Jeffro
Silver Member
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By Patrick A. Heller, Market Update
September 01, 2009
In a town hall meeting last Thursday, Rep. Barney Frank, D-Mass., who is chair of the House Financial Services Committee, was asked what he was going to do about H.R. 1207, a bill in his committee sponsored by Rep. Ron Paul, R-Texas, and co-sponsored by 282 other representatives.
This bill calls for an audit of the Federal Reserve to be conducted by the Government Accountability Office. As part of such an audit, it is expected that there would be an audit of U.S. gold holdings and trading activities.
To just about everyone's surprise, Frank stated that he was working with Paul to slightly modify the bill to make it possible to gain congressional approval in October. The modifications he wants have to do with eliminating the concern that such an audit might interfere with the Fed's policy-setting abilities.
As this legislation has gained support, Frank had previously been non-responsive to inquiries on this bill. With enough votes in the House of Representatives pretty much assured, Frank's position as chair of the committee to which the bill was referred was the last practical obstacle to this legislation passing Congress.
Once the bill passes the House, it still must be approved by the Senate, where a companion bill already has more than 20 co-sponsors. It would be difficult for the Senate to vote against such a law since pollsters show it has huge public support.
Last week, the Treasury again needed to sell an extraordinarily large amount of debt to help finance the budget deficit. In order to pay a lower interest rate, it was necessary for the value of the dollar to appear strong. One way to do this is to make a major effort to suppress the price of gold. This is exactly what happened last week - until after the Treasury debt auctions were finished.
I don't know for sure exactly why gold started to soar last Thursday afternoon and then continue rising last Friday. It was at least a great coincidence that the gold price was stymied until just after the Treasury auctions were done for the week. Gold also started to rise about a half hour after the first reports of Rep. Frank's comments.
As Fed officials have threatened, any attempt by the GAO to audit the Federal Reserve would result in higher interest rates, higher consumer prices and would put more constraints on the U.S. government to run massive budget deficits. Maybe part of the mainstream financial media is waking up to just what has been happening to the price of gold - and what could happen if the truth of price suppression efforts became public knowledge.
In odd-numbered years of this decade, the price of gold has soared an average of 60 percent in the seven-month period beginning in August. Then gold prices have consolidated for the balance of the two years until the next August in an odd-numbered year. That trend doesn't prove that it has already started this time around. But all of the other financial pressures on the dollar and the U.S. government's mounting problems tell me it could easily happen again.
Let's see, 60 percent above $950, puts gold over $1,500 by next March. I expect that will be comparatively easy to reach. September will certainly be an interesting month for the gold market.
Patrick A. Heller owns Liberty Coin Service in Lansing, Mich., and writes Liberty's Outlook, the company's monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at http://www.libertycoinservice.com.
By Patrick A. Heller, Market Update
September 01, 2009
In a town hall meeting last Thursday, Rep. Barney Frank, D-Mass., who is chair of the House Financial Services Committee, was asked what he was going to do about H.R. 1207, a bill in his committee sponsored by Rep. Ron Paul, R-Texas, and co-sponsored by 282 other representatives.
This bill calls for an audit of the Federal Reserve to be conducted by the Government Accountability Office. As part of such an audit, it is expected that there would be an audit of U.S. gold holdings and trading activities.
To just about everyone's surprise, Frank stated that he was working with Paul to slightly modify the bill to make it possible to gain congressional approval in October. The modifications he wants have to do with eliminating the concern that such an audit might interfere with the Fed's policy-setting abilities.
As this legislation has gained support, Frank had previously been non-responsive to inquiries on this bill. With enough votes in the House of Representatives pretty much assured, Frank's position as chair of the committee to which the bill was referred was the last practical obstacle to this legislation passing Congress.
Once the bill passes the House, it still must be approved by the Senate, where a companion bill already has more than 20 co-sponsors. It would be difficult for the Senate to vote against such a law since pollsters show it has huge public support.
Last week, the Treasury again needed to sell an extraordinarily large amount of debt to help finance the budget deficit. In order to pay a lower interest rate, it was necessary for the value of the dollar to appear strong. One way to do this is to make a major effort to suppress the price of gold. This is exactly what happened last week - until after the Treasury debt auctions were finished.
I don't know for sure exactly why gold started to soar last Thursday afternoon and then continue rising last Friday. It was at least a great coincidence that the gold price was stymied until just after the Treasury auctions were done for the week. Gold also started to rise about a half hour after the first reports of Rep. Frank's comments.
As Fed officials have threatened, any attempt by the GAO to audit the Federal Reserve would result in higher interest rates, higher consumer prices and would put more constraints on the U.S. government to run massive budget deficits. Maybe part of the mainstream financial media is waking up to just what has been happening to the price of gold - and what could happen if the truth of price suppression efforts became public knowledge.
In odd-numbered years of this decade, the price of gold has soared an average of 60 percent in the seven-month period beginning in August. Then gold prices have consolidated for the balance of the two years until the next August in an odd-numbered year. That trend doesn't prove that it has already started this time around. But all of the other financial pressures on the dollar and the U.S. government's mounting problems tell me it could easily happen again.
Let's see, 60 percent above $950, puts gold over $1,500 by next March. I expect that will be comparatively easy to reach. September will certainly be an interesting month for the gold market.
Patrick A. Heller owns Liberty Coin Service in Lansing, Mich., and writes Liberty's Outlook, the company's monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at http://www.libertycoinservice.com.
