Gold & Silver: Why governments want much, much higher prices soon?

By Arnold Bock
That governments will want - and will NEED - much, much higher Gold and Silver prices in the future is counter intuitive, given that they have done everything within their power till now to throttle back and to keep a lid on bullion prices. Let me explain why.



Although we have seen eleven consecutive years of gold bullion price rises, such increases have been incremental, measured and at levels which make the remainder of the commodities and equities markets look volatile. Governments have used their preferred bullion banks as agents in the paper futures markets and their central banks, in conjunction with their respective Treasury bureaucracies, to limit the inexorable rise in precious metals prices as much as possible to keep gold - the only 'real money' - from drawing unfavorable attention to their own failing fiat currencies and uncontrolled sovereign debt.



Recently central banks have become net purchasers of gold bullion after many years being net sellers. In 2011 central banks purchased 430 tonnes of gold, five times more than in 2010 and the highest since 1964. Much of this new demand has come from 'emerging markets' central banks like Mexico, Russia, Turkey, South Korea and of course China and India.



This causes one to speculate as to why governments would suddenly, however quietly, turn into buyers rather sellers of gold.



--Could it be that gold is the only 'real money' in a world comprised of paper money backed up only by faith and confidence, or lack thereof?
--Are 'paper money bugs' losing their confidence and swagger?
--Are governments positioning themselves for a period when paper money loses its value faster than they can create additional digital versions of it?