― Aristophanes
Thị trường Vàng (trên giấy chứng và hợp đồng- không phải vàng khối) không chỉ bị phát hiện là một trò gian lận trong vài năm gần đây sau vụ ngân hàng tài chính Anh Barclays bị lộ gian lận và bị phạt cùng với các ngân hàng Deutsche Bank, Société Générale, RBS, UBS, JPMorgan, Citigroup.
Toàn bộ cái gọi là 'THỊ TRƯỜNG TỰ DO TRAO ĐỔI BUÔN BÁN VÀNG" là một trò lừa đảo gian lận của nhóm tập đoàn quyền lực sau lưng các nhà nước Âu Mỹ đã tung hoành hơn 40 năm qua, ít nhất là tính tứ cái mốc chế độ Richard Nixon đơn phương tuyên bố hủy bỏ giao ước Định Mức Vàng (Gold Standard) năm 1970.
Những trò "ĐIỀU TRA" và "PHẠT VẠ" các "cơ quan công ty tài chính" hàng trăm tiệu, hàng tỉ v.v chỉ là trò ảo thuật, như chính cái gọi đồng tiền chính phủ (fiat money) và ngân hàng trung ương nhà nước là một trò ảo thuật tuyệt luân. Cần nhớ là con số trăm triệu hay chục tỉ mỹ kim, với "chúng ta" đa số không hiểu và chưa hiểu, hoặc do "tự nguyện bó nhỏ óc mình" là một "số tiền" quá lớn mà bao nhiêu sức lao lực thành phẩm dịch vụ mới trao đổi nổi, nằm mơ cũng không thể có; nhưng với bọn "ngân hàng" nhất là "ngân hàng trung ương" chỉ là những con số với vài cái nhấn máy gửi đi.
Các "tay chơi lớn" đều nhịp nhàng hành xử "thị trường vàng" này như một bản hòa âm giao hưởng do ngân hàng trung ương London của Anh điều tấu. (Nhân chủ đã lý giải "công thức định giá bản vị trong sách giáo khoa kinh tế tài chính" là bịp bợm, khi giá bảng Anh luôn luôn mạnh và vững chãi hơn Mỹ Kim, hơn cả bản vị khối Euro, vì .... quyền lực ngân hàng London, chứ không phải vì lực kinh tế như sách vở dạy).
Từ 1970, dàn giao hưởng "thị trường vàng" này hòa tấu giá cả thu tóm giá trị lao động thật, tài nguyên thật của dân chúng khắp thế giới, và điều khiển thị trường đầu tư, sản xuất toàn cầu qua điều khiển tài chính. Các tay "nhạc công" này gồm những tên đầu xỏ Bank for International Settlements, the Federal Reserve, the Exchange Stabilization Fund, the US Treasury Department, các ngân hàng trung ương quốc gia nhà nước như Bank of England, France, Germany, Switzerland... và dĩ nhiên sau này sau 1991 khi Đảng CS Trung Quốc mở cửa tham gia, dàn nhạc có thêm nhạc công mới, nhưng chơi điệu nghệ People’s Bank of China.
Chúng ta cũng cần nhớ và cần hiểu rằng, vị trí và thẩm quyền của các cái gọi là "ngân hàng trung ương quốc gia" này khác nhau tại bản xứ. Tại Anh , Âu Mỹ, Ngân Hàng "độc lập" khỏi "nhà nước" và tạo "áp suất" lên nhà nước; trong khi tại Trung Quốc, ngân hàng trung ương chỉ là một "dụng cụ cáo cấp" của đảng CSTQ, nhưng khi bước lên khỏi biên giới "tổ quốc" nó phải tuân thủ theo những nốt nhạc trong "bản giao hưởng" do bậc thầy nhạc trưởng điều khiển (London- BIS) . Không hiểu được điều căn bản then chốt này, không thể hiểu nổi cấu trúc qyền lực và ít nhất là cấu trúc "tài chính" trong vai trò chủ động kinh tế toàn cầu.
Hiện nay dàn nhạc này mở rộng hơn với một số tay nhạc công phụ khác, nhưng không giới hạn tại đây, như Ấn, Nga, Ba Tây v.v Vụ tham nhũng liên quốc BỀ NỔI là về "tài chính in tiền" giữa nhà nước Úc (bộ ngân khố, ngân hàng trung ương quốc gia Úc - Reserve Bank of Aust) và Việt Nam, Mã Lai, Nam Dương liên can đến các tên thủ tướng, tổng thống, tổng bí thư đảng, bộ trưởng của 4 quốc gia này, và "được Tòa Án Tối Cao Úc" chính thức che dấu khỏi con mắt và dư luận công chúng, nhân danh quyền lợi an ninh và bang giao quốc gia... đã cho thấy bọn "ẩn tàng" đã cấu kết với nhau và cấu kết thêm những tay chơi "non trẻ" mới nơi các quốc gia "nhược tiểu" khác ra sao rồi.
Quí độc giả có nhận thức, còn có óc phán đoán tự chủ, nếu thích thú quan tâm, xin tham khảo vài tư liệu dưới đây, và truy cứu thêm các nguồn, rồi tự có QUI KẾT RIÊNG. Chúng tôi luôn chủ trương không nỗ lực "thuyết phục" ai hết, vì không thể, và khuyến khích mọi người truy tìm và TỰ THUYẾT PHỤC. Không ai có khả năng thuyết phục ai, chỉ có chính chúng ta tự thuyết phục chúng ta, dù sai hay đúng, và tự thay đổi quan điểm khi tự nhìn ra bằng chứng mới từ sự tham cứu của chính mỗi chúng ta mà thôi.
Tài chính, dù là nền tảng lớn, nhưng cũng chỉ là một phần của hệ thống quyền lực. Chúng ta không có tự do nhân phẩm, mà chỉ là những con cờ công cụ với ảo tưởng tự do nhân phẩm trong guồng máy tập quyền. Tự do nhân phẩm chủ quyền tự chủ chỉ có khi không còn hệ thống tập quyền của thiểu số. Thiểu số này tùy tiện quyết định vận mạng hành xử sống chết của 7 tỉ người trên toàn địa cầu, phần lớn là do 7 tỉ tự nguyện trao phó, dù vì thiếu hiểu biết, bị lừa đảo dẫn dụ huân tập, hay ép buộc.
Kiến thức hiểu biết thật sự sẽ giải phóng chúng ta. Kiến thức hiểu biết thật sự chỉ đến khi chính chúng ta nhận thức tự trách nhiệm và truy tìm. Chỉ riêng hai cuộc "thế chiến" với hàng trăm triệu con người nạn nhân chỉ do vài chục đứa quyết định đã rõ ràng, nhưng vẫn chưa mở mắt đánh thức nổi nhân loại!
“Ngay cả nếu bạn thuyết phục tôi, bạn sẽ không thuyết phục được tôi" (Even if you persuade me, you won’t persuade me.)
― Aristophanes
Thật lạ lùng! Não trạng con người quả thật "bí ẩn", cái bí ẩn mà bọn quyền bính nắm quá rõ và tận dụng điều khiển chẳng có gì ẩn bí với chúng. Phải chăng chính "ảo tưởng kiến thức" nơi đại đa số chúng ta khiến "não trạng" chúng ta thành "bí ẩn" với chính mình???
Aristophane mấy ngàn năm trước từng thở dài rằng điều khó khăn nhất là khi phải giải thích một điều hiển nhiên với quần chúng...Tôi có thể nhấn mạnh thêm rằng với một quần chúng đã huân tập thói quen niềm tin không chất vấn.
“Hãy nhìn những kẻ hùng bịện giữa công chúng, trong khi họ còn chưa được gì, cả quốc gia và quần chúng chỉ có thể ca ngợi tính chính trực của họ; nhưng một khi họ ăn ngập tiền công quĩ (nhập chính-nkptc), họ thai nghén một nỗi căm ghét công lý, toan tính mưu đồ hại quần chúng và nền dân chủ" (Look at the orators in our republics; as long as they are poor, both state and people can only praise their uprightness; but once they are fattened on the public funds, they conceive a hatred for justice, plan intrigues against the people and attack the democracy.)― Aristophanes, PlutusSao Aristophane lại nhìn thấu rõ bọn chính trị gia nhà nước đến thế. Hình ảnh mấy ngàn năm trước rõ ràng hiển hiện nhãn tiền ngay bây giờ!!!
nkptc
10-3-2015
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| Rock & Stock Stats | Last | One Month Ago | One Year Ago |
| Gold | 1,168.70 | 1,233.95 | 1,350.33 |
| Gold (SGE) | 1,203.46 | 1,269.89 | 1,353.22 |
| Silver | 15.94 | 16.73 | 21.47 |
| Copper | 2.63 | 2.60 | 3.28 |
| Oil | 49.78 | 47.83 | 101.51 |
| Gold Producers (GDX) | 18.58 | 21.33 | 26.79 |
| Gold Junior Stocks (GDXJ) | 23.44 | 26.64 | 43.55 |
| Silver Stocks (SIL) | 8.61 | 10.05 | 14.42 |
| TSX (Toronto Stock Exchange) | 14,952.50 | 15,083.92 | 14,271.92 |
| TSX Venture | 688.79 | 693.40 | 1,039.39 |
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Ed Steer, Editor, Gold & Silver Daily
Below is one of the charts that I used in my presentation at the Casey Research conference in San Antonio, Texas last September—and I thought it time for a revisit.It’s based on an interesting piece of research by Sam and Bob Kirtly at SK Options Trading in Wellington, New Zealand way back on August 27, 2010.
The chart runs from January 1970 until September 2014—almost 45 years.
The yellow line is the gold price—and it’s slaved to the left Y axis. The blue line is the value of a theoretical $100 investment made on January 2, 1970—and that’s slaved to the right Y axis.
The four dialogue boxes with the red words/numbers represent the gold price at four crucial points during the last 45 years.
In theory and without considering commissions, what this chart shows in plain English is that if you invested $100 at the London a.m. gold fix on January 2, 1970, sold your position at the London p.m. gold fix the same day, then reinvested the proceeds the next day at the London a.m. fix and sold at the p.m. fix once again—and did that every business day for 45 years in a row—you’d have had the magnificent sum of $12.13 in your trading account at the close of business on February 27, 2015.
This is what I call the “London bias”—and for most of the last 45 years, it’s been negative regardless of the gold price trend indicated by the Y axis.
The bias was positive from January 4, 1971 to January 2, 1975 because the $100 initial “investment” you made was worth a bit north of $330 on January 2, 1975. During that time, the price rose from a low of $37.70 to $179.40—a gain of 375%.
All that changed from January 2, 1975 going forward and with the exception of only a couple of years between 1975 and 1980, the yearly London price bias in gold has been negative ever since—for more than two generations.
In other words, since January 2, 1975—and with the very odd exception in the interim—the gold price has closed for a loss between the London a.m. and p.m. gold fixes for 40 years in a row regardless of what was happening in the overall gold market.
Note that between January 2, 1975 and January 21, 1980, the gold price rose from $179.40 to $878.50—a gain of another 389%. However, during that time, your $100 investment declined in value from just over $330 to just over $300.
Also note on this chart that during the biggest gold bull market in history between 1999 and 2011, the “London bias” continued to be negative, as the gold price closed down every year between the fixes.
The Friday before the Washington Agreement on Gold was signed on September 26, 1999, the gold price was at $265.70 per ounce. At its high tick on September 5, 2011, the gold price hit $1,896.50 per ounce. That bull market, before it got cut off at the knees, ran the gold price up 613% percent.
During that time period, your theoretical $100 investment fell from a hair under $60 all the way down to about $17 on the day that gold peaked.
How is that possible in a free market, you might ask. Well, the answer is that it ain’t.
There is nothing free market about this chart. What it clearly shows is a carefully planned and executed price-suppression scheme in the gold market. The overt market price suppression of the 1960s during the days of the London Gold Pool turned into the covert price-suppression scheme you see here. For those looking for the proverbial smoking gun of the gold price management scheme, it’s staring them in the face in this one chart.
And without doubt, it was—and still is—being carried out by the covert and collusive actions of organizations such as the Bank for International Settlements, the Federal Reserve, the Exchange Stabilization Fund, and the US Treasury Department. I’m sure it would be safe to include, at times, the central banks of England, France, Germany, and perhaps Switzerland. In recent years, it may also have come to include the People’s Bank of China.
Subsequent to me writing this article but before its publication, Ronan Manly over at BullionStar authored an essay titled The Bank of England and the London Gold Fixings in the 1980s. It showed up on that Internet site on February 28, 2015—and is certainly a must read in conjunction with the data shown on the above chart. One thing he pointed out to me was that according to his source (which I’ve subsequently seen), the Comex began trading gold futures contracts for the first time on December 31, 1974—one trading day before the London bias turned negative more or less permanently.
The participants involved in the precious metal price-suppression scheme can be observed in real time in the “Days of World Production to Cover COMEX Short Positions” chart that Nick Laird generates from the weekly Commitment of Traders Report produced by the CFTC—the very regulatory body that’s supposed to prevent this sort of price-management scheme from occurring in the first place. Here it is.
The short positions of the largest four and eight traders are shown for each physically traded commodity on the Comex—and it’s safe to assume that these big traders, especially in the four precious metals, are composed mainly of US and foreign banks as per the monthly Bank Participation Report. As for which banks they might be, one doesn’t have to look much further than the current market-making members of the LBMA. The rest of the Big 8 would be mostly comprised of the largest brokerage houses in the Western world. And as I’ve pointed out already, the People’s Bank of China may also be involved to some extent as well.
The five-year chart posted below (based on LBMA data) of the daily average gold price on a two-minute tick basis for the last five years shows the negative bias between the London a.m. and p.m. fixes more clearly. But in actual fact, the negative bias is much worse than that, because it really begins about an hour or so before the 8:00 a.m. GMT London open—and many hours before the morning gold fix. I know this to be true on a longer-term basis as well because I’ve been following this chart ever since German gold researcher and GATA consultant Dimitri Speck first posted it on the Internet almost 15 years ago. This is Nick Laird’s version of the same thing.
As I’ve been saying since the outset, the individual London gold fixes—either a.m. or p.m.—are not and never have been the issue as far as gold price management at the “fixes” has been concerned. It’s the negative bias in the time period between the a.m. and p.m. fixes that’s the issue—and the last chart shows that the negative bias actually encompasses a far longer time period on a daily basis than the intra-fix time period itself.
If someone would care to offer a different interpretation of the above data, I’m sure the gold world in particular—and the precious metal world in general—would love to hear it.
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Gold and Silver HEADLINES
More Chinese Banks to Take Part in Setting the Global Gold Price (China Daily)A new electronic daily gold pricing mechanism due to launch on March 20 will include more participants in setting the benchmark price of the precious metal, including Chinese banks such as Industrial and Commercial Bank of China Ltd.
The LBMA hopes the new pricing mechanism will increase the number of participants in the gold market. Bank of China, China Construction Bank, and ICBC are already members.
In the past, Chinese participants—including banks, mining companies, and traders—could also participate in setting the benchmark price in an indirect way through market maker banks.
Bangladesh Seizes $1.4 Million in Gold from North Korean Diplomat (Mineweb)
Bangladesh’s customs officers caught a North Korean diplomat trying to smuggle an estimated $1.4 million worth of gold into the country.
The gold was reportedly recovered in the form of bars and ornaments from Son Young Nam, the First Secretary of the North Korean Embassy in Dhaka. He was released, but Bangladesh is seeking to press charges over the haul of gold, which weighed about 27kg in total.
Officials say that in recent months, the smuggling of gold has increased mainly from Dubai, but this was the first instance of a diplomat carrying gold.
Recent News in International Speculator and BIG GOLD—Key Updates for Subscribers
International Speculator- One of our explorers reported new drill results at its flagship gold-copper project. All holes hit mineralization, confirming its general geological theory. With the 2015 program underway, we expect more positive results just around the corner.
- This company announced it acquired the surface rights for some new targets located next to its flagship project in Nevada. This is the sort of thing a company does if it’s serious about putting a project into production.
BIG GOLD- This developer is progressing as planned and has enough money in its coffers to complete all feasibility work and start production as soon as final permits are received. This makes the stock a strong buy.
The Bank of England and the London Gold Fixings in the 1980s
With the current structure of the London gold price fixings disappearing in the very near future, there is an unusual story that I’d like to share about the gold fixings. It concerns the Bank of England’s ‘gold activities’ in the daily London Gold Fixings during the 1980s, and my attempts to get the Bank to explain what these ‘gold activities’ consisted of.
These ‘gold activities’ of the Bank came to light within some comments that senior Bank of England employee Oliver Page wrote about fellow senior Bank of England colleague and contemporary Terry Smeeton:
Before looking at Mr. Smeeton’s ‘gold activities’, it’s worth getting a sense of the roles of Terry Smeeton and Oliver Page at the Bank of England by briefly looking at the career profiles of these two gents.
In the 1990s while still at the Bank, Smeeton was also the Bank of England’s representative on the G-10 Gold and Foreign Exchange Committee at the Bank for International Settlements in Basel, as these Committee meeting minutes from 1997 highlight.
Frank Veneroso of Veneroso Associates, who is well-known for his in-depth analysis of the gold lending market, has stated that it was actually comments about the gold lending market made by Terry Smeeton in 1995 that triggered Veneroso to undertake his ground-breaking gold lending market analysis. Veneroso has also highlighted previously that Smeeton was critical of HM Treasury’s 1999 decision to auction off a substantial part of the UK’s gold reserves.
Oliver Page joined the Bank of England in 1968 and went on to be Chief Manager, Reserves Management in 1989, and Deputy Director, Supervision and Surveillance in 1996. In 1998, when the Financial Services Authority (FSA) was established, Page moved from the Bank of England to become the FSA’s Director of its Complex Groups Division (later called Major Financial Groups Division), and was also the FSA’s representative on the Basel Committee of Banking Supervisors. Page received an OBE in 2004, and retired from the FSA in April 2006, after which he became a non-executive director of Mitsubishi UFJ Securities International. Oliver Page passed away in 2012.
After Terry Smeeton died in September 2007, Oliver Page wrote Mr. Smeeton’s obituary which was published in the industry journal ‘Central Banking’, and on the journal’s website.
In the obituary, Oliver Page said of Smeeton:
Firstly, what were Smeeton’s ‘gold activities‘ in the daily gold fixes ‘through this period’ during the 1980s?
Secondly, what was the Bank of England foreign exchange and gold division doing entering the London gold fixings to ‘help’ the daily gold fixes? And why did this activity happen ‘often’?
These ‘gold activities’ do not sound like normal Bank of England customer deals being placed into the daily fixings. However it does sound like central bank intervention into the price setting process.
(Note that at this time in the 1980s, NM Rothschild was the permanent chair of the fixings and the Bank used Rothschild as its broker. The other four fixing members during the 1980s were Mocatta, Sharps Pixley, Samuel Montagu/Midland, and Johnson Matthey/Mase Westpac. Rothschild departed from the gold fixings in 2004.)
Thirdly, why exactly is it so noteworthy for Oliver Page to have mentioned that Smeeton “produced an overall profit” from his ‘gold activities‘. Could it be that Smeeton’s activities were not primarily motivated by profit maximisation? Regular Bank of England ‘buy and hold’ or sell orders on behalf of central bank customers would not fall under the ‘noteworthy at having made a profit’ category.
Interestingly, in the London Gold Pool in the 1960s (which comprised both a buying syndicate and a selling syndicate), making a profit on the Pool’s gold transactions was considered a bonus, since that was not the primary purpose of the Pool’s consortium.
The Fix is In
In February 2012, after reading Oliver Page’s observations on Smeeton, I emailed the Bank of England, and asked them to explain Mr. Page’s 1980s references to Mr. Smeeton. My question was:
1. There was no attempt in the Bank’s answer to address the crux of the issue, i.e. what Smeeton was doing in the 1980s ‘helping’ the fixing with ‘gold activities’ that produced an overall profit and that required risk management.
Executing physical gold orders for the Exchange Equalisation Fund (EEA) or for other bank customers via one of the five gold fixing members is not an activity that could reasonably be described as ‘helping’ the fixing and not the type of activity that would be noteworthy as ‘producing an overall profit’, or that would need risk management monitoring.
Nor is gold lending between central bank customers of the Bank of England and the London gold market bullion bank participants something that would have required the Bank’s foreign exchange and gold desk, and Terry Smeeton, to ‘help’ the twice daily London gold price auction fixings.
Gold lending only began in the London gold market in the early to mid 1980s and initially was only undertaken on a limited scale.
So, why the reluctance by the Bank to answer my question directly?
2. Interestingly, the Bank’s response contained an extract (see grayed area above) from a 1964 Bank of England publication about the London Gold Market which explained the four main reasons why the Bank was involved in the gold fixings, and referred to the Bank of England as being “a moderating influence” on the gold market so as “to avoid violent and unnecessary movements in the price.”
Was the inclusion of this 1964 extract about the Fixings by the Bank’s Enquiries and Information Office a tacit admission from the Bank that it continued to be a ‘moderating influence’ on the gold price into the 1980s and perhaps beyond? Why include this Fixing explanation from 1964 to explain a question about the 1980s?
3. The Bank’s email response to me also mentioned 1968 and stated that “From 1968, the Bank was a less regular participant in the daily gold fixings”. This reference to 1968 is a reference to the collapse of the London Gold Pool in March 1968 before which the Gold Pool (managed by the Bank of England) attempted to control the gold price and keep it near $35 per ounce. Since I had asked about the 1980s and not 1968, the inclusion of this reference is, in my view, highly unusual but telling.
The comment from the Bank that since 1968 “contact between the Bank and the members of the gold market remained close” is also noteworthy.
4. The Bank’s response said that Smeeton executed orders for central bank customers and also ‘managed gold’ held in the Exchange Equalisation Account. The Bank did not elaborate on what was meant by ‘managing’ EEA gold. (Note, the UK gold reserves are owned by HM Treasury and held within the Exchange Equalisation Account which is somewhat similar to the US Exchange Stabilization Fund. The Bank of England acts as custodian of the UK gold reserves on behalf of HM Treasury.)
If you look at the data on UK official gold reserves over the 1980s, such as in ‘Central Bank Gold Reserves: A historical perspective‘ by Timothy Green, you will see that the official UK gold reserves were totally static throughout the 1980s at between 591 tonnes and 592 tonnes. i.e. They did not change (see table below, last row). In fact, most of the large gold holding countries maintained static gold reserve holdings throughout the 1980s which would suggest very little customer order activity for the Bank of England gold order desk.
Therefore the unchanging nature of the EEA gold reserves during the 1980s again does not explain the Bank’s reference to Smeeton as ‘managing’ the EEA gold in the 1980s.
The Bank of England’s 1964 essay is from it’s Q1 quarterly bulletin and was published in March 1964. This was soon after the launch of the London gold pool but the reference to the role of the Bank as a ‘moderating influence’ against ‘violent and unnecessary movements in the price’ goes back to before the beginning of the London Gold Pool.
Prior to the Gold Pool commencing operations in 1962, the Bank of England was already single-handedly intervening into the London good market aiming to ‘smoothen’ the gold price so that it reverted to near $35 per ounce, by participating in the daily fixing (there was only one fixing at that time, the morning fixing). The Bank aimed to keep the London price near the U.S. Treasury gold window price so as to prevent speculative arbitrage between the two prices (excluding 1/4% US Treasury fee and transport costs).
It was based on these Bank of England operations that Charles Coombs at the Federal Reserve Bank suggested to the Bank of England in 1961 that they consider creating a gold pool amongst the U.S. and major European central banks.
Charles Coombs stated in his 1976 book, ‘The Arena of International Finance’ (page 50), that in 1960:
“The Bank of England, having assumed some responsibility for selling gold to maintain orderly market conditions, was in the awkward position of being squeezed out of the market by other central bank buyers whenever gold became available.”
A recent history of the Bank of England also refers to the Bank of England’s intervention prior to the commencement of the London Gold Pool in 1962:
“The selling consortium was in operation to prevent an unduly rise in the price when demand was strong. It had to be specifically activated by the members. It’s operations did not affect the extent of intervention in the market and the Bank continued to intervene in its own judgement.”
(Source: Page 190, ‘The Bank of England: 1950s to 1979′ by Forrest Capie, Cambridge University Press).
The Bank of England have historically used the terms ‘smoothing operation’ and ‘stabilisation operation’ when referring to operations and interventions into the gold and foreign exchange markets. A price smoothing operation is a softer, less radical version of a price stabilisation operation.
Upon reading Oliver Page’s comments about Smeeten, my initial theory was that Terry Smeeton and the Bank’s Foreign Exchange Division had also been intervening into the daily gold fixings during the 1980s so as to smoothen the gold price, via offering and bidding from a special account that sold/lent at one price (high) and bought back again at a lower price (low).
Since I asked the Bank to explain Oliver Page’s comments and they declined to do so, this even crystallised my theory somewhat. I usually prefer not to speculate. My approach is to clarify information first and try to validate it. Only if it cannot be validated can some speculation come into play. But if the Bank of England can’t answer a simple question directly, then they are inviting speculation.
My speculation thesis is that in the 1980s, Smeeton and the Bank were using a pool of gold to create artificial supply into the gold fixings so as to influence the gold price, either selling gold directly during the fixings, or lending gold short-term to the chair or lending short-term to some of the four other fixing members.
Intervention of course is two-way, so could also consist of creating demand in the fixings so as to support the price. Keeping a price within a trading ‘band’ is often a goal of financial market intervention. The mechanics of a demand side intervention would merely be the opposite of the possible tactics illustrated below.
Supplying or selling metal into the fixings and buying it back later is a gold trading tactic that would (in the Bank’s eyes) “partially help the fixings” while “producing an overall profit” for the Bank’s Foreign Exchange Division, and also a set of transactions where the trading P & L would need monitoring and risk management (from Oliver Page). The profit creation would be generated by selling high and buying low, much like a trader’s short sell trade and similar to what the Bank of England and the London Gold Pool selling syndicate did in the 1960s.
Within this scenario, I think Smeeton could have been doing a number of things via these ‘gold activities’:
By the 1980s the five London gold brokers and fixing members all maintained allocated gold accounts at the Bank of England and had storage space in the Bank’s vaults. This development occurred in the late 1970s, and was done initially for security reasons so as to minimise the transport of gold bullion around the City of London.
It would therefore be very straightforward in the 1980s for the Bank to manage transfers and allocations between a gold pool account and gold accounts of one or more of the five London gold market brokers held at the Bank.
[In fact, gold transfers between the Bank of England and the London gold market regularly happen to this day in a different guise via the Bank acting as clearer of last resort with the six bullion bank members of London Precious Metals Clearing Ltd (LPMCL).]
As to whether a 1980s Bank of England gold pool would be sourced from EEA gold, or include other customer gold, or would be a distinct separate account is not that important. Even if such an operation within the Bank’s Foreign Exchange Division was stand-alone and not coordinated with other central banks, the G10 central banks would obviously be briefed on it given their perennial close coordination on gold market issues via Basel.
The February 1998 edition of the LBMA’s Alchemist magazine features an interview with Terry Smeeton just before he retired from the Bank of England in March 1998. In the interview, on pages 2 and 3, when asked about his view on the relationship between the Bank and the London gold market, particularly in light of gold market supervision moving from the Bank to the FSA in 1998, Smeeton said:
To answer that question, you’d have to ask the Bank of England. And they probably wouldn’t tell you one way or the other.
Ronan Manly
E-mail Ronan Manly on: ronan.manly@bullionstar.com
These ‘gold activities’ of the Bank came to light within some comments that senior Bank of England employee Oliver Page wrote about fellow senior Bank of England colleague and contemporary Terry Smeeton:
Before looking at Mr. Smeeton’s ‘gold activities’, it’s worth getting a sense of the roles of Terry Smeeton and Oliver Page at the Bank of England by briefly looking at the career profiles of these two gents.
Terry Smeeton and Oliver Page
In the 1980s and 1990s, Terry Smeeton was one of the Bank of England’s experts on the gold market, and he rose to attain the position of Head of Foreign Exchange and Gold at the Bank. Smeeton joined the Bank of England in 1960 and remained at ‘The Old Lady’ until retiring in 1998. After leaving Threadneedle Street in March 1998, Smeeton went on to be a non-executive director of Standard Bank from July 1998 to September 2007, and in 2002 was appointed as advisory board member to the Dubai Metals and Commodities Centre (DMCC) and head of the centre’s Gold Management committee. Terry Smeeton passed away in September 2007.In the 1990s while still at the Bank, Smeeton was also the Bank of England’s representative on the G-10 Gold and Foreign Exchange Committee at the Bank for International Settlements in Basel, as these Committee meeting minutes from 1997 highlight.
Frank Veneroso of Veneroso Associates, who is well-known for his in-depth analysis of the gold lending market, has stated that it was actually comments about the gold lending market made by Terry Smeeton in 1995 that triggered Veneroso to undertake his ground-breaking gold lending market analysis. Veneroso has also highlighted previously that Smeeton was critical of HM Treasury’s 1999 decision to auction off a substantial part of the UK’s gold reserves.
Oliver Page joined the Bank of England in 1968 and went on to be Chief Manager, Reserves Management in 1989, and Deputy Director, Supervision and Surveillance in 1996. In 1998, when the Financial Services Authority (FSA) was established, Page moved from the Bank of England to become the FSA’s Director of its Complex Groups Division (later called Major Financial Groups Division), and was also the FSA’s representative on the Basel Committee of Banking Supervisors. Page received an OBE in 2004, and retired from the FSA in April 2006, after which he became a non-executive director of Mitsubishi UFJ Securities International. Oliver Page passed away in 2012.
After Terry Smeeton died in September 2007, Oliver Page wrote Mr. Smeeton’s obituary which was published in the industry journal ‘Central Banking’, and on the journal’s website.
In the obituary, Oliver Page said of Smeeton:
“On his work, the foreign exchange and gold markets were his great enthusiasms. So his work in the Bank of England, mainly in the Foreign
Exchange Division, suited him perfectly. The gold markets were an aspect of the financial world where he became internationally renowned.
While I was in the foreign exchange division in the 1980s, I was responsible for the risk management and performance system used to monitor activity. Through this period, Terry’s gold activities, often partly aimed at helping the London Market’s daily gold fixes, produced an overall profit.
So he was not just a talker on gold, he was a successful operator. He was very disappointed when large-scale gold sales were made in the 1990s at what turned out to be the 30-year low of the market.”
Certain phrases in Page’s tribute to Smeeton, specifically in relation to the gold fixings, struck me as very odd and raised a number of questions in my mind:Firstly, what were Smeeton’s ‘gold activities‘ in the daily gold fixes ‘through this period’ during the 1980s?
Secondly, what was the Bank of England foreign exchange and gold division doing entering the London gold fixings to ‘help’ the daily gold fixes? And why did this activity happen ‘often’?
These ‘gold activities’ do not sound like normal Bank of England customer deals being placed into the daily fixings. However it does sound like central bank intervention into the price setting process.
(Note that at this time in the 1980s, NM Rothschild was the permanent chair of the fixings and the Bank used Rothschild as its broker. The other four fixing members during the 1980s were Mocatta, Sharps Pixley, Samuel Montagu/Midland, and Johnson Matthey/Mase Westpac. Rothschild departed from the gold fixings in 2004.)
Thirdly, why exactly is it so noteworthy for Oliver Page to have mentioned that Smeeton “produced an overall profit” from his ‘gold activities‘. Could it be that Smeeton’s activities were not primarily motivated by profit maximisation? Regular Bank of England ‘buy and hold’ or sell orders on behalf of central bank customers would not fall under the ‘noteworthy at having made a profit’ category.
Interestingly, in the London Gold Pool in the 1960s (which comprised both a buying syndicate and a selling syndicate), making a profit on the Pool’s gold transactions was considered a bonus, since that was not the primary purpose of the Pool’s consortium.
The Fix is In
In February 2012, after reading Oliver Page’s observations on Smeeton, I emailed the Bank of England, and asked them to explain Mr. Page’s 1980s references to Mr. Smeeton. My question was:
“What were Terry Smeeton’s “gold activities” while he was in the foreign exchange department that “partly aimed at helping the London Market daily gold fixes” and that produced “an overall profit” over the period, while being monitored by Oliver Page using the risk and performance monitoring system?”
The Bank of England “Public Information & Enquiries Group” responded as follows:“The Bank of England does not have a role in the daily fixing of gold prices. There are five members (listed below) of the Gold Fixing, all of whom are Market Making members of the LBMA:
• Bank of Nova Scotia
• Barclays Capital
• Deutsche Bank AG London
• HSBC USA NA London
• Societe Generale”
Since the bank didn’t address my question, I responded back to the Bank with a second email, reiterating the question:• Barclays Capital
• Deutsche Bank AG London
• HSBC USA NA London
• Societe Generale”
“But if the Bank of England has no role in the fixing then what role was Terry Smeeton in the foreign exchange department playing, with “gold activities” that “partly aimed at helping the London Market daily gold fixes” and that produced “an overall profit” over the period, while being monitored by Oliver Page using the risk and performance monitoring system?
A different person from the Bank’s Public Information & Enquiries Group then responded to my second email as follows:“The Bank no longer plays a role in the daily gold fixing. But for many years the Bank had a supervisory role in the London gold market,and was involved in the fixing process, as described in the following excerpt from the Bank’s Quarterly Bulletin (1964, p16 ‘The London Gold Market‘):
'The Bank of England are not physically represented at the fixing. But they are able, like any other operator, effectively to participate in the fixing by passing orders by telephone through their bullion broker and at the fixing they use exclusively the services of the chairman of the market, namely, Rothschilds.
The Bank operate for a number of different parties; they are first the managers of the Exchange Equalisation Account, which may be a natural buyer or seller of gold :
secondly, they are the agent for the largest single regular seller of gold in the world, namely the South African Reserve Bank, which is responsible for the disposal of new production in South Africa :
thirdly, they execute orders for their many other central bank customers :
fourthly, the Bank aim, as in the case of the foreign exchange and gilt-edged markets, to exercise, so far as they are able, a moderating influence on the market, in order to avoid violent and unnecessary movements in the price and thus to assist the market in the carrying on of its business.'
From 1968, the Bank was a less regular participant in the daily gold fixings, although contact between the Bank and the members of the gold market remained close.
In particular, the Bank (including Mr Smeeton in his role in the Bank’s Foreign Exchange Division) continued to execute orders for central bank customers of the Bank, and to manage gold held in the Exchange Equalisation Account.
The Bank no longer has supervisory responsibility for the London bullion market. Responsibility for the regulation of the major participants in the market lies with the Financial Services Authority (FSA) under the Financial Services and Markets Act 2000.
Guidelines for the conduct of gold business not covered by the Act are set out in The London Code of Conduct for Non-Investment Products (the NIPs code).”
Avoiding the Question
Yet again, the second response from the Bank of England didn’t address my question directly, but while circumventing a direct answer, it did contain some very interesting information. Let’s examine the Bank’s second response in more detail.1. There was no attempt in the Bank’s answer to address the crux of the issue, i.e. what Smeeton was doing in the 1980s ‘helping’ the fixing with ‘gold activities’ that produced an overall profit and that required risk management.
Executing physical gold orders for the Exchange Equalisation Fund (EEA) or for other bank customers via one of the five gold fixing members is not an activity that could reasonably be described as ‘helping’ the fixing and not the type of activity that would be noteworthy as ‘producing an overall profit’, or that would need risk management monitoring.
Nor is gold lending between central bank customers of the Bank of England and the London gold market bullion bank participants something that would have required the Bank’s foreign exchange and gold desk, and Terry Smeeton, to ‘help’ the twice daily London gold price auction fixings.
Gold lending only began in the London gold market in the early to mid 1980s and initially was only undertaken on a limited scale.
So, why the reluctance by the Bank to answer my question directly?
2. Interestingly, the Bank’s response contained an extract (see grayed area above) from a 1964 Bank of England publication about the London Gold Market which explained the four main reasons why the Bank was involved in the gold fixings, and referred to the Bank of England as being “a moderating influence” on the gold market so as “to avoid violent and unnecessary movements in the price.”
Was the inclusion of this 1964 extract about the Fixings by the Bank’s Enquiries and Information Office a tacit admission from the Bank that it continued to be a ‘moderating influence’ on the gold price into the 1980s and perhaps beyond? Why include this Fixing explanation from 1964 to explain a question about the 1980s?
3. The Bank’s email response to me also mentioned 1968 and stated that “From 1968, the Bank was a less regular participant in the daily gold fixings”. This reference to 1968 is a reference to the collapse of the London Gold Pool in March 1968 before which the Gold Pool (managed by the Bank of England) attempted to control the gold price and keep it near $35 per ounce. Since I had asked about the 1980s and not 1968, the inclusion of this reference is, in my view, highly unusual but telling.
The comment from the Bank that since 1968 “contact between the Bank and the members of the gold market remained close” is also noteworthy.
4. The Bank’s response said that Smeeton executed orders for central bank customers and also ‘managed gold’ held in the Exchange Equalisation Account. The Bank did not elaborate on what was meant by ‘managing’ EEA gold. (Note, the UK gold reserves are owned by HM Treasury and held within the Exchange Equalisation Account which is somewhat similar to the US Exchange Stabilization Fund. The Bank of England acts as custodian of the UK gold reserves on behalf of HM Treasury.)
If you look at the data on UK official gold reserves over the 1980s, such as in ‘Central Bank Gold Reserves: A historical perspective‘ by Timothy Green, you will see that the official UK gold reserves were totally static throughout the 1980s at between 591 tonnes and 592 tonnes. i.e. They did not change (see table below, last row). In fact, most of the large gold holding countries maintained static gold reserve holdings throughout the 1980s which would suggest very little customer order activity for the Bank of England gold order desk.
Therefore the unchanging nature of the EEA gold reserves during the 1980s again does not explain the Bank’s reference to Smeeton as ‘managing’ the EEA gold in the 1980s.
What were these ‘Gold activities’?
I had previously come across the Bank of England’s 1964 London gold market essay and it’s reference to the Bank acting as a ‘moderating influence’ on the gold price. The same passage that the Bank quoted to me is also in a 1976 book called “The Arena of International Finance” by Charles Coombs (page 46). Coombs was head of foreign open market operations at the Federal Reserve Bank of New York from the 1950s until the 1970s.The Bank of England’s 1964 essay is from it’s Q1 quarterly bulletin and was published in March 1964. This was soon after the launch of the London gold pool but the reference to the role of the Bank as a ‘moderating influence’ against ‘violent and unnecessary movements in the price’ goes back to before the beginning of the London Gold Pool.
Prior to the Gold Pool commencing operations in 1962, the Bank of England was already single-handedly intervening into the London good market aiming to ‘smoothen’ the gold price so that it reverted to near $35 per ounce, by participating in the daily fixing (there was only one fixing at that time, the morning fixing). The Bank aimed to keep the London price near the U.S. Treasury gold window price so as to prevent speculative arbitrage between the two prices (excluding 1/4% US Treasury fee and transport costs).
It was based on these Bank of England operations that Charles Coombs at the Federal Reserve Bank suggested to the Bank of England in 1961 that they consider creating a gold pool amongst the U.S. and major European central banks.
Charles Coombs stated in his 1976 book, ‘The Arena of International Finance’ (page 50), that in 1960:
“The Bank of England, having assumed some responsibility for selling gold to maintain orderly market conditions, was in the awkward position of being squeezed out of the market by other central bank buyers whenever gold became available.”
A recent history of the Bank of England also refers to the Bank of England’s intervention prior to the commencement of the London Gold Pool in 1962:
“The selling consortium was in operation to prevent an unduly rise in the price when demand was strong. It had to be specifically activated by the members. It’s operations did not affect the extent of intervention in the market and the Bank continued to intervene in its own judgement.”
(Source: Page 190, ‘The Bank of England: 1950s to 1979′ by Forrest Capie, Cambridge University Press).
The Bank of England have historically used the terms ‘smoothing operation’ and ‘stabilisation operation’ when referring to operations and interventions into the gold and foreign exchange markets. A price smoothing operation is a softer, less radical version of a price stabilisation operation.
Upon reading Oliver Page’s comments about Smeeten, my initial theory was that Terry Smeeton and the Bank’s Foreign Exchange Division had also been intervening into the daily gold fixings during the 1980s so as to smoothen the gold price, via offering and bidding from a special account that sold/lent at one price (high) and bought back again at a lower price (low).
Since I asked the Bank to explain Oliver Page’s comments and they declined to do so, this even crystallised my theory somewhat. I usually prefer not to speculate. My approach is to clarify information first and try to validate it. Only if it cannot be validated can some speculation come into play. But if the Bank of England can’t answer a simple question directly, then they are inviting speculation.
My speculation thesis is that in the 1980s, Smeeton and the Bank were using a pool of gold to create artificial supply into the gold fixings so as to influence the gold price, either selling gold directly during the fixings, or lending gold short-term to the chair or lending short-term to some of the four other fixing members.
Intervention of course is two-way, so could also consist of creating demand in the fixings so as to support the price. Keeping a price within a trading ‘band’ is often a goal of financial market intervention. The mechanics of a demand side intervention would merely be the opposite of the possible tactics illustrated below.
Supplying or selling metal into the fixings and buying it back later is a gold trading tactic that would (in the Bank’s eyes) “partially help the fixings” while “producing an overall profit” for the Bank’s Foreign Exchange Division, and also a set of transactions where the trading P & L would need monitoring and risk management (from Oliver Page). The profit creation would be generated by selling high and buying low, much like a trader’s short sell trade and similar to what the Bank of England and the London Gold Pool selling syndicate did in the 1960s.
Within this scenario, I think Smeeton could have been doing a number of things via these ‘gold activities’:
- influencing the opening price of the fixing in the hours before a fixing by trading in the market so that the fixing Chair would call a certain opening price targeted by the Bank
- putting in orders to the fixing from a special gold account so as to affect overall supply and demand and target a certain opening price
- using an open line to the Chair to put in offers based on the market’s natural business and the quotes from the order books on the call
- lending to some of the five gold broker participants on a short-term basis from the EEA account or another account so as to influence supply (the five brokers all had allocated gold accounts at the Bank of England from the late 1970s onwards)
- and finally, buying back or squaring off the above transactions at some point so as to try to “produce an overall profit”
Maternal EyeBy the 1980s the five London gold brokers and fixing members all maintained allocated gold accounts at the Bank of England and had storage space in the Bank’s vaults. This development occurred in the late 1970s, and was done initially for security reasons so as to minimise the transport of gold bullion around the City of London.
It would therefore be very straightforward in the 1980s for the Bank to manage transfers and allocations between a gold pool account and gold accounts of one or more of the five London gold market brokers held at the Bank.
[In fact, gold transfers between the Bank of England and the London gold market regularly happen to this day in a different guise via the Bank acting as clearer of last resort with the six bullion bank members of London Precious Metals Clearing Ltd (LPMCL).]
As to whether a 1980s Bank of England gold pool would be sourced from EEA gold, or include other customer gold, or would be a distinct separate account is not that important. Even if such an operation within the Bank’s Foreign Exchange Division was stand-alone and not coordinated with other central banks, the G10 central banks would obviously be briefed on it given their perennial close coordination on gold market issues via Basel.
The February 1998 edition of the LBMA’s Alchemist magazine features an interview with Terry Smeeton just before he retired from the Bank of England in March 1998. In the interview, on pages 2 and 3, when asked about his view on the relationship between the Bank and the London gold market, particularly in light of gold market supervision moving from the Bank to the FSA in 1998, Smeeton said:
“When I started in the Bank of England’s foreign exchange area, we really only had the operational role, which we still, of course, have today. There was no formal supervision of the gold market, but the Bank has always maintained a maternal eye on the market, and that remained the case until the Financial Services Act and the introduction of the Section 43 regime.”
Could this Bank of England ‘maternal eye’ that Terry Smeeton refers to have extended to intervention into the gold fixings in the 1980s so as to be a ‘moderating influence’, and to “avoid violent and unnecessary movements” in the gold price?To answer that question, you’d have to ask the Bank of England. And they probably wouldn’t tell you one way or the other.
Ronan Manly
E-mail Ronan Manly on: ronan.manly@bullionstar.com
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