Gold Anti-Trust Action Committee

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The Gold Anti-Trust Action Committee (GATA) is an organization dedicated to investigating and proving its allegation that the quantity of gold held and traded by the world's central banks, international bullion banks and futures exchanges is significantly overstated and that a scheme analogous to the defunct London Gold Pool keeps the price of gold artificially low.

Contents

Background [edit]

From its inception, GATA has been chronicling its view of the lack of free markets.[1] In the mid-1990s, Bill Murphy, a former commodities trader, wrote a number of essays about the gold market. Murphy, who worked at Merrill Lynch, Shearson Hayden Stone and Drexel Burnham before starting his own brokerage firm[2] and Chris Powell, managing editor[3] of the Journal Inquirer in Manchester, Connecticut then founded GATA.[4] GATA contends that the price of gold has been manipulated by a gold cartel of central banks and other financial institutions since 1995[5][6] and that the quantity of physical gold held and traded by the world's central banks, the London Bullion Market Association (LBMA) and futures exchanges is significantly overstated.[7] The current Board members of GATA include Adrian Douglas and Ed Steer in addition to the founding team of Bill Murphy and Chris Powell. James Turk and Frank Veneroso are consultants to the GATA Board. [8]

Activities [edit]

On March 23, 2010, London gold trader Andrew Maguire produced a series of relevant e-mail exchanges between himself and the Commodity Futures Trading Commission (CFTC) on the matter. In an e-mail dated February 3, 2010, he correctly predicted specific price manipulations that would take place two days later, on February 5, 2010. Shortly thereafter, GATA was invited to testify at a CFTC hearing on position limits.[9] At the March 25, 2010 hearing, GATA was able to present its allegations for the first time.

During the hearing, a former Goldman Sachs trader, Jeffrey Christian, revealed that LBMA over-the-counter market trades 100 times its holdings of "physical gold",[10] meaning that for every one hundred ounces of gold it sells, only one buyer could actually redeem the certificate in gold;[11] the remaining 99 certificate holders would have to accept a cash settlement.[10] Christian's testimony supported one of GATA's most serious allegations, that fractional reserve practices exist within the world's chief physical gold market.[12][13] The existence of massive naked shorts in the estimated $5.4 trillion gold market has been called the world's largest "fraud", a Ponzi scheme that dwarfs the Bernie Madoff scandal.[1][10][11] GATA and some gold investors fear that a sudden surge in demand for physical gold, particularly by holders of large quantities, could trigger "the biggest bank run in history"[14] and cause the U.S. dollar and other currencies to collapse.[12]

Earlier in the year 2000, GATA member Reginald H. Howe filed a lawsuit against bullion banks (Goldman Sachs, JPMorgan Chase, Citigroup, Deutsche Bank), the International Monetary Fund, the Exchange Stabilization Fund, and the Bank for International Settlements; and Alan Greenspan, William J. McDonough, Lawrence H. Summers and then United States Secretary of the Treasury Paul O'Neill. In March 2002, Howe was denied standing by Judge Reginald Lindsay on the grounds that sovereign immunity of the United States and other law protected the defendants from suit.[15][16] GATA alleges that a gold cartel systematically feeds central bank gold into the market place to suppress its price.[17]

Since 2007, GATA has been asking the Federal Reserve and the United States Treasury for an accurate accounting of the physical gold held by the United States government. In 2009, GATA filed a Freedom of Information Act (FOIA) request in the U.S. District Court for the District of Columbia to force the government to show how much gold is held in the United States Bullion Depository at Fort Knox.[18] As of May 2011, the FOIA suit remains open.

Criticism and suspicious circumstances [edit]

GATA's allegations have been called "fringe" and "conspiracy theories" by some analysts,[who?] the conclusions considered "far fetched"[6][19] and derided GATA as a "one-man show",[7] despite the activities of other GATA members.

As Murphy began to speak at the CFTC hearing, the video camera recording the event began to malfunction. The technical problem ended the moment Murphy finished speaking.[20] There were no other instances of technical problems during the hearing, which lasted more than five hours.[12] Within 24 hours after Murphy detailed Maguire's allegations at the CFTC hearing, a series of network television interviews that had been scheduled with Murphy were abruptly cancelled[1] and Maguire and his wife were victims of a hit-and-run accident.[21] The King World News website, after posting an interview with Maguire and Douglas, as well as Maguire's e-mails to the CFTC, was disabled by a distributed denial of service attack.[20]

Notes [edit]

  1. ^ a b c Eric King, Interview with Andrew Maguire and GATA board member Adrian Douglas King World News (March 30, 2010). Retrieved May 6, 2011
  2. ^ Committee list GATA. Retrieve May 6, 2011
  3. ^ List of contact names and information Journal Inquirer, Manchester, Connecticut. Retrieved May 6, 2011
  4. ^ About GATA GATA. Retrieved May 6, 2011
  5. ^ John Dobosz, "Fed Preps For More Bloodletting" Forbes (October 10, 2005). Retrieved May 11, 2011
  6. ^ a b Jane Bussey, "Simmering Debate on the Economics of Gold Takes a Turn" The Miami Herald (June 9, 2002). June 6, 2009
  7. ^ a b Landon Thomas, Jr., "Finding Comfort (and New Friends) in Gold" The New York Times (May 7, 2006). Retrieved June 6, 2009
  8. ^ "GATA Board Members" GATA website
  9. ^ "CFTC Announces Participants for Public Meeting to Examine Futures and Options Trading in the Metals Markets" CFTC website. (March 23, 2010). Retrieved May 11, 2011
  10. ^ a b c Tyler Durden, "Former Goldman Commodities Research Analyst Confirms LMBA OTC Gold Market Is "Paper Gold" Ponzi" Zero Hedge (March 28, 2010). Retrieved May 11, 2011
  11. ^ a b Jeff Nielson, "Jeffrey Christian's 100:1 Blunder" Bullion Bulls Canada (April 13, 2010). Retrieved May 11, 2011
  12. ^ a b c "Interview: Harvey Organ, Lenny Organ, Adrian Douglas" King World News (April 7, 2010)
  13. ^ Lawrence Williams, "GATA's evidence of silver and gold manipulation at CFTC hearing" Mineweb (March 26, 2010). Retrieved May 8, 2011
  14. ^ Tyler Durden, "The Latest Gold Fraud Bombshell: Canada's Only Bullion Bank Gold Vault Is Practically Empty" zerohedge.com (April 7, 2010). Retrieved May 11, 2011
  15. ^ Howe vs. Bank for International Settlements et al., Memorandum and Order of Defendants' Motion to Dismiss (PDF) U.S. District Court for the District of Massachusetts (March 26, 2002). Retrieved May 11, 2011
  16. ^ "GATA cracks U.S. news media blackout" GATA website (April 4, 2002). Retrieved May 11, 2011
  17. ^ Joel Bainerman, "Is gold being manipulated?" Haaretz, republished on gata.org (December 27, 2005). Retrieved June 6, 2009
  18. ^ "GATA sues Fed to disclose gold market intervention records" GATA (December 30, 2009). Retrieved May 11, 2011
  19. ^ Peter A. McKay, "Despite Jittery Market, Gold Just Isn't Shining" The Wall Street Journal (2000-03-08). 2009-06-08
  20. ^ a b "Manipulating Gold and Silver: A Criminal Naked Short Position that Could Wreck the Economy" DeepCapture.com (April 2, 2010). Retrieved May 6, 2011
  21. ^ Michael Gray, "JPMorgan 'chase' story in UK" New York Post (March 29, 2010). Retrieved May 6, 2011

External links [edit]

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