Recent assertions by fund manager and geopolitical analyst James G. Rickards that the United States and China are cooperating in suppressing the gold price so that China more easily may obtain enough metal to hedge its grotesque foreign exchange surplus in dollars are not necessarily the first ones along those lines.
As Rickards has held U.S. Defense Department security clearance and was the lawyer for Long-Term Capital Management during the rescue arranged by the Federal Reserve in 1998, he is always worth the closest attention and surely knows more than he can tell without breaching some confidence or even risking assassination.
But the first suggestion that central banks were working surreptitiously to redistribute the world's gold among governments as the transition to some sort of worldwide currency revaluation may have been made by our friends the economists and fund managers Paul Brodsky and Lee Quaintance, then of QB Asset Management, now of Kopernik Global Investors, whose dissertation on the issue was published in May 2012 and publicized by GATA.
Brodsky and Quaintance speculated that central banks actually want the gold price up -- way up -- at least in the long term. They wrote:
"The key to a successful transition is a credible monetary reset. Gold is the default collateral for money because it has a long and established precedent in this role. All that would be needed would be a fairly equitable distribution of gold among global monetary authorities (taking place now?), and an agreed-upon exchange rate vis-a-vis baseless paper. It would have to be an exchange rate at which central banks could successfully monetize assets by tendering for physical gold with newly manufactured paper money, an exchange rate high enough to attract enough gold to cover unreserved credit held in the banking system. It's a high figure.
"The relative cost of holding physical gold today is minimal (above-ground bullion or in-ground bullion through mining shares) against the negative real returns offered by the preponderance of financial assets in float. We suggest that one keep identities straight; invest with central banks, not against them; and consider the hollow rhetoric of the establishment that may temporarily suppress its paper price a 'gift.' They are working for physical gold holders, not against them."
Brodsky and Quaintance did not speculate as to the lifespans of the physical gold holders for whom central banks are working. (Five years? Ten? Fifty? A hundred?) Nor did they make a judgment about the vast deception and cheating such policy by central banks would entail, nor wonder why the planet should be governed so comprehensively by such secretive and undemocratic institutions, the bigger issues behind the gold price suppression scheme. But the Brodsky and Quaintance study remains compelling and can be found here:
http://www.gata.org/node/11373
CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc.
