RW: Using Occam’s razor as our tool, can we state with certainty that the gold crashes on Friday and Monday were not an accident?
JB: Absolutely. You don’t have to use a philosophical concept; you just have to look at the data. To say nothing of the time of the selling, as has been well discussed by Ross Norman. Huge volume packed into a few minutes.
RW: James Kunstler mentioned the 500-ton dump.
JB: It was phenomenal. And the selling after the New York close, the selling before the Asian market open. The open interest rose, and then gold fell 13.1%. The only thing that can explain this is massive short selling. The volume on Monday was a record, by a factor of 66%. Sixty-six percent!
RW: Kunstler points out that you’re not going to sell 500 tons all at once unless you want to lose an enormous sum of money. So why would someone do this?
JB: The answer is to panic the market and start a slump. The only question of intellectual significance is whether it’s an extremely brave, promotionally motivated party or whether it’s official-sector activity. And in the modern era, with interventions in almost every market you can think of, it’s not as easy to rule out as it was 10 years ago.
RW: Do you think Friday and Monday vindicate what GATA has been saying all these years?
JB: Yes, but exactly how it’s been engineered is a matter of debate. If you own gold, you have to put up with strange, malign events from time to time.
RW: Do you think that George Soros had anything to do with this? We know that he dumped half his GLD holding in 4Q 2012. And he gave an interview last week where he said, “Gold was destroyed as a safe haven, proved to be unsafe.”
JB: My understanding was that Soros’ operation has been shrunk down to his personal family positions which, although enormous, are not what they were. Ross Norman insinuated Monday morning that the pressure in the gold market in the last couple of weeks has come from SAC Capital out of Stamford, Connecticut, which is Steve Cohen’s hedgefund. Cohen, of course, has been in trouble with the law and has just paid a $614-million fine for insider trading. He’s much bigger than Soros.
Having said that, I’m struck by the cultural animosity that’s broken out in certain commentary circles. For instance, MarketWatch has shown a quite remarkable hatred for people interested in gold. Reading David Weidner’s column yesterday, you’d think he was describing a religious war. There’s a lot of abuse heaped on the heads of goldbugs, but I’ve found that the gold bears are far more fanatical and far more emotional.