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A 'controlled retreat' by central banks in the gold market isn't nearly enough

Section: Daily Dispatches

7:18p PT Thursday, February 9, 2012

Dear Friend of GATA and Gold:

In his commentary this week, "Gold Cars and Gas Stations," posted at GoldSeek, 24hGold, and 321Gold --

-- financial letter writer Stewart Thompson remarks that "banks likely are manipulating gold, and manipulating it higher, with central bank buy programs" and that gold investors should take a break along with the gold price rather than keep "screaming that you're being manipulated to death."

That Western central banks may be working the gold price higher is not a new idea to readers of these dispatches and followers of market analysts like GATA Chairman Bill Murphy and GATA consultant James Turk, founder of GoldMoney.

... Dispatch continues below ...


Prophecy Coal (TSX: PCY) Wins Positive Feasibility Study
for the 600-MW Chandgana Power Plant in Mongolia

Company Press Release
January 17, 2012

VANCOUVER, British Columbia, Canada -- Prophecy Coal Corp. (TSX: PCY, OTCQX: PRPCF, Frankfurt: 1P2) has received a positive feasibility study for the company's 600-megawatt Chandgana Mine-Mouth Power Project in central Mongolia. The report was independently prepared by Ralf Thomsen, project manager at Steag, a German firm specializing in the planning, financing, construction, and operation of highly efficient thermal power plants for fossil fuels.

The study covers technical specifications, deployment, and financial analysis of a 4x150-mw thermal power plant to be built adjacent to Prophecy's Chandgana Tal coal deposit, which contains 140 million tonnes of measured coal. Last year the power plant received a construction license and the coal deposit received a mining license. Engineering, procurement, and construction management selection and project financing discussion have begun and are expected to be concluded this year.

Construction is planned to start in April 2013, with the first 150-mw unit being commissioned in October 2015 and subsequent units to start in April 2016, October 2016, and April 2017. With proper maintenance the project will have 30 years of commercial operation.

For the complete statement from the company, including maps and charts, please visit:

Our camp has often asserted that the Western central banks long have been undertaking a "controlled retreat" with gold, using derivatives and leases (not so much sales anymore) to keep the price from exploding after years of essentially short selling the metal or backstopping such short selling by bullion banks. Federal Reserve Chairman Alan Greenspan confirmed as much in his testimony to Congress in July 1998 when he said that "central banks stand ready to lease gold in increasing quantities should the price rise":

And GATA long has been calling attention to the scholarly study written in 2006 by the Scottish economist Peter Millar, who showed how central banks use the upward revaluation of gold to avert catastrophic debt deflation at the end of an economic cycle:

From time to time GATA also has called attention to Thompson's own speculation that central banks want the gold price higher now as a mechanism of economic stimulus and devaluation:

But GATA's complaint about gold market manipulation and price suppression is no less valid for all this. For while some central banks now may want to devalue their currencies, they want to do it on their own schedule and with their favored bullion bank agents preferentially positioned to profit from it rather than leave devaluation to free markets. Central banks certainly don't want a true free-market price of gold discovered any time soon, if ever.

For such a gold price would prove terribly inconvenient to central banks and their bullion bank agents, as it might result from wider realization that most of what the world imagines to be its gold supply doesn't exist -- that, as CPM Group director Jeff Christian acknowledged at the hearing of the U.S. Commodity Futures Trading Commission on March 25, 2010, as he had acknowledged in a report written a decade earlier, there is no metal at all behind most gold contracts and depository receipts:

Free markets in the monetary metals, markets that discipline governments and their currencies and protect individuals against expropriation, markets that enforce limited government, are GATA's objective, and we're not going to be mollified by 10 or 20 percent increases over the course of another year of "controlled retreat." To the contrary, we want to rout the bad guys, and that's likely to involve a lot more screaming that the markets are being "manipulated to death."

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

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Sona Discovers Potential High-Grade Gold Mineralization
at Blackdome in British Columbia -- 13.6g over 1.5 Meters

From a Company Press Release
November 22, 2011

VANCOUVER, British Columbia -- With its latest surface diamond drilling program at its 100-percent-owned, formerly producing Blackdome gold mine in southern British Columbia, Sona Resources Corp. has discovered a potentially high-grade gold-mineralized area, with one hole intersecting 13.6 grams of gold in 1.5 meters of core drilling.

"We intersected a promising new mineralized zone, and we feel optimistic about the assay results," says Sona's president and CEO, John P. Thompson. "We have undertaken an aggressive exploration program that has tested a number of target zones. Our discovery of this new gold-bearing structure is significant, and it represents a positive development for the company."

Sona aims to bring its permitted Blackdome mill back into production over the next year and a half, at a rate of 200 tonnes per day, with feed from the formerly producing Blackdome mine and the nearby Elizabeth gold deposit property. A positive preliminary economic assessment by Micon International Ltd., based on a gold price of $950 per ounce over eight years, has estimated a cash cost of $208 per tonne milled, or $686 per gold ounce recovered.

For the company's complete press release, please visit: