I attended the New Orleans investment conference this past week as the guest of GATA’s Bill Murphy and Chris Powell for which I am highly grateful. There were many good and thoughtful speakers which I will write about later in the week. I specifically wanted to attend this conference for 2 reasons, Alan Greenspan (Mr. Magoo) was a keynote speaker and I not so much wanted to hear what he had to say but more importantly “how” he answered audience questions. This topic is also for later in the week.
What piqued my interest most about this conference was the proposed debate between GATA’s Chris Powell and Doug Casey of Casey research. The topic was “Is gold manipulated or not?” I had such high expectations for this but unfortunately was extremely disappointed. The format was really not much of a debate, each speaker was allowed 7 minutes to lay out their case followed by a 4 minute rebuttal period each. The problem was, they did not interact and did not debunk the other’s position. The “debate,” if you can call it that was one sided where Chris Powell laid out documentation and fact while Doug Casey gave us his opinion.
Chris Powell started off and was pretty much 100% factual as he laid out printed documentation from the Federal Reserve and the BIS which confirms central bank activity in the gold market. Because of the time constraint he was only able to get through one quarter of his evidence. He did however bring up the testimony of Alan Greenspan to Congress in 1998 where he said, “the central banks stand ready to lease gold in increasing quantities should the price of gold begin to rise.” All of the documentation can be found here. The way Chris approached the debate in my opinion was genius because he showed document after document and the only way to argue with it was to either say they were forgeries, fakes and don’t exist, or they don’t mean what they say and his interpretation of them is flawed. If you disbelieve suppression of gold prices, please do yourself a favor and read through this documentation. It is clear to me personally that there are enough “pieces of the puzzle” to come to the conclusion, prices are and have been suppressed.
Doug Casey approached the topic from a very different and I would say “emotional” direction. He started off by saying ALL markets are manipulated including gold and silver. I expected this as I had seen Doug speak in Vancouver where he started off with the same spiel. Gold is manipulated he said “but not suppressed,” He reasoned if the price was suppressed then why has it gone up over 60 times in dollar terms? Central banks don’t and couldn’t care less about gold or its price was another of his main points. Gold is considered by the central banks as a “meaningless artifact” he argued and one they don’t even pay attention to. Doug said that central banks don’t want “stuff” (which gold is also considered) to go up in fiat terms but they cannot control prices so they don’t try. Most interesting was his final point, “why would the Fed try to suppress prices if the Russians and Chinese are buyers, this would help them, why would the Fed aid their purchases?” Good question and I’ll get to it in a moment.
Between the 7 minute statements and 4 minute rebuttals, the moderator Adrian Day asked Chris and Doug to comment whether they believe Fort Knox should be audited or not. Chris answered in the affirmative but with the stipulation the audit also verifies “ownership” of any gold that’s counted In other words, is the gold U.S. gold or is it “swapped” and in reality someone else’s gold? Casey agreed and said yes we should have an audit but then went on a bit of a tangent. He said that an audit is really just an argument to abolish the Fed and that dollars should be done away with and gold used as money.
When the 4 minute rebuttals came, Chris Powell replied to Casey’s statement that the issue is almost like a religious issue to goldbugs by saying “no it is not a religious issue, it is a public policy issue plain and simple.” Powell also pointed to Larry Summer’s Gibson paradox study where low gold prices also aid in low interest rates and allow for more debt and currency issuance than would otherwise be the case. He also pointed to documents from the CME that shed light on the fact the central banks are “customers” and actually receive volume discounts for trading. Chris then mentioned that just because gold has gone higher, this is not evidence of no suppression as gold would or could be much higher in price if it were not for suppression. In answer to Casey’s statement “we would never suppress the prices of gold and silver because this would aid the Chinese and Russians,” insider Jim Rickards claims a “deal” has been struck with the Chinese.
I have no proof of this one way or the other but it does make perfect sense to me. I could write an entire piece on this subject but for now a paragraph will have to suffice. If China (and India) are buying more than the entire year’s global production of gold …yet the price has been dropping during this operation …the metal HAS to be coming from somewhere. The ONLY “somewhere” this can be is from where it is (has) being stored, central bank vaults. The only possible way for prices to not rise when physical demand grossly exceeds supply is through the use of paper derivatives. It is really just this simple. In my opinion what Jim Rickards has said must have some truth behind it, some sort of deal has to have been struck which allows China/India (and Russia) to purchase increasing amounts of gold at decreasing prices. As I have said all along, once China cannot receive gold in exchange for dollars …then of what use are their dollar holdings? Do you see? The game will be up and there will be no incentive to China whatsoever to hold any dollars which will …end the game.
Doug used his 4 minutes with more opinion. He said the argument is pointless and that this is all “conspiracy theory.” He said traders are like little girls and if there truly was some sort of conspiracy it would be out in the open because traders all talk to each other. Casey also responded to Greenspan’s testimonial to Congress by saying we should never believe central banker’s statements. Another claim he made is that there are never complaints when any commodity is rising because the public is always long and they are “idiots” (his words). I know my description of Mr. Casey’s words is “all over the place” but this was how he spoke jumping from one topic to another.
So, what exactly did I get from this so called “debate?” Not much really because the question itself is rigged, the word “suppressed” should have been used rather than “manipulated.” Another aspect was this debate was not structured correctly because they couldn’t “go at it” so to speak. The personalities didn’t work too well either as Chris Powell is all business, scholarly and a true journalist where nothing is said unless he has proof. Casey on the other hand likes to make the audience laugh, he argues by and with his opinion. In this case, when he says that “governments don’t even care about gold,” I don’t believe he has quite thought it through all the way. Governments care more about gold than anything else, this is like saying a company doesn’t care anything about their direct competitor …a foolish thought process in my opinion. I don’t even know if he believes what he debates as he seems to enjoy stirring up the pot and getting laughs from the attendees.
By now you probably know my personal opinion, gold and silver prices are and continually “HAVE TO” be suppressed, when the rig finally fails then so will the entire financial system. If gold prices were to rise dramatically it would be seen internationally as a sign of “weakness.” Doug Casey said that central banks don’t care about gold. I believe this is 100% wrong. I believe central banks, (particularly the Fed) care more about gold than anything else including oil. This is because gold is the thermometer or “ballot box” if you will, where the votes are counted regarding monetary (and fiscal) policy. There is no other “report card” on the planet as easy to read or as important as gold is. Yes, other aspects and housecleaning must support their policies such as falsified economic reports, supported bond markets and a media cheerleading squad but an out of control gold price would trump any and all other efforts. THIS is why the gold price is suppressed. THIS is also why silver prices are suppressed. Were silver to get its legs on, gold would only be a half step behind it!
As for the debate, it was actually painful to watch. The format was poor and the participants were completely mismatched in style. As I said earlier, I had high expectations and hopes Doug Casey would actually respond to some (any?) of the factual documentation Chris Powell displayed. He didn’t respond to or even make an effort to address anything whatsoever except to say “you shouldn’t believe what central bankers say.” Maybe he should take his own advice as Alan Greenspan claims the Fed has never traded in, swapped or leased gold? More on the New Orleans conference as the week goes on.