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Ronan Manly: What were the central bank gold agreements really about?
3:05p ET Thursday, June 20, 2019
Dear Friend of GATA and Gold:
In a most important study, Bullion Star researcher Ronan Manly today lays out the evidence that the various central bank gold agreements of the last 20 years have been the mechanisms of hiding in plain sight central bank intervention in the gold market to restrain the monetary metal's price and redistribute gold reserves to central banks that had a more compelling claim to them.
... Dispatch continues below ...
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Manly's research supports the hypothesis offered in 2012 by the U.S. economists and fund managers Paul Brodsky and Lee Quaintance that central banks were redistributing gold among themselves in anticipation of a necessary devaluation of the U.S. dollar so that governments holding excess reserves in dollars would be hedged when the time came:
http://www.gata.org/node/11373
Manly's research also supports your secretary/treasurer's longstanding contention that the central bank gold sales of the first decade of this century were not really sales at all but cash settlements of leases of gold executed during the gold carry trade of the previous decade. For the gold price rose steadily from 2000-2010 despite the constant announcement of central bank gold sales. The price could not have kept rising if so much central bank gold was actually hitting the market. In fact the gold had hit the market many years earlier and could not be recovered by bullion banks and repaid to central banks without exploding the gold price.
Manly writes: "While the agreements were taken at face value by the mainstream financial media and the World Gold Council as a set of agreements to remove uncertainty from the market and put a floor under the gold price, there has never been any investigation from the same media and gold council as to:
"-- Whether the gold sales the central banks claim to be planning in each five-year period have already taken place, with the planned sales merely being book-squaring exercises.
"-- Whether the central bank gold agreements might be a 'hidden in plain sight' way to redistribute gold holdings among the world's central banks.
"-- Whether the agreements might be a 'hidden in plain sight' mechanism to use Western central bank (G-10) gold holdings as partial payments in Saudi 'gold for oil' transactions.
"-- Whether the agreements are a gold pool mechanism to firefight physical gold bar shortages at London Bullion Market Association bullion banks."
Manly adds: "The central bank cartel's claim that their coordinated sales transactions are designed to avoid market turmoil is true, but not in the way they imply. It's a 'hidden in plain sight' nod to the fact that their threat of gold sales is to prevent market turmoil in every other asset class that they watch over, just not the physical gold market."
With central banks and elected officials and other politicians practically screaming "devaluation" in recent days and the gold price starting to fly as a result, maybe the underlying scheme is coming to fruition. At least letting the gold price rise may be the most effective and traditional means of devaluing both currencies and debt, which, the Scottish economist Peter Millar wrote in 2006, must be done periodically in a fiat money system to prevent interest payments from devouring the world:
Manly's analysis is headlined "The Fifth Wave: A New Central Bank Gold Agreement?" and it's posted at Bullion Star here:
https://www.bullionstar.com/blogs/ronan-manly/the-fifth-wave-a-new-centr...
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
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