from the Cafe, easy reading, nothing new but whole article is good
The Kiki Table, Discussion du Jour: Potpourri
The Gold Market Mystery - Fact or Fiction?
Professor von Braun, The Rocket School of Economics
June 28th, 1999
..... some of these facts. It is true that gold peaked in
February of 1996 at $417 per ounce and has been in a decline ever since.
This falling price has defied the supply and demand equation for nearly
four years if we are to believe the figures put out by both the World
Gold Council (WGC) and Gold Fields Mineral Services (GFMS) group reports....
The common belief is that unreported central bank sales are what's
behind this mysterious source of supply that neither the WGC or GFMS can
account for. The reality may be that gold leased from the CB's,
(terminology is a bit tricky here, borrowed, leased, or loaned seems to
apply, with leased being favored) and sold into the market probably
accounts for this shortfall....
..... Simply put it seems that gold can be leased
(borrowed) from CB's and actually sold into the market with a promise to
pay it back being sufficient to OK the transaction....
CB gold that is not sold, but is leased or loaned, remains on their
books as still being part of their reserves. This is important to
remember as it makes it difficult for independent analysts to pinpoint
where gold is coming from...
Another element in this same complex situation, is the reported daily
turnover on the London Bullion and Metals Association (LBMA) daily
market, which is currently, according to the figures released by them (
sorry guys, but this is a questionable fact), 1000 tonnes per day. How
much of this is physical and how much is paper gold we don't know.....
Now lets look at Mr. Greenspans remarks re CB's stand ready to mobilize
their gold reserves. I have a mental picture of a trumpet being blown
and several 1000's of gold bars appearing and reporting for duty,
mobilized, ready to deal with the invasion of something, but obviously
that's not it. What is a known fact is that if you own a large
percentage of available reserves of any commodity, you can affect the
price, (deBeers and diamonds comes quickly to mind) which is of course a
potential, but not so clear case of price manipulation....
And how much gold do the CB's actually have in their possession ? This
is a key question, (actually one of several key questions).
The numbers given out re the gold market, simply do not stack up, when
it comes to what's available in the public arena in terms of gold being
traded, supply and demand, CB reserves and the big unknown - gold that
has been leased' and sold into the market, which by the way has to be
repurchased at some stage and delivered back to its rightful owner. Very
important point. If this type of transaction has taken place somebody
either has, or will have, a problem. Even more so if ....
......So, what really gives here ?
Do we have a gold market that is in the process of dying, disappearing,
acting out it's final scene, while becoming redundant or, are we
watching a replay of a previously failed attempt at suppressing a gold
price. An attempt to go off a gold standard, even though going off a
gold standard is not an option while you hold gold as a reserve
component, is something a certain gentleman who runs a very good
forecasting service based in I believe, Princeton,.....
.... instead, we have a market that is, as a result of the activities
of it's leading participants (the major bullion banks) becoming
distressed. Distressed to the point that they (the leading
participants) will go to any lengths to try to keep the price from
rising while they rush to cover their obligations. Obligations that see
them delivering physical metal back to the parties they have
leased/borrowed/conned it from and sold into the market ? Could the
statement made by AG in June of last year refer to this possibility,
after all who could upset the gold market (and create volatility) other
than the bullion dealers themselves. Surely not the mining companies!
Perhaps certain CB's have something to answer to, in this regard.
One thing of interest, so far not commented on, is the mining companies
themselves, who have been consistently painted as the bad guys by the
bullion banks, and yet have failed, miserably I might add, to come to
their own defense. Even as recent as last week the bullion banks were
blaming forward selling by mining companies as the reason behind the
current drop in price. But did we hear any repudiations from this sector
? Well lets not fart in church here, after all who might hear us?
Trying to convince the gullible public that gold is worthless is a stunt
that has been pulled before, repeatedly over many years, always by the
same group of people, always for the same reasons. They have never
succeeded yet and it is unlikely that this time will be any different.
Professor von Braun can be contacted via email at profvonb@aol.com
Bill Murphy, Le Patron
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