Central Banks Manipulating & Suppressing Gold Prices – Industry Expert To RT
The comments below are an edited and abridged synopsis of an article by Ronan Manly
Central banks have a history of manipulating the gold price. Gold is an inflation barometer and an indicator of the strength of fiat currencies, and it influences interest rates and bond prices. Central banks hold large quantities of gold as a store of value and as financial
The most influential changes in the gold market were the introduction of unallocated accounts and fractionally backed gold holdings in the London gold market from the 1980s onwards, and the introduction of gold futures trading in the US in January 1975. This channels gold demand away from physical and into paper.
In unallocated gold trading, trades are cash-settled and there is rarely any physical delivery; thus unallocated bullion does not drive demand for physical gold. Trading positions are claims against bullion banks, which do not hold enough gold to back up the claims. In January 1975, gold futures were launched in the US to create an alternative to the physical market that would siphon off demand for gold. They are fractionally backed and mostly cash-settled, and their trading volumes are multiples of delivery volumes. This undermines the demand for physical
The gold lending market is another area in which central banks have the ability to cap the gold price. By supplying gold through loans and swaps, central banks disrupt the existing supply/demand balance, and this has a depressing effect on the gold price.
Central banks also sell gold covertly. The effect of these sales usually has a negative impact on the gold
Former Federal Reserve Chairman Alan Greenspan testified before Congress that “central banks stand ready to lease gold in increasing quantities should the price rise.”If central banks outlawed fractional gold trading, gold market participants would panic and unwind their paper positions, causing a disconnect between paper gold and physical gold markets.