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Ted Butler: The new law of supply and demand
11:46a ET Friday, July 5, 2013
Dear Friend of GATA and Gold:
In commentary excerpted from his latest newsletter, silver market analyst and market-rigging opponent Ted Butler complains again that the prices of gold and silver are being determined by "excessive speculative selling" of futures contracts rather than by genuine transactions between buyers and sellers of real metal and that regulatory authorities do nothing about this perversion of commodity markets. Butler further complains that this "excessive speculative selling" has just driven the prices of gold and silver below their cost of production.
True enough as always, but this analysis falls short of more important points.
First, why do regulatory authorities fail to act? Most likely it is because suppressing the price of the monetary metals has long been Western central bank policy --
http://www.gata.org/taxonomy/term/21
-- and the "speculative selling" itself is likely selling by central banks and government treasury departments, as, for example, the U.S. Treasury Department's Exchange Stabilization Fund is authorized to intervene surreptitiously in not just the monetary metals markets but all markets:
http://www.treasury.gov/resource-center/international/ESF/Pages/esf-inde...
And second, with market manipulation making them unprofitable, why do gold and silver mining companies and the trade association of some of the larger gold miners, the World Gold Council, do nothing about it and fail even to object?
... Dispatch continues below ...
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That governments will do whatever they can do surreptitiously to destroy competition for their currencies and bonds must be accepted as the nature of government and the corruption of government by power. As deception is the prerequisite for market rigging, it can be constrained only by publicity and greater understanding by market participants. That is GATA's work, work that will always need to be done by somebody outside government in every market.
But if gold and silver mining companies have no objection to market rigging that pushes the price of their products below the cost of production, no one will have any use for them and soon they may not have any work at all. Shareholders in those companies might do well to inquire with company management about this.
Butler's commentary is headlined "The New Law of Supply and Demand" and it's posted at GoldSeek's companion site, SilverSeek, here:
http://www.silverseek.com/commentary/new-law-supply-and-demand-12264
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
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