You are here

Diplomatic cables disclose more conspiring by Western governments to rig gold market

Section: Documentation

11:18a ET Saturday, December 29, 2012

Dear Friend of GATA and Gold:

Two U.S. State Department diplomatic cables from 1974 obtained by GATA researcher R.M. show Western central bank and treasury officials engaged in secret discussions -- that is, conspiring -- to control the price of gold and prevent any increase in its recognition as money.

The first cable was sent in May 1974 by then-Treasury Undersecretary Paul Volcker, who went on to become chairman of the Federal Reserve Board, from the U.S. embassy in Paris to the U.S. secretary of state in Washington for forwarding to another treasury undersecretary. The cable conveys a report by Netherlands Treasurer-General C.J. Oort about a meeting of European Community finance ministers in the Dutch city of Zeist on April 22 and 23.

Two proposals for controlling the gold price were discussed in Zeist, Oort wrote, according to Volcker's cable: "One is that monetary authorities periodically fix a minimum and a maximum price below or above which they would not sell or buy on the market. The other consists in creating a buffer stock to be managed by an agent who would be charged by the monetary authorities to intervene on the market such as to ensure orderly conditions on the free market for gold."

... Dispatch continues below ...



ADVERTISEMENT

Fred Goldstein and Tim Murphy open All Pro Gold

All-Pro Gold, run by long-time GATA supporters Fred Goldstein and Tim Murphy, offers its services to GATA supporters and anyone else interested in precious metals. The company brokers a full line of precious metals and numismatic coins. It aims to inform prospective clients about the importance of the monetary metals as part of a diversified financial portfolio and to keep prospective clients current with market trends. All-Pro Gold has competitive pricing and ships promptly to clients so they may have physical possession. Learn more by e-mailing Fred@allprogold.com or Tim@allprogold.com or telephone 1-855-377-4653 or visit www.allprogold.com.



Of course the latter idea sounds like a plan to reconstitute the London Gold Pool, which controlled the gold price from 1961 until its collapse in March 1968:

http://en.wikipedia.org/wiki/London_Gold_Pool

Volcker's cable conveying Oort's statement is posted at GATA's Internet site here:

http://www.gata.org/files/GATAStateDeptCableReGold-May1974.pdf

The second State Department cable is dated July 1974 and appears to have been sent by the U.S. financial attache in Bonn, then West Germany's capital, to the secretary of state in Washington with copies meant for the Treasury Department and Federal Reserve. The cable reports the financial attache's conversation with Otmar Emminger, then vice president of the West German central bank, the Bundesbank, who went on to become the Bundesbank's president as well.

The cable reads: "Emminger said that European Community discussions on gold are continuing but that an intervention system is not likely to be agreed upon. ...

"Regarding gold Emminger said that the Bundesbank welcomed the recent lowering of the free-market price. Within the EC discussions were continuing whether to supplement the G-10 decisions allowing central bank gold to be pledged as security for loans with some further agreements designed to avoid overly erratic price movements on the free gold market through central bank agreement to try to keep the free gold price in a range to be agreed and changed from time to time.

"Emminger said he realized that the U.S., and particularly Paul Volcker, had been opposed to such schemes in the past. He felt, however, that the current EC discussions should not give us too much concern. A distinction should be made between active central bank intervention on the gold market (i.e., buying gold to maintain its price) and passive intervention (i.e., not selling gold in a manner that would cause erratic price movements). EC agreement on active intervention was highly unlikely because very few EC central banks had the means (i.e., sufficient foreign exchange reserves) to engage in it and those who did, mainly the Bundesbank, were opposed.

"In addition the problems of reaching any agreement on who would have to intervene when in order to maintain the gold price were so complicated -- as had been shown by the experience of the old gold pool -- that an agreement being reached without U.S. participation was extremely unlikely.

"'Passive intervention,' on the other hand, was not that dangerous and in any case could be quite flexible through frequent changes in the range within which central banks sales could take place.

"Emminger said that in connection with gold he wanted to bring up one small point. Some German periodicals, particularly the Wirtschaftswoche, had reported that the recent U.S./Saudi Arabian agreement for investments in U.S. Treasury bills contained a gold clause. He knew this was not true, but if we could find occasion to make this clear it would be helpful since the supposed fact was used to argue that even the U.S. had to agree to this 'comeback' for gold."

The July 1974 cable is posted at GATA's Internet site here:

http://www.gata.org/files/GATAStateDeptCableReGold-July1974.pdf

While this conspiring by the Western governments and central banks took place 38 years ago, they continue to impose the deepest secrecy on their activities in the gold market, and their interest in controlling the gold price as part of their general control over currency markets -- that is, their interest in defeating markets -- endures and requires exposure.

That is why GATA has filed requests under the U.S. Freedom of Information Act seeking access to all gold-related records held by the State Department, Treasury Department, Federal Reserve, and Federal Open Market Committee:

http://www.gata.org/node/11606

Of course those government agencies have not been forthcoming, and obtaining these records will require more lawsuits such as the one GATA brought against the Federal Reserve in U.S. District Court for the District of Columbia in 2009 and won in part in 2011:

http://www.gata.org/node/9917

Such lawsuits will involve substantial expense. The World Gold Council, which purports to represent gold mining companies and gold investors, declines to undertake this work. So if you're inclined to help us, please visit:

http://www.gata.org/node/16

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

Join GATA here:

Vancouver Resource Investment Conference
Sunday-Monday, January 20 and 21, 2013
Vancouver Convention Centre West
Vancouver, British Columbia, Canada
http://www.cambridgehouse.com/event/vancouver-resource-investment-confer...

* * *

Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006:

http://www.goldrush21.com/order.html

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16



ADVERTISEMENT

Opinion Around the World Is Changing
in Favor of Gold -- Find Out Why

When Deutschebank calls gold "good money" and paper "bad money". ...

http://www.gata.org/node/11765

When the president of the German central bank, the Bundesbank, pays tribute to gold as "a timeless classic". ...

http://www.forbes.com/sites/ralphbenko/2012/09/24/signs-of-the-gold-stan...

When a leading member of the policy committee of the People's Bank of China calls the gold standard "an excellent monetary system". ...

http://www.forbes.com/sites/ralphbenko/2012/10/01/signs-of-the-gold-stan...

When a CNN reporter writes in The China Post that the "gold commission" plank in the 2012 Republican platform will "reverberate around the world". ...

http://www.thegoldstandardnow.org/key-blogs/1563-china-post-the-gop-gold...

When the Subcommittee on Domestic Monetary Policy of the U.S. House of Representatives twice called on economist, historian, and gold standard advocate Lewis E. Lehrman to testify. ...

World opinion is changing in favor of gold.

How can you learn why and what it will mean to you?

Read the newly updated and expanded edition of Lehrman's book, "The True Gold Standard."

Financial journalist James Grant says of "The True Gold Standard": "If you have ever wondered how the world can get from here to there -- from the chaos of depreciating paper to a convertible currency worthy of our children and our grandchildren -- wonder no more. The answer, brilliantly expounded, is between these covers. America has long needed a modern Alexander Hamilton. In Lewis E. Lehrman she has finally found him."

To buy a copy of "The True Gold Standard," please visit:

http://www.thegoldstandardnow.com/publications/the-true-gold-standard