This echoes what GATA board member Adrian Douglas, publisher of the Market Force Analysis letter (www.MarketForceAnalysis.com), often has written about the gold and silver markets particularly -- that paper trading is scores of times greater the actual metal traded and, perhaps more important, scores of times greater than actual metal available for delivery.
This means, as you've heard from this quarter before, that there are no markets anymore, just interventions (http://www.gata.org/node/6242), with the virtually infinite amounts of money necessary for manipulation being delivered by central banks to the monster financial houses that act as their agents both officially and openly as well as unofficially and surreptitiously.
And yet we too may be faulted for paying such close attention to it. Yes, these manipulations supply the main cues for all asset and consumer prices, but now that "trillion" has become a commonly accepted term, the economy's connection to reality itself is being lost. For as Zimbabwe discovered recently and as Weimar Germany discovered 90 years ago, when it comes to human affairs, "trillion" exists only in the imagination, if there. It is incomprehensible.
The digits that flash on our computer screens every day are now mostly just the reflections of holograms concocted by machines. These machines may not yet have taken over the world in the much-feared moment of "singularity," catapulting us all into the losing side of some Arnold Schwarzenegger movie, but as Newman notes they could turn on their masters at any time.
You know all the old philosophical arguments in favor of gold and silver as an independent form of money -- human liberty, limited government, and so forth. But an equally compelling argument now may be the defense of simple reality. In the end monetary metal in your hand is at least something. Hurl it hard enough at an arrogant central banker, a parasitic fund manager, or a sleeping market regulator and it would sting a bit. However the precious metals are to be priced, holding them as money is a way of rejecting and defying the holograms and the creators of infinite money.
Having had plenty of horrible experience with infinite money, the American Founders knew all this and so insisted on commodity money. But their descendants lacked such experience, and so it came to seem primitive to let the money supply be determined by how much metal could be pried out of the ground each year. Indeed, it is primitive. It just seems that any more sophisticated money inevitably becomes too sophisticated, and the result of that is far worse than primitive -- predatory, corrupt, totalitarian, and unreal.
Alan Newman's letter, headlined "A Mockery of the Capital Markets," is posted at the Crosscurrents Internet site here:
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