Gold 2011, A Look Back: How Gold Had a Record Year in 2011, and Continued Its Trend As Paul Grilled Bernanke on Gold Money
Gold and silver made some noise this year as increased price volatility made for plenty of news. The mainstream media trumpeted each metal as it made a run at record prices, spawning a host of buyers who, afraid they might miss the boat of the “investment of a lifetime,” bought before massive corrections, sometimes putting their life savings into the monetary metals of gold or silver just shy of the peak. Many did not understand, however, that gut-wrenching corrections are part-and-parcel of any bull market, and that, if they were patient, time would show them they had made the right decision, but only at the wrong time, yet certainly not too late.
Curiously, both gold and silver fell just before major psychological markers. In silver’s case, the market fell out of itself shy of $50 an ounce in April. Gold fell in August shy of $2,000 an ounce—examples, in my opinion, of near-term price propaganda. That is, in the near-term, memorable price movements—meaning the big price movements—are usually a show by which to enamor market participants and hopefully also the general public.
In a CNN survey at the beginning of the year, money managers predicted that gold in 2011 would increase in price by a mere 1%. On Friday’s close, gold had moved up 12%, down 18% from its high of $1920 in late summer. All-in-all, gold had a sleeper year in 2011, but only when compared to its performance from the previous year, in which it appreciated 30%. Not to mention most the 10 years before that.
But, this is no surprise to the experts our mainstream press defer to when seeking the answers to the way things are in reality. Heading into 2011, the recovery was still “chugging” along, just like my Volvo was through this entire year just before it broke down in a cocktail of flame, smoke and oil. Since the economy was doing better, the experts reason, gold and silver were in a bubble. What’s up is down, and they hadn’t the mental fortitude to decipher that indeed gold and silver were not the bubble: The U.S. Dollar was the bubble. Fiat currencies were the bubble.
In the fourth issue of the year, Bob Chapman of the International Forecaster and his team stated:
We believe there is a distinct possibility that the US Treasury has little or no gold left. We know for sure that bars that look and feel like gold are in Fort Knox, but we do not know if they are gold covered tungsten bars or who they belong too. There could be hundreds of billions of dollars of bogus gold bars floating around the world.
In that same issue, they cited the work of John Williams, who said at the time that, when taking into account real inflation since 1980 when gold was $850.00 an ounce, gold should trading at $7,700 an ounce. Alongside $100 silver, The Forecaster team argued that such gold prices would be realized over the next several years.
By the end of February 2011, silver was consistently making news high, and by its end, waiting for gold to confirm those highs. Silver had its cajones out at this point, whereas gold was struggling with the $1420 resistance level. Before silver had its major breakaway to just shy of $50 an ounce, gold and silver were not confirming one another. Whereas they are typically seen moving in tandem, with silver hovering below $34 and gold below $1415, many chartists were missing the coming move. Silver was about to breakaway in a big way, only to setup a foundation for gold to confirm it in the days after.
To be sure, both metals would have their moment in 2011. In the summer 2011, alongside the hoopla of the rise in the debt ceiling, gold would receive increased media exposure as Ron Paul pushed hard to audit not the Federal Reserve, but Fort Knox. But not just Fort Knox, Ky., but also West Point, N.Y., and Denver, despite Treasury officials insisting that the gold is audited each year and is truly there.
Paul suggested that the Federal Reserve of New York, where 5% of the U.S gold reserves reside, can secretly sell of swap gold with other countries.
“The Fed is pretty secret, you know,” said Paul, insert official mainstream media distributed characterization of person quoted here. “Congress doesn’t have much say on what’s going on over there. They do a lot of hiding.”
Paul argued that the federal government has a debt to the citizens to assure U.S owned gold is safe. Articulated clearly during this discussion, is one of the services Paul believes the federal government should offer:
“This is one of the few legitimate functions of government: To check our ownership and be fiscally responsible and find out just what we own and whether it’s really there,” said Paul.
Whereas audits by the Treasury Department and Government Accountability Office are based on samples, Paul wants to open up Fort Knox and other reserves and count the bars manually.
It was indeed this bygone calendar year when Ron Paul stumped Ben Bernanke by asking, point blank, is gold money? Those with an iota of understanding of the physics of economics know that, when gold is considered money, then the contemporary world reserve currency, the Federal Reserve Note, would thus have competition as the keystone medium of exchange for man. Next logical steps down this line of reasoning include the move from a singular world reserve currency to a basket of currencies, then to, perhaps, a whole new socio-economic system. This conceivably could be based on a gold standard, since vestiges of the 19th and early 20th century gold standard remained with us through the early 1970′s. The video is great:
Paul: Do you Believe gold is money?
Bernanke: (pauses, looks away from Paul) No…it’s a precious metal…
Paul: It’s not money, even if its been money for 6,000 years, somebody eliminated that economic law. (sly smiles, he loves this)
Bernanke: Well, you know, it’s an asset…blah blah blah
Paul: Why do central banks hold it?
Bernanke: Well, it’s a form of reserves.
Paul: Why don’t they hold diamonds?
Bernanke: Well, it’s tradition, long-term tradition.
Paul: Well, some people still think it’s money.
On that day, July 13, gold was trading at around $1,530 an ounce. By the beginning of September it was sitting around $1,900 an ounce. Leading into August, discussion of the mythical debt ceiling was parading across the headlines, attempting to shame each and every American for the debt they had help to accumulate. How irresponsible of them to digest the propaganda of their masters wholesale—that America was a beacon of not hope but cash—and run-up their own credit as if their credit score was the new savings account. Surely, their children would be successful enough to pay it down for them once they had passed or so they figured. Why hadn’t they learned the principles of economy? Shameful, foolish peasants.
Everybody with any sense about them knows, however, that the true bringer of debt is war itself, and the forever war agenda of the Washington Consensus, the Pentagon termed “full spectrum dominance,” was a black hole sucking first the wealth of the United States, then the wealth of the west, until eventually every single nation was sucked into an oblivion of flux from which a new world would emerge.
By 2011, this new world had already come about, and citizens—kings’ subjects—had already began acclimating to the cold reality. In this new, cold reality, Greece is America and America is Greece. All is one.
The debt-ceiling crisis, like so much in our everyday life, was merely a propaganda piece. It did not address the core of the problem, as I am sure many of you know. It was turned into such a big story, that it now has its own entry on Wikipedia. Wikipedia blandly describes the episode as such:
“The United States debt-ceiling crisis was a financial crisis in 2011 that started as a debate in the United States Congress about increasing the debt ceiling. The immediate crisis ended when a complex deal was reached that raised the debt ceiling and reduced future government spending. However, similar debates are anticipated for the 2012 and 2013 budget.
President Barack Obama and Speaker of the House John Boehner announced on July 31 that an agreement had been achieved. After the legislation was passed by both the House and Senate, President Obama signed the Budget and Control Act of 2011 into law on August 2, the date estimated by the Department of the Treasury that the borrowing authority of the US would be exhausted.
Four days later, on August 5, the credit-rating agency Standard & Poor downgraded the credit rating of US government bond for the first time in the country’s history. Markets around the world as well as the three major indexes in the US then experienced their most volatile week since Financial Crisis 2008 with the Dow Jones Industrial Average plunging for 635 points (or 5.6%) in one day. Yields on US Treasuries, however, dropped as investors, anxious over the dismal prospects of the US economic recovery and the ongoing Eurozone debt crisis into the safety of US government bonds. Moody’s and Fitch, however, have retained America’s credit rating at AAA.”
First of all, Wikipedia describes the debt deal as complicated, as if the laymen wouldn’t have the capacity to understand the going-on’s in Congress. Let’s put this in good ole’ English so that everybody can understand: the debt ceiling debate/crisis was ballyhoo resulting in balderdash as our high-fallutin’ leaders spouted hogwash about a flea on an elephant’s ass.
Oh yes, of course, and then there was the U.S. Debt downgrade by Standard & Poor, who along with the other rating agencies have succeeded as much as the banking establishment to standardize a Moody and Poor populace.
Like a young child basking in the attention received at his or her own birthday party, Standard & Poor had to step-in and make themselves the center of attention, prolonging the news coverage of U.S bad economic behavior. To boot, they downgraded the U.S. after markets had closed on a Friday evening, leaving most U.S based savers, investors, traders and brokers no avenue by which to protect themselves. Bullion dealers had to close for the weekend in anticipation of massive sales with little recourse to hedge themselves come Sunday trading in Asia, when precious metals would presumably run.
And predictably, on the following Monday, gold opened in London up, and would climb throughout the rest of the month on into early September, after having reached a record on August 22 in after-market trading as strong demand for a store of value continued to press prices further upward. As the media paraded yellow, and demand for it increased to all-time highs, paper-pushers in the electronic markets were ready to cash out and make millions if not billions once gold had its violent correction.
By year’s end, to be sure, gold closed right around $1,565 an ounce, continuing its trajectory in an already eleven year bull market. Below are the gold closes at year’s end for each year since 2000:
2000 — $273.60
2001 — $279.00
2002 — $348.20
2003 — $416.10
2004 — $438.40
2005 — $518.90
2006 — $638.00
2007 — $838.00
2008 — $889.00
2009 — $1096.50
2010 — $1421.40
Everybody knows that, in the markets, the week after Christmas and week before New Year’s is a quiet one. In this quiet market, as the Euro was hitting yearly lows, both gold and silver fell in Dollars. This cannot be explained merely by the strengthening of the Dollar as the Euro fell. Instead, this quiet market was taken advantage of by the powers-that-be and both gold and silver fell.
Although the metals ended the year with a whimper, both gold and silver had impinged on the public mind as bad news regarding the U.S. Dollar plight sustained itself on the mainstream. Gold had a runaway in a big way over the summer, which also led more people to take seriously these “conspiracy” investments. In 2012, these trends will only continue, as Europe sees further pressure put on the artificial nexus of each nation-state through their monetary system(s). With the Federal Reserve acting as a partner of the International Monetary Fund, essentially doing their job for them, one can see that in the very near future the Eurocrisis will become the Amerocrisis.
Gold had such an extravagant year, that, after its record run over the Summer, it landed itself, sometimes, 200 points above the price of platinum. This points toward the world putting its Dollars into precious metals not for industrial purposes or jewelry purposes, but, instead, into precious metals for monetary purposes. The story of the year for precious metals was the monetary status, in a small fraction of the public’s mind, of gold and silver. Other than the fundamentals of the situation–that, with a weak industrial economy, and increasing inflation, gold logically could find itself above the platinum price–what these prices say about the mind of investors, institutions and the public is key. It says, quite simply, that there is demand on the planet for a new monetary system.