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Bill Holter analyzes gold manipulation debate at New Orleans conference
2:51p ET Monday, October 27, 2014
Dear Friend of GATA and Gold: Market analyst Bill Holter, who writes for the Miles Franklin coin and bullion shop in Minnesota and GATA Chairman Bill Murphy's LeMetropoleCafe.com, today analyzes the gold manipulation debate between your secretary/treasurer and Doug Casey of Casey Research at the New Orleans Investment Conference last Thursday. His text is below.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
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By Bill Holter
I attended the New Orleans investment conference this past week as the guest of GATA's Bill Murphy and Chris Powell for which I am highly grateful.
There were many good and thoughtful speakers. I specifically wanted to attend this conference for two reasons. Alan Greenspan was a keynote speaker and I not so much wanted to hear what he had to say but more importantly how he answered audience questions.
What piqued my interest most about this conference was the proposed debate between GATA's Chris Powell and Doug Casey of Casey Research. The topic was "Is gold manipulated or not?"
I had such high expectations for this but unfortunately was extremely disappointed.
The format was really not much of a debate. Each speaker was allowed seven minutes to lay out his case, followed by a four-minute rebuttal each.
The problem was that the speakers did not interact and debunk the other's position.
The "debate," if you can call it that, was one-sided. Powell laid out documentation and fact while Casey gave his opinion.
Powell started off and was pretty much 100% factual as he laid out printed documentation from the Federal Reserve and the Bank for International Settlements that confirms central bank activity in the gold market. Because of the time constraint he was able to get through only a quarter of his evidence. He did, however, bring up the testimony of former Federal Reserve Chairman Alan Greenspan to Congress in 1998 where he said "central banks stand ready to lease gold in increasing quantities should the price rise."
All the documentation can be found here:
http://www.gata.org/node/14617
The way Powell approached the debate was, in my opinion, genius because he showed document after document and the only way to argue with it was either to say they were forgeries and fakes or that they don't mean what they say and his interpretation of them is flawed.
If you disbelieve suppression of gold prices, please do yourself a favor and read through this documentation. It is clear to me personally that there are enough pieces of the puzzle to conclude that gold prices are and have been suppressed.
Casey approached the topic from a very different and, I would say, emotional direction. He started off by saying all markets are manipulated, including gold and silver. I expected this as I had seen Csey speak in Vancouver, where he started with the same spiel. Gold is manipulated, he said, but not suppressed.
He reasoned that if the gold price was suppressed, then why has it gone up over 60 times in dollar terms? Central banks couldn't care less about gold or its price was another of his main points. Gold is considered by the central banks as a "meaningless artifact," he argued, and one they don't even pay attention to.
Casey said that central banks don't want "stuff" (which gold is also considered) to go up in fiat terms but they cannot control prices so they don't try.
Most interesting was his final point: "Why would the Fed try to suppress prices if the Russians and Chinese are buyers? This would help them. Why would the Fed aid their purchases?"
Good question and I'll get to it in a moment.
Between the seven-minute statements and four-minute rebuttals, the moderator, Adrian Day, asked Powell and Casey to say whether they believe Fort Knox should be audited. Powell answered in the affirmative but with the stipulation that the audit would verify ownership of any gold that's counted. In other words, is the gold U.S. gold or is it "swapped" and in reality someone else's gold?
Casey agreed and said yes we should have an audit but then went off on a tangent. He said that an audit of the Federal Reserve is really just an argument to abolish the Fed and that dollars should be done away with and gold used as money.
Powell replied to Casey's assertion that the manipulation issue is almost like a religious issue to goldbugs. Powell said, "No, it is not a religious issue. It is a public policy issue."
Powell also pointed to former Treasury Secretary Larry Summers' "Gibson's Paradox" study, which found that low gold prices could facilitate low interest rates and allow for more debt and currency issuance than would otherwise be the case.
Powell also pointed to documents from commodity exchange operator CME Group showing that central banks are customers of the exchange and receive volume discounts for futures trading.
Powell then mentioned that just because gold has gone higher is not evidence that there has been no price suppression, since gold might go higher still if it were not for suppression.
In answer to Casey's claim that the United States would never suppress gold and silver prices because this would aid China and Russia, government insider Jim Rickards says a deal has been struck with the Chinese.
I have no proof of this but it makes perfect sense to me. I could write an entire essay on this subject but for now a paragraph will have to suffice.
If China and India each year are buying more than the world's annual production of gold, yet the price drops, the metal has to be coming from somewhere. This can be only from where it has been stored -- central bank vaults. The only way for prices not to rise when physical demand grossly exceeds supply is through the use of derivatives. It is really this simple.
In my opinion what Rickards has said must have some truth behind it. Some sort of deal has to have been struck to allow China, India, and Russia to purchase increasing amounts of gold at decreasing prices.
As I have said all along, once China cannot receive gold in exchange for dollars, then of what use are their dollar holdings? The game will be up and there will be no incentive to China to hold any dollars. That will end the game.
Casey used his next four minutes for more opinion. He said the manipulation argument is pointless and is all "conspiracy theory." He said traders are like little girls and if there truly was some sort of conspiracy it would be out in the open because traders talk to each other.
Casey also responded to Greenspan's testimony to Congress by saying we should never believe central banker statements.
Another claim he made is that there are never complaints when any commodity is rising because the public is always long and they are "idiots."
I know my description of Casey's comments is "all over the place" but this was how he spoke, jumping from one topic to another.
So what exactly did I get from this "debate"?
Not much really because the question itself is rigged, the word "suppressed" should have been used rather than "manipulated."
The debate was not structured correctly because the participants couldn't "go at it." The personalities didn't work too well either, since Powell is all business, scholarly, and a true journalist where nothing is claimed unless there is proof.
On the other hand, Casey likes to make the audience laugh with his opinions. In this case, when he says "governments don't care about gold," I don't believe he has quite thought it through.
In fact, governments care more about gold than anything else.
Casey was suggesting that a company doesn't care anything about its direct competitor. A foolish thought in my opinion.
I don't know if he believes what he says as he seems to enjoy stirring up the pot and getting laughs.
By now you probably know my opinion: Gold and silver prices are and continually have to be suppressed, for when the rigging fails, the entire financial system will fail too.
If gold prices were to rise dramatically, it would be seen internationally as a sign of weakness.
Casey said central banks don't care about gold. I believe this is 100% wrong. I believe central banks, particularly the Fed, care more about gold than anything else, including oil.
This is because gold is the thermometer or ballot box where the votes are counted regarding monetary and fiscal policy. There is no other "report card" on the planet as easy to read or as important as gold.
Yes, other aspects and housecleaning must support central bank policies, such as falsified economic reports, supported bond markets, and a news media cheerleading squad, but an out-of-control gold price would trump all other efforts. This is why the gold price is suppressed. This is also why silver prices are suppressed. Were silver to get its legs on, gold would be a half step behind it.
The debate was actually painful to watch. The format was poor and the participants were completely mismatched in style.
I had high expectations and hopes Casey would actually respond to some of the documentation Powell displayed. Casey didn't make an effort to address anything except to say people shouldn't believe central bankers. Maybe he should take his own advice, since Greenspan claims the Fed has never traded in, swapped, or leased gold.
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