How The ‘Cartel’ Suppresses The Price Of Gold

The Daily Bell

The editors of the Daily Bell are pleased to present this comprehensive and exclusive interview conducted by Scott Smith with William Murphy of the Gold Anti-Trust Action Committee.

Daily Bell: Thanks for spending some time with us.

Bill Murphy: Thanks for thinking of GATA.

Daily Bell: Some people would say you have done more to move the price of gold upward than the Federal Reserve – with all its blundering. How do you respond to that?

Bill Murphy: That certainly would not be the opinion in the mainstream gold world who have fought against GATA’s efforts and discoveries from day one. The Federal Reserve is a dichotomy as to the price of gold. They have been instrumental in their efforts to suppress the price of gold in their role in The Gold Cartel. At the same time their “quantitative easing” could not be more gold friendly. For those who believe GATA has had a substantial impact on the gold price, we thank them.

Daily Bell: You seem to view the world through a free-market prism – that’s fairly obvious. Would you consider yourself fully a free-market “Austrian” in terms of your economic philosophy?

Bill Murphy: Don’t really get into it that much. I used to trade commodities on a rather large scale and like to think I know a fair amount about the markets and how they work. A few weeks after I opened my website, LeMetropoleCafe.com, Long Term Capital Management blew up. My colleagues and I knew they were short more than 300 tonnes of gold on a “carry trade.” When they were forced to cover that short, the price should have gone ballistic. Instead, the bullion banks (Goldman Sachs, Deutsche Bank, Chase Bank), who were short too, bailed them out and stopped gold’s advances cold on a daily basis around $300 per ounce. That couldn’t have been clearer by the price action and the reports from the Comex floor.

Daily Bell: How convinced are you that the monetary elite manipulates the price of gold? How did you come to that conclusion?

Bill Murphy: The Gold Anti-Trust Action Committee’s basic assertion for the past 10+ years is that there is a Gold Cartel out there suppressing the gold price. It consists of the US Government, including the Fed and Treasury, various other central banks, and bullion banks like Goldman Sachs and JP Morgan Chase. Bullion banks such as Goldman and Morgan became The Gold Cartel’s hit men, trading the gold market from the short side and bombing the market in coordinated anti-trust fashion at the beck and call of our government, making a great deal of money in the process. It seems to have all started with Robert Rubin:

Before he was CEO of Goldman Sachs and then US Treasury Secretary, Robert Rubin worked as the top dog in London for Goldman Sachs. One of his duties was to oversee their gold trading operations. We know this because the CEO of Kirkland Lake Gold, Brian Hinchcliffe, whose firm is a staunch GATA supporter, worked in London back then for Goldman Sachs and reported directly to Robert Rubin.

This was many years ago (late 80′s) and interest rates in the US were very high, say from 8 to 12%. Rubin had Goldman Sachs borrow gold from the central banks to fund their basic operations, doing so at about a 1 % interest rate. Then they sold the physical gold in the marketplace, using the proceeds as they so desired. This was like FREE money, as long as the price of gold did not rise to any sustained degree for any length of time.

Soon other major financial institutions realized what Goldman Sachs was doing and copied them. Rubin continued these operations as the overall Goldman Sachs CEO in New York and then took it to a new level as US Treasury Secretary. That is how the gold price suppression became the lynchpin of his widely acclaimed “Strong Dollar Policy.” GATA’s Reg Howe caught onto this notion by finding a paper titled, “Gibson’s Paradox and The Gold Standard,” co-authored by Lawrence Summers in 1988. Summers, a professor at Harvard at the time, succeeded Rubin as US Treasury Secretary. The bottom line of Summer’s analysis is that “gold prices in a free market should move inversely to real interest rates.” Control gold and it will help to control interest rates.

From GATA’s standpoint it is a serious bummer that Summers is now the Director of the White House’s National Economic Council for President Obama. Our energetic new President has the architect of America’s economic demise as his key advisor.

I met with Bart Chilton, an outstanding and receptive commissioner with the CFTC, on December 19, 2008 and laid out GATA’s evidence of the gold market manipulation. There were three others at our meeting from the CFTC, including their senior counsel. Bart took copious notes and I suggested he take what GATA had to say to the Obama people … emphasizing the gold price suppression scheme would blow up before President Obama’s watch was over due to dwindling available central bank gold to suppress the price. Better to let the gold price trade freely now and blame what occurred on the Bush Administration, rather than let the scheme go on and eat the problem on his administration’s watch down the road.

Daily Bell: How about silver?

Bill Murphy: No question about it … MANIPULATED! JP Morgan Chase is by far the major silver short and its position is way too concentrated for a free market. Silver needed to be manipulated along with gold in order to keep attention away from the price suppression scheme. Ted Butler, well known in the precious metals internet world, knows as much about the silver market as anyone, and has brilliantly articulated just how much silver has been manipulated … and by whom.

Read more….