Today one of the great minds in the business spoke with King World News about the earth-shaking Swiss move and why it has created such enormous fallout. He also believes that London Gold Pool II is now faltering in the aftermath of the stunning chess move by the Swiss.
James Turk: “I would like to make a couple of critically important observations about what the Swiss National Bank did last week, Eric. We need to look at what the Swiss did carefully because it has implications for everyone who owns gold and silver….
Continue reading the James Turk interview below…
“The announcement by the Swiss National Bank was an earth-shaking event as we have seen, with markets around the word roiled by it. We are still seeing the aftermath as various players announce the losses they have incurred, and there are still no doubt many unintended economic consequences that have yet to appear. But here are the key points as I see them, and how they relate to gold and silver:
1) The central planners called the fixing of the Swiss franc to the euro a “peg.” It is a politically correct term but a misnomer that hides what was actually taking place, which was an attempt by the Swiss National Bank to control a price – in this case the price at which the Swiss franc was exchanged for euros.
2) Price fixing by central planners never works. It does not matter what price is being fixed, whether a real good like the price of bread or milk, or in this case, the rate of exchange of the Swiss franc. It is always just a matter of time before the price control breaks.
3) It is particularly important to remember that the market is always bigger than any government or even a group of governments acting in concert to stop the market from doing wants it wants. In this case the market simply overran the Swiss National Bank. Its bluff was called. The Swiss National Bank eventually realized that it could not buy all the unwanted euros being offered to it, which brings me to the last point.
4) The market does not like extreme overvaluations or extreme undervaluations. Eventually prices will move to bring assets toward their fair value, regardless of how many resources the central planners throw at the price capping in a desperate attempt to maintain a level of valuation that is unsustainable.
London Gold Pool II Now Faltering
So here’s the important conclusion that we should be taking from this, Eric. We all know that central planners are attempting to cap the price of gold. It won’t work any better for them trying to cap gold than it has for their attempt to cap the Swiss franc.
It is always good to remember, Eric, the weakest link of the chain always breaks first. Switzerland’s attempt to hold back a tide of fiat money was impossible. It had to happen sooner or later. It is just like what happened to the British pound in September 1992, or in March 1968, which marked the end of the central bank cartel called know as the 'London Gold Pool.' Market forces always prevail over time. The timing of events is difficult, but it appears that London Gold Pool II is now faltering.
As world economic activity continues to deteriorate, the central planners will become increasingly desperate to control money and capital. They see these controls as a way to bailout insolvent banking systems and perpetuate the welfare model of over-leveraged governments bordering on bankruptcy. However the central planners cannot perpetuate what is unsustainable. This is similar to how mobile casinos and online casino sites works as explained in this website.
So here’s the message we should take away from what transpired in the past week. The gold price can soar 40% in a matter of minutes just like the Swiss franc did late last week. There are a number of ways this could happen.
All it would take is for central planners to announce that they are once again tying national currencies to gold. Or it could be a market driven event, when holders of paper-gold realize they own some bank’s promise instead of physical metal. Regardless, owning and continuing to accumulate physical metal is clearly the right choice ahead of the coming great repricing of gold and silver.” ***ALSO JUST RELEASED: Former White House Official Warns Another Derivatives Nightmare Is About To Shock The World CLICK HERE.
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