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Lassonde says he doesn't suspect BIS in gold market manipulation
8:07p ET Thursday, November 6, 2014
Dear Friend of GATA and Gold:
Franco-Nevada Chairman Pierre Lassonde, former chairman of the World Gold Council, told GATA today that, contrary to GATA's interpretation of his interview yesterday with King World News about manipulation of the gold market --
http://www.gata.org/node/14670
-- he did not mean to acknowledge the possibility that the Bank for International Settlements might be among the entities doing the manipulating.
In that interview Eric King of King World News said to Lassonde: "Earlier today I spoke with a former board member of Paine Webber who also worked for Goldman Sachs 25 years ago, the very highly respected William Kaye out of Hong Kong. Kaye said the following about today's smash in gold:
"'This is something that you see in precious metals when there is clear evidence of manipulation. We saw 30 tons of gold sold at 2 p.m. Hong Kong time. That is a time in which no one does any real trading. What Asian trading is going to take place is already done by that time of the day. At that time of day people are simply waiting to hand things over to London in a few hours. Regardless, an awful lot of paper gold was intentionally dumped in a programmed algorithm. This was most likely done by the Bank for International Settlements. This was designed to condition the paper market by forcing the price lower. It was also designed to set the market up in London to open up at lower levels.'
... Dispatch continues below ...
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King continued: "He [Kaye] is saying that somebody is in there manipulating the price of gold and they are doing it at a very high level -- the BIS. I'm just wondering if you are pissed off enough to talk about this."
KWN quoted Lassonde as replying: "It would not be the first time that we've seen this and it won't be the last time either. There is obviously an entity or trading house who must have a short position and they are using the paper gold market to move the price. And if it's a fragile market they are going to get their way for a while."
Lassonde told GATA today: "I did not comment on the BIS but strictly on the fact that yes, someone -- institution, private group, hedge fund, we don't know -- were throwing their weight around. ... I don't believe for one second that the BIS has anything to do with this."
In any case, a summary of the documentation GATA has compiled about the gold trading long conducted, largely surreptitiously, by the Bank for International Settlements is appended.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
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Documentation of the Largely Surreptitious Involvement
of the Bank for International Settlements in the Gold Market
-- William R. White, the director of the monetary and economic department of the Bank for International Settlements, told a BIS conference in Basel, Switzerland, in June 2005 that a primary purpose of international central bank cooperation is "the provision of international credits and joint efforts to influence asset prices (especially gold and foreign exchange) in circumstances where this might be thought useful":
-- The BIS actually advertises to potential central bank members that its services include secret interventions in the gold market:
http://www.gata.org/node/11012
http://www.gata.org/files/BISAdvertisesGoldInterventions.pdf
-- According to its 2013 annual report, the BIS functions largely as a gold banking and gold market intervention service for its member central banks. On Page 110 of the report the BIS says: "The bank transacts foreign exchange and gold on behalf of its customers, thereby providing access to a large liquidity base in the context of, for example, regular rebalancing of reserve portfolios or major changes in reserve currency allocations. The foreign exchange services of the bank encompass spot transactions in major currencies and Special Drawing Rights (SDR) as well as swaps, outright forwards, options, and dual currency deposits (DCDs). In addition, the bank provides gold services such as buying and selling, sight accounts, fixed-term deposits, earmarked accounts, upgrading and refining, and location exchanges." Of course the only point of central banks trading in gold derivatives is to affect the price. See:
http://www.gata.org/node/12717
-- Secret gold market interventions by the BIS have a long history. A report in Harper's magazine in 1983, based on a seemingly unprecedented interview with BIS officials, disclosed that the BIS was constantly intervening in the gold market in secret:
-- While the BIS' involvement in the gold market is undertaken primarily on behalf of its member central banks, the bank own gold itself, according to a statement on Page 183 of its 2013 annual report:
http://www.bis.org/publ/arpdf/ar2013e.pdf
The report says:
"A. Gold price risk
"Gold price risk is the exposure of the Bank’s financial condition to adverse movements in the price of gold.
"The Bank is exposed to gold price risk principally through its holdings of gold investment assets, which amount to 115 tonnes (2012: 116 tonnes). These gold investment assets are held in custody or placed on deposit with commercial banks. At 31 March 2013 the Bank’s net gold investment assets amounted to SDR 3,944.9 million (2012: SDR 4,018.2 million), approximately 21% of its equity (2012: 22%). The Bank sometimes also has small exposures to gold price risk arising from its banking activities with central and commercial banks. Gold price risk is measured within the Bank’s VaR methodology, including its economic capital framework and stress tests."
-- The BIS isn't alone in trading in the gold market surreptitiously on behalf of its central bank members. An official of one of those members, the Banque de France, told the London Bullion Market Association conference in Rome last year that his bank is trading gold for its own account and the accounts of other central banks "nearly on a daily basis":
http://www.gata.org/node/13373
* * *
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