Proof That Gold is Not a Bubble
This really does just about say it all.
A few of you may have seen another version of this chart before, but to date I had not seen anyone tackle the implications of the data in a comprehensive way. I am posting the chart here to pique your curiosity, but this time even more so than most I beseach you to link to the article by clicking here and invest a few moments considering my discusion of the image's true value as proof that gold is not in a bubble.
And then there are implications of this image that I simply ran out of space to discuss. Foremost among them is the incontrovertible manner in which it debunks once and for all any notion that the prior cycle culminating in 1980 has any direct bearing whatsoever on the behavior or potential reach of the present bull market run. You can forget all about utilizing the inflation-adjusted 1980 high as a price target for gold ... the relevance simply is not there because of the obscene extent to which paper assets spread like a plague while the gold price and its reputation were cunningly and systematically manipulated by a fiat financial system that thought perhaps it could bury gold once and for all. If gold was so important that private ownership of it was banned from 1933 until 1975, then what changed after the 1980 spike that rendered it so incredibly unfashionable that the mere mention of the metal came to trigger automated jeers of sarcasm and ridicule? I'll tell you what changed ... the stakes.
And to think that many people resist any notion that the Fed might be engaged in efforts to subdue gold because they can not conceive of a motive for the Fed to do so!?! In a post-gold-standard world, the Fed sought to insert the USD as a "modern" replacement for the "barbarous relic". The only way to maintain a "strong dollar policy", which every administration touted in turn, is to ensure that gold does not serve its role as an alarm system ... a barometer for monetary distress and counterparty risk. Greenspan knew of gold's immutable power as the sole unsinkable currency, and that acknowledgement is clear in his own words both before and after his tenure as Fed chairman. Intense secrecy surrounding the Fed's gold operations, inconsistencies within the scant information publicly available, and the convenient absence of a comprehensive and independent audit of reported U.S. bullion holdings all contribute to the conditions necessary to succeed at subduing gold.
In the London Gold Pool we have precedent. In comprehending the stakes we have motive. In the evidence of recent silver manipulation we have a whistle blower, a smoking gun, and likely the indentities of key participants. In an international exchange structure, where fractional reserve accounting permits massive leverage over the actual physical supply, we have a modus operandi. In the culture of secrecy regarding gold operations we find the means to conceal. The circumstantial evidence is more than compelling. GATA is pining for documentary proof, but in the meantime this is one important question that rational Fools will consider with an open mind as opposed to an irrational, knee-jerk aversion to anything to which that most hideously loaded of phrases can be applied (you know which one I mean ... that Voldemort of two-word English phrases - Gasp!).
I did not mean to write a tome. :) My intention was to present the article I've linked above and try to elicit a community discusion about the significance of the graphic and the divergent trends impacting gold during the final two decades of the 20th century. I hope that you will still take time to read that article and comment here. Clearly, I've also opened up a whole separate can of worms. So by all means, let's get all the conversation going. Dialogue is good. :)