Where are the insider admissions about gold? Right here

12:40p ET Saturday, August 30, 2008

Dear Friend of GATA and Gold:

People like Mike Shedlock of Sitka Pacific Capital Management in Edmonds, Washington, who writes Mish's Global Economic Trend Analysis letter, will never debate a GATA representative about manipulation of the gold market even as they aggressively misrepresent GATA's work, as Shedlock did again this week in his essay, "Conspiracy Theory Psychology":

http://globaleconomicanalysis.blogspot.com/2008/08/conspiracy-theory-psy...

Shedlock wrote, as if it is GATA's position: "Theory 1: The U.S. government, foreign governments, central banks, various broker-dealers, and a consortium of 10 large U.S. banks are all acting together in some massive conspiracy to suppress the price of precious metals for 15 years running, and not a single insider has stepped up to expose the fraud even though housing fraud stories from insiders are being disclosed at a rapid pace, and government, CIA, and other intelligence leaks have been running rampant throughout that entire timeframe."

Actually, of course, GATA's position is that quite a few insiders have testified to the gold price suppression scheme. Though Shedlock purports not to notice it, GATA has been publicizing their admissions for years. It would be decent of Shedlock and those who share his views to familiarize themselves with and respond to these admissions, particularly:

January 1995: The Federal Reserve's general counsel, J. Virgil Mattingly, told the Federal Open Market Committee, according to the committee's minutes, that the U.S. Treasury Department's Exchange Stabilization Fund had undertaken "gold swaps." Central banks have only one purpose for "gold swaps": market intervention. The January 1995 FOMC minutes with Mattingly's statement are posted at the Fed's Internet site here:

http://www.federalreserve.gov/monetarypolicy/files/FOMC19950201meeting.pdf

July 1998: Federal Reserve Chairman Alan Greenspan told Congress, "Central banks stand ready to lease gold in increasing quantities should the price rise." That is, Greenspan himself contradicted the usual central bank explanation for leasing gold -- supposedly to earn a little interest on a dead asset -- and admitted that gold leasing was all about suppressing the price. Greenspan's admission about the gold price suppression scheme is posted at the Fed's Internet site here:

http://www.federalreserve.gov/boarddocs/testimony/1998/19980724.htm

September 1999: The Washington Agreement on Gold, made by the European central banks in 1999, was a proclamation that Western central banks were working together to control the gold price. The central banks in the Washington Agreement claimed that, by restricting their gold sales and leasing, they meant to prevent the gold price from falling too hard. But even if you believed that explanation, it was still collusive intervention in the gold market. The Washington Agreement can be found at the World Gold Council's Internet site here:

http://www.reserveasset.gold.org/central_bank_agreements/cbga1/

February 2003: Barrick Gold confessed to the gold price suppression scheme in U.S. District Court in New Orleans when it filed a motion to dismiss Blanchard & Co.'s anti-trust lawsuit against Barrick and its bullion banker, JPMorganChase, for rigging the gold market. Barrick's motion said that in borrowing gold from central banks and selling it, the company had become the agent of the central banks in the gold market, and, as the agent of the central banks, Barrick should share their sovereign immunity and be exempt from suit. Barrick's confession can be found here:

http://www.lemetropolecafe.com/img2003/memoformotiontodis.pdf

September 2003: The Reserve Bank of Australia confessed to the gold price suppression scheme in its annual report for 2003. "Foreign currency reserve assets and gold," the RBA's report said, "are held primarily to support intervention in the foreign exchange market." The RBA's report is posted at the central bank's site here:

http://www.rba.gov.au/PublicationsAndResearch/RBAAnnualReports/2003/Pdf/...

June 2005: Maybe the most brazen admission of the Western central bank scheme to suppress the gold price was made by the head of the monetary and economic department of the Bank for International Settlements, William S. White, in a speech to a BIS conference in Basel, Switzerland. There are five main purposes of central bank cooperation, White announced, and one of them 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." White's speech is posted at GATA's Internet site here:

http://www.gata.org/node/4279

Further, government manipulation of the gold price is only the unanimously accepted history of the world prior to the period about which GATA is complaining. That's what the gold standard was about, fixing the price of gold to certain amounts of government currencies. That's what the London Gold Pool was about, the effort of the U.S. and British governments, abandoned in 1968 amid extraordinary demand for the metal, to hold the gold price at $35 per ounce.

Shedlock does acknowledge government's propensity for market manipulation. He writes:

"Of course there are conspiracies and manipulations. I have listed many of them.

"Blatant manipulations:

"-- Term Auction Facility.

"-- Primary Dealer Credit Facility.

"-- Term Securities Lending Facility.

"-- SEC rule changes options expiration week.

"-- Selective enforcement of naked shorting rules.

"-- Discount window changes in options expiration week.

"-- Shotgun marriages arranged by the Fed.

"-- The bailout of JPMorgan/Bear Stearns."

So Shedlock's position seems to be that government is trying to rig almost every market except the one government used to rig openly. What strange and sublime faith he must have!

Despite the misrepresentation of GATA's work by Shedlock and others, we're actually in fairly respectable company in maintaining that the gold market is manipulated. Some big investment houses have said the same thing.

Sprott Asset Management:

http://www.sprott.com/pdf/pressrelease/press_release_not_free_not_fair.pdf

The Cheuvreux brokerage house of the French bank Credit Agricole:

http://www.gata.org/files/CheuvreuxGoldReport.pdf

And Citigroup:

http://www.gata.org/files/CitigroupGoldReport092107.pdf

There's a lot of admission and documentation above, which, it seems, is why Shedlock, Kitco's Jon Nadler, the World Gold Council, and others who disparage complaints of manipulation of the gold market refuse to debate the issue, where they might be compelled to address the evidence specifically. But GATA remains ready, any time these folks or others on their side work up the honesty and courage.

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

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