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Does Weiner really know what central bankers think better than they themselves do?

By: Chris Powell

 -- Published: Tuesday, 20 March 2018 | Print  | Disqus 

Dear Friend of GATA and Gold:

Thanks to Keith Weiner of Monetary Metals for at least attempting a reply to your secretary/treasurer's recent commentary --

-- disputing his assertion that central banks don't care about gold and aren't manipulating its price.

But in his new commentary, "Standing Ready to Lease Gold," posted at GoldSeek here --

-- 24hGold here --

-- and ZeroHedge here --

-- Weiner just reiterates that assertion, addresses only two of the many documents of gold price suppression cited to him, and evades the points of those.

"Central bankers do not think about gold," Weiner writes again, just days after Hungary's central bank announced that it is repatriating its gold reserves from London:

Could such repatriation have been decided without thinking? If Hungary's central bankers don't think about gold, wouldn't they have just forgotten the metal in London?

As for the recent explosive increase in gold derivatives on the books of the Bank for International Settlements --

-- Weiner says nothing. Could those derivatives have been undertaken without thinking too?

Weiner characterizes as "conspiracy theorists" those who complain about gold price suppression. Perhaps he will explain in his next commentary what it is when government officials meet secretly to decide and implement a course of action. Conspiracy is defined by the Federal Reserve Board's monthly meetings in Washington to the monthly meetings of the board of the BIS in Basle, Switzerland. Weiner should try attending one of those meetings.

Weiner argues at length that the purpose of the meeting of U.S. Secretary of State Henry Kissinger and his deputy, Thomas O. Enders, at the State Department in April 1974 was not about suppressing the gold price:

Yet Enders was explicit: that since the Western Europeans collectively had obtained more gold than the United States, "this gives them the dominant position in world reserves and the dominant means of creating reserves. ... If they have the reserve-creating instrument, by having the largest amount of gold and the ability to change its price periodically, they have a position relative to ours of considerable power."

Plainly, control of the world's currency and financial system was at stake for the United States. This explains the motive for gold price suppression by the United States particularly, though of course other countries might consider gold a threatening competitor to their own currencies as well.

Weiner writes that "gold is not in the system anymore." This is rank nonsense.

All major central banks book gold as a financial asset.

The International Monetary Fund considers gold so powerful and sensitive an asset that the agency allows its member central banks to fudge their accounting so that leased gold cannot be distinguished from gold unimpaired in the vault, lest accurate accounting interfere with their surreptitious interventions in the gold and currency market:

The Reserve Bank of Australia noted in its annual report in 2003: "Foreign currency reserve assets and gold are held primarily to support intervention in the foreign exchange market. In investing these assets, priority is therefore given to liquidity and security, in order to ensure that the assets are always available for their intended policy purposes":

How could central bankers intervene in the gold market without thinking about gold?

Weiner offers a long digression about Federal Reserve Chairman Alan Greenspan's testimony to Congress in 1998 opposing the regulation of derivatives, in which Greenspan mentioned gold leasing by central banks:

Weiner's digression is mere distraction from the point your secretary/treasurer sought to make: that in his testimony Greenspan acknowledged that the objective of gold leasing is price suppression, not what Weiner continues to pretend, the earning of income for central banks.

Weiner asserts that in the long run gold leasing does not suppress prices because the leased gold has to be returned. Not true. For central banks that leased gold in the 1990s sold gold heavily in the following decade. Since the gold price rose steadily in the 2000s despite the regular announcements of those sales, most likely the "sold" gold never hit the market when the announcements were made because those sales were really just the cash settlement of the gold leases from the previous decade.

Besides, since central banks are so secretive and unaccountable about their gold and their activity in the gold market, how does Weiner or anyone really know what they're doing at any particular moment?

Weiner does not address the broader point of why the Federal Reserve should have been opposing the regulation of derivatives, which generally are thought to pose certain dangers to the world financial system. But a more than plausible answer is implied by Greenspan's acknowledgment that central banks lease gold to keep its price down.

That is, what if central banks already were using derivatives to control not only the gold market but all major commodity and financial markets? Filings by CME Group, operator of the major U.S. futures exchanges, with the U.S. Securities and Exchange Commission and Commodity Futures Trading Commission, as well as postings at CME Group's own internet site show that governments and central banks indeed are secretly trading all major futures contracts:

If, when Greenspan testified, governments and central banks were already controlling markets secretly with their own trading, congressional regulation of derivatives might have exposed and impaired that.

Three years after Greenspan testified against regulating derivatives, the British economist Peter Warburton put it all together in an essay titled "The Debasement of World Currency -- It Is Inflation, But Not as We Know It":

Warburton suspected that central banks were using investment banks to issue derivatives throughout the commodity futures markets to siphon away from real assets the money that might seek a hedge against inflation, money that was seeking to use real assets, not financial assets, as a store of value. Use of real assets that way would make inflation more visible in consumer price indexes.

Warburton wrote: "How much capital would it take to control the combined gold, oil, and commodity markets? Probably no more than $200 billion, using derivatives. Moreover, it is not necessary for the central banks to fight the battle themselves, although central bank gold sales and gold leasing have certainly contributed to the cause. Most of the world's large investment banks have overtraded their capital so flagrantly that if the central banks were to lose the fight on the first front, then the stock of the investment banks would be worthless. Because their fate is intertwined with that of the central banks, investment banks are willing participants in the battle against rising gold, oil, and commodity prices."

As the saying goes: "The futures markets are not manipulated. The futures markets are the manipulation."

But there is little need for hypothesis when frank admissions of gold market rigging long have been available from central bankers themselves.

For example, William R. White, then the director of the monetary and economic department of the Bank for International Settlements, told a BIS conference in Basel in June 2005 that a primary purpose of international central bank cooperation is "the provision of international credits and joint efforts to influence asset prices -- especially gold and foreign exchange -- in circumstances where this might be thought useful":

A president of the Netherlands Central Bank who was also president of the Bank for International Settlements, Jelle Zijlstra, wrote in his memoirs in 1992 that the gold price was suppressed at the behest of the United States:

So what is Weiner thinking when he writes that central bankers don't think about gold? Does Weiner know their thoughts better than they themselves do? And exactly how does he know? He never cites any authority for his mind-reading.

A disappointing detail here: While Weiner's disinformation lately has been welcomed at 24hGold and ZeroHedge, those internet sites have declined requests to post GATA's replies.

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

* * *

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Monday-Wednesday, March 26-28, 2018
Marina Bay Sands, Singapore

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Tuesday-Friday, April 3-6, 2017
Hong Kong Convention and Exhibition Centre

* * *

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