You are here

Japan suspends Morgan for market manipulation ... again

Section: Daily Dispatches

8:41p ET Thursday, March 9, 2006

Dear Friend of GATA and Gold:

Here it is in the open again -- a former central banker
arguing that central banks have to work together to rig
(they call it "manage") the currency and gold markets
and that, indeed, this is the plan for arranging a long
and gradual decline of the U.S. dollar.

The former central banker, John Nugee, director of the
official institutions group at State Street Global
Advisors, formerly a foreign exchange official for the
Bank of England, tells Dow Jones Newswires: "Central
banks will solve their dollar overhang only if they act
together. If they try to act individually, to diversify
while hoping no one else will notice, there's a
possibility it could become as disorderly as the gold
market after 1980."

Yes, the central banks got gold under control and will
keep order -- but at what price and whose cost, and in
the open or surreptitiously? And who elected them anyway?

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

* * *

Dollar Fall to Encourage Central Bank Cooperation

By Andrew Batson
Dow Jones Newswires
Friday, March 3, 2006

http://sg.biz.yahoo.com/060303/15/3z4ca.html

HONG KONG -- The world's central banks are likely to start working
more closely together as they try to manage the impact of an
expected long-term decline in the value of the U.S. dollar, said a
former central banker who now advises the institutions.

"Just as the U.S. role as world superpower won't last forever,
neither will the dollar's role as the world reserve currency," said
John Nugee, director of the official institutions group at State
Street Global Advisors. SSgA, an arm of State Street Corp., is the
world's largest institutional money manager with US$1.4 trillion in
assets under management.

Former superpowers like the U.K., France, Spain, and Holland also
saw the value of their currency slip as they lost prominence on the
global stage, and the U.S. is unlikely to prove an exception to this
historical pattern, Nugee said in an interview with Dow Jones
Newswires.

Central banks are particularly interested in such longer-term trends
because they invest to maintain the solvency of their nations, he
said.

Nugee said he is expecting a gradual shift in the dollar's role over
the next 25 years or so, rather than forecasting short-term trends
in the market. Nugee's division serves government agencies, central
banks, and international institutions, and he himself previously
helped manage foreign reserves for the Bank of England.

But there are widespread concerns the U.S.' growing overseas
indebtedness, reflected in a current account deficit of more than 6%
of gross domestic product, is creating the risk of a sharp
correction in the nearer term. If foreign investors become less
enthusiastic about continuing to add to their dollar holdings, that
lack of demand could quickly depress the currency.

The dilemma that central banks face is that any move to reduce their
exposure to a declining dollar would only accelerate that decline,
further pushing down the value of their existing holdings.

This isn't a trivial problem: the International Monetary Fund
estimates that U.S. dollars account for 66% of combined global
foreign exchanges -- that is, the portion of reserves whose currency
holdings are known. The euro came second with a weighting of 24%,
while holdings of the Japanese yen and British pound were each just
under 4% of the total.

"Central banks will solve their dollar overhang only if they act
together. If they try to act individually, to diversify while hoping
no one else will notice, there's a possibility it could become as
disorderly as the gold market after 1980," when central bank sales
helped trigger years of declining prices for the metal, he said.

"The lesson of the gold market is that it's a very difficult thing
to do without coordinated action," Nugee said. He alluded to the
Central Bank Agreement on Gold of 1999, when several major central
banks tried to stabilize the declining gold market by publicly
pledging to limit sales from their gold reserves.

The issue is particularly acute in Asia, as economies in this region
make up seven of the world's 10 largest holders of foreign exchange
reserves, according to figures compiled by the Hong Kong Monetary
Authority, which is itself No. 7 on the list. Japan and China are
the top two holders, with Taiwan, South Korea, India, and Singapore
also placing in the top 10.

There are already some vehicles for Asian central banks to talk
regularly to each other, though there is no indication yet that they
have started to work together on market activities.

Officials of the 10-member Association of Southeast Asian Nations,
as well as China, Japan and South Korea, agreed in early 2005 to set
up the "Asian Bellagio Group," which was intended to help central
banks and other finance officials to share policies and ideas.
Little has been heard from the gathering since the initial
announcement.

The region already has another grouping of central banks, the 11-
member EMEAP, or Executives' Meeting of East Asia-Pacific Central
Banks. That organization has become the focal point for regional
efforts on bond-market cooperation, including measures to make it
easier for Asian central banks to buy each others' debt for their
reserves.

"A lot of this region is sleepwalking a bit about the long-term
future of the dollar," Nugee said. "I hope that the dollar doesn't
become an asset that people have too much of and nobody really
wants," he said.

Nugee said some form of coordination is clearly in the interest of
the central banks who hold dollars, and wouldn't be unheard of. "I
think central bank coordination is quite plausible. ...The biggest
question is whether any form of central bank coordination can
achieve anything without the Federal Reserve," he said.

For the U.S. central bank to participate in this kind of
international arrangement, it would need backing from the
administration and the Treasury -- making it ultimately a political
decision for the U.S., Nugee said.

----------------------------------------------------

To subscribe to GATA's dispatches, send an e-mail to:

gata-subscribe@yahoogroups.com

To unsubscribe, send an e-mail to:

gata-unsubscribe@yahoogroups.com

----------------------------------------------------

RECOMMENDED INTERNET SITES
FOR DAILY MONITORING OF GOLD
AND PRECIOUS METALS
NEWS AND ANALYSIS

Free sites:

http://www.jsmineset.com

http://www.cbs.marketwatch.com

http://www.mineweb.com/

http://www.gold-eagle.com/

http://www.kitco.com/

http://www.usagold.com/

http://www.usagold.com/amk/usagoldmarketupdate.html

http://www.GoldSeek.com/

http://www.GoldReview.com/

http://www.capitalupdates.com/

http://www.DailyReckoning.com

http://www.goldenbar.com/

http://www.silver-investor.com

http://www.thebulliondesk.com/

http://www.sharelynx.com/

http://www.mininglife.com/

http://www.financialsense.com

http://www.goldensextant.com

http://www.goldismoney.info/index.html

http://www.howestreet.com

http://www.depression2.tv

http://www.moneyfiles.org/

http://www.howestreet.com

http://www.minersmanual.com/minernews.html

http://www.a1-guide-to-gold-investments.com/euro-vs-dollar.html

http://www.goldcolony.com

http://www.miningstocks.com

http://www.mineralstox.com

http://www.freemarketnews.com

http://www.321gold.com

http://www.SilverSeek.com

http://www.investmentrarities.com

http://www.kereport.com
(Korelin Business Report -- audio)

http://www.plata.com.mx/plata/home.htm
(In Spanish)
http://www.plata.com.mx/plata/plata/english.htm
(In English)

http://www.resourceinvestor.com

http://www.miningmx.com

http://www.prudentbear.com

http://www.dollarcollapse.com

http://www.kitcocasey.com

http://000999.forumactif.com/

http://www.golddrivers.com/

http://www.goldpennystocks.com/

http://www.oroyfinanzas.com/

Subscription sites:

http://www.lemetropolecafe.com/

http://www.goldinsider.com/

http://www.hsletter.com

http://www.interventionalanalysis.com

http://www.investmentindicators.com/

Eagle Ranch discussion site:

http://os2eagle.net/checksum.htm

Ted Butler silver commentary archive:

http://www.investmentrarities.com/

----------------------------------------------------

COIN AND PRECIOUS METALS DEALERS
WHO HAVE SUPPORTED GATA
AND BEEN RECOMMENDED
BY OUR MEMBERS

Blanchard & Co. Inc.
909 Poydras St., Suite 1900
New Orleans, Louisiana 70112
888-413-4653
http://www.blanchardonline.com

Centennial Precious Metals
Box 460009
Denver, Colorado 80246-0009
1-800-869-5115
http://www.USAGOLD.com
Michael Kosares, Proprietor
cpm@usagold.com

Colorado Gold
222 South 5th St.
Montrose, Colorado 81401
http://www.ColoradoGold.com
Don Stott, Proprietor
1-888-786-8822
Gold@gwe.net

El Dorado Discount Gold
Box 11296
Glendale, Arizona 85316
http://www.eldoradogold.net
Harvey Gordin, President
Office: 623-434-3322
Mobile: 602-228-8203
harvey@eldoradogold.net

Gold & Silver Investments Ltd.
Mespil House
37 Adelaide Rd
Dublin 2
Ireland
+353 1 2315260/6
Fax: +353 1 2315202
http://www.goldinvestments.org
info@gold.ie

Investment Rarities Inc.
7850 Metro Parkway
Minneapolis, Minnesota 55425
http://www.gloomdoom.com
Greg Westgaard, Sales Manager
1-800-328-1860, Ext. 8889
gwestgaard@investmentrarities.com

Kitco
178 West Service Road
Champlain, N.Y. 12919
Toll Free:1-877-775-4826
Fax: 518-298-3457
and
620 Cathcart, Suite 900
Montreal, Quebec H3B 1M1
Canada
Toll-free:1-800-363-7053
Fax: 514-875-6484
http://www.kitco.com

Lee Certified Coins
P.O. Box 1045
454 Daniel Webster Highway
Merrimack, New Hampshire 03054
http://www.certifiedcoins.com
Ed Lee, Proprietor
1-800-835-6000
leecoins@aol.com

Lone Star Silver Exchange
1702 S. Highway 121
Suite 607-111
Lewisville, Texas 75067
214-632-8869
http://www.discountsilverclub.com

MRCS Canada
12303-118 Ave. NW
Edmonton, Alberta T5L 2K2
Canada
http://www.mrcscanada.com
Michael Riedel, Proprietor
1-877-TRY-MRCS
1-877-879-6727
mrcscanada@shaw.ca

Miles Franklin Ltd.
3015 Ottawa Ave. South
St. Louis Park, Minn. 55416
1-800-822-8080 / 952-929-1129
fax: 952-925-0143
http://www.milesfranklin.com
Contacts: David Schectman,
Andy Schectman, and Bob Sichel

Missouri Coin Co.
11742 Manchester Road
St. Louis, MO 63131-4614
info@mocoin.com
314-965-9797
1-800-280-9797
http://www.mocoin.com

Resource Consultants Inc.
6139 South Rural Road
Suite 103
Tempe, Arizona 85283-2929
Pat Gorman, Proprietor
1-800-494-4149, 480-820-5877
Metalguys@aol.com
http://www.buysilvernow.com

Richard Nachbar Rare Coins
5820 Main St., Suite 601
Williamsville, N.Y. 14221-8232
877-622-4227
http://www.CoinExpert.com
nachbar@coinexpert.com

Swiss America Trading Corp.
15018 North Tatum Blvd.
Phoenix, Arizona 85032
http://www.swissamerica.com
Dr. Fred I. Goldstein, Senior Broker
1-800-BUY-COIN
FiGoldstein@swissamerica.com

The Moneychanger
Box 178
Westpoint, Tennessee 38486
http://www.the-moneychanger.com
Franklin Sanders
1-888-218-9226, 931-766-6066

----------------------------------------------------

HOW TO HELP GATA

If you benefit from GATA's dispatches, please
consider making a financial contribution to
GATA. We welcome contributions as follows.

By check:

Gold Anti-Trust Action Committee Inc.
c/o Chris Powell, Secretary/Treasurer
7 Villa Louisa Road
Manchester, CT 06043-7541
USA

By credit card (MasterCard, Visa, and
Discover) over the Internet:

http://www.gata.org/creditcard.html

By GoldMoney:

http://www.GoldMoney.com
Gold Anti-Trust Action Committee Inc.
Holding number 50-08-58-L

Donors of $200 or more will receive copies
of "The ABCs of Gold Investing" by Michael
Kosares, proprietor of Centennial Precious
Metals in Denver, Colorado, and "The Coming
Collapse of the Dollar" by James Turk and
John Rubino.

GATA is a civil rights and educational
organization under the U.S. Internal Revenue
Code and contributions to it are tax-deductible
in the United States.