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Saville doesn't get it: Rig the gold price and you rig all prices

By: Chris Powell, Secretary/Treasurer, GATA

 -- Published: Wednesday, 4 January 2017 | Print  | Disqus 

Dear Friend of GATA and Gold:

Manipulation of the gold market by investment banks, technical analyst Steve Saville writes this week in the Speculative Investor, is not necessarily long-term price suppression:

Yes, GATA strives to distinguish between market activity by investment banks and market activity by governments and central banks. GATA is much more interested in the latter activity.

Yet all the investment banks targeted for gold and silver market rigging by the antitrust lawsuit in federal court in New York enjoy the U.S. Federal Reserve's coveted classification of primary dealer in U.S. government securities:

And while the transcripts disgorged by Deutsche Bank in that lawsuit, showing trader collusion in gold market rigging by all the defendant banks, have been public for many weeks now, the Fed has taken no action against the banks. It seems as if the Fed doesn't mind if its primary dealers manipulate the gold market as long as the manipulation is, as the transcripts suggest, primarily downward. This at least tacit approval would be even more probable if the investment banks lease gold from governments and central banks, making the investment banks effectively the agents of governments and central banks in the gold market.

Saville expresses no curiosity about these connections.

But Saville misses even more when he argues that gold price suppression over a long period is disproved by "the close relationship over the past three years between the U.S. dollar gold price and the bond/dollar ratio (the T-bond price divided by the dollar index)." For even Saville might admit that governments are intervening around the clock in the bond and currency markets. Making such interventions stick requires preventing gold from giving the markets contrary signals, signals that could put bond and currency prices in question.

So why wouldn't governments intervene surreptitiously in the gold market too to protect their bond and currency market interventions?

In any case no one's charts or philosophy can contradict the documentation of gold price suppression by governments and central banks that is summarized here --

-- documentation that Saville and other deniers of gold price suppression never bother to examine and dispute. Maybe one may argue over why governments and central banks intervene surreptitiously in the gold market, but the fact of that intervention right up to the present day is well established.

Indeed, Saville seems determined to abandon the subject entirely before being forced to examine the documentation. He writes: "You are allowed to make money in the financial markets by doing something other than buying or owning gold. Therefore, if you truly believe that a powerful group has both the means and the motive to suppress the gold price, then the solution is obvious: Don't buy gold."

The problem is that gold, an international reserve currency, is powerfully connected to all other markets. Manipulate the gold price and you manipulate all currency values. Manipulate all currency values and you manipulate the price of everything valued in currencies. That covers just about everything except maybe your dog's affections.

Thus the choice is far more profound than Saville's framing of it -- whether to buy gold. It is whether to aspire to free and transparent markets or just try to trade on the side of the governments manipulating markets -- that is, whether to accept totalitarianism and totalitarians, who may be grateful for the camouflage offered to them by Saville and his charts.

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

* * *

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