-- Published: Sunday, 9 February 2014 | Print | Disqus
Dear Friend of GATA and Gold:
Government records from decades ago don't necessarily prove what governments are doing today, but they can demonstrate the possibly enduring interest of governments in the matters at issue. That's what is done by two more U.S. State Department documents called to GATA's attention this week by our friend J.V.
The first is a memorandum about "the gold question" sent in March 1974 by the deputy assistant secretary for international finance and development, Sidney Weintraub, to the undersecretary of state for monetary affairs, Paul Volcker, later to become, of course, chairman of the Federal Reserve Board. The Weintraub memo outlines the U.S. government's views and options about gold policy in preparation for a meeting with Secretary of State Henry Kissinger. The minutes of the meeting with Kissinger, held the following month, describe in detail the great but little-understood power of gold in the international monetary system and the interest of the United States in controlling gold's use as money. The minutes were discovered by GATA consultant Koos Jansen and published by GATA in November:
In his memo Weintraub tells Volcker: "U.S. objectives for the world monetary system -- a durable, stable system, with the SDR [Special Drawing Right] as a strong reserve asset at its center -- are incompatible with a continued important role for gold as a reserve asset." Weintraub adds that the U.S. objective is "to encourage and facilitate the eventual demonetization of gold" and to try to keep gold's price down, in part to diminish the influence of the Soviet Union and South Africa, gold producers whose political systems were opposed in the West.
"It is the U.S. concern that any substantial increase now in the price at which official gold transactions are made would strengthen the position of gold in the system and cripple the SDR," Weintraub writes. "If international liquidity were injected via gold, there would be little likelihood of new SDR allocations. There also would be reduced incentive to sell gold on the private market even after an official price increase since central banks would cling to their gold in expectation of further official gold price increases. In addition, too large an increase in world liquidity might add to inflationary dangers. Finally, the distribution of the increase in world reserves would be highly inequitable, with eight wealthy countries getting three-fourths while the developing countries would get less than 10 percent. Producing countries (the USSR and South Africa) would benefit from the implicit floor put under the free-market gold price."
The Weintraub memo is posted at the State Department's archive here:
The second document noted by J.V. is a memo written in January 1976 by Assistant Secretary of State for Economic and Business Affairs Thomas O. Enders to Secretary Kissinger about the decisions recently taken by the International Monetary Fund meeting in Jamaica, which had legitimized floating exchange rates among currencies. Enders' memo reviews the options for a role for gold in the international monetary system and notes that less-developed countries were especially opposed to any role, since they didn't have much gold -- though of course this was before gold mining became a major or prospective major industry in some of those countries, which are now substantially weakened by the efforts of industrialized countries to suppress the price of gold to support their own currencies.
The Enders memo is posted at the State Department's archive here:
Of course the foreign offices and central banks of the countries involved in these discussions made no public statements to clarify their policy objectives toward gold. That is, they met in secret to plot their policy, conspiring within their own governments and with other governments, as is always the case. Those who disparage the complaint of gold price suppression by central banks dismiss it as "conspiracy theory." But the government archives show that it is conspiracy fact. Just as often as not, of course, government itself is conspiracy.
Last year the U.S. State Department, in a letter to GATA's lawyers --
-- denied that its archive holds anything like the three documents cited here.
CHRIS POWELL, Secretary/TreasurerJoin GATA here:
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-- Published: Sunday, 9 February 2014 | E-Mail | Print | Source: GoldSeek.com