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Is The Fed Hiding Gold Swap Arrangements With Foreign Central Banks?
There is not one asset that, over the decades and especially since the collapse of the gold standard, has received more claims of manipulation than gold. Yet evidence has always been impossible to come by. Are the interests imposing a gold price ceiling just too strong? If GATA's latest dispatch is correct, then yes, and they reach to the very pinnacle of modern financial oligarchy, represented by none other than the US Federal Reserve. GATA believes that the Fed has implicitly confirmed the existence of gold swap arrangements. As we all recall, the Fed issued nearly half a trillion in foreign CB liquidity swap lines whose primary reason was to make sure that foreign banks which were all massively short the dollar did not collapse, as the dollar skyrocketed into the end of 2008, after the capital markets became paralyzed and the dollar-short trade promptly became unwound. Could gold swaps be a comparable method for the Fed to explicitly permit foreign entities to keep gold prices low?
The other question of whether or not this confirmation needs an depth investigation over potential prior contradictory disclosure is left for the proper authorities. Of course, when it pertain to the Fed, there are no proper authorities. After all, the Fed is accountable to no one.
Dear Friend of GATA and Gold:
The Federal Reserve System has disclosed to GATA that it has gold swap arrangements with foreign banks that it does not want the public to know about.
The disclosure contradicts denials provided by the Fed to GATA in 2001 and suggests that the Fed is indeed very much involved in the surreptitious international central bank manipulation of the gold price particularly and the currency markets generally.
The Fed's disclosure came this week in a letter to GATA's Washington-area lawyer, William J. Olson of Vienna, Virginia (http://www.lawandfreedom.com), denying GATA's administrative appeal of a freedom-of-information request to the Fed for information about gold swaps, transactions in which monetary gold is temporarily exchanged between central banks or between central banks and bullion banks. (See the International Monetary Fund's treatise on gold swaps here:http://www.imf.org/external/bopage/pdf/99-10.pdf.)
The letter, dated September 17 and written by Federal Reserve Board member Kevin M. Warsh (see http://www.federalreserve.gov/aboutthefed/bios/board/warsh.htm), formerly a member of the President's Working Group on Financial Markets, detailed the Fed's position that the gold swap records sought by GATA are exempt from disclosure under the U.S. Freedom of Information Act.
Warsh wrote in part: "In connection with your appeal, I have confirmed that the information withheld under Exemption 4 consists of confidential commercial or financial information relating to the operations of the Federal Reserve Banks that was obtained within the meaning of Exemption 4. This includes information relating to swap arrangements with foreign banks on behalf of the Federal Reserve System and is not the type of information that is customarily disclosed to the public. This information was properly withheld from you."
When, in 2001, GATA discovered a reference to gold swaps in the minutes of the January 31-February 1, 1995, meeting of the Federal Reserve's Federal Open Market Committee and pressed the Fed, through two U.S. senators, for an explanation, Fed Chairman Alan Greenspan denied that the Fed was involved in gold swaps in any way. Greenspan also produced a memorandum written by the Fed official who had been quoted about gold swaps in the FOMC minutes, FOMC General Counsel J. Virgil Mattingly, in which Mattingly denied making any such comments. (Seehttp://www.gata.org/node/1181.)
The Fed's September 17 letter to GATA confirming that the Fed has gold swap arrangements can be found here:
http://www.gata.org/files/GATAFedResponse-09-17-2009.pdf
While the letter is far from the first official admission of central bank scheming to suppress the price of gold (for documentation of some of these admissions, see http://www.gata.org/node/6242 andhttp://www.gata.org/node/7096), it comes at a sensitive time in the currency and gold markets. The U.S. dollar is showing unprecedented weakness, the gold price is showing unprecedented strength, Western European central banks appear to be withdrawing from gold sales and leasing, and the International Monetary Fund is being pressed to take the lead in the gold price suppression scheme by selling gold from its own supposed reserves in the guise of providing financial support for poor nations.
GATA will seek to bring a lawsuit in federal court to appeal the Fed's denial of our freedom-of-information request. While this will require many thousands of dollars, the Fed's admission that it aims to conceal documentation of its gold swap arrangements establishes that such a lawsuit would have a distinct target and not be just a fishing expedition.
In pursuit of such a lawsuit and its general objective of liberating the precious metals markets and making them fair and transparent, GATA again asks for your financial support and that of all gold and silver mining companies that are not at the mercy of market-manipulating governments and banks. GATA is recognized by the U.S. Internal Revenue Service as a non-profit educational and civil rights organization and contributions to it are federally tax-exempt in the United States. For information on donating to GATA, please visit here:
You can also help GATA by bringing this dispatch to the attention of financial news organizations and urging them to investigate the Fed's involvement in gold swaps particularly and the gold (and silver) price suppression schemes generally.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
And here is the Fed's September 17 response to GATA:
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They would paint lead bars with a coating of gold, put those in the center, then use real gold bars on the outsides and the top.
I would not tust then till you tested every bar.
Seriously.
maybe i am misreading your comments but the
closing of the gold window was not to prevent
foreigners from taking their sovereign gold....
nixon closed the gold window to prevent foreign
holders of frn from redeeming their frn for gold
which would have been supplied out of ft knox
or some other bullion repository....
and yes the gold would have been moved between
rooms underground but nixon stopped the redemption -...
foreign governments could then and are doing so
today demanding that their gold be returned....
nixon's duplicity had no bearing on the repatriation
of sovereign gold....
No the gold window was closed due to fractional reserve system. Gold doesn't grow in amounts even if you try to charge it interest. The economy grew by doubling its participants (population) from 1910 to 1970 and the fractional reserve system piled up huge amounts of interest from the loaning activits of the 40's and 50's. Throw in the slush funded secret war of the 60's and you end up with a system that has 4 times too many reciepts for 35 dollar gold. It was forced to go off the standard because it made no sense any more. If you new to buy alot of gold right before we went off it then you made a killing while inflation destroyed the dollars buying power very quickly as it all signaled that what had been mutable for quite some time was being anchored into a false fixed notional valuation. So the people in the currency system "corrected" the valuation rapidly. This event nested in baby boomers psychology making the very unwilling to save and always wanting to turn money into a "hard" asset.
I think the gold is still there, but is probably encumbered by both long and short positions held by the usual suspects. Of course no-one will ever be able to "take delivery" they just want to speculate and an huge stash provides "gold liquidity" even though it is a figment. I think the rumored IMF sale is an attempt to sate the calls for actual physical from you-know-who in exchange for dollars. All the CBs are working together to try to keep the fiat fraud working but their act is wearing thin in some quarters.
Indeed, Gold might as well be Plutonium in the fifth sub-basement at 33 Liberty for all the good it is going to do as in power to the people uses that are fantasized. We are under the control of the proper authorities and gold as a medium of exchange ruins everything and would wreak havoc in our consumer economy. Gold is brake fluid on money-supply creation and is like mercury in the thermometer..best kept under the glass. The ultimate point is our money supply can't be allowed to expand beyond real domestic GNP plue 2-3% without serious consequences that require enduruing credit-contraction to cure excesses..TBTF not-withstanding as Volcker so carefully notes.
I think the gold is still there, but is probably encumbered by both long and short positions held by the usual suspects. Of course no-one will ever be able to "take delivery" they just want to speculate and an huge stash provides "gold liquidity" even though it is a figment. I think the rumored IMF sale is an attempt to sate the calls for actual physical from you-know-who in exchange for dollars. All the CBs are working together to try to keep the fiat fraud working but their act is wearing thin in some quarters.
How about a class-action suing GS et al for making all our Calls and Longs worthless each month when they savage the spot prices?
If the market is manipulated, there is a wronged party.
Where's Cheeky hiding??? We need direction here and war room drama...
If I understand this correctly, this is a short sale. Fed-Goldman-Whoever is short-selling gold, and has accumulated an enormous short position. Isn't the classic response to a short-sale of a commodity to simply call in the underlying commodity? That is, buy physical gold and accept delivery? What would happen if every American bought one ounce of gold? Would that be enough to catch Fed-Goldman-Whoever in a short squeeze? Sounds so easy.
Yeah gang, hop long gold. When it's obvious is definitely the time to go all in.
Never mind that the short USD trade looks like one of those 70's photographs where they were trying to cram as many people as possible into a VW, or that your stand on Au will be against the world's most powerful central banks, governments, and heaviest-hitting financial firms. At least you'll have your principles to go along with the bag you'll be holding.
absolutely and that is precisely what the chinese
are doing by having their people own gold....
thanks for the fucktarded commentary and absolutely
nonsensical prattling...
you don't own a single oz, eh!
Are Megan Fox and Paris Hilton in that VW? Where do I sign up?
Oh noooooeeesss!!! I totally lost faith in gold just now.
No wait. It was just gas. I farted and it's gone.
One plus (minus fourteen) is too minus thirteen.
Couple of good reads from the past, off the top:
http://earthhopenetwork.net/forum/showthread.php?tid=2778
http://www.financialsense.com/fsu/editorials/kirby/2006/1018.html
Time to dig into today's findings...
Repost from my above comment. Sorry bout't that.
I found one similar not looking very long.
"So, you’re looking to rent? Are you sure you want to do that?
Homes are at their cheapest prices in years, the Obama administration is offering an $8,000 tax credit, and RLSTATE.com LLC is giving 20% of the commission that they receive in representing you on your purchase right back to you (subject to your lender’s approval and Federal/State/local laws).
What can this do for you? Consider this: if you purchase a $100,000 home, you can have 8% in equity when you move in even with 100% financing!
So, how can you take advantage of this?
Call Bill Martin at RLSTATE.com. He’ll get you pre-approved for a mortgage and, then, we can go shopping for the home of your dreams. "
http://charlotte.craigslist.org/apa/1389632643.html
The one I posted before said credit would not be checked and you could get 100% financing. I don't know if these are individuals trying to scam people or just the same irresponsibility that got us here in the first place.
Just go on craigslist like I did and look around (it shouldn't take long) You'll find what I'm talking about.
Its like when a cd starts skipping and the player keeps sampling the same 3 second loop.... Until everyone in the party stops and leaves.... The most aware first.
As long as the government is giving you an 'incentive' to buy anything (Clunker, 1st time credit) you know the price floor has not been reached. And besides any school kid can tell you bringing future purchases forward just lowers demand later...
Cash for clunkers was fathered by a kid who's never even seen the bottom side of a car. Let alone an order board at an assembly plant. Destroying cars to sell new ones...
And don't forget, its green!
Up next to prop up your homes value....demolition....
We can make it into a game show just like Extreme Makeover. Except when they move the bus, the featured family is homeless.
The problem is I'm not sure how we can sell Sears on sponsoring it.
Over 80x as many gold ozs on paper than in real physical form...i.e. 80x oversubscribed.
www.howestreet.com John Rubino interview was revealing.
Serious war shaping up in PMs. Bullion banks have increased net short position according to COT data, BRICs & bugs-a-plenty on the other side of the line. BBs lost a critical backstop when ABX flipped out.
Something is seriously, seriously wrong in silver land, supporting my belief that available physical metal is close to zero. (I had to wait an entire month for my last order to be ready for collection).
Ed Steer notes that nothing has been physically delivered to SLV since Sep 3rd meaning it is now owed 30 million ounces. Errr....Houston?
I repeat, once more, like a parrot: stay away from the ETFs, they're holding paper.
you are absolutely correct about a gigantic
battle between the shorts and the longs....
with the chinese now engaged there is now a chance
of taking down the gold cartel....
the american people could do it themselves if they
demanded physical posession of gold and silver....
gold and silver have been in and out of backwardation
for the past 10-12 months....that spells
enormous trouble with a capital T - i say in
river city....
gld, slv, etf, etc are sucker instruments....or to be
used only for short term trading...
would you re-calculate the new world record net short COT position into bullion and then subtract ALL COMEX inventory again in bullion terms and then dare present such a "result" regardless of the number?
Does a bear shit in the woods?
New to this site. Had to chime in here...saw someone mention Gold as the Barbaric Relic. Yesh. Perhaps more so than you realize.
Thing about Gold is this: when powdered into a mist and shot into the atmosphere it essentially adds to the ozone layer. It's a protectorant.
For those so open-minded, just add that into the equation of why some people behave they way they do around this precious metal.
Sharkalchemy
I am not sure GATA is looking in the right place with gold swaps. Why would the FEDact this way when the US treasury can perform the same thing through the exchange stabilisation fund. I am concerned that the monthly financial reports for the ESF seem to have stopped in July just when they were starting to show some curious actions. I also find it interesting that in the 2008 financial report for the ESF the auditors KPMG found significant weaknesses in the reporting by the US treasury.
http://www.ustreas.gov/offices/international-affairs/esf/congress_reports/
google this (then look at the date):
"The US Gold Reserve does double-duty. It sits in the vaults at Fort Knox and the other depositories, but the US Treasury has issued Gold Certificates against it. The Federal Reserve owns these Gold Certificates, giving the Fed a claim to the 261.6 million ounces in the US Gold Reserve. Simple enough, and the same transaction is used for 'paper gold' - the SDR's - with just one small difference. The US Treasury has transferred its SDR's to the ESF, so the ESF and not the US Treasury issued the SDR Certificates now owned by the Federal Reserve.
Importantly, these SDR Certificates are being accounted for much the same way as the Gold Certificates. Both are carried at book value, which is much less than their market value. The Gold Certificates are carried on the Federal Reserve's books at $11,046 million, which doesn't sound like much. However, when you consider that these Gold Certificates are being valued at only $42.22 per ounce, this asset represents the entire 261.6 million ounces in the US Gold Reserve. And the SDR Certificates are being valued at - well, here is where it starts to get interesting. And here is where the mystery of the disappearing SDR Certificates comes into play. Look at the decline in the SDR Certificates in the accompanying table.
ESF / FR
The above table presents the SDR assets and liabilities of the ESF and the Fed. Though recent figures for the ESF are not available, as of August 9th the Fed still owns only 2,200 million of SDR Certificates, so presumably the SDR entries on the ESF balance sheet have not changed much since December 2000. To understand why the SDR Certificates are disappearing as well as where they are going, more background information is necessary.
The US, like each IMF Member, owns SDR's but is also responsible for the value of the SDR. Note #4 of the ESF's financial statement for 1999 explains it thus: "Its [the SDR's] value as a reserve asset derives, essentially, from the commitments of participants to hold and accept SDR's and to honor various obligations connected with its proper functioning as a reserve asset."
As of December 1998, the ESF owned 10,603 million SDR's, but it had a liability for 6,899 million SDR's. What does this liability represent? Here's what Schedule B of the Articles of Agreement of the IMF says: "…0.888671 gram of fine gold shall be equivalent to one special drawing right." That means 35 SDR's equals one ounce of gold. So the US has the potential obligation as of December 2000 - if required to make good on SDR's issued - to pay to the IMF or its members 182.4 million ounces of gold, some 69.7% of the US Gold Reserve.
That huge liability is pretty scary, but it is only a potential liability. Who knows whether the US will ever be required to make good on it, or if it does, whether the US will default just like it defaulted in 1933 on its obligation to pay US government bonds in gold and in 1971 on its obligation to redeem 35 dollars for one ounce of gold. Those are problems to worry about in the future. Of more immediate concern is the decline in the SDR Certificates. What is that all about? To answer this question and to solve this mystery of the disappearing SDR Certificates, we have to once again go back to basics.
Why are the SDR Certificates declining? The basic answer is quite simple. The SDR Certificates MUST BE reduced if the ESF intends to use its SDR's for any purpose, such as market intervention or swaps. In other words, the SDR Certificates are a claim against the SDR's, so the SDR Certificate must be cancelled to remove any claims on the SDR before the SDR can be used by the ESF. But the amount of SDR's owned by the ESF hasn't changed except briefly in early 1999, so it seems that the SDR's are not being used for any purpose.
So what I think has happened is that the SDR Certificates are themselves being used by the ESF. Here's what the IMF says about the use of SDR's in swaps: "In accordance with Article XIX, Section 2(c), the Fund prescribes that...a participant, by agreement with another participant, may engage in an operation by which (a) one of the parties transfers [i.e., swaps] to the other party SDRs in exchange for an equivalent amount of currency or another monetary asset, other than gold."
Thus, SDR's cannot be swapped for gold, but there is no IMF regulation that prohibits the swapping of SDR Certificates for gold. So let's take this observation to its logical conclusion, namely, that the ESF and/or the Federal Reserve has been swapping SDR Certificates issued by the ESF for gold owned by the Bundesbank, and presumably other central banks as well because we noted above that the Second Amendment states that "members undertook to collaborate with the IMF and other members" for the sake of international liquidity. So presumably, all IMF members are committed to undertake any scheme that the US government may hatch."
extremely valuable post - at least for me....i learned quite a bit here and will need to study it at length to fully digest....it probably holds the key to my question about how gold can be claimed as assets on two balance sheets - the h.4.1 and the tresury's.....
but the fed reports the gold as a specific weight and not as a set of gold certificates...
it sounds like the gold is being counted twice or doubly encumbered....
thanks for posting this....
Why is everyone so skeptical of the Fed? I mean, their word is as good as Gold.
- They have a 'Strong Dollar' policy
- They have an excellent record of navigating crises of no making of their own
- They'll pull out, they swear
- They honestly can't believe that people still fall for the "Just the Tip Game" line
Gold is nosediving.
Great management of the gold price and US dollar by the FED, BB and the BB.
So we are $20 off the recent gold price top...and yet the USD is at .7668. What was the price of gold when we first hit .76 USD? Much higher.
Everytime we recover slightly from a USD bounce gold gets hammered even harder. Hence every gain is less each time.
Sorry if that was clear as mud.
LOL, just the tip.
That is hilarious. Try saying: "Just the tip" with a straight face! That is what these banksters and politicians do for a living!
Germany and Indonesia ordered withdrawals from New York and London vaults and physical delivery in the past month. If only hedge fund managers and the public learn and did the same.