Speaking of bonds, does the U.S. government really believe they're pulling a fast-one on the buyers of those bonds?

Don't know how many times over the years I've heard that bond traders are some of the smartest knives in the drawer. Yet, even before all this financial mess came to light, gold has always been pushed down and the Dollar propped up before and during bond auctions, as though the auctions wouldn't go off well if free markets existed.

Obviously, all the manipulation wasn't done to fool anybody, especially the buyers of those bonds. So why do it? I have a theory:

The gold and Dollar manipulation is used as a sign of strength, or control. It's a signal used so the buyers know their bond purchases are safe, even in bad times. As long as the government can demonstrate they have control over market prices, to be able to direct market movements, at will, for long periods of time, then holding long bonds is a safe bet.

Therefore, if the government can demonstrate this continuing power and control, even in these worst of times, ever, then the government sees no problem, bond buyer will simply continue as before - buy bonds because the U.S. government is still able to play its manipulation scheme.

Of course there's a new environment today, massive money printing. But the U.S. government sees no problem there either. All governments are printing money a now, so as long as everyone does it, then relative currency prices remain stable against one another. The only fly in the ointment is that darn real money, gold and silver.

Just take a whole bunch of that extra money that's printed and sell into the gold and silver futures market. As long as gold is priced in Dollars, the reserve currency, the simply force down the world gold price. The physical price keeps providing the upward pressure of the gold price, but it's the paper (futures) price that matters in this world of financial paper.

Just make sure there's no fun in owning gold. Sure is rises, but so slowly in this world of instant gratification. No big rally's to make gold noticeable, it keeps the investors in the paper markets, where all the action happens to be. So everyone prints money at the same time and gold is kept under control. Viola, currency prices appear stable.

Currency prices stable; the bond signal still works, therefore, it's safe to buy long dated bonds.

Terry