Today's huge plunge in gold was too cute by half. Especially based on
the notion that "slower growth" in China was the cause.
THE REAL CAUSE: OIL PRICES!
EVERYONE KNOWS THAT DUBYA & CO ARE LOSING IT IN IRAQ AND IN THE
MIDDLE EAST IN GENERAL.
What is happening now is a variation of the old GOLD-PRICE THEORY of
the 1930's.
It was often said that gold was the king-pin commodity and all
others "followed" in tow. If gold went up EVERY commodity went up.
If gold went down EVERY commodity went down. Sort of like
a "commodity escalator."
WITH HORRIBLE MIDDLE EAST CHAOS LOOMING, THE US FACES A SERIOUS
POSSIBLITY OF AN OIL PRICE SQUEEZE, AND SOON.
SO THE LAST BEST AND RATHER DESPERATE WAY TO "DEFUSE" OIL PRICES IS
TO ATTACK GOLD, AND ATTACK IT HARD!
IN THEORY THIS SHOULD RAISE THE DOLLAR, AND DEPRESS COMMODITIES OF
ALL KINDS. FIRST GOLD, THEN OIL. GET IT?
AT LEAST THAT'S THE THEORY.
LOOK FOR THE FED AND CENTRAL BANKS TO TREATING GOLD LIKE IT
WAS "FALLUHJA!" IT'S THE ONLY MEANS OF CONTROL THAT THEY HAVE OVER
THE IMPENDING COMMODITY INFLATION, AND OIL IS CERTAINLY THE PRIMARY
CONCERN NOW.
OR TO PUT IT ANOTHER WAY:
IF THE MUSLIMS WANT TO USE THE "OIL WEAPON."
THE US AND THE WEST WILL USE THE "GOLD WEAPON."
TODAY'S ACTION MAKES NO SENSE ANY OTHER WAY.
Because the "China Excuse" is obvious nonsense.
IT'S A WAY TO "SAVE THE DOLLAR" DESPITE THE CRASHING OF THE US BOND
MARKET!
CONVOLUTED! YES! WILL IT WORK? PERHAPS FOR A LITTLE WHILE;
BUT THERE IS NOT FREE LUNCH, BAD POLICY WILL OUT SOONER OR LATER.
THIS IS JUST THE NEXT PITIFUL STEP IN A DESPERATE ATTEMPT TO KEEP THE
WHOLE DAMN HOUSE OF CARDS FROM FALLING IN A HEAP!
Postscript: I might add that the markets are acting very very strangely now. And, we are in uncharted territory on macro-economics. I don't want to be an alarmist but the possbilitiy of a "1929 Event" OR MUCH WORSE! Can not be ignored.
