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A summary of GATA's work and the suppression of the gold price

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  • cxpowell
    12:28a ET Sunday, January 27, 2002 Dear Friend of GATA and Gold: We ve prepared a summary of GATA s work for distribution to news organizations, political
    Message 1 of 1 , Jan 26, 2002
      12:28a ET Sunday, January 27, 2002

      Dear Friend of GATA and Gold:

      We've prepared a summary of GATA's work for
      distribution to news organizations, political
      leaders, and anyone else who is new to the issue
      of the suppression of the gold price. It's
      appended here for your use and may be updated
      from time to time.

      CHRIS POWELL, Secretary/Treasurer
      Gold Anti-Trust Action Committee Inc.

      * * *

      -- A SUMMARY, JANUARY 27, 2002 --

      In 1998, as he began www.LeMetropoleCafe.com,
      his Internet site of financial commentary,
      Bill Murphy noticed that the gold market
      wasn't trading as normal markets do.
      Eventually he sensed collusion among market
      participants to suppress the gold price and
      wrote about it repeatedly.

      Following Murphy's commentary with great
      interest, a newspaper editor in Connecticut,
      Chris Powell, noted that collusion to control
      prices is against U.S. anti-trust law and
      suggested that gold partisans and gold market
      participants mobilize against it, and so GATA
      was formed and incorporated in early 1999.
      Murphy is chairman, and Powell is
      secretary/treasurer. GATA is recognized by
      the U.S. Internal Revenue Service as a tax-
      exempt charitable, educational, and civil
      rights organization. It has received
      contributions from mining industry sources as
      well as hundreds of individuals with an
      investment or philosophical interest in gold.

      GATA has advocated litigation against
      collusion to suppress the gold price, and,
      indeed, has helped bring such litigation in
      U.S. District Court in Boston, with its
      consultant Reginald H. Howe. But GATA has
      discovered that the gold-price suppression
      scheme involves not only big bullion trading
      banks but also governments and particularly
      the U.S. government.

      Indeed, GATA has discovered that the gold-
      price suppression scheme was actually put
      down on paper, in public, by Harvard
      Professor Lawrence Summers, just before he
      went into the Clinton Treasury Department,
      eventually becoming treasury secretary. (He's
      now president of Harvard.)

      Summers co-wrote an essay for an academic
      journal examining the inverse relationship
      between the gold price and interest rates,
      and more or less concluded that government
      could keep interest rates low by suppressing
      the gold price. While there is no electronic
      copy of Summers' essay, you can read about it


      The mechanisms by which the gold price is
      being suppressed are, first, "leasing" of
      gold by central banks, wherein government
      gold reserves are sold into the market
      through intermediaries; and, second, the sale
      of gold futures, options, and other
      derivatives by bullion banks that, GATA
      believes, have assurance from governments
      that, if they ever have to produce actual
      gold to cover their positions, it will be
      made available to them cheaply from official

      Gold leasing is a matter of public record
      among the European central banks and some
      others. The United States, which reports the
      biggest gold reserves in the world, has
      always denied participating in gold leasing.
      But GATA have information that comes close to
      proving such involvement, undertaken through
      the secretive and unaccountable Exchange
      Stabilization Fund of the Treasury
      Department. Surreptitiously issuing claims
      against U.S. gold reserves, the ESF and the
      Federal Reserve Board have put those reserves
      at risk and their true ownership is now in

      One big piece of evidence of the
      surreptitious use of U.S. gold reserves to
      suppress the gold price is a statement by the
      Federal Reserve's general counsel, Virgil
      Mattingly, recorded in the minutes of the
      Federal Open Market Committee meeting of
      January 31, 1995, which you can read about


      Evidence of an auditing sort can be found in
      some essays by GATA James Turk, editor of the
      Freemarket Gold and Money Report, which you
      can read here:



      For a broad perspective on the legal
      implications of all this, you can read the
      full complaint in the GATA-supported lawsuit,
      Howe vs. Bank for International Settlements,
      et al., here:


      The lawsuit notes that the market in gold
      derivatives is tightly concentrated and
      overwhelmingly dominated by the J.P.
      Morgan/Chase investment bank. Of course the
      House of Morgan has a long and intimate
      relationship with the U.S. government. This
      concentration in the market for gold
      derivatives is in itself, GATA thinks, close
      to proof that the gold market is manipulated
      and not trading freely. This view is
      increasingly held by gold market observers.

      A report on the one hearing held so far in
      the GATA lawsuit can be read here:


      What are the purposes of the gold price
      suppression scheme?

      We believe there are several:

      1) To keep interest rates down by deceiving
      the bond markets about the rate of inflation,
      inflation historically being gauged in large
      part by the price of gold. You may remember
      the famous comments about the bond market
      that were attributed to President Clinton not
      long after he took office. He was frustrated
      with having to take the advice of his
      economic advisers that the approval of the
      bond market was crucial to his
      administration's political success. Clinton
      said he resented having to make his
      administration one of "Eisenhower
      Republicans." GATA thinks that the gold price
      suppression scheme -- the massive deception
      of the bond market -- was Clinton's revenge.

      2) To strengthen the U.S. dollar in relation
      to other curencies; to suppress commodity
      prices generally, since commodity prices take
      their cues from the gold price; and, by
      extension, to raise living standards in the
      United States by expropriating the developing
      world, which makes its living largely from
      producing commodities.

      3) To enrich through inside information about
      U.S. government policy the Wall Street
      investment houses that have helped implement
      the gold price suppression scheme and that
      long have staffed the Treasury Department and
      Federal Reserve.

      But the results of the gold price suppression
      scheme have been far greater than all this.
      The results include the devastation of the
      economies of the developing world, and
      particularly sub-Sarahan Africa, and the vast
      misallocation of capital throughout the world
      in the last decade. That is, with the bond
      market deceived about inflation, the dollar,
      and the strength of the U.S. economy, most
      economic decisions around the world for the
      last decade have been based on horribly
      mistaken premises. The U.S. stock market
      bubble, now bursting, is evidence of this.

      There's a lot more detail to be had here, but
      this is a start. All GATA's dispatches to its
      supporters, wherein GATA's evidence and
      commentary are laid out, are available here:


      GATA believes that the most important work to
      be done now is to compel the U.S. government
      to admit and explain its intervention in the
      gold market -- its secret underwriting of the
      gold leasing done by central banks around the
      world and its putting U.S. gold reserves at
      risk. This is, after all, PUBLIC policy
      undertaken with PUBLIC resources, and there
      can be no justification for surreptitious
      government intervention in a supposedly
      capitalist economy in a democracy. Everyone
      should have equal access to information about
      such policy.

      GATA believes that the gold price suppression
      policy will end when it is exposed, because
      it can't stand the light of day and because
      no investors will take the other side of any
      trade they come to realize is fixed.

      Please contact us for more information.

      CHRIS POWELL, Secretary/Treasurer
      Gold Anti-Trust Action Committee Inc.
      7 Villa Louisa Road
      Manchester, CT 06043-7541

      E-mail: GATAComm@...

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