GATA: Gold Market Manipulation – ‘Huge Amounts of Money’ – Confronting the Facts – Taking the Fight to Them – The System Is Dysfunctional
Source: The French Connection
ROTHSCHILD’S GOLD FIX – GORDON BROWN’S SELL-OFF – BIGGEST FINANCIAL FRAUD IN HISTORY? – ‘PLAUSIBLE DISCOURSE’ – THE LAW OF MARKETS
GATA founder Bill Murphy discusses gold market manipulation, on The French Connection (transcript)
Audio of interview with Bill Murphy (MP3 audio)
DARYL BRADFORD SMITH: Welcome to The French Connection’s Saturday edition. Today’s date is the third day of April, 2010; of course my name is Daryl Bradford Smith. Great to have you here for another important broadcast of The French Connection.
Been following some very important stories over the last few months with many guests including Muhammad Rafeeq who I’m going to bring up in a minute. We’ve been looking at the Treasury auctions and how nobody signed up for them and problems with them financing their future debt; and it’s a debacle that is just coming to light now in the mainstream press. We were on this actually a year ago; we knew this was coming. We described its whole process to you during that time; but during that time we were also making mention in almost every program about the gold markets and how they were manipulated; and we were one of the first people to bring you information on tungsten bars; we also brought you information about the ETFs being oversold. I remember discussing with Muhammad the fact that I was going to the ETF website, and their core holdings were remaining constant, but they had doubled their sales. I couldn’t understand how that could go on; but in fact now the disparity between what they claim they hold and what they’re selling is even worse than twice; but I think that’s only the tip of the iceberg in the ETF market. But new information has come out recently on the London Bullion Market Association’s website, that they are in big trouble with the ratios of gold being held in the spot market in London and what they’re actually selling. And what I described to you last time was that people have been selling the same piece of gold to a multiple of people and giving them certificates for it! So in other words, it’s like if you bought a car and then showed up to pick it up, and a hundred other people had titles to the car that you’re buying; and you’re all standing there saying, “Well, which one of us owns it?” You know; and nobody pointing the finger at the guy that sold it to you – or at least not yet, the mainstream media isn’t.
The job that has been done by the GATA [Gold Anti-Trust Action Committee] people on this is extraordinary. I did an interview about three years ago – or more, even – with Bill Murphy, one of the cofounders of GATA. He had been claiming these problems and anomalies have existed for some time; and trying to bring people’s attention to it. And he’s been called a nut and pooh-poohed; and he’s been attacked; and I mean it’s been… well! The due diligence that he did in the first instance, and the tenaciousness of the group that he works with; and they’re all very high-quality professionals – good moral character – and they’ve worked hard. And finally we had some confirmation in the past week. And I have been able, today for you on The French Connection, to get Bill Murphy back on the line: and we’re gonna do a three-way call with Muhammad Rafeeq, myself, and Bill Murphy; and I’m gonna bring them up right now. Bill, are you with me?
MUHAMMAD RAFEEQ: I am indeed; good afternoon, gentlemen.
DARYL: Well, Muhammad, it’s great to have you back as well. Listen: the recent information and news reports that are coming on the alternative press – interesting that the mainstream press has stayed away from this like the plague – has been very clear that this crime wave has existed for some time. That the big bullion banks, the trading banks, JPMorgan Chase and HSBC over in London as principals, have been fudging their spot market numbers and selling as many as a hundred times, the same amount of gold. Do you want to get involved, Bill, and tell us how this all came to pass, and exactly what those ratios are and what crime has been committed here?
BILL: Well, I recently spoke March 25th at a CFTC hearing on precious metals about the requisition limits and about the markets in general. And somehow I got on a docket with 15 other people that were testifying in front of the CFTC which was televised webcast: of course, the only one whose feed went down during the webcast was mine!
DARYL: As one might expect, though, Bill: you know!
BILL: Yeah, it came up right afterwards; but when everyone was watching, they didn’t see us. But what we’re talking about here in this instance was that one of our guys, Adrian Douglas on the board of directors of GATA, had been talking for years about the volume in the LBMA versus the amount of gold they have. And to him, he thought that it was almost 50 times oversubscribed. And I was very leery of this: I said, “Hey, if this isn’t true, the bullion dealers are gonna bury us!” So what happened was, during the hearings, we had another supporter there named Harvey Organ, and Adrian Douglas, who was there to back him up on some things; and was able to get a statement in during the question and answer period, about this sort of a thing. But he mentioned just what you were talking about. And then one of our big critics, Jeff Christian of the CPN Group, who’s always on our case, didn’t realize that Adrian was a GATA guy. And he piped up to the chairman and said that, ooh, that previous speaker was exactly right – except it’s 100 times greater than what they had: meaning that there’s 100 times more promises for the same amount of gold. And we almost fell off our chair, because he made our case! I mean, and he’s a bullion guy: consults people all over the world on this. And he gave us instant credibility and blew this thing wide open. So it became a feature revelation from the CFTC hearing; although as well as catching fire over the internet like crazy, because of a whistleblower that showed up, we have still to get in the mainstream press. But that may change soon now; but until now, they blackballed us.
DARYL: Well, now, the important thing here – and Muhammad, I’m going to bring you up in a minute on this – what we saw over the last couple of years, Muhammad, is that the ETFs as well looked like they were double and triple selling their pot of gold. And I was watching and mentioned to you on several broadcasts, Muhammad, that their amount of gold in the fund had remained constant; and then three months later, they had doubled the number of sales they had made – and yet their gold reserve had remained the same. And I said to myself, “This has either got to be a mistake, or they’re messing up: I don’t understand this.” Well, I’ve come to find out from reports that I’ve dug up, they were actually selling way beyond the gold that they’ve got. So this seems to be an industry-wide thing; and there’s so much hubris in this group, they don’t really care very much whether you know it or not. What’s your take on this, Muhammad?
MUHAMMAD: Well, what I witnessed firsthand at the beginning of 2009, Daryl, was something which was really quite incredible in respect to the ETF fund holdings. I followed two of the largest ETF funds specializing in gold and bullion in the United States. And what they do in order to try and give this air of credibility, they have a spreadsheet you can download from their respective websites, that have a list of all the gold bars that they’re holding. And those gold bars usually have some kind of an ID number and a location where they are. And I was watching as the gold price was pulling up really hard, beginning of 2009 – late 2008, early 2009 – and I was witnessing at the same time that the retail sales in India had totally collapsed. The jewelry business had fallen through – was part of the wider economic collapse and financial collapse that we’re looking at. So the jewelry business as a luxury item was one of the first things to go. The gold price had got so strong that the Indian market couldn’t buy. And the idea was that consumption was higher than ever on the physical market because of these ETFs; and the ETFs were publishing larger and larger holdings, literally by the day. And then I went to the London Bullion Market Association’s spreadsheets, which are downloadable for physical settlements on a daily basis. And the quantity that these guys were claiming was appearing in the funds, versus the amount that was actually being recorded as physically settled – on the London Bullion Market Association – were chalk and cheese: they were just miles apart! One day you might have 50 ounces; and they were claiming that they’d just bought 10,000 ounces! There were these kinds of figures going on; and they just weren’t being settled anywhere. And there’s no way that they could have all been done as private sales – like you selling to me, Daryl, you know – because this stuff has got certificates on it. And so the suspicion that we came to last year – and which I still believe to this day – is that these ETFs are actually holding gold leases on bars which have not physically changed ownership. They’re just temporarily easing it and claiming it temporarily as an asset. That’s my take at the moment.
DARYL: Yeah, now Bill: go ahead, Bill. Do you have a comment on that, Bill?
BILL: Yeah: because in my testimony in front of the CFTC, part of it included the concentrating positions of JPMorgan Chase and HSBC in the gold and silver market: it’s worse! Their percentage of what they’re doing relative to those markets compared to what anyone else is doing in other markets, is just off the chart. And what’s interesting in what you’re saying is that HSBC is the custodian for the gold ETF [GLD]; and JPMorgan Chase is the custodian for the big silver ETF – SLV – in London. So here we are, where we’re just what you’re talking about, and that goes back directly to the comments we made to the CFTC to focus on their futures positions; and in the derivatives markets, the both of ’em have, I think, 95% of the precious metals derivatives in the over-the-counter and futures market. So it fits into right exactly what you and Muhammad are talking about.
DARYL: Well, and so now, let’s move on, Bill, about this next phase here, where we actually got a gentleman from the inside of the trading. And this is all over the net: so The French Connection listeners by and large are already well aware of these facts. But could you give a thumbnail on Mr. Maguire’s revelations, and then the importance of what he said. Because basically what he did is confirm that the fraud being perpetrated was, in fact, real: and you had been claiming this for years. And now you had somebody who actually was a trader; and his pedigree actually brings him back to Goldman Sachs, does it not?
BILL: Yeah, he used to be a trader with Goldman Sachs, and had these buddies at JPMorgan Chase; and they were forced to have a couple too many pops one night. And they’re so arrogant, they’re laughing at everybody how they’re making money ’cause they manipulate the market. And other people do what we have been saying: they gang up together – and probably in cahoots with the Fed and the Treasury who give them signals. And what happened was, he got mad at them because he said it’s wrong – and they were laughing at everybody; and actually, he himself admits that he went along with their trade. They signaled the market to the other traders; they all jumped on the same trade, forced out unsuspecting speculators – and were just making fortunes! And so what happened was, Andrew Maguire went to the CFTC last November and told them what was gonna happen and when, in advance – and even as it was happening. So there was an e-mail trail of this. And so what happened was, then he thought he would be able to testify – and it’s big stuff because he’s got the e-mails. On the CFTC hearing, they shut him out; and he got so upset, a couple of days beforehand, he contacted us – and I’ve talked to Maguire over the years. He went to Adrian Douglas – he subscribes to Adrian’s market analysis – and told him the whole story, and produced the e-mails, and actually has a taped conversation with the CFTC. Now there’s something: because we’re dealing with it, trying to get it legally, because you can tape somebody else, but you can’t give it to a third party. And, well anyway, he gave us all this stuff; and I was able in my question and answer period to bring up the e-mails and tell everybody what happened – what JPMorgan was doing – and I presented it to the CFTC. It was a big bombshell: it was a big whistleblower event. And what GATA’s done has caught fire all over the internet, because it’s what we’ve been saying for eleven years. And here is exactly what we’re saying is happening; and there’s e-mails between Maguire and the CFTC that were produced! I mean, it’s a bombshell: it’s huge! And of course, what it’s leading to is what we started off the show about: about this whole fraud in the gold market of the bad guys manipulating the market and selling the same gold to many other people – and it’s not there!
DARYL: Yeah: it isn’t there. And I’m going to clarify: you know, we talk in kind of codespeak here. CFTC, ladies and gentlemen, is the Commodities Futures Trading Commission in the United States: similar to the Securities and Exchange Commission, they’re supposed to have enforcement oversight over the commodities trading in the United States. And in fact, it is part of their job description to ensure that these very things don’t take place in the market. And the fact that they’ve been made aware of these things, and done absolutely nothing about it, means that they are a defunct organization, as far as I’m concerned. Because their main goal as an organization has been abrogated to a criminal enterprise. And I have to say to both you gentlemen: we are talking about a huge sum of money traded. Bill, I want your take on how much money is really being discussed here, as far as trading sums and fraudulent… you know, 100 times oversubscribed. What are we talking about here?
BILL: Well, you know, my colleague Adrian Douglas is the expert on this; but I mean, it’s just huge amounts of money. And that’s what the attention… if you get the actual value of the gold traded on a daily basis – I forget the exact number – but it’s astronomical. And it’s like a red flag. Just like as you were mentioning earlier, Adrian has been all over this; and it appears he’s been dead-on. We got it confirmed by one of the people we’re going after, in a bizarre twist: so, it’s huge. I don’t have the exact number; but it’s so big that it stands out like a sore thumb.
DARYL: Well, I actually wrote on my website that it could be as high as $4.5 trillion of total amounts.
BILL: It’s so big, it’s hard to get a handle on it. But the point is that all these revelations are coming to light and, you know, we’ve been after this 11 years. And as you said earlier, we’ve been called tinfoil hat people and whatever – and not getting the time of day. And so, it’s satisfying to see this news come out. We, January 31, 2008, got to put a full-page color ad in The Wall Street Journal: it cost us $264,000. And we talked about the catastrophe and disaster coming because of what the rigging of the gold markets is allowing these other dysfunctions to occur. And two months later, sure enough the markets collapse. And that’s because gold is used as a barometer, thermometer, of U.S. financial market health: it’s just the way it is. You know, we’ve had gold go up sharply; there’s all talk of inflation and our dollar problem or crisis. So they defused the barometer and toned it down and made it dysfunctional – and we were right!
DARYL: Well, you were right. Now, let’s talk a little bit about how they quashed the true value of gold in the marketplace. Muhammad, I want you to describe for everybody what a short position is, and what a naked short position is. You know, I’ll give you mine; and then you could add color to it. A short position is having an asset, and then knowing that in your belief system, it’s going to fall: so you take a position that that particular asset’s going to lose value. And if you’re correct, you’re going to win the difference between its present price and the fallen price. But a naked short is when somebody who doesn’t have control of an asset, is allowed actually to act as if he is an owner of an asset in the same relationship. In other words, you’re saying that an asset’s going to fall in value; but you have no asset to put that on. Which means, you’re basically making a bet on something that you have no right to be involved with. And I know that’s kind of difficult, ’cause short selling is a hard concept for a non-financial person to understand. And considering tens of thousands of people are listening to this, is there a generic way you can describe what a short is, and what a naked short is?
MUHAMMAD: I think a good way to understand it, Daryl, is to firstly make a nice distinction also between the two types of market. The London Bullion Market Association is dealing in physical gold – and physical gold only. There are no contracts there for future delivery. It’s bought and sold on the day; and then, two or three days later, cash and certificates of ownership change hands. When we look at, say, COMEX, which is the world’s foremost futures market on gold; or what we’re talking about there, a good example is that, say if we were a gold mine and we want to sell – irrespective of what’s happening on the London Bullion Market – and we want to start taking some money in today based on future production. What we can do is we can actually go and sell some futures for future delivery three months from now or six months from now on COMEX, against our future production. And what happens is that we will receive some money in, as of today: some deposit money, which we can finance the operation with. We then deliver to a COMEX safehouse on the day that the contract becomes due; and we receive the balance of the payment. That’s typically how gold gets into the safehouses. Now obviously, other people – and in that sense, you’re kind of selling short, because you’ve sold something – and this is why it’s permissible, why this stuff occurs in the first place. As a gold mine, we’ve got some production coming; but we’re selling future production. Now, once that principle is established within the financial marketplace, even people who aren’t gold mines come up; and the argument with the COMEX exchange is they say, “COMEX, we’re going to sell short some contracts.” We don’t produce gold; but, we can buy the contracts back on COMEX at any time – and you settle for difference. So the idea of somebody selling short on futures is that their plan, ordinarily, is to buy back once they believe the price has dropped, and settle for the difference – and make money on that price drop. So that’s the legitimate basis on which these trades came into being, was the gold mines and people who were in gold production activity. And then other big players turning round and saying, “Well, we don’t only want to buy this and make money going up: we can sell it and make money going down.” Now the naked short obviously involves the people who aren’t producing: they don’t hold any gold at all.
DARYL: So there’s no asset behind their play.
MUHAMMAD: Absolutely none. It’s also possible that, you know, you might have a couple of 100 ounce COMEX bars in your bedroom, in which case – and you think that the price is about to go down – so you could actually go out and sell those short now. But you’ve actually got some gold that, if anybody came knocking on your door and demanded it, you’ve actually got it in your hand, though. So that there are some people who have it as an asset; some people producing it; but then the third lot, the naked sellers, they don’t have any at all. And on the futures market, it’s not only gold: you’ll find that for pork bellies, for oil, for wheat…. It happens all the time now with the derivatives, the exchange-traded futures that people sell short: it’s very common.
BILL: That was very well put. And I’d like to just throw another two cents there. This is what we were talking to the CFTC about: about these concentrated positions. First of all, there’s nothing wrong with going short as a speculator. The question is, if you’re claiming to the CFTC that you’re allowed to have concentrated positions because you’re hedged – and you’re not hedged – it’s a fraud!
DARYL: That’s right.
BILL: And this is what we’re getting into. And this is what this revelation is, when we started the show about having 100 times more shorts than are really there. They’re just claiming, using what you’re talking about – these derivatives, this paper, not real gold – and they’re saying they’re hedging the futures markets with this other paper derivative. Well, that’s not what that’s supposed to be all about. If you’re claiming that you’re a hedger, then you need to own the physical gold to hedge it. And I think that’s what’s being found out; or what came out of this hearing that was, you know, actually another bombshell.
DARYL: That’s what I’m getting into right now, Bill. Now what happened – and what you’re saying here – is that they’re taking short positions: and there’s no way they can settle it.
BILL: That’s exactly right. And even as Jeff Christian came, he gave us another bombshell! I keep using that word; but he said, “Well, there’s a mechanism in place where you can settle in cash.” Well, as Adrian Douglas pointed out, if you’re settling in cash, you have a default!
DARYL: That’s right.
BILL: That’s a force majeure: you can’t deliver. That’s what that term is, force majeure – speaking of our French Connection here – I mean, you can’t deliver.
DARYL: That’s right. Basically, so what we’ve got here, gentlemen, is this marketplace is trying to depress prices by forcing huge numbers of short contracts out into the marketplace with nothing behind them: unhedged. And as a result, they trigger certain mechanisms within the markets to cause a cascading fall in prices – thereby actually profiting from it, because in fact their shorts pay them off, even though they didn’t have a right to have that position. And you said, when someone starts challenging that short – and causing a short squeeze – their solution is to issue more shorts. And you said yesterday that they said, “Oh, we have another way of fixing that too: we just add more shorts to it.” And the guy said, “Wait a minute: I have to fix my statement there.” And he came back with some other –
BILL: That’s exactly right. This Jeff Christian says, “We hedge those shorts by selling more shorts.” And the commissioner, Gary Gensler, said, “Excuse me: I don’t quite understand that.” And then – it’s part of the public record, by the way: that’s the beauty of this – he said, “Oh, I misspoke.” And he tried to correct himself; but I mean, he’d gotten himself in so deep, in so many ways, that he became our star witness.
DARYL: Well, Bill, you can tell by open interest how many shorts are being piled on. So I mean, there’s a paper trail of this doubling up when things are getting out of hand in their direction, that you can see that they double up on shorts and ultimately cause a falling in the price. Now, Muhammad, you were taking about a setup for this recently; and this may not take place now. If this gets a lot of legs – this truth – and the whistle’s finally blown, they may not be able to drag this price down again, like it looks like they’re trying to do. ‘Cause the last thing this gold cartel can handle is all their shorts going long and having a short squeeze. ‘Cause there’s absolutely no gold out there; and they haven’t got the physical to settle these; and I don’t think they’ve got the money in the amounts going on. You want to talk to that, Muhammad?
MUHAMMAD: Well, yes. I mean, as Bill’s rightly pointed out, there are occasions in the marketplace where people get caught, for whatever reason. So we might sell something short, thinking that’s we’re gonna make money. And actually, the price goes up; and when the price goes up, we lose money. And if it continues losing money up to the point where the contract completes – and that’s known as the maturity of the futures contract – when we hit the maturity date, what the general view is, that about two or three days before maturity – it may be a bit more than that, actually: it may be starting two weeks and up to three days before the maturity of a contract – if you’re going to take physical delivery…. So we bought contracts on the exchange: we have to notify them that we want to take physical delivery of gold rather than actually settle for differences – that is, to settle cash at the end. So you’ve got this idea that the reason that these people are selling huge numbers of shorts there – far more than, we were discussing, the gold warehouse, the actual stock of gold, which is in the secure, bonded warehouses of COMEX – the number of shorts that if everybody who’d received them, who’d bought on the other side, said, “We want to be delivered: we want to take physical delivery.” – they all gave notice – I believe that if you compare the open interest at the end of any specific month, say over last year – versus the amount of gold registered, held at COMEX – I think that it’s at least almost a hundred to one ratio, which is what Bill was saying. If people demanded delivery, not only do COMEX not have it, but the gold mines of the word can’t produce it. They’re talking about trading futures now to a level which is more gold than exists in the world. It’s getting to these kinds of numbers, over a twelve-month period. They’ve traded more contracts than gold physically exists – actually really exists – is known to exist. Which means that it’s impossible for it to be delivered – and of course, that’s only one exchange. That doesn’t include all the physical delivery which is going on to the jewelry manufacturers, being settled in London and throughout the world: Switzerland, et cetera. It’s impossible to make the delivery. And we have to then – as one of the things that Bill said right at the beginning was – there should be some limits on this. Because when there aren’t limits, you can come in and sell more gold than exists on Planet Earth; and of course the price is gonna go through the floor, because nobody can take that kind of a position. Nobody’s gonna try and buy against that, because it’s irrational in the first instance.
DARYL: Well, and that’s exactly what GATA has been claiming. ‘Cause anybody with physical, Bill, has hoped that they would get a possible appreciation in their held asset; and over time, they’ve seen repeated attacks. And many of these attacks have come in the fashion that Muhammad has described, where much of this gold that’s being brought into existence is fictitious or just paper gold, and nothing behind it. And as a result, your actual asset is being decimated by inflationary forces, or by so many other forces. So there’s been an ongoing, decades-long crime against legitimate investors. And there’s people who are in the gold markets regularly trying to speculate in some ways, keeping the markets going: they’re being robbed left, right, and center by the same mechanisms. Do you want to give a description here about what GATA’s most recent position is? I know that you’ve got a lot of information on your website: much of it, you know, it’s free to the public to look at. But it’s very difficult for a non-financial person to really wrap their brain around, because it’s getting more and more complex as time goes on.
BILL: Well, yeah. This is about as sophisticated a conversation as I’ve had in 11 years on this thing. But what I’d like to bring to the attention of your listeners is that it’s a fascinating story, in that gold’s gone up now ten years in a row.
BILL: So I said, “Geez, how can the shorts be doing their thing?” But they do it within the context of that. What they’re doing within the gold cartel is they’re managing their retreat: never to have too much excitement.
DARYL: That’s right.
BILL: They don’t want to get the speculators long. In a coordinated effort – which is what makes it illegal – they attack it and bring the price down. But, so you’ll say, “Well, geez, it’s going up that much!” But people say – and not just us, but many other people: it’s commonly talked about – that if gold had kept pace with inflation, it would be $2,300 an ounce.
DARYL: That’s right.
BILL: So it’s, you know, $1,120 an ounce: that’s how much they have hurt other people – and not just investors – to make money. And it’s caused some big problems within the mining industry: the prices weren’t high enough for the miners to go to work and to produce gold. So it’s exacerbating the thing in the future. That’s affecting a lot of people. And as we put in our ad, because they suppressed the price of gold, it helped make the other financial markets in the U.S. dysfunctional. Interest rates and the dollar weren’t really where they should be, had gold reflected its true price. And it led to chaos and the financial collapse we had.
DARYL: I certainly believe you’re correct in saying that it’s a major player in the overvaluation of the dollar; but that whole thing was discussed by the Fed chairman Greenspan back in the ’90s. And a lot of people knew that there was a disconnect beginning to broaden. It wasn’t something that was being addressed: in fact, it was being made worse throughout the ’90s. And somebody mentioned in one of the shows that I watch, about Larry Summers actually adding fuel to that fire. And so did Paulson; and so did Bernanke: I mean, they’ve all added –
BILL: Daryl, let me explain that here, because it was part of our testimony; and I think it’s very important how this all started. Robert Rubin was a Treasury Secretary; before that was, when he first started, late ’80s, he was the top guy here for Goldman Sachs/J. Aron in London. And he borrowed gold from the central banks – ’cause he realized he could borrow it cheaply at 1% instead of paying 8 or 9% – and he funded Goldman Sachs’ operation in London while he was there. Other people learned what he was doing; and they would borrow gold, pay the central bank 1%, sell the proceeds in the physical market, and use the gold for his operations. And it became a thing – and which I won’t get into now. It had to do with, then Long-Term Capital Management got it; and then they blew up; and so…. But he took this, when he became Treasury Secretary, and the suppression of the gold price – he did it on a much bigger scale – was the essence of his, quote, “strong dollar policy”: that’s what it was. And so he carried on; and Larry Summers – who’s now Obama’s top economic advisor – then became Treasury Secretary and did the same thing. Now, Summers knew all about it, ’cause when he was at Harvard, he coauthored a paper called “Gibson’s Paradox and the Gold Standard”, which is on there – you can find it on the GATA site, or it’s on the internet – of the relationship between gold and interest rates. In other words, if you could suppress the price of gold, you could keep interest rates less than what they should be. So this all fits together. And then further Treasury Secretaries and the Goldman Sachs connection with Paulson and even others: anybody who was in there, whatever administration, did the same thing. But now they’re running out of enough physical gold to continue; and that’s why the gold price is going to explode.
DARYL: And you knew that this reckoning day was on the horizon here, Bill, because they were running through… the amount of printing and the amount of money in circulation – and then the interest rates that are combined with that amount of money – are not reflective of the kinds of relationships gold should have with capital or with these fiat currencies. So the disparity was growing in enormous ways; and the relationship wasn’t growing. So what you’re saying is over the last period, $1,100, $1,200 for gold and 22 point [$22 silver price]… – I’ve heard as high as $5,000, Bill, especially with the printing presses running 24/7. But that’s just America: we’re not talking about the way this has affected the euro, the Swissie [Swiss franc], the British sterling…. We can go around the globe and say that these same forces are wreaking havoc on almost every fiat currency issued.
BILL: Yeah, well, the exciting part about it is – and yes, our consultant nailed it: Frank Veneroso’s pretty well-known in the gold world, was a speaker at our GATA African Gold Summit in Durban, South Africa, May 10, 2001. And he said in seven to ten years, these central banks are gonna be running out of gold to do what they were doing. And sure enough, the European central banks were selling 400 to 500 tons per year, for the past decade; in the last three to four months: nada, nothing. Now, what’s fun – also named so I can bring it to the attention of your listeners – is that the gold world tells people that the central banks have 30,000 tons of gold in their vaults.
BILL: Our work shows, through our consultants, they have less than 15,000 tons. The difference is what they’ve gone through to suppress the price. And now they’re hitting the wall – as we can see by the European central banks with their stopping of their selling. It’s only… now the gold cartel is running through their stash, what they have left; and eventually it’s gonna hit the wall – and the price explodes.
DARYL: And also there was a crunch point where Gordon Brown, as Chancellor of the Exchequer in Britain, sold a big chunk of British sovereign gold –
BILL: 115 tons.
DARYL: Yeah. Now that’s a huge amount – for the lowest price that he could get. And somebody said, in inflation-adjusted terms, it was the cheapest sale of gold in history!
BILL: Yes; and what happened was, on my website on the day before – this is how crooked this is – Deutsche Bank, who’s part of the fraud at least back then, told their client on the day before – and I have it in writing, again on my website – that the price is gonna collapse the next day. And then they announced this sale, which just buried the market – and the price collapsed. And we were told, pretty well corroborated by people, that this was done to bail out the bullion banks that were in charge that were in trouble – and that’s why he did it. And to curry favor with the big-money crowd.
MUHAMMAD: Of course, one of the things with that sale at the time, is that the central banks are empowered to sell under acts of secrecy. It’s an international agreement among central banks whereby, when they sell gold in large quantities or buy gold in large quantities for whatever reason – ostensibly to do with shoring up economies, et cetera: it’s supposedly done for the good of the economy. Nothing to do with helping out private banks; but it’s supposedly done for economic reasons and balancing Treasury numbers, et cetera. This can be done without recourse to the London Bullion Market’s physical settlements. So that’s the only time in international law when physical gold can be settled, and the market does not need to be told; and it does not need to be recorded as occurring. And for one simple reason: central banks often transfer large quantities of gold between each other; and it would affect the price dramatically, and affect the markets dramatically. So, ordinarily, central banks sell huge quantities of gold off-market. Sometimes they’ll make a small announcement that they’re making a private sale, or something like that; but it’s not to affect the market or the market price. The way that Gordon Brown actually did it was that he came out and made a public announcement. And I was working with some guys on the bullion desk at a particular bank in London at the time that the announcement was made. And he kicked $40 off a $300 price in a single day. So if you think of that as a percentage, he knocked about 14-15% off the price of gold in a single day, when he didn’t even legally need to make the announcement – to depress the price. So he went out specifically to lower the price of his own sale.
BILL: That’s right: that’s right on the money.
DARYL: What you’re saying is that’s a crime, and it’s a theft against the British public. Because that was supposed to be in their Treasury; and now it is, anybody knows…. But, there’s other things that have happened in this marketplace, where some of these central banks have actually leased out their gold: the physical gold is no longer in their possession, although they claim it to be part of their asset class. But that gold has ended up in other coffers; and they’re also claiming it as an asset. So you’re getting double-booking on certain assets through the leasing program. And many people believe – as you pointed out, I think, Bill, on GATA – nobody’s even sure if Fort Knox has gold in it; and nobody’s done an audit on it.
BILL: No outside, independent audit since 1955. We have no idea. We believe that it’s encumbered in some way. Actually, GATA’s right now, we’re suing the Federal Reserve because we’ve tried to get some information on these terms called gold swaps – with changes of gold in different countries. And we’ve caught them in some of the minutes: they forgot to redact it. And we’ve gone to the Fed; and President Obama wants “transparency”: so we said, “Okay, let’s be transparent on this.” And they came back and said, “We’re exempt from telling you: this is secret information.” Secret?! It’s supposed to be America’s gold! So what happened was, when they said that, the end of the year, this past year, we’re suing them in district court under the Freedom of Information Act to get to what the truth is.
DARYL: Well, so now, this whole thing is going to unwind. And, you know, there were already problems back in the ’70s. And they knew that the leveraging of gold as a backing for currency was going to…. They had already jigged the fiat currencies; and there was no backing. Nixon had to retreat. The world system just started going crazy from there; because what happened, in my view, from historic research, is that as soon as the gold standard was gotten rid of in the Bretton Woods II agreement, there was no longer any real transparency. And everyone stopped paying attention to the relationship gold had directly on currencies, ’cause they figured it didn’t have any importance – or it had diminished importance. But what we find out today is, its importance hasn’t diminished; and that in fact they have been using it. The numbers that gold represents have been used; but the physical gold behind it is not there. So what we’re coming to now is a crunch point… well, we’re coming to a crash point. These numbers – these fraudulent figures and the backings for them – are not meshing with what they’ve claimed: and this could bring down the entire financial system. Is that a fair statement, Bill?
BILL: Well, you know, in reality, yes. But in reality, what the heck if gold goes to $3,000 or $4,000? I mean, it means the miners will make a lot of money; and it’s what they have done that could effect that. Because if they had just let gold trade freely – let’s say now it was $2,600 an ounce – well… so? But, it would have done a lot of things for preventing things; but it would have been a free price. But what they’ve done by suppressing it: now when it blows up, just as our financial system is in the deepest of trouble, and trying to recover – and that’s a whole different subject. But if gold explodes now, yes it’s what could happen; and they did it! It didn’t have to be that way.
DARYL: Well, Muhammad, what’s the relationship between the fiat currencies and gold in the modern world, in your view? Because they’re still tied together. The euro claimed when it was launched that 20% of its backing comes from gold bullion – which is no longer true and can’t be true. So they said it’s a pseudo-type gold-backed currency – which tried to give it some early legitimacy. But we have the Swissie over there, which they’re sitting on top of huge pots of gold; and no one really knows how much they’ve got in relation to their currency. What is that relationship in this modern paradigm?
MUHAMMAD: Well, I think one of the reasons for the disconnects which Bill is talking about, was an attempt by the architects of fiat currencies to try and shore up the idea of fiat currencies. Because when they discovered that they were able to issue paper with absolutely nothing behind it whatsoever, it was like having Christmas every day. You know, there was no justification for how much of the money supply is in circulation. They just vote it up and vote it down, how and when they feel like it. And the Swiss, whose currency historically has always been backed by gold, even they started to buy into the idea that, hey, we can just print as much as we like; and if it looks like there’s too much, we’ll pull some out; and if we want to put some more in, we don’t have to worry about how much physical gold. So part of this secret battle which has been warring away there, has been by the fiat currency supporters, who’ve never wanted a return to anything like a gold standard of any description, or a gold relationship. So that one of the reasons for kicking gold is that single reason. Then, as Bill pointed out, there’s the politicization of that history. There were a lot of ideas in the mindset of people in the financial markets, to do with relationships between social economic numbers and interest rates – and the price of gold. And again, they wanted to artificially bring about that disconnect, to make people move away from it. Where that’s bringing us to, of course, is that, in the current paradigm, where we have a collapse of the financial system – not the economic system: that’s collapsing secondarily; but the financial system’s collapse – people have turned back to gold. So they’ve ultimately failed in everything they attempted to do there. The next round, I believe – and this is something that you and I have spoken about, Daryl; and Bill, you’ve probably come across this – against something which the mainstream media is burying like nobody’s business – is that a large amount of physical delivery has certainly occurred within the last two to three years, which was nothing but gold-plated tungsten. That is scary.
DARYL: Well, now there are two schools of thought on this; and I’m going to bring up my contra view here. It could have been that they produced a thousand of those bars and pushed them around: so that would scare any big investor from wanting to buy it, ’cause they wouldn’t know what they were getting. I don’t believe that’s true. See, if I’m taking delivery of a 400 ounce bar of gold, I would get the thing tested. I’d have a core drilled; or I’d have… I mean, we’re talking about too much money here. And to get a sovereign government taking delivery – China, for instance – and then not putting a drill bit right into the center of it and pulling a plug out of it, and saying, “Wait a minute: I can only go down an eighth of an inch, and I’m hitting something too hard to drill through” – it doesn’t make any sense to me. And, of course, they’ve got testing equipment today that would indicate to them electronically that they weren’t dealing with gold, but rather a combined metal. And so the point is, it could have been used in the marketplace as a way of frightening the public away from even wanting to buy the precious metal. So I’m not entirely sold on the idea that there’s 1000 or 1,000,000 or however many bars of this tungsten-gold – although we have seen it crop up in the marketplace. Bill, do you have any knowledge of these tungsten bars?
BILL: Well, I heard all about it, of course. And you know that we have so much to get into; and our story is so wild; and there’s so much other stuff that you and Muhammad are talking about that’s just so incredible, that we don’t need to go there. I’ll leave that for someone else to prove it. I mean, I’ve heard about it; I know there’s an investigation in Hong Kong about it; but I don’t know much more. I just know that what we have, it’s all for right now: and eleven years’ worth of stringing together evidence of this gold price suppression scheme is exciting, you know, as can be. And just for people to get a handle on that, is a whole lot.
DARYL: Well, it is; but I think all of it actually comes together as a single fraud. Because these are all tools of management of this market, Bill. And I think, you know, the tungsten part of it is just one other means of suppression – one other means of making deliveries that are fraudulent, if you will. So basically –
BILL: Yeah, but I don’t know if that’s a fact. I mean, I heard all about this quite a bit; and it just very well could be. It’s just, the stuff that we’re coming out with, we know. So that’s the reason I don’t go there. I’m not saying it’s not true; I’m just saying we don’t have the evidence like we have on all this other stuff we’ve been talking about.
DARYL: Well, exactly. Now, Muhammad, when it comes to what we’ve got coming up here: it’s not making it into your London press. The Guardian hasn’t touched it; The Independent’s not touching it; The Times isn’t picking it up. I don’t think the FT [Financial Times] has picked it up either; or La Tribune here in France. Now, you did mention, Bill, The Wall Street Journal has actually shown some interest: what kind of –
BILL: Well, I want to be quiet about that one. There’s the potential; I’d just like to leave it at that. They’ve shown some interest; but I actually want to keep that thing out of this conversation.
DARYL: How long can they run from these facts, though? I’m wondering how long they can run away from this.
BILL: Well, the FT has mentioned GATA twice. But the English press and the financial press here in the United States has blackballed this story. It’s incredible. I mean, even after my hearings framing these bombshells we dropped, they wouldn’t mention our name. There were three Reuters reporters there: nothing! nada! It’s unbelievable! So at some point this thing is gonna break. But we’re taking on the richest, most powerful people in the world: and the media doesn’t want to hear about it because they’re petrified. Because, you know, they’re going against where their financial supporters are, and so on. I mean, it’s like if you mention this story, you’re dropped from the A-list party group: I mean, you’re persona non grata.
DARYL: You’re not invited to the big dance! But Muhammad, listen: I’ve got a question for you about the Rothschild banking structure getting out of the London fix, back in the ’90s. And this was well into the fraud stage. According to what Bill’s saying, they were well on their way to double-billing and triple-booking these assets already when he got out. Maybe he [Evelyn de Rothschild] saw the direction of this and didn’t want his financial empire to be tied inextricably to what was coming: ’cause this was always going to end badly. What’s your take on that?
MUHAMMAD: Well, it’s not that he saw the direction: he made the direction, Daryl.
MUHAMMAD: One of the things to realize is that when gold was at its peak of around $800 in the early to mid-1980s, we changed the way in which physical pricing occurred in London – from being an open market. And the argument was made through my favorite term, “plausible discourse”: the plausible discourse was put forward to the British Government that, you know, people were no longer gonna be interested in asset-backed currencies – it was all gonna be fiat currencies – and that the best thing to do was to minimize the importance of the gold market. That argument was put forward by N M Rothschild & Sons bankers in London. And before we know it, a committee of five men – one of whom represented his bank, and then four other banks – would sit in London twice a day and do the gold fix in his office. And he chose the price. He sat at the head of the table; the other four representatives sat at the table; they threw some prices ’round and came out. That is the guy who single-handedly, over a period of just over a decade, brought the price down from $800 to just below $300 an ounce. It all happened in his office: steadily, steadily, steadily chipping it all away. So it wasn’t something that he suddenly realized was happening and took action: he was one of the main protagonists in making it happen [on purpose]. That is utterly undeniable; and as Bill said, is a matter of open record. Until 1995, by which time the damage had been done. Once it had got down to that price, by 1998 to ’99, we find Gordon doing the insane sell-offs, at those prices: taking an extra $40 off by announcing the sale in advance.
BILL: Muhammad, why did they [N M Rothschild & Sons] get out of this fixing business – I think it was around 2004: why did they say they were no longer gonna be involved?
MUHAMMAD: Well, that was partly to do with the new European system of central banks; and it was also party to do with the internet. He started to feel very uncomfortable, Bill: because at the time that he was doing those settlements in London, hardly anybody knew. If you weren’t a member of the London Bullion Market Association, you didn’t know what the process was: it was clandestine. The British public didn’t understand. If the British public understood that one man was setting the price for gold worldwide, effectively, they would have been up in arms. But as the information started coming out about what he’d been up to – and this position of privilege that the government had given him – he just did not want to be associated with that whatsoever. Because, you know, there are all sorts of allegations; and you get into the politics of accusations, et cetera, and defending yourself using slogans like “anti-Semitism” – when we’re talking about gold. So, you know, people get very very nervous when they get called racist – and that’s the bottom line.
BILL: Yeah, well, but Muhammad, I have one question for you: because we’ve been talking about this among our group for so long. Do you think it’s also possible that he knew what we’ve been talking about earlier – that this thing could blow up? And he wanted to get as far away from it – or they did as a firm – as possible? Now there was just this derivative thing we were taking about, and the overcommitment? I mean, nobody would know better than this firm of the scam we’re talking about. In other words, he knew it was gonna blow up someday: so they wanted out! Didn’t want to be around it.
MUHAMMAD: That’s right. They didn’t want to be there when it all goes wrong: absolutely.
BILL: Yes: that’s my point. Do you agree with that?
MUHAMMAD: But also, he was on the receiving end of those purchase prices. When we start looking at who took physical delivery of those British sales, I think you’ll find that he wasn’t very far away. Because they also, they knew it was gonna blow up. But they also understood that they’d been manipulating the price down; that you can do that for a decade, maybe even two decades: create an artificial price. But ultimately, the law of markets is – and this is the point: once he’s removed and put it out to the market, these prices started climbing back again over ten years. Once the manipulation had gone, it started finding its natural level; and it’s still on the way there. And this is a very important point now, Bill: because gold’s now hit the $1,200 mark – and it’s being taken seriously as an investment medium – the press in this country has not been able to avoid the question of, “Why did Gordon sell it off so cheap?” So the mainstream media have picked up on that story. And as gold continues to grow in price, I believe – and it becomes more attractive as an investment, and more and more people chase it – all these other questions will come into the limelight. Like, you know, “Why was the price down there? Why are these people depressing the price? Why are they able to short more that the entire gold stock of the world?” All these whys are gonna start coming out. And the first one is, “Why did you sell off our gold so cheap?” He’s lost seven billion dollars at today’s prices; and the British public want blood.
DARYL: Well, and you know, guys – I have to say, Bill: one of the only advertisers that’s still buying airtime on British television is, “Sell your gold to us: put it in an envelope and we’ll give you the top price.” And in an hour’s time you’ll see 20 different companies, all vying for the public’s scrap gold. And it’s the only ads that they have on TV anymore. I mean, this is turning into, like a nightmare for these people, because you can see that everyone in the world is becoming desperate for the physical. And it’s gonna end badly for a lot of these crooks, as far as where the story ends. But interestingly, you know, Muhammad and I have actually looked into others markets, and the frauds that have gone on in the Treasury sales, and so many other things. We’re talking about a systemic failure of not only the gold market, but the Fed’s Treasury markets. There’s so many places right now that are on the precipice, that it won’t take much to send the whole thing into a crumble.
BILL: That’s right. I have one question: Where did you guys learn so much about the gold market? I mean, I’ve never had such a sophisticated conversation before with people outside our group.
DARYL: We’ve been doing this a long time.
MUHAMMAD: I started at the Bank of England about 25 years ago, Bill. And I’ve worked in the City of London for most of that time, on and off. And I’ve worked on the bullion desk at one of the largest Dutch banks.
BILL: It’s so impressive. And I’m not just doing this to stroke you: I really mean it. It’s a pleasure to be a part of this discussion.
DARYL: Well, Bill, a decade ago – a little more than that – I was a teacher of finance here in France. And it got to the point where I couldn’t teach anymore, because I didn’t believe what I was telling my students. So I had to leave and, you know, I’m a hound dog: if you put the scent in front of me, I’m going to follow it. And I linked up with a lotta good, quality researchers over time. And we’ve been able to extract a whole set of facts – not just in the gold markets, but in many markets. And it all leads back to the same people, in both instances. And of course, again, you know, we run the risk of being called… we’re against a certain religion or something: that is a complete nonsense. We have only gone to where the facts lead us. And we want to be very clear that much of what we learn about this crime wave comes from the Jewish community. They themselves publish a lot of the information we end up getting; and they collaborate with the exposure of a lot of this as well. So it’s certainly not, in our view, anything to do with anti-Semitism. But the fact is, when you get to the top, you find Goldman Sachs, you find N M Rothschild, you find people over at JP; and you find that a certain group is in de facto control of all of it. And it’s painful to watch the rest of the world be afraid to confront these facts, for fear of being called a name by the group that we’re investigating. So it’s kinda like a criminal saying, you know, “You’re an anti-criminal,” or something: and that’s supposed to be an epithet that keeps you from investigating them.
And we’ve ended up in a situation now, where we’re not very worried about what they call us. We’re more interested in bringing out as many facts to as many people as we can. And I think that’s been GATA’s role. And I go to your website regularly, Bill: I actually have never missed a single week where I haven’t spent some time perusing the things you’re doing. And frankly, a lot of our stuff has been spawned through your research: I must be honest.
BILL: Well, thank you. Well, we’re all fighting the good fight. And I want to thank you very much for this discussion; and I’ve enjoyed it immensely.
DARYL: Well, we’ve got about a minute and a half here: Muhammad, you want a closing statement before we shut this interview down?
MUHAMMAD: Yeah: I’d just like to say that, the same as what you’re just saying, Daryl: it’s great work which the GATA site has been putting together and the guys have been doing. The fact that they’ve been challenging in the courts at stateside, and that they’re challenging the press to look at this stuff and pick up these stories, and the mainstream media. It’s crucial work: we need more people out there doing this kind of thing, taking it to them – taking a fight to them; make the words come out of their own mouth, as GATA have done. ‘Cause, you know, a fact is a fact. You can lie around it all day long: it still doesn’t change the fact. A fact remains a fact.
DARYL: That’s right. And Bill, I’ll give you the last word on this broadcast, Bill.
BILL: Well, just thanks very much for having me on. Hopefully your listeners are a bit more enlightened. You know, as I said, we’ve been on this for 11 years. I think the story is going to break big time in the weeks and months ahead: we’ll see. I think once we get the first two or three stories in the mainstream press, then it’ll catch fire. But everyone’s afraid to talk about it, from what we said earlier. So it’s close; and as you mentioned earlier, I can’t wait for the bad guys to get theirs.
DARYL: Well, me too. Ladies and gentlemen, that’s gonna bring us to the end of this hour-long discussion we’ve had here. I do hope to have further discussions with both Bill, Adrian, and even Mr. Maguire, if we can possibly get him on to talk about these issues. And it’s all very important for the future of all of our families. And so, keep a close eye on what’s going on in this world: things are hotting up. And until the next time, ladies and gentlemen, this is Daryl Bradford Smith telling you all, please, be well. Bye-bye now.