Monday, July 12, 2010 – by Staff Report
Secret gold swap has spooked the market ... It takes a lot to spook the solid old gold market. But when it emerged last week that one or more banks had lent 380 tonnes of gold to the Bank of International Settlements in return for foreign currencies, there was widespread surprise and confusion ... The news that a mystery bank has just pawned the family jewels gave traders a jolt – nervous about the sudden transfer of almost 20% of the world's annual gold production and the possibility of a sell-off. ... In a tiny footnote in its annual report, the bank disclosed its unusually large holding of gold, compared with nothing the year before. The disclosure was a large factor in the correction of the gold price this week, which fell below $1,200 for the first time in more than a month. Concerns hinged on whether the BIS could potentially sell on this vast cache of bullion in the event of a default, flooding the market with liquidity. – UK Telegraph
Dominant Social Theme: The gold market is a mystery and can't be trusted.
Free-Market Analysis: As we pointed out in today's other article, we may be reaching a point where the elite's attempts to continually reinforce dominant social themes actually begin to be counter-productive. This may be seen in recent downward moves by the gold market. There are plenty of reports, as usual, about pressures being brought to bear to slow the price progress of money-metals, especially gold. But given the general upward trend, we begin to wonder if the elite's attempts are analogous to putting a cork in a bottle – and then shaking. The result will eventually just be more explosive. The markets cannot, in this sense, be contained.
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