The financial commentator and GATA consultant Rob Kirby talks in the following exclusive interview about “the rotten state“ of the precious metal markets, the highly questionable activities of central banks, why gold/silver are in no bubble at all, and his thoughts on a One World Currency.
By Lars Schall
Rob Kirby, who is the publisher of the “Kirby Analytics Newsletter“ and a consultant to the Gold Anti-Trust Action Committee (http://www.gata.org/), was born 1960 in Halifax, Nova Scotia, Canada. He studied Economics at York University in Toronto. Upon completion, he went to work in the Bay Street, the financial district in Toronto. He served on an institutional trading desk for most of the 1980s and right up until 1996. For 11 years he worked at Prebon Yamane, an international inter-dealer broker, and one year at Freedom Bond Brokers (now part of Cantor Fitzgerald). Afterwards he spent two years at Garban Inc., another inter dealer bond brokerage in Toronto. In 2002, he went to work for Investor’s Group, the largest Mutual Fund Company in Canada, and stayed there up until 2004, when he resigned to write about the markets. His website is: http://www.kirbyanalytics.com/. Mr. Kirby lives in Toronto, Canada.
Mr. Kirby, since when do you analyse precious metals, and when did it dawn on you for the first time that there might be something rotten in the precious metal pits?
I’m degreed in economics [York University, 1983] and I spent the next 15 years as a broker of foreign exchange and interest rate products including Eurodollar deposits, government bonds and interest rate derivatives to international banks and investment houses. I was aware of the term “gold bug” from the institutional universe. The institutional trading community generally viewed “gold bugs” as paranoid idiots.
I subsequently spent 4 years as a retail investment advisor in Canada. And it was not until my experience as a retail investment advisor – working for Canada’s largest mutual fund company, Investor’s Group – that I finally realized that something was not right in the gold market. Back in 2003, Investors Group had roughly 120 proprietary mutual funds on their product shelf. The spark came when I had the occasion to ask one of my co-workers which precious metals fund he used for his clients precious metals allocations. He responded to me that Investors Group did not have a precious metals fund among their 120 funds offered. When I asked him why that was so – he told me that management viewed this type of investment as “too risky” but then offered the quip that, “of course the ‘gold bugs’ would say that there’s a conspiracy against gold”.
My eyes rolled into the back of my head and said to him, “please don’t give me that load of nonsense about conspiracies against gold [re: my prejudiced view from my institutional days]”
This co-worker said, “think what ever you want,“ but he pointed out that [at the time] there was a pending LAW SUIT – with the likes of J.P. Morgan Chase and Barrick Gold – being sued for allegedly rigging the price of gold on world markets [Blanchard vs. Barrick & J.P. Morgan].
The notion that precious metals could be deemed too risky raised many questions in my mind. At that point in time, Investors Group had numerous proprietary Internet / DotCom funds that had either failed or “all but failed” and precious metals had been around and viable for 6,000 years? And what about this law suit? It was investigation into the details of the Blanchard / Barrick law suit that quickly led me to Lemetropolecafe.com and I began corresponding with GATA chairman Bill Murphy. Given my education, working knowledge of institutional markets, first hand experience of how precious metals are generally abhorred / avoided by the investment community along with some in depth research of my own – I found the GATA story not only compelling, I joined forces with them and began writing about the gold price suppression.
Let’s assume that there are enough people out there who have no idea about the rigging of the precious metal markets – could you explain, please: a) who the major players are, and b) the motive to do such things?
Over thousands of years – irredeemable fiat currencies from A [assignats] to Z [zloty] have come and gone. The one thing that ALL unbacked fiat currencies ever produced have in common is that they have ALL FAILED by ultimately achieving their true intrinsic value – ZERO. Over the same time period, Gold [and silver] has served as a universal, time tested alternative [and hence, competition] to irredeemable fiat currencies.
With this in mind, we must consider who issues irredeemable fiat money? That would be the Central Banking community – quarterbacked by the Central Bank of Central Banks – the Bank for International Settlements [BIS] located in Basel, Switzerland. It is the Central Banking elite [some refer to this group as a cabal] who are currently issuing irredeemable fiat currencies at such ruinous, debasing rates that tangibles / historic alternatives like gold and silver appear as “go to” alternatives.
We have proof that the Central Banking community views gold with disdain in that former Fed Chairman Paul Volcker is “on record“ stating that, “gold is the enemy”. You can google “Volcker gold is enemy” and read about this for yourself.
So, the gold price acts as a “report card“ for the Central Banking community. When the price of gold is rising – the bankers are failing. Nobody wants to take home failing grades to show their parents now, do they?
To laypeople, the activities of Central Banks are almost invisible. That’s because Central Bank policies are carried out by proxy institutions who do their bidding in institutional capital markets – in the case of gold – Bullion Banks like J.P. Morgan, Goldman Sachs, Bank of Nova Scotia and Deutsche Bank. These banks willingly execute Central Bank policy due to the lucre afforded them by the Guttenberg press.
From your standpoint: are central banks really necessary institutions in our world or do they have a bad track record that suggests the opposite?
I wrote a paper a number of years ago [May, 2006] titled, The Root Of All Evil. In this paper I recount a long discussion with a friend of mine – a doctor who happens to be a Syrian national. His warmest recollections of childhood were infrequent trips he used to make from Damascus to Beirut, Lebanon with his father. Their infrequent 3-1/2 hour trips there were usually for the expressed purpose of banking. He conveyed to me how beautiful a city Beirut had been which in turn prompted me to ask, what happened there anyway?
Having grown up with an awareness that Beirut, Lebanon was often referred to as formerly being the „The Garden of Eden“ or oasis of the Middle East that had „somehow“ been overrun by evil external forces and transformed into a vipers den of extremism; I was simply curious how this transformation occurred?
What my new found friend reiterated to me was a brief history of Lebanon – which he referred to, coincidentally, as the „Switzerland of the Middle East“. I must admit, the mere mention of this analogy made my ears perk up and – speaking of role reversals – I began questioning my new found psychiatrist friend with further probing questions.
He revealed to me that the Switzerland comparison was accurate on two counts. Firstly and unbeknownst to me, the geography is apparently strikingly similar. Secondly and of most interest to me, Lebanon’s history is one steeped in BANKING. Well, I confessed that I was completely ignorant to this fact and simply had no idea. Pressing for more color than this, I inadvertently got a brief summation of one man’s [who had actually been there] account of the fall of Lebanon:
When the State of Israel was created in 1948, a great many Palestinians were displaced and settled in Lebanon. As it was explained to me, the Palestinian people have historically been very adaptive and „pick up“ quickly on indigenous industrial activity. In the case of Lebanon, the major indigenous activity was „BANKING“ and the Palestinians quickly became proficient as bankers and began wooing the Petro-Currency banking business of their fellow Arab oil rich states. You see, they had a natural advantage to the Anglo/American/Swiss triumvirate banking establishment in this regard since they spoke the language and had the same customs of their target clientele. This was a situation that was completely and utterly untenable to the world’s existing axis of banking power which was quickly moving toward „fiat“ U.S. dollar hegemony.
It was explained to me that the funding which originally „seeded“ the extremist’s organizations that initially destabilized Lebanon was categorically of Swiss origin. These organizations were funded with the expressed purpose of consolidating Switzerland as the only choice as the epicenter of the world’s petro-currency/ Central Banking focal point.
Wouldn’t you suppose that a degree in economics, including specific courses on the economics of the global petro-trade and oil, would have yielded at least a few snippets of this material? I would suggest that this detail has been left out purposefully and for good reason. Then again, „winners“ have always had the responsibility of writing and recording history – haven’t they?
In short, Central Banking is not only the root of all evil – it’s a blight on humanity that needs to be removed. The issuance of currency should rest with the treasuries national of sovereign entities – backed by specie – as the U.S. Constitution dictates. Talk that the gold standard failed is false – propaganda spread by those who benefit from the power extended to them by the Great Guttenberg. The gold standard NEVER failed, it was sabotaged in the run-up to WWI.
Is the suppression of the gold and silver price an important feature of the financial crisis that is seldom reflected as such?
The suppression of the gold and silver price is ONE important aspect of the world’s current financial crisis. Equally, or perhaps moreso, is the rigging of interest rates or mispricing of capital itself. This is effected by Central Banks [principally the U.S. Fed] holding the entire interest rate curve captive via the high frequency bond trading mechanism – through proxy banks – known as interest rate swaps. If one reads Reg Howe’s treatise, Gibson’s Paradox Revisited, it becomes readily apparent how linked interest rates are with the price of gold. You cannot rig the price of gold without simultaneously rigging interest rates – the two go hand-in-hand. I explain the mechanics of interest rate rigging in a 2009 treatise titled, The Elephant in the Room: More Pieces of the Puzzle.
The U.S. Fed and Central Banking community are also responsible for major interventions in the equity complex, the energy complex as well as foreign exchange markets. In fact, the Central Bank footprint has become so large in ALL of our captial markets it prompted GATA Treasurer/Secretary, Chris Powell to opine, There are no markets anymore, just interventions.
What are the arguments with which you would counter the „gold/silver are in a bubble“ talk?
The last time gold was recognized as “being in a bubble” was back in 1980. Back then, the monetary base was roughly 200 billion when gold was $850 per oz.
The monetary base has now grown to $2.4 trillion [a factor of 12]. $850 x 12 would be $10,200 per oz. So, let’s say if gold were currently trading at $10,200 per oz – you ‘might’ be able to make a claim that gold was in a bubble. ANY talk that gold is “in a bubble” at $1,400 per oz is LUNACY.
Silver historically should be 1/10th to 1/15th the price of gold. This means that silver should NOW be priced at $140+ per oz. Silver is likely the most mispriced asset on the planet today.
Is this bubble-talk actually a disinformation campaign in the so-called „Info War“?
Bubble talk as it relates to gold and silver is ABSOLUTELY part of a disinformation campaign designed by Central Banks and their minions to keep the average investor “afraid” or “tentative” about investing in precious metals. The Powers That Be [PTB] are particularly worried about rising demand for physical precious metal because it is a matter of fact that they sell at least 100 oz in paper form for every physical oz they have in the vault. Investors the world over are beginning to realize this fact and are increasingly demanding physical metal instead of paper promises of the same.
Why do you think is an independent audit of the gold reserve of the United States not just long overdue, but also necessary? And will the Gold Anti-Trust Action Committee, who’s pushing for it, be ultimately succesful in that respect?
The U.S. claims to have 8,100 metric tonnes of sovereign gold bullion held principally at Ft. Knox, Kentucky, West Point, N.Y. and the Denver Mint. The Fed has long publicly maintained that U.S. gold reserves have been stationary, not encumbered, traded or moved in any way since the collapse of the London Gold Pool in the 1960s. However, no credible third party audit has been conducted on these reserves since the Eisenhower administration [1950s]. In contradiction to these claims, the Fed has recently gone “on record” to having participated in gold swaps. Gold swaps entail the mobilization sovereign gold. This would seem to imply that prior assertions about U.S. sovereign gold were false.
There are also allegations that that tungsten laced gold bricks have been uncovered in Hong Kong. Back in the fall of 2009, a group based in Hong Kong attempted to sell 60 metric tonnes of tungsten core gold bricks to parties known to me, who do not want their names made public. My understanding is that Chinese authorities intervened and found that the source of these tungsten bricks was America – circa the 1994 time frame. It was conveyed to me that tungsten gold bricks were substituted for any real gold formerly held at Ft. Knox. My understanding is that as much as 15,000 metric tonnes of these salted bricks may have been produced and they remain “silo-ed” in sovereign vaults to this day.
So, yes, an independent audit of sovereign U.S. gold reserves is definitely in order. In my view, the more resistance that GATA encounters from the Fed – the more credence there is to claims that the gold does not exist and/or it’s been replaced by fake gold.
Whether or not GATA is successful in its demands for a proper audit of the U.S. gold reserve – we’ll just have to wait and see, won’t we? I hope for humanity’s sake they are successful – this charade must come to an end.
Are official gold reserve figures in general trustworthy?
Official gold reserves are COMPLETE fabrications much like official U.S. government reports on inflation, unemployment and GDP. The world has been aware of crooked book keeping as it relates to vaulted sovereign gold stocks since 1998 when Frank Veneroso published his gold book. After consulting with Bk. of England source, Terry Smeeton, about the degree to which Central Banks were leasing gold – it was Veneroso who first questioned ‘static’ official gold reserve data being espoused by GFMS and the World Gold Council. When sovereign gold is leased / loaned / swapped – it typically leaves the vault in exchange for an IOU. Central Bank accounting practices [fraud] do not differentiate between IOUs and physical bullion present in the vault. It’s all counted on the same line for accounting purposes. Perhaps, by now, you’re beginning to understand why?
At least I hope our readers give it a thought. – You have had a remarkable exchange with the German Bundesbank related to the German gold reserve, of which the major chunk is held in New York City. What was the result?
My exchange with the Bundesbank was surprising to me – only from the standpoint that they bothered to reply to me at all. I queried them BECAUSE a well informed German friend of mine was of the opinion that ALL sovereign German gold had been repatriated from America back in the 1990s. Max Keiser had reported that most of Germany’s gold reserve was still at the N.Y. Fed and/or Westpoint in custody. The response I received from the Bundesbank did not really support either view. Instead, the Bundesbank admitted they had “some” gold stored in N.Y. for “market related reasons” without specifying what those reasons were.
Would you say that Germany should order its gold reserve from NYC to Frankfurt in case it does still exist at all?
With the lack of transparency – re: gold – clearly demonstrated on the part of the U.S. Federal Reserve, it is beyond my comprehension why ANY nation would trust them to store / safe keep their sovereign gold.
In the recent past there was quite some talk about the so-called „Currency War.“ Isn’t at the center of that war this specific fight going on: Gold vs Fiat Currencies?
When most laypeople hear the term “currency war” they think Dollar/Euro or Dollar/Yuan or Dollar/Yen – or at least, the mainstream press attempts to brainwash us all into believing this. This is ALL a sideshow.
As your question alludes – the real battle being waged, which the Central Banking / elitist community desperately wants to keep off the front pages and below the radar of the Mainstream Financial Press is that of Fiat Currencies vs. Gold. There is simply too much money printing going on globally for irredeemable fiat currencies to survive. This is why the precious metals’ prices have been suppressed so vehemently.
What are your thoughts related to a One World Currency, which seems to be on the agenda of institutions like the IMF?
In my view it is beyond a shadow of a doubt that there exists a group of elitists – some might call them globalists or bilderbergers – but at their core they seem to be gaggle of Central-Banking-centric, megalomaniac, thieving thugs.
There is no doubt in my mind that these elitists are wreaking systematic economic havoc of many nations of the world with a view to instituting one world government with one world irredeemable fiat currency – that they control. Whether you label this SDR or AMERO or Digital Ducats is immaterial.
By and large, these people are unelected, report to no one – and they have arbitrarily turned our global capital markets into a hallucinogenic perversion versus what economic laws would otherwise dictate.
These miscreants represent the biggest threat humanity has ever faced.
Thank you very much for taking your time, Mr. Kirby!