Examining the astounding and continuing downward trend of interest rates that has brought some rates into negative territory, the TF Metals Report's Turd Ferguson postulates today that gold and silver prices won't be going any lower, regardless of the charting done by technical analysts. Ferguson's commentary is headlined "ZIRP Morphs to NIRP" and it's posted at the TF Metals Report here:
http://www.tfmetalsreport.com/blog/6077/zirp-morphes-nirp
Of course Ferguson is right about what ordinarily has been the inverse relationship of gold prices and real interest rates. That relationship was described by the 1988 academic study by Harvard University economics professor Lawrence Summers and University of Michigan economics professor Robert Barsky, "Gibson's Paradox and the Gold Standard":
http://www.gata.org/node/1373
(Yes, Summers went on to run the U.S. Treasury Department, where his knowledge of gold pricing seems to have come in handy.)
But then Western central bank policy long has been to defeat ordinary market forces -- indeed, in recent years Western central bank policy has been to prevent any markets from happening at all:
http://www.gata.org/node/6241
This policy is what even some central bankers themselves now call "financial repression":
http://www.gata.org/node/10839
So while negative real interest rates may tend to support gold prices and asset prices generally, they also may be accompanied by still more "financial repression," particularly against the monetary metals, currencies that compete with and threaten government currencies and bonds.
Central bank gold sales and leasing, the underpinnings of the world's fractional-reserve gold banking system, whereby huge amounts of imaginary "paper" gold are created to nullify gold's scarcity and suppress its price, were always plainly mechanisms of "financial repression" to defend currencies and government bond prices. So amid the descent into negative real interest rates, what is to prevent central banks from underwriting still more "paper" gold for price suppression?
Such a policy probably could be defeated only by 1) mass exposure, which would require the mainstream financial news media to stop averting its gaze and to resolve to hold government to account; 2) a major sovereign foreign-exchange surplus holder's decision to switch its surplus heavily and abruptly into gold to strike a political blow; or 3) by the simple exhaustion of the gold reserves of the nations participating in gold price suppression, the circumstances that collapsed the last acknowledged mechanism of price suppression, the London Gold Pool, in March 1968:
http://en.wikipedia.org/wiki/London_Gold_Pool
The point here is that natural, economic, and even societal laws are disintegrating throughout the world under the pressure of what is essentially totalitarianism, the totalitarianism of central banking, which thrives only because, like the new clothes of the emperor in the fairy tale, it cannot be acknowledged for what it is -- cannot even be examined and questioned.
