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Declassified State Dept Data Highlights Global High-Level Arrangement To "Remain Masters Of Gold" By "The Reshuffle Club"

Tyler Durden's picture





 

In the days before the development of the IMF's S.D.R., or Special Drawing Rights, which was a preliminary attempt at a international currency and a way for governments to push gold away as a primary form of wealth/asset equivalency, there were discussions on what the role of the international community would be i) with regard to promoting the SDR as a globally accepted "currency" and ii) and more relevantly, how to retain dominance over the critical gold market by not just the US (represented in this case by the Federal Reserve) but by its core international counterparties.

A recently declassified telegram to the Secretary of State sent in 1968, has some very distrubring revelations to gold "conspiracy theorists" who believe there could be an international arrangement to maintain a control over gold prices in the international arena. This is especially true as the G-20 meets currently in Pittsburgh behind closed doors. Could gold be one of the issues discussed?

We particularly bring readers' attention to paragraph 13 in the telegram below, which present some troubling revelations (emphasis ours):

If we want to have a chance to remain the masters of gold an international agreement on the rules of the game as outlined above seems to be a matter of urgency. We would fool ourselves in thinking that we have time enough to wait and see how the S.D.R.'s will develop. In fact, the challenge really seems to be to achieve by international agreement within a very short period of time what otherwise could only have been the outcome of a gradual development of many years.

Furthermore, apparently 41 years ago the Plunge Protection Team had a more affectionate name (paragraph 11)

Special attention has to be given to the extent of the membership of the reshuffle club. A simple and effective rule probably would be that countries with asset holdings that are higher in relation to their gold holdings than the relation that is obtained amongst reshuffling countries are free not to participate in the reshuffles. On the other hand, countries whose asset holdings are relatively low (and whose gold holdings, therefore, are relatively high) should be obliged to submit themselves to the reshuffles. Indeed, this obligation seems so essential that it would have to become part and parcel of the new reserve asset scheme.

Also notable is the following disclosure (paragraph 3):

It is unlikely that the international monetary system could stand one or two more speculative crises like we have had last November and December during which gold losses were more than $1600 million. This is so because the point may be reached at which the speculation would reinforce itself in a cumulative way. Apart from this it is uncertain that members of the pool would be willing to go on supporting the market for such big amounts.

Oh really? "Go on supporting" presumably means they currently are supporting it? With the push for Fed transparency, could this one point get some additional insight, since if over 40 years ago the Fed, and the members of the gold "Pool" were openly intervening in the gold market, one can only imagine what the situation is now, especially with hundreds of trillions of new assets having been built on top of the Gold core of the inverted liquidity triangle?

In a nutshell - gold as an asset class is critical as it lies at the foundation of the entire credit/liquidity inverse expansion pyramid as presented by John Exter:

Control the gold, and you control the entire monetary system. For some historical Zero Hedge observations on gold, liquidity, and the dollar interplay, please see here.

Entire declassified telegram presented below:

 

big hat tip to Geoffrey Batt

 


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Fri, 09/25/2009 - 11:21 | Link to Comment brandy night rocks
brandy night rocks's picture

NEWS FLASH

 

GOVERNMENTS AND FINANCIAL SYSTEMS MANIPULATE CURRENCY VALUES (INCLUDING GOLD)

 

film at 11

Fri, 09/25/2009 - 12:07 | Link to Comment Anonymous
Fri, 09/25/2009 - 11:25 | Link to Comment pigpen
pigpen's picture

Grayson going to town on the FED lawyer. Leads off with a bodyblow and then uppercut.

Fri, 09/25/2009 - 11:26 | Link to Comment lsbumblebee
Fri, 09/25/2009 - 11:28 | Link to Comment Anonymous
Fri, 09/25/2009 - 11:28 | Link to Comment pigpen
pigpen's picture

I love Grayson.

Fri, 09/25/2009 - 11:55 | Link to Comment Hephasteus
Hephasteus's picture

God me too. I got a total mancrush on him. LOL

He just HAMMERED that Fed lawyer into the chair. When you got Ron Paul as the good cop and Grayson as the bad cop. You're going to get screwed.

Fri, 09/25/2009 - 11:32 | Link to Comment Anonymous
Fri, 09/25/2009 - 11:32 | Link to Comment D.O.D.
D.O.D.'s picture

anyone have a link to the debate yet?

Fri, 09/25/2009 - 11:32 | Link to Comment 3greenlights
3greenlights's picture

Amazing. And today the same theme repeats. From http://newsfrom1930.blogspot.com/

The "whalers" are GS but I need help on who the "sharks" might be...

Experts debating whether “killer sharks” of Twofold Bay, New South Wales are using reason. Sharks drive whales into the bay, where whalers eventually harpoon them and reward sharks with “choice morsels ... such as liver”; sharks keep guarding mouth of the bay so whales can't escape.

 

Fri, 09/25/2009 - 11:34 | Link to Comment Anonymous
Fri, 09/25/2009 - 13:55 | Link to Comment aldousd
aldousd's picture

I thought he was Joe Saluzzi

Fri, 09/25/2009 - 11:35 | Link to Comment docj
docj's picture

Heh - "TELEGRAM".  Love that!

I'm old enough to have even seen one.  Once.

Fri, 09/25/2009 - 12:01 | Link to Comment Anonymous
Fri, 09/25/2009 - 11:37 | Link to Comment Stuart
Stuart's picture

It's no longer a credible debate whether central banks actively effort to manipulate the gold market.  Those who continue to push the debate are either complicit or willfully blind.  

Fri, 09/25/2009 - 11:38 | Link to Comment glenlloyd
glenlloyd's picture

"If you sit by the river bank long enough you'll see the bodies of your enemies float by," (mentalist)

Fri, 09/25/2009 - 11:44 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

This is the biggest secret everyone knows about and no one acknowledges or discusses, except behind closed doors.

The only reason they got away with it this long was because the (corporately owned) mainstream media had a (shall we say) gentleman's agreement to not only never discuss it publicly but to mock and ridicule anyone who dared to do so.

How many times do/did we read a story along the lines of "Silly tin foil hat wearing conspiracy theorists"? Rather than look at facts, the press always engages in ad hominid attacks.

Repeat after me. We do not have an free and open press. We do not have a free and open press...............

Fri, 09/25/2009 - 12:29 | Link to Comment Anonymous
Fri, 09/25/2009 - 15:00 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

There are many moving parts to the machine, including our own intelligence services. The key is the "pile on" where everyone on cue brings the sledge hammer down on anyone breaking the silence.

I have spent hundreds and hundreds of hours researching this subject and most so called "conspiracy theories" are anything but. In fact, the "official" story is usually the actual conspiracy theory and almost always devoid of supporting facts.

But if the "official" story is pushed as the truth on Tee Vee it must be true, right?

Fri, 09/25/2009 - 16:05 | Link to Comment Anonymous
Fri, 09/25/2009 - 11:40 | Link to Comment Anonymous
Fri, 09/25/2009 - 11:43 | Link to Comment RagnarDanneskjold
RagnarDanneskjold's picture

Which way did they manipulate gold? It rocketed for more than a decade after that memo.

Fri, 09/25/2009 - 12:36 | Link to Comment Anonymous
Fri, 09/25/2009 - 20:03 | Link to Comment TumblingDice
TumblingDice's picture

Very good summary of the cartel's objectives. I must take issue with your assertion that they lost control at any point. It sure doesn't seem that way to me. Sure price skyrocketed, but it seems to me it as more of an attempt to show that gold is as bubble prone as any other asset and that it isn't prudent to hold on to it due to its high volatility.

Fri, 09/25/2009 - 19:07 | Link to Comment Hephasteus
Hephasteus's picture

What would it have done if it hadn't been manipulated?

Fri, 09/25/2009 - 11:43 | Link to Comment Anonymous
Fri, 09/25/2009 - 11:50 | Link to Comment Anonymous
Fri, 09/25/2009 - 11:50 | Link to Comment Sancho Ponzi
Sancho Ponzi's picture

OT: Insane quote of the day compliments of Bloomberg and Andrew Williams, Treasury Spokesperson

http://www.bloomberg.com/apps/news?pid=20601109&sid=a3mpIdYuoB0M


"The U.S. has lent, spent or guaranteed $11.6 trillion to bolster banks and fight the longest recession in 70 years, according to data compiled by Bloomberg.

That’s a 9.4 percent decline since March 31, when Bloomberg last calculated the total at $12.8 trillion."

"The tally “ignores the fact that virtually all commitments are backed by assets,”Andrew S. Williams, a Treasury Department spokesman who had the same role at the Federal Reserve Bank of New York until earlier this year, said in an e- mail. “The Federal Reserve’s current ‘outlays’ are largely in the form of secured loans. The aggregate value of the collateral backing those loans exceeds the loan value. These are not ‘outlays.’”

Good luck with those assets, Ben and Andrew.

 

 

Fri, 09/25/2009 - 13:41 | Link to Comment Rusty_Shackleford
Rusty_Shackleford's picture

He also went on to say:

"Yes, and by "secured" we mean that they are secured because we SAY they are secured,... because the Fed governeors have decided they are most likely probably secure,... as far as they can tell."

"Why look just here, this trillion is backed by a "perpetual motion machine" and this trillion over here is backed by "one hundred magic beans".  That's only $10 billion per bean.  We can't lose."

Fri, 09/25/2009 - 18:28 | Link to Comment Anonymous
Fri, 09/25/2009 - 20:06 | Link to Comment TumblingDice
TumblingDice's picture

We can't let these criminals bend time! WTF

Fri, 09/25/2009 - 11:51 | Link to Comment Anonymous
Fri, 09/25/2009 - 11:52 | Link to Comment Hephasteus
Hephasteus's picture

Much of this recently was financed by the yen carry trade. Since Japan is nuking that program and america is trying quickly to become the new butt end of that carry trade there may be a point in the very near future where theres not enough dark pool (carry trade) currency to support the supression. Since the carry trade would be very problematic if it got into a real economy. Which some people found out with the glacier bonds. It is used primarily as an accounting trick against the gold trade. Somebody better set up a new dark pool trick quick because people are calling 996 gold "hammered" down when it used to get hammered 60 bucks at a time.

Fri, 09/25/2009 - 12:38 | Link to Comment Anonymous
Fri, 09/25/2009 - 13:42 | Link to Comment Hephasteus
Hephasteus's picture

Well I think the plan was for china to become the pitcher and US to become the receiver. We do the same thing that japan did. Implode the banks with toxic debt set up a zombie bank system that is always broke and become the japan portion of the carry trade with china becoming the US portion. But I think china talked it over with russia and india and japan and thought that might not be so good as the asia countries like to be exporters. If we "turn" japanese than that means we have to retool up and start exporting. It becomes a differnt brand of co-dependancy and china is going to try for a more balanced system.

They are awfully oppressive of the people but I think theres alot of misunderstanding on both the governments part and the peoples part. China has always been isolationist and strived for good balance in that isolationist world. Going out into the greater sphere is scary for it because the world only seems to know one way to act. Master and servant and that just doesn't vibe right for the entire country.

Fri, 09/25/2009 - 12:39 | Link to Comment London Banker
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In 1968 it was still illegal for a private citizen to own gold in the United States or the United Kingdom.  Gerald Ford did not rescind Order 6102 of 1933 until 31 December, 1974.  The UK restored the right to own gold even later.

The original spread betting firm, IG Index, was established as international Gold Index.  When private ownership of gold was illegal, IG Index allowed citizens to "bet" on the price of gold as a proxy for ownership.  Seems quaint that betting was legal (and profits tax free in Britain) but owning gold as an investment was a crime.

Fri, 09/25/2009 - 13:08 | Link to Comment Mazarin
Mazarin's picture

This is a delightful document. A peek for the little people into the bankster realms.

Amazing delicious and juicy phrases like:

"The technique of periodic reshuffles differs from a fixed link between the NEW ASSET and gold in that it is far more flexible and convincing in bringing home that the new asset is a FULL SUBSTITUTE FOR GOLD."

"these other rules, however, are of secondary importance compared to the overriding urgency of ensuring that the NEW RESERVE ASSETS will really be an effective substitute for GOLD."

The inflationary regime, prior to "going off gold" as the backing asset, needed to suppress the price of Gold to cover-up constant theft from the people via inflation. Their losses were mounting because Gold-vigilantes (here referred to as "speculators") were gunning the price of gold and costing the central banks *trillions* (in 1968 dollars!), to suppress the Gold price to its fixed ("agreed upon") $35 basis. 

Once Kennedy was out of the way and patsy-Nixon kowtowed to closing the Gold window, the game became infinitely easier. The "NEW RESERVE ASSET" problem evaporated (replaced by "trust" in the fiat issuer). And the price of Gold has kept a tight pace on actual inflation ever since.

Manipulations of gold by the inflationist regime since the closing of the Gold window have been significant, but far less costly...they merely have to create the periodic impression that Gold (and hence "inflation") is NOT out of control...far less costly than maintaining the $35 peg.

As a banker to a King or two, I can tell you that this is the greatest game ever devised in the history of the world for transporting the wealth of nations into the hands of a very few. BRAVO! ;-)

Fri, 09/25/2009 - 13:45 | Link to Comment Rusty_Shackleford
Rusty_Shackleford's picture

Bingo.  Thank you for that.

Sun, 09/27/2009 - 02:23 | Link to Comment Hephasteus
Hephasteus's picture

No you don't get it. When you go and borrow money from a bank at interest under a fractional reserve system you create new reciepts for the same bars of gold. Run it for any lenght of time and eventually you get too many reciepts for the gold. Run it tooo long and someone with only 20 percent of the wealth of the nation can come in and take ALL the gold. Banks would be most likely to end up with all the receipts but those central banks are backed by individuals who have banks all over and might just move tons of the gold to europe and then ANY flinch in the banking system and ordinary people could come claim huge portions of the wealth.

Run a mortgage amortization for 30 years at 6 percent interest. Now run 10 mortgages for 30 years at 6 percent interest. That's how fast fractional reserve piles on reciepts for every bar of gold.  If those 10 running mortgages are based on 80 ounces of gold you've turned 80 ounces into over 800 ounces of gold. If you paid 3 percent to borrow from depositors then you have forgered over 400 ounces to yourself and over 400 ounces out to the people.

Fri, 09/25/2009 - 12:52 | Link to Comment Michael
Michael's picture

Why don't we ever get to see in the main stream media, President Obama sitting behind his Desk in the Oval Office at the Whitehouse?

I posted this comment last night and got some pretty good replies. Let me now give you my take on the question.

President Obama has a preconceived notion of how the world should be. He sees himself sitting at the round table of the world governing body. He has no qualms about who that governing body is, that he is now a member of. Showing Obama in the Oval Office sitting at his desk implies he is the leader of this country and should be there to up hold his oath of office. That is of no concern to Obama. The psychological impact of seeing the President at his desk is an anathema of the world ruling elite and BO, who wish to establish a one world government.

Fri, 09/25/2009 - 12:57 | Link to Comment Anonymous
Fri, 09/25/2009 - 16:53 | Link to Comment Anonymous
Fri, 09/25/2009 - 12:59 | Link to Comment Anonymous
Fri, 09/25/2009 - 13:01 | Link to Comment Anonymous
Fri, 09/25/2009 - 13:52 | Link to Comment Rusty_Shackleford
Rusty_Shackleford's picture

Is it possible to "hoard" FRN's?

 

I've always got a kick out of that particular highly charged word.

 

Whenever somebody has a lot of something that we want, we accuse them of "hoarding" it.

 

Should we re-label our checking and savings accounts as "Checking" and "Hoarding" accounts?

Fri, 09/25/2009 - 21:39 | Link to Comment Anonymous
Sun, 09/27/2009 - 15:26 | Link to Comment Anonymous
Fri, 09/25/2009 - 15:13 | Link to Comment Anonymous
Fri, 09/25/2009 - 16:08 | Link to Comment Anonymous
Fri, 09/25/2009 - 17:51 | Link to Comment Anonymous
Fri, 09/25/2009 - 21:47 | Link to Comment Anonymous
Fri, 09/25/2009 - 13:03 | Link to Comment Anonymous
Fri, 09/25/2009 - 15:10 | Link to Comment Anonymous
Fri, 09/25/2009 - 15:52 | Link to Comment Mediocritas
Mediocritas's picture

Latest COT due out in a few mins, will be interesting to see if there were any large changes in open interest with the PM dump the other day. No doubt some nervous BBs trying to clear out a few longs.

Will be more interesting to see how many longs stand for delivery on Monday, I'll be paying very close attention to silver. Something very strange going on there. If there's going to be a default, that's where it will come from. SLV now running in arrears to the tune of 30 million ounces according to Butler.

At last check, commercial short on silver was ~50% annual production, gold at ~40%, and those are heavily manipulated / optimistic numbers. Silver short likely much higher than that in reality.

Bears took a big hit when ABX flipped out. IMF had to come to the rescue with the stick save to cover ABX's exposed counterpart(y/ies), almost undoubtedly JPM.

More longs need to take physical delivery, haven't smelt the BB's blood this strongly since March.

Fri, 09/25/2009 - 16:08 | Link to Comment Anonymous
Fri, 09/25/2009 - 16:14 | Link to Comment Anonymous
Fri, 09/25/2009 - 16:55 | Link to Comment payitdown (not verified)
Fri, 09/25/2009 - 16:35 | Link to Comment payitdown (not verified)
Fri, 09/25/2009 - 15:33 | Link to Comment Anonymous
Fri, 09/25/2009 - 15:56 | Link to Comment Mediocritas
Mediocritas's picture

I see they mention ZH in that article

Fri, 09/25/2009 - 16:23 | Link to Comment Anonymous
Fri, 09/25/2009 - 20:07 | Link to Comment Anonymous
Fri, 09/25/2009 - 23:33 | Link to Comment Anonymous
Sun, 09/27/2009 - 10:30 | Link to Comment Anonymous
Sun, 09/27/2009 - 11:33 | Link to Comment Anonymous
Wed, 09/30/2009 - 21:12 | Link to Comment GDMFSOB
GDMFSOB's picture

That is one of the most ridiculous goddamn ideas I have ever read.

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