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No, GATA never took Russian central banker or Greenspan out of context

By: Chris Powell

 -- Published: Tuesday, 27 March 2018 | Print  | Disqus 

Dear Friend of GATA and Gold:

In commentary posted today at GoldSeek, headlined "GATA Is at It Again" --

-- financial letter writer Avi Gilburt accuses GATA of routinely taking quotes out of context, starting with the mention made of GATA by the deputy chairman of the Bank of Russia, Oleg Mozhaiskov, in his address to the London Bullion Market Association meeting in Moscow in June 2004.

But GATA has never taken Mozhaiskov out of context. To the contrary, soon after Mozhaiskov gave his address and we heard that he had mentioned us, we strove to obtain a copy of his complete remarks and have often referred to his full remarks when citing him:

Mozhaiskov's speech was notable for establishing that while GATA at that time had never to our knowledge had any contact with the Russian government or, for that matter, anyone in Russia, the Bank of Russia was following our work. We construed Mozhaiskov's reference to GATA as signifying that the Bank of Russia shared GATA's suspicion about the activity of the U.S. government and its allies in the gold market.

In any case soon after Mozhaiskov's speech Russia began repatriating its gold from the Bank of England and Russian President Vladimir Putin announced that he had instructed the Bank of Russia to start buying gold on all markets -- the very policy that GATA’s research seemed to argue for.

Gilburt construes Mozhaiskov's remarks about GATA as ridicule. But Mozhaiskov told the LBMA that there was reason to believe that the gold market was operating under something other than free-market forces. If Mozhaiskov really found GATA so ridiculous, would he have taken so much time to call its work to the LBMA's attention? Or was this his way of letting the bullion bankers know that Russia was on to them and the Western central banks for which they were fronting?

A little background here supplies more context than Gilburt can. When GATA heard of Mozhaiskov's remarks from a participant in the LBMA conference in Moscow, we were told that the LBMA had a copy of his speech. So we asked the LBMA to share it with us. The LBMA refused, apparently construing the speech as unfavorable to the bullion banks. Whereupon your secretary/treasurer located a fax number for the Bank of Russia in Moscow and sent a letter to Mozhaiskov, asking if he would provide a copy of his speech. Your secretary/treasurer told Mozhaiskov that a copy in the original Russian would do fine, since at that time your secretary/treasurer worked with a U.S. graduate student in Russian studies who was fluent in the language and would gladly translate the speech for us.

Remarkably Mozhaiskov replied within hours, agreeing to provide a copy of his speech but adding that he wanted his own friend, the president of Moscow Narodny Bank in London, to do the translation into English.

Sure enough, a month or so later the translation arrived in the surface mail from London and GATA published it in full on the day it was received.

If Mozhaiskov found GATA as ridiculous as Gilburt does, the central banker’s courtesy was all the more amazing. As his speech discloses, Mozhaiskov knew full well what GATA was about and surely was aware of how GATA was likely to construe his remarks. Neither Mozhaiskov nor anyone else at the Bank of Russia has ever complained that GATA has misconstrued him. Only Gilburt has made such an allegation, as if he knows what central bankers think better than they themselves do.

But anyone can read Mozhaiskov’s speech and draw his own conclusions precisely because GATA alone has provided the original document from the source and repeatedly has called attention to it to guard against any taking it out of context.

Then Gilburt disputes GATA’s interpretation of Federal Reserve Chairman Alan Greenspan’s famous testimony to Congress in July 1998 that central banks were ready to lease gold to suppress its price:

Gilburt says GATA has mistakenly construed this as an admission that the Fed itself was leasing gold, but he is mistaken. He cites no authority for his assertion.

If Gilburt had done a little research he would have found that in 2000 GATA extracted and publicized a statement from Greenspan denying that the Fed was leasing gold but acknowledging that other central banks were:

Perhaps Gilburt is confusing gold leasing by the Fed with gold swapping by the Fed. For in 2009 GATA extracted a statement from a member of the Fed’s Board of Governors, Kevin M. Warsh, admitting that the Fed has gold swap arrangements with foreign banks and refuses to disclose them:

Is Gilburt really incapable of wondering why, if the Fed's gold swap arrangements are innocent, they cannot be disclosed or explained? And is Gilburt incapable of understanding that a gold swap by the Fed with another central bank or with a bullion bank could be quickly turned into a gold lease by that other central bank or bullion bank?

Gilburt writes: "Again, it deserves repeating. Mr. Greenspan did not admit that the Fed manipulates gold. Mr. Greenspan did not even note that there was anyone who manipulated gold. Rather, he was saying that if someone attempted to manipulate the gold market, the Fed may have a tool to combat such manipulation attempts. More importantly, he never even opined as to whether such a tool would or could even be successful."

If this "deserves repeating" it is only because Gilburt himself has been misquoting GATA about Greenspan. GATA maintains that Greenspan’s 1998 testimony about gold leasing is important mainly for acknowledging that gold leasing is a mechanism of price suppression far more than it is what others have called it, a mechanism by which central banks try to earn a little money on a supposedly dead asset.

But Greenspan did assure Congress that gold leasing would work to suppress the gold price -- presumably because he knew from experience that it already had done so.

Gilburt continues: "GATA and its ilk will often point to evidence of small price manipulations and suggest that these 'paper cuts' have caused the market to bleed to death."

Not so. Of course GATA has called attention to charges and admissions of gold and silver market manipulation involving investment banks and various traders outside government. But our primary complaint long has been that governments and central banks are the primary manipulators of the monetary metals markets, the real parties in interest in gold price control.

Gilburt also suggests that GATA blames central banks for the entirety of every move down in monetary metals prices every day. This is nonsense and again Gilburt fails to support his charge with anything published by GATA.

Rather, GATA maintains that central banks are meddling in the gold market surreptitiously "nearly on a daily basis," to use the words of the director of market operations for the Banque de France, Alexander Gautier, in his address to another LBMA meeting, this one in Rome in September 2013:

No one but central banks themselves can know exactly how much of any day’s price move they cause. But since central banks are authorized to produce infinite money, they can move markets as much as they want in any direction.

GATA has produced documentation that governments and central banks are surreptitiously trading all futures markets in the United States, according to filings with the U.S. Securities and Exchange Commission and Commodity Futures Trading Commission:

GATA readily admits that it doesn’t know everything governments and central banks are doing surreptitiously in the monetary metals markets. But we have compiled enormous documentation of that involvement and the longstanding policy of Western central banks to suppress the gold price to defend their currencies, government bond prices, and interest rates against market forces.

By contrast Gilburt concludes his latest misrepresentations by proclaiming his great success at predicting monetary metals prices, as if that is somehow a rebuttal to GATA’s work and not just egotism.

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

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