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Chris Powell: Gold market manipulation update, April 2018
Gold Market Manipulation Update
Remarks by Chris Powell
Secretary/Treasurer, Gold Anti-Trust Action Committee Inc.
Mining Investment Asia Conference
Marina Bay Sands, Singapore
Wednesday, March 28, 2018
Mines and Money Asia Conference
Hong Kong Exhibition and Convention Centre
Wednesday, April 4, 2018
The slides for this presentation are posted here:
Slide 1 -- Title
Since we were here last year some big changes have occurred in the international gold price suppression policy. These changes indicate growing tightness in the gold market -- indicate that governments and central banks are having to work harder to keep the price down.
First, the Bank for International Settlements, the association of major central banks, has jumped back into the gold market.
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GATA consultant Robert Lambourne, who seems to be the only analyst outside government who studies the gold market interventions of the BIS, notes that footnotes in the BIS' monthly reports show that the bank's gold, gold swap, and gold derivative positions exploded from zero in March 2016 to 438 tonnes in March 2017 to 525 tonnes last month:
Slide 2 -- BIS / Notes to the financial statements
This page is taken from the BIS annual report issued in June, covering the year ending March 31, 2017. It acknowledges 438 tonnes of gold swaps.
Slide 3 -- BIS / Statement of account
This page, from the BIS' October 2017 statement of account, shows that the BIS' gold loans rose substantially since March last year.
What exactly is the BIS doing in the gold market and for whom?
In November I brought Lambourne's analysis to the attention of the BIS press office and asked if his analysis was correct and if the bank could explain exactly what it was doing in the gold market and for whom. The BIS press office replied:
"We do not comment on specific accounts and holdings of central banks or of the BIS. Please see our latest annual report for details on gold. Further information can be gleaned from central banks directly."
But the BIS' annual reports provide no more substantial information about its activity in the gold market than its monthly reports do. As for obtaining information about gold market activity from BIS member central banks, they are no more forthcoming.
A few years ago GATA sued the Federal Reserve in U.S. District Court in Washington for access to its gold market records. We received very little access, since the court ruled that nearly all the Fed's gold records are exempt from disclosure. Indeed, the most notable information we got by suing the Fed was the possibly inadvertent admission in writing by a member of the Fed's Board of Governors, Kevin M. Warsh, that the Fed has gold swap arrangements with foreign banks and will never disclose them.
Slide 4 -- Warsh photo and letter
If the swapping and leasing of gold by central banks is ordinary and innocent activity, why won't central banks disclose and explain it?
The answer to that question was given by the secret March 1999 report of the staff of the International Monetary Fund, which acknowledged that central banks conceal their gold swaps and leases to facilitate their secret interventions in the gold and currency markets:
Slide 5 -- Secret IMF report
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The second biggest development in the gold price suppression scheme since we last gathered here involves the New York Commodities Exchange –
Slide 6 -- NYMEX/COMEX building
-- where, GATA consultant Harvey Organ reports, thousands of gold futures contracts that have been called for delivery have been moved off the exchange in private transactions called "exchange for physicals," or EFPs.
One implication of this development is that there isn't enough gold in Comex warehouses to cover futures deliveries sought in New York and that deliveries have to be moved to London, where transactions are more easily concealed by mechanisms controlled by the London Bullion Market Association, or where long contract holders seeking delivery can be paid privately to postpone delivery.
There may be other explanations for this development, but it is recent and signifies that something big has changed about the gold market in the last year.
* * *
Perhaps not so coincidentally, as gold researcher Ronan Manly of Bullion Star in Singapore disclosed the other day, on April 1 the London Bullion Market Association --
Slide 7 -- LBMA building
-- will begin delaying its daily gold and silver auction price reports. Recently the auction price reports have been issued 30 minutes after the conclusion of the auctions. As of April 1 the auction price reports will be delayed 14 hours. The LBMA has provided no explanation for this delay, but of course the longer the reports are delayed, the more opportunity there will be to adjust or tamper with them.
Further, Manly discloses, the LBMA has postponed for another year its plan to start reporting individual trades of gold and silver. If something nefarious is going on with those "exchange for physicals" by which Comex futures contracts appear to be transferred to London, the LBMA's reporting of individual trades might reveal it. Now there will be no reporting by the LBMA of individual gold and silver trades in London for at least another year:
* * *
In January this year U.S. authorities charged three foreign banks and eight individuals in "spoofing" of the gold and silver futures markets:
Slide 8 -- Reuters story on spoofing
* * *
Also in January this year GATA disclosed the discounts that are being given by CME Group futures exchanges to governments and central banks for secretly trading gold and silver futures contracts. It is not widely understood that governments and central banks are secretly trading all futures contracts on U.S. exchanges, for mainstream financial news organizations refuse to report secret interventions in markets by governments:
Slide 9 -- CME Group explainer
* * *
But maybe all you really need to know about gold price suppression could have been surmised from a story on the front page of The Wall Street Journal on August 10 last year:
Slide 10 -- Wall Street Journal front page
In that story the newspaper quoted four experts on the gold market, all of them associates of the Gold Anti-Trust Action Committee and all of them introduced to the newspaper's reporter by me.
Slide 11 -- Close-up of Wall Street Journal story
Those four experts -- gold researcher Ronan Manly, Sprott Asset Management's John Embry, GoldMoney founder James Turk, and futures market analyst James McShirley -- accused the Federal Reserve of being involved with the suppression of the gold price through the surreptitious lending and swapping of central bank gold reserves.
The Wall Street Journal story was a triumph for GATA, even though the Journal declined to mention GATA by name. (The reporter told GATA Chairman Bill Murphy that the newspaper just ran out of space.)
But the story would have been a much greater triumph for us -- indeed, it would have been a triumph for free markets -- if the newspaper had not decided, in reporting these complaints about surreptitious government intervention in the gold market, to violate the first rule of journalism. That's the rule about getting and reporting both sides of a story.
The Journal reported: "Some gold bugs -- investors bullish on the yellow metal -- think the Fed secretly lends it out to suppress prices, partly to protect the dollar's value. In theory the Fed can feed gold into the market through swaps with other countries."
So where were the Journal's questions about this for the Fed and the U.S. Treasury Department? Are the Fed and the Treasury Department involved in keeping the gold price down through surreptitious interventions, or are they not involved?
But the Journal never asked such questions, even though for a year and a half, as I provided the Journal's reporter with the documents of these interventions, I repeatedly pressed her to put the questions to the Fed and Treasury. I even provided the Journal's reporter with a video showing New York Federal Reserve Bank President William Dudley refusing to answer a question about gold swaps during his appearance at the Virginia Military Institute on March 31, 2016.
Slide 12 -- Still photo from Dudley video
Can we play that video now?
The Dudley video can be viewed here:
Note the inconsistency in Dudley's response. First he talks at length about the German Bundesbank's transactions to repatriate its gold from the New York Fed. Then, asked if the Fed is involved with gold swaps, Dudley says he can't comment on "individual customer kind of transactions." But he had just discussed an individual customer's transactions with the Fed at great length -- Germany's -- and the second question, about gold swaps, was not about individual customer transactions at all but simply whether the Fed was in the gold swap business.
Ordinarily news organizations are most interested in questions that high government officials refuse to answer. But mainstream financial news reporters are not interested in questions about secret government interventions in the gold market and secret interventions in markets generally. No, such questions are too sensitive, apparently considered threats to national security.
The best that mainstream financial news organizations can do is just to acknowledge the questions sometimes. Mainstream financial news organizations can never pursue the answers, no matter how easy it would be to do so.
Unfortunately most gold market analysts themselves will not pursue these questions either -- at least not yet. GATA will continue working on them.
Will the gold industry itself ever pursue these questions? Will the gold industry ever stand up for itself?
If not, why should anyone invest in an industry that doesn't care about the suppression of the price of its product?
Slide 13 -- Contact and thanks
The documents I have cited today are all posted at GATA's internet site, GATA.org, most of them in the "documentation" section:
If you have any trouble locating them or have any questions about GATA's work, I'll be glad to hear from you at CPowell@GATA.org.
Thanks for your kind attention.
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