Saturday, March 12, 2005

Evidence of Rigging by Central Banks

Gold's Lagging Commodities is Evidence of Rigging by Central Banks, GATA Says

Gold's failure to keep up with exploding commodity prices, as it did during the last commodities boom in 1980, is more powerful evidence of surreptitious intervention by central banks in the gold market, the Gold Anti-Trust Action Committee said today.

Below is comparison of the CRB to the spot gold price in the last five months of 1980. The last five months of 1980 were the only times prior to this year when the CRB Index was above 300, GATA said. The lowest gold price during these months was $591.30 USD, and that price was registered as the CRB Index was falling in response to an increase in interest rates arranged by the Federal Reserve Board to attack inflation. Every other time in 1980 when the CRB Index was above 300, GATA said, gold was above $600 per ounce, more than $150 above where gold is priced today.

Wednesday's close on the CRB Index was 313.70 but the London PM spot gold price was only $437.25 and the New York Comex gold price was only $441.10. With the CRB Index where it is today, GATA said the price history of the last boom in commodities suggests that gold now should be priced between $591 and $647 per ounce -- and that does not adjust for the dollar's loss of purchasing power in the last 25 years.

Here is a chart of the CRB Index and spot gold prices at the end of the last six months of 1980:

Date CRB Spot Gold

June 30, 1980 286.40 $647.4

July 31, 1980 302.30 $619.7

August 29, 1980 308.40 $ 635

September 30, 1980 319.40 $671.5

October 31, 1980 327.10 $ 636

November 28, 1980 334.80 $624.6

December 31, 1980 308.50 $591.3

Source: GATA.ORG

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