Chris Powell
Gold Anti-Trust Action Committee Inc.
Mining Investment Asia Conference
Marina Bay Sands, Singapore
Thursday, April 14, 2016
I'm here again this year to update you on the surreptitious manipulation of the gold market by central banks and to explain how this surreptitious manipulation now extends to all major markets around the world.
This is remarkable not in fact but only in degree.
For central banks long have rigged the gold market, usually suppressing gold prices to protect their own currencies and government bonds against a potentially competitive world reserve currency. Central banks used to do this market rigging in the open, through mechanisms like the London Gold Pool in the 1960s, but they lost too much of their gold reserves that way. Now they do their market rigging surreptitiously using derivatives and high-frequency trading, activities underwritten by the leasing and swapping of gold by central banks. In this way central banks have created a vast, imaginary supply of the monetary metal, a supply of "paper gold" for price suppression.
Confirmations of the long-standing policy of gold price suppression by central banks abound in government archives and in the admissions made by central bankers in their communications with each other when they think that no one outside their own circle is paying attention.
Peter Mooslechner
Let's watch:
https://www.dropbox.com/s/rtgdc8dkhvabtz2/kitco.mp4?dl=0
Mooslechner's implication was that the trading and intervention being done by these Asian central banks in the gold market are meant to suppress the price of gold while they are acquiring it. This implication is consistent with the growing speculation that the United States and China are working together to facilitate China's acquisition of gold so China can protect itself against devaluation of the huge amount of U.S. Treasury debt in China's foreign exchange reserves.
When a German financial journalist, Lars Schall, attempted to question Mooslechner about his remarks to Kitco News last October, the Austrian central bank refused to make Mooslechner available. The Austrian central bank told Schall that it did not comment on the trading done by other central banks. But of course Mooslechner had commented on that trading, and he had gotten caught when his comments were noticed outside central banking and bullion banking circles.
The really interesting thing about Mooslechner's interview with Kitco News was that he showed that the Austrian central bank knows exactly what China's central bank is doing in the gold market. That is, Mooslechner's comment suggested that all major central banks are cooperating in a reallocation of world gold reserves and cooperating in the market rigging necessary to arrange it.
Market rigging by central banks goes far beyond the gold market. Of course it is already acknowledged that this market rigging encompasses the government bond market and -- in certain countries, like Japan -- even the stock market. But in fact this rigging is now comprehensive, covering all the major commodity markets as well, as I will demonstrate in a moment.
What does all this market rigging mean? It means that there really are no markets anymore, just interventions.
It means that the fundamentals of supply and demand no longer have much bearing on the price of the products of the industries represented at this conference, the mining and financial services industries. Nor do the fundamentals of supply and demand have much bearing any longer on the price of any other major commodity traded widely around the world.
And since markets are the great engines of progress, prosperity, and liberty, it means that progress, prosperity, and liberty are now terribly impaired.
But while central banks are powerful, they are not all-powerful. Their market rigging succeeds only because it operates in secret. Their market rigging would fail if it was exposed and understood, as too many people would refuse to participate in rigged markets.
This market rigging has not been fully exposed and understood for two reasons. The first is the failure of mainstream financial news organizations to examine and report it. The second is the failure of the mining and financial services industries to examine it and complain about it.
GATA is trying to shake financial news organizations and the mining and financial services industries out of their ignorance, indifference, and cowardice.
As time allows today I will present the images of some of the major documents GATA has compiled about gold price suppression and commodity market rigging by central banks. I can only summarize these documents for you and urge you to examine them yourselves. These documents are posted at GATA's Internet site, GATA.org, and will be posted again along with my remarks today. But if you need help locating any document or have any questions, please e-mail me at CPowell@GATA.org.
And so to the documents.
1) In July 1998 U.S. Federal Reserve Chairman Alan Greenspan testified to Congress that the true purpose of gold leasing by central banks was to keep the gold price down:
http://www.federalreserve.gov/boarddocs/testimony/1998/19980724.htm
2) The U.S. Treasury Department's Exchange Stabilization Fund is fully authorized by U.S. law to trade secretly in and rig any market in the world:
https://www.treasury.gov/resource-center/international/ESF/Pages/esf-ind...
3) The transcript of a meeting of U.S. Secretary of State Henry Kissinger and Assistant Undersecretary Thomas Enders at the U.S. State Department in April 1974 reveals that the United States sees gold as the great "reserve-creating instrument" of governments and central banks; that whoever has the most gold can revalue it periodically to create more world-reserve currency; that Western Europe has surpassed the United States in gold reserves and thus is in a position to control the gold price and create more monetary reserves; and that, as a result, United States policy must be to push gold out of the world financial system to protect the U.S. dollar's standing as the world reserve currency:
http://www.gata.org/node/13310
Assistant Undersecretary Enders tells Secretary Kissinger: "It's a question of who has the most leverage internationally. If they" - that is, Western European nations - "have the reserve-creating instrument, by having the largest amount of gold and the ability to change its price periodically, they have a position relative to ours of considerable power. For a long time we had a position relative to theirs of considerable power because we could change gold almost at will. This is no longer possible -- no longer acceptable. Therefore, we have gone to Special Drawing Rights, which is also equitable and could take account of some of the less-developed-country interests and which spreads the power away from Europe. And it's more rational in. ..."
Secretary Kissinger interrupts Enders: "'More rational' being defined as being more in our interests or what?"
Assistant Undersecretary Enders replies: "More rational in the sense of more responsive to worldwide needs -- but also more in our interest. ..."
© Reuters / Shannon Stapleton
4) The Bank for International Settlements is the central bank of the central banks. In a speech given at a BIS conference in Basle, Switzerland, in June 2005, the head of the BIS monetary and economic department, William R. White, declared that a primary purpose of central bank cooperation is "the provision of international credits and joint efforts to influence asset prices -- especially gold and foreign exchange -- in circumstances where this might be thought useful":
http://www.gata.org/node/4279
5) Its annual reports disclose that the Bank for International Settlements is the gold broker for its member central banks, trading, on their behalf, not only gold itself but also gold futures, options, and derivatives:
http://www.gata.org/node/12717
6) A 24-page PowerPoint presentation prepared by the Bank for International Settlements in June 2008 for potential BIS members actually advertised secret interventions in the gold market as being among BIS services:
http://www.gata.org/node/11012
7) A secret report by its staff to the board of directors of the International Monetary Fund in March 1999 reported that central banks conceal their gold swaps and leases to facilitate their secret interventions in the gold and currency markets:
http://www.gata.org/node/12016
8) A letter written by Federal Reserve Board of Governors member Kevin M. Warsh to GATA's lawyer in September 2009 confirmed that the Fed has secret gold swap arrangements with foreign banks and refuses to disclose and explain them:
http://www.gata.org/node/7819
9) But Warsh was a little more forthcoming in an essay he wrote for The Wall Street Journal in December 2011. In that essay Warsh wrote: "Policy makers are finding it tempting to pursue 'financial repression' -- suppressing market prices that they don't like":
http://www.gata.org/node/10839
After his essay was published I wrote to Warsh to ask him to specify the prices that "policy makers" were suppressing and whether he had learned about "financial repression" during his service on the Board of Governors of the Federal Reserve System. Warsh cordially urged me to have a nice day.
10) Speaking to the conference of the London Bullion Market Association in Rome in September 2013, the director of market operations for the Banque de France, Alexandre Gautier, said the Banque de France is trading gold for its own account and for the accounts of other central banks "nearly on a daily basis":
http://www.gata.org/node/13373
In January 2015 a gold dealer in Europe, Fabrice Drouin Ristori of Goldbroker.com, wrote to Gautier to ask for an explanation of the Banque de France's gold trading. Gautier replied: "The Banque de France does not make public the management of its foreign exchange reserves. Furthermore, we very seldom give interviews."
Why do you suppose that is?
11) CME Group operates the major futures markets in the United States. Its January 2014 filing with the U.S. Securities and Exchange Commission disclosed that central banks and governments are being given volume trading discounts for secretly trading all futures contracts on the major exchanges in the United States, not just financial futures contracts:
http://www.gata.org/node/14385
12) CME Group's master "10-k" filing with the U.S. Securities and Exchange Commission for 2013 disclosed that CME Group's customers include governments and central banks:
http://www.gata.org/node/14411
13) In 2011 the Wikileaks organization disclosed thousands of U.S. State Department cables. Among them were cables from the U.S. embassy in Beijing to the State Department in Washington translating reports published in the government-controlled press in China in 2009 about gold price suppression engineered by the United States and its allies. The Chinese reports said gold price suppression was meant to support the dollar and prevent gold's re-emergence as the world reserve currency:
Comment: Perhaps "prevent" would be better read as "postpone".
http://www.gata.org/node/10380
http://www.gata.org/node/10416
For example, the Chinese newspaper World News Journal wrote: "The United States and Europe have always suppressed the rising price of gold. They intend to weaken gold's function as an international reserve currency. They don't want to see other countries turning to gold reserves instead of the U.S. dollar or the euro. Therefore, suppressing the price of gold is very beneficial for the United States in maintaining the U.S. dollar's role as the international reserve currency. China's increased gold reserves will thus act as a model and lead other countries toward reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the renminbi."
14) In April 2013 the Chinese journal Global Finance published a commentary by its deputy editor, Zhang Jie, titled "Gold Leasing Is a Tool for the Global Credit Game":
http://www.gata.org/node/13314
Zhang wrote: "If one wants to control gold, it is a necessity to have the ability to short-sell the same. A central bank that directly suppresses gold would be suspected as a market manipulator. However, gold leasing by the central bank can take place unnoticed. During a financial crisis gold would have more monetary power as well as greater trust. Countries need to control the trust in their national currencies and thus suppress the actual market price of gold, which will affect exchange rates. Each country carries out its attack on the price of gold according to the method of its own national currency."
* * *
There are so many more official records and admissions of gold price suppression by central banks in GATA's archive:
http://www.gata.org/taxonomy/term/21
Please don't take my word for any of this. Please examine the documents and the admissions yourselves. Then please ask yourselves whether the mining and the financial services industries can have any integrity when the main purpose of central banking is to destroy free markets and deceive investors.
Please also ask yourselves whether the disparagement of complaints about gold market manipulation as "conspiracy theory" is fair. Ask whether central banks are in the gold market surreptitiously or not. If they are in the gold market, ask whether it's just for fun or if there are important policy purposes behind it.
But if central banks are in the gold market surreptitiously, what's wrong with calling it "conspiracy"? For central banks and other government officials often meet secretly to decide upon and implement a course of action -- the very definition of "conspiracy." In that case it is not "conspiracy theory" but "conspiracy fact."
Thanks for your kind attention.
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