- Le Metropole Members,
- Time to shake a tail-feather GATA ARMY! Get this MIDAS
piece edited by my special GATA colleague Chris Powell out to the press
all over the world.
- First, the Sprott Asset Management Report, "Not
Free, Not Fair: The Long-Term Manipulation of the Gold Price."
- Then, the recent surfacing of the transcript of the speech
by Deputy Chairman of the Russian Central Bank, Oleg V. Mozhaiskov, to
the London Bullion Market Association (LBMA) in June, in which he alluded
to gold market manipulation.
- Now, this feeback gem from the BIS:
- From "Midas" commentary for Sunday, October
10, 2004 at LeMetropoleCafe.com
- By Bill Murphy
- GATA has struck paydirt once again. The following is
an exchange between a supporter in our GATA army and Rainer Widera, head
of international financial statistics for the Bank for International Settlements.
- * * *
- Dear Sir:
- I am looking for some information on the gold market.
- It has been noted by some gold market observers that
for the fourth quarter of 2001, Gold Fields Mineral Services reported that
the delta-adjusted hedge book for gold stood at 2,924 tonnes. At this point,
the notional value of gold derivatives reported to the Bank for International
Settlements was $231 billion. But as of December 31, 2003, the BIS reports
gold derivatives of $344 billion. Meanwhile, producer hedging declined
from 2001 to reach 2,166 tonnes at the end of 2003.
- How is this possible?
- It has always been claimed that the derivative position
reflects the hedging of physical gold by the producers. How then can the
derivatives position increase while the physical hedge position decreases?
Can this be explained by an increase in speculative short positions unrelated
to mining hedge books?
- -- (Name Withheld)
- * *
- Dear ----:
- Thank you for your question on the relationship between
producer hedging in gold and the BIS data on open contracts in gold derivatives.
- Please note that the BIS data are collected from banks
and that their open gold derivative contracts reflect trading in the forward
gold market not only with producers of gold but with other commercial banks
and central banks as well.
- It is therefore not possible to establish a 1:1 relationship
between the BIS data and the hedge book of producers for gold published
- Best regards,
- Rainer Widera
- Head of International Financial Statistics
- Monetary and Economic Department
- Bank for International Settlements
- Basel, Switzerland
- * * *
- This is the key to understanding the real gold market,
what GATA has discovered over the years, how the Gold Cartel has suppressed
the gold price for years. It is the key to understanding what the gold
fraud is all about.
- It seems that GFMS and the World Gold Council are really
fronts for the Gold Cartel. They have refused to deal with the gold price
suppression scheme -- refused to acknowledge that the central banks have
surreptitiously dumped more than 13,000 tonnes of gold to keep the price
far lower than it would have been if allowed to trade freely.
- How else to explain the silence and unwillingness of
GFMS and the World Gold Council to confront such blatant contradictions
to their year-after-year reporting?
- Here are some comments on what makes the specifics of
this BIS statement so significant:
- "Please note that the BIS data are collected from
banks and that their open gold derivative contracts reflect trading in
the forward gold market not only with producers of gold but with other
commercial banks and central banks as well."
- This statement confirms what GATA has been saying all
along. GATA's conclusion has now been validated not only by the market
(outstanding derivatives are growing even as producer hedge books are being
reduced) but now by the BIS, which is telling us that banks are using derivatives
and that they are using them for their own books -- their own proprietary
trading and position taking.
- GMFS numbers are flawed because they do not account for
the banks that are short gold -- that is, the gold liabilities of the banks.
- "It is therefore not possible to establish a 1:1
relationship between the BIS data and the hedge book of producers for gold
published by GFMS."
- So the gold industry has it wrong. They can't explain
the derivatives numbers. They can't explain the huge amounts of gold mobilized
from the Federal Reserve Bank of New York and the United Kingdom, which
by themselves dwarf the industry consensus and don't even take into consideration
the gold mobilized from Switzerland and other financial centers from which
hard numbers are not available.
- That GFMS and the World Gold Council refuse to deal with
this blatant contradiction reveals their lack of intellectual integrity.
Both these organizations have done incalculable harm to gold investors,
gold companies and their shareholders, and the poor people of sub-Saharan
gold-producing countries. Both these disgraceful operations should be disbanded.
- Any company supporting these organizations should be
ashamed of itself for contributing to a shallow hoax. Why aren't gold producers
up in arms over the scam perpetuated by the World Gold Council and Gold
Fields Mineral Services?