Fragile Foundations: Central Banks Assault on Strong Currency

Dismantling Strong Currency: The Central Banks’ Devastating Impact

Updated May 2023

Right now, we are celebrating as Gold keeps making new highs while the Dollar gets pummeled into the ground, and every gold bugs dream appears to be finally coming true. Now I ask this question. What if this dream is an actual nightmare where we have been tricked into believing we are winning while we are instead being fleeced?

This theory just popped into my head while I was sitting by a fountain, letting my mind float away. I have no way of proving this or evidence to support it. Please email me if any other writer or anyone reading this has information to substantiate this theory.

Before I get into my theory, I want to state this; while it may appear that I am attacking Gold many times, all I am doing is questioning what is going on. I believe that, in the end, there is some serious money to be made investing in Gold and that it will ultimately prevail.

Central Banks’ Demise of Strong Currency

What if the Central Bankers shorted the dollar and went along with the South African Rand, Australian dollar and all the other currencies that have been appreciating since the end of last year? That means they have made a fortune in every transaction.

A fortune on the dollar short, an end of the rand long and all the other currencies longs. Add this to the picture: if they shorted gold bullion in South African Rands, Australian and New Zealand dollars, the euro-dollar, etc., that is yet another transaction they might have won on.

Now assume that they start to buy Gold bullion with profits they made by going long the Rand and short the dollar at a price that is 125 dollars cheaper than it was in Feb 20003. Have they lost, or are they laughing all the way to the bank?

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Please think of the implications regarding servicing the US Debt and allowing the major houses to cover their shorts under the guise of an increasing price in Gold, while in reality, it’s depreciating. Did any of you care when Gold went up five times its original value when the Argentinean peso collapsed? No, you did not because it did not matter. Beware, we have entered a new stage in this game. It is the insidious stage of the silent currency wars.

Let’s expand on this by just focusing on the South African Rand. Gold is approx 125 dollars cheaper now than it was in Feb 2003. If they went along the rand in November last year, they would have made approx 100% on simple currency exchange, changing Rands for dollars.

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They would have made ten times that if they went along via the futures markets. Then figure how much they would have made if they shorted the US dollar also. Take it one more step; let’s assume that the House of Morgan also did this. Now they have made a tonne of money on all these transactions, and the worst part or the best part for them is that they can buy bullion now in South African Rands at a price that is 125 dollars less.

Just look at how insidious this play is. The Feds are evil, and while working under the guise of being blithering idiots, they are evil geniuses. However, when you fight against the markets, you can only win so long — they have to dedicate all their resources to try to keep winning — and history has shown that in the end that those who challenge natural market forces will ultimately lose. However, will they lose during our lifetime or someone else’s? What do you or I care if they lose 200 years from now?

I covered this topic in more detail with eight other commentators in the latest Contrarian Round Table; when I talk about winning and losing, I am talking about a global scale and not about gains localised to individual countries. While Gold appreciates tremendously in US dollars — and those that took positions in it early have done well. The fact of the matter is that on a global level, the price of Gold has not appreciated as much as it has regarding the US dollar.

A Strong Currency Destroyed by Fed’s Currency War.

With their devilish minds, they have started a Global currency war. In fact, one can argue that the only function of the Fed is to create boom and bust cycles. Even though Gold is the Ultimate currency, most individuals do not view gold as a currency.

The devious Feds have added one more phase in this battle. They have now set the stage where country after country will compete with each other in an attempt to gain a trading advantage. Those that don’t will see their currencies appreciate tremendously.

Our main aim in writing this article was not so much to deal with the war on Gold but more to look at what tools they are employing to keep the price of Gold suppressed.

Technically until the world fully embraces Gold, they could keep inflating the price of Gold in several currencies while at the same time deflating it in other currencies and taking long positions in the cash that they deflate, while taking short classes in the money they inflate. So while the individuals in the countries whose currencies are being inflated benefit, the net effect is that the Feds still have the upper hand. This becomes a bittersweet victory.

The only sure way to defeat them is through education. The world must understand that gold is not an ancient relic but has always been the ultimate currency. Until we reach that stage, every victory will be localised to a group of countries. The only sad part is that now that they have precipitated a global currency war, the consequences will be terrible once the world eventually embraces Gold. The longer they are kept from embracing Gold, the worse the outcomes will be.

John Tyler’s Views on the Destruction of A strong Currency

More fortunes are made playing golf than in the boardroom, and as Robert Jackson said in the case United States v. Wunderlich, “Men are more often bribed by their loyalties and ambitions than money.”

A bevvy of banks shares the Fed’s franchise on money, and there’s no friendship like brinkmanship and a few billion profit. What is possible and highly profitable is usually done. The question then becomes one of the means.

Do the mums, dads, widows and orphans matter to these engineers of the financial machinery? Don’t look too hard in the machinery shed; you’d be surprised who has fingers on the buttons.

The problem is that the Fed thinks that the levers and buttons of the machine they have created can still control it. However, it has become a Frankenstein, soon to lurch through the economy and crush its creators.

“A government { or a FED} that robs Peter to pay Paul, can always rely on the support of Paul”- George Bernard Shaw.

Originally published Dec 22, 2013

Originally published on Sept 26, 2105, this insightful analysis has undergone consistent updates and refinements over the years; the latest update is May 2023

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