By James Turk
The Freemarket Gold & Money Report

This past December in my essay"The Smoking Gun" I
provided proof that the U.S. Treasury Department's
Exchange Stabilization Fund was intervening in the gold
market. From publicly available reports prepared by the
Federal Reserve, I established that the weight of gold
held as a component of the U.S. Reserve Assets has been
changing, and that these changes -- some of which are
of significant size -- result from activity by the ESF.
These Federal Reserve reports conclusively demonstrate
that the ESF has been intervening in the gold market
since at least 1996.

Though these Federal Reserve reports make clear that
the ESF is involved in the gold market up to its
"earmarks," a lot of people remain skeptical. I don't
know why that is. It is worth noting that many of the
most obstinate skeptics who deny U.S. government
involvement in the gold market live overseas and have
little if any experience or understanding of the way
the U.S. government really works. Even Americans find
it difficult to accept that the U.S. government
intervenes in the gold market. Ironically, though,
they readily admit that the government intervenes in
the debt markets, foreign currency markets, and,
according to a growing number of people, even in the
U.S. stock market. It is therefore most baffling that
they do not concede the ESF's involvement in the gold
market.

Maybe people are skeptical because they haven't
bothered to take the time to read the Federal Reserve
reports for themselves. Maybe it's because it's easier
to accept the word of some government bureaucrat who
denies ESF involvement in the gold market than it is to
seek out and look for the truth. Maybe they don't want
to believe that the U.S. government is lying to them
when Treasury Department official after Treasury
Department official denies any involvement by the ESF
in the gold market.

I don't know.

Or maybe it's because they think that government
officials work for the American people -- and not for
vested interests -- in their deliberative sessions
behind closed doors.

Wouldn't it be refreshing if we could peek behind those
closed doors to see what really is being said?

Very little emerges from behind closed doors, and the
minutes and transcripts of closed-door sessions that do
make it into the public domain contain redactions that
blank out the"good parts" -- the revealing statements.
But what if someone forgot to redact one of those"good
parts? Too fantastic to be true?

Well, sit down, take a deep breath, and carefully read
what follows.

* * *

A few weeks ago Reg Howe contacted me and asked my view
on something he had discovered. He wanted a second
opinion on this discovery, just as I contacted him for
a second opinion after I came across the Federal
Reserve reports showing the ESF's gold-related
activity.

When I read what Reg showed me, I was stunned. But at
the same time it was clear to me what I was reading and
what had happened.

A transcript of a meeting of the Federal Reserve Open
Market Committee has been released for which somebody
forgot to get his red pen out. Someone forgot to redact
some very revealing words about the ESF and its
activity with gold. Here's what was said.

* * *

http://www.federalreserve.gov/fomc/Transcripts/transcripts_1995.htm

[See the transcript from the January 31, 1995, meeting.]

MR. MATTINGLY. It's pretty clear that these ESF
operations are authorized. I don't think there is a
legal problem in terms of the authority. The [ESF]
statute is very broadly worded in terms of words like
"credit" -- it has covered things like the gold swaps
-- and it confers broad authority.

* * *

Please read the above statement again, and maybe even a
third and fourth time.

This statement, which I can only assume was
inadvertently not redacted by the FOMC Secretariat,
confirms what we already know but what the U.S.
government has all along refused to admit -- that the
ESF is involved in the gold market. In fact, the
authority of the ESF is so broad that"it has covered
things like the gold swaps."

In other words, the authority of the ESF is so broad it
has even been used to authorize"gold swaps."

Before exploring the above quote, some background
information is necessary.

The proceedings of each FOMC meeting are taped. These
tapes are transcribed, and the Federal Reserve releases
these transcripts after five years. Thus, the
transcripts from the 1995 meetings were released this
year, and, having now read through them, I can say they
contain a treasure trove of material, even though there
are many redactions.

The important point is that these transcripts are not
only informative but are an accurate record of what is
going on behind closed doors.

Here is what the Federal Reserve itself says about the
FOMC transcripts:

* * *

http://www.federalreserve.gov/fomc/Transcripts/

Beginning with the 1994 meetings, the FOMC Secretariat
produced the transcripts shortly after each meeting
from an audio recording of the proceedings, lightly
editing the peakers' original words, where necessary,
to facilitate the reader's understanding. Meeting
participants were then given an opportunity within the
next several weeks to review the transcript for
accuracy.

For the meetings preceding 1994, the transcripts were
produced from the original, raw transcripts in the FOMC
Secretariat's files. These records have also been
lightly edited by the Secretariat to facilitate the
reader's understanding. In addition, where one or more
words were missed or garbled in the transcription, the
notation"unintelligible" has been inserted. In some
instances, words have been added in brackets to
complete a speaker's apparent thought or to correct an
obvious transcription error or misstatement.

Nonetheless, for the pre-1994 transcripts, errors
undoubtedly remain. The raw transcripts were not fully
edited for accuracy at the time they were prepared
because they were intended only as an aid to the
Secretariat in preparing meeting minutes. The edited
pre-1994 transcripts have not been reviewed by present
or past members of the committee.

* * *

In other words, the 1995 transcripts are accurate.
There are no disclaimers for them, like those made for
the pre-1994 transcripts. Therefore, the above quote by
Mr. Mattingly about the ESF and gold is accurate.

And who is Mr. Mattingly? Virgil Mattingly is general
counsel of the Federal Reserve, its chief legal
adviser.

That Mattingly's remark passed without comment by
anyone in the FOMC meeting implies that everyone knew
exactly what he was referring to. In other words, to
explain ESF authority, his example was purposefully
chosen. It was one to which the Federal Reserve
governors could all relate because it was something
they saw happen during their watch.

In my imagination I can see them sitting around the big
FOMC conference table nodding their heads in agreement
when Mattingly used this example of the gold swaps to
explain how broad the ESF's authority is.

Recognize too that though he is talking in the past
tense, it doesn't necessarily mean that the swaps had
already happened. They may still be happening because
he may be referring to the authority that approved the
gold swaps and presumably the swap lines, but not
necessarily the date of the actual swaps themselves.

So that this quote of Mattingly is not taken out of
context, let me provide background information. Also, I
invite you to read the full 145-page transcript of this
Jan. 31, 1995, FOMC meeting if you would like to
confirm both the accuracy of the above quote and the
background information I am about to provide. By
reading the entire transcript you will also see how
frequently material was redacted.

Mattingly's comments were made in a discussion by the
FOMC on the rapidly deteriorating financial situation
in Mexico. Crisis conditions had been prevailing since
the peso began tumbling the month before -- that is,
December 1994. You will recall that the Clinton
administration back then had proposed that Congress
provide a $40 billion package of government guarantees
to bail out those who had loaned money to Mexico, and
that Congress had rejected this proposal. So the
administration was scrambling to come up with a way to
get the money thought necessary to"fix" the problem.
Unable to tap the Treasury directly because of the
rebuff by Congress, the administration turned to the
ESF.

Because the Federal Reserve was to be part of the
proposed bailout, the Federal Open Market Committee was
reviewing what role the Federal Reserve would play in
conjunction with the ESF. A proposal was on the table
for the FOMC's consideration. A Mr. Fix-it who seems to
be the go-between for the Treasury and the Fed was
presenting the proposal.

His name is Ted Truman. And he was responding to
various FOMC members who were questioning whether the
ESF had the legal authority to do what was being
proposed. Hence, the Federal Reserve's legal counsel,
Virgil Mattingly, responded, using the"gold swaps" as
an example of just how broad the ESFªs authority
actually is.

To give you a flavor of the full discussion underway in
the FOMC meeting, here is an excerpt from the
transcript.

* * *

MR. MELZER. What ability do the Treasury or the ESF
have to take us out of an obligation [i.e., repay the
Federal Reserve] if funds are not appropriated by
Congress? Do they have the ability just to say, we
committed to this and we are going to pay the Fed off?

MR. TRUMAN. Yes, they could.

MR. MELZER. But if they can do that, why can't they
just advance it themselves?

MR. TRUMAN. They could, but I think they feel that it
would be useful to their objectives to have a lot of
people.... [Apparently the rest of his comments are
redacted.]

* * *

The discussion continues on this point, but touches
upon the relationship between the ESF and the Treasury.
These comments also establish that the ESF does not use
"appropriated funds," meaning that the ESF is
answerable only to the secretary of the treasury and
the president. All actions of the ESF are beyond
congressional authority.

* * *

CHAIRMAN GREENSPAN. Could I just formally respond to
Governor Lindsey? There is a question here of whether
or not the amount the United States Treasury gives us
has to be appropriated funds, which I think is really
where our examination of the issue has to be. In
examining the takeout, we ought to make certain that we
talk to them with respect to the question of what
happens if they do not get the appropriated funds.

MR. TRUMAN. Mr. Chairman, the Exchange Stabilization
Fund does not have appropriated funds.

CHAIRMAN GREENSPAN. Are we going to be getting a
takeout from the Exchange Stabilization Fund?

MR. TRUMAN. I think that is what is in the program.

CHAIRMAN GREENSPAN. OK.

SPEAKER (?). That is not the same as the Treasury.

MR. TRUMAN. Even if we didn't, the precedent in the
1960s -- I think there was a question then about
whether the Treasury could engage in foreign exchange
operations outside of the ESF -- was the use of Roosa
bonds in the 1960s. The Treasury floated Roosa bonds to
obtain foreign currencies and used some of those
currencies to take us out. That did not involve
appropriated funds. That was treated as a debt-
management operation.

* * *

The above passage confirms what we already know, but
many people refuse to admit. The ESF is a slush fund
beyond congressional oversight. It can be used to"get
around" most anything (that is, it can skirt normal
governmental procedures). No wonder so many people want
to do away with the ESF. There is no room for it in our
democratic process. It is not subject to the normal
checks and balances carefully crafted by the Founding
Fathers that have proven over time to be so essential
for limiting the power of the federal government.

The ESF is the antithesis of the American foundation of
representative government because it subjects a free
people to an unconstitutional governmental force. Still
not convinced? Here are some more excerpts:

* * *

MR. LINDSEY. My second question has to do with our
credibility. I don't know what questions to ask, and I
hope you will help me out in that regard. I have this
document in front of me, which includes a page entitled
"What is the Exchange Stabilization Fund?" The document
came from Treasury International Affairs. I gather it
was written by them. I have written enough of these to
know what you do, and that is to tell your point of
view. Paragraph 3, not to mention the dots indicating
an omission in Paragraph 2, got me a little nervous.
Paragraph 3 says these holdings in the ESF are used to
enter into swap arrangements with foreign governments,
to finance exchange market intervention, to provide
short-term bridge finance, etc., and all these things
are great. So, basically Paragraph 3 is establishing
that this is not unprecedented. My question would be:
Do we do all these nice things if it's not in support
of the dollar? Is this unprecedented with regard to the
fact that we are supporting another currency?

MR. TRUMAN. The language before the dots is....

MR. LINDSEY. I am talking about the third paragraph. I
will go to the second paragraph in a second. I'm sorry.
I am running a little out of order. It is saying the
ESF has done all these things.

MR. TRUMAN. The legislation governing the objectives of
the ESF was changed, I think for the most part in the
mid-to-late-1970s. The changes included the language
that the government of the United States and the
International Monetary Fund have the obligation to
promote orderly exchange rate arrangements leading to a
stable system of exchange rates. That was interpreted
to include making loans to Bolivia in helping it
maintain a system of stable exchange rates.

MR. LINDSEY. So that has happened before?

MR. TRUMAN. Yes. They have made loans to or financial
arrangements with at least 31 countries around the
world over the last 50 years.

MR. LINDSEY. I think we all will be asked questions
about this. Can you read this paper and tell me that
there is not something missing that I should know
about, meaning that this is not only the truth but the
whole truth?

MR. TRUMAN. I can only say that Treasury lawyers have
looked into the question of whether these operations
are legal under this broad authorization of what they
can do and what the purpose is....

MR. MATTINGLY. If I can help out?

MR. LINDSEY. Yes.

MR. MATTINGLY. It's pretty clear that these ESF
operations are authorized. I don't think there is a
legal problem in terms of the authority. The statute is
very broadly worded in terms of words like"credit" --
it has covered things like the gold swaps -- and it
confers broad authority. Counsel at the White House
called the Treasury's General Counsel today and asked
"Are you sure?" And the Treasury's General Counsel
said,"I am sure." Everyone is satisfied that a legal
issue is not involved, if that helps.

MR. LINDSEY. Is there anything missing on this page?

MR. MATTINGLY. No, there is not. If you look at the
last paragraph, for example, that is part of the
statute.

MR. LINDSEY. About notifying Congress in writing in
advance?

MR. MATTINGLY. The statute says that with the
permission of the president they can make loans.

[MORE]

There you have it. The ESF doesn't have to notify
Congress about anything in advance. It is under the
sole authority of the secretary of the treasury and the
president, and they can do"gold swaps" without any
congressional approval, which brings up an important
point I made in"The Smoking Gun."

I had noted a curious pattern in the correspondence
emanating from the Treasury Department. The secretary
of the Treasury never answered any questioning letters
concerning the ESF, even if they were written directly
to him. Rather, one of his assistants invariably
responded. I therefore wondered whether the Treasury
Department chain of command was being relied upon just
as President Nixon had tried to rely upon the White
House chain of command in an attempt to avoid being
sucked into the vortex of a growing Watergate scandal.

I even asked in"The Smoking Gun":"Did Secretary
Summers' knowledge of the goings-on in the secretive
ESF explain why his underlings, and not him, were
writing the letters denying U.S. government involvement
within the gold market?"

The above excerpts from the FOMC transcript clearly
establish that my question needs answering.

It is becoming clear as more and more evidence emerges
that the secretary of the treasury does not answer
questions concerning the ESF because he, but not his
underlings, knows to what extent the ESF is engaged in
gold-related activity. His underlings can say that the
ESF is not involved in the gold market because, as far
as they know, what they say is true.

However, we now have proof that the ESF is indeed
involved in the gold market. So the secretary of the
treasury does not respond to letters asking questions
about the ESF and its activity in the gold market. He
canªt answer them truthfully without spilling the
beans. He obviously knows everything about what really
is going on within the ESF, in contrast to his
underlings. Or at least most underlings because it
appears that one of them is in there up to his elbows
washing ESF laundry. His name is Ted Truman.

>From the FOMC transcripts it is quite apparent that
Truman has a special role. Though recorded in the
attendee list in the FOMC transcripts under the
featureless title of"economist," he has a role that is
anything but ordinary. The transcripts reveal that he
clearly speaks for the Treasury Department in FOMC
meetings and is very knowledgeable about the ESF. The
insight displayed by him in the FOMC minutes makes it
clear that he is not just fully informed about the ESF
and its operations, but that he probably is also
intimately involved in ESF decision making.
Consequently, the following excerpt is particularly
intriguing.

* * *

MR. PARRY. What is the size of the ESF?

MR. TRUMAN. The usable funds in the ESF today, counting
the foreign exchange as usable, amount to roughly $25
billion.

MR. PARRY. Can you say how it is broken down?

MR. TRUMAN. About $5 billion is invested in Treasury
securities and the balance is roughly equally divided
between marks and yen. I think they have slightly more
yen than marks.

MR. PARRY. Thank you.

MR. BOEHNE. Is any of it obligated in any way beyond
what we are talking about with Mexico?

MR. TRUMAN. It is obligated only in the sense that they
have one other swap arrangement with the Bundesbank.

* * *

Wouldn't it be interesting to know what this swap
arrangement with the Bundesbank entailed? What is the
nature of this swap? Is it a dollar/deutschemark swap
facility? Or is something else being swapped, like gold
perhaps?

Gold being swapped with the Bundesbank? It's an
outrageous thought.

Or is it?

I have already established that the ESF is very much
involved with gold. The only thing I haven't
established is with whom the ESF has those gold swaps
that Virgil Mattingly was talking about.

Let's put 1 and 1 together here to see if we can come
up with an answer.

According to Mattingly, the ESF has authorized gold
swaps, presumably in the recent past (circa 1995).
According to Ted Truman, the only outstanding swap
facility of the ESF (circa 1995) other than the one
established for Mexico is the ESF's facility with the
Bundesbank.

Therefore, the ESF has a gold swap facility with the
Bundesbank.

It's an interesting proposition, and one that fits well
with another newly discovered fact. Some very
interesting sleuthing by Mike Bolser, who has been
assisting Reg Howe in his lawsuit against the Bank for
International Settlements, has revealed that the
Treasury has made a small but very significant
accounting change.

Mike noticed that the Treasury Department has changed
the designation of nearly 1,700 tonnes of inventoried
gold at the U.S. Mintªs facility in West Point, N.Y.,
which is approximately 21 percent of the total U.S.
gold reserve, from"Gold Bullion Reserve" to"Custodial
Gold."

The August 2000 Status Report on U.S. Treasury-Owned
Gold stored at West Point has a designation of"Gold
Bullion Reserve."

(See http://207.87.26.43/gold/00-08.html)

But the September 2000 and subsequent status reports
inexplicably designate this same gold that is stored at
the U.S. Mint at West Point as"Custodial Gold."

See http://207.87.26.43/gold/00-09.html

This change was made without explanation, so rather
than let the matter remain unexplained, Mike diligently
contacted the Treasury asking what seemingly are two
uncomplicated questions. Would the Treasury please
explain why they made this change, and what does this
change in designation mean with respect to the
ownership status of the gold at West Point?

They are simple questions, but perhaps they touch too
close to a nerve. Not surprisingly, the Treasury so far
has not responded to Mike.

I have some views on what Mike discovered, and why the
Treasury is so quiet about it. I think this change in
asset classification is related to the ESF gold swaps.
Hereªs my thinking.

The change Mike spotted possibly occurred as a result
of accountants looking at the financial statements of
the U.S. Mint being prepared for its annual report
ending fiscal year 2000. Note that the previous
director of the Mint (Phillip Diehl) resigned in early
2000, so this was the first annual report signed by the
new director (Jay Johnson).

If there is one thing that government bureaucrats do
well, they take great pains to call things by their
right name. To do otherwise would put their job in
jeopardy if something under their responsibility came
under congressional scrutiny, and it was subsequently
determined that the name assigned to something was
incorrect or misleading.

Therefore, this change in the descriptive label for
nearly 1,700 tonnes of gold at West Point from"Gold
Bullion Reserve" to"Custodial Gold" was purposeful. It
happened for a reason. This conclusion is all the more
plausible because the Treasury did not change the
classification from"Gold Bullion Reserve" to
"Custodial Gold" to describe the gold stored in Fort
Knox or at the U.S. Mint at Denver. Maybe new U.S. Mint
Director Johnson saw something he didn't like. What
could that have been?

I have already put 1 and 1 together to establish that
the ESF has"gold swaps" with the Bundesbank. It
therefore does not require much conjecture to add one
supposition to the equation by concluding that the gold
at West Point has been swapped with gold owned by the
Bundesbank, thereby necessitating its reclassification
from"Gold Bullion Reserve" to"Custodial Gold." Here's
what I think has happened.

The Treasury Department wanted to make gold available
to some bullion banks. This statement is based on my
premise that several of the big banks have gold books
that are hopelessly imbalanced. By having borrowed
short and loaned long, these banks have in their quest
for profits imprudently fallen into the alluring but
usually fatal banker's deathtrap -- a mismatched loan
book. But what's worse for these banks, it is even more
difficult and treacherous to try extricating themselves
from this particular deathtrap because they haven't
mismatched their loan book of dollars, which we all
know can be created by the Federal Reserve out of thin
air if dollars are needed to bail out banks from a
deathtrap predicament.

Instead, these banks have mismatched their gold book.
And no one -- not even the Federal Reserve -- can
create gold out of thin air.

So given this reality about the nature of gold, the
Treasury Department had to turn elsewhere to find the
gold necessary 1) to keep these banks from defaulting
on their bullion obligations arising from their
mismatched gold books in an environment where metal had
become increasingly difficult to come by, and/or 2) to
keep the gold price low so that the likelihood of
default by the banks would be lessened, even though
metal would remain tight because fabrication year after
year was exceeding newly mined supply.

Rather than accept the bitter pill that certain banks
were about to default on their bullion obligations, the
Treasury Department looked for alternatives and found
one -- they put their hand into the till, until
recently known as the Gold Bullion Reserve at West
Point. They swapped this gold with the Bundesbank.

I'll explain how they did it, but let's first consider
the practical aspects of this transaction.

In all likelihood these particular bullion banks needed
gold in Europe, where their obligations were originally
established. There is very little gold lending in New
York. It is a practical problem to ship the gold out of
West Point without raising the alarm of government
auditors. It is costly too. Also, it is likely that
some of the gold in West Point is coin-melt from the
1933 gold confiscation. Even if it could be smuggled
out of the West Point vault into the market without
raising suspicions, the alarm bells would go off at the
refiner and soon thereafter in the market because
everyone knows that only the U.S. government has coin-
melt bars.

The appearance of coin-melt bars in the market would
immediately raise suspicions that the U.S. Gold Reserve
was being dishoarded, an outcome that the Treasury
Department would obviously take steps to avoid in
concocting its scheme because the U.S. Gold Reserve
cannot be depleted without congressional approval.

So one is faced with the practical considerations of
overcoming these hurdles, but the answer is relatively
simple.

The Treasury has gold at West Point. The Bundesbank has
gold in Europe. The Treasury cannot directly do a deal
with the Bundesbank because, unlike the ESF, the
Treasury is subject to congressional oversight. So
instead the secretary of the treasury and the president
decide to use the ESF to set up a swap line for gold
with the Bundesbank.

By so doing, the gold in the Bundesbank's vault in
Europe becomes ESF gold, to do with as they please --
that is, the ESF lends this metal to bail out certain
bullion banks. And the Bundesbank now owns the gold at
West Point, which as a result was purposefully
reclassified from Gold Bullion Reserve to Custodial
Gold because the Treasury no longer owns this gold,
having swapped it out through the ESF in exchange for
gold in Europe owned by the Bundesbank.

Case closed. The mystery of the abnormally low gold
price is solved. The ESF did it.

The abnormally low gold price is the result of the
proof that the ESF is deeply involved in the gold
market. The ESF is involved in some 1,700 tonnes worth,
because that is the weight of gold stored in West
Point, which was probably being swapped at the rate of
a few hundred tonnes per year from circa 1995 through
2000.

There are two other tidbits that I would like to share
with you that add even more validity to this
supposition.

First, a couple of months ago I was analyzing the 1998
and 1999 balance sheets of the ESF. As a former banker,
I know a little bit about accounting, including where
to find the big holes through which the proverbial
truck can be driven. And I found one that could suggest
that in these two years 975 tonnes of gold came into
the market from the ESF.

After reaching this conclusion, I wanted to test it. So
I called a top gold market expert whose supply/demand
analyses are second to none and who believes that gold
from the U.S. reserves has been coming into the market
for several years.

Without telling him about my analysis of the ESF
balance sheet, I asked him how much gold he thought
came out of the Treasury/ESF in 1998 and 1999 in total.
His response was 1,000 tonnes, a mere 25 tonnesª
difference from what I had deduced from the ESF
financial statements. When I told him that we had
reached the same conclusion from different sources, he
chuckled but was not in the least bit surprised, being
so convinced that the Treasury/ESF has been a major
source of metal for years.

I have thoroughly reviewed his supply/demand numbers
since 1994 and have determined that as much as 2,000
tonnes of gold from the U.S. gold reserve may have
entered the market in order to make the gold price as
low as it is, which leads me to the second tidbit that
I would like to share with you. It is just as
intriguing.

This same individual told me several months ago about
some astonishing intelligence he had learned from a
source in Europe. He told me that the Bundesbankªs gold
vault was empty, which seemed so preposterous that I
found it hard to believe. He also admitted that this
news startled him and that he did not have an adequate

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...wenn ich ihn so drucken würde, dann bräuchte ich ein gutes Stück mehr Papier und über 15 Seiten die Zeilenschaltungen entfernen ist ein gutes Stück Arbeit.

Danke
Diogenes (Sparsamkeit ist eine Tugend ;-))

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This same individual told me several months ago about
some astonishing intelligence he had learned from a
source in Europe. He told me that the Bundesbankªs gold
vault was empty, which seemed so preposterous that I
found it hard to believe. He also admitted that this
news startled him and that he did not have an adequate
explanation for it. He knew that the Bundesbank was an
active lender of gold, but he had a difficult time
accepting the possibility that all 3,400 tonnes that it
owned had been loaned. Yet he was confident that his
source had provided him with accurate information.

We now know what has happened. The Bundesbank has
loaned 1,700 tonnes, half its 3,400 tonnes reserve; the
other 1,700 tonnes were swapped for gold in the U.S.
reserves, requiring the change in the West Point vault
from Gold Bullion Reserve to Custodial Gold.

In other words, the Bundesbank's vault is empty because
half its gold is stored at West Point, not Europe, and
the other half has been loaned out.

Despite the proof that the ESF is involved in the gold
market, two questions remain unanswered.

First, what is the ESF's motive?

Unfortunately, we just don't know for certain.

Many, including me, believe that it is to use gold to
provide the liquidity needed to bail out some big banks
that have imprudently grown their gold books by
expanding credit and mismatching their asset/liability
maturities. These banks are the ones with the unusual
-- some say abnormal -- derivative activities that are
named as co-defendants in Reg Howe's suit against the
BIS. That this list includes Germany's largest bank may
explain why the Bundesbank would agree to participate
in this gold-swap scheme. It was bailing out one of its
own.

Others believe that the ESF aims to manipulate the gold
price to make inflation numbers look better than they
really are, keeping the gold price artificially low.
And there are some who argue that the U.S. government,
acting at the behest and under the instructions of the
big banks, aims to destroy their combined arch enemy --
gold, even though the gold mining industry would be
destroyed along with it.

This last theory is not outlandish. It has currency
because gold is the only free-market money. In contrast
to national currencies, all of which circulate only
because of government fiat, gold derives its value from
everyone who understands that it has usefulness as
money. And governments and banks don't like that while
they can manipulate gold for a time -- and as have we
have seen in recent years, even a long time -- they
cannot in the end control the price of gold any more
than they can control the price of a Picasso painting.

The value of a Picasso is determined by the free
market, and so too is gold. In short, you and I give
gold its value -- not the central banks, not the U.S.
government, and not any other government, either acting
alone or together. But the U.S. government either has
not yet learned or refuses to admit that its power to
control gold is limited, which is an inexplicable
conclusion unless you accept the notion that
governments have short memories and need to relearn
what they should have learned from experience.

If logic prevailed, the U.S. government would have
learned from its ill-fated attempt in the 1960s to keep
the price of gold abnormally cheap at $35 per ounce
that the market determines gold's value. But instead
the U.S. government is about to learn that it cannot
keep a manipulated floating-rate gold price from rising
any more than it was able to keep the manipulated
fixed-rate gold price from rising 30 years ago. The
free-market rate of exchange between dollars and gold
will prevail, eventually repeating what happened in the
1970s after the artificially low $35 rate was no longer
tenable -- the gold price will skyrocket higher. It is
well worthwhile keeping in mind that the gold price
rose nearly three-fold in the 18 months after the
fixed-rate price was abandoned in August 1971.

Then there is the second question. To what extent is
today's exceptionally low gold price the responsibility
of certain bullion banks, which have cheapened gold by
extending gold credit to such an extreme, and the ESF,
by perpetuating this scheme?

This question too does not have an answer, at least not
yet. But as the truth about the ESF's involvement in
the gold market continues to emerge and become more
widely known, the price of gold is destined to rise to
a more normal level, just as it did after August 1971.
The high price that gold eventually achieves will
indicate how badly certain bullion banks and the ESF
have damaged gold mining companies and the gold
industry.

In conclusion, while we don't know whether any of these
motives for manipulating the gold price that I ascribe
to the US government are accurate, one point is clear
and cannot be denied. The U.S. government cannot claim
that the ESF is not involved with gold. We now have the
proof. We know this because of our peek behind closed
doors.

-END-




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Exchange Stabilization Fund - eine Art Geheimfond der Regierung, der damals aus der Goldenteignung der Amerikaner unter Rossevelt gebildet wurde

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>...wenn ich ihn so drucken würde, dann bräuchte ich ein gutes Stück mehr Papier und über 15 Seiten die Zeilenschaltungen entfernen ist ein gutes Stück Arbeit.
>Danke
>Diogenes (Sparsamkeit ist eine Tugend ;-))

[b]schau mal unter Gata oder James Turk: The Freemarket Gold und Money Report. Bei gold-eagle ist er wahrscheinlich auch. Ich hab ihn per e-mail von Bill Murphy 17 Seiten ausgedruckt

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ESF ="Exchange Stabilisation Fund".
Wurde mit den Gewinnen aus der Aufwertung des konfiszierten Goldes 1932 gegründet.
Ist nur dem Secretary of Treasury und dem Präsidenten Rechenschaft schuldig und muß selbst diesen erst innerhalb von 4 Wochen nach vollendeter Tat über diese informieren.

Böswillige könnten den ESF die CIA der Finanzen nennen ;-)

Gruß
Diogenes

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>By James Turk
>The Freemarket Gold & Money Report
>This past December in my essay"The Smoking Gun" I
>provided proof that the U.S. Treasury Department's
>Exchange Stabilization Fund was intervening in the gold
>market. From publicly available reports prepared by the
>Federal Reserve, I established that the weight of gold
>held as a component of the U.S. Reserve Assets has been
>changing, and that these changes -- some of which are
>of significant size -- result from activity by the ESF.
>These Federal Reserve reports conclusively demonstrate
>that the ESF has been intervening in the gold market
>since at least 1996.
>Though these Federal Reserve reports make clear that
>the ESF is involved in the gold market up to its
>"earmarks," a lot of people remain skeptical. I don't
>know why that is. It is worth noting that many of the
>most obstinate skeptics who deny U.S. government
>involvement in the gold market live overseas and have
>little if any experience or understanding of the way
>the U.S. government really works. Even Americans find
>it difficult to accept that the U.S. government
>intervenes in the gold market. Ironically, though,
>they readily admit that the government intervenes in
>the debt markets, foreign currency markets, and,
>according to a growing number of people, even in the
>U.S. stock market. It is therefore most baffling that
>they do not concede the ESF's involvement in the gold
>market.
>Maybe people are skeptical because they haven't
>bothered to take the time to read the Federal Reserve
>reports for themselves. Maybe it's because it's easier
>to accept the word of some government bureaucrat who
>denies ESF involvement in the gold market than it is to
>seek out and look for the truth. Maybe they don't want
>to believe that the U.S. government is lying to them
>when Treasury Department official after Treasury
>Department official denies any involvement by the ESF
>in the gold market.
>I don't know.
>Or maybe it's because they think that government
>officials work for the American people -- and not for
>vested interests -- in their deliberative sessions
>behind closed doors.
>Wouldn't it be refreshing if we could peek behind those
>closed doors to see what really is being said?
>Very little emerges from behind closed doors, and the
>minutes and transcripts of closed-door sessions that do
>make it into the public domain contain redactions that
>blank out the"good parts" -- the revealing statements.
>But what if someone forgot to redact one of those"good
>parts? Too fantastic to be true?
>Well, sit down, take a deep breath, and carefully read
>what follows.
>* * *
>A few weeks ago Reg Howe contacted me and asked my view
>on something he had discovered. He wanted a second
>opinion on this discovery, just as I contacted him for
>a second opinion after I came across the Federal
>Reserve reports showing the ESF's gold-related
>activity.
>When I read what Reg showed me, I was stunned. But at
>the same time it was clear to me what I was reading and
>what had happened.
>A transcript of a meeting of the Federal Reserve Open
>Market Committee has been released for which somebody
>forgot to get his red pen out. Someone forgot to redact
>some very revealing words about the ESF and its
>activity with gold. Here's what was said.
>* * *
>http://www.federalreserve.gov/fomc/Transcripts/transcripts_1995.htm
>[See the transcript from the January 31, 1995, meeting.]
>MR. MATTINGLY. It's pretty clear that these ESF
>operations are authorized. I don't think there is a
>legal problem in terms of the authority. The [ESF]
>statute is very broadly worded in terms of words like
>"credit" -- it has covered things like the gold swaps
>-- and it confers broad authority.
>* * *
>Please read the above statement again, and maybe even a
>third and fourth time.
>This statement, which I can only assume was
>inadvertently not redacted by the FOMC Secretariat,
>confirms what we already know but what the U.S.
>government has all along refused to admit -- that the
>ESF is involved in the gold market. In fact, the
>authority of the ESF is so broad that"it has covered
>things like the gold swaps."
>In other words, the authority of the ESF is so broad it
>has even been used to authorize"gold swaps."
>Before exploring the above quote, some background
>information is necessary.
>The proceedings of each FOMC meeting are taped. These
>tapes are transcribed, and the Federal Reserve releases
>these transcripts after five years. Thus, the
>transcripts from the 1995 meetings were released this
>year, and, having now read through them, I can say they
>contain a treasure trove of material, even though there
>are many redactions.
>The important point is that these transcripts are not
>only informative but are an accurate record of what is
>going on behind closed doors.
>Here is what the Federal Reserve itself says about the
>FOMC transcripts:
>* * *
>http://www.federalreserve.gov/fomc/Transcripts/
>Beginning with the 1994 meetings, the FOMC Secretariat
>produced the transcripts shortly after each meeting
>from an audio recording of the proceedings, lightly
>editing the peakers' original words, where necessary,
>to facilitate the reader's understanding. Meeting
>participants were then given an opportunity within the
>next several weeks to review the transcript for
>accuracy.
>For the meetings preceding 1994, the transcripts were
>produced from the original, raw transcripts in the FOMC
>Secretariat's files. These records have also been
>lightly edited by the Secretariat to facilitate the
>reader's understanding. In addition, where one or more
>words were missed or garbled in the transcription, the
>notation"unintelligible" has been inserted. In some
>instances, words have been added in brackets to
>complete a speaker's apparent thought or to correct an
>obvious transcription error or misstatement.
>Nonetheless, for the pre-1994 transcripts, errors
>undoubtedly remain. The raw transcripts were not fully
>edited for accuracy at the time they were prepared
>because they were intended only as an aid to the
>Secretariat in preparing meeting minutes. The edited
>pre-1994 transcripts have not been reviewed by present
>or past members of the committee.
>* * *
>In other words, the 1995 transcripts are accurate.
>There are no disclaimers for them, like those made for
>the pre-1994 transcripts. Therefore, the above quote by
>Mr. Mattingly about the ESF and gold is accurate.
>And who is Mr. Mattingly? Virgil Mattingly is general
>counsel of the Federal Reserve, its chief legal
>adviser.
>That Mattingly's remark passed without comment by
>anyone in the FOMC meeting implies that everyone knew
>exactly what he was referring to. In other words, to
>explain ESF authority, his example was purposefully
>chosen. It was one to which the Federal Reserve
>governors could all relate because it was something
>they saw happen during their watch.
>In my imagination I can see them sitting around the big
>FOMC conference table nodding their heads in agreement
>when Mattingly used this example of the gold swaps to
>explain how broad the ESF's authority is.
>
>Recognize too that though he is talking in the past
>tense, it doesn't necessarily mean that the swaps had
>already happened. They may still be happening because
>he may be referring to the authority that approved the
>gold swaps and presumably the swap lines, but not
>necessarily the date of the actual swaps themselves.
>So that this quote of Mattingly is not taken out of
>context, let me provide background information. Also, I
>invite you to read the full 145-page transcript of this
>Jan. 31, 1995, FOMC meeting if you would like to
>confirm both the accuracy of the above quote and the
>background information I am about to provide. By
>reading the entire transcript you will also see how
>frequently material was redacted.
>Mattingly's comments were made in a discussion by the
>FOMC on the rapidly deteriorating financial situation
>in Mexico. Crisis conditions had been prevailing since
>the peso began tumbling the month before -- that is,
>December 1994. You will recall that the Clinton
>administration back then had proposed that Congress
>provide a $40 billion package of government guarantees
>to bail out those who had loaned money to Mexico, and
>that Congress had rejected this proposal. So the
>administration was scrambling to come up with a way to
>get the money thought necessary to"fix" the problem.
>Unable to tap the Treasury directly because of the
>rebuff by Congress, the administration turned to the
>ESF.
>Because the Federal Reserve was to be part of the
>proposed bailout, the Federal Open Market Committee was
>reviewing what role the Federal Reserve would play in
>conjunction with the ESF. A proposal was on the table
>for the FOMC's consideration. A Mr. Fix-it who seems to
>be the go-between for the Treasury and the Fed was
>presenting the proposal.
>His name is Ted Truman. And he was responding to
>various FOMC members who were questioning whether the
>ESF had the legal authority to do what was being
>proposed. Hence, the Federal Reserve's legal counsel,
>Virgil Mattingly, responded, using the"gold swaps" as
>an example of just how broad the ESFªs authority
>actually is.
>To give you a flavor of the full discussion underway in
>the FOMC meeting, here is an excerpt from the
>transcript.
>* * *
>MR. MELZER. What ability do the Treasury or the ESF
>have to take us out of an obligation [i.e., repay the
>Federal Reserve] if funds are not appropriated by
>Congress? Do they have the ability just to say, we
>committed to this and we are going to pay the Fed off?
>MR. TRUMAN. Yes, they could.
>MR. MELZER. But if they can do that, why can't they
>just advance it themselves?
>MR. TRUMAN. They could, but I think they feel that it
>would be useful to their objectives to have a lot of
>people.... [Apparently the rest of his comments are
>redacted.]
>* * *
>The discussion continues on this point, but touches
>upon the relationship between the ESF and the Treasury.
>These comments also establish that the ESF does not use
>"appropriated funds," meaning that the ESF is
>answerable only to the secretary of the treasury and
>the president. All actions of the ESF are beyond
>congressional authority.
>* * *
>CHAIRMAN GREENSPAN. Could I just formally respond to
>Governor Lindsey? There is a question here of whether
>or not the amount the United States Treasury gives us
>has to be appropriated funds, which I think is really
>where our examination of the issue has to be. In
>examining the takeout, we ought to make certain that we
>talk to them with respect to the question of what
>happens if they do not get the appropriated funds.
>MR. TRUMAN. Mr. Chairman, the Exchange Stabilization
>Fund does not have appropriated funds.
>CHAIRMAN GREENSPAN. Are we going to be getting a
>takeout from the Exchange Stabilization Fund?
>MR. TRUMAN. I think that is what is in the program.
>CHAIRMAN GREENSPAN. OK.
>SPEAKER (?). That is not the same as the Treasury.
>MR. TRUMAN. Even if we didn't, the precedent in the
>1960s -- I think there was a question then about
>whether the Treasury could engage in foreign exchange
>operations outside of the ESF -- was the use of Roosa
>bonds in the 1960s. The Treasury floated Roosa bonds to
>obtain foreign currencies and used some of those
>currencies to take us out. That did not involve
>appropriated funds. That was treated as a debt-
>management operation.
>* * *
>The above passage confirms what we already know, but
>many people refuse to admit. The ESF is a slush fund
>beyond congressional oversight. It can be used to"get
>around" most anything (that is, it can skirt normal
>governmental procedures). No wonder so many people want
>to do away with the ESF. There is no room for it in our
>democratic process. It is not subject to the normal
>checks and balances carefully crafted by the Founding
>Fathers that have proven over time to be so essential
>for limiting the power of the federal government.
>The ESF is the antithesis of the American foundation of
>representative government because it subjects a free
>people to an unconstitutional governmental force. Still
>not convinced? Here are some more excerpts:
>* * *
>MR. LINDSEY. My second question has to do with our
>credibility. I don't know what questions to ask, and I
>hope you will help me out in that regard. I have this
>document in front of me, which includes a page entitled
>"What is the Exchange Stabilization Fund?" The document
>came from Treasury International Affairs. I gather it
>was written by them. I have written enough of these to
>know what you do, and that is to tell your point of
>view. Paragraph 3, not to mention the dots indicating
>an omission in Paragraph 2, got me a little nervous.
>Paragraph 3 says these holdings in the ESF are used to
>enter into swap arrangements with foreign governments,
>to finance exchange market intervention, to provide
>short-term bridge finance, etc., and all these things
>are great. So, basically Paragraph 3 is establishing
>that this is not unprecedented. My question would be:
>Do we do all these nice things if it's not in support
>of the dollar? Is this unprecedented with regard to the
>fact that we are supporting another currency?
>MR. TRUMAN. The language before the dots is....
>MR. LINDSEY. I am talking about the third paragraph. I
>will go to the second paragraph in a second. I'm sorry.
>I am running a little out of order. It is saying the
>ESF has done all these things.
>MR. TRUMAN. The legislation governing the objectives of
>the ESF was changed, I think for the most part in the
>mid-to-late-1970s. The changes included the language
>that the government of the United States and the
>International Monetary Fund have the obligation to
>promote orderly exchange rate arrangements leading to a
>stable system of exchange rates. That was interpreted
>to include making loans to Bolivia in helping it
>maintain a system of stable exchange rates.
>MR. LINDSEY. So that has happened before?
>MR. TRUMAN. Yes. They have made loans to or financial
>arrangements with at least 31 countries around the
>world over the last 50 years.
>MR. LINDSEY. I think we all will be asked questions
>about this. Can you read this paper and tell me that
>there is not something missing that I should know
>about, meaning that this is not only the truth but the
>whole truth?
>MR. TRUMAN. I can only say that Treasury lawyers have
>looked into the question of whether these operations
>are legal under this broad authorization of what they
>can do and what the purpose is....
>MR. MATTINGLY. If I can help out?
>MR. LINDSEY. Yes.
>MR. MATTINGLY. It's pretty clear that these ESF
>operations are authorized. I don't think there is a
>legal problem in terms of the authority. The statute is
>very broadly worded in terms of words like"credit" --
>it has covered things like the gold swaps -- and it
>confers broad authority. Counsel at the White House
>called the Treasury's General Counsel today and asked
>"Are you sure?" And the Treasury's General Counsel
>said,"I am sure." Everyone is satisfied that a legal
>issue is not involved, if that helps.
>MR. LINDSEY. Is there anything missing on this page?
>MR. MATTINGLY. No, there is not. If you look at the
>last paragraph, for example, that is part of the
>statute.
>MR. LINDSEY. About notifying Congress in writing in
>advance?
>MR. MATTINGLY. The statute says that with the
>permission of the president they can make loans.
>[MORE]
>There you have it. The ESF doesn't have to notify
>Congress about anything in advance. It is under the
>sole authority of the secretary of the treasury and the
>president, and they can do"gold swaps" without any
>congressional approval, which brings up an important
>point I made in"The Smoking Gun."
>I had noted a curious pattern in the correspondence
>emanating from the Treasury Department. The secretary
>of the Treasury never answered any questioning letters
>concerning the ESF, even if they were written directly
>to him. Rather, one of his assistants invariably
>responded. I therefore wondered whether the Treasury
>Department chain of command was being relied upon just
>as President Nixon had tried to rely upon the White
>House chain of command in an attempt to avoid being
>sucked into the vortex of a growing Watergate scandal.
>I even asked in"The Smoking Gun":"Did Secretary
>Summers' knowledge of the goings-on in the secretive
>ESF explain why his underlings, and not him, were
>writing the letters denying U.S. government involvement
>within the gold market?"
>The above excerpts from the FOMC transcript clearly
>establish that my question needs answering.
>It is becoming clear as more and more evidence emerges
>that the secretary of the treasury does not answer
>questions concerning the ESF because he, but not his
>underlings, knows to what extent the ESF is engaged in
>gold-related activity. His underlings can say that the
>ESF is not involved in the gold market because, as far
>as they know, what they say is true.
>However, we now have proof that the ESF is indeed
>involved in the gold market. So the secretary of the
>treasury does not respond to letters asking questions
>about the ESF and its activity in the gold market. He
>canªt answer them truthfully without spilling the
>beans. He obviously knows everything about what really
>is going on within the ESF, in contrast to his
>underlings. Or at least most underlings because it
>appears that one of them is in there up to his elbows
>washing ESF laundry. His name is Ted Truman.
>>From the FOMC transcripts it is quite apparent that
>Truman has a special role. Though recorded in the
>attendee list in the FOMC transcripts under the
>featureless title of"economist," he has a role that is
>anything but ordinary. The transcripts reveal that he
>clearly speaks for the Treasury Department in FOMC
>meetings and is very knowledgeable about the ESF. The
>insight displayed by him in the FOMC minutes makes it
>clear that he is not just fully informed about the ESF
>and its operations, but that he probably is also
>intimately involved in ESF decision making.
>Consequently, the following excerpt is particularly
>intriguing.
>* * *
>MR. PARRY. What is the size of the ESF?
>MR. TRUMAN. The usable funds in the ESF today, counting
>the foreign exchange as usable, amount to roughly $25
>billion.
>MR. PARRY. Can you say how it is broken down?
>MR. TRUMAN. About $5 billion is invested in Treasury
>securities and the balance is roughly equally divided
>between marks and yen. I think they have slightly more
>yen than marks.
>MR. PARRY. Thank you.
>MR. BOEHNE. Is any of it obligated in any way beyond
>what we are talking about with Mexico?
>MR. TRUMAN. It is obligated only in the sense that they
>have one other swap arrangement with the Bundesbank.
>* * *
>Wouldn't it be interesting to know what this swap
>arrangement with the Bundesbank entailed? What is the
>nature of this swap? Is it a dollar/deutschemark swap
>facility? Or is something else being swapped, like gold
>perhaps?
>Gold being swapped with the Bundesbank? It's an
>outrageous thought.
>Or is it?
>I have already established that the ESF is very much
>involved with gold. The only thing I haven't
>established is with whom the ESF has those gold swaps
>that Virgil Mattingly was talking about.
>Let's put 1 and 1 together here to see if we can come
>up with an answer.
>According to Mattingly, the ESF has authorized gold
>swaps, presumably in the recent past (circa 1995).
>According to Ted Truman, the only outstanding swap
>facility of the ESF (circa 1995) other than the one
>established for Mexico is the ESF's facility with the
>Bundesbank.
>Therefore, the ESF has a gold swap facility with the
>Bundesbank.
>It's an interesting proposition, and one that fits well
>with another newly discovered fact. Some very
>interesting sleuthing by Mike Bolser, who has been
>assisting Reg Howe in his lawsuit against the Bank for
>International Settlements, has revealed that the
>Treasury has made a small but very significant
>accounting change.
>Mike noticed that the Treasury Department has changed
>the designation of nearly 1,700 tonnes of inventoried
>gold at the U.S. Mintªs facility in West Point, N.Y.,
>which is approximately 21 percent of the total U.S.
>gold reserve, from"Gold Bullion Reserve" to"Custodial
>Gold."
>The August 2000 Status Report on U.S. Treasury-Owned
>Gold stored at West Point has a designation of"Gold
>Bullion Reserve."
>(See http://207.87.26.43/gold/00-08.html)
>But the September 2000 and subsequent status reports
>inexplicably designate this same gold that is stored at
>the U.S. Mint at West Point as"Custodial Gold."
>See http://207.87.26.43/gold/00-09.html
>This change was made without explanation, so rather
>than let the matter remain unexplained, Mike diligently
>contacted the Treasury asking what seemingly are two
>uncomplicated questions. Would the Treasury please
>explain why they made this change, and what does this
>change in designation mean with respect to the
>ownership status of the gold at West Point?
>They are simple questions, but perhaps they touch too
>close to a nerve. Not surprisingly, the Treasury so far
>has not responded to Mike.
>I have some views on what Mike discovered, and why the
>Treasury is so quiet about it. I think this change in
>asset classification is related to the ESF gold swaps.
>Hereªs my thinking.
>The change Mike spotted possibly occurred as a result
>of accountants looking at the financial statements of
>the U.S. Mint being prepared for its annual report
>ending fiscal year 2000. Note that the previous
>director of the Mint (Phillip Diehl) resigned in early
>2000, so this was the first annual report signed by the
>new director (Jay Johnson).
>If there is one thing that government bureaucrats do
>well, they take great pains to call things by their
>right name. To do otherwise would put their job in
>jeopardy if something under their responsibility came
>under congressional scrutiny, and it was subsequently
>determined that the name assigned to something was
>incorrect or misleading.
>Therefore, this change in the descriptive label for
>nearly 1,700 tonnes of gold at West Point from"Gold
>Bullion Reserve" to"Custodial Gold" was purposeful. It
>happened for a reason. This conclusion is all the more
>plausible because the Treasury did not change the
>classification from"Gold Bullion Reserve" to
>"Custodial Gold" to describe the gold stored in Fort
>Knox or at the U.S. Mint at Denver. Maybe new U.S. Mint
>Director Johnson saw something he didn't like. What
>could that have been?
>I have already put 1 and 1 together to establish that
>the ESF has"gold swaps" with the Bundesbank. It
>therefore does not require much conjecture to add one
>supposition to the equation by concluding that the gold
>at West Point has been swapped with gold owned by the
>Bundesbank, thereby necessitating its reclassification
>from"Gold Bullion Reserve" to"Custodial Gold." Here's
>what I think has happened.
>The Treasury Department wanted to make gold available
>to some bullion banks. This statement is based on my
>premise that several of the big banks have gold books
>that are hopelessly imbalanced. By having borrowed
>short and loaned long, these banks have in their quest
>for profits imprudently fallen into the alluring but
>usually fatal banker's deathtrap -- a mismatched loan
>book. But what's worse for these banks, it is even more
>difficult and treacherous to try extricating themselves
>from this particular deathtrap because they haven't
>mismatched their loan book of dollars, which we all
>know can be created by the Federal Reserve out of thin
>air if dollars are needed to bail out banks from a
>deathtrap predicament.
>Instead, these banks have mismatched their gold book.
>And no one -- not even the Federal Reserve -- can
>create gold out of thin air.
>So given this reality about the nature of gold, the
>Treasury Department had to turn elsewhere to find the
>gold necessary 1) to keep these banks from defaulting
>on their bullion obligations arising from their
>mismatched gold books in an environment where metal had
>become increasingly difficult to come by, and/or 2) to
>keep the gold price low so that the likelihood of
>default by the banks would be lessened, even though
>metal would remain tight because fabrication year after
>year was exceeding newly mined supply.
>Rather than accept the bitter pill that certain banks
>were about to default on their bullion obligations, the
>Treasury Department looked for alternatives and found
>one -- they put their hand into the till, until
>recently known as the Gold Bullion Reserve at West
>Point. They swapped this gold with the Bundesbank.
>I'll explain how they did it, but let's first consider
>the practical aspects of this transaction.
>In all likelihood these particular bullion banks needed
>gold in Europe, where their obligations were originally
>established. There is very little gold lending in New
>York. It is a practical problem to ship the gold out of
>West Point without raising the alarm of government
>auditors. It is costly too. Also, it is likely that
>some of the gold in West Point is coin-melt from the
>1933 gold confiscation. Even if it could be smuggled
>out of the West Point vault into the market without
>raising suspicions, the alarm bells would go off at the
>refiner and soon thereafter in the market because
>everyone knows that only the U.S. government has coin-
>melt bars.
>The appearance of coin-melt bars in the market would
>immediately raise suspicions that the U.S. Gold Reserve
>was being dishoarded, an outcome that the Treasury
>Department would obviously take steps to avoid in
>concocting its scheme because the U.S. Gold Reserve
>cannot be depleted without congressional approval.
>So one is faced with the practical considerations of
>overcoming these hurdles, but the answer is relatively
>simple.
>The Treasury has gold at West Point. The Bundesbank has
>gold in Europe. The Treasury cannot directly do a deal
>with the Bundesbank because, unlike the ESF, the
>Treasury is subject to congressional oversight. So
>instead the secretary of the treasury and the president
>decide to use the ESF to set up a swap line for gold
>with the Bundesbank.
>By so doing, the gold in the Bundesbank's vault in
>Europe becomes ESF gold, to do with as they please --
>that is, the ESF lends this metal to bail out certain
>bullion banks. And the Bundesbank now owns the gold at
>West Point, which as a result was purposefully
>reclassified from Gold Bullion Reserve to Custodial
>Gold because the Treasury no longer owns this gold,
>having swapped it out through the ESF in exchange for
>gold in Europe owned by the Bundesbank.
>Case closed. The mystery of the abnormally low gold
>price is solved. The ESF did it.
>The abnormally low gold price is the result of the
>proof that the ESF is deeply involved in the gold
>market. The ESF is involved in some 1,700 tonnes worth,
>because that is the weight of gold stored in West
>Point, which was probably being swapped at the rate of
>a few hundred tonnes per year from circa 1995 through
>2000.
>There are two other tidbits that I would like to share
>with you that add even more validity to this
>supposition.
>First, a couple of months ago I was analyzing the 1998
>and 1999 balance sheets of the ESF. As a former banker,
>I know a little bit about accounting, including where
>to find the big holes through which the proverbial
>truck can be driven. And I found one that could suggest
>that in these two years 975 tonnes of gold came into
>the market from the ESF.
>After reaching this conclusion, I wanted to test it. So
>I called a top gold market expert whose supply/demand
>analyses are second to none and who believes that gold
>from the U.S. reserves has been coming into the market
>for several years.
>Without telling him about my analysis of the ESF
>balance sheet, I asked him how much gold he thought
>came out of the Treasury/ESF in 1998 and 1999 in total.
>His response was 1,000 tonnes, a mere 25 tonnesª
>difference from what I had deduced from the ESF
>financial statements. When I told him that we had
>reached the same conclusion from different sources, he
>chuckled but was not in the least bit surprised, being
>so convinced that the Treasury/ESF has been a major
>source of metal for years.
>I have thoroughly reviewed his supply/demand numbers
>since 1994 and have determined that as much as 2,000
>tonnes of gold from the U.S. gold reserve may have
>entered the market in order to make the gold price as
>low as it is, which leads me to the second tidbit that
>I would like to share with you. It is just as
>intriguing.
>This same individual told me several months ago about
>some astonishing intelligence he had learned from a
>source in Europe. He told me that the Bundesbankªs gold
>vault was empty, which seemed so preposterous that I
>found it hard to believe. He also admitted that this
>news startled him and that he did not have an adequate


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Hallo Reinhard,

Wenn das wahr ist, dann sitzt die Buba ordendlich in der Klemme:
- die eine Hälfte des Goldes ist an die Ganken verliehen und wird höchstwahrscheinlich auf nicht mehr wiedersehen
- andere Hälfte liegt bei den Amerikanern in Westpoint. Das können sie auch abschreiben, weil über das Staatsgold nur der Kongress (!) entscheiden darf. Der kann die Herausgabe mit der Begründung ablehnen, daß er den Swap nicht genehmigt hat und der ESF daher seine Kompetenzen überschritten hat. Um die Glaubwürdigkeit zu erhöhen empfehle ich Untersuchungsausschuß (muß ja nix bei herauskommen) und ein weinig Köpferollen (Hinaufbefördern) beim ESF.

Fazit:
Deutschland steht ohne Goldreserven da. Wenn es trotzdem zum Euro kommt lausig für diesen, wenn nicht: Adieu DM. Schreibt schon mal an eurem Spendenaufruf an das Volk - Apell an den Patriotismus und spart mit dem Schmalz nicht - ihr obersten Währungsverhüter oder besser: überlegt euch, wie ihr das Gold der Leute konfiszieren könnt. Ich überlege mir inzwischen eine passende Strafe für euch, öffentlich auspeitschen wär fürs erste ein guter Anfang.

Ich frage mich, ob der ganze Eurozirkus nur angefangen wurde, um Europa um seine Goldreserven zu erleichtern - Wir haben eh zuviel, gelle?. Die Inselaffen verhökern auch ihr Gold und wollen in den T-€. Wie es da bei uns in Ã- mit dem gelben Metall ausschaut?

Grüß
Diogenes (geschockt und stinksauer)

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