Former Federal Reserve Chairman Paul Volcker today defended government intervention in the gold market to counter "exchange rate instability at a critical point."
Volcker's comments came in response to inquiry from the German freelance journalist Lars Schall, who noted GATA's reference to Volcker's expression of regret, recorded in his memoirs, about the failure of Western central banks to intervene to suppress gold prices during a currency revaluation in 1973. Volcker's support of gold price suppression was cited by your secretary/treasurer in his address to the Vancouver Resource Investment Conference last Saturday:
http://www.gata.org/node/10909
In his comments to Schall today, Volcker added that, "to the best of my knowledge," the United States has not intervened in the gold market for more than 40 years.
Nevertheless, the former Fed chairman confirmed the profound interest central banks have in the price of gold because of its effect on the currency markets, an interest that may justify intervention at any "critical point."
This contradicts oft-repeated assertions by certain gold market analysts, like Kitco's Jon Nadler, that central banks have no interest in manipulating the gold market:
http://www.gata.org/node/8717
Schall's initiative demonstrates what is so lacking in the mainstream financial media. He tracked down a central banker, put the gold price manipulation question to him, and got a noteworthy answer on the record -- a feat not yet attempted by, for example, the Financial Times, The Wall Street Journal, The New York Times, Reuters, Bloomberg News, the Associated Press, and on and on.
Imagine the news that might result from persistent questioning of central bankers in public about market intervention. Of course that's exactly why it's seldom done or permitted.
Schall's account of his search for Volcker is appended.
