Armstrong on GATA & Gold

"Gold Manipulation or Exaggeration"

From gold-eagle.com

I have just finished reading Martin Armstrong's article on "Gold Manipulation or Exaggeration". I agree with several points he has made, however, I would like to add a few comments and observations on what he had to say (or rather what he did not say), namely the following;

I agree with the following:

The "carry trade" in gold has been going on for several years.

Islam forbids charging interest on loans.

If you chased the Japanese and the Arabs out of gold (carry trade), nothing will change (in regards to the price of gold).

The governments of the world have a self interest in not returning to the gold standard. To return to such as standard would require the complete abandonment of virtually every social program introduced since WW II. I do not necessarily agree with this second statement.

Governments must return to some form of fixed exchange rate mechanism or that volatility would escalate into disrupting the world economy as a whole.

The floating exchange rate system has allowed national debts to explode and that at some time in the future there must be reconciliation with reality.

The gold standard gave way because governments continued to increase their debts, but never readjusted the price of gold in proportion to the increase in money supply.

The IMF loan portfolio looks like a charity case with assets that will never be repaid.

Mr. Armstrong (I think) gave away his true feeling about the future price of gold in the article when he said (to paraphrase) "selling gold by the CBs and IFM may be a major bearish factor short term, however, it most likely is going to provide a true free market in the long term".

Warren Buffet and not industrial consumption was responsible for the drain in silver inventories.

I disagree with the following:

Armstrong claims the "carry trade" is not responsible for the decline in the price of gold, however, his article never eludes to what is, in his opinion, responsible for the decline in the price of gold.

Holding gold without lending it can be very costly. I partially agree with this statement, however, if it was that costly why doesn't Fort Knox just lease out all their gold and save themselves the expense of guarding it with the military.

Armstrong claims that by allowing the Euro to collapse, they are in effect devaluing their future obligations, which is one way of getting out of their debt mess. This is possible, but why would you need a new (unified) currency to accomplish the same objective that individual currencies are already making good progress towards. Also, why are the Germans upset with the loss in value of the Euro......because they are more fiscally responsible than their American counter parts.

Armstrong indicated it makes perfect sense for CBs and the IMF to liquidate their gold assets. If this were true and the CBs and the IFM truly wanted to destroy gold as an asset why not flood the market and sell it all and use the proceeds to forgive the $200 billion dollars owed by heavily indebted third world countries (instead of the minuscule 300 tons proposed at an estimated value of $2.6 billion dollars). In any event, Mr. Armstrong has made the foregone conclusion the Swiss and IMF sales are a done deal. These are far from done deals. The U.S. has a large enough share of the voting in the IMF to veto the auction. As for the Swiss, it is true the Cabinet has voted to de-couple the Franc from gold, however, a referendum will be held (probably sometime in the year 2000) that will allow the citizens of Switzerland to vote if they want to sell it and how to sell it if the majority vote yes. It was reported recently that a CEO of a major gold producer was reported to have been told by the President of Switzerland the chance of such a referendum going through has about a 1 in 3 chance of succeeding. In regards to the proposed Swiss gold sales, why did Armstrong not even mention the peculiar timing of the U.S. government's "revelation" of "Nazi" gold over 50 years after the end of WW II? Is this not a relevant reason to disrupt the price of gold? Why.....because I believe Armstrong is aware the U.S. dollar has (unofficially) declared war on gold! As with all wars the reasons for starting one emanates out of fear. In any event, as a Swiss citizen I am very aware of the fact that very few referendums in the past (with regards to many other issues) are successfully passed. So, in reality the BOE sale appears to be the only done deal at this point.

As for the EMU, they have approximately 12,917 tons (or 38.5%) verses the U.S.'s 8140 tons (24.3%) of reported worldwide CB reserves. If you include Switzerland, the U.K., and Sweden the reserves amount to 16,227 tons or 48.4% of total worldwide reported reserves (i.e. twice that of the U.S.). Mr. Trichet, the Governor of the Central Bank of France, argued the U.S., Germany, France, and Italy - the world's four largest holders of gold (46.9% of total worldwide CB reserves) will keep their gold stock intact. Any CBs in the Euro-zone can not sell gold without the ECB's assent. Other than countries like Canada, Australia, and Argentina which have chosen to sell-off their gold (and are no longer significant players in the game as they have little if any gold reserves remaining) it is obviously apparent that Mr. Armstrong is mis-guided in his conclusion about CB's desire to dispose of their gold.

Now Consider the Following

The gold carry trade has probably only been wide spread since 1980. The past 20 year has been the period when the majority of the gold mining companies have come into existence, Barrick is a prime example of a junior that started on the Vancouver Stock Exchange in 1980. I suspect many of the early gold leases/loans were to mining companies as they were the most likely clients capable of repaying their loans back to CBs in gold.......otherwise these would not be called loans or leases. I believe the gold "carry trade" reached a climax about '96 since the price of gold has been declining ever since to this day. I believe the "taste" for cheap loans started with the Yen "carry trade" which preceded the gold "carry trade".

I have lived and worked in the Middle East and also Malaysia. These people have a very different perception and value of gold than do people of the West. In addition, Islamic countries do not particularly trust the West nor are they especially fond of dollars over gold. Gold in the Middle East is King in regards to monetary security.

I think Armstrong is correct in stating the Arabs (if they ever participated in a gold "carry trade") and the Japanese are not even factors in the price of gold. Why? Because neither have enough reserves to make an impact on the price of "selling short". If the Arabs shorted gold it was with the intentions of acquiring it, not to get rid of it. Consider the following reported CB reserves (tons) estimates for Islamic countries and Japan;

Algeria: 174

Iran: 151

Saudi: 143

Turkey: 117

Libya: 112

Indonesia: 96

Kuwait: 79

Egypt: 76

Malaysia: 73

Pakistan: 64

Afghanistan: 30

Syria: 26

Jordan: 25

UAE: 25

Morocco: 22

Grand Total: 1,213 tons

This amounts to a minuscule 3.6% of total world wide reported CB reserves. If you discount Iran and Libya due to political problems with the West this figure reduces to 2.8%. Algeria, the largest Islamic country holding gold, only amounts to an insignificant 0.5% of the total worldwide CB reserves. I believe the Islamic countries will never be allowed to obtain a significant position in gold as Islamic countries are perceived to be a threat to the West. The Arabs already have 60% of the proven oil reserves in the world, haven forbid they should acquire a significant position in honest money! In any event, I am confident the collective gold holdings of Islamic families hold more gold than their respective CBs and these families are not going to loan their gold to any one at a minuscule 1%-2% like the CBs of the West.

As for Japan, they have a reported CB holding of 754 tons or 2.2% of total worldwide reserves. As for Japan's "feeling" towards gold the following should be kept in mind when on June 23rd, 1997, at Colombia University Japan's Prime Minister, Ryutaro Hashimoto, said (and I quote) "I hope the U.S. will engage in efforts and in cooperation to maintain exchange stability so we will not succumb to the temptation to sell off Treasury Bills and switch our funds to gold".

So, why would Armstrong even mention the Arabs and Japanese in the "gold carry trade" if they are not even factors in the price of gold? I believe he speaks in half truths because he is not lying when he says they (Arabs and Japanese) are not factors, however, he did not even mention the real players in the gold carry trade....Western CBs and Financial Institutions like Goldman Sacks that are playing in derivatives. I have generally found when someone does not give me the full picture it is because they are hiding the truth. Armstrong used the Arabs and the Japanese as (bad) examples of why the gold "carry trade" is not responsible for the decline in the price of gold. Anyone that has studied statistics knows that you can only begin to draw valid conclusions only if you have a representative sample, and the (perhaps) most significant contribution to that sample was not even mentioned.

If there is no manipulation going on with respect to the price of gold, why (for example) did the BOE announce the sale of their reserves coincidentally when the price of gold was beginning to up. Why did Armstrong make no mention of this, or why did he not even attempt a counter argument for this announcement. Why? Because he speaks in half truths.

Finally, when one is reading Armstrong's article keep the following in mind: Mr. Armstrong is probably the best paid economist in the U.S. He is an advisor to CBs, governments, major Financial Institutions, and multinational companies - worldwide. On may 14, 1997, a Gold-Forum member by the handle of Orpailleur of France attended a conference hosted by Mr. Armstrong in London sponsored by PEI. Mr. Armstrong had the following to say " gold is the most sensitive asset to change. Its minimum target is $1000-$1200/oz., which would simply bring it in line with other assets. The uncertainty factor could well cause it to soar to $4000-$5000/oz. In the case the market perceives a danger to the present currency system, a potential target for gold would be $10,000/oz. This danger could occur in 2003 at the top of the stock market bubble. Only a DOW greater than 10,000 would be a bubble".

Well Mr. Armstrong, I think your timing was a little off! It is clear to me that Mr. Armstrong is probably a goldbug, but his change in position from 1997 illustrates he is a traitor. Mr. Armstrong has been bought and paid for, thus he is not to be trusted by us goldbugs.

GOLDFINGER

21 June 1999

-- Andy (2000EOD@prodigy.net), June 27, 1999

Answers

Hi Andy,

Glad to see your still here. Have not been here for awhile. Spend most of my time at Kitco or Gold Eagle since my preps were completed in January. I have a good read for you on this topic. Ted Butler hit a home run with this one. CHECK IT OUT

Mike

-- flierdude (mkessler0101@sprynet.com), June 28, 1999.

Mike - great piece - what a scandal, but then we all know what's going on - there are going to be "developments" sooner rather than later,

will buy more gold and silver physical when I get my sticky mitts on my 410k...

-- Andy (2000EOD@prodigy.net), June 28, 1999.

Andy,

The latest conspiracy I have heard about is that the movers and shakers on Wall Street are waiting and will liquidate their assets to crash the markets, and move all that capital into physical gold while it is at the artifical low. That way when it soars like it is supposed to during a financial crisis, they will become even richer.

The poor Joe Sixpack E-trader will be left holding the bag...

My assets are already liquid, and I plan to keep it that way for a while.

Got liquidity???

sunnin' on the porch...

The Dog

-- Dog (Desert Dog@-sand.com), June 28, 1999.

Dog,

Sounds like just another rumor to me. How about some facts? He said she said does not wash anymore.

-- Snoop (Reporter@here.com), June 28, 1999.

That's not info some would print or say publicly. If you read ALL the information available, like on Gold-Eagle.com, read between the lines, and interpret what the big insiders are saying... it's pretty academic at that point.

I'm not a conspiracy theorist in any, way, shape, or form, but this is a fairly glaring example of what goes on in the upper echelons. Us peons are not told anything, for good reason. If everyone knew, it would be as lucrative a ploy, or would be stopped before it happens. But to some close-minded individuals, it is like alien space visitors, comtrails, and the like. And that is what the Illuminati want you to think...

Read all you can on GATA. It won't be around long. It will be "silenced" like all other actions of this type, IMHO...

So, believe what you want to believe. Everyone has an opinion. That is what forums are for... opinions. I refuse to do your "legwork" for you. If you are interested, you will find out on your own.

Andy, any thoughts????

gettin' a drink,

The Dog

-- Dog (Desert Dog@-sand.com), June 28, 1999.

Guess I will shock you - see, I was a gold bug myself, about 15 or 20 years ago. Gave it up, don't own any gold except for jewelery and a mexican 2 peso gold piece now. Reason I quit, was a question I kept asking myself - under what circumstances would the guys putting out the information EVER advise you to sell gold. Answer was - they never would. So I don't go there any more.

And isn't gold supposed to drop when the economy does well? Seems like that is what it did.

-- Paul Davis (davisp1953@yahoo.com), June 28, 1999.

As for Japan, they have a reported CB holding of 754 tons or 2.2% of total worldwide reserves. As for Japan's "feeling" towards gold the following should be kept in mind when on June 23rd, 1997, at Colombia >University Japan's Prime Minister, Ryutaro Hashimoto, said (and I quote) "I hope the U.S. will engage in efforts and in cooperation to maintain exchange stability so we will not succumb to the temptation to sell off Treasury Bills and switch our funds to gold".

It seems to me the above may have laready started. With Goldman- Sachs and others selling short, someone with BIG coin needs to be on the other end of the deal as a buyer.

-- Bill P (porterwn@one.net), June 28, 1999.

The Wall Street Journal had an interesting article last week (sorry I don't recall which day) on the still continuing decline in gold prices, notwithstanding the industry's efforts at advertising and marketing.

The summary: "gold is an excellent hedge . . . against becoming rich."

-- JxD (jxd29@hotmail.com), June 28, 1999.

JxD, the sooner you learn that the mainstream media is a collective shill for White House and Fed propaganda, the easier it will be for you to understand that gold has not acted in accordance with economic factors and the market for quite some time now. Gold has been actively manipulated down in price for a number of months now. Do the homework, that is if you care to know the truth. There has been some good threads on this forum about what is going on. Why don't you start there.

Good fortune to you.

-- OR (orwelliator@biosys.net), June 29, 1999.

Bill P, the big players have been locked out of the regular market for a while now, as a large private (non-governmental) 'public' purchase would cause too much of a ripple in the market. They are the likely recipients of this covertly sold gold.

-- OR (orwelliator@biosys.net), June 29, 1999.

IT'S BEEN ON A DECLINE FOR MORE THAN 20 YEARS! I'M NOT TALKING ABOUT THE LAST THREE MONTHS! GET A CLUE AND GET OFF OF THE GOVERNMENT CONSPIRACY NON-SENSE!

-- JXD (JXD29@hotmail.com), June 30, 1999.

"IT'S BEEN ON A DECLINE FOR MORE THAN 20 YEARS! I'M NOT TALKING ABOUT THE LAST THREE MONTHS! GET A CLUE AND GET OFF OF THE GOVERNMENT CONSPIRACY NON-SENSE!"

JxD,

your stupidity is a ight to behold.

1. There is no need to shout, numb-nuts.

2. You call gold reaching a high of $800+ a decline?

3. You obviously know nothing about gold. About the machinations going on behind the scenes. Did you read the Ted Butler piece about Barricks? I think not.

4. Please don't bother commenting unless you have something useful to say. Now go away and do your homework. F minus so far.

-- Andy (2000EOD@prodigy.net), June 30, 1999.