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Thursday, October 25, 2012

Gold Price Manipulation



Gold Price Manipulation
Gold price manipulation is not new and has frequently been noted by the Gold Anti-Trust Action Committee (GATA).

As the instability of world economies grows the intensity and proliferation of gold price manipulation grows.
This nefarious activity has been around since at least 1934 when the Gold Reserve Act was instituted to set up the Exchange Stabilization Fund within the Treasury Department.  It was authorized to trade in gold and other financial instruments.
Since then the Gold Reserve Act has been amended to allow the Exchange Stabilization Fund to trade in an expanded range of financial instruments and to do that in secret, away from the prying eyes of Congress AND Jo Blow public.*
As well as a historical record of gold price manipulation which can be found at the GATA website, a recent report originated by the German Government’s auditors was critical of the German Central bank, Bundesbank for its lack of diligence in custodianship of Germanys Gold Reserves.
According to GATA, “The auditors report disclosed that the Bundesbank had secretly sold some of the German gold reserves vaulted at the Bank of England in London. But since the sale of Germany's gold in London apparently did not reduce the total official holdings in Germany's gold reserve, the sale was probably part of a gold swap with another central bank. That is, it probably was a transaction in which Germany sold its gold in London on behalf of that other central bank and in exchange took title to gold owned by the other central bank and vaulted elsewhere.”**
Although GATA have been in front of the investigation into the deliberate gold price manipulation by Central banks, they are not the only ones to observe and, indeed, take advantage of this.
The Chinese Government, for example, has been well aware of the price of gold firmly held down and has taken advantage of that with extraordinary highest ever buying of gold over recent years. 
U.S. State Department cables obtained and published by Wikileaks last year exposed the Chinese Government awareness of the gold suppression scheme and china wisely, for them, did not expose it since it enabled them to buy gold, and even gold mines, at a fire sale price. 
In an interview with, Zhou Qiren, Dean of Peking University’s National School of Development, he said, “… a global system in which the values of currencies were pegged to gold would make “an excellent monetary system.” He went on, “if the currency of each major country is bound to gold, financial headaches would of course be reduced ... it would be impossible for [U.S. Federal Reserve Chairman Ben] Bernanke to print 600 billion USD to purchase long-term debt ... (and) the gold standard would effectively prevent each country’s government from recklessly levying ‘inflation taxes’ domestically and passing troubles to others by manipulating currency exchange internationally.”
In December 2011, Zhang Jianhua, research director of the People’s Bank of China, also observed that “no asset is safe now. The only choice to hedge risks is to hold hard currency — gold.”
So China knows all about the gold price suppression scheme, and may be a jolly good indication why China is accumulating gold so furiously. 
As financier Christopher Potter points out in a column for the Lehrman Institute’s TheGoldStandardNow.org, 
“China is preparing for a world beyond the inconvertible paper dollar, a world in which the renminbi, buttressed by gold, becomes the dominant reserve currency.” Potter’s article, “China’s Preparing for the End Game — Are We Paying Attention?” points out that the Chinese government is expected to own more gold than the U.S. government in five years.”***
What will happen to gold price manipulation then?  More, what will happen to the gold price then?
Perhaps now is the time to buy gold while the price is still at fire sale levels.
References:
*http://www.treasury.gov/resource-center/international/ESF/Pages/esf-index.aspx  
**http://www.gata.org/
*** http://www.thegoldstandardnow.com/featured-articles/1682-china-grasps-value-of-gold-even-if-us-doesnt



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