Jay Taylor doesn't beat around the bush—he believes the price of gold is being suppressed to support the U.S. dollar and underwrite American foreign policy. But the publisher and editor of J. Taylor's Gold, Energy & Tech Stocks and host of the radio show "Turning Hard Times into Good Times" thinks that this suppression will fail, just as it did in the 1970s, when gold rose over 2,300%. In this interview with The Gold Report, Taylor urges investors to stay as liquid as possible so they can invest in undervalued companies poised to explode when the value of gold is reasserted.
The Gold Report: The price of gold has fallen more than $130 an ounce ($130/oz) since July. Why?
Jay Taylor: I believe we have two different markets. One is an honest market for physical metal. The other is a market that has increasingly become less than honest. The latter is a paper market, primarily in London and New York, and it is used to muddy the waters of price discovery with gold and silver. This paper market price is assumed to be the real price of gold. I don't think that's true.
There is a need on the part of Wall Street, and the ruling elite within the Anglo-American empire, to keep people uninterested in honest money and real gold because dishonest enterprises must keep people from knowing the truth. What we have essentially is a fiat currency system that is devised to allow those in charge of the monetary system to profit at the expense of the real producers of wealth: the miners, the manufacturers, the farmers, the inventors. The people that produce useful things are having their wealth confiscated clandestinely by this monetary scheme.
TGR: You have written that "the rigging in the gold price in New York and London is accomplished by a handful of major bullion banks that just happen to be the biggest shareholders of the Federal Reserve." How is this rigging accomplished?
JT: It's accomplished through massive futures markets selling on the Comex and the London markets. It is like a casino. There is a 100 to 1 ratio of gold futures bought to actual gold settlement. We see huge amounts of selling coming into the market at exactly the times we would expect gold to do well. The futures markets are so highly leveraged that a very small amount of actual dollars are needed to drive the gold price down.
The players here, the big banks, have the largest shareholdings of the Federal Reserve. They have access to massive amounts of money created out of nothing. It is interesting to note that, especially for platinum, palladium and silver, a large premium, up to 24% in the case of palladium, is being paid by people in the physical markets of Shanghai. The premium for silver has been around 14%, and the premium for platinum has been between that of palladium and silver.
TGR: In retrospect, was the creation of gold exchange-traded funds (ETFs) a mistake?
JT: I don't think so. We must distinguish between those gold ETFs that are honest and those that might not be so honest. Among the good ones are the Merk Gold Trust ETF (OUNZ), which allows investors to actually take delivery of physical gold. Another good one is the Central Fund of Canada Ltd., which publishes a quarterly audit of the amount of gold, silver and cash that backs each share. The Sprott ETFs are honest as well, and at least one Sprott fund allows investors to take delivery of gold, albeit a larger number of ounces than the Merk Gold Trust, which is designed more for retail clients who wish to turn their shares into gold.