No need for ‘theories’ with gold — just address the facts and documentation

by Chris Powell, GATA Dear Friend of GATA and Gold: Here’s another financial analyst who can’t be bothered with actual analysis, at least when it comes to gold: Peter Hodson of 5i Research Inc. of Waterloo, Ontario, former chairman of Sprott Asset Management. In commentary published today in Toronto’s National Post, “5 More Reasons Why Investors Shouldn’t Worship Gold Right Now” —… — Hodson offers a paragraph titled “Conspiracy Theories Won’t Help Gold.” It reads: “Every time gold goes down, the gold bugs blame the price drop on a takedown by some secret cartel working with the banks. The theory here is that governments do not want investors losing faith in fiat currencies, so they control the gold price to make paper currency look better. “Having once worked at a gold-focused fund company, although being a gold bug was never my thing, I’ve heard all the theories on gold and gold manipulation. “These theories may not be all bogus, but if gold could not find any reason to go to US$3,000 an ounce during the financial crisis, when banks worldwide were imploding daily, then it is hard to make a bullish case for gold when financial conditions are improving daily. “Gold is just another asset class, and its price is based on supply and demand. If the demand was there, the price would rise, regardless of any conspiracy theory. But the demand is simply not enough, so the price continues to drift down.” Your secretary/treasurer tried to post a reply to the story but the National Post seems to be rejecting it. It said: “Gold’s price is based mainly on surreptitious intervention in the market by central banks. This is not ‘conspiracy theory,’ though the regular secret meetings held by central banks to devise and implement a course of action are fairly described as conspiracies. Rather, this intervention is longstanding central bank policy extensively documented by the Gold Anti-Trust Action Committee here: “Financial journalism should address the documentation. There’s no need to evade the issue with mere ‘theory.'” Hodson and other analysts should address these questions in regard to gold: — Are central banks in the gold market surreptitiously or not? — If central banks are in the gold market surreptitiously, 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 in the gold market for policy purposes, are these 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 again? Again, there’s no need for mere theories and surmise with the gold market. There is a need to deal with facts and documentation and to go to the source, as with any other market. If you haven’t done that, don’t pretend that you have. CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc.

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