To:Congressman Saxton From: Steve Hickel
Dear Congressman Saxton,
I am a shareholder in a gold mining company and Michigan taxpayer. Recent events give me reason to believe that the price of gold is being manipulated to keep it under $297, which is at or below the cost of production. It doesn't take too much to figure that out. As a technical trader (using statistics to trade) the POG defies all attempts at analysis.
Any other commodity or stock would not show a continued and repeated
ceiling as gold does, it is statistically not possible. Upon further review it would seem that EVERY time the price of gold attains the price above $295, news stories are leaked to various major news organzization that this hord or that hord of gold will be sold. Here are but a few of those stories that only come out when gold threatens to rise above $297:
-- IMF gold sales to relieve third world debt.
-- Swiss gold sales.
I am sure you are more aware than I that Goldman Sachs is in a position of an apparent conflict of interest as they are shareholders in the Federal Reserve, Secretary Rubin worked there, they allegedly hold some third world debt, and they are reported to be one of the major forces behind the gold "shorting" that recently knocked the price of gold from $295 to $281 in two short days, when it had taken 11 days to rise to that level. Could it be that they are staunch supporters of IMF gold sales too?
Background. Pundits estimate that there is a three-year gold short position on world-wide commodity exchanges. In other words, three years of production from all gold mines in the world are known or suspected to be shorted on these exchanges (annual gold production is around 2300 tons).
That means that should gold rise to a price of $320 per ounce onthese
exchanges that the worlds largest "short squeeze" would force all of this gold to be covered, a physical impossibility and one that would cause the price of gold to rise sky high (your guess is as good as mine as to how high that would be, $1000/oz?). It also means that should only a small fraction of these futures players take physical delivery of their contracts, the exchanges' deposits of gold would go to zero and again gold would be forced to rise. I believe this is called naked shorting as the paper doesn't equal the gold available to cover the paper should that need to occur.
One has to ask, how can this been allowed to happen? Obviously, it explains why the manipulators would want to keep the lid on gold. The act of naked shorting and market manipulation is illegal; they wouldn't be in the fix they are in if this activity had been stopped years ago.
Next. Of late, several countries' Central Banks have been leasing gold to gold bullion banks who in turn have been selling gold into the gold market. This practice of "leasing" gold, although helping to defray the storage costs of gold and earning a small rate of return, hurts the price of gold because it represents a virtually unlimited supply of "undeliverable gold" (because the Central Banks aren't actually delivering the gold) with which gold traders can short the market. Long Term Capital (LTCM) is a recent example of where a hedge fund had shorted an alleged 400 tons (400 TONS!) of gold. As you know, the Federal Reserve orchestrated a bail out of this fund as they felt its failure would have precipitated negative
repricussions in US markets.
I certainly hope the US isn't leasing gold into the market to hold the
price of gold down. Are we?
Who does this activity hurt? It hurts shareholders of all gold companies. It hurts employees of these companies as it is forcing many gold mining companies to close their doors or layoff tens of thousands of workers. It hurts our country because a few large players win, while the rest of us lose. Now it has gotten out of hand.
Finally, an organization called GATA (Gold Anti Trust Action) group has been formed by Mr. Bill Murphy (lepatron@lemetropolecafe.com). Their causeis to expose the manipulation, put a stop to it, return the gold market toa free-market, and prevent it from happening again. I support their cause and urge you to do the same. Please help put a stop to the blatant price-fixing and attempts of capping the price of gold, it is hurting me as a gold-stock investor and it is hurting our free-trade commodity system. A few benfit at the cost of many, it is wrong and you have a chance through your office to stop this abuse and expose the manipulators and to offer regulations that would prevent naked shorting of gold that put us into this mess in the first place.
Sincerly,
Steve |
