In a letter he titles "Too Late to Throw in the Towel on Central Bank Gold-Market Rigging," our friend J.U. writes
"Great piece you wrote about precious metals breaking out to the upside (http://gata.org/node/19326) but I suspect it is way too early to think that central bank market riggers have thrown in the towel on suppressing them.
"What I see, despite all the excitement of gold and silver bugs, is the setting of a bull trap much like what happened to silver at the hands of [White House Chief of Staff] Bill Daley when silver was allowed to run up to nearly $50 and then was smashed down to take all the wind out of the sails of the silver bulls, and silver has remained firmly under the control of the market riggers since, trapped in a narrow trading range between $14 and $17 for years now.
"I have watched this charade for too many years to believe it is coming to an end, especially when the Federal Reserve is about to embark on another round of 'quantitative easing' and the last thing it wants is to have gold and silver going nuts while they are trying to keep in the air all the balls they are juggling."
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Your secretary/treasurer agrees that central banks won't lose interest in controlling the gold price, and the scenario J.U. describes is plausible.
But now there is so much clamor from governments and central banks for currency devaluation -- and, it seems, so much grasping by certain central banks for gold -- serious downward pressure on the monetary metals may be very hard to maintain.
During the rise of the metals from 2000-2011 central bank policy seemed to be one of controlled retreat as they made cash settlements of their longstanding gold leases and disguised them as gold sales.
Central banks may revert to controlled retreat now that demand for the metals is increasing as a hedge against the insanity of the world financial system and the central banks themselves are splitting into opposing factions.
