GOLD-EAGLE.com is read by millions. It is our forum for gold, silver, and stock trends, theories, graphs, estimates, plus assorted opinions and predictions. Wonderful web site, and thanks to its suppliers. Whether we are into stocks and bonds or not, we are all interested in gold, inflation, the value of paper instruments, and our eventual destiny. If we weren't concerned, we wouldn't read the various erudite columns published on this site. Which brings me to the point of this, and that is the obvious gold price manipulation over the past few years.
If you thought something mysterious and sinister was going on in any field, wouldn't you want to know about it? Aren't you glad to find out about Firestone Tires? Wasn't it helpful to know that the Alar apple scare was a fraud? And isn't it nice to know that the price of gold has been kept artificially low, so that we can all stock up before the fraud is exposed? Finally, wouldn't you like to know who has been, and still is, exposing the fraud, and even suing those responsible? It is an group called "GATA." How many readers know what GATA stands for? Allow me to elucidate.
The Gold Anti Trust Action Committee, Inc. (GATA), is composed of a few determined individuals who had an idea, pursued it until a logical and true answer was discovered, and are now exposing and suing those responsible, at great expense, and attempting to put a stop to their foul deeds. GATA claims there is a powerful conspiracy afoot to artificially suppress the price of gold, and the perpetrators include a cartel of bullion trading banks, and even the US treasury. Interested? James Turk, a GATA member, says that, "It must lose control at some time; it's inevitable, and then we will see gold return to where it should be; several hundred, or even thousands of dollars an ounce."
GATA began in the fall of 1998, when chairman Bill Murphy, while writing one of his market commentaries, noticed that gold was trading in such a weird way, it was clear something was terribly wrong. He wrote about his feelings. One of his readers, Chris Powell, agreed, and noted that if it were true, it was a clear violation of the US anti-trust laws. They decided to do something about it, and formed GATA.
GATA is behind a US civil action seeking damages and relief, maintaining that the cartel has hidden accurate statistics on gold, to hide the huge amounts central banks have sold and loaned to the bullion banks, which distorts the actual amount of gold in vaults, as opposed to reported amounts. GATA claims that literally thousands of tons of loaned gold have been sold into the marketplace, the borrowers no longer have it to repay their loans, and the price is being kept artificially low by these powerful entities, so as to repay their loans at prices extant when the gold was borrowed. GATA blames a great deal of the fraud on Bill Clinton and his secretaries of the Treasury, Rubin and Summers, plus Alan Greenspan. Greenspan said on July 24, 1998, "Central banks stand ready to lease gold in increasing quantities should the price rise."
Not to go on and on about what GATA has done, and continues to do, but the lawsuit's defendants include: The Bank for International Settlements, Alan Greenspan, who is chairman of the Board of Governors of the US Federal Reserve, and a director of the BIS; William J. McDonough, president of the Federal Reserve Bank of New York, and a director of BIS; five major bullion banks, including J.P. Morgan & Co., Chase Manhattan Corp., Citigroup Inc., Goldman Sachs Group Inc., Deutsche Bank, and Lawrence H. Summers, former secretary of the treasury. Quite a list isn't it?
The actions of GATA have attracted a lot of attention, exposed the manipulation and manipulators, and caused a great deal or worry on the part of the defendants in the civil action. We now know that this cannot go on forever, and recent price jumps and sudden declines prove everything GATA claims is true. The jumps prove that control is weakening. Sudden declines prove there is some strength left in the hands of those who would hold down prices until their loans are repaid. With annual production of only 2500 tons, and paper, non existent gold of 11,000 tons, there will undoubtedly be a lot of bankruptcies, failed loans, with central banks and borrowers crying in their soup. How could these loans ever be repaid except at high prices? Won't the lenders demand their gold back, rather than accept pieces of paper with ink on them? If 11,000 tons of gold loans have to be repaid, and there is less than a forth of that amount being mined each year, doesn't the price have to go up if the expose' is successful? Isn't that simple logic and math? You bet! We can thank GATA for their expose' and continual actions.
Observe what has happened as a result of the artificial price controls and manipulations. Such have kept gold at the area of $250 all these years, when it should have been twice or more than that. Mines have closed, many unable to re-open due to flooding. Thousands of miners have been laid off. Mills and smelters with their employees are idle or shuttered. Entire economies of towns and even nations such as South Africa are crippled. We, who acquire the precious metal at these absurd prices have taken advantage of the manipulation, but are outraged and want it stopped. It is time for the criminals to be punished, and their controls eliminated.
A low price of gold makes worthless paper currencies look good, no question about that. This is another reason for keeping the price of gold artificially low. If gold goes to where it should be, it makes pieces of paper with ink on them look pretty bad. Governments know that, so it is to their advantage to keep gold low by selling off their holdings, further aiding in the manipulation. The citizenry who can think, should be outraged that their government is selling, for a pittance, the one valuable thing they have in their vaults! Unfortunately most don't, or can't think, so they go on watching sit-coms nightly, and never read or understand much of anything. But we do understand.
So I'd like to make a pitch. The pitch doesn't profit me a dime, and is for a philanthropic, tax exempt group. Since it is GATA that has exposed the conspiracy, and since it is GATA that has shouldered the job, at no small expense, and since we the buyers and owners of gold and are the beneficiaries for now, and want prices to go to the level the market would place it without manipulation, shouldn't we help GATA out with its enormous expenses? After all, we have had the golden opportunity. Why not send a check to GATA (tax deductible) to show your appreciation? I do regularly, and am proud to do so. Send a check to GATA, c/o Chris Powell, Treasurer. 7 Villa Louisa Rd. Manchester, CT 06043. It's merely a way to help out a bit for a good deed done, to thank those who have labored for us, and to allow them to continue. Every dollar helps!
May 28, 2001
Don Stott has been a precious metals broker since 1977, has written five books, hundreds of columns, and his web site is www.coloradogold.com