THE MANIPULATORS WILL LOSE THEIR #GOLD WAR: GATA'S BILL MURPHY (EXCLUSIVE INTERVIEW)

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Bill Murphy

The Inteligencia Financiera Global blog (Global Financial Intelligence Blog) is honored to present another exclusive interview now with GATA’s Bill Murphy.

Thanks Bill for accepting this interview.

-Maybe most of people in the gold world know about you and GATA. Nevertheless, for those who don’t know: Who is Bill Murphy? Where do you come from a financial point of view and what did motivate you to found the Gold Anti- Trust Action Committee (GATA)?

Hello Memo.

Thanks so much for your interest in what GATA has to say. I have a Wall Street background and worked for Shearson Hayden Stone and Drexel Burnham Lambert in Manhattan in the late 1970’s and early 80’s. At one point I became a limit position trader in the copper market after forming my own company, so I am very versed in how the futures market works in the US. In 1998 I realized the Internet was going to be a big deal and opened up www.LeMetropoleCafe.com as a subscription website which would focus on the gold/silver markets, as well as provide coverage of the US and world economies. Soon after opening up for business, the famed hedge fund Long Term Capital Management blew up. They were known to be short hundreds of tonnes of gold and that would have to be covered. However, it was clear that bullion banks such as Goldman Sachs, JP Morgan, and Deutsche Bank were capping the price around $300 in a collusive manner. My future colleague Chris Powell had anti-trust experience via his newspaper business. He suggested we try and stop it, so GATA was formed.

-In our last interview, Hugo Salinas Price told us that only a blind or a Harvard economist with a doctorate would not see the gold market is being manipulated. Do you agree? As I understand it, one of the main purposes of GATA is to communicate this fact to as many people as possible,  and end this manipulation, but, Bill, isn´t it a lost war? Aren’t the manipulators “too strong to be stopped”?

Yes, Hugo is right on the money. It could not be more obvious. So much so that James McShirley, a speaker at GATA’s London conference in 2011, has written in advance at times what the gold will do on a given day. From a bigger picture someone only need to appreciate what the price of gold did last year compared to the DOW on the same quantitative easing news. The DOW went up 3,000 points and the gold price went down $600. That would have made no sense to anyone ahead of time. Gold went lower as it did because “The Gold Cartel” forced the price down with massive raids in the derivatives paper market, often when few traders were around.

Yes, this Gold Cartel is extremely powerful. But, they have an Achilles heel, and that is the physical gold market. The Chinese demand for physical gold is so massive, it is eating up the available central bank gold supply needed to suppress the price. The Gold Cartel’s raids haven’t gained any traction on the downside this year. Thus, the manipulators are being forced to retreat again as they did for 12 years in a row. They won the battle for 2013, but will lose their Gold War in the years ahead.

-As you know, many pundits like CPM Group’s Jeff Christian and famous investors like Jim Rogers say that they ignore allegations on gold market manipulation because those are mere “conspiracy theories”, what would you answer to them?

Hugo already said it best. Those who deny the manipulation are either working for the other side, suffer from cognitive dissonance, or have a “not invented here syndrome complex.”  Three points to make:

*The Gold price was rigged for many years in times past, in the open, as in the London Gold Pool in the 1960’s. Why should now be any different? It is just surreptitious intervention this time around.

*It is recognized these days that most financial markets are manipulated. What, so gold and silver are two of the only markets not manipulated these days. JP Morgan alone was just fined some $20 billion dollars for rigging, or interfering, in eight different markets.

*As my colleague Chris Powell says, “GATA is a fact finding organization,” and we have 15 years worth of documentation to back that up. Here is just one of them which confirms what GATA has known all along: Secret IMF report: Hide gold loans and swaps for market manipulation (http://www.gata.org/node/12016)

-Bill, could you explain who does this manipulation? Why and more important how do they do it?  What’s the ultimate purpose of the manipulators?

The Gold Cartel, as we call it, has the BIS, The Fed, The US Treasury, The Exchange Stabilization Fund, and various bullion banks such as JP Morgan Chase, as its main operators. Other central banks are called upon to supply physical gold into the marketplace from time to time. They conduct their operations by feeding central bank gold into the market in surreptitious fashion and using derivatives to bomb the paper price. For the time being the paper price greatly influences the physical market and the PM Fix in London, the price at which 90% of the physical deals of any given day is used to conduct business. The good news is Chinese demand is so immense, the physical market is beginning to take over in terms of determining the physical price. This is a main reason The Gold Cartel has been so ineffective this year … and they have tried to keep the price down, believe me.

They do what they do because gold is viewed as a barometer of US financial market health. Think of what the media says whenever the gold price is screaming higher. This Gold Cartel wants the gold price as subdued as possible so that it does not affect the US dollar and our interest rates negatively.

-By the way, China is now the largest consumer of gold by any measure. Do you think China has any interest on ending the dollar supremacy anytime soon? Or, do you think China and Asia in general would prefer to wait more time to keep buying bullion at today’s depressed prices?

The Chinese know what GATA knows about gold being suppressed. We know this because of communiqués made public and I have had three conference calls with the Chinese Investment Corporation, one of their Sovereign Wealth Funds. They are buying all they can at these artificially low prices. There are reports they have bought most of the gold mined over the last year. This gold is being bought by their public and the government.

The Chinese know gold ownership is going to be a big deal in the years ahead, as many of the world’s currencies come under pressure. Everyone knows the Chinese are exposed to a serious dollar devaluation because of all the US Treasuries they own. It makes sense they would be buying so much gold at these incredibly low prices. They know the gold price won’t be staying down here too much longer.

-Bill, Banco de México (Bank of Mexico or Banxico) claims to have 120 tons of gold stored at the Bank of England (BoE). Nevertheless, on December last year Banxico told me that the BIS said a physical inspection of its gold at the BoE was “not possible”. Should this be seen as an alert sign for investors and other central banks? In your opinion should Mexico repatriate its gold and buy more?

On the other hand, Comex registered gold inventories are at historic lows; the Germans got only five tones from the Fed last year and most of gold reserves at the Bank of England seem to be an illusion. It looks that most of the gold is gone. Bill, is there any real risk of a default on the gold market in the coming years? If so, what would be the consequences for the common people?

Let me answer both of those questions at the same time, if I may. The fact that Germany only received 5 tonnes of gold last year out of the 300 tonnes of gold they are supposed to get back by 2020 is most telling and is lighting up the scoreboard regarding GATA’s claims that much of the central bank gold has been used up to suppress the price and is no longer there. It is ludicrous that Germany couldn’t get all its gold back in a year, much less a pitiful five tonnes. They are not getting their gold back because it is not there. It is GONE, at least much of it.

There is a strong likelihood there will be gold defaults in the years ahead … whether that be an inability of central banks to get back what they have “swapped” or “lent out,” or from unallocated accounts … the same gold sold by institutions to numerous owners who think it is theirs. All of this is going to lead to the greatest financial market scandal in US history. So yes, Mexico should get its gold back as soon as possible and follow the Chinese example … and buy more.

-Is the silver market manipulated too or only the gold market is? Is there a risk of default on silver too?

When the gold price suppression scheme went into high gear under Treasury Secretary Robert Rubin, a decision was made that the price of silver had to be manipulated also because a dichotomy of a gold price going one way and silver going the other might make the suppression of the gold price too obvious. Thus, they have traded in tandem over the years … ridiculously so at times. 

The past many months the silver open interest on the Comex has surged, up nearly 50% off its lows of last year, while the gold open interest remains very low. We don’t know why but it surely has to do with JP Morgan (the major futures short) and The Gold Cartel. Silver completed a major base on Friday and exploded to the upside. The odds are that these massive short positions are in trouble and will have to be covered in the near future. If not, it could lead to some kind of default down the road.

-Much people invest on physical gold and silver as safe havens. Do you think it is a good idea to keep accumulating those metals? Why?

The answer is yes and never more so. Just think of what has transpired in the US over the last years regarding QE and putting money into our financial system.  And yet, our economy remains on very shaky ground. The odds are decent we are going to do more of the same for some time to come, with talk of tapering taking a back seat for a while. This money is eventually going to make its way into our economy and put upward pressure on prices. Artificially cheap gold and silver are going to the moon as this all kicks in. They will be the “GO TO” investments over the next few years and provide great financial comfort for those who own them.

-Is the gold bull market over, Bill?

Just the opposite. The prices of gold and silver have just broken out of massive bases. They were forced down to artificially low levels by The Gold Cartel … levels which cannot be sustained.  How cheap is gold? A couple of years ago a number of folks said that if the gold price had kept up with inflation, the price would be $2500 an ounce. That is how cheap gold is today and it is all due to the price suppression scheme, which is in the process of unravelling. As far as silver goes, I am a big Eric Sprott fan of Sprott Asset Management in Toronto. He has been pounding the table that silver is going to $100 an ounce, or more. He has made a fortune by being so right with calls like this over his career. He will be right again.

-What’s your forecast for the price of gold in 2014? And what would be gold’s “fair value”?

GATA held a conference in August of 2005 in the Yukon’s Dawson City. The price of gold then was $436. My take back then was that a gold price of $3,000 to $5,000 an ounce would be needed to clear the market. I will stay with that one, with gold making all-time highs above $1900 an ounce within a year. Interesting enough, one of President Putin’s top economic advisors, Andrey Bykov, attended our conference. A quite gold price shot up $12 two days after the conference and hundreds of dollars in the ensuing nine months. Russia has been increasing its gold reserves ever since.

-Bill, is gold money?

Sure it is. It has been that way for 5,000 years or so. Silver is money too. They have been regarded as true stores of value for a very long time, and will only be more so in the years ahead.

Thank you very much again for your time, Bill. We look forward to having you again soon on this blog.

(Thanks to Victor Huerta for his support on preparing this interview)

¿Y POR QUÉ SE DESPLOMAN EL ORO Y LA PLATA? Parte II

En la primera parte de esta entrega, abordamos las causas exógenas de las caídas tan pronunciadas que hemos observado en los mercados de oro y plata durante los últimos meses.

Ahora es turno de llegar a la sustancia, a la causa de las causas que explica cómo y por qué, durante años, sus precios han permanecido artificialmente deprimidos.

De entrada es justo recordar que, para que un mercado auténtico exista, tiene que ser libre. Esto es así, pues en el intercambio de cualquier tipo de bienes o servicios, y por tanto, en el establecimiento de sus precios, no debe mediar más que la voluntad expresa de las partes, el mutuo acuerdo sujeto a las fuerzas de oferta y demanda.

En este entendido, cualquier intervención exógena –peor aún si esta es gubernamental, que pretenda imponer condiciones, límites, precios, etc., no solo coarta la libertad de los que en él participan, sino que además terminará por degenerar en una artera distorsión con consecuencias insospechadas para todos: individuos, empresas y por supuesto en la provisión de las mercancías afectadas. El caos.

La evidencia histórica nos demuestra cuán desastroso es el final para aquellos casos en que el mercado libre es violado, pues sus colosales fuerzas siempre terminan por imperar, y el castigo para los responsables es proporcional al tamaño y período de la manipulación.

Ahora bien, oro y plata son dos “materias primas” que resaltan de entre las demás por sus cualidades monetarias. Ambas, cumplen con todas las funciones del dinero, y por tanto, lo son por antonomasia. Por cierto, uno elegido por la espontaneidad de la propia acción humana, que explica por qué lo han sido en todos los rincones del planeta a lo largo de los tiempos.

Es justo por esa incómoda condición y la de ser un dinero que por su naturaleza es finito, que los emisores y principales beneficiarios de otro “infinito”, el dinero fíat (el creado en papel o como dígitos en computadoras), se han enfrascado en una oscura guerra sin cuartel para mantener oprimida a la dupla de metales preciosos, a niveles en los que no estarían en un mercado de verdad. El móvil de este artilugio es entonces, no solo económico, sino también político.

La razón es clara: la cotización del oro, y en cierta medida la de la plata, es el indicador inequívoco de la devaluación del dinero fíat que, luego de agosto de 1971 –cuando se abandonó el patrón oro, tiene como eje de su modelo global al dólar estadounidense. Al menos así lo es en condiciones de mercado libre, que quieren evitar a toda costa, pues la corrupción de ese orden basado en la expansión ad infinitum del crédito, y por ende de la creación monetaria, pretende ser llevada hasta sus últimas consecuencias. Los beneficios que han obtenido, bien lo valen para ellos.

La herramienta principal en este ardid han sido los derivados financieros y el sistema de reserva fraccionario de los Bullion Banks (bancos especializados en metales preciosos), capaz de generar una falsa sensación de sobre oferta, que rebasa por mucho las existencias físicas. Dicho mecanismo en esencia consiste en la posibilidad de vender o prestar con interés varias veces un mismo lote de oro, a costa de todos los clientes que al no demandar la entrega material, se sienten simultáneamente propietarios de los mismos lingotes. En otras palabras, se auto dotan del poder de crear “oro” papel.

Jeff Christian, especialista de CPM Group, grupo especializado en materias primas y apologista del sistema fraccionario, ha declarado ante instancias oficiales de Estados Unidos, que: “los metales preciosos […] son intercambiados en múltiplos de cien veces su respaldo en físico”.

Por su parte, bancos centrales y privados tampoco dejan solos a ambos metales, pues son conocidos sus esfuerzos por manipular y/o “moderar” su sintomática alza. Los primeros, como ya se dijo, para no evidenciar la caída descomunal en el valor de sus divisas, y los segundos, para obtener utilidades prontas producto de su juego intencional con operaciones de derivados.

Una historia conocida ahora que se ha destapado la cloaca del escándalo del Líbor, pero de alcances todavía mayores. Tanto, que hace parecer a los manipuladores de ese tipo de interés como simples “niños traviesos”.

En esta trama juegan un papel principal las coordinadas ventas “en corto” (short selling) por parte de grandes corporaciones financieras de la talla de JP Morgan. Esas y otras acciones sospechosas han llevado a la CFTC (órgano regulador estadounidense) a conducir una investigación sobre una “potencial” manipulación del mercado de la plata, que no obstante ha tomado cuatro años sin llegar a conclusiones definitivas. Se espera que dicha indagatoria publique sus resultados en septiembre u octubre próximos.

Pese a ello, no se tienen muchas esperanzas de que se acabe con este fraude en el corto plazo, pues como han acusado voces autorizadas como la del especialista Ted Butler (http://bit.ly/NXIm8c), la propia CFTC podría estar jugando del lado de los señalados.

Dicho lo anterior, queda claro oro y plata tienen un largo trecho alcista por recorrer, lo mismo que todos nosotros en nuestro camino por exigir transparencia en los mercados. No podemos soslayar que esa batalla, es un frente más en una lucha mucho mayor y permanente: la lucha, por nuestra libertad.

memob@hotmail.com

Twitter: @memobarba