GOLD’S BULL MARKET ISN’T OVER 153But is something else going on; something that is not ap-
parent in the data and for which the inference would be less
certain? Could Russia and China be trying to corner the market
in gold?
Leaving aside blatant government intervention such as
FDR’s 1933 gold confiscation, there has not been a successful
effort to corner the gold market since Jay Gould and “Big Jim”
Fisk tried it in 1869. Even that corner was broken when the
U.S. Treasury unexpectedly sold large quantities of gold after
Fisk and insiders had assured Gould that the Treasury would
not do so.
The Hunt Brothers infamously tried to corner the silver
market in 1979 and 1980. That corner was broken by a com-
bination of scrap silver flooding the market in the form of tea
sets and silverware, and changes in exchange regulations that
increased margin requirements and hurt the Hunt’s ability to
maintain their leveraged futures positions.
A Russian corner of the gold market would not be lever-
aged on futures exchanges because Russia is a cash buyer of
physical gold. Russia is also immune from U.S. regulation; the
U.S. has no enforcement powers in Russia. As in the cases of
Gould, Fisk, and the Hunt Brothers, patience and stealth are
needed at the beginning of a successful corner. Russia has both.
■ Gold Manipulation
A lot of people think about gold as a percentage of a coun-
try’s total reserves. They are surprised to learn that the United
States has 70 percent of its reserves in gold. Meanwhile, China
only has about 1 percent of its reserves in gold. People look
at that and think that’s an imbalance. But those are not very
meaningful figures in my view.
The reason being that a country’s reserves are a mixture of
gold and hard currencies, and the currencies can be in bonds