Will Last Week’s Spectacular Gold Market Intervention Open People’s Eyes?
Last week, rioters breached the U.S. Capitol, the president's mental health was thrown into urgent question again, the dollar was sinking fast on international exchanges, the U.S. economy was crashing, unemployment was rising, and the president-elect announced that the new national administration would be distributing trillions more dollars in pursuit of economic recovery.
So why were monetary metals prices hammered with unprecedented violence and why did stock prices rise again?
Of course all that is exactly why.
This things prompt massive if surreptitious government intervention in the markets.
This is a very old story that still cannot be told by mainstream financial news organizations.
Back in August 2005 at the opening of the Gold Anti-Trust Action Committee’s (GATA’s) Gold Rush 21 conference in Dawson City, Yukon Territory, our friend, South Africa's "Mister Gold," the late Peter George, was already tired of the brazenness of gold price suppression.
"In the last 10 years," George said, "the central banks have effectively shown that when there is a real crisis, gold actually goes down – and it's so blatant, it's a joke".
Eight years ago, I wrote the following:
"If the Northern Hemisphere was destroyed in a nuclear war, the Federal Reserve, JPMorganChase, and HSBC would get some brokers to Sydney, Rio de Janeiro, and Johannesburg to sell gold futures massively and drive the price down by at least 5 percent.
"Kitco market analyst Jon Nadler would crawl out from the rubble and opine to the cockroaches that the gold price had fallen because so many gold buyers had been killed, as he always had predicted would happen.
"CPM Group's Jeff Christian would telephone New Zealand not to worry because he was flying down with reams of gold-colored paper that would work just as well in Wellington as it had worked in New York as long as nobody asked what was behind it.
"And the World Gold Council would console itself with whatever high-fashion models could be found wearing gold nose rings in French Polynesia.
"But with London and New York razed, at least we'd be spared more contrived rationalizations from the Financial Times and Wall Street Journal about the counterintuitive market action"
Two weeks ago, the incomparable and essential financial journalists Pam and Russ Martens of Wall Street on Parade disclosed that the recent federal "stimulus" legislation had been used to top up the Treasury Department's market-rigging agency, the Exchange Stabilization Fund, raising its balance by more than $600 billion.
This would not have happened unless the Treasury Department was planning more massive but surreptitious interventions in various markets.
Almost 13 years ago, I remarked at the "GATA Goes to Washington" conference:
"The price of gold has been manipulated through the strategic dishoarding of gold by central banks and their sale of gold futures and options at strategic moments. So the biggest question of all may be why central banks manipulate the gold price and what this means for investors.
"Gold has been manipulated by central banks because it is a currency that competes with their own currencies, a currency whose price helps set the price of government currencies and helps determine interest rates. More than that, gold is the ticket out of the central bank system, the escape from coercive central bank and government power. As an independent currency, a currency to which investors can resort when they are dissatisfied with government currencies, gold carries the enormous power to discipline governments, to call them to account for their inflation of the money supply and to warn the world against it.
"Because gold is the vehicle of escape from the central bank system, the manipulation of the gold market is the manipulation that makes possible all other market manipulation by government.
"In recent months central bankers often have complained about what they call 'imbalances' in the international financial system. That is, certain countries, particularly in Asia, run big trade surpluses, while other countries, especially the United States, run big trade deficits and consume far more than they produce, living off the rest of the world. These complaints by the central bankers about 'imbalances' are brazenly hypocritical, since these imbalances have been caused by the central banks themselves, their constant interventions in the currency, bond, commodity, and derivatives markets to prevent those markets from coming into balance through ordinary market action lest certain political interests be disturbed.
"Yes, when markets balance themselves they often do it brutally, causing great damage to many of their participants. The United States enacted a central banking system in 1913 because for the almost 150 years before then the country went through a catastrophic deflation every decade or so. Central banking was created in the name of preventing those catastrophic deflations.
"The problem with central banking has been mainly the old problem of power – it corrupts.
"Central bankers are supposed to be more capable of restraint than ordinary politicians, and maybe some are, but they are not always or even often capable of the necessary restraint. One market intervention encourages another and another and increases the political pressure to keep intervening to benefit special interests rather than the general interest – to benefit especially the financial interests, the banking and investment banking industries. These interventions, subsidies to special interests, increasingly are needed to prevent the previous imbalances from imploding.
"And so we have come to an era of daily market interventions by central banks – so much so that the main purpose of central banking now is to prevent ordinary markets from happening at all."
These interventions long have been obvious, and last week's was spectacular. But they still cannot be examined by mainstream financial news organizations or discussed candidly in respectable company.
GATA has succeeded in documenting and explaining them.