by Evelyn Gilbert

When countries go to war it is usually met with a slow down in the stock market and a rise in the price of gold and silver. On the 8-8-’08 Georgia attacked South Ossetia and with it Russia.

For the US stock market this should have been a major panic and it should have send shivers down the spine of every trader. Georgia is a staunch western ally and for it to attack South Ossetia in the still of night against all assurances of its president would have been unthinkable without the support of the USA and it’s puppet masters. It would have been unconceivable for Russia not to intervene the way that it did. And it is bringing the world to the brink of another World War. It should for all intends and purposes have send Wall street running for the Hills.

Already plagued by the economic recession, subprime crisis and the high oil and food prices it should have send stocks down the drain and drive Oil, Gold and Silver through the roof.

But it didn’t! Against all economic laws the Dow Jones industrial average shot up 300 points on friday and gold, silver and oil plummeted. So what is going on?

Perhaps it is prudent to mention here that in the week preceding both mortgage giants Fanny mae and Freddy mac already reeling from the subprime crisis announced more devastating losses. The attempt made by the US government to bail out the two giants had clearly failed.

This is what James Turk the founder of Goldmoney had to say about it:

“The banking problems in the United States continue to mount, while the federal government’s deficit continues to soar out of control. . . . So what happened to cause the dollar to rally over the past three weeks? In a word, intervention. Central banks have propped up the dollar, and here’s the proof.

“When central banks intervene in the currency markets, they exchange their currency for dollars. Central banks then use the dollars they acquire to buy US government debt instruments so that they can earn interest on their money. The debt instruments central banks acquire are held in custody for them at the Federal Reserve, which reports this amount weekly.

“On July 16, 2008 . . . , the Federal Reserve reported holding $2,349 billion of US government paper in custody for central banks. In its report released today, this amount had grown over the past three weeks to $2,401 billion, a 38.4% annual rate of growth. . . . So central banks were accumulating dollars over the past three weeks at a rate far above what one would expect as a result of the US trade deficit. The logical conclusion is that they were intervening in currency markets. They were buying dollars for the purpose of propping it up, to keep the dollar from falling off the edge of the cliff and doing so ignited a short covering rally, which is not too difficult to do given the leverage employed in the markets these days by hedge funds and others.”

But who would have such power

There is only one group who could manipulate the financial market like this it is called the President’s Working Group on Financial Markets or as it is more commonly known “The plunge protection team”
and until recently it’s existence was vehemently denied. It can order for example Central banks to buy up dollars. They can intervene in “free” markets to prevent financial meltdown. But you can only do so for a short time and it is not a fix for a system that is broken and fundamentally flawed.

What is imploding is a one Quadrillion dollar derivatives scam with banks facing trillions of write off’s and the very real chance of economic collapse to the point of turning the USA into a very poor third world country well beyond repair. Some $400 billion in ARMs (adjustable rate mortgages) for example have or will reset between March and October of this year. Assuming 3 to 6 months for already maxed out debtors to finally be unable to repay their mortgages, a huge wave of defaults is about to strike, continuing through March 2009. The next wave of financial meltdown will be the credit card meltdown and with foreclosures surging 55 % against the figures of last year the same period and that is only just the beginning.

While the PPT propped up dollar artificially the price of gold, silver and oil went down. It was noted that the oil price went down because of fears of lowering demand but while punters bought less oil and drove less it would have been ridiculous to assume that the demand would go down much lower. People need to get to work and while they might have cut down on weekend trips at some stage you don’t have much of a choice.

Additionally gold and silver made a dive in an unprecedented manner while war has broken out between arguably the most powerfull Nations on the face of the planet.
Until now oil, food, gold and silver have been what people used to buy in times of such uncertainty. Especially when conflict broke out in an area rich in resources as the chance that those resources would not be available for some time or at all.

The Federal Reserve of New York while Greenspan presided over it has been responsible for the biggest expansion of the money supply in the history of the Federal Reserve System. By keeping the interest rate at an all time low Greenspan allowed for the development of the IT bubble first and when that went to seed he allowed for a world wide housing bubble to evolve. This bubble is now collapsing and the excessive amount of money in the system is devaluing at break neck speed. Oil, food gold and silver are the only commodities left to maintain value in your portfolio and still three of those commodities tanked last week.

There can only be one explanation. In order for the price of gold, silver and oil to rise further without people catching on to the hyperinflation that is at the bottom of the meteoric rise of commodity prices, the price of these commodities needed to be brought down artificially.

By dumping large amounts of gold and silver and oil on the market and spreading the rumour of the lessening of demand the prices could be manipulated just like the stock market.

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