Toby Connor: Manipulation, fact or fantasy?


11p ET Tuesday, March 30, 2010

Dear Friend of GATA and Gold:

Toby Connor, editor of the Gold Scents market letter, yesterday threw out a challenge to those who complain that the gold market is manipulated. In an essay headlined "Manipulation, Fact or Fantasy?," Connor wrote:

"If gold is being manipulated by the powers that be, then how in the world did gold manage to rise from $250 to over $1,200? I have to say that if someone is manipulating the price of gold, they are doing a damn poor job of it."

Yes, Western central banks increasingly are having trouble keeping gold down. But as good as gold's run over the last decade may look, gold's performance still badly lags the general increase in the world money supply over the last 40 years. This lag is much remarked upon and is used to disparage gold, used to argue that gold is not a good hedge against inflation. But gold has underperformed over the longer term because of the long war waged against it by Western central banks, a war whose documentation may begin with the chronology posted by Bill Buckler's financial letter, The Privateer, here:

Connor continues: "When gold was rallying hard last November, where was the manipulation then? I didn't hear a peep from the conspiracy crowd all month."

... Dispatch continues below ...


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For Prophecy Resource Corp.'s complete statement:

Really -- not a peep last November? If Connor heard nothing then, he was studiously not listening to GATA even as he seems intent on mocking GATA now. For during November GATA published 147 dispatches, many of them complaining about gold market manipulation, including dispatches with these headlines:

"A Small Report From the Front of the Gold War."

"Gold and Economic Freedom: GATA Interview."

"Financial Times Lets GoldMoney's Turk Mock Paper Gold."

"John Embry: Con Job in the Financial Markets Continues."

"Mark Gilbert: Pervasive Intervention Makes It Impossible to Value Anything."

"Grandich Challenges Nadler to Debate on Gold."

"Nadler Refuses Grandich's Challenge to Debate."

"Investment Firm Chief Backs GATA on Bloomberg Asia TV."

"So Just What's Bringing 'Order' to Dollar's Fall, Gold's Rise?"

"'Everybody Knows U.S. Gold Reserves Are Leased and Shorted.'"

"Vietnam Acknowledges Trying to Push Gold Down."

"Iran Uses Gold Coin Sales to Manipulate Markets."

"Greenspan Suggested Gold Price Suppression in 1993."

"When It Comes to Gold, History Itself Wears a Tin-Foil Hat."

"Gartman Cites GATA on CNBC, Asks: Who Cares if Gold Is Rigged?"

"GATA Chairman Murphy to Get Hour on Bloomberg TV Thursday."

"CNBC's Santelli Blurts It Out: Central Banks Suppress Gold."

"Fed Will Destroy Itself, and Gold Price Is Rigged, Paul Tells CNBC."

"A Grudging Acknowledgment of Gold Market Manipulation."

Also among those November dispatches was your secretary/treasurer's address to the precious metals conference in Munich, an address that collected official government documents confirming the gold price suppression scheme. The address was titled "Gold Suppression Is Public Policy and Public Record, Not 'Conspiracy Theory," and it can be found in the "Documentation" section of GATA's Internet site here:

Connor continues: "When gold was rocketing higher in late 2007 and early 2008, where were the conspiracy buffs? Was there a conspiracy to raise the price of gold at that time?"

Yes, there was a conspiracy against gold in 2007 and 2008 -- a conspiracy that was sometimes open, sometimes surreptitious -- and GATA was documenting it or calling attention to traces of it with hundreds more dispatches posted at its Internet site:

"How about the monster rally in 2005 and 2006?," Connor asks. "How could this possibly happen if gold is being suppressed?"

It could happen if Western central banks have been staging what GoldMoney founder and Free Gold Money Report editor James Turk and others call a "controlled retreat" with gold, a retreat begun with the British gold sales undertaken in 1999 to rescue the investment houses that had shorted gold to outrageously low levels, considering shorting gold to be a sure thing as long as central banks stood behind them -- and the central banks did stand behind them, even as it proved so embarrassing to the Bank of England and the British government.

"Folks, here is the truth," Connor concludes. "Virtually anything can be tampered with in the short term. It happens all the time. But no one, and I mean no one, can halt a secular bull or bear market. Case in point: Greenspan and Bernanke have printed literally trillions upon trillions of dollars in the vain attempt to halt the secular bear market and it has backfired every time. Just like it's going to backfire this time too."

GATA does hope and expect that the gold price suppression scheme will backfire eventually; after all, we've been working on that for more than 10 years. But gold has been "tampered with" for far more than "the short term." A Federal Reserve document shows that the Fed was at least contemplating aggressive suppression of gold as early as April 1961:

A declassified Central Intelligence Agency memo shows that by 1968 even the CIA had gotten into the gold price suppression act:

A letter from Fed Chairman Arthur Burns to President Ford in 1975 shows that gold price suppression then was commanding the urgent interest of the highest officials of the U.S. government:

And a letter from a member of the Fed's Board of Governors shows that the Fed again was at least contemplating gold market intervention as recently as last September and that the Fed even now insists on concealing the documents about such intervention, apparently because surreptitous intervention against gold is not at all ancient history:

"Short term?" At a minimum this "tampering" with gold has been going on for more than 50 years, perhaps longer than Connor has been alive.

There is so much more documentation of the gold price suppression scheme, and GATA has collected much of it here:

All of Connor's questions have been answered, some of them many times. If, as he says, he has not "heard," it is only because his mockery preceded any research. So his commentary is valuable mainly for showing what happens when people really don't want to know and can't bear to test their beliefs against contrary evidence. There are still many such people in the gold world, though they seem to be diminishing in number.

You can find Connor's commentary at the Gold Scents Internet site here:

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

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