Central Bank Manipulation of the Gold Market

In a video posted on YouTube, date unknown except for its post date, Congressman Ron Paul pressed Fed Chairman Benjamin S. Bernanke with the question “does the subject of gold ever come up in your conversations?” Bernanke responded, “Only in terms of the sales the central banks are planning.” This is a revealing statement because it sheds light on a continuous conspiracy perpetrated against the American people. Its origins can be traced all the way back to the 1980s. In January 1995 the Federal Reserve’s general counsel J. Virgil Mattingly told the Federal Open Market Committee that the Exchange Stabilization Fund had began performing “gold swaps.” The then Federal Reserve Chairman Alan Greenspan testified before Congress in July 1998 that "central banks stand ready to lease gold in increasing quantities should the price rise".

In setting up the National Economic Council, President Barack Obama appointed Lawrence Summers to the position of Chairman. The appointment is significant to mention because Lawrence Summers is one of the principal actors in this conspiracy. Beginning with his article Gibson's Paradox and the Gold Standard, which he cowrote with Robert B. Barsky in 1988 and which later evolved into Robert Rubin's Strong Dollar Policy implemented under President Clinton, both Barsky and Summers concluded in order to convince the public the purchasing power of their currency wasn't depreciating it was necessary for the banks to reduce their interest rates by suppressing the natural buoyancy of gold's worth. Said differently, to keep confidence alive in America's faith-based fiat currency system, Barsky and Summers determined it would be necessary to suppress the dollar price of gold in their favor by flooding the paper gold market with futures to extend the longevity of USD hegemony.

Bill Murphy, former starting wide receiver for the Boston Patriots and former futures trader, established Le Metropole Cafe after Long-Term Capital Management (LTCM) exploded and went short 300 tonnes of gold. He went on to form the Gold Anti Trust Action Committee, a.k.a. GATA in January 1999, six months after Greenspan's testimony, with Chris Powell, managing editor for the daily newspaper the Journal Inquirer. The purpose of this Committee was and still is to expose the central bank manipulation of the gold market by the participating key figureheads at Goldman-Sachs, J.P. Morgan-Chase, Bank for International Settlements (BIS), International Monetary Fund (IMF), the Securities Exchange Commission (SEC), the Exchange Stabilization Fund (ESF), the Commodities Futures Trading Commission (CFTC), the Counterparty Risk Management Group, the President's Working Group on Financial Markets (PPT), and finally, the Federal Reserve System as well as many others.

Soon Murphy, Powell, et al concluded that central banks were using gold as a dual posted asset by double-counting their gold reserves. James Turk would humorously quip at the 2005 Gold Rush 21 Conference that:

Not only are central banks guilty of disinformation, deception is one of their most frequently used tools. The history of banking is replete, with examples that are not just a lack of disclosure, but rather outright deception. To give just but one example, look today at how they account for gold loans. They carry gold in the vault, and gold out on loan as one line item. In effect, they are saying they are above Generally Accepted Accounting Principles and that they can as a result report cash and accounts receivables as one in the same thing. Accounting like that would make even the people at Enron blush.

With an annual supply/demand deficit somwhere between 1500-1800 tonnes (it may be even higher now), central banks have to fulfill the gap by suppressing the gold price through the surreptitious dishoarding of their gold reserves. GATA estimates the gold cartel has clandestinely lent out more than 16,000 tonnes of gold from the coffers of the central banks out into the open market where the precious metal is sold by bullion dealers who the central banks had leased the gold to. By doing this, the gold cartel created what GATA calls a "gold carry trade." A contract had been created between the central banks and the bullion dealers. The bullion dealers were allowed to do with the gold what they wished, but because the central bank had leased the gold to the bullion dealers at one percent, or marginally within range, they had to within a certain time period give back the central banks the gold that was loaned to them if it had to be mined from the earth to do it. If at the end of contract the bullion banks couldn't pay up, the central banks would renegotiate the terms and extend the time period.

The gold cartel's price-capping rule began at $6 USD, where interventions would be made in the open market to knock down the gold pirce if it rallied anything above a $6 USD/oz gain within a 24 hour session. It is unknown to the author of this blog article where the price-capping rule is currrently set at, but it's reasonable to conclude that since it has abandoned the $6 USD price-capping rule the gold cartel may be losing its control.

On September 26, 1999, fifteen central banks united together under the Washington Agreement, a declaration GATA feels was an admission to price-fixing collusion. The names of these fifteen banks go as follows: Oesterreichische Nationalbank, Banca d'Italia, Banque de France, Banco do Portugal, Schweizerische Nationalbank, Banque Nationale de Belgique, Banque Centrale du Luxembourg, Deutsche Bundesbank, Banco de Espana, Bank of England, Suomen Pankki, Der Nederlandsche Bank, Bank of Ireland, Sveriges Riksbank, and the European Central Bank.

In May 2000, GATA sent five delegates to Congress who made a 45 minute presentation to the House Speaker Dennis Hastert. The GATA delegates presented a document to every member of the Senate and House Banking Committees called Gold Derivative Banking Crisis. This document compiled all the information they had gathered from their investigations up until that point.

Blanchard & Company filed lawsuit against J.P. Morgan and Barrick Gold on charges of gold suppression. At a U.S. District Court in New Orleans on February 28, 2003, Barrick Gold confessed to the charges, but cited the Foreign Sovereign Immunities Act as a reason to dismiss the case. Chris Powell explained: "Barrick claimed that in borrowing gold from central banks through Morgan-Chase, Barrick became the agent of central bank policy. And that as the agent of central banks, the company could not be properly sued without suing the real parties and interests, the central banks as well. And that, since the central banks as agencies of sovereign governments have immunity and could not be made party to the Blanchard suit, the whole suit should be dismissed."

Because gold has not been audited by the United States since 1955 during the Eisenhower Administration, market analysts who study this phenomenon are blinded by the central banks' fraudulent double-counting. Murphy and party have calculated that the central banks have less than half the gold they say they do in their vaults. Mining supply is going down, and demand continues to rise, and the central banks will soon find themselves pincered into delivering on promises they cannot honor.