World Gold Council notices attack on gold, blames 'speculative traders'

Section:

12:07p ET Sunday, April 20, 2013

Dear Friend of GATA and Gold:

More than a week after the spectacular attack on gold began, the World Gold Council, nominally the representative of gold mining companies and gold investors, has grudgingly taken note of it with a statement dated Thursday and issued Friday by the council's chief executive officer, Aram Shismanian.

"It has become increasingly clear over the course of the past week," Shishmanian said, "that the fall in the gold price was triggered by speculative traders operating in the futures markets. Their short-term view of generating a trading profit is in stark contrast to the views of long-term investors in gold, as evidenced by the massive wave of physical gold buying that began over the weekend and accelerated following Monday’s further decline. The surge in gold purchases is spanning markets from India and China to the United States, Japan, and Europe. Buyers are viewing this as an opportunity to purchase gold at prices not seen in the past couple of years."

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"Speculative traders?"

Yet the biggest participants in the gold market are not "speculative traders" but central banks. What makes the World Gold Council so confident that central banks were not involved here? Has the World Gold Council ever tried questioning central banks about their surreptitious gold trading, swaps, and leases any more than, say, has been done by the Financial Times, which, also on Friday, published a long story (http://www.ft.com/intl/cms/s/0/3d8681be-a8fb-11e2-bcfb-00144feabdc0.html) purporting to explain gold's fall also without putting a single question to a central bank?

Well, at least maybe the attack on gold has put the World Gold Council on the defensive -- less defensive about gold itself, of course, than defensive of its own irrelevance to the cause of free and transparent markets in the monetary metals.

The full text of the World Gold Council's statement is appended. A PDF copy is here:

http://www.gata.org/files/WorldGoldCouncilStatement-04-18-2013.pdf

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

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Statement by Aram Shishmanian
Chief Executive Officer, World Gold Council
Friday, April 19, 2013

http://www.gold.org/media/press_releases/

It has become increasingly clear over the course of the past week that the fall in the gold price was triggered by speculative traders operating in the futures markets. Their short-term view of generating a trading profit is in stark contrast to the views of long-term investors in gold, as evidenced by the massive wave of physical gold buying that began over the weekend and accelerated following Monday's further decline. The surge in gold purchases is spanning markets from India and China to the United States, Japan, and Europe. Buyers are viewing this as an opportunity to purchase gold at prices not seen in the past couple of years.

The World Gold Council is uniquely positioned in the gold market to get immediate feedback on market patterns. We are already seeing shortages for bars and coins in Dubai, while premiums in Mumbai are at $26 per ounce and $6 in Shanghai, indicating that buyers are willing to pay more than current spot prices for the metal.

Clearly the desire to own gold, as an investment and for adornment, has made itself felt in the physical market. Gold operates on the basic economic fundamentals of demand and supply. Our view is that demand is strong while supply remains constrained, and that this dynamic ultimately drives the long-term price of the metal.

* * *

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