The Devious Dervishes of Banking: Part One

A Cautionary Tale of Journalisms’ Sad Retreat from

Modern Medias
#turkey, #china, #gold, #goldchat, #koos-jansen, #precious-metals, #bullion-star, #perth-mint,
#brics, #gold-monetization,

Back in December, a post by Bron Sucheki - http://goldchat.blogspot.com.tr/2014/12/pobc-

paper-recommends-leasing-its.html - opened up a valuable window on the topic of precious
metals markets and the way the Western world receives it's information about those outside
which are outside of the West.Stories in the alternative media regarding the notion that China,
India, and the rest of the “BRICS” alliance of nations are poised to become ‘cartel busters’ ....as
they scoop up most of the worlds’ gold and silver.... have amplified the importance of this theme.
A horde of bloggers anchoring their narratives to the notion has arisen to entice impatient metal
holders to their sites via suggestion that their troubles will be over any day soon as result of this
‘chess match’ between east and west.

Amongst those segments of the alternative media reporting on precious metals markets, the
appearance of this meme is tied to a congregation of talking points that associate via the common
theme of predicting an imminent and hefty price spike for the metals. Gold repatriation, mine
supply deficits, and exchange defaults are the other pillars of this story line. Welded together,
they represent the narrative by which the metals community is daily cajoled to ‘keep the faith’
during a time of tribulation.

To summarize the Gold Chat debate in a paragraph, the Dutch blogger Koos Jansen, who is
employed by Singapore-based Bullion Star to write about the global gold markets, had written a
story https://www.bullionstar.com/blog/koos-jansen/a-close-look-at-the-chinese-gold-lease-
market/ about the gold leasing markets in China, and the way that the gold trade works in that
country. For the purpose of this, and his other postings on China and gold, he uses a combination
of information published by the exchanges, interviews with bank employees, the public
statements of government officials, and news stories from a variety of well known media
sources. Bron Sucheki, an employee of western Australias' state-owned Perth Mint, stepped in on
his personal blog to offer his opinion about some of the details of the Chinese leasing markets,
the inherent challenges of dealing with foreign languages, interpreting mixed signals from
authorities not bound to strict observance of objective fact, and the cultural barriers to
understanding markets of which the writer lacks first hand knowledge.

The purposeful representation of emerging trends in geo-politics as a kind of WWW wrestling

cage match has not to date undergone any careful inspection or critique. The opportunity Brons’
post provided was to put in focus the work of one of the chief architects of the new trend cited
above, and subject it to evaluation by those standards of journalistic integrity that may very well
be becoming passé in the new ‘internet-based’ media culture. If the bona fides of this new type
of internet-based media are to be trusted by the community it targets, they will need be subject to
the same scrutiny any other part of the financial world receives.

What came out of that initial exchange was a revealing peek at the way narratives get set up
nowadays by means of channeling data points into support for a preconceived conclusion. While
that is nothing new in itself, what is a novel development is packaging what are truly opinion
pieces into a representation of journalistic reportage - a form of communication that I call
advocacy media. If, for instance, you believe that banking and its regulatory oversight in the
West are “corrupt,” and that, in contradistinction those in China and/or other Asian countries are
not… you can build a narrative that conforms to those assumptions – with or without the
evidence to justify them. Whereas in traditional journalism, an initial supporting case for the
difference between the two jurisdictions would be a required part of the precis, in the new style
of media this vital step seems to get jettisoned.

As a result, what western media increasingly reflects is a kind of advertorial journalism where
some fundamental principles of the original craft appear to have gone missing. With the demise
of print journalism, and the guild of journalists who were employed by it, the new internet based
media has become divided between a large and disparate base of independent bloggers who are
commercially unsupported, and those who write from under the umbrella of a commercial
enterprise which sells a product or service, not information, as in the old-style media package.

Since the background strings of commercial support are purposely blurred, lines between old
style reportage and this new, subsidized one are unclear, such that often times it seems as if the
advocacy writers are doing the job of journalists, when that is not in fact their charter. Because
the commitment to an objective pursuit of fact-based data is not their primary principle, it has
become gradually possible to change the shape of how the western world receives the news. In
the same way that Facebook, having successfully monetized its ‘brand,’ has moved on to
‘shaping’ the perceptions of its client base, advocacy reporting seeks to secure loyal eyeballs by
creating and sustaining a narrative that conforms to the desires of its readership to be coddled
and guided, rather than informing them on the issues of the day so that the reader can be left to
make their own informed conclusions.
Readers of this Golden Fleece series https://www.scribd.com/collections/8831150/The-Golden-
Fleece will by now have gleaned from previous segments that there exists a measure of cynicism
on the part of this author about the regard for accurate representation of facts from those writers
who present their daily updates on markets to the precious metals community. Certainly I am not
the first to express this concern; the battle lines draw between the ‘goldbug’ media and its
equally rabid critics has become a steady feature of the past few years of disappointing
performance for the former, and pointlessly overdone schadenfreude on that of the latter – who
accuse them of being mere ‘pumpers’ and conmen. I find the whole dialectical circus distasteful
and fruitless and identify with neither faction. If I write from a position of some cynicism, it is a
cynicism for the entire battleground. Establishing a position equidistant from either should be an
easy step – yet there are strong supporters of fanaticism on both sides who work actively against
any such non-aligned territory being opened up! One of my objects in writing this story is
overcoming the resistance to this non-aligned position, and by doing so, contributing to the
setting up of a new standard of objectivity and respect for truth in media long overdue to replace
the tired factional squabbling that stands in stead of those qualities.

During the past three years or so, when the price of precious metals has been in stasis or decline,
a narrative has grown up designed to give hope to impatient or despairing investors that their
rationales for their holdings are not faulty. Most such stories come from that sector of the trade
which depend upon retail investment demand for its continued existence. Any sustained fall in
demand for precious metals would be fatal for such enterprises. With this in mind, they have
hired writers whose task is to drive home the notion of both their value and imminent return to
upwards price direction. In the minds of most of their readers, these writers are giving them an
objective window on the markets they are interested in. Of course, what they are really getting is
an advertorial for the product that the writers’ employers are selling. Because the distinction
remains blurred, the latitude for contra-factual narratives is greatly increased.

When Sucheki applied his analytic skills and commercial experience to the Chinese gold market,
he was able to see several anomalies with the way that market had been presented by Jansen.
While the resulting dialogue between them was inconclusive, the bigger takeaway from the
exchange – the perils of reporting on foreign markets without first hand knowledge – was left
hanging … till now. And therein lies our tale!

In 2012 news stories began appearing in the Turkish press about how both the Government and
the financial sector hoped to facilitate the flow of personal savings of Turks from ‘under the
pillow’ to bank accounts – where it could be better utilized to both underpin the countries
reserves, while increasing liquidity – and profits – in the banking sector. Since the majority of
those citizens savings –up to 5000 tonnes it was said – existed in the form of gold, this
‘monetization’ of the metal was one that required a considerable reshaping of the way that the
banking sector worked. Previously the Turkish economy was divided up into two competing and
completely separate sectors – the traditional jewelry industry of bazaars of Istanbul and other
cities, and the ‘western-style’ banks that were modeled upon an exclusively fiat form of
exchange. As an Asian country with considerable experience of inflationary episodes, and a long
tradition of hard money systems inherited from Islamic times, Turkeys' populace has a firmly
engrained sense of the value of gold as protection and a store of value. The deeply embedded
custom of giving gold as a wedding gift and at circumcision ceremonies meant that there exists a
firm allegiance to its image as the preferred expression of value and store of wealth. Convincing
the target audience to ditch those perceptions in favor of a modern sensibility of preference for
interest would be a tough sell for a nation whose Muslim-based cultural ethos expressly forbids
interest/usury models – so other means of persuasion needed be found.

Koos Jansens' survey of the Turkish gold market

https://www.bullionstar.com/blog/koos-jansen/the-turkish-gold-standard-part-1/ gives us an
excellent chance to review the points that go into the subsequent making of this story and its
interpretation in western-based media, as well as a prism through which to view the same
authors' efforts to analyze the Chinese gold market. While different in their history and their
contemporary development, the two share a fundamental similarity of being Asian markets
which are not well understood or reported upon in the by western media. Scrutiny of the methods
that modern internet media scribes use to secure themselves the title of expert analysts' of any
given topic will serve us well in evaluating the extent to which the investment community is well
served by these efforts.

Drawing upon his own parallel studies of the Asian gold markets, this author will detail some of
the serial inaccuracies, over-simplifications, and/or misunderstandings that result from the
modern form of internet journalism which is overly-reliant upon a telephone and internet
connection, rather than the traditional form of beat reporting. Part Two of this piece will
examine our contrasting conclusions in detail... and perhaps serve as a cautionary tale for all
those who sincerely believe modern advocacy reporting is capable of penetrating the opaque
world of gold by means of “industry contacts,” "government spokespersons," or "reputable
media sources." Caveat Emptor!

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