Goldbugs have long-believed that central banks try to manipulate the price of gold, i.e. dumping gold onto the market at certain times to keep the price down, then slowly re-acquiring it after the spike passes, etc. But in an era where the goldbugs are predicting $2000/oz and higher (I’ve seen predictions of $5000/oz), I don’t think the central banks have enough gold in their vaults to blunt that rise — and even worse, if they made a concerted effort to dump it, that very signal would push prices through the roof. Even worse, it’s a prisoner’s dilemma. The central banks are helped if they all dump the gold, but if one goes rogue and starts buying it all up, it ruins the plan for all of them.

So no, the central banks can’t just dump their gold onto the market. Yet they have serious fears that the public senses the inflationary forces in the world and are looking for a hedge. And they REALLY don’t want the gold price to spike and fuel those fears.

So what if they created a scare in the gold market about purity? Instead of giving people trust in their own currencies, what if they tried to impugn trust in the ability to buy real gold?

The initial discovery was something like four gold bars, which the Hong Kong bankers drilled invasively to test the contents. Reminds me of drilling the earth and measuring how many grams of gold per tonne. The HK bankers hoped to have 99% gold yield in their drill program for the resident bars. They found something like 1% instead and 99% tungsten. By the way, tungsten sells for less than $70 per ton, which makes its swaps for gold to be 60x more profitable than silver bar swaps. Another handy usage for the Gold/Silver ratio in calculations. The hunt was on. Now not a single assayer on the planet is available, as all are tied up. They have been commissioned to test the gold bars shipped from the United States of Fraudulent Banker America in their own bullion vaults. They use basic methods of four drill holes with direct assay of shavings, but also less invasive methods like electro-magnetic waves to examine the metal lattice structure. When highest level methods are needed, they turn to mass spectrometry. NOW ALMOST NO GOLD BARS WILL LEAVE THE LONDON OR NEW YORK METALS EXCHANGES WITHOUT SOME AUTHENTICATION, AS DISTRUST IS WIDESPREAD.

Think, for a second, what a diabolical scheme this would be, if perpetrated by central banks.

In a move they can blame on simple counterfeiters (trying to pass off the tungsten as if it were gold at a huge profit), they can paralyze the entire gold market in a fear that if you buy gold, it won’t be real. They can try to destroy demand for gold in such a way that — if undiscovered — would never be traced to them. All this while keeping all their gold safely in their vaults and devaluing their fiat currencies.

Now, I’m not going to up and claim that such a scheme is being perpetrated. But would you put it past the central bankers, a group of people desperate to keep faith in their own fiat currencies — since faith is the only thing that backs them?