It's strange what you encounter when you try to take a serious look
at the gold policy of central banks and their agents, the bullion banks.
Some observers, including the Gold Anti-Trust Action Committee
(GATA), estimate that Western central banks have on hand nowhere near as
much gold as they claim. These observers suspect that much Western
central bank gold has been sold or leased largely surreptitiously to
restrain the gold price over the last two decades.
Here is the explanation provided to me in an interview by the Canadian financial analyst and fund manager
Marshall Auerback when I asked: Do you think that the Western central
banks and the International Monetary Fund really have in their vaults
the gold they say they have?
Marshall Auerback: "In a strict accounting sense they might, but it
might be irrelevant. I suspect that the central banks have not been
selling much gold over the past few years since the inception of the
Washington Agreement on Gold, but I think they have still been leasing
considerable amounts into the gold market. From a flow standpoint, it's irrelevant whether the gold is sold or lent, as it still appears as supply in the market.
"So the key question becomes: Can the leased gold be recovered by the
central banks? The work of GATA and others such as Bob Landis and Reg
Howe suggests that the gold cannot be recovered. In effect you have a
'prison of the shorts' situation, whereby the gold that has been lent
out and melted down to become, say, part of some Indian bride's dowry
will not be coming back into the market.
"Ultimately, I think, the central banks will ratify this in an
accounting sense by reclassifying the leased gold as sold, so from a stock standpoint, that will validate GATA's argument that there is far less gold being held by the central banks than is commonly believed." [1]
Moreover, major news organizations avoid the gold market manipulation
issue although it might seem to be a godsend for them -- the Financial Times,
The Wall Street Journal, The New York Times, Reuters, Bloomberg News,
the Associated Press, etc. They seem reluctant to put to central banks
any pointed questions about gold.
On August 13 GATA Secretary/Treasurer Chris Powell published a list
of gold-related questions that financial journalists could put to
central banks:
http://www.gata.org/node/11661
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