Articles & Blogs - Gold Commentary

User Rating: / 26
PoorBest 

I ended Part I having concluded my review of the process of this debate, where I pointed out a number of serious deficiencies. Most specifically, the host of the debate, Jim Puplava, allowed Jeffrey Christian to poison the atmosphere by repeatedly denigrating both Bill Murphy and GATA with his gratuitous rhetoric – contrary to the explicit “rules” for the debate which Puplava had announced.

At the same time, I told readers that despite those defects, when it came time to analyze the substance of the debate that they would encounter revelations which will confirm all the suspicions of the gold-bulls – and shock the “disbelievers” of gold-manipulation. Now it's time to deliver on that promise.

To Puplava's credit, most of the topics for debate were selected right off of GATA's web-site. This partially negated Jeffrey Christian's advantage, which I discussed in Part I: Bill Murphy had to try to positively establish a proposition, while Christian was in the position of merely being able to deny, deny, deny. Given those parameters, the prospects for significant insights appeared slim. However, as gold-bulls are learning, we should never underestimate Jeffrey “100:1” Christian.

After all, the prospects for any useful developments at the CFTC hearings seemed slim, once that corrupt entity refused to allow veteran metals-trader, and “whistle-blower” Andrew Maguire to testify about the years of rampant, precious metals manipulation which he had directly observed in his own, personal experiences...and then Christian shocked the world by stepping in front of the microphone and blurting out that the “gold market” was a hundred times the size of the actual amount of “physical” metal in that market. However, I'll return to Christian's previous revelation later on.

The first topic in the debate was GATA's observation that officials for the Bank for International Settlements had openly acknowledged gold-manipulation as a basic “tool” for maintaining “stability” in monetary markets. For those not familiar with this shadowy institution, the BIS is the “central bank” for central bankers, and thus (at the least) they would be aware of any broad, international efforts to “manage” (or manipulate) the price of gold.

As readers will remember from Part I, Christian opened the debate by categorically stating that “in all of my years of involvement in the gold market, I have never seen any evidence of any efforts to manipulate or suppress the price of gold.” Thus, he was given the opportunity to either deny that such manipulation had taken place, or to simply deny the comments.

Christian did neither. Instead, he said that what the Bank for International Settlements had been talking about was not the bad manipulation alleged by GATA, but rather good manipulation – and therefore that GATA had “taken this out of context” (one of Christian's favorite accusations against GATA). He claimed that the manipulation which those bankers referred to was what had occurred prior to 1971, when the world was still on a quasi-gold standard.

At that time, the U.S. dollar (the world's reserve currency) was pegged to the price of gold, at $35/oz. Christian claims that the manipulations of the gold market which took place at that time were simply to “help” maintain the U.S. dollar at that fixed exchange rate, and thus this qualifies as “good manipulation”.

A couple of comments must be made at this point. First, having read statements by BIS officials myself, I saw nothing in my own reading which specifically referred to that period of time. Second, at best, manipulating any market is unethical, and therefore the most-favorable characterization of such an activity which could be (accurately) made was that it was “not expressly illegal”.

However, for the sake of argument, let's suspend those observations, and take a closer look at the “good” manipulation which Christian passionately defended. As is generally the case with bankers, Christian left out some rather important details in defending this banker-manipulation. All he was willing to divulge was that the U.S. dollar was “under considerable [downward] pressure” when this manipulation was conducted. Somehow, he 'forgot' to mention how and why the U.S. dollar was “under pressure” and so I will fill-in-the-blanks for him.

A gold standard, even the bastardized version which existed until 1971, imposes a degree of fiscal discipline on governments. Specifically, governments must stay relatively close to a balanced-budget, or the “mechanics” of the gold market serve to “punish” spendthrift governments – by causing rapid out-flows of a government's precious gold-reserves, to satisfy the debts being incurred.

Thus, in 1971, the U.S. dollar was “under pressure” because the U.S. government had (for the first time in history) embarked upon a reckless, fiscal campaign of soaring deficits, and (consequently) excessive money-printing. It was the fiscal sins committed by the U.S. government which caused this “pressure” on the U.S. dollar, and in the eyes of Christian (and his banker-buddies) this “justified” manipulating the gold market – in order to attempt to perpetuate unsustainable fiscal policies (which severely harmed the American people).

In other words, the bankers were committing a second sin to try to cover-up their first sin. Given the rampant hypocrisy which bankers demonstrate every day of their lives, I'm sure it's no surprise to most that they subscribe to the belief that “two wrongs can make a right”. Yet all I've done so far is to explain how the U.S. dollar came to be under pressure. It's also essential to point out why the U.S. dollar was under pressure.

As the 1960's progressed, the United States began spending exponentially larger amounts of money to fund its despicable and immoral “military adventures” in Vietnam and much of the rest of Southeast Asia. Among its many virtues, the gold standard is a “pacifist”, which doesn't allow the funding of frivolous wars.

To sum it up, the “good manipulation” which Christian defended so fervently was to manipulate the gold market in order to cover up the cheating which the U.S. government was doing with its accounting, which (in turn) was all done so that the U.S. military would have enough money to continue their relentless carpet-bombing of millions of innocent people in Southeast Asia.

There were two, subsequent, similar episodes in the debate, addressing two other incidents where bankers had admitted (or discussed) manipulating the gold market. Both involved former chairmen of the U.S. Federal Reserve: William McChesney Martin, who served from 1951 until 1970; and the infamous Sir Alan Greenspan.

Repeating his previous pattern, Christian used his serial defense that GATA was once more “taking this out of context”. In the case of McChesney Martin, Christian reiterated that this was just more “good manipulation” from the 1960's. In the case of Greenspan, Christian claimed that Sir Alan was not talking about bad manipulation, which was actually taking place, but was speaking hypothetically, about more “good manipulation” in which he was ready/willing/able to engage.

While Christian's version of these events is merely his interpretation, rather than something he could demonstrate explicitly, I'm prepared to be charitable. Let's assume everything that Jeffrey Christian said about these anecdotes is 100% true, and then analyze his position.

It was Christian, himself, who told us that the gold market was regularly manipulated prior to 1971, in order to prop-up the U.S. dollar (the same Jeffrey Christian who claimed categorically that manipulation didn't exist). What must be obviously noted is that GATA (and all the rest of us who allege manipulation) claims that the manipulation taking place today is also totally aimed at propping-up the value of the U.S. dollar.

In other words, the only difference between the manipulation which Jeffrey Christian freely admits took place prior to 1971 and the manipulation which GATA argues is taking place today is that the manipulation taking place today would be obviously illegal, while the prior acts of manipulation were arguably legal...Sorry, there is one other difference: because the U.S. dollar is much more grossly overvalued today (now that it is backed by nothing), this means there is much more downward pressure on the U.S. dollar (versus gold) in our current era – and thus a much greater incentive for the bankers to engage in their manipulation today.

Essentially, this is what Christian's argument boils-down to: because U.S. officials didn't voluntarily and explicitly confess to illegal manipulation of the gold market (while engaging in routine, official testimony), but only confessed to legal manipulation of the gold market, that this means that illegal manipulation doesn't exist. Obviously, the only basis for attaching any weight to such a feeble argument is if Christian could have provided examples of public officials who did voluntarily confess to crimes (spontaneously), while giving official testimony.

But Christian was only beginning to undermine his own position. As part of his “defense” of good manipulation, Christian discussed the underhanded modus operandi of these bankers:

One of the first things you know about intervention in [i.e. manipulation of] the currency markets, and its true of central banks, but it's also true of private institutions [emphasis mine] is that it's much more effective if people don't know what you're doing. They only see the effects you know, I mean there are reasons why people don't want the market to see them coming [emphasis mine]...then maybe what we have to do is to suspend some [government] publications for a while, so that people don't see us reporting this almost immediately...

There are many comments to make about this passage. To begin with, after freely admitting that manipulation of the gold market was a routine activity by central bankers, Christian now tells us that both he and all of his banker-buddies understand that gold-manipulation (and any currency manipulation) is much more effective if you conceal it.

So, after confirming that gold-manipulation exists, and confirming that bankers engaged in gold manipulation to prop-up the U.S. dollar, thanks to Christian we now know of two superb motives for bankers to hide that activity today. First, it's illegal. Second, it works better if the bankers lie about it.

Of course, Christian added much more than that. He pointed out that central bankers like William McChesney had no compunction about hiding their activities until it was convenient to report them. Obviously, there would never, possibly be a “convenient” time for the bankers to admit to illegal manipulation of the gold market.

Understanding the implications of Christian's remarks, Bill Murphy interjected at that point – to warmly and profusely “thank” Christian for doing so much to help make GATA's case, and in so doing, Christian also seriously eroded any credibility he might possess.

Presumably, someone with as lofty an opinion of himself as Christian possesses should be able to understand that after categorically denying the existence of any “manipulation” in the gold market, that his long-winded discussion of how and why the gold market was manipulated represented a blatant contradiction of his own words.

However, I am sure that there are a few Christian “loyalists” out there who (at this point) would be willing to argue that he didn't contradict himself (i.e. lie), but rather merely “misspoke” (a seemingly frequent occurrence with Christian). They would argue that what Christian really meant when he categorically denied the existence of any gold manipulation was that he only meant the “bad manipulation” alleged by GATA didn't exist.

If Christian had been able to stifle himself at that point, such an argument might have at least remained plausible. Unfortunately for the bankers who insist on having him speak on their behalf, “Loose-lips” Christian couldn't get himself to stop there.

In the third and final part of my review of “The Great Debate”, I will focus on three topics: some of the laughable fallacies which Christian tried to pass-off concerning the gold market, Christian's attempt to “explain” his famous “100:1” remark, and Christian's own example of the bankers engaging in “bad manipulation”.

TrackBack URI for this entry

Comments (5)

Subscribe to this comment's feed

...
written by fu.rieger, May 24, 2010

Jeff Christian: "... cheats and whores like Gata."

http://www.bullionbullscanada....d=6&id=616

• 
• +1
• 
• 

...
written by goldmint, May 20, 2010

Let me correct what I wrote. He said countries lease gold in order to take advantage of high gold prices.

• 
• +0
• 
• 

...
written by paxjds, May 20, 2010

Jeff,
A small omission in your article is besides the Vietnam War, President Johnson was spending money "faster than a drunken soldier in a house of ill repute" on the massive Socialist policy called the Great Society.
To the Crooked Reserve, I mean Feaderal Reserve Bank, and all large Banks, and Bullion Banks; all manipulations are good manipulations. I think it is great to know that they have been manipulating before 1971. The Truth be known, the Crooked Federal Reserve has been manipulating since they were formed in 1913. That is why the dollar today is only worth 4 cents today.
There is a 45 minute film called "The Creature from Jekyl Island. I think any article you write concerning the Banksters of the world, that you provide a link to this history of the founding of the "Crooked Federal Reserve" to today. These banksters of 0% Nobility and 0% Honesty here and around most of they world, bring poverty and misery to the people of the world. I have traveled in my career all but Africa and seen the extent of worldwide poverty that IMHO is mainly a result of Banksters and not very Altruism politicians in almost all countries. They manipulate just about everthing, and everything evolves to more poverty. Appearences of benivalence is just a manipulation of the masses.
Now we are approaching the collapse of world economies and currencies that have been manipulated beyond gold asnd silver. To all people of good will, IMHO I reccomend physical: 80% gold, 15% silver, and 5% lead insurance to defend these and your family when the riots and breakdown in society start because of the years of excesses of Bankster Manipulations of more than just Gold and Silver.

• 
• +0
• 
• 

...
written by Jeff Nielson, May 20, 2010

Goldmint, I missed that particular comment, I'm afraid - but I'll certainly take your word. Not being bound by "the truth", Christian quite often says one thing...and then says the opposite a little later.

Yes, supposedly no one wants gold in a high-interest environment because (so goes the 'logic') gold generates no "income". Of course, the real truth is that no matter what rate of "interest" we are able to collect on our paper money at any point in history, that money is ALWAYS losing value at a faster rate.

On the other hand, gold is the only vessel/vehicle able to perfectly preserve our wealth. Thus, irrespective of whatever the NOMINAL interest rate is at any time, it's ALWAYS "a good time" to convert our wealth to gold (or silver).

• 
• +0
• 
• 

...
written by goldmint, May 20, 2010

Christian said countries lease gold in order to take advantage of high interest rates. I thought they leased at low interest rates. Why would another country want to pay to lease gold other than to manipulate the price of gold?

• 
• +0
• 
•