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DOUG CASEY says Gold Conspiracy Advocates
are Trailer Park Hillbillies
The following was published by Doug Casey and
widely disseminated on the Internet this past week. Mr. Casey
has irked your editor in the past with his arrogant dismissal
of any and all conspiracies in this world and his contempt
for people who happen not to have been born into wealth and
privilege has has he. As is typical of Doug, in the missive
that follows, he resorted to name calling to impugn the integrity
and marginalize those who believe our government is engaged
in trying to squash the price of gold in order to protect
their legalized counterfeiting operation.
I'm not sure why it is so hard for Doug to understand
and believe conspiracies happen. Conspiracies may be an alien
to the world Doug lives in, but where on earth has he gotten
the notion that it is so unusual for two or more people to
clandestinely set in motion actions of armies of people for
the benefit of the conspirators? For every great political
movement or birth of any new dictator, there has always been
a conspiracy. So why it is so easy for Doug to automatically
dismiss all conspiracies? Why can't he understand the plausibility
of the Exchange Stabalization Fund (the President & Treasury
Secretary) and/or the Federal Reserve Chairman might secretly
set in motion an unspoken policy that provides an incentive
for a few gold bullion banks to drive the gold price lower?
Why does he ignore all the evidence that this is happening?
Does he think Greenspan and O'Neil tell us everything they
are doing with respect to U.S. Policy and that these big boys
have no secret agenda other than what they say on CNBC? If
so, then why have they refused to answer Congressman Ron Paul's
inquiries into the mysterious gold accounting by the ESF as
revealed by James Turk?
Apparently Mr. Casey has never bothered reading
exceptionally well documented books on the topic of the Fed
as to how, why and by whom the Fed was created in the first
place. I guess he has never read "The Creature from Jekyll
Island" or James Perloff's "the Shadow of Power" or Kinsey,
Crimes and Consequences." Most of these books are available
either on the Internet or from www.therealityzone.com.
Or perhaps Mr. Casey simply wishes to dwell in the world of
science fiction and nano-particles, where one does not need
to deal with the reality of a sinful and broken world - at
least not yet.
In any event, here is what Doug Casey was quoted
as saying this past week about the gold conspiracy and the
gold markets in general:
"Most surprising to me is the price of gold
itself. I'm not a believer in conspiracy theories, so it's
hard for me to credit that "they" are holding the price the
metal down. "They" (in the past it's been the Rothschilds,
the Bilderbergers, the CFR, the BIS, among many others, possibly
including space aliens) are usually an excuse created by the
unsophisticated to explain what went wrong with some convoluted
theory that didn't pan out. Certainly none of the theorists
have ever met one of "them" in the flesh-nor are they likely
to, if only because most seem to live in low rent one-bedroom
flats and spend all their time on the Internet. But figures
(which are notoriously unreliable) on the gold markets (which
are highly opaque) do seem to show that there is a large short
position in the metal.
"Frank Veneroso, who I consider a credible analyst,
and whose research brought the gold short play into the public
eye, has said that annual demand is around 4,000 tonnes, mine
and scrap supply around 3,000 tonnes, official sales around
300 tonnes and that the difference of 700 tonnes is gold loans,
mainly from central banks. The numbers vary, depending on
who's crunching them, but the most accurate one is probably
new mine production, which was 2,460 tonnes in 1999. It appears
that there's been a deficit of use over production for more
than a decade. It does make sense to me that central banks
would have been loaning out the metal to bullion dealers for
years (at relatively low interest rates) in order to get some
current return on the seemingly dormant asset. The bullion
dealers (mostly large international banks) would sell the
gold into the forward market, capturing a premium. Better
yet, the price of the metal was driven down by all the selling,
so when it came time to deliver, they'd make even more. It's
been, and will continue to be, a great strategy-as long as
there's a bear market in gold.
"The last gold bull market crested in January
1980 at over $800, and it's been all downhill since then;
at the same time, the world's economy and common stocks (until
recently) have been in a truly historic bull market. Since
all this has been going on for over 20 years now, a full generation,
everyone believes it's going to go on forever. Even gold miners
believe it and most of them have been shorting their production
years into the future.
"The problem, however, is that all that gold
which has been borrowed from vaults has been made into jewelry
and such is owned by millions of individuals. If the lenders
of the gold, the central banks, want it back, the bullion
dealers and mining companies aren't going to be in a position
to deliver. What appears to be developing, in other words,
is a classic short squeeze, but one of gigantic proportions.
The X-factor, however, is that central banks still have maybe
20% of all the gold in existence left in their vaults, and
if things started getting dicey-say some New York bank getting
in trouble because of its bullion dealing-they could sell
a lot to deep its price down. But the short position is going
to have to be covered at some point.
"I'm super-bullish on gold for lots of reasons
(detailed in Crisis Investing and International Speculator)
that are unrelated to the alleged short position. But it sounds
credible to me, and it's just one more good reason the metal
isn't just going through the roof, it's going to the moon.
I just wish I knew the timing-but I sure wouldn't want to
be short right now."
Doug is Bullish on Gold. So do his Conspiracy
It would be tempting to let Mr. Casey's ranting
and raving about gold conspiracy buffoons rest simply because
he is bullish on gold as are most of us trailer park hillbillies.
If nothing mattered more in life than our own personal wealth
accumulation, we might easily overlook Doug's views. But for
those of us who think freedom matter, we believe Thomas Jefferson
was right when he said, "the price of liberty is eternal vigilance."
In fact, your editor believes the rigging of the gold price
was in fact a major reason why the dollar has been so overvalued
and why the enormous global economic dislocations Stephen
Roach talks about frequently these days is posing such a great
threat to the global economy. And it should not be too much
of a stretch to make the connection between a global economic
decline and a decline of personal liberties.
And, we think knowing whether or not our government
or the Exchange Stabalization Fund is involved in rigging
the gold price is very important because their willingness
to go to this extent simply suggests they no longer understand
and respect the connection between free markets and freedom
overall. To the extent our policy makers lack that understanding,
then the future is not very bright for those of us who would
like to see America emphasize the rights of individuals rather
than the power of a collectivist dictatorial society.
The Pro-Conspiracy Views Expressed on Korelin/Hartfield
I was asked to discuss the case for conspiracy
on the Korelin/Hartfield report this Saturday afternoon. (As
noted at the start of this message and every weekly message,
you can listen to this program at www.kuik.com.
Simply follow the directions set out above.) Some of the major
points that quickly came to mind, I discussed on the show.
Following is a list of those points as well as some I did
not have a chance to make, which I believe provide very strong
circumstantial evidence if not "smoking gun" evidence that
the gold markets have been and are continuing to be fooled
with so as to continue creating a false sense of security
in the U.S. dollar.
1. Frank Veneroso's work from 1997through 1999.
Mr. Veneroso, a Harvard graduate, high priced consultant to
the World bank and various foreign central banks, undertook
a fundamental study of the gold markets. His findings which
were based on the most detailed fundamental analysis of supply
and demand dynamics in the world so far as the gold markets
are concerned, suggested to Frank that if the gold markets
were free of central bank influence, the equilibrium price
of gold - without any increase for gold as a monetary holding
- should be in the neighborhood of $600 per ounce. In addition
to the detailed supply and demand numbers, Veneroso's model
factored in elasticity of demand and supply characteristics
over short and longer periods of time.
2. Veneroso's work revealed that central banks
were, through outright sales and gold loans, dishording far
more gold than they were publicly admitting. That meant that
far less gold was in the coffers of the central banks than
the central bankers claimed. Talk about Enron like accounting!
3. In 1999 Bill Murphy, who had been an assistant
to Frank Veneroso, formed the Gold Anti Trust Action Committee
(GATA), a civil rights organization, to shed light on what
he believed was most certainly an illegal market manipulation.
4. GATA pointed out a host of statistically
significant trading patterns including but not limited to
lower market closes in New York 94% of the time over a number
5. GATA pointed out that after gold would tend
to move higher with major economic or political events, an
apparent intervention always with the same major banks involved,
consistently drove the price of gold lower time after time
after time. Interestingly, it was always the same two or three
bullion banks that traders spoke of as killing gold rallies.
6. Governments have always hated gold and have
acted to suppress it. Why should the current government all
of a suddent choose to be even handed with respect to gold.
The answer is that with enormous amonts of fiat dollars created
out of thin air to save Mexicao, Asia, LTCM, Russia and other
problems, the executive branch of the U.S. government and
the Fed are in head over heels. And the American government
is no different than any others. For example:
- 1930's - illegal to own gold and was
punishable by a $10,000 fine and 10 years in prision.
- 1960's/70's sold gold outright - backfired
as gold went from $35 to $850.
- CURRENTLY - Knowing that a transparent
policy would only serve to drive the price of gold higher,
America's elite have chosen to keep their anti-gold activities
this time secret. A constant refusal to answer congressional
questions leaves little doubt that the Treasurer is either
hiding something now or wants the right to do so in the
7. 1998-99 Bank of England Pre-Announced gold
sales causing it to get the lowest price possible. The motive
for this apparently stupid move was to allow corporate interests
to cover their gold shorts at the lowest possible cost. And
you thought Crony capitalism didn't happen in "advanced" countries
like England and the U.S.?
8. By spending a great deal of time investigating
government accounting on the Internet, James Turk unveiled
a reclassification of gold at West Point to "custodial gold"
that coincided with exactly the same movement of gold out
of Germany at exactly the same time. This provided powerful
circumstantial evidence that gold held in the U.S. at Westpoint
was swapped to the Geramns who then sold gold in Germany,
thus driving the price of gold lower. Soon after James made
his accounting discoveries public, the U.S. Treasury department
changed its description of "custodial gold" to "deep storage"
gold. Although the U.S. Treasury was asked frequently about
this, they have yet to come clean on what this was all about.
In fact, Treasury Secretary O'Neill has repeatedly stonewalled
even attempts by Congressman Ron Paul to get an answer as
to what the Treasury was up to on this issue.
9. The Treasury Continues to Stonewall their
gold market activities. The Exchange Stabalization Fund which
is comprised of the President & Treasurer, have complete power
to sell all of the U.S. gold tomorrow if they wish to do so
without and permission of Congress. Not only do they not have
to gain permission, but they are not accountable to anyone,
including the people of the United States through Congress.
How outrageous to think that two men are given the dictatorial
power to completely debase our currency over night without
anyone except the President & Treasury Secretary being aware.
CONGRESSMAN RON PAUL has "proposed a bill known as the "Monetary
reform and accountability Act" All this bill would do is require
the Treasury Secretary to advise Congress when it does anything
with gold. Although the Treasury Secretary says he Treasury
has not sold or transacted gold for many years, he still refuses
to support this proposal for transparency for the Aemrican
People. Why? WE suspect it is because in fact the ESF has
been engaged in transactions to drive the price of gold down
and thus by default the dollar up.
10. Lawrence Summer's wrote a paper on the topic
of "Gibson's Paradox" while at Harvard during the late 1980's.
Before Summers went to work under Robert Rubin, he had co-authored
this paper that demonstrated that if governments were to be
successful in engaging in monetary bailouts, they would have
to cap the gold price. Otherwise the currency would fall and
interest rates would rise, thus rendering bailouts unsuccessful.
Mr. Summers brought this knowledge with him to his job in
Washington and quickly put it to work when the Clinton Administration
began a series of national and corporate bailouts, beginning
with the Mexican crisis in 1994. Interestingly enough, it
was during 1994 that some very strange statistical occurrences
began to appear in New York gold trading, like a lower close
in New York over 90% of the time over a protracted multi-year
period of time. Also, from 1994 onward, gold almost always
behaved in a manner not at all typical of the yellow metal
during times of crisis. It may also not be a coincidence that
Alan Greenspan and the head of the New York Fed also became
actively involved in the BIS, perhaps in order to influence
that organization's gold market behavior.
11. The Decision in Reginald Howe's Lawsuit.
The Judge in Reginald Howe's anti-gold price fixing lawsuit
against the major gold bullion banks, the Fed, the BIS and
the Treasury, found an out by reviewing precedent in the law.
Apparently it is no longer true that every man is equal under
the law in the U.S. If you are a small investor and a larger
one that would have suffered greater harm refuses to launch
a lawsuit, then you as the smaller investor do not have "standing."
The rational is that if the bigger investor who was presumably
hurt more does not sue, then a smaller investor has no right
to legal recourse. The judge in effect left open the door
for a larger mining company to take up the lawsuit against
the defendants in Reggie's case. We think the fact that the
judge did not throw the case out for lack of merit, suggests
that in fact the judge found a great deal of merit in Reginald
So Who are Doug Casey's "Low Life Conspiracy
I think it is interesting that Mr. Casey paid
a compliment to Frank Veneroso as the man who allowed the
public to see that based on its fundamentals gold should be
headed for the moon. I heard the highly regarded, Harvard
educated, former World Bank consultant and consultant to various
central banks say at a CMRE meeting in New York in 2000 that
he believed the gold price was manipulated. Doug is apparently
unwittingly paying homage to one of those "low life, stupid
conspiracy nuts" in the person of Frank Veneroso who provided
the framework upon which GATA was born. But how Frank Veneroso
could ever be described as a "low rent, one-bedroom flat"
kind of a guy is beyond me.
Likewise for another Harvard graduate, namely
Reginald Howe. This corporate trial lawyer, displayed some
of the greatest intestinal fortitude and brilliance in court
that has ever been seen when he stood up against 16 of the
most powerful lawyers printing press money can buy before
Judge Lindsey in that Boston Federal court. I am so proud
to say I know Reginald Howe because Reginald stood up for
truth and justice against all odds and he won! He won against
a court in which all the odds were stacked against him. The
judge not only failed to throw the case out on its merits
but also provided reason in his decision to suggest he knew
Reginald Howe in fact had a meritorious case. Once again,
how is it that this highly educated trial lawyer can be described
by Doug Casey, as a stupid low life conspiracy nut?
I think it is time for Mr. Casey and others
like those we watch every day on CNBC, who suggest that "our
government has never given us a single reason to doubt their
truthfulness" to openly debate Bill Murphy, Reginald Howe,
James Turk and other pro-conspiracy advocates. If the conspiracy
notion is, as Doug Casey says, not "an excuse created by the
unsophisticated to explain what went wrong with some convoluted
theory that didn't pan out," then these low life misfits and
their theories could easily be exposed and the gold conspiracy
theories laid to rest. In fact, wouldn't it help the anti-conspiracy
people to expose the stupidity and fallacies of the pro-conspiracy
folks? I can tell you this much. Bill Murphy at GATA has been
pleading with people like the CPM group, or the World Gold
Council or Goldfields for such a public confrontation. And
in fact, would it not be better for everyone concerned if
these issues could be discussed in as large a public forum
as possible so that objective truth could be exposed rather
than the name calling and marginalization defense of the anti-conspiracy
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