Friday, November 06, 2009

Have the central banks given up?

With gold at $1,092.90/oz this morning, I was wondering whether the central banks (plus the Basel BIS, the World Bank, and the IMF) had all just given up.

For decades they have striven to keep gold below $1,000 dollars, to hide their counterfeiting practices from seeing the light of day.

Even with the forthcoming pre-announced sale of a further 200 tonnes of gold by the IMF (to whoever wants it, probably the Chinese government), has the heart gone out of the fight to keep the gold price down below the magically psychological $1,000 dollars?

If they have given up, what is the 'natural' ceiling, if gold were to be treated like copper or zinc, or any other regular metal commodity? (If it's such a barbarous relic, then why do all the Keynesians in central banking care so much about the price of gold?) Is the natural price of gold 'On the Moon' at $6,000 dollars, or somewhere in the $2,000 - $3,000 dollar range?

I suppose we shall see once the IMF has off-loaded its 200 tonnes.

Have the central banks actually run out? Gold leasing has been a joke for decades, with central banks giving away their hoards of treasure in the full expectation that they would never see them again. Is Fort Knox empty?

Who knows? They certainly won't allow an audit. If James Bond were to pay it a visit today, what would he find? Tumbleweed? Crickets?

It's all very interesting. If gold breaks through $1,100 without any sign of a central bank intervention then it will get even more interesting.

Will we ever see $1,000 dollar gold ever again? Have the central banks resigned themselves to locking the price of gold to under $2,000 dollars an ounce? If they have, this doesn't have the same 'ring' as $1,000 dollars, and I predict that if the price gets to the $1,900 mark, then it will sail through $2,000 like a train through cobwebs, despite any feeble attempts of the central banks to halt the onslaught.

So this morning, in the manner of Gandalf the Grey, I shall ponder these riddles.

1 comment:

Anonymous said...

Great man....

You have indepth knowledge of banks and all that..

Keep it up....

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