Amphora's John Butler: Currency market rigging likely would paint gold's tape

10:34a ET Thursday, May 23, 2013

Dear Friend of GATA and Gold:

In his market letter for May, commodities fund manager John Butler of Amphora Capital in London describes the rationales and mechanisms of surreptitious currency market intervention by central banks, rationales and mechanisms that will be familiar to anyone who follows the gold market with even the slightest skepticism.

Drawing on a long conversation he had years ago with his professor of international economics in graduate school, a professor who was a former high U.S. Treasury Department official, Butler writes that supporting the U.S. dollar amid suppression of interest rates well may involve surreptitious suppression of the price of gold:

"The United States may have little in the way of foreign exchange reserves but it has a huge pile of gold reserves -- the world's largest, in fact. If the U.S. were to set about covertly intervening to support the dollar amid artificially low interest rates, therefore, it would make far more sense to do so through covert intervention in the gold market. Should they follow my former professor's advice, they would sell gold into the market at relatively illiquid times for maximum price effect. They would do so repeatedly until certain technical chart patterns turned in favor of the dollar and against gold, establishing a new trend. And if they succeeded, no one need ever know."

Central bankers, Butler notes, are very skilled tape painters.

With Butler's kind permission, the May edition of his letter, the Amphora Report, is posted at GATA's Internet site here:

http://www.gata.org/files/AmphoraReport-May2013.pdf

For information about subscribing to the Amphora Report, please visit:

http://www.amphora-alpha.com

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