Gene Arensberg: Banks' huge shorting of gold, silver looks like manipulation

9:30a ET Sunday, August 31, 2008

Dear Friend of GATA and Gold (and Silver):

Resource Investor's Gene Arensberg seems convinced in his latest "Gold Gold Report" that the recent enormous shorting of gold and silver by a few banks was a market manipulation and likely a currency intervention inspired by the U.S. government.

Arensberg writes:

"Regardless of whether or not the very large bank short positions are letter-of-law legal (and we'll leave it up to others to determine that), they are almost certainly spirit-of-law aberrant. The sheer size and concentration of so large a uni-directional positioning from so few entities certainly raises legitimate questions and concerns about the metals futures markets and their roles in legitimate price discovery in the U.S. commodities markets -- especially since the action on the paper-contract-dominated spot cash market prices for gold and silver caused shortages for physical metal in the physical markets the futures markets are supposed to "answer to". ...

"Is it a coincidence that these two or three U.S. banks took such huge short positions in gold and silver not very long after Federal Reserve Chairman Ben S. Bernanke spoke publicly about the weak dollar? (A very rare event, but it occurred in the same week in June that Treasury Secretary Paulson and President Bush both came out and jawboned the dollar higher.)

"Did J.P. Morgan Chase, the same bank that the Federal Reserve turned to in the 'rescue' of Bear Stearns, act on behalf of the Fed to knock the legs out from under the gold and silver markets while supporting the U.S. dollar? If so, is that a legitimate function of a U.S. bank to perform on behalf of its central bank?"

Arensberg's new "Got Gold Report" is nicely illustrated with charts, is headlined "Firestorm Erupts Over U.S. Banks' Gold, Silver Shorting," and can be found at Resource Investor here:

http://www.resourceinvestor.com/pebble.asp?relid=45789

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

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