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In their latest market letter, Lee Quaintance and Paul Brodsky of QB Asset Management in New
York add credence to speculation that the gold price could not have been so
restrained lately without the assistance of China and Russia and maybe even
Japan and South Korea, all eager to hedge their dollar exposure with gold but
unable to get it in size without a long period of price suppression.
Quaintance and Brodsky write:
"According to most dyed-in-the-wool hard-money
advocates there is a 'gold cartel' that suppresses the gold price. They tend
to argue that U.S. banks continually short gold (and silver) futures nakedly,
clipping significant yield each quarter without sufficient metal in stock to
deliver to futures buyers if exercised.
"They further argue that these
banks do not fear regulatory reprisal, and in fact that their actions are
blessed by the powers that be because runaway gold prices would signal to the
world that there is something wrong with the currencies gold competes with,
notably U.S. dollars. Thus, as the argument goes, banks have the means,
motive, and implicit sovereign go-ahead to suppress the gold price.
"Mmmm, maybe. We
certainly agree that gold should fundamentally be priced much higher than
where it is and that the way gold futures seem to be reliably stepped-on
before Treasury auctions and Fed meetings is a bit snarky. But as for the
progenitors of the crime? It might be better to look east.
"Conspiracy theorists should consider foreign
dollar reserve holders that would like to take delivery of as much physical
gold (and silver?) as possible in a very short time,
and do so at cheap prices. It would be simple to do: Fund offshore hedge
funds that continually short gold futures through U.S. bank accounts, thereby
keeping the spot price and London fixings down. Physical gold could then be
delivered to sovereign accounts directly from mines and through exports at
the suppressed prices."
In any case, it's worth remembering, as GATA has
reported, Russia and China long have known all about the Western
central bank end of the gold price suppression scheme, and well might have
devised a course of action in regard to it:
http://www.gata.org/node/11723
http://www.gata.org/node/10380
http://www.gata.org/node/10416
And if somehow Russia and China have not
devised such a course of action, they too may want to read the latest QB
Asset Management letter, which is titled "It's Time" and which Quaintance and Brodsky graciously have allowed GATA to
post in PDF format here:
http://www.gata.org/files/QBAMCOItsTime-12-2012.pdf
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