Gold Forum Survey -- a big boost for GATA


Boudewijn Wegerif, GATA vice-chair

The renowned gold analysts Veneroso Associates
( declared in an Executive Summary
mid-January, a week or so before Chris Powell's Invitation to a Lawsuit:
"The fact that (the price of gold) meets repeated impenetrable
resistance at $300 has set off speculation that the official sector is
holding the gold price down. We disagree."

Veneroso Associates admit that the price weakness is "perplexing", but,
"The big European central banks would like to see a higher price on
their substantial gold holdings. It seems unlikely the US would act
alone to 'cap' the price of gold".

The Executive Summary goes on to repeat again and again that "there are
gold observers who believe that there is a conspiracy by central banks
to hold the gold price down." But no, Veneroso insists, leave the
central banks out of it. Federal Reserve Chairman Alan Greenspan's
famous statement that " central banks stand ready to lease gold in
increasing quantities should the price rise," is noted and dismissed
with, "We believe Mr. Greenspan made this statement simply to indicate
that central banks could act to prevent a Hunt-type effort to manipulate
the gold price---not to indicate that the official sector would
intervene to control the price of gold."

However, Veneroso want us to understand that they are aware that there
is SOMETHING GOING ON; because also, again and again, one reads, "We are
short of explanations for the current low gold price." And finally it is
asked, in underlined, bold: ARE THE BULLION BANKS ADDING TO SHORT
POSITIONS? And the question is immediately answered with: "We have
suggested in recent months that there may have been an increase in
bullion bank short positions, which may explain some of the weakness in
the gold price."

Precisely! That is the point that GATA chairman Bill Murphy, commenting
as Midas at's James Joyce Table, has been making all
The collusion GATA wants to present to the world through the U.S. courts
is a bullion dealers' collusion at base, with possible, if not probable
links to the FRB and Treasury Department.

And Venoroso Associates know it obviously know it. For having asked
and sort of answered the big question they relax into being right
properly informative:

"Goldman Sachs is the bullion banker most frequently associated with
this rumored transaction," they write. "Goldman has also been the most
featured seller on all rallies since the LTCM crisis in September.
Lastly, Goldman has been extremely aggressive in offering large bullion
banking facilities to producers on very liberal terms, even though banks
in general have been more risk averse since the crisis of the late

The Veneroso Executive Summary goes on to spell it out in even more
detail: "Because of Fed involvement in the LTCM bailout and because
Treasury Secretary Robert Rubin was previously with Goldman, Goldmans
association with the LTCM bailout and its role as a conspicuous seller
in the gold market has fueled recent conspiracy theories that the Fed
and Treasury are working to 'cap' the gold price in order to protect
hedge fund, broker dealer and bank exposures from a rising gold price.

"Since the turmoil of last summer, there have been firings of bullion
dealers at several banks and broker dealers. These institutions were all
heavily involved in encouraging hedge funds to put on leveraged
positions that were too large for their markets. It is rumored that
there are newly uncovered problems at some of these banks and broker
dealers. We hear that these institutions may have large proprietary
short positions in gold in the form of carry trades and option
positions. It is our guess that several of these institutions do have
large short side exposures that they have added to. It is possible that
allegations that they are adding to these positions to 'protect' these
positions have some merit. Is also possible that they are acting in
collusion to keep the gold price down."

And here the Executive Summary gets really interesting: "Paul Krugman of
MIT, who has no axe to grind, has reported that some hedge funds told
the Australian officials that they and several large banks were
colluding last summer to break the currencies of Australia, Canada and
several Asian countries."

Paul Krugman is quoted: "some people from the hedge funds actually told
the Australians, in effect, that resistance [against an aggressive bear
attack on the A-dollar] was futile---that they were only a small piece
of a coordinated play against Australia, New Zealand, South Africa, and
Canada---not to mention Hong Kong, Japan, and China." (The original
appears in italics for emphasis).

So what do Veneroso Associates make of that? Well, they write, "We do
not know exactly what to make of all the above rumors and allegations.
However, without revealing all of our inputs, we have some evidence that
the official sector, rather than orchestrating such activities, is not
even fully aware of these activities."

Beautiful. Great. We understand. Veneroso Associates would have the buck
stop at Wall Street, not Washington. But the beauty of a well-presented
lawsuit is that the buck stops where it must. So what will the court,
and public opinion, make of Red Baron's researches (at showing how Goldman
Sachs turned from bull to bear after Robert Rubin became Secretary of
the US Treasury? Few will accept that it is just Goldman Sachs and the
other investment houses in the "Counterparty Risk Management Group" vs
Gold. No, they will agree with the heading to Red Baron's essay posted