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Commodities Gold: A Vast Conspiracy? Mark Lewis, 12.19.02, 11:56 AM ET
NEW YORK - Now that gold is spiking toward a six-year high, you might think the dealers would be celebrating. But at least one of them--Blanchard, of New Orleans--has instead filed an antitrust lawsuit against Barrick Gold and J.P. Morgan Chase, accusing them of conspiring to suppress the price so they could profit by short-selling.
Stoked by war jitters, the falling dollar and concerns about the global economy, gold has soared past the $345-per-ounce level, its highest point since 1997. But Donald Doyle, who runs privately held Blanchard, alleges the current price is less than half of what it would have been if Barrick (nyse: ABX - news - people ), one of the world's biggest producers, had not worked with J.P. Morgan (nyse: JPM - news - people ) to surreptitiously dump bullion on the market.
"Since the end of 1987, when the collaboration between Barrick and J.P. Morgan began, the growth of global income and wealth would have lifted the gold price to approximately $740 if the price had been able to respond to the normal laws of supply and demand," Doyle said in a statement. "If gold had kept pace with inflation, the price today would be approximately $760."
Toronto-based Barrick issued a statement dismissing Doyle's lawsuit as "ludicrous and totally without merit," adding that Doyle's press release "contains numerous factual inaccuracies and defamatory statements." J.P. Morgan didn't immediately return a call seeking comment.
The lawsuit may give comfort to those gold-bug conspiracy theorists who believe that the yellow metal, which topped $800 two decades ago, has been sabotaged ever since. The speculation offered in dark corners of the Internet is that the world's central bankers and their allies have kept gold weak so that stock markets would remain strong.
Doyle's press release was much more restrained; it referred only to "trading agreements" between Barrick, J.P. Morgan "and other, as yet unnamed, bullion banks."
Meanwhile, gold continues to gain strength as nervous investors seek safe havens. The metal rallied earlier this year, then fell back. Now it is surging toward levels not seen since the spring of 1997.
"It is safe to say that the coming weeks are the most important for the gold market than any period of the last five years at least, and possibly the last 20 years," J.P. Morgan analysts said in a report, as quoted by Reuters. "Gold will either stall at this major $350 resistance area, signaling that the three-year range and the 15-year downtrend is intact, or will blast higher, sustaining recent gains."
If the rally continues, the gold bugs may be too busy saying "I told you so" to worry much about Barrick and Morgan and their alleged manipulations.
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