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.