No hope for metals, or a ‘controlled retreat’ by central banks?

No hope for metals, or a ‘controlled retreat’ by central banks? by Chris Powell for GATA

Dear Friend of GATA and Gold:

In a letter he titles “Too Late to Throw in the Towel on Central Bank Gold-Market Rigging,” our friend J.U. writes

“Great piece you wrote about precious metals breaking out to the upside (http://gata.org/node/19326) but I suspect it is way too early to think that central bank market riggers have thrown in the towel on suppressing them.

“What I see, despite all the excitement of gold and silver bugs, is the setting of a bull trap much like what happened to silver at the hands of [White House Chief of Staff] Bill Daley when silver was allowed to run up to nearly $50 and then was smashed down to take all the wind out of the sails of the silver bulls, and silver has remained firmly under the control of the market riggers since, trapped in a narrow trading range between $14 and $17 for years now.

“Once they get as many longs in the bull trap as they can, they will smash silver again as they always do. As long as prices are set on the New York Commodities Exchange, there is no hope.

“I have watched this charade for too many years to believe it is coming to an end, especially when the Federal Reserve is about to embark on another round of ‘quantitative easing’ and the last thing it wants is to have gold and silver going nuts while they are trying to keep in the air all the balls they are juggling.”

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Your secretary/treasurer agrees that central banks won’t lose interest in controlling the gold price, and the scenario J.U. describes is plausible.

But now there is so much clamor from governments and central banks for currency devaluation — and, it seems, so much grasping by certain central banks for gold — serious downward pressure on the monetary metals may be very hard to maintain.

During the rise of the metals from 2000-2011 central bank policy seemed to be one of controlled retreat as they made cash settlements of their longstanding gold leases and disguised them as gold sales.

Central banks may revert to controlled retreat now that demand for the metals is increasing as a hedge against the insanity of the world financial system and the central banks themselves are splitting into opposing factions.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org

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Chris Powell

The Gold Anti-Trust Action Committee was organized in the fall of 1998 to expose, oppose, and litigate against collusion to control the price and supply of gold and related financial instruments. The committee arose from essays by Bill Murphy, a financial commentator on the Internet (LeMetropoleCafe.com), and by Chris Powell, a newspaper editor in Connecticut. Murphy's essays reported evidence of collusion among financial institutions to suppress the price of gold. Powell, whose newspaper had been involved in antitrust litigation, replied with an essay proposing that gold mining and investor interests should act on Murphy's essays by bringing antitrust lawsuits against financial institutions involved in the collusion against gold. The response to these essays was so favorable that the committee was formed and formally incorporated in Delaware in January 1999. Murphy became chairman and Powell secretary and treasurer.