For several years, the US government’s official stance has been that it has not only never engaged in manipulating gold prices, it has also never even discussed the subject.
To comply with a court order from a Freedom of Information Act lawsuit filed by the Gold Anti-Trust Action Committee, Inc. (GATA), on February 18 the Fed turned over to GATA the minutes of a secret April 1997 meeting of the G-10 Gold and Foreign Exchange Committee.
This document was one of several that were sought by GATA to gain more information on the actions of the Fed that involve gold swap discussions and activities since 1990.
The judge allowed the Fed to keep nine other documents secret.
From the Gata Website; “According to the minutes, the U.S. delegate cited above, identified only as “Fisher” — apparently Peter R. Fisher, head of open market operations and foreign exchange trading for the Federal Reserve Bank of New York — also warned that central bank gold sales and leasing might be construed as positive for gold. The minutes say: “First, he noted that some market cynics viewed central bank activity as a contrary indicator and therefore one had to be conscious of possible feedback effects. Second, he noted that the price of gold, unlike other commodities, had historically not trended toward the cost of production. This seemed to suggest an ongoing supply/demand imbalance. Third, he had the sense that the gold leasing market was an important component in this puzzle, though he did not understand enough about that market, particularly the credit risk aspects of gold lending.”
A Canadian delegate, the minutes say, wondered whether data about the gold market could be trusted — a point much pressed by GATA and others lately.
U.S. delegate Fisher, the minutes say, “explained that U.S. gold belongs to the Treasury. However, the Treasury had issued gold certificates to the Reserve Banks, and so gold (by these means) also appears on the Federal Reserve balance sheet. If there were to be a revaluation of gold, the certificates would also be revalued upwards; however [to prevent the Fed’s balance sheet from expanding] this would lead to sales of government securities. So the net benefit to Treasury would need to be carefully calculated, since sales of government securities would expand the public portfolio of government securities and hence also expand the Treasury’s debt-servicing burden.”
This seems to be as candid an acknowledgement as any of the U.S. government’s profound interest in suppressing the price of gold.
Two years after the G-10’s Gold and Foreign Exchange Committee discussed coordinating Western central bank policies toward gold, most of those central banks announced just such a formal mechanism of cooperation, the Washington Agreement on Gold:
The minutes of the April 1997 meeting of the G-10 Gold and Foreign Exchange Committee, which the Fed sought to conceal, along with the secrecy on which the Fed successfully has insisted for its other gold records, are powerful confirmations of Western central bank interest in controlling the gold market surreptitiously. The minutes have been posted at GATA’s Internet site here:
Once again, this new document confirms that the Fed has consistently lied in denying its discussions and activities about gold swaps.