2 July 2009

Gold Market manipulation ~ items.~ comments~thoughts

In commentary posted yesterday, Brad Zigler, managing editor of the Hard Assets Investor Internet site, has done GATA the service of taking us seriously enough to answer us specifically in some respects. Zigler's commentary is headlined "Gold Manipulation Redux" and can be found at Hard Assets Investor here:


Zigler seems to accept that central banks intervene in the gold market, openly and surreptitiously. He seems interested mainly in asserting the integrity of the futures markets.

He writes that since gold has been rising for quite a while now, any gold price suppression scheme could not be working. GATA argues that the scheme indeed is working by substantially slowing gold's rise.

Zigler acknowledges that a few U.S. banks have hugely disproportionate short positions in the futures markets in gold and silver but he does not consider these positions manipulative. Further, he writes, "No tenable scenario has been offered to explain how these institutions would actually profit from the supposed suppression of gold prices. The banks' relationship to the Federal Reserve is often posited as evidence of a collusion of some sort, but the mechanics remained unspecified."

Zigler is entitled to his own definition of "tenable," but GATA has suggested many times that if central banks are implementing their gold suppression policy through bullion banks and mining companies that hedge, as Barrick Gold acknowledged central banks to be doing, even claiming to be an agent of the central banks itself --

http://www.gata.org/files/BarrickConfessionMotionToDismiss.pdf --

then huge profits could be made by hedged miners, bullion banks, and their associated firms executing and front-running the trade orders of central banks. Surely Zigler would acknowledge that there are constant private communications among the Treasury, Fed, and financial houses. Many of the latter are official U.S. government agents, primary dealers for government bond sales. Does Zigler really think that no information of trading value is ever conveyed in these communications? Maybe Zigler would not be offended by this favoritism, but others would be -- and are.

Blanchard Coin & Bullion's federal antitrust lawsuit against Barrick, which elicited Barrick's confession to the gold price suppression scheme, maintained that Barrick had access to so much central bank gold obtained through its bullion bank, J.P. Morgan Chase & Co., that the mining company could run the gold price up or down at will. There would be a lot of profit in that. And GATA Chairman Bill Murphy has written and spoken often about how bullion banks could profit enormously by suddenly shorting gold in huge amounts, causing crashes, creating panic among investors, and covering short positions as the panic grows before allowing the price to rise again. Any firm with access to enough borrowed central bank gold could profitably manipulate not just the gold market with central bank approval but nearly every other market. And there's no denying that huge amounts of central bank gold have been leased and made available for just such purposes.

GATA has been formally refused access to U.S. Treasury Department and Federal Reserve records about the U.S. gold reserve. Anyone who believes in the integrity of the futures markets should have some curiosity about this, for it is an indication that the gold reserve indeed has been put in play in ways similar to those suggested by GATA. How much does Zigler want to bet that there never have been and are no records of communications among the Treasury Department, the Fed, and Morgan Chase involving gold?

Zigler disputes silver market analyst Ted Butler's assertion that the U.S. bank short positions in silver are unprecedented. He says there are bigger bank short positions in Australian dollar futures. But Butler was talking about the U.S. commodity markets, not foreign currency markets.

Zigler attributes the disproportionate U.S. bank short positions in gold and silver to legitimate hedging by producers and marketers rather than to manipulation by those banks. Since details of those short positions are kept confidential by the U.S. Commodity Futures Trading Commission, we can't yet know. But GATA thinks that this information should be made public, perhaps with a modest delay to provide some protection to current trading positions. Since hedging by precious metals miners has fallen dramatically, we do not think that most of the bank short positions in gold and silver is legitimate hedging. And while GATA argues for more transparency, Zigler, like the big shorts in the precious metals, seems to prefer continued concealment. Presumably Zigler trusts the CFTC to be doing its job -- just as Bernie Madoff's investors trusted the Securities and Exchange Commission to be doing its job. GATA doesn't trust any of the regulatory agencies.

But again let it be noted that, unlike most of GATA's critics, Zigler has had the courage to confront some of our specifics, and we're grateful for that and commend his commentary to you.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


Market manipulation obvious to CNBC analysts

Submitted by cpowell on 03:41PM ET Tuesday, June 30, 2009. Section: Daily Dispatches
6:40p ET Tuesday, June 30, 2009

Dear Friend of GATA and Gold:

For five minutes Monday morning CNBC market analysts discussed how obvious U.S. government manipulation of the financial markets has become. If manipulation is obvious to CNBC analysts now, soon even some mainstream gold market analysts may have trouble denying it. You can watch the CNBC segment here:


Mr. Ziegler has an agenda. The the manipulation of gold has been going on a long time-and all unsuccessfully in the long run-take a look at the London gold pool, for example-or better still read TIME magazine:

Mr. Ziegler-it certainly appears Mr. Volker was selling gold out of Fort Knox and official parties were gravely concerned...I know-these conspiracy folks like Volker and Time magazine are tedious Mr. Zigler.

“Shrinking Role for US Money”
Oct. 15, 1979 (TIME Magazine)

“Frenzy in the gold and currency markets heightens an urgent issue.

“From the harried canyons of Wall Street to the outwardly calm boardrooms of Zurich, the world’s financial centers experienced a whiff of panic last week. In two days of frantic trading, the price of gold on the London exchange soared a breathtaking $50 per oz. to $447 at one point; then it plunged back down almost as steeply, closing the week at $385. Silver, platinum and copper also gyrated wildly. Said a New York bullion trader: ‘The market’s gone bananas.’

“The madness, as usual, was not over precious metals so much as money—specifically the battered US dollar. Once again greenbacks were being sold off heavily in world markets in exchange for more robust currencies. Struggling to keep the buck from plunging further, which would hurt West German exports, the Bundesbank spent $1.2 billion in deutsche marks to buy up unwanted dollars last week. By happenstance, as the buck was worrying down again, central bankers, finance ministers and some 6,000 other leading moneymen were gathering in Belgrade, Yugoslavia, for the annual meeting of the 138-nation International Monetary Fund. Treasury Secretary G. William Miller and Federal Reserve Chairman Paul Volcker had hardly arrived when they were besieged with calls for US action to stem the panic.”

(note:Twenty years before GATA and conspirational gold manipulation theories appeared, real live gold manipulation occurred out in the open, with Volcker in the lead)

More from TIME:

“Volcker promptly returned to Washington to draft plans for what could be the second massive dollar-rescue program the US has had to mount in eleven months. Among the steps under discussion:

“LARGER GOLD SALES. The 750,000 oz. of Fort Knox bullion the US now sells monthly might be doubled, in hopes that this might help drive prices down. Hinting at such a strategy, Under Secretary of the Treasury Anthony Solomon said last week that the gold boom was ‘extremely unhealthy for the world economy.’”

Perhaps, that is why Fort Knox has not been audited since Eisenhower, GLD has unlimited sub custodians that can never be audited? Credit Agricole-far higher rated in Europe than Goldman Sachs or JPM in research agreed in 20o7 that GATA was correct. Read there ad in the WSJ-all of what they say is in the public record-in particular look into Barrick's gold claiming to act on behalf of Central Banks-with a 15 year evergreen agreement-meaning they never have to return the gold, until they receive formal notice-and then...the 15 year clock strikes-it has been 10 years and no letter has been delivered-and the money keeps earning 5%-now that's an arms length transaction-by the people who brought you CDO's and derivatives-I suggest anyone do there own due diligence and take Mr. Ziegler's piece with a grain of salt until then.

Wednesday, 01 July 2009 15:15 EST - Posted by Bill

I believe the powers that be WANT a higher gold price. A huge dollar devaluation against gold would work just fine for an indebted country.

I believe the OBVIOUS manipulation is designed to stop spikes causing embarrasment, not to cap permanently. They want an orderly devaluation over several years, not a colapse.

But please Mr. Zeigler, don't deny manipulation. Anyone that has traded gold futures sees 'them' turn up and sit on the bids all day long. Sometimes they let it go, sometimes they sit on it all day. Sometimes it starts in London. Sometimes in New York. But don't tell me the huge sell orders that fly in at key resistance, and just beyond it, is just noise. they show their hand and it is a firm hand. No other market will see sellers just ABOVE resistance. That is a way to go bankrup and all traders know it. But gold has them hit it so hard on breakouts some days it has to be BIG boys manipulating. Any one who sees it and then doesn't acknowlege it seems strange is not paying very close attention to their market or is in denial.

No comments: