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Writing today for Resource Investor, Jeffrey
Lewis of Silver-Coin-Investor.com notes the irony that even though we're
"in the age of the LIBOR scandal, Financial Accounting Standards Board
mark-to-market rule changes, high-frequency trading programs front-running
retail investors, MF Global's dramatic demise, and
Bernie Madoff's outrageous Ponzi scheme ... it continues to be taboo to even
entertain the idea that the precious metals markets could actually be
managed."
But Lewis more than entertains the idea. A
central bank that arranges or backstops price suppression in the monetary
metals "can print effectively unlimited amounts of dollars to pay for
its losses, and it would never be forced to deliver
physical metal it did not have because it would generally be trading futures
on the short side," Lewis writes. "Since the seller of a futures
contract controls physical delivery, it can simply opt not to deliver and
cash-settle instead."
A central bank trading
secretly in gold and silver? While it may sound fantastic, in the United
States it is actually the law, and has been for a long time, the
Treasury Department's Exchange Stablization Fund
having been established in 1934 specifically for that purpose, and the ESF's
mandate having been expanded since then to authorize secret trading in any
market:
http://www.treasury.gov/resource-center/international/ESF/Pages/esf-inde...
All anyone has to do to expose the scheme is
to ask central banks about it. Their refusal to answer some simple questions
is telling:
http://www.gata.org/node/11862
Fortunately for central banks, the
prerequisite for mainstream and respectable financial journalism is never to
put a specific question to a central bank and complain publicly about its
refusal to answer. There couldn't possibly be any news in central banking's
control of the value of all capital, labor, goods, and services in the world.
This is pretty much what the British economist
Peter Warburton figured out about central banks, their investment bank
allies, and commodity markets 11 years ago in his groundbreaking essay,
"The Debasement of World Currency: It Is Inflation, but Not as We Know
It":
http://www.gata.org/node/8303
"What we see at present," Warburton
wrote in 2001, "is a battle between the central banks and the collapse
of the financial system fought on two fronts. On one front the central banks
preside over the creation of additional liquidity for the financial system to
hold back the tide of debt defaults that would otherwise occur. On the other
they incite investment banks and other willing parties to bet against a rise
in the prices of gold, oil, base metals, soft commodities, or anything else
that might be deemed an indicator of inherent value. Their objective is to
deprive the independent observer of any reliable benchmark against which to
measure the eroding value, not only of the U.S. dollar but of all fiat
currencies. Equally, they seek to deny the investor the opportunity to hedge
against the fragility of the financial system by switching into a freely
traded market for non-financial assets. ...
"How much capital would it take to
control the combined gold, oil, and commodity markets? Probably no more than
$200 billion, using derivatives. Moreover, it is not necessary for the
central banks to fight the battle themselves, although central bank gold
sales and gold leasing have certainly contributed to the cause. Most of the
world's large investment banks have overtraded their capital so flagrantly
that if the central banks were to lose the fight on the first front, then
their stock would be worthless. Because their fate is intertwined with that
of the central banks, investment banks are willing participants in the battle
against rising gold, oil, and commodity prices."
Despite the abdication of mainstream financial
journalism, Lewis writes today, the scheme is being found out. "The
market seems to be progressively reaching the point where 'everyone knows'
that the price of silver, gold, and just about every other commodity is being
politically managed to the point where underlying fair value across the board
has become remarkably distorted."
Now we just need to reach the point where
everyone does something about it. In recent months GATA has solicited
several leading and immensely prosperous and powerful figures in the monetary
metals world, people whose names you would instantly recognize and who almost
singlehandedly, on their own or by helping GATA, could pull the plug on the
gold and silver price suppression schemes. But even with introductions from
mutual friends, those figures don't want the slightest trace of association
with GATA.
To some extent this is understandable. Those
people are as respectable as mainstream financial journalists and have a lot
to lose at the hands of government, and they have already made their fortunes
and achieved their privileged positions and think that they can leave the
world to fend for itself.
But if you ever run into any of them at
conferences or shareholder meetings, you might ask them why, with so much
wealth, they won't help GATA, won't send even a contribution like the $20
sent the other day by credit card over the Internet by a guy in California,
who thereby donated to GATA $20 more than, for example, Newmont Mining has
donated since GATA was founded in January 1999. If you challenge their indifference,
one or two or the rich and powerful guys may at least feel a little guilty
about it.
If you're inclined to help GATA, you can
donate even $1 via our credit card mechanism on the Internet here --
http://www.gata.org/node/16
-- and thereby become
more relevant to the struggle for free markets in the monetary metals than
the world's biggest gold and silver mining companies. With sufficient
support, we'll undertake new freedom-of-information litigation against the
U.S. Federal Reserve, Treasury Department, and State Department:
http://www.gata.org/node/11606
We have beaten the Fed once already --
http://www.gata.org/node/9917
-- and what we've
learned will help us beat the Fed again along with the other secret market
riggers in government here and around the world.
Lewis' commentary is headlined "The Great
Precious Metals Managed Retreat" and it's posted at Resource Investor
here:
http://www.resourceinvestor.com/2012/11/02/the-great-precious-metals-man...
CHRIS
POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
Join GATA here:
Vancouver Resource Investment Conference
Sunday-Monday, January 20 and 21, 2013
Vancouver Convention Centre West
Vancouver, British Columbia, Canada
http://www.cambridgehouse.com/event/vancouver-resource-investment-confer...
* * *
Support GATA by purchasing DVDs of our London conference in August
2011 or our Dawson City conference in August 2006:
http://www.goldrush21.com/order.html
Or by purchasing a colorful GATA T-shirt:
http://gata.org/tshirts
Or a colorful poster of GATA's full-page ad in The Wall Street Journal
on January 31, 2009:
http://gata.org/node/wallstreetjournal
Help keep GATA going
GATA is a civil rights and educational organization based in the
United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail
dispatches are free, and you can subscribe at:
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To contribute to GATA, please visit:
http://www.gata.org/node/16
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