Gold Price Manipulation - by Sid Reynolds


In order to explain the Why's and How's of the Gold Price Manipulation scheme (and why it is illegal and unfair), 6 aspects need to be discussed - namely motive, means, proof, opportunity, track record and impact.


  • US Government: To artificially keep interest rates down by deceiving the bond markets about inflation, and thus the gold price. In short, lower gold price = lower inflation = higher stock market = higher reelection chances.
  • US Government: To artificially strengthen the US dollar relative to other currencies. Clinton's "Strong Dollar Policy" was suppression of gold price. In short, lower gold price = higher US dollar = higher stock market.
  • Some Bullion Banks: To provide cheap source of capital to earn huge income, providing gold price is kept low.
Refer: 6)

Background: The gold price suppression scheme was actually put down on paper, in public, by Harvard Professor Lawrence Summers, before becoming Treasury Secretary under Clinton. He wrote of the inverse relationship between the gold price and interest rates, and concluded that government could keep interest rates low by suppressing the gold price. Refer:

Mechanisms: In 1999, the "Washington Agreement" was signed which severely reduced capacity of Central Banks to sell gold, so alternative methods had to be found to suppress the gold price. The 2 mechanisms are:

  • "Leasing" of gold by Central Banks (CBs). Leasing takes 3 forms:
-Direct leasing: Where CBs lease gold to Bullion Banks (BBs) at ~1%pa, and the BBs then dump this gold on the market and then invest proceeds in bonds at ~5% - no problem unless CB's want their gold back! This is far more secretive than CB selling gold directly, because any sale appears on their books, whereas IMF has told CBs to disguise leased gold among total gold reserves and report it still as an asset (for more refer section 3, Proof #11). This problem with this scam is that it requires constant supply of physical gold held by CBs (which is running out), to offset the bullish gold fundamentals, including annual deficit (currently demand minus supply = 1400+tonnes pa!). Gold leasing is bizarre in that it is like a landlord leasing a flat, and then the tenant sells the flat, and the landlord not registering the sale at his next tax return - bizarre but legal with gold.
[NB: When will the cartel run out of physical? As much as 3 years according to analyst Frank Veneroso, but in practice much sooner due to outstanding gold fundamentals... ie declining supply, record demand, weakening $US, negative real interest rates, covering short positions, bubbles in equities & real estate]
-Swaps: Similar to gold loans, except 2 CBs actually "swap" gold with each other (eg US and Germany), then lease out gold to BBs. This is a sneakier way to lease gold, because US Fed can say they don't lease any of their gold, which is true because they actually lease Germany's gold while Germany leases out the US gold!
-Hedging or ("Forward Sales"): where a producer pre-sells un-mined gold at a fixed price to lock in profits in advance. Since the buyer wants actually physical, an equal amount of gold is "leased" from a CB and sold into the spot market by the gold producer (or "hedger"), suppressing the gold price. The hedger earns cash, but often forward sells much more gold than what they have in reserves - ie trouble!
  • Massive sales of gold derivatives by BBs (eg JPM, Goldman Sachs, Morgan Stanley, Deutsche) backed by government. In theory, buyers of futures contracts can demand delivery of physical gold. But in practice, physical is not required because the powerful USA doesn't want to self-destruct ie USA usually insists on cash settlement instead of delivery of dwindling physical. The more gold is demanded, the more $ they print (from their infamous printing presses that also support the Dow). Futures' sales trick people into thinking gold price is falling. However, this will either end in "default" (, or merely slow down the speed that gold rises. Why? 1) Gold is in a major bull market; 2) leasing scam will soon run out of physical; 3) little physical is needed to push down price, but keeping it there requires far more gold.
NB: For years, the daily selling patterns of these BBs are not consistent with normal profit maximisation ie gold price usually rises in London's physical market, then drops in New York's paper market. The only explanation is to suppress the price, regardless of losses incurred. This is corporate suicide, unless backed by government.
For more on J P Morgan derivatives, refer:
For more on secret scam with BBs & US Government, refer: (search "just")

Coordinator: "Exchange Stabilization Fund" (ESF) is a secret branch of US Treasury, and is not accountable to US Congress or courts. ESF reports only to US President and Treasury Secretary. Refer Proof #1, #2, #3

  • CBs eg England, Germany: Refer Proof #4, #5 & #11
  • BBs eg J P Morgan: Refer Proof #6
  • Word Gold Council: Refer Proof #7
  • IMF: Refer Proof #11
NB: Certain Bullion Banks such as J P Morgan in effect trade for ESF and US Fed, and as such are privy to the confidential direction and intent of the US Fed. For more, refer: (search "proxy")


#1. US Supreme Court "Under the Sherman Antitrust Act, a combination formed for the purpose and with the effect of raising, depressing, fixing, pegging, or stabilizing the price of a commodity in interstate or foreign commerce is illegal per se". Put simply, while gold leasing and futures is legal, it is illegal to do so for manipulation purposes.
Refer 1, 80). So ESF illegally manipulates gold price.

#2. The US Treasury at its website denies that the ESF has conducted a gold swap in the last 10 years. In addition, a court filing on behalf of Secretary O'Neill specifically denied that the ESF had conducted gold swaps after 1978: Refer (page 3, footnote 2.)
This is contradicted during a confidential US Fed meeting, where there was admission of dealing in gold swaps.
Refer: (p69 of meeting transcript, or p72 of pdf file)
For more on admission of existence of ESF, refer

#3. Alan Greenspan, at a testimonial at a 1998 House Banking Committee hearing: "Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise."
Refer: (Section 38)

#4: In front of 3 witnesses, Bank of England Governor Eddie George spoke to Nicholas J. Morrell (CEO of Lonmin Plc) after the Washington Agreement gold price explosion in Sept/Oct 1999: George said "We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded. The US Fed was very active in getting the gold price down. So was the U.K." Refer:

#5. The infamous Bank of England gold sales, where the gold went to the LOWEST bidder, not the highest bidder: ".... Applicants whose bids are accepted will be allotted gold at the lowest accepted price."
Refer 9, "4. Acceptance of Bids...")
Extraordinary! But wait, there is more:

  • advertising the sales, which noone ever does (unless they want less money for their gold)
  • drawing the sales out over a period, rather than just one single auction

#6. After years of denials, Barrick Gold admit that they and their banker J P Morgan are involved in manipulation of the gold price, and/or they are agents of central banks. A US court judge has thrown out their dismissal appeals.
Barrick then announce cessation of hedging, after extolling its virtues 1 day earlier. Many say it's due to Barrick going $16m more in debt for every $1 rise in gold price.

#7: Why won't World Gold Council (WGC) answer letters/emails worldwide regarding Manipulation? The 2 biggest contributing gold producers to WGC are Barrick Gold and AngloGold. These 2 companies are disliked in the gold industry, because they are the biggest hedgers, and therefore provide much gold to the gold price manipulation scam. For Barrick, refer Proof #6. For AngloGold, why is Frank Arisman on the board of AngloGold when he is also an officer of JP Morgan? There has been an explosive growth in gold derivatives on Morgan's books in recent years, which has driven the gold price down. Clearly there is a huge conflict of interest there.

#8: Royal Bank of Canada admits there is gold price manipulation, then oddly 2 days later said it was a secret:

#9. One heavy hedger Sons of Gwalia, Australia, has major financial problems. Refer:

#10: For more proof in somewhat more detail refer:

#11. IMF has directed CB's not to disclose how gold is leased/swapped, only total reserves (proof below).
IMF have denied this, "This is not correct: the IMF in fact recommends that swapped gold be excluded from reserve assets." Refer (search "correct").

However, numerous member countries/entities have proven the IMF has lied ie

  • Philippines: "Beginning January 2000, in compliance with the requirements of the IMF's reserves ..., gold under the swap arrangement remains to be part of reserves and a liability is deemed incurred corresponding to the proceeds of the swap." Refer (search "swaps")
  • The Central Banks of Portugal, Finland & Italy confirmed in writing that swapped gold remains a reserve asset under pertinent IMF regulations. The staffs of the central banks of Canada, Ecuador, Finland, Holland, and Portugal have also confirmed this. Refer, (search "Finland")
  • European Central Bank: "Following the recommendations set out in the IMF operational guidelines of ... developed in 1999, all reversible gold transactions, including gold swaps, are recorded as collateralised loans in balance of payments and international investment position statistics. This treatment implies that the gold account would remain unchanged on the balance sheet."
The German Bundesbank (the secret "swapper" of gold with US) lists "Gold and Gold Receivables (loans)" as a one line item on its balance sheet. This approach is in direct conflict with Generally Accepted Accounting Principles (GAAP), and thus German banking law. So, from their published financial statements there is no way to determine how much gold Germany holds in its vaults. The refusal of the Bundesbank to provide a breakdown between physical gold and gold receivables belies any notion of market transparency.
Clearly deceptive accounting, countenanced by the IMF has allowed official sector gold to hit the market without a corresponding drawdown on the balance sheets of central banks. This has made it impossible for analysts to ascertain the exact size of official sector gold loans, swaps and deposits. The unwillingness of central banks to provide even a minimum level of transparency suggests that total gold receivables are substantially larger than the accepted industry figure of ~5,000 tonnes. Refer

Futures: Daily, ESF tries to drop gold price with as little metal as possible, ie during paper-dominated New York trading hours, after physical-dominated London trading hours. (search "London")
Leasing: This is ESF's Achilles' Heel because physical gold is continually required and it is running out quickly. When it does run out, some analysts say it will also trigger the end of the Futures scam eg "The prices for the futures will wildly escalate in rapid fashion until bankruptcy (or bailout by government) of all who are short."

The US government has a poor track record when it comes to honesty and transparency. More recently:

  • Ashanti, Enron, Arthur Anderson, J P Morgan etc: eg
  • US mainstream financial media (eg CNBC) are perpetually bullish on equities and bearish on gold eg when equities are high they say "Buy! They are going to the moon", but when low they say "Buy! They are cheap".
  • The US mainstream financial media also refuse to run any stories by GATA, despite vast evidence.
  • The US economy "added" 126,000 jobs in October 2003, but that included 25,000 grocery workers in California returning to work from a labor action. One of many fudges by US government. Source: Jim Sinclair, 7/11/03
• For more examples, refer


  • The devastation of the economies of the developing world, and particularly sub-Sarahan Africa.
  • With the bond market deceived about inflation, the dollar, and the strength of the US economy, most economic decisions for the last decade have been based on horribly mistaken premises (eg Nasdaq boom/crash).
  • The gold reserves of US (and other countries) now adorn the wrists and necks of Indian women. The US has to accept their gold is gone, or pay a lot more to get it back, or be bailed out in declining $US.
  • Since some Bullion Banks are privy to confidential intent of US Fed, they have unfairly earned vast fortunes.
  • Owners of gold and gold shares have lost a lot of money, at the expense of these Bullion Banks.
• English citizens should be outraged that their gold was blatantly sold for as low as price as possible.

By Sid Reynolds, Feel free to distribute this concise 3-page Word Document to anyone!
Disclaimer: I am not a gold guru. I rely entirely on statements by experts. I have merely pooled them together.