Lawyers for the Gold Anti-Trust Action Committee have filed suit against five investment houses, an international bank, and top officials of the U.S. Treasury Department and Federal Reserve Board for “conspiring” to suppress the price of gold.
According to GATA officials, the suit — filed Dec. 8 in U.S. District Court in Boston, Mass. — charges defendants with “anti-trust violations, securities fraud, and breach of fiduciary duty,” as well as charging government officials with exceeding their constitutional authority to regulate commerce and the U.S. economy.
The suit was filed by Reginald Howe, a lawyer and gold-market analyst, as well as a consultant to GATA. He is also the founder of Golden Sextant.com, a website “devoted to gold market commentary.”
The suit alleges that the investment houses — Chase, JP Morgan, Deutsche Bank, Citibank and Goldman Sachs — as well as U.S. officials and the Bank for International Settlements “have been at the center of a scheme with central banks” and investment firms “to coordinate the sale of gold and gold derivatives to keep the price of gold low and thereby disguise inflation and weakness in the U.S. dollar.”
Howe said the Bank for International Settlements, or BIS, is improperly attempting to pay its private shareholders far less than fair value for their shares as it moves to rid itself of private investment and replace those shareholders with shares owned by international financial institutions.
The charges leveled by GATA in the Howe lawsuit are not new. As WorldNetDaily reported in May 1999, the group alleged that gold price manipulation was taking place, perhaps to de-emphasize the precious metal’s stature as a valuable commodity.
“Entire nations, such as Great Britain, are poised to release hundreds of tons of gold into the market over the next few years in a move some believe is an attempt to artificially deflate gold prices and possibly to de-emphasize gold as a valuable commodity,” WND reported then.
Because of what it viewed as suspicious market activity in the face of high gold demand and low gold supply — a classic “supply-and-demand” equation that usually triggers a price increase — GATA was, even last year, contemplating a suit “aimed at breaking up the alleged control over gold market prices.”
In his legal action, Howe claims the Bank for International Settlements — which owns a “substantial amount of gold” (reports say 192 tons) — is planning to cancel shares of its stock currently in private hands “so that the bank might become owned entirely by member governments” who may also have an interest in suppressing the price of gold.
“I’ve been a trader for 25 years, and I began noticing that the gold market was just not trading the way it was supposed to,” said GATA Chairman Bill Murphy, in an interview last year. He said that when gold reached the $295-300 per ounce range, “I began noticing that the market price for gold would always stop (at a certain level), lose, then come right back” to the previous level — but never higher.
That didn’t follow the established rules of supply and demand, he explained
For its part, BIS has denied the allegations made in the suit, calling them baseless.
“The BIS is aware of the lawsuit … and the BIS considers the lawsuit without merit,” bank spokeswoman Margaret Critchlow told Reuters last week.
BIS is known as the central bank to the world’s central banks.
Other gold traders and industry leaders had little to say about the GATA suit. A spokesman at Blanchard and Co. — the country’s largest rare coins and precious metal’s dealer — had not heard of the GATA suit. Neither had officials at the Gold Information Network.
And at least one industry expert, who asked not to be identified, said GATA itself lacked credibility as an organization.
On the other hand, gold expert Jim Sinclair, according to Goldseek.com, called the Howe/GATA lawsuit “the most positive gold development in 21 years.”
Beyond the accusations and denials, though, are distinct indications that many Western nations — at least on the surface — appear to be moving away from using gold as the guarantor of their currencies.
Besides Great Britain, the Swiss National Bank is looking to dump hundreds of tons of its gold. The bank has commissioned the BIS to help sell 1,300 tons of gold — or about half of Swiss gold reserves — “under a plan for coordinated gold sales agreed by 15 European central banks last year,” Reuters reported Tuesday.
The Dutch central bank has also unloaded what it deemed “excess gold” recently via BIS.
Both Howe and Murphy remain convinced there is manipulation taking place, and they believe there is some panic within the industry — especially when gold prices manage to spike before they are eventually brought back under control.
Also, Murphy says a number of investment houses are “short” tons of gold – meaning they have loaned out money ostensibly backed by gold that hasn’t even been mined yet.
Howe said his lawsuit will seek to “stop the Treasury Department and the Fed from intervening in the gold market, and to stop the investment houses from manipulating the price of gold.” Also, he said he is asking the court to “issue an order to the BIS to compensate its private shareholders fully,” and to pay “damages against all the defendants for fixing the price of gold.”