Gold Price Declines as a Debt Ceiling "Breakthrough" is Reached
Gold is drifting listlessly, adding to yesterday’s losses. At last check, the spot price has retreated $16 from its record high, to $1,586. Silver’s latest rise above $40 didn’t last long; it’s back to $38.47.
The gold price fell off a cliff yesterday at 1:30 p.m. EDT – right after the Comex closed and electronic trading began. Coincidentally or not, the drop came precisely at the moment President Obama announced a “breakthrough” in the debt ceiling drama.
“I do believe that the gold price is being manipulated somehow,” says newsletter editor Matt Badiali in a recent interview with The Gold Report. “I went into this as a skeptic. I’m a geologist, a scientist. I looked at the gold price at Eric Sprott’s suggestion. He gave me an idea that I could test with data from Datastream. When we did the math, I was shocked.”
No doubt this subject will come up next week at the Agora Financial Investment Symposium in Vancouver. Matt is among the speakers, and so is one of Eric Sprott’s most trusted lieutenants, David Franklin.
The debt ceiling “breakthrough” is, in fact, the sort of “kick the can” solution to which we alluded yesterday. The proposal, from a bipartisan group of senators with the unfortunate nickname “Gang of Six,” purportedly cuts $3.7 billion in spending.
In the first place, very few of those cuts are specified in the five-page plan released yesterday. And as you might have guessed, the cuts come over a 10-year period…as if future presidents and congresses are somehow bound to honor the commitments of the current bunch. They’re not.
But the best part is the promise of a $500 billion “down payment.” Much of this is to be achieved by caps on “discretionary” spending between now and 2015.
In the real world, a “down payment” implies you have cash on hand ready to plunk down for the purchase of a home. In Washington, it means you’ll get around to coming up with the money piecemeal over the next four years. Maybe.
The only concrete is the use of “chained CPI” as a basis for a stealth default on future Social Security benefits.