Turk: “As important as the Ukraine is to propel the price of gold higher, last week there was an even more important development. Bloomberg reported that the gold price is being manipulated, which followed shortly on the heels of a similar report in London’s Financial Times. Any report like this in the mainstream media is a big deal, but to have it reported twice is indeed an important development....
“The fact that this information is now being made public is a historic event in the gold world. News reports like these in the mainstream media describing price fixing and the interventions in the gold market are now being brought to the attention of the mainstream investing world. It was just a matter of time before these interventions finally appeared in the mainstream media. The US regulators won’t do anything about it, just like the investigation by the CFTC into the silver price manipulation was eventually buried.
However, it is different over here in Europe. There is a 50/50 chance that regulators will pursue it here in London, but regardless, there is probably a 90% chance that German regulators will make waves. So expect more mainstream media reports about interventions in the gold market, which is important.
These reports are a red flag because investors know that market interventions and central planning cause distorted prices. So mainstream investors will start looking at how to play it. In other words, how to position themselves to take advantage of these market distortions.
Soros breaking the Bank of England back in 1992 is a good example. The pound’s exchange rate was fixed in the Exchange Rate Mechanism imposed by European central planners. This fixed rate clearly overvalued the pound, the effects of which were increasingly reported in the mainstream media back then.
As more and more investors read these reports and jumped on the short side, along with savvy people like Soros who early on recognized the opportunity, eventually the dam broke. The ERM broke up, and the pound collapsed, losing a third of its value in a matter of days.
Now here is how this example applies to gold, which is the mirror image of the pound: Years of interventions by central planners have kept the price of gold too low, just like they tried keeping the pound too high. But central planners ignore the reality that market forces are more powerful than they are. As a result, they are oblivious to the reality that it is hopeless for them to try keeping an asset overvalued, as in the case of the pound, or undervalued, as is the case with gold. The same is true for silver.
So again, Eric, as I ponder the year ahead, the picture for gold and silver just keeps getting better. And when gold eventually climbs to a new record above $1950, we’ll look back and marvel at how cheap and undervalued gold and silver were at current prices.”
at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/3/4_A_Historic_Event_Has_Taken_Place_In_The_Gold_Market.html
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