Market News International retracts report about central bank gold sales

11:02p ET Friday, December 9, 2011

Dear Friend of GATA and Gold:

Market News International, which, on the basis of confidential sources, reported Thursday that the Bank for International Settlements, Bank of England, and Federal Reserve had sold gold that day to reverse an upward spike in the price as the euro zone financial crisis worsened, has retracted the report. (See http://www.gata.org/node/10752.)

Word of the retraction comes via GATA's friend Michael Kosares, proprietor of Centennial Precious Metals in Denver and its Internet site USAGold.com, who wrote to the news agency in search of information supporting its report. Kosares today received this reply from MNI's Vicki Schmelzer: "The bullet that was posted was posted in error. We had one contact mentioning that this might be the case, but when we called other, more trusted sources later, they said this was not the case and in fact selling by these institutions was totally unlikely. We put out a retraction shortly after the initial bullet."

Of course MNI's statement doesn't mean that central banks were not selling or leasing gold this week to support the euro and other government currencies as the Western financial system teetered. Since mainstream financial news organizations simply assume that market interventions by central banks, particularly interventions in gold, are properly secret and can't be asked about in polite company, it's unlikely that any central bank was pressed enough this week about its gold activities that it even had to bother issuing a "no comment."

Indeed, MNI's retraction just as easily could mean that the news agency was pressured or threatened by a government or governments for broaching a topic considered likely to jeopardize national security.

At least the counterintuitive behavior of the gold price is far from news and long has been one of GATA's themes.

South African gold mining analyst Peter George remarked on this in August 2005 at GATA's Gold Rush 21 conference in Dawson City, Yukon Territory, Canada. "In the last 10 years," George said, "central banks have effectively shown that when there's a real crisis, gold actually goes down, and then it's so blatant it's a joke."

Video of George's comment from six years ago can be found at the 38-second mark in the video at the top of the page here:

http://www.gata.org/node/20

The smashing of the gold price on September 6 this year, just moments before the surprise devaluation of the Swiss franc, which until then had been the only remaining "safe haven" currency apart from gold, was the sort of blatant intervention George talked about. In an interview that day with King World News, this intervention was cited by Hinde Capital CEO Ben Davies, who had spoken at GATA's Gold Rush 2011 conference in London a month earlier. Davies said of gold: "Why was it selling off just ahead of a really bullish announcement? You have to believe that there was some coordinated action. ... The central banks will all have been in on knowing ahead of time that the Swiss were going to announce this. So there was central bank selling because they really didn't want the price of gold to skyrocket on what is incredibly bullish news for gold." (See http://www.gata.org/node/10393.)

Anyone seeking meaningful information from central banks about gold has to sue, as GATA sued the Federal Reserve in December 2009 in U.S. District Court for the District of Columbia under the U.S. Freedom of Information Act, winning this year disclosure of one incriminating document but failing to win disclosure of many more the Fed insisted on keeping secret:

http://www.gata.org/node/9560

http://www.gata.org/node/9623

So what did central banks do in the gold market this week? Mainstream financial journalists seem to know better than to ask.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.