GATA Discusses Possible Gold Price Manipulation
DALLAS--(BUSINESS WIRE)--May 16, 2000--A delegation supporting the Gold Anti-Trust Action
Committee met with some of Washington's most powerful politicians on May 10, 2000.
As a result of that meeting, the delegation was introduced to the Honorable Spencer Bachus from Alabama,
Chairman of the House Banking Committee's Subcommittee on Domestic and International Monetary Policy.
Six staff members attended the meeting with The Chairman as his committee has the responsibility to monitor the gold and silver markets.
After the meeting with Congressman Bachus, the 90 page document of our evidence of the manipulation of the gold market was personally delivered by
Gold Anti-Trust Action Committee Chairman, Bill Murphy, to all of the 88 banking member's offices.
The following open letter from the Gold Anti-Trust Action Committee was presented in the recent issue of Roll Call (May 15) and it was addressed by name
and state to every Senate and House banking committee member.
The open letter:
``Extensive research has led the Gold Anti-Trust Action Committee (GATA) to the conclusion that the gold market is being recklessly manipulated and now
poses a serious risk to the international financial system.
``Annual gold demand, currently at record levels, exceeds mine and scrap gold supply by more than 1,500 tonnes. In the Washington Agreement of Sept. 26,
1999, 15 European central banks announced that they were capping their lending of gold and would limit their official sales of gold to 400 tonnes per year
for the next five years. Some major gold producers have reduced their forward sales, and speculators have reduced their borrowed gold selling. Commodity
prices and wages are rising. Yet the price of gold has declined steadily. With demand so much greater than supply, the price of gold should be rising
sharply.
``According to the Office of the Controller of the Currency, the notional value of the off-balance-sheet gold derivatives on the books of U.S commercial
banks exceeds $87 billion, which is greater than total U.S. official gold reserves of approximately 8,140 metric tonnes.
``Gold derivatives surged from $63.4 billion in the third quarter of 1999 to $87.6 billion in the fourth quarter, after the Washington Agreement was
announced. The notional amount of off-balance-sheet gold derivative contracts on the books of Morgan Guaranty Trust Co. went from $18.36 billion to
$38.1 billion in the last six months of 1999.
``Veneroso Associates estimates that the private and official-sector gold loans stood at 9,000 to 10,000 tonnes at the end of 1999. Most of these loans
represent gold that has been sold in the form of jewelry and cannot be retrieved. Mine supply of gold for all of 1999, according to trade sources, was only
2,579 tonnes. Thus the gold loans are far too big too be repaid back in a short time. The swift $84 rise in the gold price following the Washington
Agreement caused a panic among bullion bankers. But that was only a warning of what is to come.
``Federal Reserve Chairman Alan Greenspan and Treasury Secretary Lawrence Summers, responding to GATA's inquiries through members of Congress,
have denied any direct involvement in the gold market by the Fed and the Treasury Department. But they have declined to address whether the Exchange
Stabilization Fund, which is under the control of the treasury secretary, is being used to manipulate the price of gold.
``Several prominent New York bullion banks, particularly Goldman Sachs, from which the immediate past treasury secretary, Robert Rubin, came to the
Treasury Department, have moved to suppress the price of gold every time it has rallied over the last year.
``The Gold Anti-Trust Action Committee believes that U.S. government officials and these bullion banks have induced other governments to add gold
supply to the physical market in recent years to suppress the price. Britain's National Accounting Office is now investigating the Bank of England's decision
to sell off more than half its gold. Contrary to proper accounting practice, reductions in gold in the earmarked accounts of foreign governments at the New
York Federal Reserve Bank are being listed by the Commerce Department as the export of non-monetary gold. These 'exports' from the Fed occur upon
rallies in the gold price.
``Why would anyone want to suppress the price of gold?
1) ``Suppressing the price of gold has made it a cheap source of
capital for New York bullion banks, which borrow it for as
little as 1 percent of its value per year. Gold is borrowed
from central banks and sold, and the proceeds are invested in
the financial markets in securities that have much greater
rates of return. As long as the price of gold remains low,
this 'gold carry trade' is a financial bonanza to a privileged
few at the expense of the many, including the gold-producing
countries, most of which are poor. If the price of gold was
allowed to rise, the effective interest rate on gold loans
would become prohibitive. 2) Suppressing the price of gold
gives a false impression of the U.S. dollar's strength as an
international reserve asset and a false reading of inflation
in the United States.
``Too much gold is being consumed at too cheap a price. Massive amounts of derivatives are being used to suppress the gold price. If this situation is not
corrected soon, there will be a gold derivative credit and default crisis of epic proportions that will threaten the solvency of the largest international banks and
the world standing of the dollar.
``AS YOU ARE AWARE, A 90 PAGE DOCUMENT OF OUR EXTRAORDINARY FINDINGS WAS PERSONALLY DELIVERED TO YOUR
OFFICES LAST THURSDAY.
``THE GOLD ANTI-TRUST ACTION COMMITTEE REQUESTS THAT A FULL AND COMPLETE INVESTIGATION BE LAUNCHED INTO
THIS MATTER AS SOON AS POSSIBLE.
``THE LONGER THE GOLD PRICE IS ARTIFICIALLY HELD DOWN, THE BIGGER THE EVENTUAL BANKING CRISIS.''
Gold Anti-Trust Action Committee, Inc.
Bill Murphy, Chairman, LePatron@LeMetropoleCafe.com
Chris Powell, Secretary/Treasurer, GATAComm@aol.com
Ethan B. Stroud, Attorney at law, formerly Justice Department, Treasury Department
John R. Feather, Attorney at law, formerly legal staff, Federal Reserve Bank Suite 1203, 4718 Cole Avenue, Dallas, Texas 75205
Contact:
Gold Anti-Trust Action Committee, Inc.
Bill Murphy, Chairman, 214/522-3411
Fax: 214/522-4432
LePatron@LeMetropoleCafe.com |
