- Part of that control is controlling real money-the precious
metals. More and more gold traders are coming to the inescapable conclusion
that the financial Powers That Be (PTB) are deliberately suppressing the
price of gold in order to mask a real inflation rate of over 10% per annum.
The dollar is crumbling at home and abroad and Fed chief Ben Bernanke is
still talking about 2% inflation! This is a key strategy to hide the inflationary
effects of fiat money that dovetails downward manipulations of the CPI
and the PPI with other tactics to obscure the flood of money creation.
This is why the fed stopped publishing M3, the broadest indicator of government
expansion of money and credit. All of this adds to the arsenal of evidence
pointing to multiple government conspiracies--the key issue that must be
driven home to ordinary citizens if we are to preserve liberty. No other
issue is as crucial as proving conspiracy on a large scale.
- But, there will be no big name defectors, nor direct
proofs. We will always be relegated to compiling dozens of examples of
manipulation and piecing them all together into a pattern of collusion.
James Turk of the The Freemarket Gold & Money Report (<(http://www.fgmr.com)>
http://www.fgmr.com) wrote an excellent primer on the subject of central
bank manipulation of gold pricing. Here are some key excerpts with [my
comments in brackets]:
- "It is becoming a well-known 'secret' that governments
are trying to manage the gold price by intervening in the gold market,
and Friday's trading was a good example of their fiddling with the free-market
process. Here are some pointers for everyone interested in learning how
governments intervene in the gold market.
- 1) "Work with a proxy. The U.S. Exchange Stabilization
Fund is the ringleader of the government manipulation efforts, but it never
enters the market directly itself, regardless whether it is intervening
in the currency or the gold market. It works with proxies in order to cover
its tracks. The secretive ESF places its orders to intervene with the Federal
Reserve Bank of New York, which carries out all intervention for the U.S.
government as well as all orders from foreign central banks placed for
execution during U.S. market hours... the New York Fed places these
- government-instigated trading orders with the big New
York banks. Because these banks have such huge trading volume, the logic
is that government-instigated trading will be hidden amid the huge order
flow handled by these banks. This line of attack to hide the government's
trades works, except when the government's orders are so huge and one-sided
that they overwhelm normal market forces.
- 2) "Wait until after the London market closes, which,
because of the time change, is noon in New York. The London market is basically
a market for physical gold, while New York trades paper, which represents
only promises to pay gold. There's a big difference between these two markets.
It is easy to manipulate paper because all a government has to do is to
create these paper promises out of thin air, as government does all the
time when it intervenes in the foreign exchange markets. But governments
cannot create physical gold out of thin air. So they tend to stay away
from the London market, and put physical gold into their market interventions
only sparingly because once they are out of physical, their intervention
game is over. On Friday gold closed in London at $382.75, $13.35 above
the New York close only 90 minutes later. So, clearly, the government through
its compliant bank agents bombed only the paper market.
- 3) "Intervene on a Friday afternoon in order to
have the maximum impact from your intervention. After noon New York time,
not only is London closed but the rest of the world is closed as well.
This afternoon period in New York represents the moment when the least
amount of liquidity is in the market. So if government interveners want
'more bang for their buck,' they can get it when the rest of the world
is asleep or already enjoying the weekend.
- 4) "Just keep selling and selling. When you intervene
in the market on a Friday afternoon with the intention of forcing the market
lower, you begin selling short. Because you are the government and you
are creating promises only to pay gold 'out of thin air,' you just keep
selling and selling until you hit key sell-stops resting in the market.
After all, who is going to give the government a margin call? Consequently,
there is no practical limit as to how many paper promises the government
can sell. So how much do they sell? Simple -- they sell enough until they
complete their task, which is to drive the market lower.
- "Why does the government do this? Because market
prices communicate information, and sometimes that information runs counter
to what governments would like us to hear and believe. So governments intervene
in a market by preventing it from alerting us of the market message governments
don't want us to hear. For example, we all know that the message of a rising
gold price means that the dollar is headed for rough times, which is useful and
important knowledge." [They also do this because the government has
a vested interest in keeping citizen taxes to a low enough level that they
will not actively protest government spending. By huge deficit spending
combined with tax cuts, people never feel the pain of the war in Iraq,
- Do I have documents proving the government intervention
I discuss above? No, but the body of evidence developed over the past few
years by me (http://www.fgmr.com> www.fgmr.com ), www.GATA.org , Reg
Howe (see www.goldensextant.com), Frank Veneroso ( http://goldmoney.com/en/commentary/2003-09-04.html)
as well as many others is not only huge and compelling but also growing."
Once again, conspiracy by government is hard to prove because they control
all of the key information and use "national security" to thwart
public access. People with good inductive reasoning skills can, however,
see patterns of conspiratorial conduct if you look at enough examples.
- Adrian Ash of the Bullion Vault company noted with pleasure
how two of the establishment bankers (Credit Agricole and Citibank) tacitly
acknowledged that central bankers were manipulating the price of gold.
Typical of the outrage from the establishment financial press were these
random quotes "...What is it with leading commercial banks - first
Credit Agricole...now Citigroup - and their accusations of wanton gold-price
manipulation by central bankers... It was SO embarrassing..."
- Ash writes that "The Remonetization of Gold by Paul
Mylchreest put the reputation of France's largest bank right on the line
- the very same line spun by the Gold Anti-Trust Action Committee (GATA)
since 1999. 'Central banks have 10-15,000 tonnes of gold less than their
officially reported reserves of 31,000' the Chevreux report announced.
'This gold has been lent to bullion banks and their counterparties [to
avoid showing it as a sale] and has already been sold for jewelry, etc.
Non-gold producers account for most of the borrowing and may be unable
to cover shorts without causing a spike in the gold price. In other words,
'covert selling (via central bank lending) has artificially depressed the
gold price for a decade [and a] strongly rising Gold Price could have severe
consequences for US monetary policy and the US Dollar.'"
- What Mylchreest was saying is that the gold markets are
not totally public nor transparent. Central Banks have ways of buying back,
lending, and borrowing gold in private-off the books.
- US GOLD STOCK DISCREPANCY
- Turk also noted that "Back in December 2000 I wrote
'The Smoking Gun' (<http://www.fgmr.com/smokegun.htm>http://www.fgmr.com/smokegun.htm)
and noted the discrepancy between the size of the U.S. gold stock as published
by the Federal Reserve in its monthly Bulletin, which included 'gold held
by the ESF [Exchange Stabilization Fund]' in its report, and the size of
the gold stock published by the U.S. Treasury in its monthly Bulletin.
The two reports were different, establishing that the ESF held gold or
owed gold (because in some months the discrepancy was a negative balance)
at the month-end record dates in which there was a discrepancy, which was
virtually every month from the end of 1996 to my December 2000 publication
- "Then, less than two months after the publication
of my discovery, the Federal Reserve in February 2001 inexplicably changed
its reporting of the gold stock to delete any reference to the ESF, thus
making its record of the size of the U.S. gold stock equal to the Treasury's
report... This after-the-fact 'adjustment' to U.S. government reports was
revealing, given that the government felt sufficiently compelled to hide
further the tracks of the ESF to make this embarrassing change to its reports.
That appeared to be the end of this little window into the operation of
the shadowy ESF, because the Fed was no longer reporting the U.S. gold
reserve plus the ESF's gold balance.
- "Or so I thought. Recently I was analyzing the Fed's
audited balance sheet released in its 2002 annual report and I noticed
that the discrepancy has reappeared....What is the reason for this divergence
in these two reports? It seems obvious that this difference is the weight
of gold held by the ESF, which used to be reported by the Federal Reserve
- in its monthly Bulletin. The divergence between the two
reports has reappeared because the Fed can report in its monthly Bulletin
whatever it wants to include, or in this case, exclude. But it cannot exclude
the impact of the ESF on its year-end financial statement because if it
did, its auditors, KPMG, would not give an unqualified opinion in the audit
[Not necessarily so. KPMG and other of the "big 4" accounting
firms often cover for government connected firms, as at Enron.]
- "Does this blatant management of the gold market
by the U.S. government mean that we should not buy gold?
- Definitely not, unless you would rather rely upon the
hollow promises of politicians instead of the proven and reliable trustworthiness
of gold." I partly disagree. While gold cannot be totally suppressed,
private ownership is always at risk for government restrictions, sales
or even confiscation. Right now it's a good hedge against very heavy inflation.
The US dollar lost, according to one newsletter writer, a "full 10%
of its value in September alone."
- World Affairs Brief - Commentary and Insights on
a Troubled World
- Copyright Joel Skousen. Partial quotations with attribution
- Cite source as Joel Skousen's World Affairs Brief