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Gold price is manipulated by the Fed, suspects mining tycoon Frank Giustra, but suppression can't last forever

Kitco News

The gold price has been “manipulated” by central bank authorities, in particular, the Federal Reserve for decades in a broader scheme to maintain U.S. dollar supremacy in the global monetary system, said mining and movie mogul Frank Giustra.

Giustra, who is the CEO of Fiore Group and also the founder of Lionsgate Entertainment, had in the past said that the price of gold was “managed” by central banks and bullion banks. Now, he is doubling down and saying that the price is “outright manipulated.”

“It’s been no secret that since the U.S. abandoned gold in 1971, they’ve tried to suppress it to allow the U.S. dollar to maintain its supremacy. That supremacy is important in terms of your home interest rates keeping them low, it’s important to anchor inflation expectations, it’s important for a whole bunch of reasons,” Giustra told Michelle Makori, Editor-in-Chief of Kitco News.

Due to the highly levered nature of the precious metals markets, gold is highly susceptible to spoofing, and other forms of trading manipulation, Giustra noted.

In September 2020, JPMorgan was found guilty of spoofing the metals futures markets by the CFTC and was subsequently fined $920 million.

“What I’ve noticed is that lately, when there’s a massive sell order, when there’s the crushing of the gold price, it’s quite vicious. To me, it looks like it’s done on purpose,” he noted.

Giustra said that he believes the Federal Reserve is one of the key actors in orchestrating a larger price manipulation movement.

“I think [the Fed] is working with the bullion banks and I think that they don’t necessarily communicate directly with the bullion banks, they can do it through the BIS [Bank of International Settlements] and give them instructions to sell futures, and then that’s executed through the bullion banks,” he said.

Giustra concedes that the authorities behind this price manipulation have not left a clear trail of evidence for their actions.

“You’re never going to find a smoking gun on this. That’s the problem. I think, years from now in hindsight, we will have seen what they were up to, but they’re not going to leave you a smoking gun to find. There’s only circumstantial evidence. I just look at it from the trading perspective, I see what’s happening in trading and it doesn’t make any sense what’s going on,” he said.

Importantly, the Federal Reserve can’t keep manipulating and suppressing the gold price forever, Giustra said.

“They can’t keep this game up forever. Never has there been a manipulation that’s lasted forever. Eventually, everything comes out of the wash. I think that given the dynamics between the U.S., China, Russia, and the rest of the world right now, I think that maybe we might see that eventuality sooner than I expected…they can’t suppress the gold price forever,” he said, noting that gold is still worth investing in over the long-term.

Once China releases a gold-backed central bank currency, the manipulation will likely fade and the price of gold will “see a new low,” he said.

Currently, countries around the world are engaged in what Giustra calls a financial war.

“The financial war between countries had already started. It was already simmering before this hot war in Ukraine and now it’s full on,” he said. “We’re in a global financial war. This is war. The sanctions were an act of war if you look at it from the perspective of being sanctioned. So, there’s a war taking place and the U.S. is fighting that war in any way that they can. The last thing that the U.S. need is a $3,000 gold price, because that’s just going to alert everybody that there’s a problem.”

All of this makes the current global monetary system unsustainable, and it is likely to see a hard reset, Giustra added.

“I suspect there has to be a reset of the global monetary system. It’s out of whack. The U.S. dollar is grossly overvalued relative to its trade deficits, and I think that has to be reset. I don’t see this happening by way of consensus, like it happened during the Bretton Woods agreement and the 1985 Plaza Accord, in those situations, everybody sat down and came to an agreement about how to reset the global monetary system. This go around, you’ve got a very competitive and very strained world in terms of relations, and I think that it’s going to be forced upon us,” he said.

China and Russia are likely to partner together to de-dollarize in this new global reset, Giustra added.

Giustra’s comments come as the Chinese and Russian central banks have recently announced plans to meet and discuss the promotion of their respective national currencies.

This comes as China has refused to condemn Russian’s invasion of Ukraine.

As for the U.S. dollar, Giustra said that it will likely lose its status as the sole global reserve currency and instead, serve as one of a few major global de facto currencies in a multi-polar world, Giustra said.

“In a world where you have a bifurcated monetary system, you have a U.S. dollar system for the West, and some other system, maybe a gold-backed system for the rest of the countries,” he said.

Giustra noted that the price of gold can’t be suppressed forever, watch the video above for more details on how to invest in gold and diversify your portfolio.

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