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NYTimes is shocked to discover that the Third World can be kind of corrupt

Section: Daily Dispatches

Is Gold Being Manipulated?

By Joel Bainerman
Haaretz, Tel Aviv, Israel
Tuesday, January 27, 2005

Considering the erratic behavior of gold this last month, with the
price reaching $540 before falling to $490, it may be a good time to
ask whether the price of gold is being manipulated.

One of the most vocal proponents of such a theory is Bill Murphy of
the Gold Anti-Trust Action Committee (

GATA has gathered an inordinate amount of evidence the gold market
has been managed since 1994 by a cartel consisting of bullion banks
(Goldman Sachs, JP Morgan Chase, etc.), the International Monetary
Fund, the U.S. Exchange Stabilization Fund, the U.S. Federal
Reserve, and the Bank for International Settlements.

In 2002 GATA filed a lawsuit against the entire gold cartel in
Boston federal court. The judge declared the U.S. has sovereign
immunity against suit and that he did not believe GATA had proper
legal standing to go forward -- that the suit should be brought by a
gold company -- which is just what happened. Blanchard Coin filed a
lawsuit in New Orleans federal court against JP Morgan Chase and
Barrick Gold on gold price manipulation charges.

Oleg Mozhayskov, deputy chairman of the Bank of Russia, brought GATA
to the attention of the mainstream gold world when he delivered the
keynote address at the London bullion dealers conference in Moscow
on June 4, 2004. In his speech he claimed:

"This dualism in gold price formation distinguishes it from other
commodities and makes the movements in the price sometimes so
enigmatic that market analysts need to invent fantastic intrigues to
explain price dynamics. Many have heard of the group of economists
who came together in the society known as the Gold Anti-Trust Action
Committee and started a number of lawsuits against the U.S.
government, accusing it of organizing an anti-gold conspiracy.

"They believe that with the assistance of a number of major
financial institutions (they mention in particular the Bank for
International Settlements, J.P. Morgan Chase, Citigroup, Deutsche
Bank, and others), some senior officials have been manipulating the
market since 1994. As a result, the price dropped below $300 an
ounce at a time when it should, if it had kept pace with inflation,
reached $740-760."

The gold establishment claims that the world's central banks have
32,000 tons of gold in their vaults, minus a few thousand tons of
gold out on loan to gold producers. GATA says the central banks have
less than half of that, or have less than 16,000 tones left in their

The difference is staggering.

GATA has discovered that the more than 13,000-ton difference can be
accounted for by the gold cartel surreptitiously feeding central
bank gold into the marketplace over the last decade to artificially
suppress the price.

According to Murphy, the good news is since there is a 1,500+ ton
yearly supply/demand deficit, the gold cartel is running out of
enough available central bank gold to continue their scheme. With
oil soaring, commodity prices in the U.S. at 23-year highs, the
dollar sinking fast, and the physical market surging, the price-
fixing scheme is on its last legs. The gold price, he predicts, is
going to skyrocket.

"For seven years GATA has discovered one piece of evidence after
another supporting our long-held contention that the gold market is
managed by certain central banks and their agents, the bullion
bank," says Murphy. "For one to appreciate how this can go on and on
and not be brought to the attention of the public, one need only to
reflect on Enron and Refco. Before its initial public offering of
stock, Refco was audited by the most highly regarded firms on Wall
Street and nothing wrong was discovered. Yet look at what was really
transpiring behind the scenes. Now the company is bankrupt and under
criminal investigation."

For years GATA has claimed that the key to the eventual surge in the
price of gold was the rising physical demand for gold amid the
diminishing supply of central bank gold used to suppress the price.
The gold establishment has associated the rise in the price of gold
over the years with the weakening of the U.S. dollar. GATA has
claimed otherwise.

"We said the gold cartel was using the action of the dollar for
price-rigging purposes," Murphy claims. "GATA has said over and over
that the price of gold could rise hundreds of dollars per ounce and
the dollar do nothing relative to other currencies. We said it would
happen when the gold cartel began to lose control of its price
manipulation scheme."


Joel Bainerman writes on international economic affairs. His
published archive can be viewed at


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Franklin Sanders
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