Dear Friend of GATA and Gold:
Gold researcher Jan Nieuwenhuijs writes today that he can't find any evidence that gold futures contracts on the New York Commodities Exchange are being used to suppress the price of the monetary metal. After reviewing the contract trading data, he invites readers to provide contrary evidence.
His analysis is headlined "Is the Gold Price Suppressed on the Comex Futures Exchange?" and it's posted at his internet site, The Gold Observer, here:
Responding to Nieuwenhuijs' invitation, your secretary/treasurer concludes that his analysis misses the crucial evidence, because that evidence isn't in the public trading data at all.
That is, the data does not show whether governments and central banks are selling gold contracts through brokers on the exchange.
If governments and central banks are selling gold futures, then gold price suppression is indeed government policy -- and there is much evidence that they are. For example:
1) At a hearing in U.S. District Court in Boston in November 2001 on GATA consultant Reg Howe's gold price manipulation lawsuit against the U.S. Treasury Department, Federal Reserve, Bank for International Settlements, and bullion banks that trade gold on the Comex, an assistant U.S. attorney declared that the U.S. government has the authority, under the Gold Reserve Act of 1934 and related statutes, to act on the gold price exactly as Howe's lawsuit complained:
2) Through its Central Bank Incentive Program, the operator of the New York Commodities Exchange, CME Group, gives governments and central banks special volume discounts for trading all futures contracts sold on the exchange, including gold contracts:
Such trading must be conducted through brokers approved by the exchange, which would provide camouflage for official interventions.
Would CME Group offer the discount program if it was never being used by governments and central banks?
3) The U.S. Commodity Futures Trading Commission, which regulates the New York Commodities Exchange, repeatedly has refused to say, even for a member of Congress, whether the commission has jurisdiction over manipulative futures trading undertaken by or at the behest of the U.S. government:
The commission's refusal to answer such a simple question about its jurisdiction is effectively confirmation that the U.S. government indeed is meddling in the gold futures market to defend the dollar and U.S. interest rates.
Analysis of futures market trading data doesn't tell much unless you also know the identities of the parties behind that trading. If governments and central banks are doing a big part of the selling in gold futures via intermediary brokers, the trading data alone won't reveal it. So Nieuwenhuijs' analysis here really doesn't address the price suppression issue. He's looking in the wrong place.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.