A little nugget of gold

I was asked recently by a close relative what the heck was going on with precious metals.  The best answer I could give was the theory given here on this blog---managing perceptions.  That is, the government is making you think things are better than they actually are so as to increase confidence in the hopes that this will spur the economy into real performance.

Well, here's some more support for that idea.  I mean, if 85 billion dollars a month of Fed greenback support isn't enough to convince you.  Also, if you were wondering why gold doesn't go through the roof, here's a little nugget of info that may explain it on Kitco:

As I've said before, and will continue to say, until these guys go away, or go to jail. the paper trades, are dictating the price of Gold and other metals right now. When these guys aren't allowed to go short more ounces than has ever been minted, we'll see the true price of Gold again, that's dictated by supply and demand. [ emphasis added]

Well, yeah!  I mean, if you can short more gold than exists, sure the price will be depressed.  Why wouldn't it be?  Makes sense to me.  Makes sense that they aren't prosecuted.  Instead, they get a wink from the powers-that-be.   That helps the powers-that-be to manage the perceptions.  If the price of gold went through the roof, that would be a problem for the perceptions.  It would signal dollar weakness and inflation.  We just can't have that bit of truth being let out of the bag, now can we?

I suppose this is all well known to traders, but I didn't know about it.  Is that really true?  Can they short stuff that doesn't even exist?  It ought to be illegal, but this is the government for you.

As for the politicos, they don't seem to get how the government is playing this shell game.  Or why.

The ironies of ironies is that the left depends upon the petrodollar to pay for all their spending.  All the while, they are pulling their own rug right out from under themselves.  And they call the GOP the stupid party.