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Is US Government Gold Price Suppression Illegal?

By Patrick A. Heller
Commentary on Precious Metals Prepared for CoinWeek.com

In my constant complaints about the US government, its trading partners, and allies suppressing gold prices, I have never accused them of acting illegally.  That is because all of this chicanery is legal.  Here’s why.

The Gold Reserve Act enacted January 30, 1934 supplanted President Roosevelt’s 1933 Executive Order 6102 which made it illegal for Americans to own gold or gold certificates anywhere in the world, with some exceptions for jewelry and collector coins.  (By the way, these laws made American gold ownership more illegal than owning heroin as heroin owned by a US citizen outside the US did not break an American law.)

Among other provisions of this Act, the US government officially revalued gold from $20.67 per ounce to $35.00 per ounce.  It also made gold clauses in contracts illegal.

Finally, the Act also directed the creation of the Exchange Stabilization Fund (ESF), which occurred on January 31, 1934.  In April, the US Treasury transferred $2 billion of its $2.8 billion profit from the revaluation of gold into the ESF.  The Act authorized the ESF to use its assets to deal in gold and foreign exchange for purposes of stabilizing the value of the US dollar.  The ESF was designated as a part of the executive branch that would not be subject to legislative oversight.

When Special Drawing Rights, a special paper reserve currency, were created by the International Monetary Fund in 1969, the ESF was designated as the holder of these assets.  The ESF was then allowed to issue special Drawing Rights Certificates to the Federal Reserve in order to monetize their dollar value.

Thus, the ESF is authorized to trade gold to secretly help stabilize the value of the US dollar.  Therefore, the Fund’s activities can only be inferred by observing market trends.

The ESF does issue periodic reports.  Go to http://www.treasury.gov/resource-center/international/ESF/Documents/Trunc%20+%20Notes.pdf to view the Exchange Stabilization Fund’s March 31, 2012 financial statement.  It shows total assets of just under $104 billion, of which $55 billion are Special Drawing Rights, $23 billion are US government securities, $14 billion are denominated in Euros, and $11 billion are denominated in yen.

So, I can complain about the way the US government manipulates the gold market.  I can point out that the US government is harming Americans by such activity.  I can even explain how suppression of gold’s price is pushing the US economy closer to chaos and to the collapse of the dollar.  But, I cannot allege that such actions are illegal.  There.  Does that make you feel better?

Patrick A. Heller owns Liberty Coin Service and Premier Coins & Collectibles in Lansing, Michigan and writes Liberty’s Outlook, a monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at http://www.libertycoinservice.com. Other commentaries are available at Numismaster (http://www.numismaster.com under “News & Articles). His award-winning radio show “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 AM Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio and text archives posted at http://www.1320wils.com.

Patrick A Heller
Patrick A Heller
Patrick A. Heller was honored with the American Numismatic Association’s 2012 Harry J. Forman Numismatic Dealer of the Year Award. He owns Liberty Coin Service in Lansing, Michigan and writes Liberty’s Outlook, a monthly newsletter on rare coins and precious metals subjects. His award-winning radio show “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 AM Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio and text archives posted at http://www.1320wils.com). He is also the financier and executive producer of the movie “Alongside Night”.

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  1. Woo Hoo! So it’s not illegal, whoopie! Now, what’s left – whether or not it is a good idea, good policy. That is ENTIRELY a matter of P-O-L-I-T-I-C-S; yours, Patrick, Obama’s, mine, maybe someday Romney’s.

    Surprise, surprise, just like ALMOST everything else, it comes down to politics, and it’s half-brother, political economics, my field of study for over 35 years now.

    NOTHING has repealed the last 40+ years of currency economics, Patrick; not YOU, not the John Birch Society, not the Tea Partiers, and not even Ron Paul, much as you might wish it were otherwise. You still are obsessed on what PRECEEDED 1971, when what you SHOULD be tryng to do is grasp, appreciate, and understand the POST-1971 world of currencies. THAT is a useful endeavor. Being a gold bug is NOT useful. Bugs get squashed.

    • What motivated you to write your post? Who signs your checks? Yes, we understand
      but do not appreciate the POST-1971 world of fiat currencies your kind defends.

      You are obviously defending currency economics that will destroy our country after
      the rich banksters and politicians have removed their ill-gotten gains from the public
      trough. So you must be one of them.

      • Well, how’s 41 years of stamping your feet and whining and crying about it working for ya? Not well, huh. Denial is not just a river in Egypt. “Hard currencies” are over, dead, and buried. You may as well whine about the 1856 demise of the pure copper large cent. It’s over. Learn to cope.

        • That’s what they said in Rome… By now it does not take an idiot to open books and read about it… It all CRASHED.

          All this “NEW AND IMPROVED” is bogus because it is based on USURY.

  2. This is not true, this is misleading. This ESF was designed to balance offsets in the price of gold, allow for Gold payments to a stronger currency. hence when it was enacted in 1934 when gold was banned Gov’t bought everybody’s gold or gave them value of $20 per oz. Then following week, valued gold at $35 oz. Everyone got ripped off for $15, but the gold went to England and to back the T-Bill which was gold backed. Not the same thing as rigging and smack downs of Silver and Gold by JP Morgan in the COMEX using HFT. That is illegal and still is using fraudulent and non-disclosed means. The ESF was only meant for settling differences in strong weak Exchange rates and trade imbalances.

  3. When immoral people pass laws that cause aggregation of wealth to a select few at the expense of the vast majority, we’ve been taken off the path of the Founding Fathers and shanghaied back towards British rule. Those unaware that the FED was patterned after the Bank of England may now regard themselves as updated. Bellman, are you a member of the American Economic Association? You come off like that bunch. You trashed Griffin’s work! Check out mine! I want to hear back from you that this organization I exhaustively document does NOT exist! I want to hear back from you (after apoplexy) that their refusal to disclose a roster does NOT signify they have anything to conceal from the public! The “last 40+ years of currency economics” are falling apart! India, China, Russia, Iran and several USA States are beginning to disregard BASTARDIZED synthetic currency. Readers, the world IS afflicted by a financial conspiracy (not “cabal”) which appears to trace to The Crown in London, the world’s largest landowner. “The name of the Society shall be The Pilgrims. The object of the Society shall be the promotion of the sentiment of brotherhood among the nations.” Bellman, did you receive any fellowships in college or foundation grants? Folks, the instant Bellman resorts to psychiatry (“there’s something wrong with your mind”) you should dismiss him entirely. His heresy against gold should be sufficient to disregard him as a valueless cipher!

    • I’m not going to enage in your Brit bashing fantasms, Mr. Savoie. Trot them all out – Bildeburgs, the CFR, anythng you want. Go join your fellow Brit bashers like the Annointed One, Lyndon LaRouche. You deserve one another.

      I received normal student loans under federal and state (Pennsylvania) programs, nothing more. No fellowships, no foundation grants, just a classical liberal arts education at a pretigious Pennsylvania private college who PRACTICED the mantra that economics, TRUE economics, is absent value judgments. It merely dispassionately describes the allocation of resources, with as little ideology added as can be done – not “right”, not “left”. Read them all, but don’t adopy ANY ideology. Mine them for the economics contained therein.

      More should benefit from such an education

      • You read my remarks, but not the documentary. And you won’t, either, having attained the thresh hold your mentality allows, you need see no evidence. If I had said anything actionable for a law suit, I would have been hit, because the top Wall Street attorneys are members of the group I fault. I have never been in touch with Lyndon. I sure hope we never hear you acquired any gold and worse still, silver. All you need for security is the currency you initially raved about.

    • Your use of phrases like “his heresy against gold” betrays you as what your are – a quasi-religious zealot regarding a stinking element on the Periodic Table of the Elements. How sick is that?

      Your use of the word “heresy” says all anyone needs to know about you, sir.

      • From your blog—“There are millions are delusional conspiracy nuts out there.” People, this Bellman is the type person elitists LOVE! If we were all just like him, their progress towards taking us back to feudalism under The Crown would have already been consummated. Bellman, I hereby publicly offer you $5,000 if you can produce a Pilgrims roster for the year 2000 or more recent, subject to co-authentication by myself and Joel Van Der Reijden. The reason many people believe in conspiracies is because such ill-intentioned plans exist. Big Pharma conspires to medicate everyone. That’s a conspiracy and is very plain from their actions. You take banker/government paper, we’ll take gold. Heresy is embracing multicolored confetti “money” while urinating on the real item. Several States have reached the same conclusion, why not get in touch with the legislators involved and tell them off? And what IS it with people who use an abbreviated initial at the start, then go to full names? Permissible but TACKY!

  4. Since when does illegal or legal matter to the government. We have guys like Jon Corzine walking away free after stealing billions of depositors money. We have a crime syndicate in charge.

  5. Все правильно говорит Курт Бельман, скоро доллару конец настанет, как у вас говорится happy end, только вот happy в этой фразе будет отсутствовать!!! Это всего лишь вопрос времени. Недолгого времени…))

    English Translation – All right said Kurt Bellman , soon there will be an end to the dollar , as you say happy end, but that’s happy in this sentence is missing !!! It’s just a matter of time. A short time …))


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