Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
VR and Gaming Becomes the Metaverse - 7th Dec 21
How to Read Your Smart Meter - Economy 7, Day and Night Rate Readings SMETS2 EDF - 7th Dec 21
For Profit or for Loss: 4 Tips for Selling ASX Shares - 7th Dec 21
INTEL Bargain Teck Stocks Trading at 15.5% Discount Sale - 7th Dec 21
US Bonds Yield Curve is not currently an inflationist’s friend - 7th Dec 21
Omicron COVID Variant-Possible Strong Stock Market INDU & TRAN Rally - 7th Dec 21
The New Tech That Could Take Tesla To $2 Trillion - 7th Dec 21
S&P 500 – Is a 5% Correction Enough? - 6th Dec 21
Global Stock Markets It’s Do-Or-Die Time - 6th Dec 21
Hawks Triumph, Doves Lose, Gold Bulls Cry! - 6th Dec 21
How Stock Investors Can Cash in on President Biden’s new Climate Plan - 6th Dec 21
The Lithium Tech That Could Send The EV Boom Into Overdrive - 6th Dec 21
How Stagflation Effects Stocks - 5th Dec 21
Bitcoin FLASH CRASH! Cryptos Blood Bath as Exchanges Run Stops, An Early Christmas Present for Some? - 5th Dec 21
TESCO Pre Omicron Panic Christmas Decorations Festive Shop 2021 - 5th Dec 21
Dow Stock Market Trend Forecast Into Mid 2022 - 4th Dec 21
INVESTING LESSON - Give your Portfolio Some Breathing Space - 4th Dec 21
Don’t Get Yourself Into a Bull Trap With Gold - 4th Dec 21
4 Tips To Help You Take Better Care Of Your Personal Finances- 4th Dec 21
What Is A Golden Cross Pattern In Trading? - 4th Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - Part 2 - 3rd Dec 21
Stock Market Major Turning Point Taking Place - 3rd Dec 21
The Masters of the Universe and Gold - 3rd Dec 21
This simple Stock Market mindset shift could help you make millions - 3rd Dec 21
Will the Glasgow Summit (COP26) Affect Energy Prices? - 3rd Dec 21
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

The Price Of Gold And The Art Of War Part IV

Commodities / Gold and Silver 2015 Jan 08, 2015 - 03:19 PM GMT

By: Darryl_R_Schoon


If you wait by the river long enough, the bodies of your enemies will float by
                           Sun Tzu, The Art of War, 5th century BC


After theV, bankers could no longer force the price of gold lower by loaning central bank gold and selling it in the open market. In 2001, as demand—and the price of gold—rose, the bankers were forced to flood markets with discounted ‘paper gold’, gold futures, i.e. paper promises of future gold deliveries at lower prices, in order to contain gold’s rising price.

The bankers sold their paper promises of cheaper gold on COMEX to contain gold’s rising price in an acceptable range for the next ten years, i.e. a controlled ascent, with two notable exceptions. The first was the 2008 global economic collapse. The second was the euro zone sovereign debt crisis in 2011.

In both crises, the price of gold began to rapidly rise, breaking above the bankers’ control at A and B (see gold trendline chart); when increasingly fearful investors turned to gold signaling that a severe financial crisis was underway; a signal bankers’ feared could destroy confidence in their lucrative and long-running ponzi-scheme of credit and debt.


Severe financial crises such as the 2008 global economic collapse and the 2011 eurozone crisis are an anathema to the bankers’ confidence game of credit and debt; a game where confidence is critical to keeping credit and debt circulating in increasing amounts and sufficient velocity, a monetary phenomena masquerading as growth necessary to pay down constantly compounding debts accrued when money is issued in the form of credit from central banks.

If investors suddenly withdraw from stocks and bonds and buy gold and silver, the price of gold and silver will explode upwards triggering an exodus from stocks and bonds; and the bankers’ ponzi-scheme will collapse as the circulation of credit and debt will fall below the levels necessary for markets to effectively function—this is the raison d'être for the bankers’ war on gold.

If you know the enemy and know yourself, your victory will not stand in doubt; if you know Heaven and know Earth, you may make your victory complete.
Sun Tzu, The Art of War, 5th century BC

It was the 2011 eurozone crisis (the second breach, B, of the gold trendline) that is responsible for gold’s present malaise, i.e. its fall from $1900 to $1200. In the summer of 2011, the EU sovereign debt crisis had rapidly worsened and the price of gold skyrocketed, rising from $1480 in July to $1900 by September.

The explosive breach of the gold trendline in the summer of 2011 is responsible for gold’s subsequent fall and present low price. This is because gold’s near vertical ascent is what bankers feared most, a spectacular 28.4 % rise in two months; that, if allowed to continue, would signal to investors that it was time to trade their stocks and bonds for the safety and profits­ of gold and silver.

Of the bankers’ reaction, I wrote:
When Europe’s debt contagion spread in the summer of 2011, the price of gold began moving rapidly higher which bankers feared could itself turn into runaway contagion…Jesse’s Café Americain traced the planned ambush of gold by central banks during their September take-down…Gold had risen to a record high, $1900, on September 1st and on September 2nd, central banks then took corrective action, dropping their lease rates for gold sharply lower into negative territory.
This meant that central bankers would actually pay bullion banks to borrow their gold and sell it on the open market. The new supplies of gold capped gold’s increasingly steep seven month rise and, by the end of September, the price of gold fell back to $1600.
After Sept 2nd, gold lease rates still remained negative, insuring a continued low price for gold even as the European debt crisis accelerated and the global economy slowed. This is exactly what central bankers intended. Gold is a barometer of systemic distress and central bankers wanted to conceal the flames rising from their now burning house.
drschoon,Gold Fire Sale, February 2012
After gold’s explosive breakout in 2011, the bankers have done everything in their power to force gold lower so investors will not be tempted to abandon increasingly volatile and unstable paper markets for the safety and upside of gold and silver.

This is why gold is $1,200 today instead of $2,200, $2,600 or higher. Demand for gold from the east—China, India and Russia—continues to increase, financial and geopolitical crises continue to proliferate and yet gold continues to trade in a moribund, depressed range.

Bankers have successfully overcome free market dynamics by distorting the price of gold primarily through the use of ‘paper gold’, gold futures sold at a discount enabling bankers to artificially force the price of gold lower.

In Gold Bulls Retreat As Short Holdings Rise to Highest Ever , Bloomberg News reported:
… The most-traded Comex gold option on Oct. 3, 2014 was for the right to sell December futures at $1,100 an ounce, or almost 8 percent below where prices ended the day… Short positions increased 4.5 percent to an all-time high of 81,262 contracts. The bearish holdings doubled since the last week of August.

As the pressure on the banker’s faltering ponzi-scheme continues to increase, so, too, does the bankers’ need to constrain the price of gold as another explosive breakout could gain sufficient momentum to overcome the bankers’ considerable resistance—a possibility that has stiffened the bankers’ already considerable resolve.

In the end game, however, resolve isn’t enough.

The conclusion from November’s missive is reiterated. November’s conclusion itself is a reiteration of the October missive’s conclusion. The bases for both metals – on both the nearest contracts – have moved into backwardation. The height of the backwardation has no precedent since 2008. For those heavily skewed towards silver over gold, the outperformance of silver is likely to commence with no notice.
Sandeep Jaitly, Fekete Research: Gold Basis Service, November 27, 2014

On November 9, 2014, Dr. Fraser Murrell’ article, Permanent Gold Backwardation = Global Meltdown - An analysis of the potential for permanent gold backwardation to lead to global financial crisis and an enormous increase in the gold price shed light on Professor Antal E. Fekete’s and Sandeep Jaitly’s work on backwardation and precious metals.

Dr. Murrell wrote:
Antal Fekete warned many years ago that a “permanent gold backwardation” would act as a financial black hole that would consume the entire global financial system…some “financial experts” (who have called Fekete a “pseudo-expert”) including Dr Tom Fischer with help from Bron Suchecki (Perth Mint), have claimed that backwardation represents nothing special and that it creates no arbitrage opportunity and so it has NO effect on the economy.

However, their argument fails to understand the nuance of “fractional reserve bullion banking” whereby (in addition to buying and leasing physical gold) a bullion bank can create (out of thin air) and sell into the market gold certificates which carry none of the costs of holding physical gold  The extra saving results in the arbitrage.

… (1) when there is high market demand for physical relative to future gold, the bullion banks can arbitrage by selling (expensive) spot certificates and buying (cheap) futures, and (2) when there is high market demand for future gold relative to spot gold, the bullion banks can arbitrage by buying back (cheap) certificates and selling (expensive) futures.

There is however one obvious risk in this business, namely that they get stuck with a full arbitrage book in a permanent backwardation – whereby they have sold (unbacked) gold certificates and the market never swings back into a contango to let them out…

… Over the last three years the bullion banks and governments have tried to break the backwardation and normalize the economy by dumping huge amounts of physical gold and “paper gold” at the gold spot price.

But they have failed, because although they have reduced the gold price from $1,900 back down to $1,200, they have not been able to create a lasting contango.  Instead, the gold buyers and hoarders have dug in, bought everything and demanded more – which has only strengthened the backwardation.

Sooner or later, the bullion banks and governments will run out of ammunition and they will be forced to step back and allow the market to do its thing…The gold price will eventually peak in the tens of thousands of dollars and unless the bullion banks unwind their short positions, they will either default or go bankrupt.

I count Professor Antel E. Fekete and Sandeep Jaitly as colleagues and friends. In 2009, I was in Canberra, Australia at the Gold Standard Institute symposium as a speaker with Professor Fekete and Sandeep Jaitly when Bron Suchecki spoke, not as a representative of Perth Mint but as one whose knowledge about the gold refining industry contributed needed light on an otherwise opaque subject.
Dr. Murrell’s article, however, on Professor Fekete and backwardation sheds even more light on an even more opaque subject—the backwardation of gold and silver in the end game. Professor Fekete’s thesis that permanent backwardation in the end game will lead to hyperinflation and a total collapse of fiat money and the triumph of gold is in line with my own prognosis.

A recent book, Gold Value and Gold Prices, 1971-2021 by Gary Christenson also bears special attention regarding gold’s price in the end game; although it should be noted the dollar terms in which Gary Christenson values gold are subject to extreme change should hyperinflation destroy fiat currencies as current currency yardsticks may not be tomorrow what they are today. In such terms, gold’s final resting place will be far higher.

I also recommend Fiat Paper Money; The History and Evolution of our Currency by Ralph T Foster, a disturbing book that should be given perhaps as a gift to all economic Luddites who still believe paper money, stocks and bonds will hold their value in the coming days.

On January 24th in Spokane, WA, I, and noted silver expert, David Morgan along with Marshall Thurber will present The Checkerboard Game—the Future of Money, Power and Consciousness, for event details see  

When David Morgan suggested the topic of change should be covered in addition to gold and silver, I asked Marshall Thurber if we could do The Checkerboard Game, a profound life-altering experience about economic and social change, a game he had created for the Positive Deviant Network where I had presented my paper predicting a cataclysmic economic collapse. This will be the first time The Checkerboard Game will be available to the public.

In my current youtube video, The Checkerboard Game and the PDN, I talk about how The Checkerboard Game was created. Marshall was a student of both Buckminster Fuller and Edwards Deming (the father of the quality revolution), two of the greatest minds of the 20th century.

Today, in January 2015, we are well into the end game. Capitalism’s fatal wasting disease, deflation, is gaining momentum around the world as it also did during the 1930s. The present power structure does not have much time left. Its fall has begun and so has the emergence of the better world to come.

Buy gold, buy silver, have faith.

By Darryl Robert Schoon

About Darryl Robert Schoon
In college, I majored in political science with a focus on East Asia (B.A. University of California at Davis, 1966). My in-depth study of economics did not occur until much later.

In the 1990s, I became curious about the Great Depression and in the course of my study, I realized that most of my preconceptions about money and the economy were just that - preconceptions. I, like most others, did not really understand the nature of money and the economy. Now, I have some insights and answers about these critical matters.

In October 2005, Marshall Thurber, a close friend from law school convened The Positive Deviant Network (the PDN), a group of individuals whom Marshall believed to be "out-of-the-box" thinkers and I was asked to join. The PDN became a major catalyst in my writings on economic issues.

When I discovered others in the PDN shared my concerns about the US economy, I began writing down my thoughts. In March 2007 I presented my findings to the Positive Deviant Network in the form of an in-depth 148- page analysis, " How to Survive the Crisis and Prosper In The Process. "

The reception to my presentation, though controversial, generated a significant amount of interest; and in May 2007, "How To Survive The Crisis And Prosper In The Process" was made available at and I began writing articles on economic issues.

The interest in the book and my writings has been gratifying. During its first two months, was accessed by over 10,000 viewers from 93 countries. Clearly, we had struck a chord and , has been created to address this interest.

Darryl R Schoon Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in