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Who smashed gold this afternoon? Let's 'round up the usual suspects'
7:52p ET Monday, February 24, 2020
Dear Friend of GATA and Gold:
Somebody seems to have dumped a lot of gold derivatives on the market this afternoon, and Zero Hedge estimates it at $3 billion worth and attributes it to the Bank for International Settlements:
There may not yet be any public evidence tying this particular attack to the BIS, but whoever did it plainly meant to drive the price down rather than to take profits on a long position, since you don't take profits by driving the price down all at once but by selling gradually enough not to crash the price.
... Dispatch continues below ...
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And the BIS can't help being one of "the usual suspects" given its many acknowledged interventions throughout history.
For example, in 2005 William R. White, the director of the BIS monetary and economic department, told a BIS conference in Basel, Switzerland, that a primary purpose of international central bank cooperation is "the provision of international credits and joint efforts to influence asset prices (especially gold and foreign exchange) in circumstances where this might be thought useful":
The BIS actually advertises to potential central bank members that its services include secret interventions in the gold market. Here's a PowerPoint presentation the bank made to prospective central bank members at BIS headquarters in June 2008:
Indeed, according to its 2013 annual report, the BIS functions largely as a gold banking and gold market intervention service for its member central banks. On Page 110 of that report the BIS says: "The bank transacts foreign exchange and gold on behalf of its customers, thereby providing access to a large liquidity base in the context of, for example, regular rebalancing of reserve portfolios or major changes in reserve currency allocations. The foreign exchange services of the bank encompass spot transactions in major currencies and Special Drawing Rights (SDR) as well as swaps, outright forwards, options, and dual currency deposits (DCDs). In addition, the bank provides gold services such as buying and selling, sight accounts, fixed-term deposits, earmarked accounts, upgrading and refining, and location exchanges." See:
Secret gold market interventions by the BIS have been going on for a long time. A long article in Harper's magazine in 1983, based on a seemingly unprecedented interview with BIS officials, disclosed that the BIS was constantly intervening in the gold market in secret:
GATA consultant Robert Lambourne, probably the only student of the BIS outside central banking itself, documents the bank's monthly interventions in the gold market by interpreting the footnotes in the bank's monthly report. Lambourne's most recent dispatch, analyzing the bank's monthly report issued January 31, disclosed that the bank's interventions in the gold market had reached their highest point in nearly a year:
Three years ago GATA asked the BIS to explain its interventions in the gold market -- their underlying objectives and their real parties in interest. Of course the bank refused to account for itself:
But the BIS doesn't necessarily rig markets for its own advantage. Rather it acts for its members, which include most central banks, to which the BIS gives cover for market interventions.
It would be nice if mainstream financial news organizations made even a nominal effort to preserve their professional dignity by asking the BIS to account for and explain its interventions and by reporting that the bank won't explain.
But maybe such journalism is no longer necessary. For can there by anyone who follows the gold market who doesn't know by now where the out-of-the-blue smashdowns in the monetary metals come from?
And can anyone who follows the gold market not have noticed that these smashdowns have been losing effect since last June?
Really, if people who follow the gold market can't figure out the purpose and general origin of today's attack and can't understand that an attack this brazen signifies profound weakness and possibly depletion of the real metal central banks are prepared to lose to defend their currencies against the once and future international reserve currency -- well, any such people should apply for jobs at the Financial Times or Kitco.com.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
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