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:
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:
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.