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.
What you say makes good sense to me. Even Peter Schiff and Marc Faber like gold but won’t admit or state their belief that the $ price of gold is suppressed. I think you and others (such as Dave from Denver in investmentresearchdynamics are right), but I have seen statements such as “Once the Chinese exchange is underway the gold price suppression will be ended,” and “No way there could be $1,275 gold and sub $20 silver ever again because supply would be zero.” But here we are. While I do fully agree with you guys, I think the timing has been a bit early. BTW, John Williams of Shadowstats says hyperinflation before EOY 2014 is out. I think he said 2013 a few years ago. Once again, he may be right, but EARLY.
early by 5 years is better than 1 second too late.
Thanks for your report. I have been following this issue since 2004. My background is in science and after 50 papers published in peer reviewed journals I turned to my own (one man) business. I can recognize by their approach who is concerned with Truth and who wants to mislead you. Chris Powell has always been my reliable source for really useful information. Doug Casey on the other hand fits the mold of those (the majority) who would rather not have this issue floating around. I had high hopes for this debate, but alas, as you too gently chronicled, ’twas not to be, and even Greenspan surprised me; I can’t help wondering what Ayn Rand, his heroin would think of him now?
Chris Powell is a true and old time journalist from the days of yore, always factual. Ayn Rand wouldn’t piss on Greenspan if he was on fire I’m afraid.
Thank goodness main street has you and Andy to tell us the truth in a world now based on lies!
the truth how we see it is not always the way everyone see’s it but we try hard to be fair and honest.
Douglas R. Casey is as much of a fraud as he was in 1980 when he boldly predicted that gold was not only the greatest investment at the time but the only investment. He had no confidence in the creativity of America, Japan, etc.
His bodily mannerisms were identical to his protoge? Jeff Berwick or was Casey the prototype of Berwicke? Was Casey genuine in his belief at the time, hoping to enter into the globalist society or was he already part of it, being used as their shield, to attrack sheep to be slaughtered? Who knows. But I heard Casey in an interview in 2011, discussing his entry to gold, making no mention of his 1980 book. Casey is a well paid Anglo fraud. The fact that Chris Powell would be a part of this, tells me a lot about Chris Powell.
I don’t know what you “think” about Chris Powell, I know him to be a straight up guy who is working on your behalf for free and fair markets.
There’s more than one way to manipulate a market. Rermove liquidity and see where prices go,,,
You think maybe one reason the POG & POS aren’t where they should be is because people spend money on other things.
The golden rule no longer applies, as vast majority of people would rather have an iphone and big screen TV than a couple ounces.
For 99.99% of mankind’s history, man didn’t have iphones, HDTV, Mercedes Benz’s etc. Gold USED to be a sign of wealth universally, and still is in some third world contries, but today for most people gold is just something to hoard.
So, one way to manipulte PMs during bad times is to reduce the fiat cash sloshing around, thereby forcing people to sell their stack in order to survive in this economy.
How long can it last? If Janet Yellen had the smarts, she’d allow PMs to rise before Black Friday, to get the metals into the market, retailers selling electrogadgets, and bump the GDP up a half notch.
QE did not reduce liquidity.
Correct, but the phasing out of QE has.
we will see.
Question on another topic,
The Federal Bankruptcy Judge in Sacramento is going to rule this week on the City of Stockton’s Bankruptcy Plan. If he approves the plan there will be no cut to the retirement plans of the City Employees. If he doesn’t approve the plan and tells the City, they need to come up with more money to pay the lone holdout Franklin Templeton . The City is currently offering TF 300k for a 34 million dollar investment. Could a rejection of the bankruptcy plan be a Black Swan event? I’m sure all of the other soon to be bankrupt municipalities would use this ruling to their advantage against the public unions. Would the members of calPERS take to the streets, after having been promised retirement they may never have? It will be interesting to see what happens.
someone…somewhere…has to take a haircut sooner or later, end of story.
I think the Chinese will continue to drain the West for as long as they can and so have every reason to suppress the price – indefinitely. When the vaults are empty, they will slow their own pace and drain the world’s miners. Only the West can say “hold, enough” and thus far their silence (and help) has been taken as the source of manipulation.
My heart goes out to the poor countries (like South Africa) and the mining companies who are being denied a fair return. Then again, their own silence shows how little they understand the problem, which is why GATA’s case should be targetted at them (rather than fellow gold-bugs).
GATA has targeted miners from the beginning in 1999 but no one has ears to hear.
Doug Casey is a faux intellectual wannabe, never seen him in a serious debate once, just likes to spout his govt. Is bad, anarchy is good spiel and talk about the fall of the Roman Empire…same old same old, nothing new or original.
As for the gold bugs they have it completely wrong, as the last 3 years has proven. Everything that happens is bullish for gold….until it isn’t then it is blamed on manipulation to save their flawed assumptions. For that is all they are, assumptions. The $US is the only game in town when the whole world is in financial trouble, you are going to see the $US get stronger and stronger against all other currencies including gold and silver. You can expect gold under $1000 and silver who knows where in the near future and it will have NOTHING to do with manipulation and EVERYTHING to do with capital flows. Don’t just follow the the gold bugs assumptions and flawed analysis that have lead people to buy all the way down from the tops, listen to the real deep analysis with no conflict of interest of those who’ve been right these last 3 years and before, people like Dan Norcini, Martin Armstrong and John Maulden to get a more balanced view.
The REAL truth hurts it seems, but not to those who REALLY seek it
Oh, and right on que gold and silver go down even more….gee, I thought Sinclair called the bottom again a month or so ago….and I guess you guys weren’t far behind him. The blind leading the blind, who are the real manipulators here? Those who are correctly calling a bear market in gold or those telling everybody to buy gold all the way down in a bear market and whose business is too sell gold?
yes, we are manipulators for writing what we believe is true.
it will be found out and painful after the fact.
Amazing a guy like Doug Casey thinks all this is conspiracy theory stuff? Is he doing that to appear politically correct to his monetary interests? Makes me wonder about the guy… and respect GATA even more.
GATA’s facts are linked in the article.
Thanks for the report on the ‘debate’ and other posters here. I didn’t know of Casey until a few years ago when I came across him via promotions of his work on a blog – The Burning Platform. Through the blog a promotion was run for a big discount on Casey’s reports, etc. Once I read his stance on gold suppression/manipulation I just couldn’t take any of his other work seriously.
it’s only him Mike, some of his contributors do some good work.