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September 13, 2004

Riding the Volcano
by Alex Wallenwein

Is Gold really being "controlled"?

Look at the price of gold that the London Gold Pool tried to maintain: about $35 an ounce. How successful were they? Today, gold is over $400 an ounce. It has been above the $300/oz. mark for the vast majority of the years since 1980 - despite all manner of "fine-tuning" of the fractional reserve/fiat-banking system.

Do you still think the manipulators are so overwhelmingly powerful?

Think of the volcano they have set themselves up to ride - into either perpetuity, or into their doom. They are trying to keep a lid on it.

Fat chance!

It's like, in order to prove to their prospective subjects (us) that they are the "masters of the earth," they have mounted the volcano of gold price suppression at a time of relatively low activity. Evert tiny little rumble was interpreted by those of us who are betting against their power as potentially "the big one" - only to leave us disappointed and thereby making the "riders" appear more powerful.

But they realize full well the downside of the gamble they have engaged in. They realize full well that the more time passes, the more success at "taming" the volcano they can claim before us, the closer approaches the hour of their inevitable destruction.

Most gold investors follow this logic to some extent - but they want their profits NOW.

The real problem for gold investors is that they have a relatively short time horizon. They have neither patience nor the ability to wait. Since they want profits - i.e., a higher return in paper money than they put in - their eyes are not really on the stability and inherent soundness of the underlying asset - gold.

So they leverage themselves to high heaven, believing themselves to be either lucky - or smart - enough to predict the exact timing of the coming "crash."

Because their time horizon is so narrow, they set themselves up for the same inevitable failure as the "masters" of the volcano, except that their failure is inevitably a near-term phenomenon, while the "masters" ultimate failure continues to be a long term certainty. Every short-term failure of the gold speculators is another notch in the gun handle of the volcano riders.

But the volcano doesn't care about notches in anyone's handle. It is not impressed.

The volcano follows its own time line. The "day of reckoning" it has in store for us is strictly a matter of "economic physics." It is strictly a function of the amount of pressure below on the one hand, and the structural weakness of the ground above. When the former finally overcomes the latter, she will blow.

Fire and brimstone will surely rain from the sky - and it will rain on those who have made their camp near their masters, waiting for the pearls of wisdom and the financial oracles they occasionally deign to dispense to the masses of their loyal subjects.

If you have any sense, you will not pitch your life savings' tent anywhere near their sphere of influence.

If you have any sense, you will make camp as far from them as you can. You will go across the waters, to foreign lands, lands that are built on the solid bedrock of physical gold, not on ever-shifting volcano ashes of leveraged paper-instruments. You will go off the "grid" of fiat-based monetary entanglements.

What you absolutely don't want to do - if you have sense - is set yourself up to "take advantage" of the blowing volcano. That puts you right into the camp of the volcano's self-proclaimed "masters."

Who is a master here, who and what takes advantage of whom in the end - will soon enough become painfully clear to all.

The best you can hope for is to be able to remove yourself from the epicenter of this building financial eruption, as far as you can. You will "profit" if you are simply more or less unaffected by the violence of the coming outbreak.

Unfortunately, this can be only partially successful. Although you can effectively use physical gold to insulate your relative wealth position from the coming onslaught, the accompanying devastation of the financial environment in which you will live and spend your wealth is just too far outside of your control.

No one can foretell the topography of the financial landscape after the eruption. You only know this: that it will be the worse the longer the volcano is building pressure before it blows - and everything the volcano riders are now doing to "manage" the events to come is only adding to that pressure.

Got gold?

Alex Wallenwein
Editor, Publisher
The Euro vs Dollar Monitor

Just like driving your car, investing only makes sense if you can see where you are going. The Euro vs Dollar Monitor is your golden windshield wiper that removes the media's greasy film of financial misinformation from your investment outlook. Don't drive your investment vehicle without it!

Copyright © 2003-2008 Alex Wallenwein

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