Chris Powell: Why invest in gold miners if they won't defend themselves?

Mines and Money Asia Conference, Hong Kong
Friday, April 7, 2017

Since we gathered here a year ago, gold and silver market manipulation has burst into the open and become undeniable. Even some mainstream financial news organizations have had to report it, if begrudgingly and only briefly. But the gold and silver mining industry itself keeps running away from it.

Fortunately, this conference allows it to be discussed anyway.

The biggest development in gold and silver market manipulation in the last year has been Deutsche Bank's admission that its traders conspired with traders from other big investment banks to suppress gold and silver futures prices. This admission by Deutsche Bank came as part of its response to class-action antitrust lawsuits brought against it and its co-conspirators in U.S. District Court in New York. Deutsche Bank has provided the plaintiffs with transcripts of electronic messages between the traders showing them coordinating their trades to smash gold and silver prices down. The bank has agreed to pay nearly $100 million to the plaintiffs to settle the cases. The bank also has agreed to provide more evidence against the other conspiring banks:

http://www.gata.org/node/16964

http://www.gata.org/node/17157

This action by the Justice Department is suspicious because for many years the U.S. Commodity Futures Trading Commission announced repeatedly that it had investigated complaints of manipulation of the silver market and had found no actionable evidence, closing its investigation in 2013:

http://www.gata.org/node/13058

So it seems that the U.S. government just wants to stop exposure of gold and silver market rigging, perhaps because the U.S. government itself and other governments have been masterminding it, as GATA has documented extensively over the years at our internet site, GATA.org:

http://www.gata.org/node/14839

Much more evidence of government involvement in gold and silver price suppression has come out during the last year.

According to its own recent reports, the Bank for International Settlements, the central bank of the central banks and their gold broker, re-entered the gold swap business in a big way after having withdrawn from it for a time. Gold swaps allow central banks and their agent investment banks to move gold and gold derivatives around the world so that metal can be applied for price suppression where gold demand most threatens to get out of control. An increase in gold swapping by the BIS indicates greater strain in the gold market and more danger to government currencies from gold's use as a competitive reserve currency.

http://www.gata.org/node/16704

Another indicator of stress in the gold market in the last year has come from the New York Commodities Exchange, the Comex. For many years the Comex has been almost entirely a "paper" market for gold, with very little real metal actually taken out of it. But in recent months gold offtake on the Comex has exploded:

http://www.gata.org/node/17226

Also in the last year, the Austrian and Netherlands central banks refused requests from gold researcher Koos Jansen, who writes for Bullion Star in Singapore, to disclose lists of the gold bars in their national reserves. Such disclosure might allow researchers like Jansen to ascertain how much of the gold in national reserves has been surreptitiously leased or swapped and put into the market for price suppression.

http://www.gata.org/node/16705

http://www.gata.org/node/16866

But a few weeks ago Mexico's central bank, under pressure from financial journalist Guillermo Barba and Mexico's national government auditors, did disclose its gold bar list. The list showed that much of Mexico's gold reserves is held in an "unallocated" account at the Bank of England. That is, much of Mexico's gold is leased or swapped out -- which is exactly what the Austrian and Netherlands central banks and other central banks don't want the world to know about their own reserves:

http://www.gata.org/node/17233

The International Monetary Fund has been touting the new "transparency" of its operations, but last September gold researcher Ronan Manly, who also writes for Bullion Star in Singapore, asked to see the records of the IMF's gold transactions and the agency refused him:

http://www.gata.org/node/16722

The IMF's hypocrisy about transparency was new but its refusal to disclose its gold transactions was the same old thing. For as GATA long has noted, the secret March 1999 report to the IMF's board by its research staff, obtained by GATA and published in 2012, confirmed that central banks conceal their gold transactions to facilitate their surreptitious interventions in the gold and currency markets. That is, to conceal their market rigging. The secret March 1999 IMF staff report is posted at GATA's internet site:

http://www.gata.org/node/12016

Last July a study by Dirk Baur, professor of accounting and finance at the University of Western Australia in Perth, concluded that central banks have been rigging the gold market by lending gold, just as GATA has long maintained:

http://www.gata.org/node/16611

Of course that gold lending is a primary mechanism of price control by central banks was admitted officially by Federal Reserve Chairman Alan Greenspan in his testimony to Congress in July 1998. Greenspan said: "Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over the counter, where central banks stand ready to lease gold in increasing quantities should the price rise."

That is, Greenspan told Congress not to worry about the gold price because central banks had it under control with surreptitious leasing of their gold reserves.

https://www.federalreserve.gov/boarddocs/test...98/19980724.htm

And in January this year a cable from the U.S. embassy in London to the State Department in Washington was discovered by the TF Metals Report in the secret U.S. government archives obtained by Wikileaks. The cable, sent in December 1974, shows that the U.S. government had just sought and received assurance from London bullion banks that the gold futures market that was about to open in the United States would create so much price volatility that ordinary investors would be scared away from gold. Of course the bullion banks, some of which are formally agents of the U.S. Treasury Department -- primary dealers in U.S. government securities -- were to become primary traders in that gold futures market and thus themselves primary creators of that frightening volatility:

http://www.gata.org/node/17081

During the last year the Indian government has urged Indians to convert their gold savings into paper financial instruments -- to "paperize" their gold -- purportedly to make it more useful to the country than mere individual savings. The Indian government's scheme has failed spectacularly. A few days ago Reuters reported that the government's program to issue interest-bearing securities in exchange for real metal had drawn out only seven of the estimated 24,000 tonnes of metal under private and temple ownership in India:

http://www.gata.org/node/17245

The Indian people's attachment to gold as money and wealth seems as firm as their government's desire to impoverish them by suppressing gold's price as measured by government currencies. India is a developing country but imagine how wealthy it would be if central banks and governments, including India's own government, stopped trying to suppress the measure of the money that Indians most want to use.

From the documentation GATA has compiled it is plain that governments and central banks are constantly operating in the gold market surreptitiously to defend their currencies and to control interest rates. This destroys free markets everywhere, since currencies and interest rates are measures of value.

For example, in a presentation to potential new member central banks in 2008, the Bank for International Settlements even advertised that its services include secret interventions in the gold market:

http://www.gata.org/node/11012

Lately central bankers have even been caught on video confirming these surreptitious interventions against gold.

Here is Peter Mooslechner, executive director of Austria's central bank, inadvertently confessing during an interview with Kitco's Daniela Cambone at the London Bullion Market Association meeting in Vienna in October 2015:

http://www.gata.org/node/15878

Mooslechner said Asian central banks are "intervening" in the gold market, though of course no such interventions have ever been announced. Unfortunately Cambone did not press Mooslechner about this, and when other journalists contacted the Austrian central bank in the hope of following up with Mooslechner about his comment to Kitco, the bank refused to make him available.

Here is William Dudley, president of the Federal Reserve Bank of New York, taking questions after his presentation at the Virginia Military Institute in March last year. First Dudley is asked by a GATA supporter in the audience, Ware Smith, about the German Bundesbank's repatriation of gold reserves from the New York Fed's vault and other central bank vaults. Dudley answers the German repatriation question in detail. Then Dudley is asked by Smith whether the Federal Reserve is involved with gold swaps. Dudley replies that he doesn't want to talk about "individual customer kind-of transactions" -- even though he had just talked at length about the Fed's "individual customer transactions" with the Bundesbank.

http://www.gata.org/node/16341

But Smith's second question did not ask Dudley about "individual customer transactions." Smith asked Dudley only the general question, the question GATA itself put to the Fed in 2009: Is the Fed involved with gold swaps?

A few days after Dudley refused to answer the gold swaps question in Virginia, I e-mailed the question to the publicist for the New York Fed: Is the Fed involved with gold swaps? The New York Fed's publicist directed me to video of Dudley's speech in Virginia that was posted on the internet but refused even to acknowledge my question.

I have brought all this to the attention of The Wall Street Journal and many other mainstream financial news organizations and have urged them to put the gold swap question and other specific gold questions to the Fed and other central banks. The mainstream news organizations have refused to press these questions. These questions are just too sensitive. Honest answers to them or even publicity about the refusal of the Fed and other central banks to answer the questions would explode their surreptitious market rigging. Indeed, surreptitious market rigging has become the primary purpose of central banking throughout the world.

But thanks to GATA's freedom-of-information litigation against the Federal Reserve in U.S. District Court for the District of Columbia in 2009, we obtained the answer to the gold swaps question from a member of the Fed's Board of Governors, Kevin M. Warsh. Handling GATA's formal request for information on gold swaps, Warsh replied, in writing to GATA's lawyer, that the Fed possesses and refuses to disclose "information relating to swap arrangements with foreign banks on behalf of the Federal Reserve System." Gold swap information, Warsh explained, "is not the type of information that is customarily disclosed to the public."

http://www.gata.org/node/7819

Can anyone wonder why this information is concealed? As the secret IMF staff report of March 1999 says, it is concealed to facilitate secret market interventions by governments and central banks.

Perhaps most remarkably, in January this year a major gold mining company executive acknowledged on video that he believes that governments are rigging the gold market. Here is Canadian billionaire Frank Giustra, a confidant of former President Bill Clinton, being interviewed by money manager Marin Katusa at the Vancouver Resource Investment Conference in January. Katusa asks Giustra why the gold price doesn't match the political and financial turmoil in the world.

http://www.gata.org/node/17223

The gold price is lower than it should be, Giustra said, because governments have "managed" it. This raises questions that Katusa failed to put to Giustra:

First, if governments are suppressing the gold price, why should anyone invest in gold mining companies?

And second, if governments are suppressing the gold price and you're an executive of and big investor in gold mining companies, are you going to try to do anything about it, or are you just going to sit there and quietly accept it?

Suppression of the gold price supports government-issued currencies, helps suppress all commodity prices, and thereby destroys markets everywhere and expropriates the developing world. Gold price suppression thereby constitutes the primary mechanism of imperialism -- a mechanism more effective than armies, since it is surreptitious and not generally understood.

So I would put two questions to all of you here, since you're all involved in the commodity business one way or another. Can you at least acknowledge, as Giustra finally has done, that the governments of developed countries are waging war not only against your businesses but also against the developing world? And if you can acknowledge this, will you try to do anything about it?

If you would like to try doing something about it, GATA can make some suggestions and provide more information.

I will be glad to hear from you by e-mail at target="_blank" CPowell@GATA.org.

Thanks for your kind attention.

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