourse? What could they say or do, even if they knew it was coming from China?