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Market analyst Hutchinson acknowledges gold suppression

Section: Daily Dispatches

11:50a ET Wednesday, October 14, 2009

Dear Friend of GATA and Gold:

Market analyst Martin Hutchinson's latest column, published this week at Prudent Bear, acknowledges the likelihood that central banks will try to manipulate the price of gold so that they might avoid having to do anything about the difficult problems signified by a rising gold price.

Hutchinson's commentary takes note of the Financial Times story GATA brought to your attention last week with a little preface of commentary, "Ohmigod! Commodity Investors Might Have to Buy ... Actual Commodities":

Hutchinson writes:

"Given the predilections of today's policymakers, it is unfortunately unlikely that they will tighten monetary policy sufficiently to break the commodity flight, whatever the gold price does. Instead, led by the determined Keynesians of the International Monetary Fund, they are much more likely to attempt to control the gold price itself, either surreptitiously by selling off massive quantities of the world's gold reserves, or openly by imposing limits on gold futures trading and possibly, like Franklin Roosevelt in 1933, making it illegal for ordinary individuals to own gold or to buy gold futures.

"That will of course only make matters worse; it would be equivalent to trying to avoid a speeding ticket by smashing the car's speedometer. Manipulating the gold price to pretend that liquidity is not excessive does not stop liquidity from being excessive. Nor does it lead any but the stupidest institutional investor to believe that his urge to invest in physical commodities is misguided. Rather, it will cause commodities investment to be carried out through shell companies in tax havens, away from regulators' radar screens. The effect on global supply chains will be equally damaging, but policymakers will no longer have a straightforward way of determining how to avoid the resulting economic depression."

You can find Hutchinson's commentary, headlined "When Money Becomes Worthless," at Prudent Bear here:

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

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