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If we do not do what
our duty tells us must be done, we will live in odium in the history of our
progeny and our posterity... John Maxwell (Struggle For the Future; Jamaica Observer - Kingston, Jan 9, 2005)
GO GATA!!!
We know The Gold Cartel is in
trouble. Whenever their available gold supply used to suppress the price has
run way down, they rally their spokesmen to beat the drums for the IMF to
sell gold to aid the poor. We have seen this modus operandi many times over
the years.
The latest developments in this
world sham/disgrace, which represents one of the most egregious examples of
elitist hypocrisy of all time:
Use IMF gold to write
off debt: Brown
January 17
By Lynn Bolin
UK Chancellor of the Exchequer Gordon Brown has voiced his support for
plans for International Monetary Fund (IMF) gold reserves to be used to
finance debt relief for the world's 70 poorest countries.
Addressing a gathering of 18 African finance ministers at the Commission for
Africa meeting in Cape Town on Monday, Brown also called for the
establishment of an international financing facility to generate an
additional USD 50 billion annually in extra resources to help achieve the
United Nations' (UN) Millennium Development Goals (MDG) by the target of 2015.
-END-
That was today. On Friday this
same bombastic bozo, the one who sold 400 tonnes of English citizens’
gold for $280 an ounce a few years ago, also said the following in this
article:
U.K.'s Brown to Urge G-7
Ministers to Ease Poverty
Jan. 14 (Bloomberg) -- U.K.
Chancellor of the Exchequer Gordon Brown will tell of ``shock'' and ``hope''
he experienced during a tour of Africa when he meets next month with finance
ministers from the Group of Seven industrial nations and will urge them to
alleviate poverty on the continent.
``It is right to tell the G-7
finance ministers and politicians that, as long as we fail to act, all those
promises of help to parents and children we have made are not going to be
redeemed,'' Brown told reporters traveling with him in an interview today in
Dar Es Salaam, Tanzania. ``We have seen grinding, abject, relentless poverty
and we have had a glimpse at the aching souls of the left-out
millions.''….
Brown said much of his passion
for helping the world's poor came from his father John and the tales of
church missionaries he heard when growing up in Kircaldy, Scotland.
`Tragedy and Tribulations'
``My father was a Church of
Scotland minister,'' Brown said. ``There were many contacts between the
Church of Scotland and Africa and we repeatedly heard stories of people
coming back from Africa. From a very, very early age you were hearing both
the tragedy and tribulations of Africa.''
Brown said fatherhood had also
encouraged him to seek greater aid and made him more emotional when he met
young children in poverty. Brown has a 14-month old son and lost his first
child, a daughter, after she died of a cerebral hemorrhage in Jan. 2002, 10
days after she was born.
``You're looking into the eyes
of children all the time and you ask what their prospects are going to be,''
he said. ``It does influence you. It does influence you when you see the
problems children face.''
-END-
This guy doesn’t give a
rat’s butt for the poor. If he did, he would be asking the richer
nations to HOLD BACK on all gold sales. The price of gold would then soar and
the economies in the sub-Saharan Africa would be enhanced enormously, especially
as far as the poor are concerned. A soaring gold price, allowing
substantially higher gold producer profitability, should put 100,000 miners
back to work. Each miner supports 10 to 12 dependents. Then, you have the
economic multiplier effect from this increased gold mining activity and so on
and so on.
So how does South Africa respond? Their Finance Minister kowtows to the British clown like South Africa is an acquiescent colony of England:
Reuters – January 18
SA backs UK IMF gold plan for debt relief
The world's biggest gold
producer, South Africa, backs a British proposal to use International
Monetary Fund (IMF) gold reserves to write off the debts of poor countries,
Finance Minister Trevor Manuel said yesterday.
Gordon Brown, Britain's finance minister, has suggested the IMF use some of
its gold reserves to write off $12-billion of debt owed by the world's
poorest countries as part of a wide-ranging plan for poverty relief.
Asked yesterday if he supported the proposal, Manuel said that revaluing of
the IMF's gold was "very necessary".
So far, Brown has won little backing from global policymakers on his proposal
for the IMF to support debt relief with a revaluation of its massive gold
stocks - one of the biggest in the world - by selling and then buying back a
portion.
South Africa's share of global output has slipped from 27% in 1993 to 15% in
2002, as high-grade deposits near the surface ran out of ore, hitting
production. But it remains the top producer, and its backing for the plan is
key.
Manuel was speaking on the sidelines of a two-day meeting of Britain's Commission for Africa, which aims to put poverty at the top of the global agenda as Britain takes the G-8 presidency.
He also said South Africa was not against selling the institution's gold
reserves as long as this was managed so as to avoid swings in the price of
the precious metal.
"We (as a global community) have done it before and can do it again, we
shall do it again, but as a major gold producer we want to take part in the negotiations
to ensure the price is managed."
Manuel said global sales of gold reserves by individual countries were
inevitable given the diminished need to hold them, but sales by the IMF for
debt relief should take priority.
Gold producers should expect gold sales, whether by the IMF for debt relief
or by individual nations seeking to raise cash.
"As gold producers we have to be realistic, with so many countries
sitting with huge gold reserves and these reserves not being used to defend
exchange rates any longer as they were in the past, it's likely that they
will sell," Manuel said.
"We would probably want to ask that if we could speed up debt relief and
ensure that there is deeper debt relief for African countries, that the IMF
sales get precedence over some of the other countries sales," he told
reporters.
Brown's proposal is part of a wider plan to get donor countries to repatriate
their share of World Bank and African Development Bank debts owed by
developing countries, a process which Britain has already begun.
Under a 1971 agreement, most IMF gold is valued at just $40/oz to $50/oz,
about a tenth of the current market price of more than $420/oz.
The IMF holds more than 100-million ounces of gold. Development agencies say
revaluing the gold could raise some $30-billion for poor countries, although
some nations are worried it could rattle markets. – Reuters
-END-
This is the first time I have
seen mention of selling IMF gold and then only buying back a portion. As far
as I am concerned, Trevor Manuel is somewhat of a traitor and should be
viewed as such by a faction in South Africa.
My assessment is not over the
top and not without some degree of knowledge of what is going on down there. In
early 2001 I toured the country to expose the gold price manipulation
scandal, finding my way to Johannesburg, Cape Town, Durban and Pretoria. I met with the Minister of Mines, the number three executive at the South
African Reserve Bank in Pretoria, the leading politician of a leading
opposition party, etc. Then on May 10, 2001 we held our GATA African Gold Summit in Durban. Five sub-Saharan African gold producing nations were represented and it
was prime time TV material two days running on SABC!
Without going into too many
details at this point, it was very clear to me the power structure in SA is
mainly interested in holding onto that power, and to make sure its lines to
THE MONEY were not interrupted. Bottom line: affronting The Gold Cartel was a
no-no. JP Morgan Chase is one especially powerful creature in that part of
the world and the politicos, as well as most of the gold companies, are
petrified of bucking them.
If that is what they want to do,
that is their business. But to do it surreptitiously and lyingly is another. For
a guy like Trevor Manuel to pontificate he is for gold sales to help the poor
is the height of hypocrisy. He is nothing more than a mouthpiece for The Gold
Cartel, as is England’s Mr. Bozo Brown.
OK, that is my rant. Now for
some backup which bolsters where I am coming from. First an update from the
IMF regarding gold loans/swaps, etc. For those not interested in all this
intricacy and detail, go right to the BOLD in the update:
Repurchase agreements,
securities lending, gold swaps and gold loans:
An update
Prepared by the IMF
for the December 2004
Meeting of the Advisory Expert Group on National Accounts
This paper is for the
information of the members of the Advisory Expert Group (AEG), regarding the
currently accepted treatment of repurchase agreements, securities lending
without cash collateral1, gold loans, and gold swaps2. The paper also sets
out areas where work is continuing by the IMF Committee on Balance of
Payments (Committee) and on which the Committee will provide further reports
in due course.
Gold swaps and Gold loans or deposits
Background
Gold swaps are usually
undertaken between monetary authorities. The gold is exchanged for foreign
exchange deposits (or other reserve assets) with an agreement that the
transaction be unwound at an agreed future date, at an agreed price. The
monetary authority acquiring the foreign exchange will pay interest on the
foreign exchange received. Gold swaps are typically undertaken when the
cash-taking monetary authority has need of foreign exchange but does not wish
to sell outright its gold holdings. In that manner, gold is a leveraging
device. Gold swaps sometimes involve transactions where one of the parties is
not a monetary authority (usually it is another depository corporation). Gold
swaps between monetary authorities do not usually involve the payment of
margin.
Gold loans or deposits are
undertaken by monetary authorities to obtain a non-holding gain return on
gold which otherwise earns none. The gold is "lent to" (or
"deposited with") a resident or nonresident financial institution (such
as a bullion bank) or another party in the gold market with which the
monetary authority has dealings and confidence and which is probably acting
as an intermediary for a gold dealer or gold miner which has a temporary
shortage of gold. The intermediary will, in turn, "lend" the gold
to the dealer or miner – in effect, a change in ownership of
nonmonetary gold then occurs. In return, the borrower may provide the
monetary authorities with high quality collateral, usually securities
(frequently, but not necessarily, substantially in excess of the value of the
gold provided) but not cash, and will pay a "fee" thereby
increasing the return from holding gold. The collateral does not change
ownership and is treated as an off-balance sheet holding of the monetary The
nature of gold swaps and gold loans/deposits is similar to that of repos and
securities lending in that the market risk toward the underlying asset (in
this case, gold) remains with the original holder: if gold prices increase,
the volume of gold returned is the same as that swapped, while the same value
of the foreign exchange (as defined at the time of the initiation of the
swap, plus any accrued interest) is returned.
Statistical treatment
The statistical implications of
gold swaps and gold loans/deposits are complex and have not been fully worked
through. Work is still being undertaken by the Committee to address the
implications. In particular, gold may be double counted with either a gold
swap or gold loan/deposit if the party acquiring the gold were to on-sell it
outright, because both the original owner and the outright purchaser would
report ownership of the gold. In addition, there is the difficulty of having
monetary gold being used in these transactions for purposes other than for
reserve assets, and how (de)monetization would apply if the gold is sold for
industrial purposes. Moreover, there is a proposal to treat (some)
nonmonetary gold as a financial asset, rather than a commodity, and the
outcome of that discussion may have further implications on the treatment of
gold swaps and gold loans/deposits.
Finally, how the "fee"
for gold swaps and gold loans/deposits should be treated has yet to be
resolved. All these matters are being considered by the Committee and a
report will be taken to the AEG in due course.
-END-
I will do the best I can to get
right to the point of this dry subject, for it is ESSENTIAL to GATA’s
argument. GATA says the gold loans/swaps are 16,000 tonnes plus, meaning half
the central bank gold is not there any more. The gold establishment now says
they are less than 3500 tonnes out on loan, as 1500 tonnes have been returned
by gold producers over the past three years.
GATA says the central banks, at
the behest of The Gold Cartel and the IMF, are purposely deceiving the
world’s citizens and investing public about how much gold they REALLY
have. The statement above that central banks may have double counted their
true gold reserves is an admission of what they have done.
Now to the evidence which proves
THEY DID SO DELIBERATELY!! The following piece, written in a similar state of
rage years ago, reveals central banks emailing GATA that the IMF instructed
them to account for lent/swapped gold as reserves, while denying to GATA, in
writing, that was the case! GATA’s Andrew Hepburn caught the IMF in a
blatant lie. Touche:
December 18, 2001
http://www.gata.org/bofi.html
The Bank of Italy Confirms Gold Cartel, IMF Gold Deception
The following documentation and
statements were presented in Reg Howe's lawsuit filed in the District Court
of Massachusetts against Defendants: Bank for International Settlements, Alan
Greenspan, William J. McDonough, J.P. Morgan & Co. Inc., Chase Manhattan
Corp., Citigroup, Inc., Goldman Sachs Group, Inc., Deutsche Bank AG and
Lawrence H. Summers, Secretary of the Treasury.
*In July 1998, Fed Chairman Alan
Greenspan, testifying before the House Banking Committee, stated: "Nor
can private counterparties restrict supplies of gold, another commodity whose
derivatives are often traded over-the-counter, where central banks stand
ready to lease gold in increasing quantities should the price rise." This
statement amounted to a declaration that the gold price had been and would
continue to be controlled.
*According to reliable reports
received by the plaintiff, this effort was later described by Edward A. J.
George, Governor of the Bank of England and a director of the BIS, to
Nicholas J. Morrell, Chief Executive of Lonmin Plc:
We looked into the
abyss if the gold price rose further. A further rise would have taken down
one or several trading houses, which might have taken down all the rest in
their wake. Therefore at any price, at any cost, the central banks had to
quell the gold price, manage it. It was very difficult to get the gold price
under control but we have now succeeded. The U.S. Fed was very active in
getting the gold price down. So was the U.K.
The "abyss" comment
made by George and related by Morrell is no rumor monger talk. Morrell quoted
George in front of three people that I know personally pursuant to the
dramatic rise in the price of gold following the surprise Washington
Agreement announced on September 26, 1999.
The evidence that the GATA Army
has collected over the past year since Reg Howe filed his Complaint fully
supports Morrell's comment that the central banks would do anything to
"manage" the price of gold. Tragically, "anything" came
to mean lying, deceiving and breaking various laws.
The essence of the Washington Agreement was that 15 European banks agreed to limit the sales of central bank
gold to 400 tonnes per year for 5 years and not to increase their lending of
gold over that time. The British and the Americans were not clued in prior to
the announcement.
The reaction of the gold price
to the Washington Agreement was the most dramatic rise in the price of gold
ever. That is not what any of the central bankers had in mind. They were just
perturbed at the tactics of The Gold Cartel to suppress the gold price and
wanted to do something about it. They had no intention of creating financial
chaos.
How could they have been so
surprised at what occurred? Easy. They were working off the inept gold
industry gold loan numbers of less than 5,000 tonnes. The real number was
more than double that at the time, which means the central banks had FAR less
gold in their vaults than they realized.
The announcement set off a panic
because the yearly supply/demand was running over 1600 tonnes (again, more
than they realized) and there would be no way to hold the gold price down
under the new agreement. The scheming Gold Cartel was in deep trouble.
Something had to be done FAST. A solution had to be found that would allow
the central banks and The Gold Cartel to calm down the market by feeding
central bank gold into that market to satisfy the strong gold demand.
The problem for The Gold Cartel
and the central banks was they needed to come up with a way to get the job
done and not let the investment world realize the seriousness of the
situation. Some sort of plan of deception had to be devised and one was - in Santiago, Chile in October 1999 by the IMF. The plan centered around IMF central bank
members "swapping out" their gold, yet still accounting for that
gold as a central bank gold asset.
To put it bluntly, they would
perpetuate a lie about what the true status of central bank gold really was. We
know that to be the case as a result of the super-sleuthing of GATA Army's
Andrew Hepburn of Canada.
Andrew asked the IMF the
following:
Why does the IMF insist that
members record swapped gold as an asset when a legal change in ownership has
occurred?
The IMF answered:
"This is not
correct: the IMF in fact recommends that swapped gold be excluded from
reserve assets. (see Data Template on International Reserves and Foreign
Currency Liquidity, Operational Guidelines, para. 72,)"
Yet, the following can be found
on the central bank of The Philippines website:
"Beginning
January 2000, in compliance with the requirements of the IMF's reserves and
foreign currency liquidity template under the Special Data Dissemination
Standard (SDDS), gold swaps undertaken by the BSP with non-central banks
shall be treated as collateralized loan. Thus, gold under the swap
arrangement remains to be part of reserves and a liability is deemed incurred
corresponding to the proceeds of the swap."
The central banks of Portugal, Finland, and the ECB itself, then all confirmed (in writing) the Philippine's treatment of
gold swaps to Hepburn.
Hepburn's latest investigative
work reveals the Bank of Italy changing their accounting procedures in
October of 1999 to accommodate the IMF's devious scheming. Andrew Hepburn
just reported in with the following:
I had been under the impression
that Italy was very pro-gold and that none of their reserve had been
lent/swapped out. I can now state with a fair degree of certainty that they
are indeed "managing" their reserve. A few days ago I emailed the
Bank of Italy and inquired as to whether or not they had swapped, lent or
otherwise transferred any of their gold to investment banks or other central
banks. Today I received I response which did not answer my question but
instead pointed me to a publication on their website entitled "Monetary
and Credit Aggregates of the Euro Area: the Italian Components".
Unfortunately, the way the site
works is that there are no separate URL's so I can only give the directions
for getting to the report that I'm about to focus on. To quote the email I
received "...you can find the data you requested on www.bancaditalia.it
under the item Publications\Statistics\Supplements to the Statistical
Bulletin\ Money and credit aggregates of the euro area: the Italian
components in table 1 in the column "Gold and gold receivables".
The name of the column,
"Gold and Gold receivables" indicates that at least part of the
reserve represents only a paper claim on gold-i.e. not all the gold is in the
vaults of the Bank of Italy.
The next interesting piece of
information is found in the notes/definitions section of the report. On page
45, S034162M, which apparently is the code for an account, reads in the
following manner:
"S034162M – CENTRAL
BANK: ASSETS – GOLD AND GOLD RECEIVABLES
Comprises the gold owned by the Bank of Italy and receivables in respect of
deposits denominated in gold and swaps."
The above essentially confirms
that the Bank of Italy is active in the swaps/deposit market. The next
excerpt of note is found on page 48 of the report. They state that:
"In October 1999, as part
of the harmonization of the Eurosystem statistics, the accounting treatment
of the Bank of Italy's official swaps (in gold and dollars) with the EMI
between September 1997 and June 1998 and with the ECB from July to December
1998 was modified. The main change was the switch from stating gold assets
net of official swaps to stating them gross of such transactions."
A few things are of interest
here. First, they admit to doing gold swaps. Second and much more importantly
in October, 1999 the ECB adopted the collateralized loan approach to
accounting for gold swaps. This is the same treatment that the IMF denied it
ever recommended but we know to be the case. Under this treatment swapped
gold remains as a reserve asset even though the ownership has changed and the
gold has left the vault. Furthermore, this accounting change went into effect
around the time of the Washington Agreement. If I remember correctly, the WA
only curtailed sales and lending; it said nothing about swaps. Because of the
new treatment it is very possible that gold swaps have increased
significantly since late 1999.
The term "official
swaps" is in reference to swaps with the EMI and ECB. I'm unsure as to
the level of swaps with the EMI but I believe around 15% of the ECB's
reserves are in gold which means that Italy transferred at least 450 tonnes
in that swap arrangement.
On page 51 in the "Methodological Index", the following is said
when explaining an account code:
S003675M – AVERAGE
LIQUIDITY DATA – NET ASSETS IN GOLD AND FOREIGN CURRENCY
Net gold and foreign currency claims on non-euro-area residents.
Unfortunately, they do not
specify how much of the claims are on gold and how much on foreign currency. What
is interesting, however, is that the Bank of Italy apparently has a gold
claim on a non-euro-area country. It would be very interesting to see if
Italy has a gold swap with the BIS, the IMF or even the U.S.
Andrew
What Andrew has uncovered ought
to be one of the most important findings ever for the gold industry. The BIS
and GFMS (generally accepted gold industry statistician) state that central
bank gold loans are around 5,000 tonnes. Neither mentions anything about what
the total amount of gold "swapped out" of the central banks might
be.
GATA suggests that amount is
significant. So significant that we believe the total amount of central bank
gold that has been lent/swapped is closer to 15,000 tonnes, not 5,000 tonnes.
The difference between the two
numbers has staggering ramifications for all gold market participants and
investors. GATA believes that if the "truth" were known, the price
of gold would have to more than double to ration the "true"
supply of gold left to satisfy demand.
This is just what The Gold
Cartel does not want the investment world or general public to know. That is
why they have stifled GATA's discoveries and refuse to allow our startling
findings to be presented in the mainstream U.S. press.
GATA has caught The Gold Cartel
and the IMF doing something that is very wrong. To allow them to continue to
get away with this sham is even more wrong!
The Gold Anti-Trust Action
Committee and our Army of supporters ask the gold industry to examine the
facts and help us fight to expose the "truth."
Who could be against that?
Bill Murphy
Chairman
Gold Anti-Trust Action Committee
***
The direction the IMF, Brown,
and Manuel are trying to take the world in as far as the poor in sub-Saharan Africa is concerned is disingenuous. If it were not for these folks and The Gold Cartel,
the price of gold would be FAR higher and there would be substantially more
funds available to help the poor.
More importantly, there would be
hope, which there is little of in the black communities right now. I will
never forget what my black South African cab driver/chauffeur friend told me
during my tour of the country. I "Bill," he said, "these kids
have no hope. They get into trouble because they have no future. They have
unprotected sex (and contract AIDS) far too early because there is nothing
else for them on the horizon."
Wild-eyed diatribe on my part as
far as what is wrong and what could be in South Africa? Not at all. We need
only refer to Midas commentary this summer about the Russians, who know what
GATA knows:
THEN, in a stunning development,
Oleg V. Mozhayskov, Deputy Chairman of the Central Bank of Russia, bluntly brought GATA to the attention of the mainstream gold world, which I am sure
had most of them gagging. Mozhayskov delivered the keynote address at the London Bullion Dealers Conference in Moscow on June 4th 2004. His speech was delivered in
Russian. The only words he mentioned in English were Gold Anti-Trust Action
Committee (or GATA)…..
Here is a quote from this
remarkable speech in which this Russian banking bureaucrat lashes out against
the US for its economic policies:
"This dualism in gold price
formation distinguishes it from other commodities and makes the movements in
the price sometimes so enigmatic that market analysts need to invent
fantastic intrigues to explain price dynamics. Many have heard of the group
of economists who came together in the society known as the Gold Anti-Trust
Action Committee and started a number of lawsuits against the U.S.
government, accusing it of organising an anti-gold conspiracy. They believe
that with the assistance of a number of major financial institutions (they
mention in particular the Bank for International Settlements, J.P. Morgan
Chase, Citigroup, Deutsche Bank, and others), some senior officials have been
manipulating the market since 1994. As a result, the price dropped below
US$300 an ounce at a time when it should, if it had kept pace with inflation,
reached US$740-760."
-END-
That’s right…$750
gold if it were not for The Gold Cartel.
This is what an industry
organization like the World Gold Council should be in a rage over. Instead,
they say and do nothing, this useless group. Something must be done about
this. GATA
has that some thing in mind. Stay tuned.
MIDAS
Bill Murphy
Editor
Lemetropolecafe.com
Chairman
Gold Anti-Trust Action Committee
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