The paranoids were right -- there WAS a conspiracy against gold

Even Paranoids Have Enemies:
Is There a Gold Conspiracy?

By Robert Appel
Luxe Magazine

(A supplement to the National Post, Toronto)

Wednesday, November 29, 2006

In the early 1990s, I recall, there was a front-page story in Canada's Financial Post (progenitor to our present National Post) featuring interviews with professional traders from the international gold desks. All were of one view. "Unusual activity" was taking place; the gold market was not as it should have been. Something was up.

I wish I had kept that edition in a lock-vault. It would be as significant today to connoisseurs of financial conspiracy as Lee Harvey Oswald’s Cuban postcard collection is to presidential assassination buffs. Wait -- did I actually use the words "financial" and "conspiracy" in the same sentence? Indeed. And with good reason.

Long before he ever became chairman of the Federal Reserve, Alan Greenspan wrote a number of interesting papers pointing out that the only true "threat" to the ability of sovereign nations to print as much money as they liked, whenever they liked, was gold.

It is possibly no coincidence that, during Greenspan's own tenure at the helm of the Fed, bullion began to act just a little bit wacky. Instead of keeping pace with the Dow or even with inflation -- de minimis expectations based on decades of prior behavior -- bullion actually began to weaken as other markets and commodities surged ever higher. Some called this counterintuitive behavior. Others had an even catchier name for it -- "conspiracy"!

By the late 1990s several Western central banks and key international gold mining firms suddenly, and oddly, discovered common ground. The central banks, led by the United Kingdom, ostentatiously dumped gold onto the open market, protesting all the while that it was a "non-productive asset" taking up otherwise valuable space in their vaults.

Some of the world's largest mining firms simultaneously began to "sell forward" future supplies of gold at ever-lower prices -- that is, prices constantly being depressed by the forward-selling process itself. The firms claimed that they were altruistically concerned about the future price of gold and were merely introducing stability into their business models by forced forward-selling. To appreciate this argument, think of a baker concerned that the market for his bread and rolls might weaken, so he decides to ingest his entire inventory by himself.

Seem a tad counterintuitive? Good. You are starting to catch on.

Speaking of "catching on," one of the first groups to do so was an organization formed in 1999 called GATA, the Gold Anti-Trust Action Committee. They were considered complete crackpots by the traditional financial establishment.

Until this year, that is.

A new and spanking-fresh report from Credit Agricole, the largest commercial bank in France, not only seemed to validate everything GATA had ever said but specifically opined in writing that Britain's ill-conceived aggressive and subversive dumping of gold into a sodden market during the late 1990s likely caused a "current loss to UK taxpayers of about $2 billion."

So, gold conspiracy? Yea or nay?

Do the research and decide for yourself. If nay, at least offer Oliver Stone the screen rights. It's a gosh-darned interesting tale.

If yea, then seriously consider backing up the truck in 2007 for gold-related assets, because that pretty, perky yellow metal may yet have a whole lot of catching up to do.

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Join GATA
at the
2007 Vancouver Resource Investment Conference
Vancouver Convention and Exhibition Centre
Sunday and Monday, January 21 and 22, 2007

http://www.cambridgeconferences.com/ch_jan2007.html

Admission is free for those who register in advance. The conference has arranged discount rates at the Pan Pacific Hotel adjacent to the convention center.

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