Remarks by Chris Powell, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
New Orleans Investment Conference
Hilton New Orleans Riverside Hotel
Wednesday, October 26, 2016
Since 1999 the Gold Anti-Trust Action Committee has been trying to get the
financial industry, the mining industry, and mainstream financial news
organizations to acknowledge that the gold market is aggressively manipulated
by governments and central banks to protect their currencies and bonds
against competition from a potentially superior currency and store of value.
This year seems to have been the one when respectable people in the financial
industry gave up disputing us.
Not that GATA still isn't disparaged. Rather, respectable people in
the financial industry have gone from denying that the gold market is
manipulated to dismissing complaints of gold market manipulation because,
they say, "All markets are manipulated."
Of course this response is an evasion. It fails to address the specifics
and purposes of the manipulation of the gold market. That is, are all
markets manipulated nearly every day by the surreptitious sale by governments
and central banks of massive amounts of imaginary product? Are all
markets manipulated every day so the developed world can expropriate the
resources of the developing world?
Respectable people in the financial industry still find such issues
politically incorrect, very bad for their business. To avoid these issues,
some of these respectable people even assert that central banks don't matter
-- even though central banks are authorized to create infinite money and
deploy it in secret on a patronage basis, making them the most powerful
institutions in the world.
But the evidence of market rigging that has been exposed this year makes
it easy to understand the transition from "gold isn't manipulated"
to "everything is manipulated."
For example:
-- In the class-action anti-trust lawsuits brought in federal court in New
York against the investment banks that operated the daily gold and silver
price fixings in London, Deutsche Bank effectively confessed to manipulating
the gold and silver markets, agreeing to pay $38 million in damages and to
provide evidence against the other defendant banks. The judge authorized the
lawsuits to proceed to the discovery and deposition stage, where production
of evidence is mandatory. So now the case may get very interesting. The
production of evidence may reveal more government involvement with the banks
that run the gold market.
See:
http://www.gata.org/node/16380
http://www.gata.org/node/16847
-- A study published in July by a finance professor at the University of
Western Australia, Dirk Baur, concluded that, as GATA long has maintained,
central banks rig the gold market primarily through their leasing of gold,
their creation of imaginary gold. This leasing vastly inflates what the world
mistakenly understands to be its gold supply and thus suppresses the price.
While gold's advocates like to say, "You can't print gold," in
effect central banks print massive amounts of it, and while it is imaginary
gold, people still accept it. Professor Baur's study is posted at GATA's
Internet site:
http://www.gata.org/node/16611
-- In August JPMorganChase's chief of quantitative and derivatives
strategy, Marko Kolanovic, issued a report asserting that the rise in stock
markets after the United Kingdom's vote to withdraw from the European Union
was caused by central bank intervention:
http://www.gata.org/node/16641
-- In January a review of former Secretary of State Hillary Clinton's
e-mail correspondence, released by the State Department, disclosed an e-mail from
her political adviser, Sidney Blumenthal, asserting that France decided to
overthrow Libyan dictator Muammar Gaddafi to thwart his plan to use gold and
silver to underwrite a new pan-African currency:
http://www.gata.org/node/16074
-- In March GATA consultant Robert Lambourne disclosed that the annual
report of the Bank for International Settlements showed that the BIS, which
had gotten out of the gold swap business, had returned to gold swapping in a
big way. This signified that central banks lately have been moving gold
around desperately to apply it where they believe its price most needs
suppressing:
http://www.gata.org/node/16704
-- In August the Netherlands central bank refused the request of gold
researcher Koos Jansen to publish its gold bar list:
http://www.gata.org/node/16705
This month Austria's central bank, which had publicized its plan to audit
its gold reserve, refused Jansen's request to publish its gold bar list and
the audit:
http://gata.org/node/16866
In recent years the International Monetary Fund has boasted of increasing
the transparency of its gold operations, but in September gold researcher
Ronan Manly reported that the IMF had refused to give him access to the records
of those supposedly transparent transactions:
http://gata.org/node/16722
These refusals by the Netherlands and Austrian central banks and the IMF
suggest, as the annual report of the BIS does, that central bank gold has
been moved all around for price suppression purposes and is badly
oversubscribed -- that the same gold bars reside on the books of many
financial entities, that many people and institutions think they own the same
gold.
-- Speaking on March 31 to a financial conference at the Virginia Military
Institute in Lexington, the president of the Federal Reserve Bank of New
York, William Dudley, refused to answer a question from a GATA supporter in
the audience, W. Ware Smith Jr., about whether the Federal Reserve is
involved with gold swaps. Smith's question about gold swaps followed his
question about Germany's repatriation of some of its gold from the New York
Fed. I'd like to show you a one-minute excerpt from the exchange between
Dudley and Smith:
https://drive.google.com/file/d/0B7bb1NsDZTmj...1VsQndneXc/view
You can't hear Smith's follow-up question, but that's when he asked Dudley
if the Fed was involved with gold swaps.
Note Dudley's reply to Smith: "I can't comment on individual customer
kind of transactions."
But Smith had not asked Dudley to comment on any "individual
customer kind of transactions." Smith had asked only if the Fed is
involved in gold swapping. And of course in his previous reply to Smith,
Dudley had discussed transactions with an individual customer of the
Fed, Germany's Bundesbank.
When Smith told me about his exchange with Dudley, I wrote to the
publicist for the New York Fed, Eric Pajonk, seeking confirmation and posing
Smith's question for myself. I asked Pajonk: Is the Fed involved with gold
swaps?
The New York Fed's publicist acknowledged my e-mail and directed me to a
transcript of Dudley's speech at VMI and to a YouTube video of Dudley's
appearance there, from which the video excerpt I showed you was drawn. But
like his boss, the New York Fed's publicist would not answer my question
about gold swaps. Remarkably, the New York Fed's publicist repeatedly refused
even to acknowledge my gold swaps question:
http://www.gata.org/node/16341
Now we already knew from a letter sent in 2009 to GATA's lawyer by a
member of the Fed's Board of Governors, Kevin M. Warsh, that the Fed is
indeed engaged in gold swaps with foreign banks and refuses to disclose the
records of these swaps:
http://www.gata.org/node/7819
So why can't Dudley acknowledge the Fed's gold swap business today?
Because gold swaps are for surreptitious market rigging, making the issue too
sensitive. Any honesty from the Fed would lead to many more questions about
the sensitive matter of market manipulation.
From the vast documentation GATA has collected of surreptitious
intervention in the gold market by central banks -- documentation drawn
mainly from government archives and statements by central bankers themselves,
many of these documents quite current -- and from Dudley's clumsy evasion of
the gold swap question, you can see how easy it has become to catch central
bankers. All you have to do is corner them with specific questions about a
document. Though central banking, operating largely in secret, is
conspiracy, GATA's work isn't mere "conspiracy theory." GATA's work
is just traditional journalism.
That's why the most urgent issue for investors in the monetary metals may
not be the surreptitious intervention in the markets by governments and
central banks -- intervention that constitutes the destruction of the market
economy and even the destruction of democracy itself. Rather the most urgent
issue for monetary metals investors may be the cowardice and even the
corruption of mainstream financial news organizations, which won't report
critically on central banking and expose its interventions.
Nearly every major mainstream financial news organization in the world has
received from GATA a detailed summary of the documentation we have compiled
-- a summary containing internet links to the original documents. This
summary is posted in "The Basics" section at our Internet site,
GATA.org:
http://www.gata.org/node/14839
But not one major mainstream financial news organization has pursued the
issue.
My recent experiences with The Wall Street Journal and Financial Times may
illustrate the nature of mainstream financial news organizations today.
In April, when GATA was publicizing New York Fed President Dudley's
evasion of the gold swap question, I wrote something in GATA's daily
newsletter, the GATA Dispatch, denouncing the cowardice of the mainstream
financial press. I sent this commentary to many financial journalists.
I received an indignant response from a reporter for The Wall Street
Journal, Katy Burne, who identified herself as the Journal's reporter
covering the New York Fed. I invited her to telephone me. When we spoke Burne
insisted that she often puts critical questions to officials of the New York
Fed, including Dudley himself. She said she was ready to put to them
questions about gold. She asked me to send her GATA's documentation.
I agreed to do so but I cautioned her that I already had provided the
documentation to two other reporters for the Journal at their request -- Kate
Kelly in 2010 and Greg Zuckerman in 2011 -- and that the newspaper had done
nothing with it. As I sent Burne the documentation, I told her I'd be
delighted to provide more information, and since April I have updated her
many times by e-mail.
But as usual the Journal has done nothing with the information. Mainstream
financial news organizations continue to prohibit critical questions to
central bankers, especially about gold, the control of gold being the secret
knowledge of the financial universe.
Of course Burne may have tried briefly to pursue the gold issue with New
York Fed President Dudley, only to be instructed against it by her superiors,
or even by Dudley himself. Either way, I suspect that she is no longer so
indignant about my criticism of her newspaper.
Two weeks ago an editor for the Financial Times, Dan McCrum, wrote a
column asserting that there is no explanation for movements in the gold price
except what he called "fashion":
http://www.gata.org/node/16826
McCrum's column was so outrageously mistaken and lazy that I wrote to him
that there is indeed another explanation for movements in the gold price:
surreptitious intervention by central banks. I sent him the summary of GATA's
documentation and urged him to review it.
McCrum cordially replied: "Many thanks for your e-mail.
Unfortunately, I feel it would be counter to the spirit of the column were I
to write more on the subject of gold."
But what if the "spirit of the column" was wrong? What if the
column failed to acknowledge and examine the evidence? What if the column
misinformed readers? McCrum's column wasn't journalism; it was just
propaganda and disinformation.
Ironically, we know from the State Department cables obtained by Wikileaks
in 2011 that the government-controlled press in China has been full of
reports about gold price suppression by Western governments. Those Chinese
press reports were translated by the U.S. embassy in Beijing and cabled back
to Washington. That is, China knows all about gold price suppression and the
U.S. government knows that China knows:
http://www.gata.org/node/10380
http://www.gata.org/node/10416
This failure of Western journalism especially bothers me because I am one
year short of 50 years in the newspaper business. I know that governments too
often operate in secret and sometimes, facilitated by secrecy, will deceive
and even do awful things. I know that, as it also is a human enterprise,
journalism is imperfect too. But if journalism won't even try to hold
government to account, what will?
As much as it disappoints me as an investor in the monetary metals, I can
understand the mining industry's cowardice. As it is a natural resource
business and the most capital-intensive business, the mining industry is
almost entirely dependent on government and the biggest investment banks,
which in turn are essentially government agencies themselves.
In contrast, journalism's calling is higher, and in the West its rights
are far greater.
As for GATA's calling, we increasingly are regarded as bad for the
monetary metals business. Ross Norman, CEO of the venerable London bullion
brokerage firm Sharps Pixley, made this point about GATA in a cordial
exchange with me the other day. GATA's complaints about manipulation of the
monetary metals markets, Norman wrote, are discouraging investment.
Yes, as GATA Chairman Bill Murphy has noted, the more GATA has established
that governments and central banks are rigging the monetary metals markets,
the less popular GATA has become with people selling monetary metals
products. While some people still dismiss GATA as a mere touter of the
monetary metals, the organization warns investors of what they are up against
even as we explain the potential consequences of the enormous naked short
position in gold represented by the "paper gold" and gold
derivatives that are underwritten by central banks. The logic of GATA's work is
that the monetary metals are grossly undervalued, undervalued by hundreds of
percent.
But if, as GATA has concluded, surreptitious intervention by governments
and central banks, and not mere "fashion," is the primary
determinant of the gold price, and if the objective of that intervention is
generally suppressive, would we help gold and free markets more by remaining
silent about the intervention? Given their surreptitiousness and
unaccountability in the gold market, central banks themselves plainly
have concluded that exposure would demolish their policy, maybe even demolish
central banking itself, and help gold.
In this respect GATA agrees with central banks.
So GATA persists, figuring that if we can't easily make friends in the
monetary metals industry, then we can aim for something else, fulfillment of
the old maxim of the English common law, which, ennobled into Latin, goes: Fiat
justitia et ruant coeli.
"Let justice be done though the heavens fall."
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