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Martin Sibileau: Central bank secrecy means a manipulated gold market
11:36p HKT Friday, March 22, 2013
Dear Friend of GATA and Gold:
Martin Sibileau, an executive with a big investment firm in Toronto and author of the market letter "A View from the Trenches," last week completed a three-part series of essays about gold market manipulation.
Part I argues that, far from being mere "conspiracy theory," gold market manipulation is only the logical consequence of mainstream economics and a necessity in a fiat money system:
http://sibileau.com/martin/2013/02/21/gold-manipulation-the-logical-outc...
Part II outlines the mechanisms by which manipulation is undertaken in the gold market, largely through the cooperation of central banks and bullion banks to create vast supplies of imaginary "fiat gold":
http://sibileau.com/martin/2013/02/26/gold-manipulation-part-2-how-they-...
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Part III, likely to be of most interest to lay investors, argues that it is in the interest of central banks and bullion banks to destroy and expropriate the gold mining industry. Sibileau writes:
"If, for instance, due to the expansion of fiat gold, the spot price of gold fell significantly, affecting the margins of miners, we could see consolidation in the industry via leveraged mergers in the current context of ultra-low interest rates. In this case, the same banks that led junior miners to become insolvent as they drove the price of gold down now could be selling their investment banking services to merge them with bigger players. In the process, the banks would demand that the new companies hedge their production against further future gold price declines. This supply of future gold could offset the initial demand of the bullion banks, leaving room for a further expansion of gold loans ... longer than most would believe."
Sibileau asks: "Why should the morphing of gold reserves into fiat gold (via gold loans) be called a manipulation? There is nothing different between the creation of fiat gold out of bullion and the creation of U.S. dollars out of U.S. Treasuries.
"The answer is simple: There should be nothing wrong with it if it was not hidden. ...
"If the central banks did not show the bullion swapped as [being] gold in their possession and if the bullion banks showed the reserve ratio of fiat gold to bullion, just like banks do with fiat money, this could not be called a manipulation. Even with consistent selloffs at 8:20 a.m. ET or 4 a.m. ET we would still not be able to call this a manipulation. ...
"How would the market react therefore if there was full disclosure? Physical gold would trade at a premium."
Sibileau's analysis seems to match GATA's pretty closely. He concludes that gold market manipulation probably can continue far longer than most observers expect.
Having just spent a week at an international mining conference at which 99.9 percent of gold and silver mining company executives seemed unaware of the monetary nature of their product and the deadly intentions of central banks toward it, your secretary/treasurer can't disagree with Sibileau. The gold and silver mining industry is just too stupid and cowardly to stand up for itself and fulfill its fiduciary obligations to its shareholders, and its trade association, the World Gold Council, seems to exist mainly to ensure that there never is a world gold council.
But that Sibileau, planted in an investment house in Toronto whose very name evokes the gold and silver market, has both figured all this out and managed to publish it without being fired and shipped off to Guantanamo Bay is encouraging. Word of gold price suppression is leaking out, even if gold and silver mining executives may be the last to get the joke being played on them and their shareholders.
Sibileau's third commentary, the one likely of most interest to lay investors, is posted here:
http://sibileau.com/martin/2013/03/16/gold-manipulation-part-3-the-syste...
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
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