By Lars Schall
Sunday, November 13, 2011
The politics of central bank gold is rife with
speculation, ill-informed comment, and outright disinformation, and many
relevant questions remain unanswered even after decades.
Take as an example this publication by Zero Hedge's
Geoffrey Batt from September 27, 2009:
It presents what is said to be a declassified
memorandum dated June 3, 1975, written by the chairman of the Federal
Reserve, Arthur Burns, to President Gerald Ford. Zero Hedge called it a
"smoking gun" for the manipulation of the gold price by the Fed in
cooperation with the West German government, then headed by Chancellor Helmut
Schmidt, while the German market analyst Dimitri
Speck, in his German-language book "Secret Gold Politics,"
considers the letter a hoax, noting that it was published by Zero Hedge
without an indication of its source.
This lack of sourcing may cause some people to consider the Burns letter to
be a product of "conspiracy theorists" spinning yarns. So to prove
that the supposed "conspiracy theorists" sometimes can work more
thoroughly than is thought, I wrote to Schmidt's secretary, asking that the
following letter be forwarded to him.
"Dear Mr. Schmidt:
"Though I am a German financial journalist (I
come from the Ruhr area), I have to write you in English, since I send you
this inquiry together with my American friend Chris Powell, who is a
journalist from Connecticut and secretary/treasurer of the Gold Anti-Trust
Action Committee Inc., which is based in the United States.
"Powell and I have some specific questions
related to a letter that was written by the then-chairman of the Federal
Reserve, Arthur Burns, to then-president of the United States, Gerald Ford.
While some people question the authenticity of this letter (among them Dimitri Speck in his excellent book 'Geheime
Goldpolitik: Warum Zentralbanken den Goldpreis steuern,' Finanzbuch Verlag, Munich, 2010, Page 201), maybe the information
itself contained in the letter is actually correct.
"To clarify this, could you please take a look
at the document, about which Powell has written:
"'The document is a seven-page memorandum from
Federal Reserve Board Chairman Arthur Burns to President Gerald Ford. It is
all about controlling the gold price through foreign policy and defeating any
free market for gold. It has been posted at GATA's Internet site: http://www.gata.org/files/FedArthurBurnsOnGold-6-03-1975.pdf
"'Burns tells the president: 'I have a secret
understanding in writing with the Bundesbank,
concurred in by Mr. Schmidt' -- that's Helmut Schmidt, West Germany's
chancellor at the time -- 'that Germany will not buy gold, either from the
market or from another government, at a price above the official price of
$42.22 per ounce.'
"Burns adds, 'I am convinced that by far the
best position for us to take at this time is to resist arrangements that
provide wide latitude for central banks and governments to purchase gold at a
"Now what we would like to know from you with
regard to the letter is this: Are its references to you correct and what have
you perceived as the objectives of the policy Burns describes in the letter?
"Moreover, since you are concerned both with
Germany's future and the financial system of the United States, I would like
to take the chance to ask you about a different gold-related issue. Powell,
the Canadian financial analyst Rob Kirby, and I have tried to get some
answers about the German gold reserve located in New York City and London.
See here: http://www.gata.org/node/9363, http://www.gata.org/node/9871, and especially
"Could you maybe tell us your opinion related
to this critical topic, please?
"Thank you very much for your attention,
"Best regards, Lars Schall."
After not receiving any response, I wrote again to
Schmidt's secretary a few days later, prompted by a newspaper story about the
German gold reserves:
"Dear Ms. Niemeier:
"Could Mr. Schmidt now give a comment related
to Germany's 'barbarous relic,' addressed here?:
"'Financial Times Deutschland Joins Hunt for
Germany's Gold': http://www.gata.org/node/10656.
"'The long clamor about the German gold
reserves by GATA and particularly by our friends, the German journalist Lars Schall and the German market analyst Dimitri
Speck, this week caught the attention of the German edition of the Financial
Times, which published a story headlined 'Speculation and Rumors: The Hunt
for the Treasure of the Bundesbank.'"
"Otherwise I have to publish next Monday something
that says that Mr. Schmidt refused to make any comment, which I would find
quite regrettable. Sooner or later he has to say something on this, I
"Best regards, Lars Schall."
Mr. Schmidt maintained his silence. While this is
perhaps a shame, it was predictable. However, Mr. Schmidt, who enjoys a
tremendous reputation among the German public, missed the chance to clarify a
question of history and fertilize what is becoming an international debate
about the German gold reserves.
Politicians talk, philosophers are silent. As for
gold, Mr. Schmidt seems to be among the philosophers.
the other hand you can take this little story as evidence that we
"conspiracy theorists" at least try to be more thorough than some
people may want us to be.
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