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In his commentary this week, "Gold Cars and Gas
Stations," posted at GoldSeek, 24hGold, and
321Gold --
http://news.goldseek.com/GoldSeek/1328632354.php
http://www.24hgold.com/english/news-gold-silver-gold-cars-and-gas-statio...
http://www.321gold.com/editorials/thomson_s/thomson_s_020712.html
-- financial letter writer Stewart Thompson remarks
that "banks likely are manipulating gold, and manipulating it higher,
with central bank buy programs" and that gold investors should take a
break along with the gold price rather than keep "screaming that you're
being manipulated to death."
That Western central banks may be working the gold
price higher is not a new idea to readers of these dispatches and followers
of market analysts like GATA Chairman Bill Murphy and GATA consultant James
Turk, founder of GoldMoney.
Our camp has often asserted that the
Western central banks long have been undertaking a "controlled
retreat" with gold, using derivatives and leases (not so much sales
anymore) to keep the price from exploding after years of essentially short
selling the metal or backstopping such short selling by bullion banks. Federal
Reserve Chairman Alan Greenspan confirmed as much in his testimony to
Congress in July 1998 when he said that "central banks stand ready to
lease gold in increasing quantities should the price rise":
http://www.federalreserve.gov/boarddocs/testimony/1998/19980724.htm
And GATA long has been calling attention to the
scholarly study written in 2006 by the Scottish economist Peter Millar, who
showed how central banks use the upward revaluation of gold to avert
catastrophic debt deflation at the end of an economic cycle:
http://www.gata.org/node/4843
From time to time GATA also has called attention to
Thompson's own speculation that central banks want the gold price higher now
as a mechanism of economic stimulus and devaluation:
http://www.gata.org/node/9005
http://www.gata.org/node/9955
http://www.gata.org/node/7090
But GATA's complaint about gold market manipulation
and price suppression is no less valid for all this. For while some central
banks now may want to devalue their currencies, they want to do it on
their own schedule and with their favored bullion bank agents
preferentially positioned to profit from it rather than leave devaluation
to free markets. Central banks certainly don't want a true free-market price
of gold discovered any time soon, if ever.
For such a gold price would prove terribly
inconvenient to central banks and their bullion bank agents, as it might
result from wider realization that most of what the world imagines to be its
gold supply doesn't exist -- that, as CPM Group director Jeff Christian
acknowledged at the hearing of the U.S. Commodity Futures Trading Commission
on March 25, 2010, as he had acknowledged in a report written a decade
earlier, there is no metal at all behind most gold contracts and depository
receipts:
http://www.gata.org/node/8627
Free markets in the monetary metals, markets that
discipline governments and their currencies and protect individuals against
expropriation, markets that enforce limited government, are GATA's objective,
and we're not going to be mollified by 10 or 20 percent increases over the
course of another year of "controlled retreat." To the contrary, we
want to rout the bad guys, and that's likely to involve a lot more
screaming that the markets are being "manipulated to death."
Chris Powell
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