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This is the section on gold, which still
needs explanations, but is otherwise done.
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gold as an
inflation hedge
… it is little wonder that gold has been
chosen in most nations as an inflation hedge. South African gold
marketers — in an attempt to sell the popular South African rand, a
coin, containing precisely one troy ounce of gold — trace the
march of inflation 400 year back.
Specifically, between 1560 and 1974, the South Africans say
that the cost of living increased by 7,653 per cent. During
that period, they say, the price of gold increased by 7,690 per cent. Says
a proposed ad, “you could call it a good hedge against
inflation.”
…
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Dollar Crisis
Weathered
Dollar Crisis Weathered
Milwaukee Journal - Google News Archive - Sep 18, 1962
A mood of cautious optimism about the dollar appears to prevail at this
week’s meetings of the international Monetary Fund (IMF) and World bank
in Washington.
The world’s money managers and financial experts are being told that
the key currency is in better shape than it has been in two years. The root
difficulty—the persistent deficit in this country’s international
balance of payments—is becoming less severe. By the end of next year,
the Kennedy administration hopes to eliminate the deficit completely. This
would slow down or halt increases in foreign holdings of dollars.
The current good health of the dollar is a partial tribute to the
new spirit of co-operation in international monetary circles. The United
States now can turn to foreign central banks and fiscal authorities for help
in easing the damaging shifts of capital between countries. Foreign
banks have established a gold pool to fight speculation on the London gold
market. The IMF stands ready to use its reserves to
help cushion the dollar if the United States should suddenly be hit by an
outflow of short term funds. All of these measures help maintain calm and
stability in the international money markets.
The battle of the dollar is not won, however. The American economy has yet to
prove that it can grow at a rate fast enough to restore complete confidence
in the currency. This involves keeping the lid on inflation, maintaining a
favorable trade balance, winning greater access to new markets in wester
Europe.
…
See Federal Reserve Archival System results for London "gold
pool"
Quiet Pooling Of
Resources Stabilizes The Gold Market
Quiet Pooling of Resources Stabilizes the Gold
Market
Fort Scott Tribune - Google News Archive - Feb 26, 1963
By SAM DAWSO?’
AP Businss News Analyst
NEW YORK (AP) United States money transactions with the rest of the world
have taken a turn for the worse in recent months. But there’s been
nothing that could be called a new raid on its gold reserves, Times have
changed.
… the stability of gold and the evident strength of the dollar in
world financial markets is cause of considerable satisfaction.
Much of the thanks goes to the group of central bankers,
American and foreigners, who have rigged up a device to halt the raids that
in the past unsettled one or another currency and for a brief period put the
American dollar under strain to the surprise of most Americans who thought it
as good as gold.
The group acts quietly. In fact, American money managers have never
officially said the United States was taking part. But the success of
this quiet pooling of international financial resources to protect currencies
against the stress of temporary ups and downs of trade and financial balances
shows plainly in the stable gold market as reported daily from London. This
week prices have been below $35.08 an ounce, making any buying of U.S.
government gold unprofitable.
This very real, if officially unannounced, international
gold pool keeps the London free market stable simply by buying when
the price is below the official U.S. Treasury figure. When the price goes
above that figure the pool can step in and sell.
This swells the amount of gold available and as the supply goes up the
demand is met and the price returns to the desired level.
The pool doesn’t pretend it can protect the dollar forever if
the balance of payments deficit keeps mounting. That is why the
United States has taken many measures to boost the total U.S. exports on one
hand and to discourage the outflow of dollars on the other. The measures have
fallen short of their goal.
…
Gold Still Drains
Off
Gold Still Drains Off
Miami News - Google News Archive - Jul 6, 1965
VAS11iNGTON — Private gold hoarding and speculation in the first
quarter of this year drained off nil the newly mined gold and an estimated
$250 million from official monetary reserves as well.
…
Most of this drain almost certainly occurred through the operations of the
gold "pool" in London. Acting for a group of the leading financial
nations the Bank of England controls the London gold market, selling to hold
down the price when demand is heavy and buying for the account of the pool
when demand is light.
The Bank of England uses newly mined gold from South Africa for its sales
and can also call upon the official reserves of the members of the pool when
necessary. The United States’ share in the pool is 50 per cent.
Thus it is probable that upwards of $100 million of the U. S. gold
loss this year has gone straight into the hands of gold speculators,
not into other countries’ reserves.
Gold speculation was heavy in the early months this year, largely because the
crisis of the British pound led to fears of a general currency upheaval,
including fears of a devaluation of the dollar. A dollar devaluation
means an increase in the price of gold.
…
Gold Data: Lesson
in Artful Dodging
Gold Data: Lesson in Artful Dodging
Wall Street Journal - Aug 1, 1967
By RICHARD F. JANSSEN
WASHINGTON -- "In this business, you have to choose between
lying to people or scaring them to death.” The speaker
isn’t a doctor or a nuclear bomb expert but a Johnson Administration
official coping with the balance of payments problem. His choice is usually
clear: Don’t public or more pertinently the nervous bankers abroad who
could cash in their dollars and touch off a run on the nation’s gold
supply...
…
Illustrating the uncertainty among outside analysts is this year’s
decision of the New York based National Foreign Trade Council to halt its
long practice of forecasting of payments deficit. Instead the respected
council estimated most components individually and stopped right there
cautioning that it no longer dared predict such items as the dollar inflows.
…
AII the shadowy activities revolve around the persistent payments
deficit—which has as foreigners acquired more dollars than they returned
to the U.S. … With $29 billion of foreign owned dollars stacked up as
potential claims on $13.2 billion gold stock figure, they have ample reason
for what's left as best unsaid...
Since international high finance is so subtle, ... the dilemma rarely
has to be resolved with the outright lie either. Instead the
Administration is ever more shrewdly guarding the dollar’s value abroad
and intelligence about it through little known techniques that range from doublecounting
gold bars to tinkering with of otherwise routine Government securities.
The result is a web of statistics that mask almost as much they display about
the dollar outflow.
… Some of this double counting dates back to the 1950s
when the IMF made gold investments in interest earning short-term
Treasury securities. The fund can reclaim this $800 million gold
whenever it wants. And 5228 million more is gold the U.S sold outright for
dollars in the last year or so to smaller nations so they in turn could make
their mandatory quota payments to the IMF. Swiftly before these show up in
Government data, the IMF restored this gold to the Treasury as a
special deposit. The purpose was clearly by both parties. Mitigation
of the original sales effect on the U.S. statistics…
Only a discreet footnote following in Government statistical publications
brings these double countings to light. But because they were openly
announced when they were initiated, Washington officials contend they
aren’t really deceptive...
…
Happily for officials anxious to put the best face on the figures,
there’s no simple standard for deciding just what is a dollar going
into foreign hands and thus swelling the payments deficit. Few of them are
greenbacks carried out of the country the basic measure comes from major
banks reports of how foreigners checking accounts went up or down during a
reporting period. These dollar deposits are considered liquid liabilities.
Also counting as liquid liabilities are the dollars foreigners invest in most
Treasury securities regardless of their maturity and dollars they invest in
other Federal securities and bank certificates of deposit having original
maturities of less than one year. But the self-imposed accounting standards
that class these as liquid liabilities are sterner than those in most other
nations, so Administration men argue that it’s not dishonest to bend
events around them to America's best advantage. Thus it was that, because a
single day’s added maturity would make these short-term investments
count as a favorable dollar inflow, a recent a 400 million debenture offer by
the Federal National Mortgage Association appeared with maturity of one
year and two days. If foreigners should chance to buy some it would
help rather than hurt the payments position.
Privately foreign financial officials are delighted to see Walther Lederer,
the Department's chief payments economist, persistently pointing out that
there’s no real advantage for the U.S. in getting foreigners to put
dollars in securities that are just barely over an arbitrary line. The Treasury is very clever but Walther
spoils it by being so honest one embassy aide snickers.
… foreign purchases of such securities aren’t being left
entirely to chance. Other governments are frequently coaxed to
rechannel their dollar investments into the most statistically soothing
forms. It's partly because the Treasury can quietly arrange such investments
at the last minute before a balance of payments reporting period ends of
course that forecasting the deficits has become so much less attractive to
private predictors. In the first 1967 quarter for instance it was
largely a spate of foreign official purchases that spared the Government from
having to report a deficit close to $900 million instead the figure
was roughly $540 million...
It's not all arm-twisting a State Department official insists arguing that
interest rates on short-term Federal securities and bank certificates of
deposit have been high enough to inspire such purchases voluntarily. Even so,
the growing awareness in Washington that pressures are applied makes
the topic a sensitive one.
…
Discreet Dissembling
The discreet dissembling is squarely in the public interest officials are
convinced. To give the world a glimpse at raw payments deficit figures
for just a single month or at one day’s actual gold outflow they argue
could prove disastrous. While U.S. authorities might take an
immensely adverse number calmly knowing a big inflow is on the way, such a
figure might so frighten outsiders that greater exodus of dollars would
result.
…
Even a prominent private financier who helped create the Government's
dollar defenses confesses that he can’t tell anymore what our balance
of payments trend is. Since he has left Washington ho says the dodges have
become even more artful. The Treasury's credibility problem is becoming
terrible...
Us Looked To For More
Gold Action
U.S. Looked To For More Gold Action
Daytona Beach Morning Journal - Google News Archive - Dec 18, 1967
LONDON (AP) — Financial experts in London looked to the United
States Sunday for measures to halt panic buying of gold, which is
expected here to continue in the world’s bullion markets.
…
The London experts expressed doubt of U.S. ability to stem the flood
of buying orders which have poured in on all bullion markets since
Britain’s Nov. 18 devaluation of the pound.
Authoritative estimates put the amount of the metal that has moved out
since then through the international gold pool in London at more than 1,000
tons worth about $1.1 billion.
Nearly 60 per cent of that gold came from the United States.
The experts explained the gold rush as a coincidence of widespread
loss of faith in paper money as a result of the pound’s
devaluation, inflation in much of the world, and a
broad belief held by international speculators that the price of gold must
rise.
Some British economists and politicians add to this their feeling that
President charles do Gaulle of France may have had a hand in fomenting the
gold rush. The French, however, strenuously deny this.
France withdrew from active participation in the eight-nation
international gold pool, which operates out of London, in June when
Paris refused to supply more gold. The pool was set tip in 1961
to stabilize the gold market by buying or selling the metal as needed to
satisfy demand.
…
The dollar came under pressure Friday in Europe’s money markets,
except in London, after showing strength all week despite the gold rush.
The sale of dollars by European holders showed the fear of many on this
side of the Atlantic that the dollar was weak because of the
continuing—and increasing—deficit in the American balance
of foreign payments.
…
The TIME article below was written in March 1968, as the "London
Gold Pool" collapsed under a speculative gold
stampede.
Speculative Stampede
Friday, Mar. 22, 1968
Quietly and secretly, technicians at Fort Knox, Ky., loaded an estimated
$450 million worth of gold ingots [about 410 tons of gold] onto a heavily
armed convoy. The convoy proceeded to a nearby U.S. Air Force base,
where the gold was loaded aboard a transport plane and flown to Britain.
There, it was sent to the Bank of England, to be transported
by Swissair and British European Airways flights to the coffers of Swiss
banks. The influx of gold became so bulging, in fact, that one Swiss bank had
to reinforce the walls of its vault to contain it. It was all part of the
largest gold rush in history, a frenetic, speculative stampede that
last week threatened the Western world with its greatest financial crisis
since the Depression.
Socks & Mattresses. Telephone and telex lines to London, the
world's largest gold market, were swamped as buyers throughout Europe demanded
gold, gold and more gold. More than 200 tons, or
$220 million worth, changed hands on the London gold market in one day to
establish a new single-day trading record. Where gold could be bought
directly, mob scenes erupted and the price soared. Ten times the usual
number of buyers jammed the gold pit in the cellar of the Paris Bourse, and
fist fights broke out as the price on one day rose to $44.36 an ounce v. the
official price of $35. In Hong Kong, frantic trading drove the price
up to $40.71, and around t
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