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By James Turk
Copyright 2004 by The Freemarket Gold & Money Report
All rights reserved
Letter No. 341
March 15, 2004
On March 8th the European Central Bank and 14 of Europe’s national central banks made the following announcement:
“In the interest of clarifying their intentions with respect to their gold holdings, the undersigned institutions make the following statement:
By Andrew Hepburn
January 12, 2004
The Gold Anti-Trust Action Committee (GATA) believes that central banks, acting through certain investment banks, have surreptitiously manipulated the price of gold. Such activity appears to have started in the mid-1990s and continues to this day. Prominent entities involved include J.P. Morgan Chase, Goldman Sachs, Deutsche Bank, the Federal Reserve, the Bank of England, and the Bank for International Settlements. GATA specifically alleges that the U.S. Treasury's Exchange Stabilization Fund has been used, contrary to official denials, for gold market interventions. Furthermore, GATA believes that the official sector intervened in the late 1990s to prevent an impending gold derivative crisis, the result of excessive short positions accumulated over many years.
Gold Derivatives: Hitting the Iceberg
What is the size of the total short physical gold position, or put another way, how much gold from their vaults have the central banks collectively deposited, leased or swapped into the market through the bullion banks? Taking advantage of guidelines promulgated by the International Monetary Fund, most central banks report their gold reserves without providing a breakdown between bullion held in their vaults and gold receivables owed to them on account of deposits, loans and swaps, as would be required under more normal accounting practice. Thus the size of the total short physical position continues to stir controversy, with Gold Fields Minerals Services sticking to its estimate of 4000 to 5000 tonnes notwithstanding the mountain of research by the Gold Anti-Trust Action Committee and its associates suggesting an amount two to three times as large. See, e.g., T. Wood, "That gold short position," Mineweb (December 5, 2003).
In order to explain the Why's and How's of the Gold Price Manipulation scheme (and why it is illegal and unfair), 6 aspects need to be discussed - namely motive, means, proof, opportunity, track record and impact.
- US Government: To artificially keep interest rates down by deceiving the bond markets about inflation, and thus the gold price. In short, lower gold price = lower inflation = higher stock market = higher reelection chances.
- US Government: To artificially strengthen the US dollar relative to other currencies. Clinton's "Strong Dollar Policy" was suppression of gold price. In short, lower gold price = higher US dollar = higher stock market.
- Some Bullion Banks: To provide cheap source of capital to earn huge income, providing gold price is kept low.
Background: The gold price suppression scheme was actually put down on paper, in public, by Harvard Professor Lawrence Summers, before becoming Treasury Secretary under Clinton. He wrote of the inverse relationship between the gold price and interest rates, and concluded that government could keep interest rates low by suppressing the gold price. Refer: www.gata.org/gibson.pdf
In previous work I drew attention to the link between the rapid growth of interest rate derivatives [IRDs] at Chase and Morgan subsequent to an unprecedented gold market preemptive selling episode in 1996. This report will further explore the likely interventional reasons behind this extreme interest rate derivatives growth. In addition, an important 1998 Federal Reserve consultant's publications that describe exact methodology needed to enforce the government's long-term interest rate policies are reviewed. Also the report shows preliminary evidence that since Summer 2003 the long interest rates appear to be under the controlling influence of those Federal Reserve policies. Finally, issues threatening the gold and interest rate interventional operations of the Federal Reserve are briefly discussed.
Investment Indicators from Peter George
Wednesday, December 3rd, 2003
Archimedes was a famous mathematician whose theorems and philosophies became world-known. In his own time he gained a reputation few other mathematicians of this period achieved. He is considered by most historians of mathematics as one of the greatest mathematicians of all time. He discovered pi.
by James Turk, April 21st, 2003
© 2003 by The Freemarket Gold & Money Report.
One of the statistics complied by the International Monetary Fund is the quantity of gold owned by the world's central banks. That weight is reported to be 32,291 tonnes of gold. Most people accept this number at face value and without questioning its accuracy. However, central banks actually own less gold.
In reality central banks own 32,291 tonnes of gold AND gold receivables. This distinction is important. From both a legal and an accounting point of view, gold in the vault is clearly very different from gold owed to you. The reason is that gold in the vault is much less risky than someone's promise to pay you gold.
America is earth's Eldorado. She came to be such because of ambitious men and women of drive and ability that knew no such word as fail, visionaries who were willing to gamble precious years of their lives today on a dream for tomorrow.
Throughout my life, I have encountered many of these men and women in America. They are always salient standouts from the bland establishment crowd, whether their field of endeavor is academics, business, the arts, law, or science. They think for themselves. They make truth their authority, while others make authority their truth. In their eyes, life is not meant for comfort and security. It is a crucible. It is meant for the pursuit of something noble, something enduring. Truth and its exposition are the goals that transcend all else. At the risk of simplification, this is what drives all change and progress throughout history -- this drive for the truth. It moves the entrepreneurs, the rebels, the contrarians of humankind.
[Note: Presentation on Thursday, May 23, 2002, to a seminar at the Grocers Hall, London, organized by the Association of Mining Analysts and sponsored by Durban Roodepoort Deep on Prospects for Gold - A new era or more toil ahead?]
As indicated on the program, your chairman, Michael Coulson, has asked me to address: "The gold anti-trust action - the Boston court judgement and the road ahead." While I will speak to the assigned topic, my own title for this talk is Money in Court: Paving the Road to Ruin, and I will speak from the perspective of the American Constitution.