IMF Information Leaks: Central Banks Gold Manipulations
Valentin KATASONOV | 07.02.2013 | WORLD | BUSINESS

IMF Information Leaks: Central Banks Gold Manipulations

GATA and «golden cartel»

By the end of XX the most meticulous, nit-picking experts started to suspect there was something wrong with the gold market operations. To be exact: even if the gold prices were not getting lower, still they were evidently lagging behind the price hikes for all other world market commodities. Gold prices went down against the stock exchange indices, real estate etc. No large deposits were discovered at the time, no golden meteorites fell on earth. Underestimated prices were hard blows against gold producers. Some of them wanted to make head or tail of it, so they created GATA (Gold Anti-Trust Action). They suspected there was a group of wrong doers conducting activities on the world market who were united in a trust that manipulated gold prices to bring them down… Normally GATA used the term «gold cartel» in its findings. Gradually it became clear who the majors behind the cartel’s activities were. The list included: the US Treasury, US Federal New York Bank (the leading one among the twelve major US banks within the US Federal Reserve System structure), the Bank of England, a number of largest commercial and investment US and West European banks (Goldman Sax, a Wall Street Bank, has a special place here). This is a nucleus of the cartel. Other parties to the cartel surface from time to time too, including the central banks of some countries. 

The 1990s were the years of US burgeoning activity on world asset markets. To say it more plainly, the Americans started to privatize state enterprises on global scale (including Russia). They needed strong dollar for those plans. Financial analysts and speculators know perfectly well a simple rule: the lower is the gold price, the stronger is the dollar. The simplest and effort saving way to bolster the dollar is to «push down» the «gold metal» price, the metal that overtly and covertly fulfills the functions of the reserve currency’s competitor. To «push down» the price one needs supply exceeding demand. Those who wanted to bring down gold prices started to look at the direction of treasuries and central banks vaults. Gold intact was there since the Bretton Woods system collapsed in the 1970s to be replaced by the Jamaica financial system. In the new system gold was not money anymore; it became a stock exchange commodity like oil, wheat or bananas. 

Central banks gold manipulations story

How can the gold be used to manipulate prices? The foremost condition is to fully classify all the official yellow metal reserves and related transactions. Then central banks independence should be strengthened to prevent nose poking into their activities on the part of «the representatives of people», financial oversight bodies and other actors prone to being too curious. State auditors should be barred from «gold coffers». For instance, the last time the US General Accounting Office checked the Fort Knox vaults was over sixty years ago. 

Then the gold transactions may start to take place under the guise of secrecy. No sales, but «temporary» transfers to different structures in the form of loans or leasing operations. In the vaults gold is substituted by IOUs, claims, certificates etc. This way the gold is counted on the balance sheets in the form of paper (or computer stored documents) instead of metal. «People» don’t have to know about it. Ten-twenty central banks are involved in «gold manipulation» frauds, every year many tons (perhaps hundreds) of precious metal may be supplied to the market to bring the prices down. 

Experts (including GATA) have found enough evidence to prove it’s not an invention, but rather a result of criminal plot involving central banks, private bankers and speculators. The questions rise: who the central banks gold has been transferred to? Has the gold been returned to the central banks storages? Are the lawmakers aware of what has been going on? How much gold has actually been left in the central banks or state treasuries vaults?

Some attempts have been undertaken by members of parliament, politicians and public figures to make head or tail of what the gold reserves were, if official statistics reflected the real state of things, who managed the official gold reserves and how it was done? For instance, US Representative Ron Paul regularly tried to do it. The same way GATA has made inquiries. 

Monetary authorities preferred to shy away. The replies were either very laconic or boiled down to the assertion «the country’s gold reserves are intact». The very same stance has been taken for the last fifteen years (since the talks about the «gold cartel» started to go around) by international financial agencies: the Bank for International Settlements (actively involved in yellow metal operations and suspected of being a part of the «gold cartel»), the World Bank, and the International Monetary Fund.  (1)

IMF information leak

Now here is the latest news related to the subject. It was posted on the GATA’s website in December 2012. (2) One of GATA’s researchers got hold of secret study conducted by the International Monetary Fund 13 years ago. It is related to the world gold market and the central banks market activities in 1999. It’s a hush-hush document, so the writer may have the luxury of putting on paper the whole truth. It says, «Gold sales by central banks are usually shrouded in secrecy as part of official reserves management policy. Only selected public information has been made public by the central banks or the respective governments and usually only after the sales have been completed». Here are the key facts and figures taken from the report. In 1999 more than 80 central banks had lent 15 percent of official gold reserves into the market and that central banks then lending gold included the German Bundesbank, the Swiss National Bank, the Bank of England, the Reserve Bank of Australia, and the central banks of Austria, Portugal, and Venezuela.

The study confirms that the central banks brought the prices down, «the increased mobilization of central bank reserves through gold lending operations has had a depressing influence on the spot price for gold since on-lent gold is usually associated with sales of gold in the spot market». Further, the IMF study says, gold lending had caused central banks to become active in the gold derivatives market with bullion banks and gold producers, «selling through forwards and options». In turn, «bullion banks have made efforts to secure and consolidate long-term relationships with central banks». It is also added, «The number of countries with official-sector involvement in the gold lending market is now estimated to have reached over 80. The outstanding amount of gold lending provided by the official sector by end-1998 amounted to nearly 15 percent of official gold holdings of all central banks. The share of industrial countries in the stock of total official gold lending rose from 33 percent at end-1995 to 46 percent by end-1998 as some industrial-country central banks increased their lending, while new lenders, such as the Bundesbank and the Swiss National Bank, entered the market». Here’s the opinion of the GATA expert, who posted the report. He says, «With so many central banks lending so much gold in secret to financial institutions whose primary talent lately has been shown to be rigging markets, who but the usual agents of disinformation still can deny that the gold market is manipulated precisely to prevent the world from enjoying free markets generally?»

2013: waiting for new «gold» rows and related sensations

It’s a long time the coming into the open of ominous mystery surrounding the gold has been waited for. Back in 2004 the Rothschild’s London club announced its withdrawal from «gold fixing» – the procedure by which the price of gold is determined twice each business day on the London market by the five members of the London Gold Market Fixing Ltd, on the premises of N. M. Rothschild & Sons. It is designed to fix a price for settling contracts between members of the London bullion market, but informally the gold fixing provides a recognized rate that is used as a benchmark for pricing the majority of gold products and derivatives throughout the world's markets. This way the Rothschilds made the world know their decision to leave the gold business they had been involved in for the last two hundred years. In reality it’s just a spectacular gesture. They have not left the gold business but went on to deal in it through other structures under different names. They had a hunch the ‘gold cartel» exposure was in the wind, the tycoons decided to timely get away from the heat of the would-be explosion… 

The worries of people and politicians related to the state of official gold reserves were instigated by the tungsten filled gold scandal sparked in 2012. Tungsten filled bars were offered as gold bars on the market (though experts knew about it since 2004, the ballyhoo was raised by media in 2012). The suspicions were raised about tungsten stored in the treasuries and central banks vaults. Ron Paul managed to put through a legislature on Fort Knox and the New York Federal Reserve Bank to be partially audited. Germany demanded back its Bundesbank official gold reserves stored in the Federal Reserve Bank New York vaults, but it hit the wall of silence on the part of the US Federal Reserve System. It ended up with Ben Bernanke, currently chairman of the Federal Reserve, saying that hurricane Sandy … completely destroyed the underground vault holding all of Germany's gold reserves, thereby nullifying all recent German attempts at gold repatriation. He could think of nothing better. It bolstered the opinion the Federal Reserve System and other central banks have been involved in gold manipulation since a long time ago. 

I think the central banks gold manipulations will become an issue to hit the radar screens in 2013. For instance, everyone is impatient waiting for making public the results of US Treasury gold reserves partial auditing. The government has promised to make it public in 2013. With German gold mysteriously vanished in the USA, Germany’s reaction is still expected. 

There are questions raised concerning the activities of the Bank for International Settlements, that is actively involved in yellow metal transactions – its own and the ones related to central banks deposits and loans. The bank’s accounts are too short and general to make clear the details of the deals, the counteragents and the beneficiaries. 

The International Monetary Fund will go on with persistent demands for genuine information about the gold reserves to be disclosed by China. In 2009 the People’s Bank of China announced its gold reserves grew by 76% and became equal to 1054 tons. The official gold reserve date hasn’t changed since then. Few think the figures have anything to do with real situation. It is believed the Chinese monetary authorities strongly decrease the figures while clandestinely converting their innumerable currency reserves into yellow metal. 

The US Congress is to take final decision on the Federal Reserve System being subject to more comprehensive auditing for the first time in the century. If it happens then all Federal Reserve gold transactions will be checked. Almost all serious experts expect sensational exposures. 

(1) More detailed information on «gold cartel» manipulations - Gold in the Economy and Politics of Russia by V. Katasonov. – Ankil, 2009, pp. 57-63. 
(2) «IMF study in 1999 found 80 central banks lending 15% of official gold reserves». December 9, 2012 (
Tags:   GATA  IMF  Germany  US