Murphy On Gold
IMF Deceit, UK’s Brown A
Hypocritical Farce, SA’s Manuel Nearly A Traitor
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)
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
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
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.
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
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.
``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.''
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
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
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
"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
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:
securities lending, gold swaps and gold loans:
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
Gold swaps and Gold
loans or deposits
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.
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
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.
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:
The Bank of Italy
Confirms Gold Cartel, IMF Gold Deception
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:
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.
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
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
Why does the IMF insist
that members record swapped gold as an asset when a legal change in ownership
The IMF answered:
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:
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.
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
"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
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.
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
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
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
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
in mind. Stay tuned.
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