Lesson from the history of gold

Lesson from the history of gold

If there is anything positive about the financial world of the 21st century, it is that the Internet allows access to many types of analysis. Before, you had to deal with the one-sided point of view of a commission-hungry broker. However, today those who wish to find information about investments can do so without outside influence.

The Internet allows educating the masses about safe money, monetary history, and market manipulation by central banks and their agent dealers. Because it is linked to the price of gold, anyone with internet access can learn about the 1957 crisis, the London gold pool, Nixon’s closing of the golden window, and more.

Those interested can also learn about the long-term historical drivers of gold and the correlations that have persisted for decades. Two of them are money supply and real interest rates (adjusted for inflation).

However, today we will talk about something else. Recently, Variant Perception published a short article that provides an important lesson in the history of gold and helps to understand some of the main long-term drivers for the precious metal price.

gold price and real interest rates in the 1970s

As the author writes: “In 1975, US citizens were again allowed to own gold in a macro-inflationary environment; this could have prompted the idea of ​​a subsequent rise in the price of gold since 1975, but the opposite happened. “

With these words, the article ends. What could have caused the “opposite” phenomenon in 1975?

As you know, on April 5, 1933, President Roosevelt signed a decree according to which, by May 1, 1933, US citizens had to exchange all their gold for currency at the rate of $ 20.67 per ounce. From that day on, ownership of gold by US citizens became illegal.

This was until January 1, 1975, when President Ford finally revoked the decree and again allowed private ownership of the gold metal. So why, as the author notes, did the price fall when “one could expect it to rise”?

It may not surprise you that COMEX gold futures began trading on December 31, 1974.

And what was the purpose of creating a gold derivatives market? The answer is obvious. Perhaps the anticipated rise in physical demand could have been prevented or reversed by transforming gold from a safe store of wealth into an unsustainable “risky asset”.

You might think this is a simple conspiracy theory; however, thanks to Wikileaks, it became known that this is in fact a fact of a conspiracy.

telegram of December 10, 1974
Item 4 of the telegram on the futures market

Wikileaks cites the text of a telegram sent on December 10, 1974 – three weeks before the permission of private ownership of gold metal in the United States.

This telegram was sent from the UK Treasury to the US Secretary of State.

The text suggests that the volume of futures trading is likely to exceed the volume of physical trading.

It goes on to say that trading high-volume futures will create a volatile market, while price volatility will reduce physical demand.

And what is the lesson in all this? Gold is heavily undervalued in 2021 due to banking interventions that continue to this day.

Gold is no longer just a physical metal. They also include futures accounts, leases, bills of exchange, options, unallocated accounts, and ETFs. But they are not backed by physical metal, and when banking fraud finally fails, those who put their trust in these “investments” will be left with nothing.

Buy only physical gold. Do not accept bank sponsored replacements. And keep preparing for the imminent monetary reset.

Posted by Craig Hemke Jul 14, 2021 | Translation: Gold Reserve

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