Financial juggernauts are looking for real money! Bank of America, Morgan Stanley, Wells Fargo, UBS and Blackrock collectively purchased several dozen tonnes of gold in the first quarter of 2020. How long before bankers eat their hats and start buying Bitcoin ?
The highest historical gold
The price of the barbarian relic evolves around 1557 euros. In further rise 200% compared to 2008, year of the implosion of Wall Street. Crisis after crisis, and as inflation swells, gold asserts its safe haven status.
Building on this success, many central banks have returned to buying gold. China and Russia lead the rush to torpedo the dollar. Nothing new under the sun. On the other hand, it is less common to hear that Western private banks are buying physical gold.
Morgan Stanley traders expect gold to rise $ 3,000. Bank of America, which in a report titled “The Fed Cannot Print Gold,” also sees yellow metal hitting $ 3,000 in the next two years. BlackRock, the $ 6 trillion fund, has tripled its holdings to 1.2 billion.
This resurgence in popularity of the “barbaric relic” in the West is a sign of a paradigm shift when you know that the banks (central and commercial) manipulate the gold market daily, hour by hour. A downward manipulation, most of the time.
Why are Western central banks driving gold down?
Because gold is a universal reserve currency competing with their monkey currencies. If gold moved in a free market, it would determine the value of currencies (and debt securities since debt is the shadow of money. Currency = debt).
Central banks are manipulating the price of gold to defend the value of fiat currencies. They’ve been doing it since the end of the Gold Standard in 1971, after the United States saw its gold reserves dwindle from 25,000 tonnes to 8,000 tonnes (because it imported much more than it exported, which is still the case).
This manipulation is done today through the purchase and sale of derivative financial products (Futures, Options) through high frequency trading firms that act as intermediaries for central banks.
And in the futures market, the one with the deepest pockets leads the dance. Easy for central banks who can create infinity…
Futures markets are not manipulated, they ARE manipulation
Concretely, derivatives have created a colossal and imaginative supply of gold, the delivery of which is never requested. The reason being that most speculators prefer to leave their gold in the coffers of banks which allow them to speculate.
The gold market has become a fractional reserve system on the same principle as any modern currency. This principle states that the banks don’t really have the money they owe us. They bet on the fact that we don’t all remove it at the same time… Ditto in the gold market where there is a lot more paper gold traded than there really is gold.
To put it another way, if speculators were all claiming their gold physically, only one in 500 would be delivered (based on 2016 figures from the graph below).
The value of gold is kept down thanks to promises of gold which are ultimately delivered in fiat currency and not in physical form. Unlike Futures contracts on cotton, milk, copper, wheat, etc … which generally lead to a delivery of the goods.
So if banks can’t print gold, they get around the problem by printing “paper gold” …
Pile I win, face you lose
In light of this banker illusionism, we had to expect sooner or later that Bitcoin would end up being chained to a Futures market … This market, like the others, allows a white-collar mafia to control prices and win every time. In the case of gold and Bitcoin, the strategy is clear: crush them so as not to draw attention to inflation and protect the entire slave system of money-creating money from debt.
Note, however, that there are many easier to make a physical delivery of Bitcoin at the expiration of Futures contracts. In other words, while speculators avoid getting gold (too bulky and too expensive), there is no reason why they should be deprived of it in the case of Bitcoin. It is therefore theoretically more difficult to create a fractional system on the back of Bitcoin. Finally, let us trust them to find the parade with exorbitant and inhibiting transaction costs …
And now Bitcoin…
How long will loan sharks manage to drown gold and Bitcoin in paper? Not forever. This manipulation heard by the banking cartel becomes more and more untenable because of the Sino-Russian tango which takes advantage of it to buy all the gold of the world at low cost !
The Cold War between Trump and the Putin / Xi duo will put the Gold Standard back at the center of the international monetary system. A shock that will result in a multiplication of the price of gold (and therefore Bitcoin) …
The Dollar and the Euro still together account for more than 80% of the foreign exchange reserves of central banks around the world.
This privilege however, may end sooner than expected. The value of the dollar only depends on one thing. Uncle Sam’s ability to force oil producing countries to sell their black gold exclusively in dollars. Which is far from guaranteed in the future.
As for the euro, its survival depends on the Germans’ desire to give charitable money to their neighbors. Again, nothing is less certain …
Suffice to say that Gold has assets to highlight as the old decadent monetary architecture of Bretton Wood has lead in the wing. And if the gold shines, then Bitcoin also shines because they are two sides of the same coin. Cryptocurrency will even end up doing well due to the fact that it is difficult to pay gold dust on the internet …
Child of Satoshi, the alchemist who turned a cryptographic algorithm into gold.
I’m talking about monetary geopolitics, not shitcoins.