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Distortion after distortion from CPM Group's Jeff Christian

Section: Daily Dispatches

8:19p ET Monday, May 17, 2010

Dear Friend of GATA and Gold:

For whatever they're worth, here are a few observations on the debate broadcast Saturday by Jim Puplava's between GATA Chairman Bill Murphy and CPM Group executive Jeffrey M. Christian, to which you can listen here:

-- Christian again accused GATA of always distorting what people say. Certainly GATA draws conclusions from what people say and those conclusions may be disputed, but with every conclusion of importance about what someone has said GATA has provided the full text or an Internet link to it so people can evaluate GATA's conclusions.

Particularly in this respect Christian accused GATA of distorting Federal Reserve Chairman Alan Greenspan's 1998 remark in testimony to Congress that "central banks stand ready to lease gold in increasing quantities should the price rise." Christian insisted that this comment had nothing to do with gold price suppression. Rather, Christian said, Greenspan meant that a rising gold price would prompt central banks to lease more gold to make money.

... Dispatch continues below ...


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Christian's conclusion is not supported by Greenspan's full testimony. (See As GATA has often noted, Greenspan's testimony sought to dissuade Congress from regulating derivatives. His remark about gold was in the context of preventing corners in the commodity markets, the context of commodity prices in general -- not the context of central banks making money. Greenspan said:

"Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise."

GATA has construed this as Greenspan's telling Congress not to worry about a corner in the gold market because central banks already had cornered that market.

In any case Christian's assertion that central banks lease gold to make money is ridiculous. Central banks make money by conjuring virtually infinite amounts into existence with ledger entries -- more so now than ever -- and don't have to lease or sell gold or anything else to make money. The money central banks make by leasing or selling gold is barely measurable compared to the money they conjure into existence.

No, central banks disperse gold into the market through leasing and outright sales -- and hold gold in the first place, as the Reserve Bank of Australia acknowledged in its annual report for 2003 (see -- for only one purpose, currency market intervention.

In the debate Christian acknowledged the RBA's acknowledgement. He also acknowledged that central banks prefer to intervene in the currency markets surreptitiously, though he failed to acknowledge the deceit involved. He acknowledged that central banks used to intervene in the gold market to adjust the value of their currencies back when there was some formal connection between currencies and gold. But Christian was sure that there had not been any surreptitious intervention in the gold market since then, sure that central banks would not do surreptitiously today what they once did, often in the open.

To GATA Christian's position seems to require too much faith. With central bank interventions so pervasive these days, to believe that central banks are not intervening surreptitiously in the gold market it is necessary to believe that the gold market is the only market they're not intervening in.

-- Christian accused GATA of distorting Barrick Gold's 2003 motion in U.S. District Court in New Orleans to dismiss Blanchard & Co.'s anti-trust lawsuit against the gold miner, a lawsuit that complained of gold price manipulation. (See In that motion, Christian insisted, Barrick did not claim what GATA has said Barrick claimed -- that the company should share the immunity of central banks against suit. But even Christian might agree that Barrick's motion said the lawsuit was of great importance to central banks and their gold business. And perhaps most importantly the federal judge who rejected Barrick's motion, Helen Berrigan, seems to have construed Barrick's motion exactly as GATA did.

In June 2003 GATA published an excerpt from the federal court transcript of the hearing on May 20, 2003, in which the judge explained her decision to reject Barrick's motion. (See Addressing Barrick's lawyer, Judge Berrigan said:

"But I'm very much troubled by the end result of your argument, which is to the effect that if an outfit is large enough and involves enough people, enough entities, then they can kind of do what they want. ... But I just don't find it possible to think that something could -- if, in fact there is an anti-trust violation going on here -- that because it involves so many powerful entities from all around the world, therefore it's going to be immune from being challenged. That's, as we say, not acceptable."

-- In the debate Christian said GATA had distorted remarks made by William S. White, then head of the monetary and economic department of the Bank for International Settlements, in a speech at a BIS conference in Basel, Switzerland, in June 2005. White said that among the five main purposes of international central bank cooperation was "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." (White's speech is posted at GATA's Internet site here:

Christian said he is a friend of White and White had told him that his remark about central banks influencing gold prices was a reference to history, not the present. But that's not how White put it to the BIS conference. White prefaced his list of the five main purposes of central bank cooperation this way: "The intermediate objectives of central bank cooperation are more varied." All the objectives White listed, including influencing the gold price, were placed in the present tense. White did not distinguish any of his five purposes as having expired with time; in his speech they were all current objectives. The influencing of gold prices had no more gone out of date than the other purposes White listed, like "the development of robust and effective networks of contacts," which presumably never goes out of fashion. But again, since GATA publishes the documentation from which it draws its conclusions, people can judge for themselves on the basis of the whole record.

As the debate showed, Christian is doing the distorting, not GATA.

But the most important things Christian said during the debate may have been about himself:

-- He is in the gold hedging business.

-- He has advised Barrick Gold, though he did not say specifically that he had advised Barrick to undertake the gold hedging practices that proved so expensive to the company.

-- He has advised "most of the central banks in the world."

-- And "central banks think very little about gold," and those that do think about it and have gold reserves are happy when the gold price goes up.

Maybe those who aspire to a free gold market should be glad that Christian presumes to speak for the central banks about gold, since the central banks themselves are so reticent about the subject. For example, the Bank of England is still refusing to release documents about the bank's gold sales at the bottom of the market a decade ago. (See And as Murphy noted during the debate, if the Federal Reserve doesn't care much about gold, why has GATA had to sue the Fed in U.S. District Court for the District of Columbia for access to all sorts of gold-related documents the Fed is refusing to disclose, including documents involving the Fed's gold swap agreements with foreign banks? (See

Obviously central banks have much to hide about gold.

Yet Christian said that in his long career in the commodity markets he has never seen evidence of manipulation of the gold market. As he earns his living by advising central banks and the leading gold hedger, he can't have much incentive to look.

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

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