Reply to Ross Norman: Is GATA discouraging gold investment?

Section:

2:16p ET Monday, October 17, 2016

Dear Friend of GATA and Gold:

Under the circumstances Ross Norman, CEO of London bullion dealer Sharps Pixley, was pretty heroic with his cordial reply today --

http://www.gata.org/node/16842

-- to the questions your secretary/treasurer publicly posed to him Saturday:

http://www.gata.org/node/16839

That is, virtually alone in the bullion dealing and banking industry, Norman acknowledged the possibility that central banks are surreptitiously intervening in the gold market and manipulating the monetary metal's price. "I don't know for sure," Norman wrote, "but I would not be surprised." He added that central banks certainly have motives for rigging the gold market.

While Norman declined your secretary/treasurer's invitation to review and challenge or accept the documents of that intervention summarized by GATA here --

http://www.gata.org/node/14839

-- no one has ever challenged them, presumably because they are genuine and support the conclusions GATA has drawn from them and because if Norman had lent any credibility to them he would be quickly ostracized from his industry.

... Dispatch continues below ...



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Having been pressing this issue for 17 years against what seems to be all the money and power in the world, GATA knows very well that this issue is essentially prohibited in polite company. After all, the world financial system now rests on the lies that markets are free and currency values true. If those lies are ever exposed and understood, all power arrangements on the planet will change.

So let us be grateful for Norman's friendly hint that he knows better.

Norman went on to counter with some questions and issues of his own, and while your secretary/treasurer is little more than a scribe and archivist, hardly a font of knowledge and wisdom, Norman answered and thus deserves answers in return.

1) Emphasizing that his interest is entirely in assuring that the daily London gold price fixing, the benchmark price, has integrity, Norman asks what your secretary/treasurer would recommend for a benchmarking process. The answer is: nothing. For the general sentiment in GATA long has been to wonder why the world needs any special gold benchmarking process in the first place. After all, there are no special benchmark prices for other commodities or currencies, and no benchmark prices for stocks and bonds. Rather, there are closing prices and daily continuous pricing charts, and the world seems to make do with them. The London gold fix is a very odd and inexplicably venerable duck. GATA long has suspected that the fix has endured mainly because it facilitates control of the gold price by governments and central banks. For if governments and central banks are represented at the fixes -- through bullion bank intermediaries, of course -- they may be less compelled to strive to influence the price by trading surreptitiously around the clock.

2) Norman asks why Deutsche Bank would admit involvement in rigging the gold and silver markets and agree to settle the lawsuits making such accusations. He suggests that such a settlement is only part of the bank's general inclination to confess to just about anything these days, to pay some big penalties, and to start fresh. Of course GATA doesn't know Deutsche Bank's motives and Deutsche Bank is not about to answer GATA's inconvenient questions any more than the Federal Reserve and Treasury Department are. But note that, unlike some of its other admissions, in the gold and silver rigging cases Deutsche Bank reportedly has agreed to provide evidence against other participants in the London gold fix. We will have to await developments, and we will await them eagerly insofar as the discovery and deposition process in the rigging cases may implicate central bank involvement.

3) Norman fears that GATA's complaining about market rigging in gold is discouraging investment. He has plenty of company in that fear. For the more GATA has proven that governments and central banks are rigging the monetary metals markets, the less popular GATA has become with people selling gold and gold-related products and investments. While some people still disparage GATA as a touter of gold, the organization now is generally regarded as being bad for business, since we warn investors of what they are up against even as we explain the potential consequences of the enormous naked short position in gold represented by "paper gold" and gold derivatives. The logic of GATA's case is that the monetary metals are grossly undervalued. But if, as GATA believes, surreptitious intervention by central banks is the primary determinant of the gold price and if the objective of that intervention is generally suppressive, would we help gold and free markets more by remaining silent about the intervention? Given their surreptitiousness and unaccountability in the gold market, central banks themselves plainly have concluded that exposure would demolish their policy, maybe even demolish central banking itself, and help gold. In this respect GATA agrees with central banks, so we persist, figuring that if we can't easily make friends in the monetary metals industry, then we can aim for something else: Fiat justitia ruat cælum.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org

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