Central bank subversion of markets, the producing class, and democracy

Central banks, LBMA are one and the same; and gold price suppression's Asian angle

Submitted by cpowell on Thu, 2015-10-29 20:15. Section: Documentation 3:29p CT Thursday, October 29, 2015
http://www.gata.org/node/15898

Dear Friend of GATA and Gold:
Freelance financial journalist Lars Schall today reports another brief exchange with the press officer of Austria's central bank, Christian Gutlederer, that is illuminating though it wasn't meant to be.
Schall originally asked Austria's central bank to have its executive director, Peter Mooslechner, answer some questions about his comment to Kitco News last week at the London Bullion Market Association conference in Vienna. Asked about the role of central bank gold reserves, Mooslechner volunteered that "central banks in Asia ... are increasing their reserves a lot and they are much more active in using also their reserves in trading in the market and intervening into the market":
http://www.gata.org/node/15878
Schall sought details from Mooslechner --
http://www.gata.org/node/15897
-- asking:
-- Can you elaborate on the trading of gold by central banks and their use of gold for market intervention?
-- Exactly which central banks are doing this trading and intervention, what are its purposes, objectives, and results, and what markets are involved?
-- Are this trading and intervention public and announced or are they secret and surreptitious?
-- Are this trading and intervention undertaken directly by central banks or through intermediaries?
-- If this trading and intervention are undertaken through intermediaries, who are they?
-- Should markets and citizens generally have the right to know about this trading and intervention?
-- And how do you know about it, Herr Mooslechner?
Gutlederer replied: "Sorry, we are not going to answer your questions. We never comment on our investment strategy and trading."
When Schall protested that he had not asked about the Austrian central bank's "investment strategy and trading" but about Mooslechner's assertion of surreptitious intervention in the gold market by Asian central banks, Gutlederer replied: "We are never commenting on the strategies of other central banks and to make it clear from the very beginning I added we are not commenting also on our strategies."
But of course Mooslechner had commented on "the strategies of other central banks." If this is something the Austrian central bank "never" does, how did Mooslechner get away with violating bank policy?
The explanation lies in the context of the central banker's seemingly prohibited comment.
Mooslechner was speaking on the sidelines of the LBMA meeting in Vienna to a simpleminded and compliant reporter for an Internet news organization that always shills for the financial establishment. Given the location, the central banker well could have thought that he was among colleagues and that his remarks would not escape a friendly circle.
Indeed, other recent interactions between central banks and representatives of the LBMA also demonstrate that for all practical purposes central banks and the LBMA are actually the same institution.
For example, telling disclosures about surreptitious trading in the gold market by central banks were made by the director of operations for the Banque de France, Alexandre Gautier, at LBMA meetings in Rome in September 2013 and in Lima in 2014.
At the meeting in Rome, Gautier said that the Banque de France is trading gold for its own account and for the accounts of other central banks "nearly on a daily basis":
http://www.gata.org/node/13373
At the meeting in Lima, Gautier said central banks are managing their gold reserves "more actively" using gold swaps:
http://www.gata.org/node/14716
And in a letter to the Bank of England's Fair and Effective Markets Review Committee in January this year --
http://www.gata.org/node/15241
-- LBMA Chief Executive Office Ruth Crowell argued that the bank should facilitate gold lending by central banks as a means of providing "liquidity" to the gold market. That is, that central banks should keep letting LBMA members handle central bank gold reserves to prevent any shortage of metal in the market that might drive the price up and make government currencies and bonds less attractive.
Crowell could not have expected that her letter to her pals at the Bank of England would become public, even if it was placed in the bank's public archive, because no mainstream financial news organizations will ever consider market rigging by central banks.
All this signifies that the London Bullion Market Association is a primary mechanism of central banks for surreptitiously managing the gold market, for preventing it from becoming a market at all. The central bankers and LBMA members get together regularly at LBMA meetings around the world to share information relevant to this market rigging and to nurture social relationships. What is supposed to be confidential government information in shared with friendly outsiders, like Mooslechner's observation about secret intervention in the gold market by Asian central banks.
And when this information accidentally leaks out through overconfidence in the central bank and bullion bank fraternity that nobody else is paying attention, central banks like Austria's pretend that the information is not supposed to leave central bank offices at all, though it is being shared with LBMA members all the time and is immensely tradable and facilitates insider trading.
* * *
Mooslechner's specifying Asian central banks as the ones lately using their gold reserves to intervene secretly in the gold market gives credence to the speculation three years ago by the U.S. economists and fund managers Paul Brodsky and Lee Quaintance that the central bank gold price suppression scheme is part of a plan to redistribute world gold reserves more fairly, particularly to holders of large surpluses of U.S. dollars and U.S. government debt, so they may be hedged against a devaluation of the dollar:
http://www.gata.org/node/11373
It would make no sense for Asian central banks to be, as the Austrian central bank's Mooslechner says, "increasing their reserves a lot" and then "using their reserves in trading in the market and intervening into the market," knocking the price down, unless the objective was to scare off private buyers of gold so central banks could obtain more for themselves.
There's a great story here, the financial news story of the modern age, about the subversion of markets, the producing class, and democracy by the unelected elite of the financial class, central banks. Too bad that the first rule of mainstream financial journalism is never to put a critical question to a central bank, and especially not a critical question about gold.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.