12 May 2017
by Stewart Dougherty, Sprott Money:
Evidence is mounting that the Deep State (DS) is starting to lose the dirtiest financial war in history: their War on Gold. More deeply, it is a war against something the Deep State profoundly loathes: personal financial liberty. The War on Gold, which has raged for 37+ years, has generated more than $1 trillion in criminal profits for the Deep State plunderers, while costing the worldwide owners of physical gold multiple trillions of dollars. All of this is coming to an end.
Due to its criminal hyper-manipulation, gold’s price has become a paradox: its weakness actually reflects its strength. With everything that has been thrown at it, it is astounding that its price is anything north of zero. The fact that it has been resilient at around $1,200.00 per ounce should concern the manipulators, because if this is as low as they can take it despite their full-spectrum, multi-billion dollar assault against it, then it is defeating them. Which is not surprising. By every conceivable, objective financial and monetary measure, gold is one of the most underpriced assets on earth. It is not going to stay that way. (Most of the dynamics we will discuss also apply to silver, but to streamline this article, we will focus on gold.)
The Deep State’s first strategic objective in the War on Gold has been to steal as much money as possible by conspiratorially rigging its price. They have perpetrated this crime in the full knowledge that it will never be investigated or prosecuted, because it is state sponsored. The Deep State is the state, and never prosecutes itself for its own crimes, no matter how flagrant and egregious they are.
The second, broader strategic objective has been to discredit gold as a monetary asset and safe financial haven throughout the west. The Deep State realized at the outset of the war that it would be impossible to achieve this in the east, which has a deep, cultural affinity for gold, so they have confined this gambit the west.
There are eight primary tactics in the War on Gold. Seven of them are generally known by those who study the gold market; one of them is little known or appreciated. The unknown tactic is actually the most important and effective tactic of all, while also being the Deep State’s Achilles’ heel.
The tactics in the War on Gold are:
1) Randomly and unpredictably attack the gold price in the futures markets, producing large price whipsaws, investor losses, and a generalized spirit of price uncertainty, danger and concern; over time, make existing and prospective investors view the market as a corrupt casino rigged against them, causing them to capitulate and leave the field;
2) Employ the most advanced, covert “Black Psychological Operations” (PsyOps) methods, customized for the financial sector by the CIA’s Division of Psychological Warfare, the Fed, the Treasury, the ECB and the BIS, to destroy gold sentiment in the west. As part of this campaign, use the Mainstream Financial Media (MFM) to conduct a continual propaganda campaign denigrating gold in every respect, destroying interest in it;
3) Fraudulently overstate official holdings to create the illusion of massive supply overhang;
4) Sterilize investment funds by steering them into non-auditable paper proxies (e.g., ETFs);
5) Weaken, then destroy the dealer network by killing product demand, spiking dealer costs (e.g., required hedging against relentless price volatility), causing large unhedged losses, demonizing dealers as money launderers and crooks, and wiping out profitability / business viability;
6) Financially weaken miners via crushed prices, making them dependent upon bullion bank (DS) financing and debt, and forcing them to comply with bullion bank orders;
7) Paint phony price charts that enable the “financial services industry” (stock brokers, investment advisers, bankers, etc.) to make gold investing appear stupid, and talk people out of buying gold, particularly in physical form; if this fails, sterilize investment funds by steering them into phony, paper gold;
8) Create a marketing blackout throughout the west (which is the Achilles’ heel).
Tactics #1 and 8 are the subject of this article, because they are inextricably linked. It would be impossible for the Deep State to employ Tactic #1 if it were not for their simultaneous use of Tactic #8.
As we know, Tactic #1 has been carried out by years’ worth of massive, unpredictably-timed, electronic, naked-short price attacks primarily conducted on the Comex, the Deep State’s captured and non-regulated Command and Control Center. GATA has long documented in exquisite and laudable detail the gold price-rigging scandal, and Deutsche Bank’s admission in late 2016 that they and numerous other major banks manipulated the gold market for years ended, once and for all, any possible doubt about gold market corruption.
As is typical in Deep State-sponsored financial crimes, none of the Deep State criminals ever goes to jail; instead, they simply pay fines to the Deep State itself. Deep State criminality is a closed system of plunder from which the profits never leave; they merely circulate from one Deep State pocket to another.
Tactic #8, the complete lack of industry-sponsored gold marketing throughout the west, is a crucial component of the War on Gold. Without Tactic #8, the Deep State would be incapable of employing Tactic #1, because the criminalized, fractional reserve gold exchanges, primarily the Comex, would no longer exist. They would no longer exist because they would be unable to source even the minimal amount of physical gold required to create the false illusion of legitimacy, which would fully expose them as being nothing but the paper metal frauds they already are for all intents and purposes.
According to the Mainstream Financial Media, gold is a “commodity.” This deliberate mischaracterization of gold is intended to deflect attention away from its unparalleled monetary importance, and make it appear no different in nature from corn, natural gas or pork bellies. Rarely has a greater monetary lie ever been perpetuated.
Gold is not a commodity; it is the world’s only natural and universal money, and therefore its pre-eminent consumer product. From the time of its discovery over 6,000 years ago, human beings have instinctively realized that gold is incomparable as pure, honest, incorruptible, reliable, functional, lasting, valuable, and true money and wealth. This is precisely why the Deep State swindlers despise it. It is the antithesis of the immoral, baseless, corrupt, predatory, fraudulent fiat currencies they endlessly and parasitically counterfeit into oblivion at extraordinary profit to themselves and crushing expense to their victims, the people.
Providers of consumer products and services know that their offerings must be marketed. Not even the best of them sell themselves; they must be sold.
In 2016 alone, corporate managements worldwide spent over $1 trillion to advertise and promote their goods and services. They paid this astronomical sum because they know that marketing is indispensable to commercial success. Marketing is not an expense; it is an investment in profit.
We all recognize the phrases marketers have created to bring their products to life: “Just Do It,” “Don’t Leave Home without It,” “The Ultimate Driving Machine,” “Everywhere You Want to Be;” “Good to the Last Drop,” “Where’s the Beef?,” “Be All You Can Be,” “I Love New York,” “We Bring Good Things to Life,” “Think Different,” “Like a Good Neighbor, …;” “When it Absolutely, Positively Has to be There Overnight,” “We Try Harder,” “Diamonds are Forever,” among so many memorable others.
There is only one consumer product industry we can identify that does absolutely nothing to develop its market: gold mining. For decades, the miners have refused to lift a finger to promote gold. (Their appointment long ago of the World Gold Council as a marketing agent has been a complete disaster, and its dreary saga could be an article all its own.) This refusal constitutes a colossal rejection by them of the most important business function of all and a total abdication of their fiduciary obligation to shareholders. As a result of the miners’ persistent and indefensible refusal to market gold, western consumer demand for it is a fraction of what it could and should be.
We cannot find one senior gold mining corporation that includes in its top executive ranks a Chief Marketing Officer, or any role even resembling it. While we do find senior executives in: “Exploration,” “Operations,” “Investor Relations,” “Technology,” “Corporate Development,” “Regulatory Affairs,” Legal (“General Counsel,” “Compliance”), Finance (“Chief Financial Officer”), “Mergers and Acquisitions,” “Tax,” “Sustainability,” “Human Resources,” and “Strategy,” the marketing function is completely absent throughout senior miner top management. This is unprecedented in consumer commerce.
The miners’ refusal to market their product is so idiotic that it must be deliberate. It is impossible that such self-destructive commercial stupidity could come naturally to even one senior mining executive, let alone the entire set of executives in the senior gold mining industry, particularly given its extremely negative consequences.
This begs the questions: What is going on here? Why do the gold miners deliberately refuse to market gold, even though it is obvious that market demand and price for it have severely suffered as a result? Why do they deliberately destroy enterprise and shareholder value by ignoring the most important function in consumer commerce: marketing? Why do they willfully and knowingly repudiate their fiduciary obligations to shareholders, creating in the process potentially serious legal liabilities for themselves and their corporations? And why do all senior miners walk in such lunatic lock step when it comes to their refusal to market?
Executives at the senior mining companies have a long history of enriching themselves with lavish pay, benefits, pensions and stock options while at the same time stabbing their shareholders in the back. For example, their “forward hedging strategy,” conducted at the behest of and in full collaboration with the bullion banks during the brutal, 22 year gold bear market (1980 – 2001) savaged the prices of gold and mining shares. All the while, rich, no-lose compensation packages for mining executives were written around pre-arranged and hedged gold prices. The shareholders got screwed as the executives got rich. As we can see today, nothing has changed.
The miners’ excuse for their multi-decade failure to develop the gold market is that it is “just a commodity,” and no one markets those. Even if we agreed that gold is a commodity, which we adamantly do not for the reasons explained above, the excuse is not credible. In 1993, on a meager annual budget of only $23 million, one of the most successful advertising campaigns of all times was launched for a so-called commodity: “Got Milk?”
If creative advertising could make milk exciting, which it did, imagine what it could do to increase interest in and demand for gold. So what’s the problem here? Why is no one in the gold mining industry willing to give marketing a try? What, possibly, have they got to lose, other than the dismal gold price and multi-billions of corporate losses their marketing incompetence has produced over the past 37 years? More specifically, what is it about marketing gold’s incomparable monetary virtues that paralyzes them? It is obvious that the senior mining executives are not working for shareholders. So for whom are they working?
The only logical answer we can provide is that the senior miners are direct allies in the Deep State’s War on Gold. By employing Tactic #8, the traitorous miners have damaged gold demand as much as the criminals who use Tactic #1 have damaged its price.
The financial cost of the senior miners’ complicity in the War on Gold is astronomical. From 1980 through 2016, excluding China and Russia, approximately 79,000 metric tonnes, or 2.5 billion ounces of gold were mined. During the 1980 – 2001 bear market, gold was virtually given away by the miners for nothing, reaching dirt-cheap, double-bottomed prices of only $250 per ounce in 1999 and 2001. In the bear market that started in 2011 and continues to this day, gold has plunged from an inflation adjusted 2011 high of $2,081 to today’s price around $1,200, which is close to its average, all-in production cost. In other words, 37+ years into the War on Gold, miners continue to give away their shareholders’ gold for a pittance, when they could easily increase its price simply by doing what every other consumer company does: market it.
If we assume that the Deep State’s War on Gold has only shaved $100 per ounce off its price, the undervaluation of the gold mined from 1980 – 2016 is $250,000,000,000.00 ($250 billion). While this is an astounding sum, we believe the actual cost is much higher. According to our analysis, the underpricing of gold ranges between $1,000 and $3,000 per ounce, depending on the comparative metric we use (e.g., global money supply; global debt; global private savings; global GDP; global equities; inflation; and the like). By other metrics, it is even more, but we will be conservative.
Therefore, the total undervaluation of the gold mined during the War on Gold ranges between $2,500,000,000,000.00 and $7,500,000,000,000.00 ($2.5 to $7.5 TRILLION). This is tantamount to theft from the owners of the mined gold, namely, shareholders.
On a global basis, physical gold owned by individuals, businesses, religious organizations and sovereign institutions is currently undervalued by between $5.8 and $17.4 trillion dollars. This is the cost to the world, in gold undervaluation alone, of the Deep State’s criminality, corruption and avarice. Being the home and global headquarters of the Deep State, the United States is the only nation in the world whose #1 export, in currency value, is financial fraud.
The War on Gold is suffering from the effects of the Law of Diminishing Returns: it requires more and more Deep State price-rigging to move the gold price down less and less. This is because available supplies of physical gold are rapidly disappearing from west to east, where demand is unquenchable. Tactic #1 is in trouble.
In far greater trouble is Tactic #8. When Indian Prime Minister Modi announced his demonetization scheme at 8 PM on November 8, 2016, the social media network throughout India went supernova within minutes. Citizens who acted immediately were able to dump some or all of their “extinguished” rupee notes for food, medicine, gold and whatever else they could get their hands on from shops still open that evening. The next morning was too late, as the fangs of the scheme deeply sank into the nation’s flesh.
Social media saved the day for those on the vanguard. Similarly, when the people in large numbers sense that something has become rotten in the state of their money and that their savings and financial well-being are at extreme risk, they will take to Social Media in droves to both seek and give advice on how to protect themselves. When this happens, decades’ worth of Deep State fraud and senior miner traitorousness will be washed away in a matter of hours. We already see in Bitcoin how “electronic currency” can go viral even well before a full-blown financial panic. The current Bitcoin phenomenon demonstrates that the people sense something in the air, and are mobilizing. When the wall of propaganda against gold starts to fall, the people will mobilize into it, as well.
As pure money, gold simply has no true competitors. Increasingly, this will become self-evident to tens of millions of people in the west, who will create new demand for it. The physical gold market cannot accommodate such incremental demand at anywhere near the current price. At a certain point, the market will not be able to satisfy physical demand at all, as people realize there is no substitute for and hold on to it for dear life. Nothing on earth produces a price frenzy like a no-offer market.
In our view, people will be richly compensated for front running the coming monetary mass awakening, something we view as being absolutely inevitable. Given the world’s exponentially compounding risks and troubles, the fact that we continue to enjoy halcyon, actionable days can only be regarded as an extraordinary gift from God, to all of us.
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