Author: John Embry of Sprott Asset Management
The gold market powered its way to a succession of new all-time highs in the wake of India's stunning purchase of 200 tonnes of IMF gold and mounting concern about the fate of the U.S. dollar. There is little doubt that India's actions drew widespread attention to a historic shift in attitude of central banks towards gold. For at least the past 15 years, Western central banks have been flooding the market with massive quantities of gold, primarily by leasing it surreptitiously to their bullion-bank cronies. Ostensibly that portion of their activities, which was transparent (i.e. direct sales), was for reserve diversification. However, the real motive for their behavior was to depress the price of the yellow metal, thereby reducing critical scrutiny of their increasingly reckless monetary policy, ensuring that interest rates remain at low levels and allowing the U.S. dollar to retain its supremacy.
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