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Diplomatic cables show central banks conspiring to rig gold even after demonetization

Section: Documentation

3:44p ET Tuesday, May 7, 2013

Dear Friend of GATA and Gold:

U.S. diplomatic cables show that three years after the United States canceled the dollar's official convertibility into gold for foreign governments, thereby ending gold's formal role as money, Western governments and central banks were still meeting secretly to scheme about controlling the monetary metal's market price.

The cables, identified this week by GATA's consultant R.M. among thousands published recently by Wikileaks, reiterate that when it comes to governments and gold, "conspiracy" -- that is, planning and acting together in secret -- is not mere "theory" but simple fact and the basic way business is done.

This was established by GATA's freedom-of-information lawsuit against the Federal Reserve Board in U.S. District Court for the District of Columbia, which in 2011 forced the Fed to release the minutes of the secret April 1997 meeting of the G-10 Gold and Foreign Exchange Committee, a meeting of government finance and central bank officials devoted to similar secret scheming about controlling the gold market:

The G-10 Gold and Foreign Exchange Committee is so secret that the Fed maintains that it has no other records about it. Its meetings are not announced and no attendance by the public or journalists is permitted.

... Dispatch continues below ...


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Other U.S. displomatic cables show that the government of China long has recognized this conspiracy:

Among the U.S. diplomatic cables published recently by Wikileaks and identified this week by GATA consultant R.M. are:

-- An account of a meeting in 1973 between U.S. Secretary of State George Shultz and West German Chancellor Willy Brandt in which Shultz acknowledged that a growing U.S. trade deficit "had drained our gold reserves," "forced the closing of our gold window, bringing the end of convertibility" in 1971, and prompted devaluation of the dollar. Until the international financial system was rebuilt, Shultz is quoted as saying, "it would be unwise for us to return to the old type of intervention in the exchange markets."

Shultz's secret account to Brandt was contrary to President Nixon's public explanation of the suspension of dollar convertibility into gold two years earlier:

The cable about Shultz's meeting with Brandt is posted at Wikileaks here:

And at GATA's Internet site here:

-- A cable dated April 25, 1974, from the U.S. mission to the European Union in Brussels, Belgium, about recent European central bank consultations on gold. The cable says the central banks intended "to avoid any remonetization of gold" and were considering setting a "movable band" for a gold price ceiling and floor as well as "some kind of an intermediary through which market interventions might be channeled -- possibly in the form of a buffer stock." Central banks in the consultations felt that they needed to be free to buy as well as sell gold, the cable says, or else the price "could not be controlled."

This cable is posted at Wikileaks here:

And at GATA's Internet site here:

-- An account from the U.S. Embassy in Paris on April 29, 1974, about the same recent European central bank consultations on gold. The cable quotes a French finance ministry official as reporting: "As regards transactions of central banks on open market, group had envisaged possibility of mechanism whereby a committee of central bank governors would periodically fix upper and lower limits on prices at which such transactions could take place. Purpose of this device would be to try to dampen fluctuations in market gold price."

This cable is posted at Wikileaks here:

And at GATA's Internet site here:

It's not clear if any particular market-rigging mechanisms resulted from the secret 1974 discussions by the Western central banks. But these discussions well may have been the precursors to the system of gold swaps and leases used in recent years to control the gold market, a system described in the confidential March 1999 report of the International Monetary Fund, which found that Western central banks were concealing their gold swaps and leases to facilitate their surreptitious market interventions:

In any case the official documentation continues to demolish the ignorant sneers that complaints about gold market intervention by Western central banks are mere "conspiracy theory." Conspiring -- planning and acting together in secret -- is simply what central banks do, and those who doubt it should try to attend one of their secret meetings, or even try putting a specific, critical question about gold to a central bank. Central banks are the biggest participants in the gold market, often acting through the Bank for International Settlements in Basel, Switzerland, and devising critical questions about their secret trading of gold, futures, options, and other derivatives is pretty easy. But not one gold market "expert" or "financial journalist" in 10,000 has ever done the work. Thus their work is almost always irrelevant or actual disinformation.

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

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