Saturday, February 21, 2009

Gold dips under a thousand

As of writing, gold has dipped once again below the magic $1,000 dollars an ounce resistance barrier. This will have been because of central bank intervention, trying to hide the extent of their fiat currency lunacy.

Central banks and their representatives, if they ever speak of it, refer to gold as an irrelevant barbarous relic. Don't believe a word of it. If anything keeps them up at night, it is the price of gold.

Expect them to keep trying to hold the price under a thousand dollars for some time to come, until they reach a point where they just have to let it go. I suspect that on Friday, when it did nip over the barrier for a moment, a lot of central bankers must have been taking a long pre-weekend lunch (at taxpayers' expense, obviously).

I remember once being on an Army run where I had to get three miles done in 27 minutes, with full kit on. One guy I was with started struggling at one mile, so I and a colleague did what we could to hold him up. We did so for a mile and half, but it became excruciating holding this man up. The PT Sergeant jogged back and told us that all three of us would fail to make the mark unless we let the man go, and we would all have to do it again. He further told us that the regiment needed two men at the target on time rather than two heroes who failed to make it. Rather cunningly he left the final human action choice to us. It pains me to admit it, but we dropped the 'Sack of Spuds' we were holding, who to his good grace did ask us to let him go. I will never forget the shame. However, I and my colleague did cross the line with about three seconds to spare.

The gold price is currently in this position, as the 'Sack of Spuds'. The central banks are holding the dollar up against it as much as they dare. But eventually, they will have to let it go either when they run out of metal or when they stop trusting the other central banks aiding them in this price manipulation collusion.

AngloAustrian advice: Buy as much of this cheap gold as can, or other related hard assets, before the central banks stop subsidising it. Make sure you hold the gold in such a way that your central bank's government isn't then able to steal it back from you when they have run out. When the gold price does finally take off, when the central banks drop their man, it is going to rocket. Make sure you are well-positioned before it does, otherwise your entire economic life is going to be in the hands of the socialists. Don't go there, whatever you do.

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