"Today Zero Hedge posts a couple of items suggesting that central banks are intervening surreptitiously in the markets even more lately to avert deflation or that they should intervene more -- items suggesting an end to gold price and commodity price suppression as central bank policy.
The first item is from an anonymous commodity trader who can see no other explanation for the recent rally in commodities:
Such speculation is plausible since, as Eric Scott Husander, the founder of the market data firm Nanex in Winnetka, Illinois, disclosed in 2014, CME Group, operator of the major futures markets in the United States, has been offering volume trading discounts to governments and central banks for secretly trading all major futures contracts on CME Group exchanges and counts governments and central banks among its customers:
The second item at Zero Hedge reports a paper by an analyst for bond house Pacific Investment Management Co., Harley Bassman, advocating that the Federal Reserve should start buying gold to stimulate the economy by devaluing the dollar, as the U.S. government undertook devaluation against gold in 1934:
Such thoughts evoke the paper published in 2012 by the American economists and fund managers Paul Brodsky and Lee Quaintance speculating that central banks were surreptitiously redistributing the world's gold reserves and aimed, upon the scheme's completion, to revalue the monetary metal substantially upward to reliquefy themselves, a paper GATA often has called to your attention:
Indeed, the idea of an upward gold revaluation to avert debt deflation was also broached in a 2006 paper by the Scottish economist R. Peter W. Millar, called to your attention by GATA the following year --
-- and even by a former member of the Federal Reserve Board, Lyle Gramley, during an interview with Business News Network in Canada in 2008. Though BNN seems to have removed the video of the interview, your secretary/treasurer transcribed the relevant passage when he called it to your attention here:
For several reasons your secretary/treasurer long has been inclined to believe that gold price suppression would be followed by an official gold revaluation.
First, of course, as Millar noted in 2006 and as Bassman notes now, official gold revaluations have happened before.
Second, because official market intervention to suppress prices always causes shortages eventually, that being the lesson of the collapse of the London Gold Pool in March 1968:
And third, because central banks and governments could not survive any steady erosion of their currencies in favor of gold; their currencies would become vulnerable to quick collapse. As a result central banks and governments would have to get in front of the inevitable and make it seem like their doing and thereby preserve the impression that they remain in control.
So if the stars are aligned for an official revaluation of gold, will this nullify GATA's work?
Not at all.
For as much as GATA's research long has implied a huge and uncoverable short position in gold underwritten by central banks and thus a much higher price for the monetary metal, and as much as GATA may be placed in the camp of "gold bugs" and gold investors, GATA's objective has not really been a higher gold price. Rather, GATA's objectives have been free and transparent markets in the monetary metals and commodities; limited, accountable, and democratic government; fair dealing among the nations; and an end to imperialism, whose primary mechanism in recent decades has been currency market rigging, just as it was the primary mechanism of Nazi Germany's exploitation of occupied Europe during World War II:
It will gain the world little if gold's upward revaluation merely begins another, more sustainable round of gold and commodity price suppression and the undermining of free and transparent markets and democracy by central banks and governments, free and transparent markets and democracy being the great engines of human progress and liberty.
That's why the questions GATA raises are likely to remain compelling, though we may despair of their ever getting posed by mainstream financial news organizations and market analysts:
-- Are central banks trading the gold and commodity markets surreptitiously, directly or through intermediaries, or not? (Of course they are, and GATA has summarized much of the documentation of this trading here --
-- though it can never be addressed by people who suppose themselves respectable.)
-- If central banks are trading the gold and commodity markets surreptitiously, directly or through intermediaries, is it just for fun -- for example, to see which central bank's trading desk can make the most money by cheating the most investors -- or is it for policy purposes?
-- If central banks are trading the gold and commodity markets surreptitiously, directly or through intermediaries, is this trading for the traditional purposes of defeating a potentially competitive world reserve currency, or have these purposes expanded?
-- If central banks, creators of infinite money, are surreptitiously trading a market, how can it be considered a market at all, and how can any country or the world ever enjoy a market economy and democracy again?
Let’s look at some of the catalysts driving this perfect storm...
"This week we had the launch of the long awaited Shanghai Gold Exchange fix, something that has been purposefully underplayed by the mainstream media. Then, hot on the heels of the SGE launch, the PBOC (People’s Bank of China) and Russia’s central bank announced a joint gold trading platform. This is an act of war against Western central planners, who have played right into their golden hands.
But I think it is important to take a look at the history of how this new SGE fix has come about and why and how it was so hard fought by Western central planners, as this draws attention to the underestimated implications this will have on price discovery, which up until now has been the domain of the paper markets.
China Checkmates The West In The Gold War
More importantly, it illustrates that Western central planners have lost the war against China’s move to wrest away control and to consolidate the gold market, a market that was once firmly under Western control. Obviously, this has huge implications. Given that there are billions of dollars of underwater derivatives under threat and price is increasingly being set outside of the (bullion bank) market makers control, the pressures for a gold price reset are massive.
With China playing the long game, the (upside) battle is now won. But knowing the LBMA bullion banks would try to skirt the SGE fix, China forewarned these (Western bullion) banks that if they didn’t participate, they would be barred from participating in the Chinese gold markets. Furthermore, any manipulation attempts by the bullion banks would be dealt with the Chinese way, not the bought and paid for Western regulators’ way. So this is a true game-changer.
And you can add into the bullish mix Deutsche Bank admitting to colluding with several other bullion banks in order to rig bullion prices. Aside from the multi-billion dollar civil law suits that will ensue, some of which are already filed, the key element here is the agreement by Deutsche Bank to release transcripts that prove collusion. This is a huge deal.
Andrew Maguire And Deutsche Bank’s Confession
Perhaps Deutsche Bank will attempt to seek immunity from prosecution, but given the banks they will formally name that will be at the center of the evidence I provided to the regulators in 2009 – 2011, it looks like these regulators will finally be forced to act. Either way, once it is realized that the true gold price is as yet undiscovered and related to billions of dollars worth of entrenched naked short derivative bets, the sharks will smell blood and watch out above (as the price of gold will soar).
Right now the Western central planners are losing control of the precious metals market reigns, as evidenced by the distinct changes in market behavior. Historical correlations are evaporating and we are seeing a push into physical on a scale I have never witnessed before. All dips are going to be bought and discounts from here on will be shallow, and the only thing that can save Wester central planners is a…To continue listening to the powerful KWN audio interview with whistleblower Andrew Maguire that will be released later today, and you can access it when it’s released..."
