In September 2017, news emerged of a plan to launch a broad-based
“Shareholders’ Gold Council” to address poor shareholder returns and
under-performance in the gold mining sector. This plan was spearheaded by
well-known hedge fund Paulson & Co and its founder John Paulson.
Initially earmarked for a launch in June 2018 or early July, BullionStar covered
this new Council in detail in a late June article titled “The
Shareholders Gold Council (SGC) – “Just don’t mention the Gold Price”.
The aims of the new Council include shareholder representation on company
boards, company accountability to shareholders, the removal of poor
performing CEOs and board members, and the alignment of CEO compensation with
share price performance. All of these aims, it should be noted, seek to
reduce the cost base of miners and have little effect on top line revenue or
the price that a gold mining company can sell its output for.
The new shareholder coalition will also make recommendations on board
appointments, CEO pay, company takeovers, and make recommendations on AGM and
EGM voting decisions, similar to the myriad reports that are churned out
daily by proxy advisory firms Institutional
Shareholder Services(ISS) and Glass,
Lewis and Co.
16 Members, 4 of which are Anonymous
Throughout the summer, there was no news flow whatsoever about the new
Council and the launch appeared delayed. The existence of such a delay was
officially confirmed this week when Bloomberg ran a story
confirming that the grouping has just been launched. The delay, according to
the head of the new Council, Christian Godin, was “because of compliance
issues and housekeeping challenges dealing with 16 institutions and
back-office teams“. Godin joins to head up the Council from Canadian
investment management company Montrusco Bolton
Investments.
According to Bloomberg’s story which is titled ‘Paulson
Joined by 15 Investors in Council to Oversee Gold Miners’, the new
Shareholder’s alliance, in addition to founding hedge fund Paulson & Co, includes institutional
and hedge fund firms Delbrook
Capital, Tocqueville Asset
Management, Livermore
Partners, Kopernik Global
Investors, Apogee Global
Advisors and Equinox
Partners. Other named members of the alliance are Adrian Day Asset Management,
Swiss based
AMG Fondsverwaltung AG, Equity Management
Associates, Luxembourg based La Mancha (Naguib
Sawiris), and privately-held Sun Valley Gold LP.
According to Bloomberg, there are also four institutional members of the
new Council who wish to remain anonymous, bringing the total number of
institutions involved to sixteen. Previous coverage of the Shareholders Gold
Council mentioned names such as Vanguard,
State Street
Global Advisors, Blackrock and Van Eck, so these
could be some or all of the four that do not want their identities revealed.
This preference for anonymity by four institutional shareholders of
gold mining companies is itself worrying, because it begs the question that
if they haven’t even got the courage to publicly identify themselves, then
how committed and motivated are they really to effect change within the gold
mining companies that they invest in.
Don’t Mention the Gold Price
But as detailed in BullionStar’s article in June, there is one topic that
this new Shareholders Gold Council could research and investigate, but has
blatantly chosen not to. This is the issue of the gold price, an issue that
goes to the heart of a gold mining company’s operations and the performance
of its share price, including as we explained in June:
“how that gold price is discovered and established in today’s gold
markets, whether that gold price is manipulated by bullion bank traders, and
whether that gold price is subject to central bank interventions that attempt
to control and stabilize it.”
The gold price as it relates to the health and performance of gold mining
companies and their shares (common equity) is also a topic that is of
interest to the Gold Anti-Trust Action
Committee (GATA). GATA is a US-based educational and civil
rights organization that was established 20 years ago to, in its own words “expose,
oppose, and litigate against collusion to control the price and supply of
gold and related financial instruments“.
GATA has even gone so far as to write a letter to John
Paulson at the Paulson & Co headquarters in Manhattan, requesting that it
be allowed to make a presentation to the Shareholders Gold Council “about
the longstanding policy of Western governments and central banks to intervene
in the gold market surreptitiously to suppress the monetary metal’s price“.
GATA’s letter, dated 21 September 2018, can be read in pdf format here.
GATA’s letter to Paulson refers to:
“the largely surreptitious manipulation of the gold market by
governments and central banks, usually undertaken through intermediary
brokers and the bank for International Settlements.”
While making references to the fact that GATA has:
“found that gold price suppression is actually longstanding Western
government policy, acknowledged in government archives and the writings and
public comments of many central bankers themselves but seldom reported by
financial organizations“.
Conclusion
As someone who has found some of the government archives, writings and
comments of central bankers that GATA refers to above, I would have to agree
with the statements in GATA’s letter to Paulson. That is why it will be very
interesting to see how John Paulson responds to the GATA letter, if indeed he
responds at all.
GATA has also asked Paulson if it can join the Shareholders Gold Council,
another possibly tall order for Paulson’s new grouping to fulfill, especially
since the new coalition is already opaque with four large institutional
members not having the courage to publicly put their names on record.
So, will this Wall Street centric New Shareholder’s Gold Council
investigate the gold price as part of its remit? Or will it, like its
similarly named World Gold Council, not
bother to really care what goes on in the central bank gold world. It
remains to be seen, but the best answer currently would be “Don’t hold your
breath!”
Ronan Manly
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