Aug 12, 2008

GATA: Gold near a bottom? Ask the Western central banks

Dear Friend of GATA and Gold:

Your secretary/treasurer remarked last year at a meeting of the Committee for Monetary Research and Education that if a worldwide nuclear war broke out and only one financial market in the world was still functioning in a city that had escaped destruction, what remained of the U.S. Federal Reserve and Treasury Department would find that market and sell promises of gold, and gold would go down, at least for the day, lest any financial market people who had survived the war think that anything was wrong:

The war between Russia and Georgia isn't nuclear but it's a pretty good one with disturbing implications, including implications for the world's energy supply -- so of course today oil joined gold in declining.

Who is selling all that gold, or promises of gold? Apparently it's not the gold mining companies. Quoting Gold Fields Mineral Service, Mining Weekly reports that gold hedging by mining companies is at its lowest level in 20 years:

The carnage in the gold market has drawn Resource Investor's Gene Arensberg away from vacation to produce a special edition of his Got Gold Report, which examines the panic and is headlined "Gold Near a Bottom?" If the question is more than rhetorical, it might best be put to a few Western central bankers, whose crucial meetings and records, unfortunately, are seldom public. In any case you can find Arensberg's report here:

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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