COLUMN

MOVING ON GOLD

by Michael C. Ruppert

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Dec. 31, 2002, 12:00 PST (FTW) -- Not only is gold set for a long-term bull market, it is becoming a weapon in the global war to curb blatant U.S. aggression. And while this premise is supported by recent developments in Asia and Australia, there is also a surprising indication from the Federal Reserve that a controlled burn philosophy will actually support the trend.

Facing a major U.S. economic crash as a result of oil price spikes and deflationary pressures that might destroy dollar hegemony, there are signs that the Fed might reintroduce gold in one way or another into the U.S. monetary system. Either way, the gold "cat" is out of the bag.

With gold prices having broken the $350 barrier -- an increase of more than 25 percent this year -- two other developments are signaling a global rush to gold. I stress again that when I say gold I mean physical, in-your-possession gold, not gold derivatives or paper.

First, as reported by Reuters on Oct. 28, China, via the newly opened Shanghai Gold Exchange, has allowed investment and private purchases of gold by its population. Being one of only two worldwide trading exchanges that trade in physical gold, this move is certain to increase demand as deflationary pressures indicative of a global depression start to become visible.

This upward pressure on gold, compounded by war fears, oil price spikes and a teetering U.S. economy made itself visible on gold markets just this month.

On Dec. 19 Reuters reported panic buying of gold in Tokyo and Australia. I agree with observers who say that this has less to do with Iraq than with a global effort -- unacknowledged by the major media -- to exert pressures on the U.S. economy. The world might not find it possible to stop the U.S. military from doing anything it wants. But it is possible to pull the plug on the financial engine that feeds the military, and this is where the Empire's feet of clay begin to show.

Just recently, speaking at the Economic Club of New York, even Alan Greenspan, mentioned gold, choosing to open his remarks with subtle hints that deflationary pressures might foretell the reintroduction of gold into the U.S. monetary system to prevent the dollar from going into free fall. Recent cuts in interest rates have not sparked economic growth. That's a surefire deflationary warning, especially with rates near the basement.

For too long the likes of J.P. Morgan, world central banks, Goldman Sachs and others have sat on the price of gold, and that cartel is getting ready to try to do a "controlled burn" on the bust out.

Either way, physical gold prices are going up -- way up. There might be peaks that show small declines at around $380 and $450 an ounce but I agree with analysts who say that $500-to-600 gold is not only possible, but likely, within the next 18 months. After that, depending on how soon the impacts of peak oil begin to be felt, gold at between $800 and $1,000 an ounce is not out of the question at all.