Doug, here is a list of the WGC member companies:
gold.org
note the presence of some of the dedicated non-hedgers. imo the simple reason why the WGC refuses to acknowledge the manipulation issue is that not a single gold mining corporation officially acknowledges it. there may be some individuals within the mining cos. that privately admit to having suspicions regarding this possibility (i personally know of a few), but i have yet to see the allegation voiced officially.
the reason for this is equally simple: no-one has as of yet produced incontrovertible, documented proof of manipulation. all we (and GATA) have, is a veritable mountain of circumstantial evidence that truly smells, but is not in the realm of proof - at least not yet.
reading through speeches and papers of the WGC one certainly doesn't come away with the impression that it is an anti gold organization. it is as i mentioned before e.g. extremely critical of the BoE's gold sales, which by the way they were announced and are executed form part of the suspicious evidence.
WGC of course stops short of accusing the BoE of manipulation...but the way they describe the BoE's activities in this regard sounds like "you either must be totally dense morons, or there's a reason for the sales you're not telling us about".
they'll never get closer to alleging manipulation outright before they get a tape recording of the chancellor discussing how to best suppress the PoG with a GS representative for example...
i'm certain that if such proof were to be forthcoming the WGC would make a big stink over it.
i'm pretty sure btw. that many miners also look at GATA's activities with tacit approval...but they don't want to be seen to support the effort officially for above reason.
excerpt from a speech by Ms. Haruko Fukuda of the WGC in Zurich this year on official sector sales...note the not-too-subtle reference that a weak gold price "is only in the interest of those seeking the supremacy of the US dollar". the British government is described as a gaggle of dorks in this speech....
<<I want to delve for a moment into the current gold auctions being staged by the Bank of England on behalf of the UK Treasury. In Britain it is the Treasury that owns the country's gold reserves; the Bank of England simply manages these and other assets on behalf of the Treasury. On the 7th of May 1999 the Treasury announced that in the current fiscal year (which ends in April) the Bank of England would sell 125 tonnes of the UK's 715 tonnes of gold reserves, by means of five auctions, the final one of which is due to happen in March. At each auction 25 tonnes are sold. The current policy of the UK government is to continue these sales after March to the point where Britain's gold reserves have been reduced to 300 tonnes. By then, gold will have been scaled down from almost 18% of Britain's total gross reserves in 1998 to about 7%. Right from the start, we at the World Gold Council have been critical of Britain's gold auctions, a policy which has puzzled many observers. The British government argues that in terms of volume related to the size of the market these auctions are inconsequential. That is a fair point. After all, global demand for gold is currently exceeding newly mined supply by more than 1,000 tonnes a year.
But we have consistently argued that this reasoning entirely misses the key message that is being sent to the market by these auctions. That message is not that 'the British government is mobilizing some of its gold reserves in order to help solve some domestic crisis' but instead it is that 'the British government is selling some of its gold reserves because it no longer believes in gold as a reserve asset', and it is this message which has been so intensely damaging. Parliamentary opponents to the British gold sales have persistently called upon the Prime Minister, Mr Tony Blair, and his Chancellor, Mr Gordon Brown, to deliver a coherent, economic rationale for these sales, but these calls have been dodged by the government. Instead, there have been obfuscation and evasion; the auctions have been defended by the government not on the basis of sound economic policy but along the lines of 'everyone else is doing the same', which is not only untrue but also astonishingly weak. In fact, only a handful of the 100 or so central banks that hold gold have sold any significant quantities in the past ten years. It is fair to say that the British gold auctions have met with much greater public opposition than the government could have expected. The World Gold Council campaign against the auctions garnered individual protests against the sales from more than 70,000 British citizens, who were surprised and angered that the government should be selling off a national asset at a time when it is enjoying the benefits of an economic boom and a strong currency, a period when, far from reducing strategic reserves, the country should be building them up. Some of you may be aware that the British government is currently facing a barrage of hostile press coverage, supported by a wave of antagonistic public opinion, over the financing of the National Health Service which British tax payers have funded for the last 50 years. Had the Government stated at the outset that it was selling some of its gold reserves to help the NHS out of a crisis, it is conceivable that it would have won public support. As it is, it has merely repeated that these sales have been prompted solely by reserve asset management policy, a deeply obscure and misleading statement. The fact that 40% of the proceeds of the gold sales has been invested in the euro has been greeted in Britain, in its present Eurosceptic mood, with almost universal derision. But in any case we would argue at the World Gold Council that, for the UK, with extremely sound public finances, there can be no conceivable reason why the country's gold should be sold to provide additional resource for the NHS or any other item of current fiscal expenditure. Funding the need for current resources - for health, education, defence or whatever - should come from current income. The need to retain gold is for long-term, not short-term, purposes. Gold has been acquired over many years and should be looked at in a long-term perspective. It is part of the nation's wealth. If governments see short-term needs to increase public spending - as indeed they will for justifiable reasons from time to time - this should be on the basis of current receipts rather than taking short-term gains on an asset which will support the public finances for many years to come.
To re-iterate my main point today: it is not the World Gold Council policy to oppose all official sector gold sales, rather it is its policy to oppose any official sector gold activity which undermines gold's important function as a reserve asset. Britain's plan to reduce gold reserves to a mere 300 tonnes, on a par with the gold reserves of Albania in percentage terms, is surely relegating gold into a less important category.
Some clouds, however, may have silver - or perhaps gold - linings. The British decision was extremely unpopular with other central banks, especially in Europe. I think it is fair to say that Britain's gold auctions helped prompt the important announcement made by Dr Wim Duisenberg, President of the European Central Bank, in Washington on the 26th of September last year. In what we call the Washington Agreement on Gold, the central banks of those European Union countries which have adopted the euro plus the UK, Switzerland and Sweden, have agreed to limit their sales of gold reserves to approximately 400 tonnes a year for the next five years, with no more than 2,000 tonnes in total to be sold. This figure includes the proposed Swiss sale of 1,300 tonnes, the UK sale of 415 tonnes, and - as has recently become clear - 300 tonnes by the Netherlands. The Washington Agreement also limited gold lending and gold derivative operations to the same level as when the agreement was signed.
When the Agreement was announced the World Gold Council welcomed it at once, for a number of reasons. For one thing, it clarified the intention of several of the world's biggest official sector holders of gold. Together with the United States, the BIS, the IMF, Japan and Australia, all of whom have stated they have no intention of selling any of their current gold holdings, the Washington Agreement on Gold covers almost 90% of gold held in the official sector. The Washington Agreement has removed, at least for the next five years, much of the scope for market rumours about more official sector sellers emerging from the woodwork. The Agreement removed at a stroke the fear in the market that there was a big "overhang" of official gold. More importantly, the Agreement also stated clearly that its signatories have not abandoned their conviction that gold plays and will continue to play a vital role as a reserve asset. Mr Greeenspan and the central bank governors of Germany, France and Italy have also made emphatic public statements of their strong continuing commitment to gold as a vital national reserve asset. This is a welcome reminder that, so far as the central banks are concerned, history has not come to an end, and that for them gold has not lost its key attributes - that is, its liquidity, universal acceptability, portability and, perhaps the most important of all, that it is no one else's liability.
We welcome the evidence that central banks recognize increasingly their responsibility to the gold market and to avoid actions that would unnecessarily destabilize it. Gold is held not just by central banks but also by millions of people around the world as a store of value. Many of these people are very poor and have limited access to credit. Thus, when the price of gold falls, their ability to borrow and their purchasing power immediately collapses. This underlines the importance of stability in the real price of gold to millions of poor people, especially in countries like India and Indonesia. Even nation states are liable to increased instability as a result of a weak gold price; a number of the world's developing nations are particularly dependent on revenues from gold exports. Last week the Financial Times published an analysis of the difficulties that Guyana, a gold producer, may face as a direct consequence of the weakness in the price of gold. Tanzania could also be badly affected this year, as some 20% of its export earnings now comes from gold exports. The scenario of prolonged weakness in the gold price is to the detriment of all, except those who want to see the absolute supremacy of the dollar.
This complex interaction between the economics of gold supply and demand, the nature of the role of gold as a reserve asset held by the world's central banks, and the economic prospects of those of the world's developing countries which are heavily dependent on gold exports should weigh heavily on us all. I have no intention of admonishing the Swiss for their decision, whether final or not, to sell half of their gold reserves. Rather I want to lay before you some thoughts concerning this decision. There is a general belief that Switzerland's strong gold reserves have been an important factor in ensuring that the Swiss franc has long held centre stage as one of the world's two or three most dependable currencies. The economic and financial stability that Switzerland has long enjoyed owes a great deal to the country's gold reserves, which have guaranteed Switzerland's vital autonomy. We appreciate that this is recognized in Switzerland, as shown by the report of the Expert Group of the Swiss National Bank and the Finance Ministry on Gold Reserves published on the 24th of October 1997. That report emphasizes the importance of gold and currency reserves in sustaining confidence in the Swiss franc. The experts concluded that, nevertheless, the Swiss National Bank could safely dispose of half of its gold. But who knows whether they are correct? The world economy and financial system is inherently unstable and unpredictable. Gold has been a pillar of stability in good times and bad. Is it not possible that, by selling half of your gold reserves, this impressive economic and financial strength could be subtly undermined?
Furthermore, if they take place as envisaged, the sales will be taking place at a time when there has been a worldwide explosion of credit and the equity and bond markets have experienced a very long "bull"run. Gold has also played its part in this credit expansion as large quantities of derivative products have been written on gold, so that there is now a massive paper gold market. This, of course, has been facilitated by gold lent by central banks. Some believe that the developed world's economies are close to seeing this bubble burst, whereupon the traditional role of gold - as a safe haven and wealth preserver - will come back into its own in its physical form. One does not have to be a prey to apocalyptic gloom to insist upon the importance that gold has for everyone's investment portfolio; after the event - though the degree of the severity of the correction is impossible to gauge and is subject to intense debate - it will of course be too late to be wise. Is this really the right time to sell gold?>>
regards,
hb |
