World Gold Council is either useless or complicit in gold suppression

By Adrian Douglas
Sunday, January 3, 2010

The World Gold Council is at best worthless, at worst complicit in the suppression of the gold price. I strongly suspect it is the latter.

If that is the case, considering that the council is paid by the mining industry to promote gold, for it to be part of the gold price suppression scheme is one of the cruelest and sickest scams in history.

What cannot be disputed is that gold has not kept pace with fiat monetary inflation. How can that be so? That is gold's primary function, as it has very little industrial use. Since mine supply has been falling, central banks have become net buyers, gold hedges have been dramatically reduced, and mints are working furiously to cope with rising demand, what exactly is the World Gold Council's explanation of the underperformance of the gold price compared to inflation if, as the council's spokesman suggested the other day (http://www.gata.org/node/8198), it does not share GATA's views?

If the council doesn't have have a view as to how gold can suddenly not perform the function it has performed for 6,000 years, it should be disbanded and not drain precious funds from the mining companies and shareholders who pay for the council.

If the World Gold Council wanted to increase the demand for gold to help the mining industry, why did it sponsor the GLD exchange-traded fund, an investment vehicle that offers no guarantee that it has a single ounce of gold bullion in its custody? Isn't the council ashamed of sponsoring an investment vehicle that has been shunned by Greenlight Capital, which sold a half billion dollars of GLD shares to invest in and hold physical gold bullion? Why doesn't the council sponsor an ETF that has strict audit procedures and that holds real metal like Central Fund of Canada?

Why does the council issue a report, as it did in 2009, in which it describes an increase in gold demand as a decrease, explaining that it did not count central bank net buying as demand because "the central banks are traditionally sellers of gold"?

Why does the council fritter away millions of dollars promoting jewelry, whose demand typically falls as the gold price rises?

The council does not behave as if it wants a higher gold price.

GATA was successful in its campaign to stop mining companies from hedging by getting shareholders to lobby company management and sell their shares if hedging continued. GATA should consider encouraging investors to sell their shares in companies that waste money by supporting the World Gold Council.

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Adrian Douglas is publisher of the Market Force Analysis letter (http://www.MarketForceAnalysis.com) and a member of GATA's Board of Directors.

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To contribute to GATA, please visit:

http://www.gata.org/node/16

Please add this to the agenda for the GATA AGM in Vancouver.

Cheers

Adrian