A Simple Experiment to Disprove the Alleged Gold/Silver Price Suppression Schemes

As long as man has lived, man has always been keen to commit grand acts of deception on his fellow man. Joseph Goebbels, Hitler’s Propaganda Minister said, “The bigger the lie, the more it will be believed.” The theory of global warming caused by carbon emissions is likely to be another one of these great lies. Over the past several years, as the global monetary crisis has unfolded, men that have repeatedly been caught in a web of their own lies, deceit, and gross misrepresentations include the most prominent of all financial leaders – Alan Greenspan, Tim Geithner, Ben Bernanke, Robert Rubin, Sandy Weill, Lloyd Blankfein, Henry Paulson et al. But the greatest big lie of all, in my opinion, is our global monetary system and the suppression of gold and silver prices to perpetuate this lie.

The beauty of the argument between the believers and non-believers regarding the price suppression of gold and silver is that non-believers can discredit those they view as gold/silver conspiracy buffs and put a rest to this argument with a simple little experiment that will require very little time or effort. But more on that in just a little bit.

Over the years, my interest in this topic has led me to conduct my own research regarding this matter, a very small portion of which has been outlined below.

IMF Gold Sales v. the Alchemy of Gold Futures — What’s the Impact on Gold Prices? Feb 18, 2010

Gold and Economic Freedom, Reinterpreted for the 21st Century, May 8, 2009

Bankers and Economists Say Gold is a Bubble. Here’s Why You Should Ignore Them., Dec 28, 2009

Will CFTC Chairman Gary Gensler Really Curb Manipulation Schemes in the Futures Markets, or is it Another Smoke & Mirrors Game? July 10, 2009

JS Kim Uncovers Four Parallel Markets for Gold: Asia Futures, NY Futures, Physical Bullion, Physical Coins, Oct. 16, 2008

The GLD and SLV: Legitimate Investment Vehicles or Not? July 15, 2009

Is Gold Expensive at $791 an Ounce? Why Gold Will Continue to Soar Much Higher, November 2, 2007

Gold’s Speculative Stigma is Unwarranted, Sept. 11, 2006

The lies about gold and silver bandied about by bankers and gladly disseminated by the mass media have persisted for years. Even when gold was trading at $500, $600, $700 and $800 an ounce over the past several years, at each one of these junctures, the mass media disseminated numerous stories that quoted “metals experts” from various global financial institutions about gold being a bubble just waiting to pop. And of course, the next time gold steeply corrects, and it will, the same “metals experts” will be quoted by the mass media again that proclaim the “end of the gold bull” without a peep of the behind-the-scenes actions taken by the big bullion banks in the gold/silver futures markets in London and New York to manufacture these steep declines.

Of course, this discussion would be incomplete and near irreverent without a mention of the tireless efforts of GATA’s Chris Powell and Adrian Douglas to uncover the most damning available evidence of government-directed bullion bank price suppression schemes. GATA, of course, is the OG of the gold/silver price suppression scheme theories, having sorted through mountains of documents to find evidence of a banking cartel that artificially suppresses gold/silver prices in order to convince the world to continue subjecting itself to a fraudulent fiat currency monetary system that is led by the US dollar:

GATA Chairman Murphy rebuts defense of gold lending, April 7, 2010

If everything’s manipulated, does that make it OK? April 1, 2010

A London trader walks the CFTC through a silver manipulation in advance, March 25, 2010

Can’t manipulate Treasuries market? But that’s the point of rigging gold! March 25, 2010

Adrian Douglas: More Fed minutes document gold market manipulation, March 14, 2010

Gold is decade’s best-performing investment, March 6, 2010

Most recently, Zero Hedge chimed in with a criticism of CPM Group Managing Director Jeffrey Christian’s take of why the gold futures markets exist:

Jeffrey Christian Has A Second Chance To Disprove The Gold Ponzi Scheme, Fails, April 10, 2010

Given that the number of non-believers far outnumber the number of believers regarding gold and silver price suppression schemes despite the growing-by-the-minute mountain of evidence, here is my challenge to the non-believers, many of whom own considerable dollar/euro/yen amounts of unallocated (and allocated, for what that’s worth) paper gold and silver certificates and gold and silver paper ETFs. Over the years, as I educated myself further regarding certain topics, my views regarding some widely-accepted theories have radically changed, including my views regarding the carbon-emission based theory of global warming (I have long stopped believing this particular theory).

So here is a simple experiment that I challenge all non-believers to engage in that will not hurt you in the tiniest of manners yet provide a massive benefit if your current beliefs are proven to be wrong.

If you currently own any of the physical gold or silver paper ETFs, if you are long in gold/silver futures contracts, and if you own paper gold/silver certificates, sell just a small portion of these holdings (10% or so) and replace them with physical delivery of that gold and silver instead. For this experiment to work, you must encourage every single person you know that is in this same situation (holding a derivative gold/silver product or paper certificate as a proxy for physical gold/silver) to also convert a tiny 10% of these holdings into physical gold and silver. If this simple experiment can spread across the globe, we will discover if those of us that endorse a gold/silver price suppression scheme are right or if those of you that endorse holding paper ETFs like the GLD and SLV as a sound financial practice are right.

For example, if the holders of all paper gold and silver followed Greenlight Capital David Einhorn’s lead and converted just 10% of their paper gold and silver into physical gold and silver (actually we’re not asking you to execute the same actions as Einhorn as he converted 100% of his paper GLD holdings into physical gold last year), and this caused the price of gold to increase significantly, then this would prove that the gold futures market contributes absolutely nothing to the free market price of gold in which supply and demand leads to price discovery.

If the banking cartel has not set up a fractional reserve system for gold and silver that they use solely to manipulate prices, and if most paper gold and paper silver is 100% backed by physical gold and silver as they claim (sans the futures markets), then the conversion of 10% of all paper gold and silver into physical gold and silver should not cause any increased demand in the physical supply of gold and silver that would send prices higher. In fact, the conversion of 50% of all paper gold and paper silver into physical gold and physical silver should have a negligible effect as well if indeed bankers have set up an honest system for gold and silver in which supply and demand currently set prices. However, if this act causes an increase in gold and silver prices, then one should question the very purpose of paper gold/silver derivative products. If such a small act can create a huge disturbance in gold/silver prices, and physical supply and demand for gold and silver are not the market forces that set prices in today’s gold and silver markets, then what is the very purpose of the gold/silver futures markets in London and New York? (for even though the futures markets allow producers to hedge against future fluctuations in the prices of the commodities they produce, the hedging action shouldn’t be so skewed in one direction that it massively skews the price from the price a free market would determine for a prolonged period of time, aka, years and years). The more significant accompanying question then becomes this: If the prices set in the gold/silver futures markets in London and New York are not determined by physical supply and physical demand of gold and silver, then are the prices not being set in these markets entirely fraudulent?

So take the Gold and Silver Challenge, non-believers. Take physical delivery of just 10% of your paper gold/silver derivative products and encourage everyone you know to do the same. Even if you consider yourself the greatest skeptic of all regarding gold/silver price suppression schemes, you have absolutely NOTHING TO LOSE and EVERYTHING TO GAIN from participating in this simple experiment. And if it just happens that you discover that your faith in gold/silver paper ETFs and derivative products was wrong, well, you may just make this discovery in time to exchange these paper products for physical gold and silver before it is too late.

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