Financial Analyst and Author Jim Rickards
The methods, Rickards says, include strategic dumping of official gold reserves, which isn't done much anymore; dumping paper gold on the futures markets to panic weak-handed and skittish longs, especially hedge funds, which is "child's play"; and gold leasing by central banks to investment banks that leverage the gold supply by a factor of 10, effectively devaluing gold, since most gold investors don't realize that there is no metal behind their claims, just the market-manipulating power of the central banks and their investment bank agents.
Another method, Rickards says, is the exchange-traded gold fund GLD, which functions mainly to fleece ordinary investors of their gold for shipment to China.
The big problem with the London gold fix, Rickards says, was not price rigging, most of that being done on the futures market in New York, but the front-running the participating banks did against the trades of their own clients.
"We don't really have a reference price for gold," Rickards says. "What we have is theater."
But gold investors may be confident, Rickards says, because market manipulations always fail eventually.
Rickards identifies the three major participants in gold market manipulation as the U.S. Federal Reserve, the U.S. Treasury Department, and the government of China.
The Fed, Rickards says, actually wants a weaker dollar and more inflation and so favors a gradually higher gold price provided it happens in an "orderly" way, and when gold was nearing $2,000, central banks freaked out.
China, Rickards says, wants a lower gold price because it is still buying, not to back the yuan metallically someday but simply to hedge its foreign exchange surplus of U.S. Treasury bonds that will be devalued along with the dollar.
And the Treasury Department, Rickards says, has to accommodate China's acquisition of gold so as to discourage any dumping of Treasuries.
Gold market manipulation will end, Rickards says, when China gets enough gold to hedge its Treasuries fully and the Fed gets the inflation it wants. But, he adds, the Fed wrongly thinks that it can dial inflation up and down as necessary. He expects hyperinflation when markets eventually get away from the Fed. He thinks this process will conclude in a year or two.
For once Rickards claims some authority for the scenario he presents. He says it is what he has been given to understand from unidentified officials at the International Monetary Fund.
The interview is as important as any financial commentary in many weeks and it can be heard at the Anglo Far-East Internet site here:
http://www.afeallocatedcustody.com/research/teleconferences/download-inf...
Comment: The above linked interview is an excellent summary of the who, why, and how's of past and present manipulation of the gold market.