FT's Gillian Tett provides the rationale for gold price suppression

Explaining "financial repression" as the coercion of investors to purchase government bonds that pay negative real interest rates, Gillian Tett of the Financial Times this week provided the perfect rationale for the Western central bank gold price suppression scheme -- all without mentioning gold at all.

In an essay published in The Wall Street Journal last December, recently resigned Federal Reserve Board member Kevin M. Warsh was among the first to complain about "financial repression," which he described as a matter of policy makers' "suppressing market prices that they don't like":

http://www.gata.org/node/10839

Almost exactly a year ago, the economists Carmen Reinhart and Belén Sbrancia wrote a path-breaking International Monetary Fund paper about "financial repression." It initially caused many Western investors to blink. For while such "repression" has been extensively discussed in emerging markets in recent years, not many people in America knew what this dark-sounding phrase meant.

(Answer: "Financial repression" occurs when governments engineer a situation in which investors feel compelled to buy bonds at unfavourable rates, ie below the prevailing level of inflation, thus helping to reduce national debt.)

How times change. A year later, the word "repression" is being bandied about at investor conferences across the Western world. No wonder. In the eurozone, there are growing signs that governments in places such as Spain and Ireland are "encouraging" -- if not forcing -- banks and state pension funds to buy public sector bonds, at potentially unfavourable prices.

Anybody buying Treasuries.... is essentially agreeing to subsidise the US government in coming years -- unless you believe that deep deflation looms. Call it, if you like, a form of "voluntary" repression; either way, it will almost certainly end up helping the US state, to the detriment of investors.