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GATA distributes press release on sharp rise in gold price-capping derivatives
11:49a ET Sunday, May 22, 2005
Dear Friend of GATA and Gold:
GATA consultant James Turk, founder of GoldMoney
and editor of the Freemarket Gold & Money Report,
has drawn on research by GATA's Mike Bolser and
Reg Howe to report that government intervention
against the gold price has exploded since the
middle of last year.
Turk also finds that while gold has been having
trouble lately against the U.S. dollar, it is on
the verge of breakouts against the British pound
and South African rand.
So, Turk asks, "Why isn't gold soaring?"
His answer:
"Here's what Frank Veneroso had to say in the
March issue of Gold Newsletter:
...There is only one possible explanation
...for why purchases of thousands of tonnes
...of gold in the futures and forwards
...markets do not blow the price of gold
...sky-high: The official sector must step
...in on gold price rallies as an offsetting
...forward seller.
"Yesterday the Bank for International Settlements
provided proof to substantiate Frank's
observation.
"Reg Howe and Mike Bolser analyzed the latest BIS
numbers, which are stunning. Their report reveals
that in major banks and dealers in the G-10
countries, 'the total notional value of all gold
derivatives rose from $318 billion at mid-year
2004 to $369 billion at year-end.'
"That $51 billion increase -- a 32-percent annual
rate of growth -- occurred while gold miners were
reducing their hedge positions.
"The reduction in hedge positions by mining companies
should have resulted in a decrease in the aggregate
position in the BIS report. That it didn't happen
suggests that Veneroso is right.
"But how much more ammunition can governments throw
at the gold market?
"The answer is of course unknowable, both to us as
well as to the governments intervening in the gold
market. At some point the banks executing the
government positions are going to reach the tipping
point, when the free-market demand for gold
overwhelms government price capping. I think that
moment is near for one important reason.
"Price capping in gold can be prolonged only by
continually supplying the market with physical
metal. Right now the demand for physical metal is
strong. So governments can sell all the paper
derivatives they want, but it isn't going to stop
people from buying metal. In fact, the low price
of gold resulting from government price capping is
causing the demand for physical gold to increase."
Turk's report, "Some Bullish News About Gold," may
be the most important gold market commentary of
the year. Forget technical analysis of the market;
this is the record of government intervention
AGAINST the market -- and a map of where the price
of gold is going when governments exhaust the
reserves they are willing to lose to prop up
their central banking systems.
You can find Turk's report at the GoldMoney site
here:
http://www.goldmoney.com/en/commentary.php#current
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
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http://www.silver-investor.com
http://www.thebulliondesk.com/
http://www.goldismoney.info/index.html
http://www.minersmanual.com/minernews.html
http://www.a1-guide-to-gold-investments.com/euro-vs-dollar.html
http://www.investmentrarities.com
http://www.kereport.com
(Korelin Business Report -- audio)
http://www.plata.com.mx/plata/home.htm
(In Spanish)
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(In English)
http://www.resourceinvestor.com
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http://www.interventionalanalysis.com
http://www.investmentindicators.com/
Eagle Ranch discussion site:
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Ted Butler silver commentary archive:
http://www.investmentrarities.com/
----------------------------------------------------
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The Moneychanger
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Franklin Sanders
1-888-218-9226, 931-766-6066
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