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Bank of England Gold Auctions and GATA
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If the judge admits the action, even Alan Greenspan will be required to appear under oath to answer gold price fixing allegations |
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BANK OF ENGLAND GOLD AUCTION
Supply into the physical precious metals markets remains tight. The Bank of England (BoE) held it's latest scheduled
gold auction of 25-ton on the 23rd of January. As has become normal for these auctions, it was oversubscribed by
4.8 times, with a cover price of US $268 (above London fix on that day).
From Durban Daily News By Des Parker, February 1, 2001
The war savvy of legendary 19th-century Zulu king Shaka is inspiring American crusaders determined to end what they say is an international conspiracy holding down the price of gold regardless of the economic and social cost to mining countries such as South Africa. Yesterday, as he planned to meet the famous warrior's direct descendant, King Goodwin Zwelithini, in Durban, a member of the Gold Anti-Trust Action Committee (GATA) described how Shaka's horn- shaped fighting strategy had been adapted to help return the metal to the $600 an ounce level he felt it should be. "On the left flank we are gaining support from politicians in America and abroad, and growing interest from the media," GATA Chairman Bill Murphy told journalists, unionists, and business people in Durban. "On the right we have increasing financial and moral support from gold producers. The frontal assault is our court action -- started in the United States in December -- charging the Bank for International Settlements, five global investment banks, and top U.S. treasury and Federal Reserve officials with price fixing, securities fraud, and breach of fiduciary duty." The complex GATA theory holds that this "cartel" has colluded to hold down bullion prices since around 1994 by coordinating the market for gold derivatives. Central banks had been influenced into lending from their gold reserves -- in effect selling it, says Murphy -- as well as auctioning big portions of them off. The resulting market surplus of the metal depressed prices.
Apart from shoring up the banks' derivative positions, said Murphy, the actions aimed to keep the dollar strong and hold down American inflation. He claimed the actions had moved out of control and were a threat to the world financial system.
GATA charges that a "blind eye" has been turned to the tens of thousands of jobs lost and the economic damage to gold producers such as South Africa. While current gold production was well below demand, prices had been forced down from close to $400 an ounce in the mid-1980s to barely more than $260 today.
Murphy supported his argument with these year-end prices:
1995: $388 1996: $369 1997: $289 1998: $289 1999: $289 2000: $273
Murphy is attending the Investing in African Mining Indaba 2001 in Cape Town this week.
Among business, political, and union leaders he has met or is to see, he said, were top people at Anglogold and Harmony, National Union of Mineworkers general secretary Willie Madisha, and executives of the South African Chamber of Commerce.
In our last Precious Metals Update, we advised readers of GATA's complaint filed in the Massachusetts District Court in Boston. On March 15 JP Morgan and Goldman Sachs amongst others are scheduled to appear in court to respond to the complaint. If the judge admits the action, even Alan Greenspan will be required to appear under oath to answer gold price fixing allegations brought by GATA.
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