Those gold smashes aren’t the bullion banks’ doing but government’s

Those gold smashes aren’t the bullion banks’ doing but government’s by Chris Powell for GATA

Dear Friend of GATA and Gold:

Writing yesterday at Sprott Money, market analyst David Brady attributes last Sunday night’s flash-crash attack on the monetary metals to the desperation of bullion banks to cover their longstanding short positions in the futures markets in anticipation of cataclysmic events that will be enormously positive for the metals.

Brady writes that he has never seen the bullion banks manipulate the markets so brazenly: “When you run out of a burning building, you don’t stop to close the door behind you, for obvious reasons. These guys steamrolled the door down to get out. … Perhaps the banks are aware of a pending correction in stocks that will force the Fed and the Treasury to respond with stimulus on steroids. Hence their desire to get out of their short positions sooner rather than later.”

Brady’s analysis is headlined “Bullion Banks Crash the Party — for Now” and it’s posted at Sprott Money here:

https://www.sprottmoney.com/blog/Bullion-Banks-Crash-the-Party-For-Now-David-Brady-August-12-2021

Yes, as Brady and others have noted this week, the latest intervention could not have been more obvious. Brady acknowledges the possibility that this and similar interventions have been meant to remind investors of “who really controls the metals.”

Other observers complained this week about the failure of market regulators, like the U.S. Commodity Futures Trading Commission, to investigate and stop this market rigging. Brady and those other observers are missing something.

Indeed, it long has seemed that the entities rigging the monetary metals markets have lost all concern about being caught and causing suspicion. It has seemed that they have wanted investors to believe that it is impossible to make any money in the business of mining and saving the once and future world reserve currency.

But for those who are willing to look a little deeper, it’s easy to see that the perpetrators of this scheme are not really the bullion banks at all. After all, those banks are in business simply to make money, and it is nothing to them whether they make it on the long or short side of a market. There is a reason that they are always short in gold, and to discern that reason, you need only to put the crucial question to one of their regulators, the CFTC.

GATA has done that several times, as has U.S. Rep. Alex Mooney, R-West Virginia. That question is:

Does the CFTC have jurisdiction over manipulative trading in futures markets undertaken at the behest or with the approval of the U.S. government?

The CFTC steadfastly refuses to answer that simple and basic question about its own jurisdiction:

https://www.gata.org/node/20089

Why would the CFTC refuse to answer that question, even for a member of Congress, unless the answer would expose the scam?

That is, these flash crashes and other counterintuitive moves in the monetary metals markets are not market events at all but government interventions.

Maybe for their own accounts the bullion banks have been front-running or piggybacking the government trades they have been executing, and maybe the banks have some liability of their own here apart from the government. Maybe the government can’t permit the banks to be identified as the nominal shorts in the metals futures markets when a big reversal in those markets is contemplated or feared. Such a reversal might destroy the banks or force the government to rescue them in the open, exposing the many years of surreptitious interventions.

In any case, can anyone really think that the U.S. government or any other government would let any bank manipulate something as sensitive as the currency markets for so long unless it was done to execute government policy?

And does anyone really doubt that for 50 years, since the closing of the gold window for the U.S. dollar, Western government policy has been to suppress the gold price?

Reams of documentation of the policy of gold price suppression have been summarized and detailed by GATA here:

https://www.gata.org/node/20925

Indeed, for example, in 2005 the director of the monetary and economic department of the Bank for International Settlements, William R. White, declared at a BIS conference in Basel, Switzerland, that the major objectives of international central bank cooperation include “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.”

https://www.gata.org/node/4279

Of course as GATA’s consultant on the BIS, Robert Lambourne, long has shown, the BIS constantly trades the gold market surreptitiously for its central bank members, as it did throughout June, when its gold swap position again rose above 500 tonnes:

https://www.gata.org/node/21363

The BIS has even advertised to potential central bank members that its excellent services include surreptitious interventions in the gold and currency markets:

https://www.gata.org/node/11012

So please wake up, you market analysts with half a brain. (Mainstream financial journalists, you can keep sleeping, since your employers are bought and paid for and if you gave any hint of consciousness about market manipulation by government you’d be fired.)

Yes, the bullion banks have rigged the monetary metals markets from time to time with their “spoofing,” for which they recently have been prosecuted and fines, but the primary, long-term rigging has been government work.

This rigging failed with the collapse of the London Gold Pool in 1968 and it will fail again, or government policy on gold will change, as it has changed from time to time, revaluing gold upward to reliquefy themselves and devalue debt. But that failure or that change can be hastened and free and transparent markets can be achieved, along with some justice among the nations, only when more people realize and acknowledge what really has been going on — and it’s not just the bullion banks.

Fortunately, as the interventions grow more brazen and desperate, they well may hasten the day themselves.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org