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New Orleans Address - Gata versus The Gold Cartel - Bill Murphy

Section: Essays

Hello everyone. I would like to extend a special greeting to those Gold Anti-Trust Action Committee supporters who have come from all over the world to attend this conference.

Two years ago from this very podium, I presented evidence the gold market was manipulated by a cartel of bullion banks. Since then, GATA has secured massive amounts of additional evidence that confirms our original assessment.

For those of you still not familiar with the staggering amount of price-fixing proof GATA has on the Gold Cartel, I suggest you go to GATA has laid out more evidence of a concerted effort to manipulate the gold price than the United States Government has publicly produced on Bin Laden's direct responsibility for the Terrorist attacks against America.

America rightly declared WAR on the Muslim Terrorists.

GATA rightly declared a war of our own against the Gold Terrorists.

Three years ago my colleague, GATA Treasurer/Secretary Chris Powell, suggested we do something about the obvious price capping activities of the bullion banks.

That is how The Gold Anti-Trust Action Committee came into being. Nothing we have discovered the past 3 years has contradicted our initial assertion. Over these ensuing years, not one person in the gold industry has told us where we are wrong or why our sobering evidence is faulty. NO ONE!

That is not to say that there have not been highly visible individuals in the gold industry casting aspersions our way. For the first couple of years the executives of heavily hedged gold producers, Barrick and AngloGold, initiated some of their highly attended presentations by chortling at the "conspiracy nuts" - to elicit some "yucks" from the many sycophants in their audience.

I don't think they will use that tactic anymore. If a bunch of crazed madmen living in the caves of Afghanistan can pull off a successful conspiracy via those awful Terrorist attacks on the U.S., do you not think it conceivable that the richest and most powerful people in the world could effectively conspire to manipulate the price of gold?

Mocking the concept of conspiracies is all of sudden "out." The truth of the matter is corporate price-fixing conspiracies are very common. What is most uncommon with the gold conspiracy is the magnitude of this price-fixing case, the parties involved and the devastation it has wrought on so many unsuspecting victims.

It was clear to GATA from the very beginning that bullion banks such as Goldman Sachs and Chase Bank were capping all gold price rallies. Every single gold spike, whether a minor or major one, has been simultaneously stuffed by these two banking institutions.

I think it fair to say no market has ever traded like gold. Spike, smash. Spike smash. This occurs when a vigilant Gold Cartel is surprised by some announcement, or event, which brings on a surge of physical gold buying, leaving the cabal without enough physical on hand to slow down the price pops. However, calls go out, physical is mobilized, and before you know it, the price of gold is trashed right back down to where the spike began in the first place.

This cartel is extremely well organized. What do you think the odds are the "official" price of gold would close out 1997, 1998 AND 1999 at EXACTLY $289 per ounce? I doubt the odds makers in Las Vegas would even touch that one. But, that is exactly what happened and will give you some idea how precise the cabal's work has been over the years.

When Chris and I formed GATA, our goal was to expose this manipulation, fight for a free gold market and to win the day for so many GATA contributors who believed we could get the job done. We have given our best effort to do just that, as have so many in GATA's Army of supporters.

The revelations of our findings present a most troubling picture:

FIRST. The manipulation of the gold price goes way beyond certain bullion banks. It includes the controversial $40 billion Exchange Stabilization Fund (which operates solely under the auspices of the President and Treasury Secretary); the IMF, The Bank For International Settlements and our Federal Reserve Bank.

SECOND. This manipulation has made a mockery of the notion that American financial markets are free trading. While government spokesmen preach that concept to an unsuspecting world, the banking and political elitists rig a market when it is in their best interest to do so. It is very sad to think of how many lives were lost fighting Communism, only to learn that our Government has stooped to its OWN Orwellian approach to the markets.

THIRD. Fair play in America is slowly fading into oblivion. Many of us here to today have seen the decimation of our gold investments over the past half-decade. All the while, The Gold Cartel and their favored clients have borrowed gold at 1% interest rates, sold it in the physical market, and invested the proceeds at 6% U.S. Treasury rates.

FOURTH. And, this one ought to shock you! More people have died because of the heinous activity of The Gold Cartel than have been killed by the Muslim Terrorists. On behalf of GATA, I have been to Vancouver and Toronto in Canada: New York twice, Washington, D.C. 3 times, New Orleans twice, Denver, Austin, Texas and Fairbanks, Alaska in the U.S.; Paris; and to Johannesburg twice, Durban twice, Cape Town and Pretoria in South Africa.

It was on my two trips to South Africa that I saw first hand the economic devastation of the Blacks in sub-Saharan Africa. There is just no money to combat their terrible disease, crime and unemployment problems. Aids and cholera epidemics are out of control. It is just awful.

If it were not for The Gold Cartel and their sinister operations, the price of gold today would be well north of $600 per ounce, which would set off a natural resource boom. Money would be freed up to deal with these plagues that are killing off so many.

How does the U.S. address this issue? With pompous deceit! A few years ago, the IMF proposed to sell 3000 tonnes of its gold to help the poor African countries via a debt relief program. President Clinton, Robert Rubin and Lawrence Summers went to great lengths to influence the passage of such a proposal. What hypocrisy! They did not care about the Blacks as they proudly proclaimed. They wanted the 3,000 tonnes of physical gold to flood the market to perpetuate the gold fraud.

Fortunately, they fooled almost no one. Thirty-six out of 41 poor African gold producing countries voted against it; as did the Congressional Black Caucus; as did the leadership of the Democratic and Republican parties in the U.S.

The IMF, banking and political elitists were rebuffed... but not to be denied.

In October 1999 the IMF held a meeting for its member countries in Santiago, Chile, only a couple of weeks after a lightening $84 run-up in the price of gold. GATA's Mike Bolser found the IMF manual distributed to the attendees, which explains how member central banks are to account for something called gold swaps - gold that leaves the vaults of the central banks. In effect, Bolser came across the IMF's gold "play book."

As you will learn shortly, it appears the gold swap issue is at the heart of the manipulation of the gold price.

Bolser's discovery led GATA's Andrew Hepburn to query the IMF with the following:

Why does the IMF insist that members record swapped gold as an asset when a legal change in ownership has occurred?

The IMF answered:

    "This is not correct: the IMF in fact recommends that swapped gold be
    excluded from reserve assets. (see Data Template on International Reserves
    and Foreign Currency Liquidity, Operational Guidelines, para. 72,"

Over the years the GATA camp has received nothing but denials from the U.S. Treasury, Alan Greenspan, BIS, bullion banks and the IMF. In essence, their responses have been well-couched, disingenuous and difficult to disprove. THIS response was NOT because of the sleuthing of Canada's Hepburn. Their constant lying finally caught up with them. The central bank of the Philippines responded to Hepburn as follows:

    "Beginning January 2000, in compliance with the requirements of the IMF's reserves and foreign currency liquidity template under the Special Data Dissemination Standard (SDDS), gold swaps undertaken by the BSP with non-central banks shall be treated as collateralized loan. Thus, gold under the swap arrangement remains to be part of reserves and a liability is deemed incurred corresponding to the proceeds of the swap."

In other words, the IMF instructed the central banks that even though the gold was gone, it should still be counted as part of their reserves. The central banks of Portugal, Finland and the ECB itself all confirmed the Philippine's response to Hepburn.

The GATA camp caught the IMF flagrantly deceiving the public. Since then, the IMF has refused to answer all follow-up questions from GATA supporters.

This is no insignificant issue.

On May 10th of this year The Gold Anti-Trust Action Committee held the GATA African Gold Summit in Durban, South Africa. Leading South African gold producers; the National Union of Mineworkers; the largest S.A. trade union (Cosatu); The Ministry of Minerals and Energy; the South African Reserve Bank; and representatives from 5 sub-Saharan African Governments attended. The all day affair was widely covered by the South African press, including two days of television coverage by the South African Broadcasting Company.

GATA was fortunate to have James Turk, Reg Howe and Frank Veneroso take time from their very busy schedules to go all that way and give evidentiary presentations in support of GATA's allegations.

It has been Frank's contention for years that the so-called gold loans of the central banks are far greater than the 5,000 tonnes acknowledged by the gold industry. At the summit, Frank explained how he came up with numbers of 10,000 to 16,000 tonnes of gold loans, or two to three times the amount acknowledged by The Gold Cartel.

Why is this so important? It's very simple. Mine supply is only 2500 hundred tonnes per year. The annual supply/demand deficit is running around 1600 tonnes per year. The only way the Gold Cartel can keep the gold price from rising and to ration the limited mine and scrap supply is to feed central bank gold into the physical market.

The difference between Frank's numbers and those used by the gold industry are extraordinary, for if Frank is correct, which I am sure he is, The Gold Cartel will begin to run out of ammunition in a few years. Their gold hoax has to crumble.

It is very ironic that in harming so many innocents, the blundering bankers have set the stage for the detonation of a gold derivative neutron bomb that is going to rock the financial markets, one that could even threaten their own viability. That is because there is no way they can get their gold back short of a rise in the price of many hundreds of dollars per ounce, perhaps even $1,000 per ounce. I will leave that topic for Frank and return to the critical gold swap issue.

At a January 1995 Federal Open Market Committee meeting, Virgil Mattingly, the general counsel to that committee made the following statement:

"It's pretty clear that these ESF operations are authorized. I don't think there     is a legal problem in terms of the authority. The statute [31 U.S.C. s. 5302] is very broadly worded in terms of words like 'credit' -- it has covered things like the gold swaps -- and it confers broad authority."

The GATA Army bombarded Senators, Congressmen, the U.S. Treasury and Alan Greenspan asking for an explanation of this stated reference to ESF gold swaps. This was pursuant to our Army receiving HUNDREDS of letters from Senators and Congressmen via the U.S. Treasury that the ESF "has not held any positions in gold since 1978."

The heat became so intense that Greenspan felt compelled to respond to Kentucky Senator Jim Bunning by forwarding a memo to him that Mattingly had written Greenspan. Mattingly stated the following:

"Given the passage of time, some six years, I have no clear recollection of exactly what I said that day but I can confirm that I have no knowledge of any "gold swaps" by either the Federal Reserve or the ESF. I believe that my remarks, which were intended as a general description of the authority possessed by the Secretary of the Treasury to utilize the ESF, were transcribed inaccurately or otherwise became garbled."

That answer just does not pass any kind of smell test. Not only were his comments recorded, all the Fed Governors present signed off on the final transcript. Clearly, this was a pitiful cover-up attempt reminiscent of the missing 18 minutes of Watergate Tapes.

Think about this. To accept Mattingly's answer, in a precedent setting sense, ought to be able to give defense attorneys the right to throw out recorded and transcribed confessions by using the "garbled defense"!

What the IMF, BIS, ESF, The Fed and the bullion banks don't want you to know is that a big percentage of the central bank gold has been swapped out. It is GONE. They are petrified they will be found out and will go to any lengths to conceal the real gold truth. GATA's gold swap revelations make it way more than likely that Frank Veneroso's central bank gold numbers are the correct ones, not the ludicrous ones postured by the gold industry.

By only focusing on this one GATA issue, it is easy to understand the magnitude of the gold problem, unnecessarily created by greedy elitists.

This problem is most scary. While the West dumps its gold to perpetuate the strong dollar gold scheme set in steroid-like motion by Clinton, Rubin, and Summers, the East is scoffing up cheap gold. The Russians, Chinese and Muslims/Arabs are hoarding physical gold, for they realize a price explosion is coming.

The Russians have now have a gold coin as currency, the Chevronet, and are building their gold reserves, not reducing them. The Muslims are beginning to run with a gold coin called the Islamic Dinar, while other Arabs are loading up on gold via purchases out of Turkey and Switzerland. Meanwhile, the Chinese have been scouring all over South Africa, quietly buying physical gold. AND, this January the Chinese officially open up their gold market to their public.

Get the picture? The banks in the West are going deeper and deeper into gold hock with their lending and swapping while the East is saying "thank you very much" and raking it in.

On May 10, 2000 Frank, Reg, Chris and I met with the Speaker of the House Dennis Hastert and presented this "Gold Derivative Banking Crisis" document to him. We explained to The Speaker that if the U.S. bullion banks continued their gold price-capping follies, our financial system could be held hostage by a foreign power that threatened to buy up the physical gold market.

Gold has now become a national security issue. Like it or not, the gold problem for the U.S. worsens every day like a malignant cancer. The choice is to deal with the gold problem now, which will require painful chemotherapy-like treatments, or stay in denial - which could be fatal.

The press in the United States has chosen denial and total suppression of the subject. I was on CNBC 34 months ago. That was the last major coverage GATA received by the American free press. A disturbing revelation for me has been to realize there is NO SUCH THING in America as a FREE PRESS when it comes to opposing the "big money" interests. It is a disgrace and makes a mockery of our chastising the press of other countries over censorship.

On December 7, 2000 our colleague, Reg Howe, filed a Complaint in Massachusetts Federal Court against 5 bullion banks, the BIS, Treasury Secretary Summers and Alan Greenspan/William McDonough of the Federal Reserve System. On November 5, 2001 Reg survived a motion to dismiss by these most formidable of opponents. Only one paper in the U.S., the New York Post, has even mentioned this case, which may be one of the most important in U.S. history.

I have had 3 lunches with some very sharp Wall Street Journal reporters. The result: nada. Reuters and Bloomberg will not carry GATA releases and refuse to mention our existence. The right and left wing investigative TV/newspaper reporters, that say they will take on all comers, REFUSE to take on the big money Wall Street crowd on the gold issue. This lack of journalistic integrity will eventually take its toll.

This is of concern to ALL U.S. citizens. Thomas Jefferson warned Americans to be very wary of the devious New York banks over two hundred years ago. For these bullying banks to have so much power over the U.S. press is frightening. The Gold Cartel maneuvers are most un-American and diametrically opposed to what our country stands for.

That is what the Gold Anti-Trust Action Committee and our Army of supporters have worked so diligently to expose.

We are not going to let them get away with it. They are going to pay for the harm they have done. GATA will not rest until this rotten cabal goes down - until WE prevail and WE win the day.

My colleague Chris Powell described best what the GATA effort is all about in his coverage of Reg Howe's day in court against 14 hotshot Gold Cartel lawyers:

    "When it was over, the courtroom cleared out quickly, and Howe was left alone at the counsel table packing his books and papers into his briefcases. Forgive the editorializing, but I couldn't help but think of the scene at the end of the trial in that wonderful movie, "To Kill a Mockingbird," when Gregory Peck, playing the quietly heroic defense lawyer, Atticus Finch, does the same thing, seemingly alone -- and yet he is not alone, but rather watched by the oppressed people in the gallery with awe, admiration, and respect for standing up against the most hateful and vicious power.

    "What I saw today was really not so different."

Chris went on:

    "Enough of the cursed cynicism that the courts are as rigged as the markets, that there is no fighting the power. We know some things about market rigging but there is no evidence that anything in court today was rigged. We got a day in court if not quite yet OUR day in court. And for all its faults this remains a country where one brave man pleading his own case can summon the representatives of all the money in the world and put the bastards in danger of having to answer for themselves."

That, my friends, is what GATA is all about (pointing to GATA painting).

Thank you.