Gold Prices - Control, Suppression and Manipulation
Wikileaks published a cable going back to 2009 in the year that European
central banks halted their sales of gold.
It said the following: “The U.S. and Europe have always suppressed the
rising price of gold. They intend to weaken gold's function as an
international reserve currency. They don't want to see other countries
turning to gold reserves instead of the U.S. dollar or euro. Therefore,
suppressing the price of gold is very beneficial for the U.S. in maintaining
the U.S. dollar's role as the international reserve currency. China's
increased gold reserves will thus act as a model and lead other countries
toward reserving more gold. Large gold reserves are also beneficial in
promoting the internationalization of the Renminbi [Yuan]."
Chinese Gold Accumulation - In the five years from 2003 to 2008 china
added 454 tons of gold to their reserves. They amassed these reserves in a
government agency which handed over the extra tonnage to the People’s Bank
of China in 2008. We believe that they continue this policy of using a
non-central bank agency to gather gold for their reserves. If they do stick
to this policy they should make their next announcement in 2013. The volumes
of gold added up to 2008 could be seen as adding 91 tons a year since 2003
or, more likely, adding the growing domestic gold production directly to
their stockpile. If that is the case then we expect an additional amount of
at least 2,000 tons to be passed from the gold buying agency to the People’s
bank of China.
With the government licensing so many international banks to import gold to
China, Chinese citizens are buying directly from these banks and therefore
the international market. The accumulation of gold reserves in China is
therefore a total of the two sources. So don’t be surprised if China is
holding [citizens plus central bank] around 5,000 tons or more by 2013. This
is still a small amount compared to their dollar reserves. But central banks
don’t look at gold in quite the same way as mere mortals.
Gold Price Suppression - The Chinese belief that the U.S. and Europe
have always suppressed the rising price of gold cannot be refuted
reasonably. The gold sales by the U.S. and then in the seventies the gold
sales by the I.M.F. were direct attempts to squash the gold price in the
pretence that gold would be sold out of the system.
In 1978 the Second Amendment of the IMF Articles was intended to delete gold
from the international monetary system. The amendment followed the failure
of previous attempts to establish a new international monetary system. In
particular these included the failure of European countries to force the
United States to either settle its deficit in gold, or else devalue the
dollar against gold. This Second Amendment of the Articles barred members
from fixing their exchange rates to gold and removed the obligation on
members to conduct transactions in gold at the official gold price.
Not only did the United States refuse to keep gold in the system, it then
led a crusade against gold (while being careful to keep a very large
strategic stock of gold in its own reserve, sealed off from the outside
world).
Symbolizing the plan to drive gold out of the system, the IMF was instructed
[the U.S. held the deciding vote in the I.M.F.] to dispose of 50 million
ounces of its gold stock of 153 million ounces. It achieved this partly by
sales to the market and partly by giving some gold to members in relation to
their quotas.
Ironically, this exercise had the effect of spreading gold much more widely
through the international community than ever before, and gave many
countries a new interest in the gold market. Few countries showed any
inclination to sell the gold handed to them, and in the vast majority of
cases it continues to sit on their books. The later sales of gold were
snapped up so fast that the U.S. realized that they would really have to
sell all their gold, if they were to succeed, but they themselves valued
gold so much they halted those sales.
Accelerated Sales - From the mid-eighties central banks took a
different ‘tack’ on their anti-gold campaign. Just as there is not greater
patriot than, “he who commits you to his cause”, the anti-gold campaign then
allowed mining companies such as Barrick, to borrow central banks gold then
sell it forward for around five years at a time when gold prices were
falling. The mining companies then financed their own production, getting
the gold price up-front plus the interest accruing for the five years [the
Contango] and delivering their subsequent production back to the central
banks. This caused an acceleration on the amount of gold produced by mining
and swamped the gold market so much that the price of gold fell from $850 an
ounce in the eighties to $275 by the end of the nineties.
1999 the First Break in the Anti-Gold Campaign -The first fracture in
the developed world’s anti-gold campaign came when the Governing Council of
the European Central Bank decided that the national central banks
participating in the euro area should include gold in the initial transfer
of foreign reserve assets to the European Central Bank. The transfer was to
take place on the first day of 1999, the launch date of the euro as a single
currency. This action confirmed the importance of gold as a reserve asset.
The Governing Council decided the initial transfer of foreign reserves would
be to the maximum allowed amount of €50 billion. This figure was adjusted
downwards by deducting the shares of those E.U. central banks which would
not participate in the euro area at the outset i.e. to a total of
approximately €39.46 billion. The E.C.B. agreed that 15% of this initial
transfer should be in gold. Gold clearly enhanced public confidence a point
made in the 2009 Chinese cable [above]. Despite the gold sales under the
gold sale agreements, gold’s share of the ECB’s total reserves has grown
considerably since then due to the sharp increase in the gold price. As at
September 2010 the E.C.B. had 26% of its reserves in gold.
When the “Washington Agreement” was instituted in the year 1999 it attended
the launch of the Euro as Europe’s currency. The “Washington Agreement” plus
the subsequent European Central Bank Agreements were to sell ‘up to’ a
ceiling level of 400 or 500 tonnes of gold and was intended to establish the
euro as a major currency, without competing with gold. Like the U.S. sales
of gold, there was no intention to get rid of gold as an important reserve
asset, hence the strictly limited sales and the retention of the bulk of
gold reserves in the different national foreign exchange and gold reserves.
In it, they stated that gold would remain an important element of global
monetary reserves, and agreed to limit their collective sales to 2,000
tonnes over the following five years, or around 400 tonnes a year. They also
announced that their lending and use of derivatives would not increase over
the same five-year period. (The signatory banks later stated that the total
amount of their gold they had out on lease in September 1999 was 2,119.32
tonnes.)
The signatory banks accounted for around 45% of global gold reserves. In
addition a number of other major holders - including the USA, Japan,
Australia, the IMF and the BIS, either informally associated themselves with
the Agreements or announced at other times that they would not sell gold.
Including these, the proportion of gold reserves covered by the Agreement or
a similar announcement rises to around 85%.
The announcement of the Agreement came as a major surprise to the market. It
prompted a sharp spike in the gold price over the following days, but it
also removed much of the uncertainty surrounding the intentions of the
official sector. Once the markets had adapted to it, a major element of
instability had been effectively removed with the introduction of greater
transparency.
The Chinese are absolutely correct in believing that the U.S. and Europe
have suppressed the price of gold! The evidence is glaring at us through
history.
http://www.goldforecaster.com/
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