Dear Friend of GATA and Gold:
Surely many issues remain to be addressed arising from last week's panicked protest to the Bank of England by the London Bullion Market Association and World Gold Council about the impending "Basel 3" regulations emanating from the Bank for International Settlements:
Here perhaps are a few of them.
-- The report does not well explain the World Gold Council's participation in the protest. Indeed, the council's participation could look like an afterthought, since the protest does not provide much detail for its claims that the impending "Basel 3" regulations would harm gold mining companies. The protest simply asserts that the new regulations, driving up bullion bank costs for using "unallocated" gold -- that is, bank credits for metal that may not even exist, "paper" gold or imaginary gold -- will increase financing costs throughout the gold mining industry.
But if the creation of vast amounts of "unallocated" or imaginary gold by LBMA members is suppressing the gold price, as GATA and others long have maintained, then making "unallocated" gold more expensive for banks to carry will, as the LBMA / WGC protest claims, push those banks out of the "unallocated" gold business. Diminishing the supply of "unallocated" gold almost surely will drive up the price of real metal -- and with a rising price of real metal, gold miners should have less trouble getting financing from institutions that aren't seeking to sabotage the price of the mining industry's product.
Its endorsement of the LBMA's opposition to higher gold prices may support longstanding suspicions that the World Gold Council exists mainly to ensure that there never is a world gold council, that the council is a creature not of the gold mining industry but of its major bankers.
-- While the LBMA / WGC protest confirms that the impending "Basel 3" rules are supportive of a higher gold price, those rules are not in force yet, and the Bank of England and other central banks still could postpone their implementation or revise them to the satisfaction of the London bullion banks, as the protest requests. The BIS could postpone or revise them too.
-- The protest raises the question as to which side of gold the BIS is on. For while the BIS, the central bank of the central banks, apparently would push the gold price up with its "Basel 3" rules, the BIS also long has been a primary broker for central bank intervention in the gold market, providing camouflage for that intervention --
https://www.gata.org/node/11012
-- undertaking large and surreptitious gold-related trades every month --
https://www.gata.org/node/21001
-- and thereby, to use the euphemism of the LBMA / WGC protest, "providing liquidity to the market," helping to hold the gold price down. Presumably the BIS also continues to execute trades on behalf of the U.S. government, whose longstanding policy has been to suppress the gold price and drive the monetary metal out of the world financial system to protect the U.S. dollar's status as the world reserve currency:
https://www.gata.org/node/13310
So are there now both pro- and anti-gold factions at the BIS, just as there are among central banks generally? What exactly is the BIS' policy on gold? Just what is the BIS doing in the gold market, for whom, and for what objectives?
GATA has posed those questions many times, and the BIS itself has replied cordially that it won't answer them:
https://www.gata.org/node/17793
Indeed, while the elected agencies of government around the world are free to determine speed limits, the hours during which liquor may be sold, tax rates, and such, the valuation of currencies and thus the power to determine the value of all capital, labor, goods, and services in the world, the power to determine who has money and wealth and why, is not a matter for democracy.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
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