Federal Reserve Admits Gold Price Manipulation

The Federal Reserve disclosed in response to a Freedom of Information Act request by the Gold Anti-Trust Action Committee that it has entered into gold swap arrangements with foreign banks that artificially suppress its price.

The Federal Reserve System has disclosed to GATA that it has gold swap arrangements with foreign banks that it does not want the public to know about.

The disclosure contradicts denials provided by the Fed to GATA in 2001 and suggests that the Fed is indeed very much involved in the surreptitious international central bank manipulation of the gold price particularly and the currency markets generally.

The Fed’s disclosure came this week in a letter (pdf) to GATA’s Washington-area lawyer, William J. Olson of Vienna, Virginia, denying GATA’s administrative appeal of a freedom-of-information request to the Fed for information about gold swaps, transactions in which monetary gold is temporarily exchanged between central banks or between central banks and bullion banks.

Pennsylvania Congressional candidate Jake Towne has written about this issue, which is a direct indictment of the Director of Obama’s National Economic Council, Larry Summers.

In the 1990s, the American government in collusion with the central bankers decided to execute the Summers’ scheme although they may have simply been building on his mentor Robert Rubin’s gold trading practices at Goldman Sachs. By suppressing the price of gold AND silver – a far smaller and easier-to-manipulate market than gold – and publishing rigged CPI numbers, they could slowly and steadily confiscate the purchasing power of their populations while masking the debasement of the dollar and hence all other fiat currencies while not causing a loss of consumer confidence.


Here is how the scheme works:

  • Central banks, like the FED, take gold bars from their vaults and lease them to cartel entities like Goldman Sachs (GS) at a low rate, typically around 1%. Unless the sale is announced like Gordon Brown’s infamous sale of 60% of England’s gold reserves from 1999-2002 at $275/oz., the central bank continues to carry gold on lease and gold in the vault as one line item on its balance sheet.
  • The cartel then sells the physical gold into the futures market at spot price. The spot and future prices were suppressed by this extra supply. Large dumps can be orchestrated to cause “waterfalls” in the price due to algorithm or stop-loss trading.
  • Now the cartel has plenty of capital which could be leveraged by an investment bank at 30:1 or higher and used for ANY transaction.
  • The physical gold bars leave the exchanges. Most of the central bank gold is melted down to meet the supply deficit, and now adorns the necks of Indian women or rests in the vaults of investors.

Towne talked about the gold price suppression issue on the radio show March of Liberty with Jason Wood.

part a

part b

The International Monetary Fund, which is also involved in the scam (pdf), recently sold over 400 tons of gold from its stockpile.

The International Monetary Fund’s executive board approved gold sales of 403.3 metric tons valued at about $13 billion and pledged to avoid disrupting the market with the transactions.

The IMF said it would “stand ready to sell gold directly to central banks.” The sales could also be conducted in the open market in a “phased manner” over time, the Washington-based lender said in an e-mailed statement today.

…The IMF board last year endorsed the quantity to be sold, which accounts for one-eighth of the IMF’s total gold stockpile, as part of a plan to shore up its finances. The sale will also increase the agency’s ability to lend at reduced rates to low-income countries. The IMF is the world’s third-largest holder of gold reserves.

House Financial Services Committee member Ron Paul talked about his bill to audit the Federal Reserve, for which a hearing is being held Friday.

The role the Fed plays in the President’s secretive Working Group on Financial Markets goes unnoticed by members of Congress. The Federal Reserve shows no willingness to inform Congress voluntarily about how often the Working Group meets, what actions it takes that affect the financial markets, or why it takes those actions.

But these actions, directed by the Federal Reserve, alter the purchasing power of our money. And that purchasing power is always reduced. The dollar today is worth only four cents compared to the dollar in 1913, when the Federal Reserve started. This has profound consequences for our economy and our political stability. All paper currencies are vulnerable to collapse, and history is replete with examples of great suffering caused by such collapses, especially to a nation’s poor and middle class. This leads to political turmoil.

Even before a currency collapse occurs, the damage done by a fiat system is significant. Our monetary system insidiously transfers wealth from the poor and middle class to the privileged rich. Wages never keep up with the profits of Wall Street and the banks, thus sowing the seeds of class discontent. When economic trouble hits, free markets and free trade often are blamed, while the harmful effects of a fiat monetary system are ignored. We deceive ourselves that all is well with the economy, and ignore the fundamental flaws that are a source of growing discontent among those who have not shared in the abundance of recent years.

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