Everyone now knows gold is suppressed, but what’s the difference?

10:50a ET Monday, May 31, 2010

Dear Friend of GATA and Gold:

Our old friend J.T. poses a question. He writes:

“By now almost everyone knows, thanks primarily to GATA, that the precious metals markets are being manipulated by the U.S. government and some of its allies. There are some who continue to deny it, but I believe that they have become the exception. But even if the last person on Earth learns about the manipulation — let’s say he is a member of some cannibalistic, head-hunting tribe in the Solomon Islands — the manipulators appear uncaring and impervious to this recognition. Indeed, even with such widespread exposure they seem undeterred and hellbent to continue. So why doesn’t the exposure make a difference?”

There’s no way of quantifying it but we know from the behavior of our friends anyway that GATA’s work has encouraged gold acquisition at least that much. If J.T. is correct and most people who pay close attention to the gold market are aware of the price manipulation, then it stands to reason that GATA’s work has encouraged gold acquisition by others as well.

But as crucial as gold is, it remains a small sector of the financial world. Despite its spectacular rise over the last decade, most investors, at least in the West, haven’t given it a thought. Even some of the biggest investment managers who are aware of gold’s performance and are favorably disposed toward gold do not fully understand the difference between real metal and paper claims to metal and so invest in gold exchange-traded funds rather than take possession of bullion. Thus they have their investment used against them by the infinite expansion of the imaginary gold supply to match the infinite expansion of the supply of government currency and credit.

In short, while most of the people who pay the closest attention to gold may now understand government’s historic interest in controlling its price and are aware of some of the mechanisms of that control, that’s still a very small number of investors, short of the point at which enough people understand that particular methods of holding gold can work against them while other methods work for them. Gold being such a small sector and the gold supply being so small relative to the claims sold against it, it may not take too much more effort to reach a tipping point, to turn enough paper claims into delivery claims and blow up the suppression scheme.

After all, the western European central banks, previously active agents in the scheme, seem to be participating much less lately, even as the Russian and Chinese central banks and a few others have become gold buyers. The Bank of Russia has been monitoring and citing GATA’s work for more than six years. (See http://www.gata.org/node/4235.) More recently Chinese officials have been monitoring GATA’s work as well.

Meanwhile, GATA is suing the Federal Reserve in U.S. District Court for the District of Columbia for access to the Fed’s gold market intervention documents, possession of which the Fed has acknowledged, if only inadvertently. (See http://www.gata.org/node/8192.) Much has come out of GATA’s prodding and poking the Fed and the Treasury Department over the years. Much more yet may come from it. With the right publicity, the next disclosure may be powerful.

But exactly when will the big break come — the break that leads to the great revaluation of gold we expect, when the central banks are overwhelmed or, perhaps more likely, get in front of the inevitable, using gold revaluation to restore their own solvency, yielding resentfully to some accountability, freer markets, and fairer dealings among individuals and the nations?

Of course we don’t know. We can only keep working to hasten the day, and hope that some of us will live long enough to see it.

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

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Sunday and Monday, June 6 and 7, 2010
Vancouver Convention Centre
Vancouver, British Columbia, Canada
http://www.cambridgehouse.ca/index.php/world-resource-investment-confere…

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