The link on the Sharps Pixley website to the above article doesn’t seem to be working and readers can’t access it at the moment, so here’s a second copy of the original article:
GATA Points to ‘Proof’ of Gold Price Suppression Intent
It has long been claimed that the gold price, along with virtually every other traded market, is manipulated by financial interests which can lay hands on sufficient funds, or credit, to be able to do so. That is an unfortunate aspect of the capitalist system and tends to benefit the big money, mostly at the expense of the small investor. But since its formation in 1998 the Gold Anti-Trust Action Committee (GATA) has gone a stage further with its claims that not only is the gold price manipulated (which suggests it can be pushed up as well and down), but that there is collusion by big money (mainly the bullion banks), central banks and governments to go a stage further and keep the gold price SUPPRESSED, given that a rising gold price is seen by the financial markets as a sign of weakness in the almighty dollar and in the global economy. That runs counter to the impression that governments wish to portray.
From time to time GATA has also managed to acquire documents which support its point of view in terms of memos from some key figures, particularly from the US Treasury and Federal Reserve, which would appear to support the idea of a gold price suppression policy. And now it has just been involved in publishing a document, dating back to the early 1970s, which has just appeared in the TF Metals Report, citing a cable obtained by Wikileaks.
The cable, according to GATA, suggested that the U.S. gold futures market was created in December 1974 as a result of collusion between the US government and gold dealers in London to facilitate volatility in gold prices and thereby discourage gold ownership by US citizens. That is perhaps an arguable contention as it perhaps rather points out the consequences of a change in US policy in allowing citizens to own gold.
The cable was sent to the State Department from the US Embassy in London and describes the embassy’s extensive consultations with London bullion dealers about the imminent re-legalization of gold ownership in the United States and possible substantial gold purchases by oil-exporting Arab nations.
The cable reads: “The major impact of private U.S. ownership, according to the dealers’ expectations, will be the formation of a sizable gold futures market. Each of the dealers expressed the belief that the futures market would be of significant proportion and physical trading would be minuscule by comparison. Also expressed was the expectation that large-volume futures dealing would create a highly volatile market. In turn, the volatile price movements would diminish the initial demand for physical holding and most likely negate long-term hoarding by U.S. citizens.”
The cable is interesting not just for confirming the assertions by GATA and others in the gold-price suppression camp that futures markets also function as mechanisms of commodity price suppression and support for government currencies, an assertion perhaps first made comprehensively in 2001 by the British economist Peter Warburton, but also for showing the close connection at the time between the U.S. government and London-based gold dealers and producers, some of which are cited by name. Those cited include Samuel Montagu & Co., Sharps Pixley & Co., Mocatta & Goldsmid, and Consolidated Gold Fields. The first three mentioned were at the time London’s largest bullion dealers and the latter was in effect, mainly through its South African subsidiaries and associates, the world’s largest miner of gold.
It should be noted, however that none of the above cited companies exist in their original form nowadays, and, except perhaps for Mocatta’s successor, can no longer be considered part of any grouping which exerts any significant effect on the gold price today. The following is a note to set the record straight on this given that the companies quoted may well have had a major influence in the markets around four decades ago.
Thus, Samuel Montagu is no longer a bullion dealer/broker, but now just forms part of the private banking service of HSBC. The name was actually last used by HSBC in 2000. But its former precious metals broking activities will now form part of HSBC’s continuing business – but not under the Samuel Montagu name.
Sharps Pixley was bought by Kleinwort Benson and then by Deutsche Bank which effectively closed it down. Subsequently the name was acquired by current CEO, Ross Norman, who relaunched the company around six years ago as a website portal to sell gold in UK markets, as well as providing news and information about the precious metals markets. In 2013 Sharps Pixley was acquired by Degussa Goldhandel from Germany which claims to be one of the largest sellers of retail physical gold in Europe, but the Sharps Pixley end is still run by Ross Norman. It recently launched a state of the art retail bullion shop/outlet in London’s prestigious St. James Street.
Mocatta & Goldsmid is now ScotiaMocatta, the precious metal and base metal banking division of the Bank of Nova Scotia, while Consolidated Gold Fields was originally the controlling entity for the gold mining company that is now Gold Fields of South Africa.
The abovementioned cable from the US Embassy in the UK to the State Department perhaps does not quite provide ‘proof’ of US Government involvement in actual gold price suppression, but is yet another piece of circumstantial evidence that it was certainly aware of the likely effects of the futures market on the gold price pattern and may well have colluded in this as being in its best interests.