Comex gold inventories don't matter as much as central bank inventories do
10:42a ET Wednesday, January 6, 2016
Dear Friend of GATA and Gold:
The Perth Mint's Bron Suchecki today notes that gold inventories on the New York Commodities Exchange are not necessarily a good indicator of tightness in the gold market, since "eliglble" gold -- gold in Comex warehouses -- easily can be converted to "registered," gold available for delivery against Comex contracts. Suchecki's analysis is headlined "Issuers Can Make Deliveries Using Eligible" and it's posted at the Perth Mint's research page here:
This is a point GATA often has made, though in different ways and for different purposes.
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That is, if, as GATA has maintained from its inception, central banks are intervening surreptitiously in the gold market to control currency values, interest rates, bond prices, and equity prices, central bank gold inventories are far more relevant to the gold price than mere Comex inventories. For through intermediary bullion banks, central bank gold inventories may become Comex inventories as quickly as "eligible" gold in Comex warehouses may be reclassified as "registered."
That's why, as the International Monetary Fund discerned in a secret report in March 1999, central banks intervening surreptitiously in the gold market insist on concealing their gold swaps and leases, lest the market get an idea of the real supply of gold, the supply available for intervention:
Indeed, studying Comex data last June, securities lawyer Avery B. Goodman concluded that bullion bank JPMorganChase was administering the U.S. government's gold leasing and swapping operations and that the U.S. gold reserve was effectively guaranteeing Comex gold contracts, at least for the time being:
Yes, as Suchecki writes, some gold bugs make far too much of the decline of "registered" Comex gold stocks. But then many gold market analysts, including Suchecki himself, make far too little of the overwhelming documentation of surreptitious intervention in the gold market by central banks, since doing that can get one in trouble with the authorities. In fairness to Suchecki particularly, it must be noted that the Perth Mint is an agency of the government of Western Australia.
A summary of the documentation of central bank rigging of the gold market can be found at GATA's Internet site here:
There's a lot more of it here:
GATA pleads for it to be analyzed, concurred in, or disputed -- anything but ignored.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
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