Two-Pronged Manipulation Technique: Gold Priced Out of Reach For Indians Via Weak Rupee, Kept Out of Headlines in USA Via Strong Dollar
As gold has broken through new highs in the Indian Rupee, demand there to buy gold, sensitive as the people are to market conditions, has slowed. There has been increased selling of scrap gold, on the other hand, as sellers try to take advantage of a gold price in the Rupee that has climbed stalwartly, recently reaching a record of Rs 30,400 per 10 grams. This marks an 8.5% increase when compared to last year’s price. The Rupee has been low as of late, which has helped to precipitate the high gold prices. I believe this to be a pre-programmed rise in the gold price in Rupee denominated terms so as to thwart demand and encourage that people cash out.
Furthermore, usually a weak Rupee means a strong dollar. Thus, gold demand can be priced out of reach of Indians and taken out of the headlines in the United States simultaneously. And so, the result is that demand is quelled in both nations. According to one publication, gold demand “is being kept at bay” by the rise in the price of gold, and I believe this is exactly what is taking place. By breaking the price through record highs, gold demand in India has been slowed. According to one jeweler, investment has decreased by 10-12% since January. By keeping the price down in terms of the US Dollar, gold can be kept out of the headlines and out of the minds of the U.S. citizenry.
It is tradition in Indian and other European nations for individuals to give gold and silver for gifts for holidays, seasons and definitive life events. Much more so than in the west and especially the United States. Gold and silver demand has long been a topic of interest among industrial powers whose operations depend on attainment of gold and silver. A central theme has been how hoarded silver can be teased back out onto the open market and made available for industrial applications. One way in which to achieve this could be to send prices through the roof.
What we see in the charts below are correlated price movements on June 21, 2012. Whereas the silver price continued a decline in USD, dropping from $28.05 to $26.75. That’s a drop of $1.35. An inverse move on the Rupee chart took place around the same time. As can be seen below, the silver Rupee price goes from R 1,510 to shy of 1,545, a change of nearly R 35. The current USD-INR conversation rate is 1 USD = 57.06 INR.
By pricing the metals out of the reach of Indians, whose savvies incline them to BTFD, precious metals demand is “kept at bay.” In the United States, the opposite has taken place, with gold and silver prices remaining depressed in recent months, and dipping further at the tailend of last week. Unlike in India, where gold and silver are more-so a part of the daily language and experience, in the United States gold and silver are basically abstractions. By keeping the price down, gold and silver remain out of the headlines. In India, no matter what, gold will be on the Indian collective mind. When the price is high, they will stay back and wait on a dip.
What the cabal tasked with manipulating precious metals’ prices would like to avoid is that which unfolds today, in which suppressed gold prices visit not only the metals in dollar denominated terms, but also in Rupee denominated terms. In the US, gold sits below $1600. In Rupees, it has fallen today Rs 180. So, going into the week of 6/25/12, we might be seeing a change in the M.O. of a gold suppression technique in which the price goes sky high in Rupees, while simultaneously being “kept at bay” in the US. This would then signify that the cartel might be forced to move towards a net neutral or net long position, thus setting the ground for the next leg up for the precious metals. Still, the dip in Rupees is relatively marginal, and might not yet bring out big buyers.