While central bank trading is a primary determinant of the price of gold and other currencies, gold market analysis seldom makes any reference to the broker that provides much camouflage for central bank gold trading: the Bank for International Settlements (BIS).
Of course over many years the Gold Anti-Trust Action Committee (GATA) has amassed much documentation of BIS interventions in the gold market. Among our favorites are a BIS PowerPoint presentation, made at a BIS conference for prospective BIS members , actually advertising that the bank's services to members include gold market interventions...
...and a speech by a leading BIS official declaring that to "influence" the price of certain assets, "especially gold and foreign exchange," is a big objective of central bank cooperation through the BIS:
Robert Lambourne, who – apparently alone among financial analysts outside central banking – calculates and reports the monthly changes in the bank's gold swap positions, called attention to another confirmation of the bank's major but largely surreptitious role in rigging the gold and currency markets. It is a pamphlet in which the bank profiles itself. The pamphlet is posted at the BIS' internet site here.
On Page 3, under the heading "Banking Services," the BIS says:
"We offer financial services exclusively to central banks, monetary authorities, and international organisations, mainly to assist them in the management of their foreign exchange assets. As an institution owned and governed by central banks, we are well placed to understand the needs of reserve managers – their primary focus on safety and liquidity, as well as the evolving need to diversify their exposures and obtain a competitive return.
"To meet those needs, we provide credit, gold and foreign exchange intermediation, and asset management services, while administering our own capital. An integrated risk management function ensures that financial and operational risks are properly measured and controlled."
But this measuring and controlling are done in secret, the better to deceive and cheat the markets that are being measured and controlled. This measuring and controlling, the BIS suggests, are actually for the benefit of those who are deceived and cheated, particularly those using gold to try to protect themselves against rampant inflation, which has become the main product of modern central banking.
How good central banks are, determining the value of all capital, labor, goods, and services in the world so that mere free markets needn't bother!
Gold market analysis that doesn't incorporate the work of the BIS is largely a waste of time – that is, nearly all gold market analysis.
About the Author:
Chris Powell is a political columnist and former managing editor at the Journal Inquirer, a daily newspaper in Manchester, Connecticut, USA, where he has worked since graduating from high school in 1967. His column is published in newspapers throughout Connecticut. He is also secretary/treasurer of the Gold Anti-Trust Action Committee Inc., (GATA) which he co-founded in 1999 to expose and oppose the rigging of the gold market by Western central banks and their investment bank agents.
