By Rob Mackinlay

If gold conspiracy theories are true they will make the Madoff scandal "look like a walk in the park”, according to the World Gold Council.


Marcus Grubb, Managing Director, Investment Research and Marketing at the World Gold Council also said that if gold and silver prices are being manipulated it will be done via the futures market.

However he said that the WGC did not agree with the views of organisations like the Gold Anti Trust Action committee(GATA) and analysts like Ted Butler. (GATA replies below)

Grubb said: “A lot of these theories come from the period when gold was falling in price and there was a negative dynamic to the market. Mining companies held massive hedges and were making more money out of these than out of actually mining. And then central banks could sell without any restrictions.”

He added that he could see no reason why central banks would want to suppress gold prices – the central claim of GATA. Grubb said: “Central bank gold sales have been below the cap for several years now. We speak to a lot of central banks and, for good reason, now would be the worst time to declare gold sales. But why would they want the gold price to go down if 40-50 per cent of their reserves are in gold? There’s no gain for central banks to force down gold.”

Grubb said: “If you wanted to manipulate the market you would do it through the futures market because it would be the quickest and easiest route.” But he said that the manipulation claims are “typically trying to argue that the big banks are selling into rallies using gold futures but, again, to me, that looks like the natural ebb and flow of the gold market.”

He said that the markets were complex and that institutions held different positions in different markets adding that: “A lot of people making allegations only look at one side (of the market) and say “everyone is short gold” but there are so many reasons why this could be the case. But for these people making allegations about banks like JPMorgan, well a response with a four letter word is almost appropriate."

He said: “If WGC and central banks were suppressing gold prices we would make Madoff look like a walk in the park.”

Chris Powell, secretary and treasurer of GATA said: "While Grubb sees investment demand for gold increasing significantly and mine production falling markedly, he neglects to explain how the growing gap between supply and demand is being filled, neglects to examine the role of central banks in filling the gap, openly and surreptitiously, and filling it in ways plainly designed to suppress the price.

“It is amazing that so much documentation of the gold price-suppression scheme of the central banks has been published without prompting the slightest comment from the World Gold Council, supposedly the representative of the gold mining industry and gold investors. So it is hard not to conclude that the council approves of and indeed is complicit with the price-suppression scheme."

GATA has collated evidence from a number of sources including Alan Greenspan, the IMF, a court case involving Barrick Gold, the World Gold Council and analysts from Citigroup and Credit Agricole. In another piece GATA consultant, James Turk, analyses a Federal Reserve Bank of St Louis document, which “provides primary, original source supporting evidence that GATA has been right all along.”

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