Is the US a Gangster State?

The recent nosedive in gold prices has been evaluated and deemed a result of a robbery orchestrated by the U.S. in order to protect the value of the dollar. Now, the U.S. faces criticism that it is a gangster state.

What insidious plan did the U.S. implement to deserve this accusation? In a commentary in the English version of Pravda, Paul Craig Roberts propounded that in April, 400 tons of gold were short-sold in an unprecedented manner. This short sale was a naked short sale, which is to say that the sellers were not in possession of any physical gold. According to the Commodity Exchange bulletins, which report commodity sales, the sellers only had gold equal to about half of the value of the short sale in their vaults. Orders for the naked short sales were placed by a prodigious organization — the Federal Reserve’s bullion banks. So, a player too big to fail has entered the game. As a matter of course, naked short sales by a federal organization justify the portrayal of the represented state as a gangster state.

But why is the U.S. manipulating gold prices? The expansionary monetary policy of the American central bank is causing lack of confidence in the dollar, thereby opening up the possibility of the dollar’s reserve currency status ending. If the dollar loses its current status, it could signal the end of the American economy. The U.S. is financing itself by freely printing bank notes. In order to protect the value of the dollar during the expansionary monetary policy period, gold prices must be kept under control.

So why is the amount of physical gold not being questioned while evidence of manipulation is left to lurk? Two famous fund managers explain it. Gold trades on the New York Stock Exchange are carried out on paper — shares. Only shares in the amount of 100,000 can be redeemed in gold. Because the price of bullion is not set in the physical market but in a paper futures market, there is no control over future sales and short selling. It is even reported that the existing June futures contracts are 12.5 times the amount of deliverable gold. If more than 8 percent of these trades were to demand delivery, the exchange market would default. In such a situation, federal financial regulations may collapse. As you can well understand, the U.S. is carrying out its manipulations on the belief that “too big” cannot collapse in the short term. But this system of temporary escape is not sustainable in the long run. Investors in gold and other commodities should be prudent.