Putin understood currency market rigging 5 years ago, as Mozhaiskov did 10 years ago

Section:

8:39a ET Tuesday, March 18, 2014

Dear Friend of GATA and Gold:

The TF Metals Report's Turd Ferguson this week calls attention to remarks made five years ago by Russia's then-prime minister, Vladimir Putin, who is now president again, at the World Economic Forum in Davos, Switzerland, criticizing the United States for mismanaging the world's reserve currency and calling for its replacement:

http://www.tfmetalsreport.com/blog/5584/vlad-closet-turdite

Some of Putin's points are similar to those made five years before that by Oleg V. Mozhaiskov, the then-deputy chairman of Russia's central bank, the Bank of Russia, at the summer conference of the London Bullion Market Association in Moscow:

http://www.gata.org/node/4235

Mozhaiskov told the bullion bankers:

"Today the net debt owed by the United States to the outside world (the so-called 'international investment position') is in the region of US$3 trillion. ... The world has come to a paradoxical situation in which the creditor countries are more concerned with the fate of the dollar than the U.S. authorities themselves are. ...

... Dispatch continues below ...



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"The statistical correlation between the market prices of dollar and gold is obvious. For the problem we discuss today it means specifically that gold, in addition to its unique physical and chemical properties used in industry, has retained its particular monetary attractiveness for cautious financial investors, and its market price is still heavily influenced by the state of the international monetary system.

"This dualism in gold price formation distinguishes it from other commodities and makes the movements in the price sometimes so enigmatic that market analysts need to invent fantastic intrigues to explain price dynamics. Many have heard of the group of economists who came together in the society known as the Gold Anti-Trust Action Committee and started a number of lawsuits against the U.S. government, accusing it of organising an anti-gold conspiracy. They believe that with the assistance of a number of major financial institutions (they mention in particular the Bank for International Settlements, J.P. Morgan Chase, Citigroup, Deutsche Bank, and others), some senior officials have been manipulating the market since 1994. As a result, the price dropped below US$300 an ounce at a time when it should, if it had kept pace with inflation, have reached US$740-760.

"I prefer not to comment on this information but dare assume that the specific facts included in the lawsuits might have given ground to suspicion that the real forces acting on the gold market are far from those of classic textbooks that explain to students how prices are born in a free market."

That is, 10 years ago Mozhaiskov was telling the London bullion bankers and their Western central bank clients that Russia was on to their exploitation, just what Putin told the Western central bankers and their friends five years ago in Switzerland.

Will Russia actually do anything about it? For the moment, amid the confrontation with the West over Ukraine, Russia seems content to warn the West that, thanks to its energy exports and its discovery of gold and currency market riging, Russia at last understands and is ready to use its great economic power.

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

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