Gold Perception Management - How You Are Manipulated
2007-04-17
By James West
VANCOUVER, BC -- Last week in my inaugural column for Gold World, I talked about the fact that some of the world's larger financial institutions have a supremely vested interest in keeping the price of gold within a conservative growth curve. If gold were to trade where truly free market forces would allow it, you would hear the sound of crumbling among the towers on Wall Street.
This week, I want to talk about why I, and a lot of guys who spend a lot more time thinking about it than I do, believe this is the case, and what the Big Money is doing to ensure the price of gold does not fly up into the stratosphere.
Consider today's headline news article by Peter Brimelow from MarketWatch:
"New York (Dow Jones) -- Gold closed Friday up $10.20 in New York, close to the year's high. But that followed a week in which the failure of the metal to respond to usually helpful influences - a reeling dollar, surging metal prices, various economic and political factors - had caused widespread gold bug grief and rage.
Over the weekend, that's been intensified by rumors of renewed official-sector gold selling.
Long-time believers in gold price manipulation, like Bill Murphy of www.LeMetropolecafe.com, have of course been apoplectic.
But more conventional commentators were also upset. The Gartman Letter, which is carrying a fairly large gold position, writing extremely early on Friday, expressed itself "somewhat dismayed by gold's rather tepid action" and commiserated with clients who sold.
Quite unusually for recent times, gold's powerful action on Friday was exceeded by even more violent increases in the gold shares. The American Stock Exchange Gold Bugs Index (HUI) jumped 2.41% to Comex gold's 1.5%.
If sustained, this could have an important impact on sentiment. The idea that gold shares lead gold is deeply ingrained, and an end to their recently sluggish performance would be a great recruiter for the bulls."
If you're not familiar with Bill Murphy and his stalwart band of like-minded gold enthusiasts, you can't call yourself a goldbug. Bill has an extensive commodities and futures background having spent time over the years with some of the most well-known Wall Street firms.
As the head of The Gold Anti-Trust Action Committee, Bill has been the single most vocal proponent of the idea that the " manipulation of the gold market, this enormous scandal and fraud" has been perpetuated on the investment community and the general public since the 90's.
The Gold Anti-Trust Action Committee was organized in January 1999 to advocate and undertake litigation against illegal collusion to control the price and supply of gold and related financial securities.
I quote the following from Bill's essay of November 2005 titled "The Manipulation of The Gold Market". (You can read the full article here: gata.org )
"The key to understanding the manipulation of the gold market, this enormous scandal and fraud, is that it can be compared to a murder trial. In the United States a murderer can be put to death if he is found guilty beyond a reasonable doubt. Many times murder defendants are convicted based solely on "circumstantial" evidence because a reasonable person could reach no conclusion other than guilty.
For seven years GATA has discovered one piece of evidence after another supporting our long-held contention that the gold market is managed by certain central banks and their agents, the bullion banks.
It is a price-fixing case involving some very powerful people and institutions ... in fact it is a Gold Cartel.
The U.S. attorney handling the Samsung conspiracy conviction said in an interview this fall that the United States had experienced an "epidemic" of price-fixing cases in the late 1990s.
All GATA has done is uncovered one of them, the grandest of all.
For one to appreciate how this can go on and on and not be brought to the attention of the public, one need only to reflect on Enron and Refco. Before its initial public offering of stock, Refco was audited by the most highly regarded firms on Wall Street and nothing wrong was discovered. Yet look at what was really transpiring behind the scenes. Now the company is bankrupt and under criminal investigation.
That said, GATA does have its "smoking gun."
It has to do with derivatives and central bank gold.
The mainstream gold world says the central banks have nearly 32,000 tonnes of gold in their vaults (minus a small amount that has been sold in recent years or is on loan to gold producers for their hedging operations).
GATA says the central banks have less than half of that -- the difference being what was clandestinely fed into the market to suppress the gold price over the last 10 years.
The work of three respected GATA consultants -- Reg Howe, Frank Veneroso, and James Turk -- each using different methodologies, supports GATA's contention of vastly diminished central bank gold supply."
It is widely anticipated by this group that the cartel defined above is losing their grip on their ability to suppress gold's value.
Bill Murphy sums it up perfectly:
"The price of gold is headed to well beyond $2,000 per ounce. GATA knows why. Now you do too."
Until next time,
James West
goldworld.com
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