Gartman admits gold price suppression but leaves out why

10:40p ET Saturday, September 1, 2007

Dear Friend of GATA and Gold:

In the Friday edition of The Gartman Letter (http://www.thegartmanletter.com/), Dennis Gartman again acknowledged that central banks are probably suppressing the price of gold, and as he did so, he couldn't help but mention GATA.

Gartman wrote:

"Gold is firm this morning as we write, trading upward toward the resistance that has been quite formidable at the $667-668 level since late last week. It is as if someone, or something, has been holding spot gold down, supplying what is needed at that level to keep gold from breaking out to the upside.

"We suspect that it is selling from one of the legacy central banks of Europe, selling gold under the Washington Agreement.

"GATA will argue that this is being done nefariously. We shall argue that this selling is being done judiciously and that when that selling is sated more shall become evident at $674-675 ... and when that is sated, at $679-680 ... and when that is sated. ...

"The point here is that the legacy central banks have made it clear that they wish to liquidate their gold reserves in a regular fashion, and they shall.

"We have erred always as quiet, steady bulls of gold for several years; we shall not change our thesis now."

So the difference between Gartman and GATA here seems to lie in a couple of adverbs: GATA thinks that the central banks are acting "nefariously," while Gartman thinks that they are acting "judiciously."

That is, GATA thinks the central banks are working together to undermine, since they cannot quite destroy, a supra-national currency that is the deadly competitor of their own currencies. Gartman thinks that the central banks are working together only "to liquidate their gold reserves in a regular fashion."

And that, of course, does not quite answer the question:

WHY should the central banks want to dishoard gold?

Whatever the central banks are trying to accomplish with gold, it may be said that they are trying to accomplish it "judiciously." But exactly what is it?

Is it, say, just to diminish their vault expenses?

Or might it be, say, to manipulate and deceive the currency and bond markets, in which the central banks acknowledge intervening almost every day in a general scheme of regulation? (A scheme no doubt undertaken "judiciously.") Could the Reserve Bank of Australia have been telling the truth in its annual report for 2003 when it declared, "Foreign currency reserve assets and gold are held primarily to support intervention in the foreign exchange market"?

That question of a general scheme of market intervention by the central banks, yet to be addressed by Gartman and most others who apply technical analysis to markets, is a question so much bigger than gold. It is the question of whether there really ARE any markets to analyze anymore rather than ever-more-expansive central bank interventions. It is the question of whether central banks are pursuing public policy or dispensing patronage to the financial class, trying to maintain that class in power over the producing class.

Of course it is a lot to ask technical analysts, such as Gartman, to pursue the question of why the central banks might be dishoarding gold, for that question raises the possibility of an answer that would equate the work of technical analysts with entrail reading and necromancy. But then while it looks ridiculous now, people used to do that sort of thing ever so "judiciously" too.

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

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