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First I would like to thank Haywood Securities for the gracious reception
last evening.
Right around the turn of the century (sounds like a long time ago) I
toured the South African countryside on behalf of GATA. It was in early 2001
ahead of GATA's conference in May that year. It was quite a journey as it
took me to Cape Town, Johannesburg, Pretoria, and then Durban, where the
conference was to be held.
I will never forget it as it was GATA's first trip abroad to expose the
gold and silver price suppression scheme.
During that trip GATA supporters in Cape Town raised the equivalent of
$50,000 to put an ad in the newspaper that is the Wall Street Journal South
Africa. It was published during the internationally attended Indaba gold
conference there. In that ad we decried hedging practices used by Barrick
Gold and AngloGold that were major factors suppressing the gold price at the
time. The ad caused quite an uproar.
Years later Barrick and AngloGold took losses of around $17 billion on
their hedges, which severely affected their share price.
During my trip I met with the CEO of South African Airways and the second
and third top executives at the South African Reserve Bank in Pretoria.
The South African Broadcasting Co. covered GATA conference, right at a
time when gold was making multi-year lows right around $252 an ounce.
Representatives of five nations attended.
After hosting two other conferences -- in the Yukon Territory and
Washington -- GATA held its most recent conference at the Savoy Hotel in
London in August 2011. It sold out with attendees from 39 countries.
A month later the price of gold topped out at $1,900.
Now there is a reason for rehashing this.
From our first conference when gold was at its bottom, to one month after
our last conference, the Gold Cartel -- the Fed, U.S. Treasury, Bank for
International Settlements, bullion banks, and a few other central banks --
allowed a managed retreat in the price of gold. It went up gradually for 12
years in a row.
Then in September 2011 everything began to change.
The Gold Cartel went from managed retreat mode to maniacal attack mode,
which included a $200 bombing over a long weekend period in April 2013,
engineered when few traders were around.
This attack mode went on steroids close to six weeks ago following release
of Federal Open Market Committee minutes, an attack in which gold and silver
were slaughtered while the Dow rose 200 points on the same interest-rate
news. The Gold Cartel did its thing while the Plunge Protection Team did its
thing.
That day I was giving a presentation at the New Orleans Investment
Conference when the gold price was $1,175. Until that day the open interest
in gold on the Comex (an equal number of total long and short contracts) was
soaring as the gold price had been getting pounded. It was clear the Gold
Cartel was doing the selling. It was becoming clear that the situation for
gold and silver was hopeless until the Gold Cartel blew up.
On the day of my presentation the cartel orchestrated a normally bullish
outside day reversal to the upside. It was a sucker trap. The price of gold
then fell $110, going straight down over the weeks ahead. During this period
silver went down an unprecedented 15 days in a row.
The intensity of the daily selling had "Gold Cartel" written all
over it. As a result of what the cartel has done over the last four years,
the gold and silver mining industry is reeling with major producers suffering
and many junior minors and exploration companies on life support. Those of us
who have invested in these firms know that all too well.
So much for the bad news.
This presentation is about some potentially very good news, which has a
high probability of kicking in over the not-too-distant future.
But first, let me step back a bit.
Following my presentation at the New Orleans conference, some word was
spread that GATA was giving up. Nothing could be further from the truth. It
was just that we were being realistic about what was going on:
1. What was so blatant about the price action, which looked so hopeless.
2. For 17 years most of the mainstream financial news media have refused
to give GATA the time of day no matter what evidence of market manipulation
my colleague Chris Powell sends them. For example, the veteran gold reporter
for Bloomberg News told us to our face that she is forbidden to mention GATA.
3. The gold and silver mining industry refuses to deal with the farce that
is destroying it. The supposed spokesman for the industry, the World Gold
Council, won't have anything to do with GATA.
Still, GATA is continuing to pound away to get the truth out, but with
changed expectations, which I will mention shortly. Quitting is the furthest
thing from our minds.
But first, here is what we know about the gold market over the past four
plus years
- No amount of quantitative easing anywhere in the world
has done the price of gold any good.
- Neither have near-zero interest rates.
- Nor has enormous physical demand from India and China.
- Nor the staggering debt in the United States.
- Nor a race to the bottom in many currencies.
The Gold Cartel has been able to mobilize enough physical gold, via the
central banks and other sources, to meet demand. Yes, the shenanigans in the
paper/derivatives market set the market tone, but at the end of the day the
PM Fix in London is how 90 percent of physical market transactions are
priced. If the paper market was totally phony, the physical market would
force a phony lower paper market to be rejected.
As for the silver market, the smartest people in our camp can't figure out
where the Gold Cartel and JPMorgan are coming up with enough supply to meet
demand. Silver has been the heaviest-acting market that I have seen in 40
years. It trades as if it has an anchor around its neck.
The paper-market selling of gold and silver of late has been the most
intense we have seen on a day-to-day basis over the last 17 years. So much so
that the Gold Cartel is turning the normally bullish speculators into shorts
because of the one-way easy trade so far while the cartel's members
themselves are covering their own short positions. Gold recently broke
$1,073, a multi-year low, which has the spec shorts and other market bears
encouraging more rallies to be constantly sold.
So where is the good news in that?
The GATA camp has long wondered what the Gold Cartel's end game would be
for the gold and silver price suppression scheme -- how they would be able to
come up with enough physical supply to keep that scheme going. Because of
this scheme, both gold and silver have been taken to artificially low prices.
If the price of gold had just kept pace with inflation in the United States,
it would be over $2,500 an ounce.
These artificially low prices of late will not stand. The Gold Cartel is
going to hit a tipping point some time when they will be unable to carry on.
There is a strong possibility that this tipping point is near and they
know it, which is why their day-to-day selling has gone into overdrive.
Perhaps recognizing that their day of reckoning is not far off, the Gold
Cartel could be concluding their four-year-plus orchestrated takedown. If
that is so, the best way to accomplish their goal would be to make the short
side trade so obvious, so easy to make money on, that it would turn the specs
very short, maybe the most in history, while cartel covers more of its own
short positions.
Some in our camp have been calling for the end game to happen with a reset
in the West in which the prices of gold and silver go sharply higher
overnight. That sort of reset would cause catastrophic losses for many shorts
and put the Comex in jeopardy, which would have repercussions for other
financial markets dealing in futures. But if a reset is ever to occur, the
Gold Cartel would want its camp to be the least short possible, preferably
even long. As the latest commitment-of-traders report shows, the commercial
traders, many of them in the cartel, have already gone from extremely short
to virtually flat, which is extremely unusual.
A reset could cause huge problems. Yet what we are seeing of late could
also be setting up something else, which could do a lot to solve any
developing physical supply issues, at least over the short term. That is to
continue to get the specs as short as they have ever been and then drive the
prices of gold and silver up sharply over a brief period for some highlighted
reason -- similar to driving the price of gold down $200 over that long
weekend in April 2013. That move wiped out many spec longs but the Comex
survived. It was manageable.
What is critical to appreciate is that if the Gold Cartel is going to
solve some looming physical market issues, any sort of action would have to
be swift and violent. For a gradual move up would just cause the specs to
cover their shorts and go long again, just as before that release of the Fed
minutes. That is the way the precious metals markets have always worked.
There is no reason for that to change now.
Yes, suddenly sharper higher precious metals prices would encourage retail
buying in the West, but it ought to crush Chinese and Indian buying, as the
Chinese and Indians like to buy dips and are loath to chase the markets. And
after what has happened to the precious metals in recent years, suddenly
higher prices probably would also attract a fair amount of normal hedging.
Now the Gold Cartel could make such a raid just a short-term trade and go
tight back to what they have been doing. Or it could lead to that end game,
with gold and silver soaring, if only to where they should have been in the
first place.
Most important to appreciate is that it wouldn't happen because the cartel
wanted it to but because the cartel was forced to let it happen given the
worsening limits of the physical market. Obviously the gold and silver scene
would change overnight should anything like that scenario happen. And yes, we
would like to watch it happen. But this just could be an explanation why the
Gold Cartel has gone into such intense selling mode every day lately.
Something very strange is going on.
Predicting this sort of dramatic move and jumping up and down about it
would be the kiss of death. So let's just leave this as a reasonable
possibility, an exciting one. If it does occur, there will be a lot more
smiles on our faces the next time we see each other.
And that leads us back to where GATA is likely to make its most impact in
the years ahead, beyond what we have accomplished so far, as when a federal
judge ordered the Federal Reserve Board to pay GATA $2,800 for refusing to
let GATA see one of the Fed's gold records when we sued the Fed. A copy of
that check is posted at GATA's Internet site here:
http://www.gata.org/files/FedCheckLegalCosts.jpg
Regarding the gold and silver price suppression scheme, We have come to
realize that you either "get it" or you don't. Of course there is a
middle ground occupied by those who simply do not want to hear about it, a
"cognitive dissonance" because GATA has taken on the richest and
most powerful interests in the world, and who wants to confront them?
And then there are those who disparage us because they are apologists for
those doing the dirty deeds.
But there is something coming because of what the Gold Cartel has done
that will have to be dealt with and will be very hard for our naysayers to
ignore.
Like it or not, the gold price is widely viewed as a measure of U.S.
financial market health. The gold price is a thermometer that has turned
dysfunctional thanks to the Gold Cartel. It does not work. When feeling very
ill, would you want your doctor to take your temperature with a broken
thermometer?
The gold price has been suppressed for planned reasons. Those reasons have
to do with interest rates, the dollar, confidence in U.S. fiscal policy, etc.
That subject is an entire treatise itself, but suffice it to say gold
price suppression went into high gear under U.S. Treasury Secretary Robert
Rubin as the key to his "strong dollar" Policy. To achieve their
goals the Gold Cartel has secretly rid central banks of much of their claimed
gold reserves and has fleeced ordinary investors of their gold, gold that ordinary
investors didn't take possession of, leaving their gold hypothecated and
pledged over and over again, gold that investors think they have access to
but will not when they try to retrieve it.
The rigging of the price of gold and silver is the lynchpin rigging
operation that has set up all kinds of imbalances in the U.S. economy and led
to other market manipulations to prop up our economy and financial markets.
Everyone knows that our interest rate market has been manipulated and there
is the Plunge Protection Team constantly propping up our stock market by
buying serious dips. Then you have the bullion banks in the Gold Cartel
getting fined for rigging interest rates, the currency markets, the energy
markets, the mortgage markets, etc. In recent years JP Morgan alone has paid
$30 billion in fines for rigging markets.
This rigging have led to a mirage that "everything is fine," as
in that great line in the movie "The Stepford Wives." But the odds
are that all is not fine behind the scenes. All this market manipulation is
leading to serious chaos in our financial markets and economy when all this
market management blows up.
When that chaos materializes, it is going to raise the question: How could
this have happened?
About the same time, when gold and silver price suppression blow up, a new
fear factor will have investors panicking to secure the gold and silver they
think they own. Some of them will be turned away due to defaults and failures
to deliver, and the ensuing scandal will be epic.
The public will not care much about gold and silver but they will be in an
uproar as to how their financial well-being has been so suddenly compromised.
They will demand answers from the press and elected officials.
The search for answers will lead to the rigging of the gold and silver
markets. The mainstream financial news media will no longer be able to ignore
the evil that GATA has been exposing all these years. The media will have no
choice then but to air what we have had to say because the public will demand
answers.
Then we will be heard then -- unfortunately too late for many. But our
efforts will not be in vain since, once they are known, they may prevent a
repeat occurrence for another generation.
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