The Secretary/Treasurer of the Gold Anti-Trust Action Committee, Chris Powell, addresses in an exclusive interview for MMNews different aspects that have to be taken into account when it comes to the gold market. In his point of view, the suppression of the gold price is a “war being waged by the U.S. government against the rest of the world.”

By Lars Schall

Chris Powell, the Secretary/Treasurer of the Gold Anti-Trust Action Committee, GATA, has been managing editor of the Journal Inquirer, a daily newspaper in Manchester, Connecticut, since 1974. He writes a column about Connecticut issues that is published in a dozen other newspapers in the state and Rhode Island and often appears on radio and television public-affairs programs in Connecticut.

He twice has been elected chairman of the Connecticut Associated Press Managing Editors Association and remains a member of its board of directors. He was legislative chairman of the Connecticut Council on Freedom of Information for six years before he gave up that post last year.

Mr. Powell is a member of the Connecticut, Manchester, and Vernon historical societies; the Connecticut Policy and Economic Council; Community Partners in Action (formerly the Connecticut Prison Association); and the New York, New Haven, and Hartford Railroad Technical and Historical Association.

Mr. Powell, your organization GATA was founded in 1999. What caused you and Bill Murphy to take this step?

We perceived collusive manipulation of the gold market and considered it a violation of anti-trust law as well as a moral wrong.

Is the attempt to manipulate the gold price a development that took place only since the mid-1990s or were there already ambitions to do so in earlier decades?

Governments have manipulated the gold price since gold began to be considered money. As central banking developed and became more sophisticated, it began to manipulate the gold price more surreptitiously, the surreptitiousness increasing the manipulation's impact.

For large parts of the 1970s, the gold price has had some kind of intimate relationship with the price of oil. Do you see similarities as well in the last decade?

Less so as both markets increasingly were manipulated with derivatives, oil up as well as down.

Is a high oil price good for the price of gold?

It could be if a rising oil price is taken as a sign of inflation and monetary debasement that can be hedged by gold, and if gold is permitted to function as a hedge against monetary debasement, without market intervention by central banks.

Another basic question: how does an artificially low gold price work against public purpose? Who are the injured parties apart from gold producers and speculators?

Because gold is a potentially independent currency, the rigging of the gold market is the prerequisite of the rigging of all the other currency markets, the government and commercial bond markets, the commodity markets, and the equity markets. Everyone is deceived. Most cheated are producers of commodities, savers, and countries whose economic governance is more responsible than that of the United States.

Is the suppression of the gold price the key to low interest rates? And if this is true, isn't then the suppression of the gold price a big feature of the financial crisis and the long period of reflation?

Yes.

How does this rigging of the gold market contribute to other frauds -- for example, at the currency markets?

It makes the other major currencies, particularly the dollar, seem stronger than they are.

Do you observe a currency war right now? How is this currency war related to gold?

The main currency war is the suppression of the gold price to support the U.S. dollar. This war is being waged by the U.S. government against the rest of the world.

Investors and traders will flee weakening currencies in favor of strengthening currencies, as by selling dollars for gold.

Is it safe to say that the last days of the fiat experiment are among us now that people themselves are bypassing the government and enforcing their own gold standard?

As long as there are governments, some will circulate money without any particular backing. I don't expect the fiat currency system ever to end. Rather I hope that discipline will be brought to currency systems by free markets in the precious metals.

Before we discuss the topic "central banks," why does the IMF prohibit gold-backed currency for its member states? How does it makes sense from a central banker's point of view?

The IMF is an association of central-bank-based governments. Prohibiting members from linking their currencies to gold is a matter of monopolizing power, of crippling the potential competition.

One basic scheme to suppress the price of gold, I suppose, is the so-called carry trade, in which central banks play the main role. How?

The idea is (or was) to make and keep selling gold and buying government bonds profitable -- to borrow gold at 1 percent and sell it to raise funds for  buying government bonds paying, say, 5 percent. The gold carry trade blew up some years ago and the gold price now is kept under control by naked short positions in the futures and options market that are essentially underwritten by central banks.

In which way participates the U.S. Exchange Stabilization Fund here in this intervention game?

The U.S. Exchange Stabilization Fund is specifically authorized by law to intervene in the currency and gold markets surreptitiously. It answers only to the treasury secretary and the president.

What reasons does GATA see to raise doubts that gold exchange-traded funds either have the gold they claim to have or can get enough real gold to meet likely demand?

ETF gold really isn't audited and the custodian of the main gold ETF is also a huge short in the gold market, a grotesque and unacknowledged conflict of interest.

J. S. Kim stated in a recent interview with me:

I think if U.S. regulators stepped in and said Goldman Sachs, HSBC and JPMorgan couldn’t participate in the gold and silver futures-market for three weeks – I really think you would see the gold and silver price more than double in that time.[1]

Do you agree with Mr. Kim?

In principle, yes.

Are ETF's basically the fundament these days of a suppressed gold price?

GATA thinks they are a primary mechanism of price suppression, preventing investment demand from taking real metal outside the banking system.

GATA has recently had some trouble with the U.S. Commodity Futures Trading Commission, CFTC.[2] May I ask you about your observations with regard to this "battle royal"?

We got a very valuable platform at the CFTC's March 25 hearing on the precious metals markets and we're grateful for that. We're impatient with the CFTC for its failure to act against metals market manipulation.

What news coverage did GATA and especially your chairman Bill Murphy receive because of this controversy?[3]

There was some news service and financial newspaper coverage.

What do you suppose the gold price would be if central banks were not supplying more than a quarter of annual demand?

I'm not sure how much real metal they're supplying lately but if they ever get out of the gold market there's no telling what the price would be. For that matter, there's no telling what the price of ANYTHING would be, except much higher.

From your perspective: Why is it that people don't call more attention to the fact that Central Banks claim as an asset the gold they lease out to bullion banks? Isn't this pretty much Enron accounting and why do not more people bring attention to this huge fraud?

The financial media are seldom inclined to make trouble for the financial establishment, from which they draw their advertising.

Why can't we use this fraudulent accounting practice to force audits of central banks to see if they truly hold the gold in their vaults that they claim they have?

With enough political clamor we could. We've been working on it.

What did GATA do, for example, related to an audit of the American gold reserves?

We're suing the Federal Reserve in U.S. District Court for the District of Columbia for access to its gold-related records.

Would you like to talk a bit about the German gold reserves as nearly "possessions" of the Federal Reserve in New York? Is there any reason why German folks should pay attention to this question?

The Bundesbank has said publicly that most of Germany's gold is kept at "gold trading centers." One has to assume that this means that Germany's gold is being used for price suppression.

As you remember, we've talked a few months ago about the fact that Barrick Gold was trying to close its hedge book. What does this move tell you in general?

It suggests that Barrick expects higher gold prices.

Is Barrick part of the suppression scheme, too? It’s a partner of the bullion bank JPMorgan Chase, right?

Barrick was part of the scheme when its hedge book was larger. I don't know about right now.

What do you see happening in the gold and silver markets in the future?

I hope that the price suppression schemes will be overwhelmed by physical demand in the next few years.

Mr. Powell, you're a journalist for a long time. Were your experiences related to GATA disenchanting with respect to the state of journalism?

I'm disappointed in the press but not surprised that it's reluctant to approach an issue so sensitive to the government and the investment houses.

How do you judge on the performance of mainstream media when it comes to the financial crisis?

Not high.

Do you observe other instances that tell you that journalism itself is in a profound crisis of its own?

Oh, yes. We're virtually in a depression and the demographics and intelligence of the country are declining generally.

What can be done to make things better?

Restore some standards in all areas of public life.

One final question: what would you like to see happen with the central banks of the world, in particular with the Federal Reserve System in the U.S.?

At a minimum, make them fully transparent and accountable, prohibiting them from withholding any documents or holding any closed proceedings.

Thank you very much for taking your time, Mr. Powell!

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