How do we know that central banks rig the gold market?

THEY TOLD US ! GATA How does the Gold Anti-Trust Action Committee know that central banks are working with bullion banks and other financial houses to suppress the price of gold? We know because of the painstaking research of our consultants -- Reg Howe, James Turk, Andrew Hepburn, Mike Bolser, and Bob Landis. They have gone through the official reports and the footnotes of the Bank for International Settlements, the International Monetary Fund, the Federal Reserve, the U.S. Treasury Department, central banks and government agencies, mining companies, and financial houses, and have amassed enormous evidence. But that's the complicated stuff, and we also know for a very simple reason. We know that the central banks and their intermediaries are working together to suppress the price of gold because time and again they have TOLD us so. After all, what was the Washington Agreement of September 1999 if not a proclamation that the 15 participating central banks were colluding to regulate the gold price? Of course in the Washington Agreement the central banks affected to be SUPPORTING the gold price; they pledged to limit their gold sales to 400 tonnes per year for five years -- lest, they said, the gold market be flooded with metal and the gold price collapse, taking with it the economies of gold-producing countries. Of course GATA has put a different construction on the Washington Agreement. We consider it the device by which central bank gold LOANS are written off as SALES at discounted prices, rather than be called back and cause a short squeeze in gold. That is, far from supporting the gold price, the Washington Agreement was how the central banks kept gold from rising and prevented the bankruptcy of the financial houses that, at the invitation of the central banks, eagerly joined the gold carry trade of the 1990s. In that carry trade gold was, in effect, loaned by the central banks for next to nothing and sold by the financial houses to depress its price, strengthen the U.S. dollar, reduce interest rates, and inflate the price of paper assets, which were purchased with the proceeds of the gold sales. But no matter how you want to construe it, the Washington Agreement was admittedly a coordinated action by the central banks to regulate the gold price. That central banks get together to discuss and unify their policy toward gold is a matter of ordinary public record. Anyone who really believes that this collusion is always benign, in the public interest, and without ulterior motives shouldn't go even grocery shopping alone. The Washington Agreement wasn't the first coordinated intervention of the central banks in regard to gold. It was at least the second and probably much more belated than that. How do we know? Because Federal Reserve Chairman Alan Greenspan told us. In fact, he told Congress too. As usual, no one in the financial press seems to have been paying attention. But on July 24, 1998, Greenspan told the House Banking Committee: "Central banks stand ready to lease gold in increasing quantities should the price rise." He repeated that statement a few days later to the Senate Agriculture Committee: www.federalreserve.gov/boarddocs/testimon...

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