Why is it that gold Is so low right Now?

Gold is down for several reasons. Some of which are in play at the current time. First off the gold market is partly controled by players in the banking system and the government. These people dont like seeing people in gold and silver because it gives them a competing currency that they cant debase. Gold is down for another important reason. Because of fractional reserve banking we are currently going through a DEFLATION not inflation. Credit is tightening and its getting harder to borrow. As a result of that the money supply is contracting. Some believe that this contracting of the money supply by the banks will be at a much faster rate then any new money creation by the FED. This can go either way. We could have a serious DEFLATION of the money supply which will destroy the ecomomey or we will have a massive inflation that will do the same thing. Either way gold will react to this by moving down in a deflation or up in an inflation. Gold either way will buy the same goods and services. To understand what Im saying here you must first understand that the banks are currently frozen and not lending. Remember that under fractional reserve banking for every dollar the Federal Reserve creates, the banks create 10 to 28 more dollars in the form of credit. If the banks write off loans then then that eliminates money the banks have created in the form of loans. That also means that 10 to 28 times those write offs must also contract by other banks as well because the loan being written off is the reserve or the fraction of the reserve that other banks base their assets on to create more money. Example I the Fed creates 1 million dollars then it get deposited into my bank account. Under fractional reserve banking, my bank keeps 10 percent in reserv and loans out the other 90 percent to you. You then deposit that 900,000 dollars into your account. My bank then uses the 900,000 loan to you as an asset and goes back to the Fed and then borrows 810,000 from the Fed through the discount window and loans that out as well. The 90,000 dollar difference is the amount of the asset that must be held in reserve by the bank. They in turn loan out the other 810,000 to someone else and the process keeps going all over again untill the loan amounts become zero. That 810,000 asset to the back can dow be used to secure a 721,000 loan from the Fed and so on. Once you default on the original 900,000 loan and the bank writes off the loan as is happening today, that means they have wpied out the basis for all the other loans thay went back to the Fed and borrowed. This leads to a DEFLATION in the money supply and a credit freeze. Prices will drop as the contraction occures because businesses will not be able to borrow. That means that cash will become more valuable and gold therefore will decline in price during a contraction or deflation in the money supply. This is the main reason why gold is going down. Those like me believe that gold will go up in this situation becaus ethe government will not allow the government debt to increase in value not in terms of dollars but in purchasing power. I believe they will inflate the system to lower the value of the money supply and in turn lower the real value of the Federal debt and obligations. I expect there will be another stimulis package in the future especially after the nation lears of the 1200 fuel rebate that will be tacked on the the Permanent Fund Dividend in Alaska this fall.

http://www.adn.com/legislature/story/488420.html

JUNEAU -- The Legislature's approval of a 1,200 "resource rebate" for Alaskans will blast an unprecedented amount of free money into the state economy.

Let's do the math.

Under the new law legislators passed Thursday, the 1,200 payments will be tacked onto Alaska Permanent Fund dividend checks going out this fall.

The dividend itself is expected to be big this year -- a record 2,000-plus.

So 2,000 plus the 1,200 rebate equals 3,200. Multiply that by 620,000, which is the number of people expected to qualify for checks, and that totals to just shy of 2 billion.

How much is that?

It's roughly double the total wages paid in the Alaska construction industry in 2007, and well in excess of the 1.4 billion in wages paid in Alaska's oil, gas and mining sector.

It's also about double the state government wages paid in 2007. Ditto for the federal civilian payroll.

So pumping 2 billion into the economy will be an extraordinary event.

It's something that's likely to draw national media attention to a state so rich it's able to avoid income or other broad taxes and still send shares of its oil wealth directly to its citizens, said Scott Goldsmith, an economist at the University of Alaska Anchorage Institute of Social and Economic Research.

This will give every Alaska resident 3200 to save, invest or spend this year. I think the Federal Congress will do something along the same lines around tax time in a deflation. If they dont Ill be suprised.

Basically Gold is moving down due to market control and due to the DEFLATION from the banks. This deflation is pushing the dollar up. I dont believe the Fed will allow a deflation to occure and they will inflate the system by bypassing the banks and issuing currency to people directly. It would not suprise me if the Congress would give say a 5,000 or 10,000 refundable tax credit to all filiers making under say 30,000 a year as a stimulis package. That would push gold through the roof. Its not as crazy as it sounds. Read this and you will reilize that what Im saying doesnt seem so nuts. http://www.huffingtonpost.com/2008/07/12/iraq-pm-al-maliki-handing_n_112340.html

BAGHDAD â€” It is a politician's dream: Handing out cold, hard cash to people on the street as they plead for help. Iraq's prime minister has been doing just that in recent weeks, doling out Iraqi dinars as an aide trails behind, keeping a tally.

The handouts by Prime Minister Nouri al-Maliki and a handful of other top officials are authorized _ as long as each goes no higher than about 8,000 US Dollars, and the same people don't get them twice. Aides say they are meant merely to ease the pain a bit, and are motivated by a belief that better conditions will lead to more security.

The cash handouts are just one small _ if eye-catching _ part of a major investment push this summer by Iraq's government. The aim is to rebuild basic services and jumpstart Iraq's damaged economy by quickly distributing as much of the country's glut of oil revenue as possible.

U.S. officials and a fed-up American public are urging exactly that _ for Iraq to spend its own money, not America's, to rebuild the country now that violence has eased.

Yet the new Iraqi effort runs a high risk of failure: The government is disorganized, fears of favoritism remain and the shadow of corruption haunts every step.

"Money is not a problem," al-Maliki told a recent gathering of tribal chiefs in the southern city of Basra, after government forces had defeated Shiite extremists there. "But we must put it in honest hands to spend."