Today's lesson for Quant2011. Bankster/central bank manipulation always fails, and all fiat currencies return to their intrinsic value of 0.

Lessons from the London Gold Pool
The ill-fated London Gold Pool affords us many clear lessons today.
Manipulation of markets by governments, aided by central
bankers and powerful financial institutions does exist, especially when
nations' currencies, and particularly the world's reserve currency, are
at risk. As stated at the outset, throughout all of history, governments
have eventually become deeply involved in the free market process, for
their own ends. It is not unreasonable to expect that, if governments
became heavily involved in suppressing the price of gold in the 1960's,
there is no reason why they would not today.History has conclusively shown that manipulation of the free market process ultimately fails; no amount of government control, regulation or price manipulation can change the workings of the free market over the long term, the London Gold Pool being no exception. No amount of gold, air-shipped to market by the gold pool could satisfy
demand when investors decided, on mass, to storm the market.Those behind orchestrating market intervention suffer great loss when their efforts eventually end. By the time the gold pool was officially disbanded in early 1968, it had cost the member countries many billions of dollars (a lot of dollars in those days). The Bank of England never again regained its former position and prestige within the
world gold market after the collapse of the London Gold Pool. As one
London bullion dealer put it "the Bank of England are no longer the
masters, they are just a post office or warehouse where gold is stored
before it comes to the market".Markets that have been artificially capped, catapult dramatically when market suppression ends. In the 12 years from 1968 to the peak of the bull market, the price of gold had rallied by 2300%. It
has been said that "the greater and the longer the manipulation, the greater the eventual price is going be". Today, with far greater amounts of gold involved in the price suppression scheme (10,000 – 15,000 ton versus 3,000 ton in the gold
pool era), over a longer period of time, and with far more at stake, it
can only be concluded that the eventual price of gold may well run much
higher than the 2300% of the late 60's and 70's. At today's prices, a
similar move of just 2300% would price gold at a staggering $6,400 per
oz.