More attention from The Globe and Mail for Sprott report on price suppression
- Gold Slips on Lower Oil,
Firmer U.S. Dollar
By Wendy Stueck
The Globe and Mail, Toronto
Wednesday, August 25, 2004
VANCOUVER -- Gold retreated from
four-month highs yesterday as a
lower oil price and a firmer U.S.
dollar appeared to break the
"What we have is a slightly weaker
oil price, coupled with a slightly
stronger dollar and equity markets,"
said James Steel, assistant
vice-president with Refco Group
Ltd. LLC in New York. "And the
combination has hit just when it
would not be unusual to see some
Gold futures for December delivery
fell $7.80 (U.S.) or 1.9 percent
to close at $405 an ounce on the
Comex division of the New York
Mercantile Exchange. The December
futures contract hit a four-month
high of $416.80 on Friday.
Even as gold gave up some of its
recent gains, a well-known Canadian
fund manager released a report
alleging that the gold market is
manipulated and that the metal
would trade at much higher prices
if prices were not deliberately
tamped down by governments and
In a report entitled "Not Free,
Not Fair: The Long-Term
Manipulation of the Gold Price,"
John Embry, chief investment
strategist for Toronto-based
Sprott Asset Management Inc.,
and research associate Andrew
Hepburn say they agree with gold
market commentators who believe
the gold price is "actively
The report echoes opinions put
forward by the Gold Anti-Trust
Action Committee, a group formed
in 1999 to lobby against what it
describes as "illegal collusion"
in the gold market.
Among the new report's conclusions:
The world's central banks intervened
in the late 1990s to prevent a gold
derivatives crisis that threatened
the stability of the global financial
system, and the U.S. Exchange
Stabilization Fund and Federal
Reserve Board have been active in a
scheme to depress gold prices.
Such opinions have been routinely
put forward by GATA, and just as
routinely shot down by gold
producers and financial experts --
a reality acknowledged by the
report's authors when they write:
"As significant gold owners
ourselves, we firmly side with the
alleged lunatic fringe on this
Mr. Embry manages the $272.3-million
(Canadian) Sprott Gold and Precious
In addition to alleged price
manipulation, another common theme in
current gold market commentary is the
role of the U.S. dollar and the United
States' twin deficits -- the budget
deficit and the current account deficit.
This theme holds that rising deficits
in the United States, along with
political jitters and rising oil
prices, bode well for gold.
In a recent report, John Ing of Maison
Placements Canada Inc. said foreign
investors, including China, are likely
to reduce their holdings of U.S.
dollars and increase their stores of
other major currencies and gold.
"Don't look now, but gold is rising,"
Mr. Ing said in his report. "To repeat,
$510 an ounce is only an interim
A recent update by the industry-backed
World Gold Council focused primarily
on consumer demand, highlighting
strong jewellery sales in Asia in the
second quarter. The council's chief
executive officer, James Burton, said
the council's activities have helped
boost jewellery demand in major
markets. About 2,600 tonnes of gold
was mined last year around the globe,
the council said, while gold scrap
added 945 tonnes to total supply and
central bank sales accounted for 617
tonnes. Consumer demand, including
jewellery, was 2,804 tonnes last
year, the council says.
Earlier this year, U.S. lobby groups
Earthworks and Oxfam America launched
"No Dirty Gold," aimed at changing
consumer opinions about gold. Industry
players dispute the campaign's claims
about waste and gold mining's impact
on indigenous people.
The S&P/TSX gold index fell 4.45
points yesterday to close at 193.61
on the Toronto Stock Exchange.
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