A tribute to Jeff Christian, loyal soldier in the battle against gold

11:36p ET Thursday, May 27, 2010

Dear Friend of GATA and Gold:

CPM Group executive Jeffrey M. Christian this afternoon posted at Kitco what is headlined as his "final response to GATA," insisting that he has refuted GATA at every point of disagreement in our exchanges in recent weeks, but so angrily that he doesn't quite seem to believe it even as he writes that he will have no more time for it. GATA too is prepared to let readers draw what conclusions they will from our documentation file --

>http://www.gata.org/node/8303

Warburton wrote:

"What we see at present is a battle between the central banks and the collapse of the financial system fought on two fronts. On one front the central banks preside over the creation of additional liquidity for the financial system in order to hold back the tide of debt defaults that would otherwise occur. On the other, they incite investment banks and other willing parties to bet against a rise in the prices of gold, oil, base metals, soft commodities, or anything else that might be deemed an indicator of inherent value.

"Their objective is to deprive the independent observer of any reliable benchmark against which to measure the eroding value not only of the U.S. dollar but of all fiat currencies. Equally, their actions seek to deny the investor the opportunity to hedge against the fragility of the financial system by switching into a freely traded market for non-financial assets. [Emphasis added.]

"It is important to recognize that the central banks have found the battle on the second front much easier to fight than the first. Last November I estimated the size of the gross stock of global debt instruments at $90 trillion for mid-2000. How much capital would it take to control the combined gold, oil, and commodity markets? Probably no more than $200 billion, using derivatives. Moreover, it is not necessary for the central banks to fight the battle themselves, although central bank gold sales and gold leasing have certainly contributed to the cause. Most of the world's large investment banks have overtraded their capital so flagrantly that if the central banks were to lose the fight on the first front, then their stock would be worthless. Because their fate is intertwined with that of the central banks, investment banks are willing participants in the battle against rising gold, oil, and commodity prices."

The fractional reserve gold banking system in London that Christian defends and from which he makes his living -- he says he has advised most central banks in the world -- is a primary mechanism in central banking's battle against gold and commodity prices, and Christian is a loyal soldier in that battle, a derivatives salesman helping to inflate and sustain the supply of imaginary gold so that, as Warburton wrote, the world might be deprived of its main "benchmark against which to measure the eroding value not only of the U.S. dollar but of all fiat currencies."

Christian says the fractional-reserve nature of the gold market "is well understood by professionals in the industry and by most investors involved in these assets." GATA suspects that it could be understood more widely, that the more widely it is understood, the less happy Christian's central bank clients will be with him for helping to make it understood, and that this may be the cause of his recent ill humor.

GATA hopes that Christian's central bank clients are not shutting him up. For he may have done more to advance understanding of the gold market than any of us, and we're grateful to him.

Christian's essay, "CPM Group [Executive] Jeffrey Christian's Final Response to GATA," can be found at Kitco here:

>http://www.gata.org/node/16

Join GATA here:

World Resource Investment Conference
Sunday and Monday, June 6 and 7, 2010
Vancouver Convention Centre
Vancouver, British Columbia, Canada
>http://gata.org/tshirts

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

>http://www.gata.org

To contribute to GATA, please visit: