Craig3215, what do you think of GATA and Bill Murphy's hypothisis . . .
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The suppression of the price of gold was the essence of Robert Rubin's famed Strong Dollar Policy. What else did the US do to effect that policy? Talk? Jawbone?
It seems to have all started with the suddenly not so highly regarded, Robert Rubin…
Before he was CEO of Goldman Sachs and then US Treasury Secretary, Robert Rubin worked in London for Goldman Sachs. One of his duties was to oversee their gold trading operations. We know this because the CEO of GATA supporter Kirkland Lake Gold, Brian Hinchcliffe, worked in London back then for Goldman Sachs and reported directly to Robert Rubin.
This was many years ago and interest rates in the US were very high, say from 8 to 12%. Rubin had Goldman Sachs borrow gold from the central banks, sell it in the physical market and use proceeds to fund their basic operations They could do so at about a 1 % interest rate. This was like FREE money, as long as the price of gold did not rise to any sustained degree for any length of time.
Soon other major financial institutions realized what GS was doing and copied them. Rubin continued these operations as the Goldman Sachs CEO and then took it to a new level as US Secretary Treasurer. As mentioned, the gold price suppression became the lynchpin of his widely acclaimed "Strong Dollar Policy." GATA's Reg Howe caught on to this notion in a paper titled, "Gibson's Paradox and The Gold Standard," co-authored by Lawrence Summers in 1988. Summers, a professor at Harvard at the time, succeeded Rubin as US Treasury Secretary. The bottom line of Summer's analysis is that "gold prices in a free market should move inversely to real interest rates." Control gold and it will help to control interest rates. How disturbing to have Summers, a man very responsible for America's current market nightmares, back on the scene as Obama's most significant economic advisor.
Bullion banks such as Goldman and Morgan became The Gold Cartel's hit men, trading the gold market from the short side and bombing the market in coordinated anti-trust fashion at the beck and call of our government, making a great deal of money in the process.