“A stock market crash, a depression, and hyperinflation…it’s the triple crown of disasters.”
—Gary North, Financial Commentator
Way back on February 2, 2006, a French investment bank, Cheuvreux, which is the investment banking division of Credit Agricole, an even larger French commercial bank, published a report. The following summary has been cheerfully copied and edited by your feckless reporter, J. Pierpont Foghorn, from sources believed to be reliable, from GATA dispatches and from www.lemetropolecafe.com.
The wholly unexpected 56-page report completely endorsed – in detail – the findings of the Gold Anti-Trust Action Committee (GATA) that the price of gold has been surreptitiously suppressed by Western central banks and that those banks do not have the gold (some 31,000 tonnes) that they claim to have.
The report was authored written by Cheuvreux’s mining sector analyst in London, Paul Mylchreest, and is really, actually titled, “Remonetization of Gold: Start Hoarding.” It repeatedly cites GATA by name and foresees an “unprecedented” rise in the gold price, possibly accompanied by a spike to as much as US $2,000. I.e., It’s happening.
The CA Executive Summary
“We are raising our mid-cycle gold price estimate to US $900/oz from US $750/oz and see the possibility of a spike to US $2,000, or higher. Covert selling (via central bank lending) has artificially depressed the price for a decade.
“Central banks have 10,000-15,000 tonnes of gold less than their officially reported reserves of 31,000. Their gold has been lent to bullion banks [JP Morgan, Goldman Sachs, et al] and has been sold for jewelry, etc. Non-gold producers [financial institutions] account for most of the selling into the marketplace, and may be unable to cover their short positions without causing a spike in the gold price.
“There is a supply deficit in the gold market of around 1,300 tonnes per year before any central bank selling and perhaps 700 tonnes per year after ‘official’ sales but before covert selling. This compares with world gold mine output of only 2,500 tonnes [now 2400 tonnes] per year. Some central banks, notably Russia, are starting to buy gold for their reserves. [China, probably South Korea, Argentina, Taiwan and South Africa are also buying gold. China added 454 tonnes in the past 6 years.]
“Gold acts as an early warning of potential crisis such as inflationary/ deflationary pressures and general confidence in paper currency, especially the U.S. dollar.
“A strongly rising gold price could have severe consequences for U.S. monetary policy and the U.S. dollar. History suggests that gold always wins against an inflating paper currency (that is, one subject to excessive supply growth).
“Gold and gold mining stocks are poised for an unprecedented rise in prices and profile. Investors who are holding UK/European equities need to assess the implications for their portfolios. …”
The Cheuvreux/Credit Agricole report details GATA’s findings in Chapter IV, “Analysis of the Gold Market,” and concurs in them as “broadly correct.” The report itself can be found at: http://gata.org/node/3845
Comments on the Credit Agricole Report
Well, on mainstream TV, CNBC, Bloomberg, Fox Business TV…it was business as usual – not a word. “Nothing to see here, folks. Gold news is no news.
But this was no bucket shop report. Credit Agricole is the equivalent of a Bank of America in the US. There are very few banks in France. This is one of the biggest. It would be like Citi Group putting out a buy recommendation on gold. Oh yeah, Citi did. And the analysts who wrote it were fired. But that would create the need to write about all the gold analysts who’ve been fired for recommending the yellow metal lately…and that’s another newsletter. Cheuvreaux’s recent rankings of their research department throughout Europe were as follows:
Cheuvreux: the 2005 All-Europe Research Team ranking No. 1 in France, No. 2 in the Netherlands, No. 3 in Belgium, No. 4 in Spain and Nordic countries, No. 5 in Germany
The 2005 All-Europe Research Team ranking Cheuvreux is ranked No. 2 for Western European country research, with 6 rankings in the Top Five.
[Yes, Cheuvreux lately has misbehaved lately like their U.S. banks counterparts, by over bonusing the help, and treating their women employees badly, but their analysis still stands.]
“No financial house in Europe could be more part of the establishment than Credit Agricole,” GATA Chairman Bill Murphy said in February 2006, “and now its endorsement of GATA is circulating among other big financial houses in Europe and around the world.
In August, 2005, GATA organized Gold Rush 21 in historic gold camp, Dawson Creek, in the Yukon. Bill Murphy described the Conference as “truly historic and decisive.” It gathered the world’s top experts on gold to spell out, explain, and publicize the gold price suppression scheme. Then the conference participants issued the Dawson Declaration, an appeal for free markets in the precious metals as a matter of basic human rights. The Conference referred to gold and silver as the “Monetary Metals.”
Foghorn says that it was as a result of this 2005 GATA conference which a special assistant to then Premier Putin attended, that Russia announced that they would begin to refine gold in their own country, and to add gold to their central bank holdings. Shortly thereafter, Premier Putin was photographed holding a gold bar. I can’t think of another head of state that’s been photographed with real money ever.
A two-DVD set of the proceedings of the Gold Rush 21 conference, including a dramatic 25-minute video summary of the conference, produced by the brilliant Vancouver videographer Trevor Johnston, can be obtained through this Internet link, http://www.goldrush21.com/ You can see the opening summary of the speakers at the website.
Adam Fleming, former chairman of Harmony Gold, now chairman of Wits Gold, said at GATA’s Gold Rush 21 conference (just before the strong rally that carried gold from $460 to over $700 began) “that just a little investment demand could take the central banks out of their gold ‘in the blink of an eye.”
As the Credit Agricole’s brokerage house declared, “Start hoarding!”
“As for gold itself,” Murphy said then, “you can find coin and bullion from coin dealers, but as the Cheuvreux report gets around, there may not be much left.” [Today, more than ever, buy gold bullion or numismatic coins if you can find them. Precious metal coins have indeed become hoarded.]
You can sign up for GATA’s listserv of articles about what’s happening in the real gold market at the home page of www.gata.org. Look on the right side column of the home page, below the picture of GATA’s Wall Street Journal ad.
So now we have Credit Agricole saying GATA is correct.
And the Vice Chairman of the Russian Central Bank at the London Bullion Marketing Association annual meeting in 2004 saying GATA is correct.
And the Gulf Cooperation Council in the middle east in 2005 saying GATA is correct.
And John Embry, manager of the Sprott Precious Metals Fund Canada in 2003 saying GATA is correct.
And Richard Russell, and The Privateer, and a dozen other gold newsletter writers and commentators saying GATA is correct.
Gee, maybe they’re on to something.