Don Coxe, Global Portfolio Strategist at BMO Financial Group (Bank of Montreal), a respected voice in the commodities space, said that commodities speculators had been a target when the US government stepped in to nationalise Fannie Mae and Freddie Mac.
Coxe said that prior to making the decision to nationalise the two mortgage companies, US officials scrutinised commodities futures market data. Coxe said the data showed a spike in speculative money in commodity futures markets from late May to early July, as opposed to industry participants. He said that the architects of the nationalisation plan would have known about useful side-effects in commodities prices: “They knew then that there was going to be enormous pressure to unwind these positions… it caused a 40% rally in bank stocks and, in the process, what it did was force massive sales of commodity futures and commodity stocks.”
There seems to be little disagreement about Coxe’s version of events. John Embry said this about Don Coxe: “I feel his view carries considerable weight. He is a contemporary of mine in Canadian financial circles and is one of the brightest, well-informed individuals that I have had the pleasure to know. He is also a member in good standing of the financial establishment, so for him to make this allegation is truly significant.”
Ben Davies of Hinde Capital said: “When seasoned respectable individuals like Don Coxe start verbalising in full about the intervention in markets you have to stand up and take note.”
But Coxe told investegate.co.uk that gold bugs had got it wrong if they saw what happened as a conspiracy: “I said it was a brilliant strategy and they (central banks) may have saved the world, there was nothing infamous or conspiratorial about it.”
“There was nothing conspiratorial about gold in this. They weren’t wasting a lot of time on gold, the focus was on oil. They were faced with enormous pressure with several investigations going on at the time.”
He said: “I’m sorry, but in this case I have vigorously denied that there is a conspiracy of central banks to hold down gold prices. My attitude is that they cause me no end of trouble, these gold bugs.”
Conspiracy or not, the fall in commodity prices appears to have been engineered and a desired and predicted side product of a bank rescue. The question gold bugs are now asking is whether the central banks' power to control these prices is never ending.
Despite his different take on conspiracy theories,Don Coxe appears to remain a gold bull.
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