Pick up your Times today. Click on Bloomberg, or browse your Reuters. In fact look anywhere you like in yesterday and today’s media worldwide, and what do you find? Articles all making the case for gold to rise to new highs. And yet gold after tumbling from $1030 in February has been range-bound languishing near $740 for a month unable to punch its way back up. There are of course many reputable financial commentators backing gold and many private individuals piling into gold as a ‘safe haven’. But is it?
There are not many organisations in the world with enough clout to flood the media with a story backing a single commodity’s price rise all on one day. There must be someone powerful behind this. And I don’t mean the World Gold Council, a mining lobby group for the metal, who are always keen to explain why the price is too low!
No, this kind of media requires big backing, big political influence.
In this case the IMF is suspect number one – the International Monetary Fund.
Their job is to bail out insolvent countries like Iceland, Hungary and so on. It is unkindly rumoured that Korea too should be on that list, Ireland, Greece and maybe even Gordon Brown’s Subprime Britain. The IMF is looking at needing a mountain of cash to carry out its function, and Gordon Brown, its new and media-shining emissary has been going round with the begging bowl hoping that the Arabs might like to blow some of their hard-earned oil money on helping corrupt obscure bankrupt little places, out of some feeling of fellow sympathy.
No one reported how much was raised with Brown using the begging bowl but my guess would be not very much. So the IMF’s next port of call is, it appears going to be Mr Goldbull.
Maybe good old Mr GB can be persuaded by a few well-chosen words placed in newspapers of past authority such as The Times to ignore the massive deflationary forces which have been unleashed, and start buying an overpriced metal – at a time when high quality shares can be picked up for a fraction of their true worth.
The story is though even stronger than that. All these articles tell you quite clearly that the IMF is about to begin a massive gold dump to raise the cash they need, which is not surprising as gold is all they have to sell. That’s why there is this coordinated news story being released right now.
The dump will drive the price of gold down from $750 to maybe $400 in a few months time. As safe havens go, it’s not such a good one after all, it appears.
The falling GBP might help sterling gold buyers if the GBP hits parity with the US$ within a year from now. But even they would in all probability lose 10% or 20%.
Here is the totally unconvincing Reuters report trying to boost the gold price. HERE. It’s almost a plea to buy what they know will soon be a financial basketcase..the last hope of the banks and governments to raise large funds to solve their crisis, GOLD. Don’t be fooled.