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Whether it's up or down, central banks are manipulating markets in secret

Section: Daily Dispatches

1:10a ET Thursday, August 9, 2012

Dear Friend of GATA and Gold:

Izabella Kaminska, the brilliant financial writer and researcher at FT Alphaville, has gone from suggesting, last September, that central banks were suppressing the price of gold by stuffing leased metal into the market --

-- to suggesting, this month and last, that central banks now may be supporting the gold price as a mechanism of currency devaluation or at least reflation:

It's not such a wild idea. GATA people and other students of the gold market whose work GATA has brought to your attention, like the Scottish economist Peter Millar --

-- and geopolitical analyst James G. Rickards --

-- have speculated on the necessity of an upward revaluation of gold to avoid either a deflationary collapse of Western economies or a hyperinflationary collapse of Western currencies.

... Dispatch continues below ...


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:

The financial newsletter writer Stewart Thompson has asserted the same thing for at least three years and recently has claimed that central banks have already gotten behind an upward move in the gold price --

-- though such a policy has been hard to find in the gold price chart over the last year and a half.

Central bank or government intervention to raise the gold price is as much a matter of history as central bank or government intervention to suppress the gold price is. Kaminska's most recent commentary, cited above, notes the U.S. government's confiscation of gold coin in 1933 at the official price of $20.67 per ounce and gold's revaluation six months later to $35 per ounce, a 69 percent devaluation of the dollar. The gold price was held at $35 per ounce for 35 years, the last eight of them through the frankly suppressive and market-defeating mechanism of the London Gold Pool:

Of course central banks don't confide their gold policies to anyone except the investment banks that happily implement those policies as masking agents, gaining the ability to profit through insider trading, and GATA has had to sue the Federal Reserve a couple of times to try to discern its gold policy --

-- just as we recently brought freedom-of-information actions against not only the Fed but also the U.S. Treasury and State departments:

But there's a problem with Kaminska's musing that only central banks are propping up the gold price these days. Yes, some central banks, mostly Eastern ones, are buying gold, but there is no indication of gold buying by any major Western central bank. Indeed, to the contrary, there is a long history over the last couple of decades of Western central bank gold sales, leases, and swaps that can be interpreted only as mechanisms for underwriting the "paper gold" market -- that is, to use the euphemism for gold price suppression, for providing "liquidity" to the gold market. To support its price, Western central banks would not have to come close to buying gold. They could just stop supplying "liquidity" to the "paper gold" market.

Now maybe Western central banks are slowly withdrawing support from the "paper gold" market, but it sure didn't look that way when someone sold immense amounts of "paper gold" simultaneous with the devaluation of the Swiss franc last September, apparently meaning to prevent the metal from ascending to the role of ultimate "safe haven" currency.

That is, the decades of Western central bank gold price suppression, right up to the attack on gold amid the Swiss franc's devaluation last September, are almost certainly still exerting a far more suppressive effect on the gold price than any supposed recent support being lent to gold by Western central banks.

But regardless of whether Western central banks have turned to supporting the gold price to devalue currencies and reduce the burden of unpayable government and private-sector debt, those who believe that those central banks are suppressing the gold price and those who believe that central banks are supporting it should be able to agree that central banks are manipulating the gold market largely surreptitiously, which has been the essence of GATA's complaint since the organization's founding in 1999. It is simply taken for granted -- not just by most gold market analysts but even by the supposed journalists in the mainstream financial news media -- that central bank policy formulation and even central bank policy itself are not to be questioned directly.

How absurd and tragic that these supposed journalists, when compelled, usually resentfully, to report about gold, seek interviews with investment house analysts and newsletter writers but never, ever with the primary sources, central banks themselves. That the central banks wouldn't say anything -- that they have to be sued for such basic information -- is no excuse, for such unaccountability itself then becomes the story.

Of course it's not just journalism that is at fault; it is also entire political systems. Elected agencies of government may decide every trivial question but the valuation of all currency, capital, labor, goods, and services in the world is left to be determined in secret by a few dozen people, as if this is the natural order of things.

It is not. It is the destruction of democracy.

Powerful as central banks are, the basis of their power is only this refusal to question, to undertake the most ordinary journalism. The only thing that sustains them is the failure of journalism -- the failure of The Wall Street Journal, the Financial Times, The New York Times, the London Telegraph, the Associated Press, Reuters, Bloomberg News, and so forth -- to demand of them:

Exactly what are you doing in the markets, and why?

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

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Prophecy Platinum Announces Wellgreen Preliminary Economic Assessment:
38% Pre-Tax IRR, $3.0 Billion NPV, and a 37-Year Mine Life

Company Press Release

VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) reports the results of an independent NI 43-101-compliant preliminary economic assessment for its fully owned Wellgreen nickel-copper-platinum group metals project in the Yukon Territory.

The independent assessment, prepared by Tetra Tech, evaluated a base case of an open-pit mine (with a mining rate of 111,500 tonnes per day), an on-site concentrator (with a milling rate of 32,000 tonnes per day), and an initial capital cost of $863 million. The project is expected to produce (in concentrate) 1.959 billion pounds of nickel, 2.058 billion pounds of copper, and 7.119 million ounces of platinum, palladium, and gold during a mine life of 37 years with an average strip ratio of 2.57.

The financial highlights of the preliminary economic assessment, shown in U.S. dollars, are as follows:

Payback period: 3.55 years
Initial capital investment: $863 million
IRR pre-tax (100% equity): 38 percent
NPV pre-tax (8% discount): $3 billion
Mine life: 37 years
Total mill feed: 405.3 million tonnes
Mill throughput: 32,000 tonnes per day

Prophecy Chairman John Lee says: "We are pleased with the preliminary economic assessment results. The numbers indicate that Wellgreen is one of most exciting mineral projects in the Yukon. The company is drilling to upgrade and expand the resource base. The infrastructure is excellent as the project is only 1,400 meters in altitude and 14 kilometers from the paved Alaska Highway, which leads to the Haines deep seaport. Discussions are under way with support from local stakeholders regarding permitting and logistics."

For the complete press release, please visit: