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Explaining gold price suppression, Indian magazine cites GATA, Butler, Sprott

By: Chris Powell

 -- Published: Sunday, 8 October 2017 | Print  | Disqus 

Dear Friend of GATA and Gold:

While there's no telling when exposure of Western central banking's longstanding scheme to suppress monetary metals prices will explode the scheme, word is getting around the world. This is signified by a long commentary published in this month's edition of an Indian magazine of politics and economics, Swarajya, written by Shanmuganathan Nagasundaram, founder of a financial consulting firm.

Nagasundaram's commentary, headlined "Gold Can Help India Set Global Agenda on Monetary Policy," cites the work of GATA, silver market analyst Ted Butler, and Canadian investment house founder Eric Sprott.

Nagasundaram writes: "Going by the price action of the last six years, readers might be tempted into believing that the demand for gold is less than the supply. Nothing could be farther from the truth. Annual demand has been running far ahead of gold mine supplies, and prices have been contained through a deliberate price suppression mechanism orchestrated by the Bank for International Settlements through the U.S. Federal Reserve and the Bank of England.

"Through a series of papers titled 'Do The Western Central Banks Have Any Gold Left?,' Eric Sprott of Sprott Inc., a global precious metals investor, has shown that annual net consumer demand has been running for the last decade or so at about 4,000 tonnes per year, whereas the new mine supply has averaged about 2,800 tonnes.

"How prices have been contained under such conditions of demand-supply mismatch is a rather technical issue that will need a separate article by itself. Just to provide a one-line summary, it's done in the futures market by holding concentrated short positions by non-verifiable participants. For interested readers, this issue has been extremely well documented by the Gold Anti-Trust Action Committee, metals price analyst Ted Butler, and several others.

"What is more relevant here is how this supply shortfall to the tune of around 1,000 tonnes per year has been met with year after year. As has been shown by Sprott, this marginal supply could have come only from the Western central banks without disrupting overall market conditions.

"A valid question would be: Would these sales not be reflected as a decrease in gold holdings on their balance sheets? The central banks sidestepped the issue by showing owned and leased holdings of gold as one line item.

"So, as happened during Raghuram Rajan's tenure, the Reserve Bank of India (RBI) swapped/leased a good portion of its 557-tonne gold reserves with the Bank of England. The Bank of England, in turn, would lease this gold to one of the participating banks, which would then sell it on the open market. The gold would then be reflected as being owned by both the purchasing individual as well as the RBI.

"This double counting of gold could well be to the tune of around 20,000 tonnes (around 15 percent of total supplies above ground), and the chance that the RBI gets this leased gold back is very slim."

Nagasundaram's commentary is posted at Swarajya's internet site here:

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

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 -- Published: Sunday, 8 October 2017 | E-Mail  | Print  | Source:

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