Question
Is the CIA
involved with the world gold market?
About
the CIA (1)
The Central
Intelligence Agency (CIA) was established by the National Security Act of 1947
as an independent agency under the direction of the National Security Council.
Its principal mission was to “correlate and evaluate intelligence (from around
the world) relating to the national security, and provide for the appropriate
dissemination of such intelligence within the Government.”
One of the
main objectives in creating the CIA was to prevent a repeat of the Pearl Harbor
intelligence failure where bits of information that might have provided warning
of the Japanese attack were not woven together as they should have been. The
National Security Act permitted departments and agencies to continue to collect
and disseminate “departmental” intelligence, but CIA was given the
responsibility for coordinating and evaluating all intelligence relevant to
more than one department of agency.
Unlike the
Federal Bureau of Intelligence (FBI), which is a domestic security service, the
CIA has no law enforcement function and is mainly focused on overseas
intelligence gathering, with only limited domestic intelligence
collection.
The
involvement of the CIA with the world gold market emerges clearly out of recent
declassified documents. The first document we describe is the most important.
This document makes the connection between losing influence in world affairs
and the price of gold. The information of the CIA about the world gold market
seems to be mostly on a strategic level, like
- lose
influence world affairs and gold
- controlled
sell and buy official gold
- controlled
sell South Africa
production
- analyze
violations Washington Agreement
- approach
to report virtually unchanged gold reserve by sell of official gold
- analyze
gold price movements and manipulation thereof
- positioning
London as focal
point of the world gold market
- research
regarding (future) gold production and financial position of a country
Declassified
secret memorandum CIA dated 1968-04-12
Re
International Monetary Problems
…CIA…US lose influence in world affairs
whenever…vulnerability to confidence crises…gold is a basic problem…
In this
memorandum, it is literally mentioned:
“We (writer:
The US) lose influence in world affairs whenever:
- The
dollar is weak in exchange markets;
- There
is a major outflow of gold; and/or
- We
are obligated to pressure countries into holding dollars or giving us payments
assistance.
Small
payments deficits permit us (writer: The US) greater freedom to act. But our
position can also be improved by action on the international monetary system
itself to:
- Decrease
vulnerability to confidence crises;
- Increase
world monetary reserves (liquidity); and
- Improve
tools for adjusting payments surpluses and deficits.
Vulnerability
to Confidence Crises
Gold is a
basic problem. Whenever the price of gold in private markets rises
significantly above $ 35 (writer: 1968) an ounce there can be pressure on
foreign central banks to replace dollars and sterling with gold. They worry
that the US
will not be able to meet the demand for converting dollars into gold and either
suspend conversion or revalue gold, thus penalizing those who hold a large part
of their reserves in foreign exchange rather than gold.
With $ 33
billion of foreign dollar holdings ($ 16 billion in official hands) and only $
10 billion of gold in the US
reserve, the risk is clear (writer: 1968).
To contain
these pressures our strategy is:
- To
isolate official from private gold markets by obtaining a pledge from central
banks that they will neither buy or sell gold except to each other;
- To
bring South Africa
to sell its current production of gold in the private market, and thus keep the
private price down.”
Declassified
secret memorandum CIA dated 1970-02-xx
Re The
World Gold Market In 1969 And Prospects For 1970
…CIA…gold sales in violation with IMF
regulations …report virtually unchanged…
“This
memorandum, one of a series begun shortly after the two-tier gold market was
established in March 1968, reviews and updated developments in both the
official and private tiers of the world gold market through January 1970.
… Official
sales (writer: of the South
Africa gold sales) of about $ 345 million
(writer: at official price $ 35 an ounce) included $ 160 million disposed of in
accordance with the IMF regulations and approximately $ 185 million in
violation of the Washington Agreement of March 1968.
…In the Official
Market for Gold……In December 1969 Spain sold $ 200 million under a
six-month forward contract to the Bank of International Settlements (BIS) and
the BIS sold the same amount spot to the US. This somewhat roundabout method
of completing the transaction enabled Spain to acquire the foreign exchange
immediately and also to report year-end gold reserve virtually unchanged.”
Declassified
secret memorandum CIA dated 1970-08-xx
Re The
World Gold Market: A Semiannual Review
…CIA…Swiss bullion dealers in excellent
position to influence the London
free market fixing…
In this review,
it is literally mentioned:
“Manipulation
of the free market price is suggested by the extremely narrow price range that
prevailed for seven consecutive weeks. During this period, more than 85% of all
morning and afternoon fixings fell within the $ 34.7 to $ 35.01 range, with
nearly 40% of all quotations set at exactly $ 35.00. More-over, Swiss bullion
dealers are in an excellent position to influence the London free market fixing.”
Declassified
secret memorandum CIA dated 1970-10-xx
Re
Recent Trends In The Free Gold Market
…CIA…UBS again manipulating the gold
markets…restore London
focal point gold market…
In this
report the CIA tries to analyze the jump ($ 3 per ounce) of the gold price on
the world’s free market in October 1970. The CIA concluded on this matter literally
as follows:
“In the
absence of any monetary crises there seems to be no obvious explanation for the
recent substantial price increases for gold. There is, however, strong
circumstantial evidence that Zurich
bullion dealers, under the leadership of the Union Bank of Switzerland
(writer: UBS), are again manipulating the gold markets. London bullion dealers had hoped that the
1969 “December Agreement” between the International Monetary Fund (IMF) and South Africa
would restore London
to its former position as the focal point of the world gold market. It has
not.”
Declassified
top secret research paper CIA dated 1987-05-xx
Re USSR: Gold
Production and Sales Potential
…CIA…expects USSR increase gold sales…without
reducing its gold reserve…
This is a
research paper regarding an in depth analysis of the Soviet gold production. In
1987 the Soviet gold production was one-fifth of the world’s annual output. The
CIA literally “expects Soviet gold production to continue to grow slowly
through the early 1990s, enabling Moscow
to increase gold sales for hard currency without substantially reducing its
gold reserve. Rising gold sales, however, probably will not offset the effect
of continued low oil world oil prices on Moscow’s
hard currency earning capacity“.
Notes of
the writer
In our paper
dated 20 July, 2015
we concluded that JPM in cooperation with the BIS controls the dollar gold
price through interventions on the development of the dollar gold price. Overall
the conclusion was that there is no free market for gold.
In our
paper dated 7 October, 2015
we explained that JPM and the BIS are operating agents for the BIS network to
maintain the confidence in the dollar and therefore manipulate the dollar gold
price.
The BIS
network is the successor of the Gold Pool. The Gold Pool provided for central
banks of surplus countries with large foreign exchange reserves to share the
burden of interventions in the London gold market in order to keep price
fluctuations within a reasonable range. The BIS network determines the
intervention zone for the dollar gold price for their operating agents.
In our
paper dated 9 October, 2015 we wrote about the striking testimony of Alan
Greenspan (former Chairman Federal Reserve from 1987 to 2006) on 24 July, 1998
over the regulation of OTC derivatives. According to Greenspan is cornering and
manipulation of the gold market possible.
In our
paper dated 29 November, 2015
we wrote about the fifth objective of Central Bank cooperation being the joint
effort of Central Banks to influence the price of gold and foreign exchange.
In our
paper dated 23 September, 2016 we explained the setting and the importance of
de Spot price of gold. The Spot price of gold is the basis for many
transactions in gold. Actually it is an quotation made by so-called (thirteen) Market
Makers (commercial banks) and based upon their trading activity in the hardly
regulated OTC-market.
(1) Commission Congress March 1996
|
Nico Simons is a Dutch investigative journalist on financial issues, especially monetary issues. His articles are regularly published on MoneyInsights.org.
|
The author is not affiliated with, endorsed or sponsored by Sprott Money Ltd. The views and opinions expressed in this material are those of the author or guest speaker, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.
