I forgot about this little bit. Another reason the bullion banks
manipulated the price drop for gold last week. They have to buy back
tons because it was only out on loan from world Central banks so they
could all make higher returns in other areas of the market.
A review of fiat currency aspects are included at this site.
Natalia
http://dollarcollapse.com/dollarcollapse-faqs/
(snip)
* Central bank manipulation is about to backfire. The world's central
banks, led by the U.S. Federal Reserve, have been making up the
difference between mine production and gold demand by secretly dumping
their gold on the market. They do this by lending their gold for a
nominal interest rate to "bullion banks" like JP Morgan Chase and
Citigroup, which then sell it and invest the proceeds at higher rates.
Because the banks are obligated to return this gold to the central
banks, they're "short" the metal. At some point in the future they have
to buy this gold back on the open market. If gold's price is low, they
make money, and if it's high, they lose. Since it's currently high and
rising, these banks are looking at multi-billion dollar losses. And as
these losses mount, the pressure grows to bite the bullet and close out
their short positions by buying back their gold. When one bullion bank
does this, the others will be forced to follow, producing a classic
"short squeeze," in which all the major bullion banks try to buy at
once, sending gold through the roof. Chapter 12 of "The Collapse of the
Dollar..." offers an overview of the central banks' machinations. For a
far more detailed treatment, see Sprott Asset Management's 70-page
report, "Not Free, Not Fair: The Long Term Manipulation of the Gold
Price," available at www.sprott.com. <http://www.sprott.com/>
Add it all up --- favorable demand trends, a Fear Index buy signal, and
the coming central bank short squeeze --- and the next few years should
be spectacular for gold.
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