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The Gold Pool

 1961 Gold pool:

Was set up as the US was running high deficits to cover for the Vietnam War and the Great Society. Its goal was to prevent the gold price to break through the $ 35/onz. Each time the Gold price was about to overrun this level, the international pool sold gold until the price was rebalanced.

General De Gaulle looked through this game and simply requested the exchange of his dollars for GOLD. As a result in 1970 Nixon had no other choice than to close the gold window.

 

The 2008 paper Gold pool has triggered a run on the Dollar and the World Gold reserves.

The actions of the PPT can be compared to the Gold Pool which existed before the last great financial crisis and was revitalized in 1960. But instead of selling PHYSICAL Gold and Silver (there is little left), this Summer (but also on many other occasions each time it was needed) they sold PAPER Gold and Silver.

This action however is back firing: the lower they take paper Gold and Silver down, the more physical Gold and Silver is being bought!  Johnson Matthey has weeks of delay in delivery and today they even talk of stop taking orders all together and February of 2009 is the shortest delivery date for silver Eagles.

This is today's version of the Gold Pool:

The US financial markets are slowly being revealed as a series of corrupt Ponzi schemes. The gold market is the vulnerable linchpin for the USDollar and US Treasury markets. That is why gold is so important to be controlled and suppressed.

 


Under the 1944 Bretton Woods agreement, foreign banks could convert US dollars to Gold at a rate of $ 35.20 per oz. (or this is how the US Dollar took over the role of the British Pound as Reserve Currency - ironically, the US dollar has been walking the same path as the British Pound is...)

Markets that have been artificially capped, catapult dramatically when the market suppression ends: since 1968 the Gold price has risen by 2,500% !

Know of any better investment? Got Gold?

Throughout the post war years of the 1950's and 60's, the daily price of gold rarely moved outside of a 15 cent trading range $35. In 1944, the Bretton Woods conference saw the US dollar overtake the function of the British Pound as sole reserve currency of the world.

Over time, the glut of US dollars held abroad began to threaten US gold reserves and by 1959, as more and more Dollar holders were exchanging them for Gold, a Gold Pool was set up to control the Gold price. It was especially important to maintain the London fixing at $ 35.20 because it was cheaper to purchase gold in London than across the Atlantic as shipping and insurance would increase the final price.

It was in 1961 under Kennedy that a Gold Pool (to prevent the market price of Gold from exceeding $ 35.20 per oz.) arrangement was set up. It all went well until in November 1967 the devaluation of the British pound caused another run on Gold. In a matter of weeks the pool had laid out in excess of 1000 ton.

Charles de Gaulle (French president at that time) withdrew from the pool and demanded Gold for the US dollars they held instead of US-treasuries. The drain on US gold became acute.

This rings a bell! Holding the gold price artificially down - in fact - created even more demand. The more London Gold-pool reaffirmed its determination to defend the $ 35.20 per oz gold price (ironically), the more gold was bought and the more Gold the pool had to deliver. As the London Gold pool continued to fight the free market process by defending $ 35.20 (like today they defend $ 1,000), the stronger demand became.  As daily turnover mushroomed to 30 times the normal sales, the British Queen declared a "bank holiday" (upon request of the USA). The London gold market remained closed for 2 weeks while France and Switzerland continued to trade Gold at a price exceeding $ 45 per oz.

The resulting two-tier market for Gold was completely abandoned in 1970 when Nixon closed the Gold window. This was the day, the US dollar (and at the same time many other currencies which held US Dollars as Reserve) officially became Fiat Paper Money.

NOTE: Today, Gold is manipulated using the 'DERIVATIVES' or the 'PAPER MARKET' . The result being that Physical demand and physical delivery keeps on growing. Some day the physical market will clash with the Paper markets and the price of Gold will explode and/or a new 'Bank Holiday' will be seen. This time it will be declared by the USA.


1961 Gold pool (representatives of 7 countries who tried unsuccessfully to control the price of Gold between 1961 and 1968 at $ 35.20 per oz.):

Was set up as the US was running high deficits to cover for the Vietnam War and the Great Society. Its goal was to prevent the gold price to break through the $ 35/onz. Each time the Gold price was about to overrun this level, the international pool sold gold until the price was rebalanced.

General De Gaulle looked through this game and simply requested the exchange of his dollars for GOLD. As a result in 1970 Nixon had no other choice than to close the gold window. Looking at the chart below, it is not hard to understand why De Gaulle took this decision.

 

 

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