by Steve St. Angelo, SRSRocco Report:
According to newly uncovered information in the gold market, it provides additional evidence of why the Fed, Central Banks and the IMF were forced to RIG the gold market. Actually, looking at this new information, I had no idea of the amount of Fed, Central Bank and IMF gold market intervention until I put all the pieces together.
Now, when I say “new information”, it pertains to new information and data that I dug up from older official documents. While most of the folks in the precious metals community realize that the Fed and Central Banks have sold gold into the market to depress the price, this new evidence puts the gold market it in an entirely DIFFERENT LIGHT.
Furthermore, additional data points to a “Gold Supply & Demand” situation that would have gone completely out of control, if the Fed, Central Banks and IMF did not step in.
To preface this subject matter, the Central Banks dumped a lot of gold into the market during the 1960’s to maintain (suppress) the official gold price. This was known as the “London Gold Pool” where an estimated 78 million oz (moz) of gold were dumped into the market between 1961 and 1968. I explained this in my THE GOLD REPORT- Investment Flows.
However, when Nixon dropped the Dollar-Gold Peg on August 15, 1971, the problems with the global monetary system were just beginning. In a report published in November, 1972, by the U.S. Congress and Subcommittee on International Payments of the Joint Economic Committee for the purpose of “De-emphasizing gold as a reserve asset”,it stated the following:
Not only did the committee suggest and permit the “voluntary” sale of official gold into the market, but also to “prohibit” against Central bank purchases. Which meant the committee was proposing a plan to only allow the DUMPING of gold into the market, but forbid any OFFICIAL BUYING. This of course was supporting the “FREE MARKET” fundamentals for proper gold price discovery…. LOL.
At the bottom of that quote, the committee went on to state that when the international monetary reform had been achieved (to an IMF SDR basket), all prohibitions of gold (investment) purchases by American citizens would be promptly abolished.
So, the wonderful folks up in government had a METHOD” to their madness. According to their assessment, it would have not been prudent to allow Americans to start purchasing and hoarding gold until the completion of the new fiat monetary system was achieved.
Again, most of us in the precious metals community understand that the Central banks dumped a lot of gold into the market during the 1960’s London Gold Pool to maintain the official gold price. However, new uncovered gold supply and demand data suggests there was another FACTOR that forced even more dumping of official gold during the 1970’s.
Forecast Of Massive Gold Supply & Demand Imbalance
The reason that Nixon dropped the Gold-Dollar Peg in August 1971 was to keep U.S. gold from flowing overseas as the U.S. Government had been printing a great deal of paper money. Thus, countries such as France were exchanging Dollars for real gold. This forced Nixon to drop the convertibility of Dollars into gold so the United States could hold onto its remaining gold reserves.
But, and here is a BIG BUT… converting Dollars into physical gold was only one part of the monumental problem facing the gold market and industry. Up until now, this was the only real problem that I was aware of as it pertained to the gold market in the 1970’s. However, forecasts of future Gold Supply & Demand factors were going to totally disrupt the market unless the Fed and Central banks stepped in.
This next quote comes from the USGS 1971 Gold Yearbook. The highlighted area shows just how bad the gold supply and demand situation was going to be at the end of the decade:
According to a gold expert at Consolidated Gold Fields Ltd., global gold demand was forecasted to reach 63 million oz (Moz) by 1980, up from 42.5-45 Moz in 1972. You see… this was a BIG PROBLEM. Why? Because gold mine supply was also forecasted to decline to 38-41 Moz in 1980. This would have resulted in a huge net deficit.
So, how well did Consolidated Gold Fields Ltd., forecast turn out? Let’s look at the chart below:
Actually, it turned out pretty darn accurate. Global gold production declined from its peak of 46.5 Moz in 1970, to 38.8 Moz in 1980. This was mainly due to the peak and decline of South African gold production. I would imagine very few individuals in the precious metals community realize just how much gold South Africa produced.
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