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Another smoking gun of market rigging, but Warburton saw it all back in 2001

Section: Documentation

8:58p ET Friday, September 5, 2014

Dear Friend of GATA and Gold:

In his profound and prophetic essay 13 years ago, "The Debasement of World Currency: It is Inflation, But Not as We Know It" --

-- the British economist Peter Warburton realized that central banks had abused their unlimited power of money creation and that this had impelled them into comprehensive commodity market rigging and price suppression to save the financial system they had perverted.

"What we see at present," Warburton wrote, "is a battle between the central banks and the collapse of the financial system fought on two fronts.

"On one front, the central banks preside over the creation of additional liquidity for the financial system in order to hold back the tide of debt defaults that would otherwise occur.

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"On the other, they incite investment banks and other willing parties to bet against a rise in the prices of gold, oil, base metals, soft commodities, or anything else that might be deemed an indicator of inherent value. Their objective is to deprive the independent observer of any reliable benchmark against which to measure the eroding value not only of the U.S. dollar but of all fiat currencies. Equally, they seek to deny the investor the opportunity to hedge against the fragility of the financial system by switching into a freely traded market for non-financial assets.

"The central banks have found the battle on the second front much easier to fight than the first. Last November I estimated the size of the gross stock of global debt instruments at $90 trillion for mid-2000. How much capital would it take to control the combined gold, oil, and commodity markets? Probably no more than $200 billion, using derivatives. Moreover, it is not necessary for the central banks to fight the battle themselves, although central bank gold sales and gold leasing have certainly contributed to the cause. Most of the world's large investment banks have overtraded their capital so flagrantly that if the central banks were to lose the fight on the first front, the stock of the investment banks would be worthless.

"Because their fate is intertwined with that of the central banks, investment banks are willing participants in the battle against rising gold, oil, and commodity prices.

"Central banks, and particularly the U.S. Federal Reserve, are deploying their heavy artillery in the battle against a systemic collapse. This has been their primary concern for at least seven years. Their immediate objectives are to prevent the private-sector bond market from closing its doors to new or refinancing borrowers and to forestall a technical break in the Dow Jones Industrials. Keeping the bond markets open is absolutely vital at a time when corporate profitability is on the ropes. Keeping the equity index on an even keel is essential to protect the wealth of the household sector and to maintain the expectation of future gains.

"For as long as these objectives can be achieved, the value of the U.S. dollar can also be stabilized in relation to other currencies, despite the extraordinary imbalances in external trade."

GATA long has collected and published documentation of the central bank war on the gold front:

A week ago Eric Scott Hunsader of the market research firm Nanex in Winnetka, Illinois, disclosed via Zero Hedge a smoking gun from the central bank front against the commodity, government bond, and equity markets, a letter from CME Group, operator of futures exchanges including the New York Commodity Exchange, to the U.S. Commodity Futures Commission, asserting that the exchanges give discounts to central banks for their trading on all CME Group futures markets:

That central banks are likely trading not just currencies and bonds but the full range of futures -- that is, that surreptitious central bank intervention in the markets has become comprehensive -- does not seem ever to have been reported by the mainstream financial news media. So GATA brought the CFTC document to the attention of many major financial news organizations, but not one reported about it or even acknowledged receipt of the document.

Tonight Zero Hedge discloses another smoking gun -- another filing by CME Group, this one with the U.S. Securities and Exchange Commission, CME Group's "10K" statement for 2014. On Page 9 of the statement CME Group says: "Our customer base includes professional traders, financial institutions, institutional and individual investors, major corporations, manufacturers, producers, governments, and central banks." [Emphasis added.]

The CME Group filing is posted at the company's Internet site here --

-- and for safety's sake at GATA's Internet site here:

GATA will send this smoking gun as well to those financial news organizations. Maybe someday one of them will dare to commit journalism to report the biggest story in the world and probably in history -- that there are no markets anymore, just interventions.

But more likely these disclosures will result only in still more "financial represssion" by central banks and governments, more market rigging that is ever more obvious but guaranteed against mass exposure because of the timidity of the news media. It all has been in plain sight for a long time, but, like the emperor's new clothes in the fairy tale, it simply cannot be discussed in polite company.

Ever sardonic, Zero Hedge writes tonight --

-- "At this point why even pretend there is a 'market'? ... The 'market' ... is whatever central banks say it is. ... If central banks are going to be rigging the market as they now conclusively are on a daily basis, perhaps they can disclose ahead of the trading day start to everyone, and not just to the primary dealers, what the closing S&P 500 price for any given day is."

That is the catastrophe here apart from the use of inside government information to benefit the money power at the expense of everyone else: the loss of free markets and democracy, the great engines of progress and prosperity. Market rigging is the ugly triumph of the declining stage of civilization, the corruption of civilization by prosperity amid the general loss of civic virtue. Market rigging is the sort of thing the Nazi regime did with the German stock market as defeat neared in World War II --

-- except the Nazis weren't as clever as our rulers now. They simply set prices arbitrarily in the open without the cover of futures, other derivatives, and intermediary brokers.

As Zero Hedge writes, the documentation of comprehensive and surreptitious market manipulation by central banks is now conclusive. But that doesn't mean that it will matter. It won't matter if people won't look at it, acknowledge it, and act on it, and for the time being, at least, the news media and all major industries and commercial interests won't. They remain in denial.

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

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