The coming default of the LBMA.

1. How gold price is suppressed.

In several posts, I have discussed HOW the bouillon market was being manipulated and why. Basically, an avalanche of SALE orders submitted in quiet trading hours, that's how.

2. I have also posted various people's conjectures as to WHY. Basically, to keep gold going down and thus camouflage the real (price) inflation that is occurring because of the monetary inflation.

3. The cost of manipulating the gold price.

Have you heard about the GOLDEN RULE? The rule says HE WHO HAS THE GOLD, MAKES THE RULES. And the reason why nations hold gold is to guarantee to their trading partners that their currency is backed by something solid - something that has been regarded as of universal value for ages.

So where is our gold?

a) There is the anecdotal evidence of the soldier who asked for live ammo while guarding Fort Knox. His Sergeant told him to forget it, THERE WAS NOTHING TO GUARD.

b) Then there is the strange refusal of the FED to audit the amount of gold in its vaults. Would you trust a bank that refused to audit its holdings?

c) Germany is supposed to have 2,400 tons of gold, of which 2/3 is in the US. Germany has asked for its gold. The fed is willing to return 300 tons in 10 years. Let's remember that after WWII the US had 24,000 tons of gold. By the time of Pres Nixon, this had decreased to 12,000 tons. The last figure we had was 8,000 tons. It should be easy to return 2/3 of 2,400 (1,600 tons) right away. But it is not being done.

d) There is other evidence that the suppression of the gold price required the use of Western gold:

1) Sweden has 120 tons of gold. On paper at least. The Swedes admit that 88% of that gold is not at home and much of it has been 'traded.'

2) Finland has 96% of its gold out of the country and admits that 1/2 has been traded.

3) France and Austria admit that their gold has been traded.

What does this all add up to? What this means that a lot of the gold the West claims it has been sold and is no longer in the possession of the LBMA (London Bouillon Bank Association). As the actual value of the US Dollar decreases, these countries will demand their gold back. But, some people calculate that there are 100 claims for every ounce of gold in the possession of Western banks. And if the LBMA is required to turn over gold, it won't be able to do so. And that is the definition of default.

Here is the latest on the US Dollar. A timely intervention drove it up - for now. The drop in value of the USD continued. Will it go lower?