Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Gold's Manipulation in 1975 Isn't a Smoking Gun

By

Government efforts to keep the metal's price down have proven ineffective.

PrintPRINT
Numerous people have asked me to comment on the Zero Hedge article Exclusive Smoking Gun: The Fed On Gold Manipulation.

The "Smoking Gun" is a now declassified document about gold that was sent to President Gerald Ford on June 3, 1975 by Arthur Burns, chairman of the Federal Reserve from 1970 to 1978.

The document concerns the "broad question as to whether central banks and governments should be free to buy gold, from one another or from the private market, at market-related prices."

Market prices at the time were $160 to $175 and the official price was $42.22 per ounce.

Arthur Burns states, "It is an open secret among central bankers that, at a later date, the French and some others may well want to stabilize the market price within some range."

Burns also says, "The Federal Reserve has sought to avoid taking a rigid position," while going "some distance to try and conciliate the French view." Yet... "If we do ever accede to French views on gold, we should at least use our bargaining leverage to some major political advantage."

Finally, Burns states, "All in all I am convinced that by far the best position for us to take at this time is to resist arrangements that provide wide latitude for central banks to purchase gold at market-related prices."

Shocking Revelation?

Burns sought an agreement whereby central bankers and governments wouldn't buy gold at market prices. Because gold prices never traded at $42.22 again, essentially that was an agreement to not buy gold.

After Nixon closed the gold window, why is it such a revelation that events like this happened? Did any governments cheat?

The most interesting thing in the document was Burns's willingness to bargain for "political advantage." However, the idea that governments are lying manipulators willing to sell their soul for the right political advantage can hardly be considered a startling revelation.

Smoking Gun or Historical Footnote?

The importance of this document is only in the historical sense in that it helps shows us how the move toward an irredeemable fiat currency evolved around that time.

The document has no direct bearing on what is happening today, although it remains true that gold is the enemy of the welfare warfare state and its central banks.

The so-called "smoking gun" of 1975 is much ado about nothing. It's nothing more than a historical footnote with little current relevance.

Misplaced Fears

If governments today are still acting to suppress the price of gold by the same methods, let's have more of them because they clearly aren't working.

Given that the price of gold is roughly $1,000 an ounce, it goes to show that governments are not bigger than the market, and that such manipulation (even if it does still exist) can never work in the long run.

The fear shouldn't be of government to government agreements that can never work in practice, but rather a fear that governments may tax gold sales profits at some phenomenal rate, thereby effectively confiscating gold a second time.
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE