Gold price conspiracies

[brumsen]

I am rather fascinated with talk of conspiracies regarding the price of gold.

It seems that there are (at least) two camps:

1) Those that see the fractional reserve banking system as a conspiracy. Those within the conspiracy (they say) want to basically keep the system going, play down the severity of the crisis that we're in, and manipulate the gold price as needed to prevent a flight into the safe haven of gold, precipitating the collapse of the banking system (or at least, a severe devaluation of several currencies)

2) Those that see a gold bug conspiracy. Those within that particular conspiracy (they say) are doing their best to scaremonger, perhaps even issuing calls for tax strikes and the like (under the guise of predicting them), thus helping the general sentiment towards a flight into the safe haven of gold. They would be inclined to predict doom because they have invested in gold themselves, and would therefore like to see the price of it rise.

So what is happening here? Are they really conspiracies (since most of the things described are pretty much out in the open)? Are both these things happening or only one of them? How to adjudicate which is the true story? Is this simply what drives the economy anyway, since what generally drives all this (ie the crisis and all that) is nothing but sentiment?
And perhaps as an afterthought: might the gold bug conspiracy have as an aim - perhaps its primary aim! - to basically overthrow the US government, or at least get rid of the current president? It's as effective a way of killing your president as another (except that you may be throwing out the baby with the bathwater).

Just a bit of speculative thinking. Please comment.

[JoeyDonuts]

I'm starting to wish I'd have gotten that mouthful of diamond-studded golden tooth caps back when times were better. I'd be rizzling in mizzle for shizzle, dawg!

[Sword_Of_Truth]

3) Nothing has a static market value. Everything up and down depending on the markets mood. Why should gold be any different?

[Chaos]

3) Nothing has a static market value. Everything up and down depending on the markets mood. Why should gold be any different?

Because gold is the super-duper-magic intrinsic value cure-all super-commodity...

... at least according to some people... :eye-poppi

[brumsen]

Because gold is the super-duper-magic intrinsic value cure-all super-commodity...

... at least according to some people... :eye-poppi
Gold isn't a commodity; it is more like a currency, with the big difference that it cannot be created at will. Therefore its value is relatively stable compared with other currencies.

Sure, the market value goes up and down in terms of (other) currencies. But my question was, what's driving the market movements of gold these days, and could these drivers properly be called conspiracies?

[Tanja]

I presume supply and demand is a part of it.

A related (conspiracy-like) anecdote, told to me by a South African friend, whose father was working in a goldmine while he was a student. During his time there, a mine was discovered which had huge amounts of gold, much more than they expected to find. According to my friend's father, they didn't excavate any of it - they filled the mine with concrete to prevent it from ever being excavated.

There is obviously no way for me to check the accuracy of that story.

A similar style conspiracy is the subject of a very cheesy 70's film called Gold, starring Roger Moore.

ETA: I can't believe I responded to a thread in the Conspiracy Theories Forum...I think it may be my first! :D

[Dave Rogers]

Gold isn't a commodity; it is more like a currency, with the big difference that it cannot be created at will.

Why isn't it a commodity? There's demand for it, it's used in various processes as a material, it's independent of the producer, and it has a price that fluctuates according to supply and demand. I work for a company that uses gold as a process material, and therefore buys it and uses it, and it behaves exactly the same as any other commodity as far as I'm concerned. It happens to have been popular to use it as a currency, but that doesn't preclude its being a commodity.

Dave

[brumsen]

It happens to have been popular to use it as a currency, but that doesn't preclude its being a commodity.

Sure, it is also a commodity. But mainly - in terms of market behavior - a currency.

[Dave Rogers]

Sure, it is also a commodity. But mainly - in terms of market behavior - a currency.

OK, so I assume you've withdrawn the assertion that gold isn't a commodity. Can you explain, with examples, how it behaves more like a currency and less like a commodity?

Dave

[brumsen]

OK, so I assume you've withdrawn the assertion that gold isn't a commodity. Can you explain, with examples, how it behaves more like a currency and less like a commodity?
With industrial output and share prices stagnating, gold generally goes up. If it were an industrial commodity, that wouldn't be logical.

[timhau]

With industrial output and share prices stagnating, gold generally goes up.

Gold didn't go up much when the dot.com bubble burst. It didn't go up during the 1997-8 Asian financial crisis. During the early 1990s recession, gold price was higher than during either of these periods, but there was no easily discernible peak there. During much of the 00s, gold price went up along with e.g. the DJIA. The inverse correlation between gold price and big stock market indices isn't as strong as many people think.

[brumsen]

Gold didn't go up much when the dot.com bubble burst. It didn't go up during the 1997-8 Asian financial crisis. During the early 1990s recession, gold price was higher than during either of these periods, but there was no easily discernible peak there. During much of the 00s, gold price went up along with e.g. the DJIA. The inverse correlation between gold price and big stock market indices isn't as strong as many people think.
Yeah, well, OK. Let me put it this way, then: it seems that gold price is more sentiment-driven than you would expect for something that is purely a commodity. You can have recession and stagnation without people feeling that they have to abandon cash and stocks for the 'safe haven' of gold.
So if you are prepared to accept this: what of the 'conspiracy theories' in the OP?

[timhau]

So if you are prepared to accept this: what of the 'conspiracy theories' in the OP?

Ah, right. Sorry about continuing the derail.

Conspiracy theories of the 1st type are your run-of-the-mill Elite Cabal Controls the World theories. They are at best weird. Some of them border on insanity, some go way beyond that border.

As for the second type, they aren't conspiracies but marketing techniques. Gold dealers want to do business, so they publish web sites that extoll the virtues of gold. My bank does the same -- they send me a monthly newsletter telling me what a wonderful bank service they provide and what intriguing investment opportunities their managed funds give. Gold dealer web sites are not likely to tell you of the risks you take when you invest in gold (e.g. that historically speaking, gold is at the moment fairly expensive which may make it a poor investment right now); similarly, my bank will never mention that their managed funds have extortionate fees that they charge based on invested capital, not return, and that historically their managed funds lose to the index more often than not (make that always, if you want to count in their fees). This isn't a conspiracy, it's biased reporting by a non-neutral source with a financial stake in the matter -- in a word, advertising.

[Old Bob]

Gold, not paper gold has been climbing in price more than bank interest and my bet is it will go to $3000 in the next two years. Now given our exchange rate that looks good in these trying times. With a run on the banks possible it may happen sooner. I hope it doesn't but if it does I stand to profit. Then we will be in scarry times. (Lock & load)

[LightinDarkness]

I would agree that the second type isn't a conspiracy at all - its rational behavior.

Conspiracy theorists and gold dealers pump up doom and gloom because, since they have a stake in the deal, they need the price to go up in order to make money. The most deranged conspiracy theorists buy and stack gold bars in their basement as they wait for the next predicted Armageddon (we have one every few days it seems), but eventually they will have to sell all that gold because they can't go to the store and buy anything with it. Everyone pumping the utter doom/were all going to die/flee for the hill stuff wants gold to go up so they can make money off their gold investments.

[brumsen]

I would agree that the second type isn't a conspiracy at all - its rational behavior.
But even though they stand to gain from it....it might be true, independently of what they say. What I mean is this: they may be issuing well-meaning investment advice to their fellow citizens, and given that they believe in their own advice it is no surprise that they will benefit if their predictions were coming true. You'll hardly argue that everything is tickety-boo in the financial markets, I suppose?

[timhau]

True. The chance that they will be proven right is small, but not non-existent, and even if they turn out to be wrong, there's no need to assume wilful deception. I think I compared those gold dealer 'news' websites to the Toyota customer magazine that the local dealer has sent us ever since we bought our little Yaris from them. According to a review the latest issue, the Yaris is the best subcompact car there is. The guy/gal who wrote it may sincerely believe what (s)he wrote, and (s)he may even be correct. But given that it's the national Toyota importer that publishes that magazine, they'd say that no matter what the facts were. That's not a venue where opposing viewpoints get a fair shake (and nobody should expect it to be, either).

[brumsen]

I would agree that the second type isn't a conspiracy at all - its rational behavior.
...and moreover, this would be a false opposition!
Why would you argue that conspiring isn't rational?!

[Travis]

I'm not sure why people are setting up a "rational behavior" vs "conspiracy" dichotomy. A conspiracy is often rational in that it will benefit the person who is scheming it up. It's still a conspiracy, however.

So, to the OP. #1 is possible but I haven't seen any evidence supporting it. On the other hand #2 is absolutely real and you can see some good evidence of what it's like in a thread in the economics section of this forum about how we're heading for "the worst great depression ever!"

[brumsen]

I'm not sure why people are setting up a "rational behavior" vs "conspiracy" dichotomy. A conspiracy is often rational in that it will benefit the person who is scheming it up. It's still a conspiracy, however.
Interesting how conspiring is pretty rational, but believing in conspiracies isn't, according to many here.

So, to the OP. #1 is possible but I haven't seen any evidence supporting it. On the other hand #2 is absolutely real and you can see some good evidence of what it's like in a thread in the economics section of this forum about how we're heading for "the worst great depression ever!"
Excuse me? Haven't seen evidence of #1?! Government and banking officials saying that there are problems but they aren't all that big? Well, on this side of the pond I certainly see such evidence.
#2: but how is that a conspiracy, as it's all out in the open? It's more like people trying their best to make self-fulfilling prophecies.

[LightinDarkness]

...and moreover, this would be a false opposition!
Why would you argue that conspiring isn't rational?!

Nice try - dreaming up conspiracies in order to support your opinion in order to make profit off being a gold bug may be rational, but the conspiracies themselves are not logical nor would even a majority of players in such conspiracies be acting rational. That is the problem with conspiracy theory.

[brumsen]

........ but the conspiracies themselves are not logical nor would even a majority of players in such conspiracies be acting rational.
Please elaborate. I don't see at all what warrants saying such a thing.

[LightinDarkness]

Please elaborate. I don't see at all what warrants saying such a thing.

A conspiracy theorist doesn't see how conspiracy theories are irrational? Color me surprised.

There is no conspiracy put out there by woos that I have seen yet which has any chance of actually occurring because they are all irrational. All of them - from the NWO to Freemasons controlling the world - require such a massive amount of conspirators in the game working together for a goal that probability dictates someone would expose the conspiracy before it occurred. Real conspiracies only exist on a small scale because for every additional player in the game the probability goes up that the entire scheme collapses.

Each one also requires a large amount of players to act against their own interest. Take for example, the NWO. If the NWO were actually a real organization it require an absolutely astounding number of people involved in it, including countless numbers required to do everyday NWO work. Not everyone can be a diabolical evil genius bent on global destruction. You have to have - at some point - average people, who presumably enjoy their freedom, working to end it and create a global dictatorship. Irrational.

Which is why, although historical conspiracies exist, none of them are on the level conspiracy theorists dream of which have the government(s) plotting against them. And that is why there is no conspiracies with gold bugs, just gold bugs dreaming up conspiracies in order to fear monger the price of gold to a higher level.

[timhau]

Interesting how conspiring is pretty rational, but believing in conspiracies isn't, according to many here.


If the evidence is of the 9/11 Truther or NWO nutcase quality, then no, it certainly isn't rational.

[brumsen]

A conspiracy theorist doesn't see how conspiracy theories are irrational? Color me surprised.
Nice post, lightindarkness, but for the unnecessary and unwarranted intro.

And that is why there is no conspiracies with gold bugs, just gold bugs dreaming up conspiracies in order to fear monger the price of gold to a higher level.
What is certainly (it seems to me, at least) happening is that government and banking officials are trying to pass off the current situation as less serious than it probably is. Understandably, to prevent a panic. Not necessarily a conspiracy, no. (Although I am seriously wondering how easy it would be for certain parties to manipulate the gold price)
At the same time, gold bugs are doing the opposite. Not necessarily a conspiracy either.

[LightinDarkness]

What is certainly (it seems to me, at least) happening is that government and banking officials are trying to pass off the current situation as less serious than it probably is. Understandably, to prevent a panic. Not necessarily a conspiracy, no. (Although I am seriously wondering how easy it would be for certain parties to manipulate the gold price)
At the same time, gold bugs are doing the opposite. Not necessarily a conspiracy either.

What the situation "seems to you" is not supported by the facts. Given the media's feverish desire to doom monger to get the ratings up, they are doing quite a good job already at blowing a normal cyclical recession completely out of proportion.

Meanwhile, the gold bugs are joining in because they need to in order to sell all that gold they were hording for the Apocalypse that isn't coming.

[brumsen]

What the situation "seems to you" is not supported by the facts. Given the media's feverish desire to doom monger to get the ratings up, they are doing quite a good job already at blowing a normal cyclical recession completely out of proportion.
I was talking about government and banking officials. You are talking about media. So you are looking at different facts, which will support different things.

[Old Bob]

What the situation "seems to you" is not supported by the facts. Given the media's feverish desire to doom monger to get the ratings up, they are doing quite a good job already at blowing a normal cyclical recession completely out of proportion.

Meanwhile, the gold bugs are joining in because they need to in order to sell all that gold they were hording for the Apocalypse that isn't coming.

Lightin darkness, do you get paid to spout pro Mason,keep the ball rolling at any cost? Look at the hundred of bulk carrier's out of work, the cost of oil(very low) the car makers plight. Every second job on this planet has gone for years, maybe forever. As a Mason are you pledged to tell the truth? I don't think so.

[Rogue1stclass]

The "gold bugs" have found a way to sell gold. It's not a conspiracy, but a bandwagon. One company, who's name I forget, started advertising on Coast to Coast AM marketing gold as a "secure investment when others fail" and has met with some success. Other companies want a piece of that, and so follow the same model. They feed people's uncertainies and sell gold, which increases the price.

No conspiracy needed.