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Lee Quaintance and Paul Brodsky: For gold market rigging, look east too
4:45p ET Wednesday, December 12, 2012
Dear Friend of GATA and Gold:
In their latest market letter, Lee Quaintance and Paul Brodsky of QB Asset Management in New York add credence to speculation that the gold price could not have been so restrained lately without the assistance of China and Russia and maybe even Japan and South Korea, all eager to hedge their dollar exposure with gold but unable to get it in size without a long period of price suppression.
Quaintance and Brodsky write:
"According to most dyed-in-the-wool hard-money advocates there is a 'gold cartel' that suppresses the gold price. They tend to argue that U.S. banks continually short gold (and silver) futures nakedly, clipping significant yield each quarter without sufficient metal in stock to deliver to futures buyers if exercised.
... Dispatch continues below ...
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"They further argue that these banks do not fear regulatory reprisal, and in fact that their actions are blessed by the powers that be because runaway gold prices would signal to the world that there is something wrong with the currencies gold competes with, notably U.S. dollars. Thus, as the argument goes, banks have the means, motive, and implicit sovereign go-ahead to suppress the gold price.
"Mmmm, maybe. We certainly agree that gold should fundamentally be priced much higher than where it is and that the way gold futures seem to be reliably stepped-on before Treasury auctions and Fed meetings is a bit snarky. But as for the progenitors of the crime? It might be better to look east.
"Conspiracy theorists should consider foreign dollar reserve holders that would like to take delivery of as much physical gold (and silver?) as possible in a very short time, and do so at cheap prices. It would be simple to do: Fund offshore hedge funds that continually short gold futures through U.S. bank accounts, thereby keeping the spot price and London fixings down. Physical gold could then be delivered to sovereign accounts directly from mines and through exports at the suppressed prices."
In any case, it's worth remembering, as GATA has reported, Russia and China long have known all about the Western central bank end of the gold price suppression scheme, and well might have devised a course of action in regard to it:
http://www.gata.org/node/11723
http://www.gata.org/node/10380
http://www.gata.org/node/10416
And if somehow Russia and China have not devised such a course of action, they too may want to read the latest QB Asset Management letter, which is titled "It's Time" and which Quaintance and Brodsky graciously have allowed GATA to post in PDF format here:
http://www.gata.org/files/QBAMCOItsTime-12-2012.pdf
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
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Opinion Around the World Is Changing
in Favor of Gold -- Find Out Why
When Deutschebank calls gold "good money" and paper "bad money". ...
http://www.gata.org/node/11765
When the president of the German central bank, the Bundesbank, pays tribute to gold as "a timeless classic". ...
http://www.forbes.com/sites/ralphbenko/2012/09/24/signs-of-the-gold-stan...
When a leading member of the policy committee of the People's Bank of China calls the gold standard "an excellent monetary system". ...
http://www.forbes.com/sites/ralphbenko/2012/10/01/signs-of-the-gold-stan...
When a CNN reporter writes in The China Post that the "gold commission" plank in the 2012 Republican platform will "reverberate around the world". ...
http://www.thegoldstandardnow.org/key-blogs/1563-china-post-the-gop-gold...
When the Subcommittee on Domestic Monetary Policy of the U.S. House of Representatives twice called on economist, historian, and gold standard advocate Lewis E. Lehrman to testify. ...
World opinion is changing in favor of gold.
How can you learn why and what it will mean to you?
Read the newly updated and expanded edition of Lehrman's book, "The True Gold Standard."
Financial journalist James Grant says of "The True Gold Standard": "If you have ever wondered how the world can get from here to there -- from the chaos of depreciating paper to a convertible currency worthy of our children and our grandchildren -- wonder no more. The answer, brilliantly expounded, is between these covers. America has long needed a modern Alexander Hamilton. In Lewis E. Lehrman she has finally found him."
To buy a copy of "The True Gold Standard," please visit:
http://www.thegoldstandardnow.com/publications/the-true-gold-standard
