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Gold market manipulation update, March 2014
Remarks by Chris Powell, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Mines and Money Hong Kong Conference
Hong Kong Convention and Exhibition Centre
Wednesday, March 26, 2014
For 15 years the Gold Anti-Trust Action Committee has been documenting and publicizing the largely surreptitious manipulation of the gold market by Western central banks, a longstanding policy of gold price suppression aimed at controlling the currency markets and interest rates. While GATA is a research, educational, and civil rights organization, those who object to examination of our topic call us a "conspiracy theory" organization.
There is much conspiracy here, but it is easily ascertainable as fact rather than mere theory, conspiracy occurring whenever people gather in secret to plan or implement some undertaking or policy. Meeting in secret to plan or implement policy is, of course, the very definition of modern central banking.
After all, when is the last time you were invited to a meeting of the G-10 Committee on Gold and Foreign Exchange or were even told that such a committee exists and meets secretly? When is the last time you were allowed to learn the results of the committee's work without having to bring a lawsuit against the participants, as GATA did a few years ago?
... Dispatch continues below ...
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Minutes of one meeting of that committee, held in April 1997, wrested by GATA three years ago, at federal court order, from the secret archive of the U.S. Federal Reserve, are posted at GATA's Internet site. They show Western central bankers and treasury officials conspiring to unify their policies toward gold:
The Federal Reserve insists implausibly that it has no other records of the G-10 Gold and Foreign Exchange Committee. The Fed apparently would have the world believe that the committee met only once:
It is far more likely that the committee has met many other times and that the records of its meetings would be even more incriminating.
Reams of such documentation -- including minutes of other secret government meetings; admissions by many former central bankers, including four former chairmen of the Federal Reserve; diplomatic cables; and even legislation that remains in force -- are compiled in GATA's documentation archive:
A summary of the Western central bank gold price suppression scheme and the major documents confirming it is posted here:
With the exception of one document -- perhaps the most powerful one -- I mean to review today only the most important documents that GATA has brought to light since this conference was held here a year ago.
That powerful older document is the secret report written by the staff of the International Monetary Fund in March 1999. The report explains that Western central banks conceal their gold swaps and leases because disclosure would impair their secret interventions in the gold and currency markets:
Anyone who maintains that gold price suppression is merely "conspiracy theory" and who has not read that secret IMF report either doesn't know what he's talking about or is committing disinformation. Without exception those who dismiss GATA's work have not examined the documentation at all and never agree to discuss it.
So what has GATA uncovered in the last 12 months?
For starters, there have been more incriminating records from the archives of the U.S. State Department, like the transcript of a meeting in April 1974 called by Secretary of State Henry Kissinger to consider the danger that the price of gold might get beyond the U.S. government's control. The minutes of that meeting, published by GATA last November, confirm the U.S. government's long understanding of the "golden rule" -- that is, whoever has the gold makes the rules. The minutes explain explicitly the need for the United States to control the gold price:
Assistant Undersecretary of State for Economic and Business Affairs Thomas O. Enders: It's against our interest to have gold in the system because for it to remain there it would result in it being evaluated periodically. Although we still have some substantial gold holdings -- about $11 billion -- a larger part of the official gold in the world is concentrated in Western Europe. This gives THEM the dominant position in world reserves and the dominant means of creating reserves. We've been trying to get away from that into a system in which we can control. ...
Secretary Kissinger: But that's a balance-of-payments problem.
Assistant Undersecretary Enders: Yes, but it's a question of who has the most leverage internationally. If THEY have the reserve-creating instrument, by having the largest amount of gold and the ability to change its price periodically, they have a position relative to ours of considerable power. For a long time WE had a position relative to theirs of considerable power because WE could change gold almost at will. This is no longer possible -- no longer acceptable. Therefore, we have gone to Special Drawing Rights, which is also equitable and could take account of some of the less-developed-country interests and which spreads the power away from Europe. And it's more rational in. ...
Secretary Kissinger: "More rational" being defined as being more in our interests or what?
Mr. Enders: More rational in the sense of more responsive to worldwide needs -- but also more in our interest. ...
The transcript of this meeting is posted at GATA's Internet site here:
On January 8 the market data company Nanex in Winnetka, Illinois, published research showing that the smashing of the gold price in the U.S. futures market two days earlier was not what some had been calling it, a mistaken "fat finger" trade, but the product of a sophisticated high-frequency algorithm trading program carefully designed to take the market down:
In the last 12 months commentary in government and other official circles in China has continued to cite the Western government policy of gold price suppression. Gold price suppression is a frequent topic in the news media in China, even as it is a forbidden topic in the Western news media.
For example, in January GATA published the remarks of the president of China's gold mining association, Sun Zhaoxue, to a financial conference in Shanghai, in which he said gold price suppression is U.S. government policy to maintain the dominance of the U.S. dollar in the ongoing international currency war:
And in December GATA distributed commentary by Zhang Jie, deputy editor of the Chinese publication Global Finance and a consultant to the China Gold Association, who said the U.S. Federal Reserve manipulates the gold market to protect the U.S. dollar's standing as the world reserve currency. Zhang said:
"Through continuous gold leasing the gold in the market can be circulated and produce derivatives, creating more and more paper gold. This is very significant for the United States. Gold leasing is a major tool for the Federal Reserve and other central banks in the West to secretly control and regulate the gold market, creating gold credit derivatives and global credit conflict."
Last September at the London Bullion Market Association's conference in Rome the director of market operations for the central bank of France, Alexandre Gautier, reported that the bank trades gold for its own account "nearly on a daily basis" and is "active in the gold market for central banks and official institutions":
Last July GoldMoney's research director, Alasdair Macleod, discovered a 1,200-tonne reduction in the records of the Bank of England's custodial gold inventory between February and July 2013, the period encompassing the gold price smash down of April 2013. The Bank of England refused GATA's request for an explanation of whose gold came out of the bank's vaults and why and whether this reduction had something to do with the plunge in the gold price:
Last June the annual report of the Bank for International Settlements confirmed that the BIS trades secretly in the gold market for its clients, central banks. The BIS report said:
"The bank transacts foreign exchange and gold on behalf of its customers, thereby providing access to a large liquidity base in the context of, for example, regular rebalancing of reserve portfolios or major changes in reserve currency allocations. The foreign exchange services of the bank encompass spot transactions in major currencies and Special Drawing Rights (SDR) as well as swaps, outright forwards, options, and dual currency deposits (DCDs). In addition, the bank provides gold services such as buying and selling, sight accounts, fixed-term deposits, earmarked accounts, upgrading and refining, and location exchanges."
The BIS report continued:
"The bank operates a banking business in currency and gold on behalf of its customers. In this business the bank takes limited gold price, interest rate, and foreign currency risk."
The BIS annual report is here:
Exactly why are the BIS and its client central banks and the Bank of France secretly trading gold and gold derivatives every day?
The explanation was provided by a presentation the BIS made to prospective members in June 2008, a presentation advertising, among the BIS' services to its members, secret interventions in the gold and currency markets:
It is so easy to figure all this out. Anyone can do it. All you have to do is put a specific, critical question to a central bank or the BIS about its activity in the gold market and the purposes of that activity. You won't get an answer.
Since January I have been pressing another such question with the Federal Reserve Bank of New York.
A few months ago I obtained a copy of a speech given in May 2004 by H. David Willey, a former vice president of the New York Fed, to the American Institute for Economic Research in Great Barrington, Massachusetts. Willey said the New York Fed provides gold accounts to bullion banks -- banks that trade gold. Willey's speech begins on Page 53 of the copy cited here and his reference to gold accounts provided to banks by the New York Fed appears on Page 62:
This was more of an admission of the New York Fed's involvement with the gold market than had ever been made officially, so in January I asked the New York Fed's public information office about it: Does the New York Fed provide gold accounts to bullion banks, or did the New York Fed ever do so, as its former vice president said in that speech in 2004?
The New York Fed's public information office acknowledged my question but quickly brushed me off. So I put the question by certified mail to the president of the New York Fed, William Dudley.
Of course I have not enjoyed the courtesy of a response and so have drafted my congressmen into trying to get an answer to this very simple and potentially very telling question. But I suspect that getting an answer from the New York Fed will require another lawsuit.
The gold mining industry is generally oblivious to the issue of gold price suppression. The industry has little idea of the monetary nature of its product and less idea of how its product is priced -- priced by secret market rigging by central banks.
Yes, there has been a little progress on this issue with the gold mining industry lately. Two weeks ago Rob McEwen, founder of mining giant Goldcorp and now CEO of his own company, McEwen Mining, who spoke at this conference a couple of years ago, conceded during his company's fourth-quarter conference call that central banks are probably rigging the gold market. He even complimented GATA by name:
But McEwen added that he didn't think there was much point in complaining about it.
GATA disagrees. We think publicity is the decisive element here, because market rigging works only by deception.
But in any case the gold mining industry has not yet done anything to defend itself. Its trade organization, the World Gold Council, ignores the price suppression issue and even frequently distributes disinformation itself.
For the most part gold mining company executives are too scared even to look at the issue, and it's easy to understand why. Mining is the business most vulnerable to government -- for mining rights and royalties, enforcement of environmental regulations, and so forth -- and, as the most capital-intensive business, gold mining is also the business most vulnerable to the big investment houses that are need to finance most mines and that are the very aggressive agents of central banks.
While Western financial news organizations lately have publicized complaints about manipulation of the daily London gold fixes operated by bullion banks, those news organizations refuse to get near anything involving surreptitious intervention in the gold market by central banks, even when the documentation is laid in their laps, as GATA has been laying it there for many years. Gold price suppression is simply a prohibited topic in mainstream financial journalism in the West.
Indeed, in the West the first rule of mainstream financial journalism and particularly financial journalism about gold is never to put a specific critical question about the monetary metal to any of the primary participants in the gold market, central banks. That is, nearly all gold market reporting in the West is, by design, irrelevant distraction at best, disinformation at worst.
This is because the location, disposition, and use of national gold reserves are secrets far more sensitive than the location and disposition of nuclear weapons.
For control of the gold price, as Secretary Kissinger's deputy explained to him in 1974, confers control of the currency and bond markets and control of interest rates generally, which in turn confers control of the value of all capital, labor, goods, and services in the world -- the control of everything that has a price.
Control of the currency markets is more powerful than any military force. Indeed, it is the primary mechanism of imperialism.
It's actually an old story from history. The Nazi German looting of occupied Europe during World War II was done primarily not through force of arms but rather by the rigging of currency exchange rates. Nazi rigging of currency exchange rates turned every resident of an occupied country into an agent of the occupation facilitating the flow of production out of his own country and into Nazi Germany.
This was documented in detail by the November 1943 issue of the U.S. War Department's intelligence letter, Tactical and Technical Trends --
-- and by the history of Nazi Germany written in 2005 by Gotz Aly, a book titled "Hitler's Beneficiaries":
If you can grasp this much history you may see that my organization isn't about worshipping gold; we are not idolaters. GATA really doesn't care what anyone uses as currency. No, GATA's work is about restoring the prerequisites of human progress -- free markets and transparency and accountability in government, limited government.
Without free markets and transparency and accountability in limited government, no one at this conference has any idea of the real value of his company's product, nor, for planning purposes, what that value might be. To the contrary, most things perceived today as market indicators are mere holograms, illusions, and all economic planning is actually a waste of time.
I'm ready to assist anyone who would like to study the documentation and I'll be glad to receive inquiries by e-mail at CPowell@GATA.org.
Thanks for your kind attention today.
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