Market News International retracts report about central bank gold sales

Market News International, which, on the basis of confidential sources, reported Thursday that the Bank for International Settlements, Bank of England, and Federal Reserve had sold gold that day to reverse an upward spike in the price as the euro zone financial crisis worsened, has retracted the report. (See http://www.gata.org/node/10752.)

Word of the retraction comes via GATA's friend Michael Kosares, proprietor of Centennial Precious Metals in Denver and its Internet site USAGold.com, who wrote to the news agency in search of information supporting its report. Kosares today received this reply from MNI's Vicki Schmelzer: "The bullet that was posted was posted in error. We had one contact mentioning that this might be the case, but when we called other, more trusted sources later, they said this was not the case and in fact selling by these institutions was totally unlikely. We put out a retraction shortly after the initial bullet."

Of course MNI's statement doesn't mean that central banks were not selling or leasing gold this week to support the euro and other government currencies as the Western financial system teetered. Since mainstream financial news organizations simply assume that market interventions by central banks, particularly interventions in gold, are properly secret and can't be asked about in polite company, it's unlikely that any central bank was pressed enough this week about its gold activities that it even had to bother issuing a "no comment."

Indeed, MNI's retraction just as easily could mean that the news agency was pressured or threatened by a government or governments for broaching a topic considered likely to jeopardize national security.

At least the counterintuitive behavior of the gold price is far from news and long has been one of GATA's themes.

South African gold mining analyst Peter George remarked on this in August 2005 at GATA's Gold Rush 21 conference in Dawson City, Yukon Territory, Canada. "In the last 10 years," George said, "central banks have effectively shown that when there's a real crisis, gold actually goes down, and then it's so blatant it's a joke."