Dear Friend of GATA and Gold:
Lending of gold by central banks depresses the price and the only possible reasons for the secrecy around it are manipulation of the gold market and the enrichment, through inside information, of the financial houses to which central banks lend their gold, a study by New Orleans coin and bullion dealer Blanchard & Co. has found.
The study, written by Blanchard's vice president and director of economic research, Neal R. Ryan, published today, calls on the International Monetary Fund to require central banks to make complete and frequent disclosure of their gold lending and thereby equalize information in the gold market.
In its own studies this year, the IMF already had acknowledged the inadequacy of central bank gold accounting, and Ryan says he has forwarded his study's recommendations to the IMF and has been told he will receive a response soon.
Among the Blanchard study's findings:
-- No accurate statistics about loaned central bank gold are published by individual countries or the IMF. Instead gold loans are estimated by outside sources and these estimates vary.
-- Gold loaned into the market can significantly affect the price.
-- Central banks actively manage their gold loans even as they deprive the market of information about them.
-- Bullion banks, the borrowers of central bank gold, have a huge advantage over the investing public in the gold market, inside information acquired in their dealings with the central banks.
-- The IMF could start a transparent gold market by requiring accounting changes for central bank gold.
"Why," the Blanchard study asks, "aren't gold loans made public? Good question. There is no reason (save the argument made by some that central banks are using gold loans to manipulate the gold price) Blanchard's research has been able to unearth that explains why gold lending information is not made public, except for the unconscionable advantage it gives to bullion banks."