by Chris Powell, Gold Seek:
ILLUSTRATION 1 — INTRODUCTION
There is a saying about political struggle: “First they ignore you, then they laugh at you, then they fight you, and then you win.”
My organization, the Gold Anti-Trust Action Committee, gets the point about struggle. Bill Murphy and I started GATA 27 years ago, in 1998, with the objective of exposing and stopping the rigging of the gold market.
The purpose of gold market rigging, as we have documented extensively, has been to depress and control gold prices to defend government currencies and bonds, and particularly to defend the U.S. dollar, the world reserve currency, and U.S. government bonds, against competition from the former world reserve currency.
TRUTH LIVES on at https://sgtreport.tv/
The rigging — starting with the Bretton Woods agreement of 1944, which pegged the official gold price at $35 per ounce — worked pretty well for decades, but started to falter seriously as central banks sold or lent so much of their gold reserves into the market for price control and then discovered in the 1960s, 1990s, and early 2000s that they couldn’t recover all their metal without exploding the gold market and crashing their currencies and the investment banks that had been borrowing the gold and using it in a carry trade with government bonds.
The rigging — starting with the Bretton Woods agreement of 1944, which pegged the official gold price at $35 per ounce — worked pretty well for decades, but started to falter seriously as central banks sold or lent so much of their gold reserves into the market for price control and then discovered in the 1960s, 1990s, and early 2000s that they couldn’t recover all their metal without exploding the gold market and crashing their currencies and the investment banks that had been borrowing the gold and using it in a carry trade with government bonds.
And then, in this decade, the U.S. freezing of Russian foreign-exchange assets amid the conflict over Ukraine signified that foreign assets assigned to U.S. custody weren’t safe and that U.S. dollars and Treasury bonds weren’t safe either. Governments and central banks began to realize that the only financial assets that are safe are gold and maybe silver held in their own vaults in their own countries.
So the new gold and silver rush began, seemingly led by China, which long has been accumulating gold — far more than it has been reporting officially — and now is even opening gold vaults and exchanges in other countries to help take gold and currency pricing power away from London and New York and to help internationalize the Chinese currency, the renminbi.
A few months ago, we at GATA began to wonder if the metals had won because of the breakup of the longstanding government and central bank coalition against gold. Then, a couple of weeks ago, came big smashdowns in gold and silver.
Mainstream financial news organizations tried to contrive explanations for the smashes. Nobody in mainstream financial news organizations asked the crucial questions: Exactly WHO was doing all that selling, and exactly WHAT was being sold — real metal or just derivatives and futures contracts?
Since the bulk of the selling came out of the London and New York markets, the evidence is that the smashes were probably interventions by the U.S. Federal Reserve and its ally, the Bank of England, to break the enthusiasm in the monetary metals markets and get them down in advance of the Fed’s imminent reduction in interest rates, whereupon the metals might rise again but from a lower base and not excite the world so much.
In any case, the main point about gold is that it is the playground and battlefield of governments and central banks, and probably will remain so forever.
Soon after GATA got started in 1998, we got a huge contribution, $50,000, from a mining entrepreneur. We used it as a retainer for a major national antitrust law firm. They did a lot of research and gave us some bad news — that gold market rigging is perfectly legal when perpetrated by the government, even through intermediaries, and that the rigging was almost certainly a government operation, in which investment banks act only as the government’s brokers, providing camouflage.
ILLUSTRATION 2 — Treasury Department’s ESF page
The lawyers noted that the Gold Reserve Act of 1934, as amended over the years, gives the U.S. Treasury Department the authority to use its Exchange Stabilization Fund to intervene secretly in and rig not just the gold market but any market in the world:
