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Gold: Foreign Central Banks Versus The US Government

Gold: Foreign Central Banks Versus The US Government

By Patrick A. Heller
Commentary on Precious Metals Prepared for CoinWeek.com

An important market shift has occurred, as I expected, that now pits a growing number of foreign central banks against the plans of the US government.

The US government, including its primary trading partners and a dwindling number of foreign allies, has a strong interest in holding down gold and silver prices. The price of gold is an unofficial report card on the health of the US dollar, the US economy, and the US government.

As long as the US dollar appears strong, it can maintain its status as the effective world reserve currency. This status generates a multi-trillion dollar interest-free subsidy of the US government by other nations. Further, a strong dollar allows the US government to finance its huge deficits at lower interest rates.

All seeing eye Gold: Foreign Central Banks Versus The US GovernmentIn the past few years, some gold and silver price suppression tactics by the US government have become so flagrant that more foreign central banks have stopped turning a blind eye to the continuing decline in the value of the US dollar.

As a result, central banks are no longer net sellers of gold reserves. In fact, the latest statistics of acknowledged official gold reserves shows central banks to be net buyers. And not only are they buying, they are adding reserves at the fastest pace since 1965! Most of the acquiring central banks are from the undeveloped and developing nations, which need a reserve currency that is safe from collapse.

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