Thursday, November 24, 2011

Brown´s Bottom by PGAs - an unofficial story by Freegolders trying to reconstruct what actually happened

This RPG fun page is an PGAs amateur try to explain certain events which lead to the event known as "Brown Bottom" + some things like WGA which happened before and after... Most people just do not get Another, FOA writings as it was timewise mixed up or are a bit lost in long posts of FOFOA and have difficulties in understanding the story when fragmented, hopefully this timeline would expose what actually happened and could help to understand where are we.
WEll, not saying if it was true or not, lets try to put in in a timeline and see if it makes some sense.

A/ The Main part, topics, events, comments

A1/ Prelude

World Gold Council Reaction (about the "Brown´s Bottom sales")
The reaction of the World Gold Council has been one of surprise, and its press release sounds slightly  May critical of the Treasury announcement, viz:-
"has had an immediately damaging effect on the gold price, which fell nearly $7 to $281.50 an ounce in early trading in London."
"While the Treasury should be applauded for giving a detailed explanation ... it is nevertheless inevitable that this will be interpreted by the international bullion market as further evidence of official disenchantment with gold as a reserve asset."
"The irony is that Gordon Brown, the UK's Chancellor of the Exchequer, is simultaneously leading the charge on behalf of IMF gold sales - purportedly to assist debt relief in poor countries - while damaging the price by proposing to sell some of the UK's reserves in advance."
"The damaging reverberations of such a symbolically-charged action by the Treasury will be felt for many months to come, not only in the UK, but in a number of the 41 so-called Heavily Indebted Poor Countries in Africa and elsewhere."
"With each $1 drop in the price of an ounce of gold, these developing countries will suffer real economic damage."
"The drop in the price of gold on Friday as a result of the UK Treasury's announcement immediately wiped off $150 million from the annual export earnings of Sub-saharan Africa."
"The decision to sell gold and hold official UK reserves overwhelmingly in foreign currencies betrays a failure to consider the reasons why gold has always been considered an important defensive asset in the long term."

[Mrt: Why so much confusion, why so much hassle and why is the main reason to sell withheld from public? lets have a look what actually happened in the time of the decision on the broader scale and stir it with few comments of Another/FOA and other commentators. What if we put it in a Timeline?]

A2/Prelude II .
US Gov documents and meetings

A3/ Prelude I.

  • About_Seventies: "The US treasury sales in the late 70s. They sold 1 million a month using open bid proposals with much fanfare. If the CBs wanted physical sales to drive the price they would sell in the same way." (~Another 1997 November 16)
  • About_Seventies: "All: I ask you, why did the world go off the gold standard in the early 70s? You have an answer, yes? For all the problems this created, could the countries not just revalue gold upward, to say $300 ( back then ) ? What was the real reason the world entered a period of "freely traded" "managed gold"? "
    "This question has more impact on the gold market of today than it did then! In days past, it was held as good knowledge that the US stopped gold backing to protect the dollar and keep gold from leaving to other shores.
    But, in the same time frame, all central banks did sell gold to all persons, even the US. All treasuries held gold and dollars as reserves. To what end did the world financial system gain with the dollar off gold backing, and then allowed to "dirty float" against all currencies? Would the world not have been better off to find gold revalued to, say $300 and then begin a "dirty float"? Noone would have lost, and the inflation would have , at best, not have been worse!
    Truly, I tell the reason for this action. The US oil companies knew that the cheap reserves were found. The governments knew this also. The only low cost oil reserves in the world at this time were in the Middle East, and their cost to find and produce was very low. It was known, that, in time, ALL oil would come from this land. As much higher US dollar prices were needed to allow exploration and production of other reserves, worldwide. But, how to get crude prices, up, when the Gulf States were OK to pump and produce in exchange for "gold backed dollars"? I will not name the gentlemen that brought this thinking to the surface in that era, but it was discussed. It was known that oil liked gold. It was known that "local oil" would be used up without higher prices. What if, the US dollar was taken off the gold standard, and gold was managed "upward" to say, $208 per ounce? The dynamics of the market would force oil to rise and allow for much needed capital to search for the higher priced oil that was known to exist! The producers would find shelter in gold even as the price of oil was increased in terms of a now "non gold dollar"! Price inflation would rise, but gold and oil would also increase. The dollar would continue to be used as the only payment for oil, and in doing so replace gold as the backing for this "reserve currency". All would be fair.
    The war in 1973 and the Iran problem did make markets "overshoot", but all did work to the correct end. The result was "a needed higher price for a commodity that was, as reserves, in much over supply by the wrong countries"! It was known that the public would never have accepted this "proposition" as fair. To this end, we have come.
    And it is from this end, that the gold markets are managed for today!" (~Another Apr 04 1998)
  • About_Seventies: "So who was this gentleman (or gentlemen) that ANOTHER would not name who "brought this thinking to the surface in that era"? You'd think that after 40 years there would be at least some corroborating evidence, wouldn't you? Well, as a matter of fact there is. And it first surfaced just last year! We now know that the mystery gentleman was none other than Nixon's National Security Advisor, Heinz Alfred "Henry" Kissinger! And we now have independent and corroborating evidence that Nixon and Kissinger pulled the plug on the Bretton Woods gold standard for the specific purpose of raising the price of oil!
    We know this now because the Saudi Oil Minister from 1971 gave an interview to CNN just last year! Sheikh Ahmed Zaki Yamani was the Saudi Oil Minister from 1962 to 1986. Here's what he told CNN in that interview"
    (~FOFOA at Bron´s: here. )
    (And now more from there:)
    Sheikh Yamani
    : "They decided to raise the price of oil 400%. They needed to help the oil companies to invest outside OPEC. In Mexico, in North Sea and so on. And this will not happen without a high price of oil…"
    Sheikh Yamani:
    "Yes and there was an agreement between the Shah of Iran and between Dr. Henry Kissinger to raise the price of oil… I really highly respect Henry Kissinger. He is really a planner and strategically he is a man to be respected."
    • Here are the actual average oil prices per barrel for those years:
          1971 $3.60
          1972 $3.60
          1973 $4.75
          1974 $9.35
          1975 $7.67
          1976 $13.10
          1977 $14.40  
    I note that $14.40 is exactly 400% of $3.60. And here's ANOTHER's "overshoot"…    1978 $14.95
                 1979 $25.10
                 1980 $37.42
                 1981 $35.75
    The point here is that ANOTHER's tales are not the speculations of your typical market analyst. They are the kind of inside information that never made it into the history books and still resides at the level of former Oil Ministers and National Security Advisors.
        You'll find a video of the Sheikh Yamani interview here.
  • About_what_Seventies_mean_for_Today: "I do now take you to my post to Junior: 
    You state: "The USA/IMF and its'Hegemoney currency could not withstand cheap oil prices." ?

    " Mr. Junior, Be very sure to understand this: They can "stand cheap oil prices". But, it is the loss of having the US$ removed as the "world reserve currency" that makes them "fight" a lower oil price, and the new "world oil currency" that it would bring. Bring this thought into focus and you will understand why Iran and Iraq did fight so long. And why Iraq invaded. The warships are an attempt to keep prices from "falling"! You think long and hard on this! "
    All: Look now and see if the US dollar does not "fight" for a high oil price! In every way, the question of supply disruptions is shown as the need for other suppliers. But, other suppliers cannot produce at a lower price? If the gulf states are allowed to bring oil "down" to it's true "fair" production price, in terms of a "correctly higher revalued" gold price, the US dollar would no longer be priced and backed by oil. Any paper trading currency would do. I would say, "if the Euro is strong in gold, and crude oil is allowed to be devalued by gold at $10,000 to $30,000, then all other paper currency reserves held against the EURO would be , "for show?"
    "The world is going off the dollar standard as the dollar is going off the oil standard", find this event "in your time"! We watch this new gold market, together, yes? (~Another Wed Mar 25 1998)

A4/ EuroThinkers

Note: See this doc


  • 1974: US Congress eliminated the restrictions that it had adopted forty years earlier on private ownership of gold by American citizens. Shortly thereafter trading of gold contracts was resumed on the COMEX.
  • 1977: US Congress repealed the prohibition on gold clauses in private contracts, enabling the issue of gold-linked securities.
  • 1979 - 1999: Gold in bear market.
  • 1979: Ireland's participation in ERM resulted in the Irish pound breaking parity with the pound sterling.
  • 1979 March: European Exchange Rate Mechanism (ERM) was a system introduced by the European Community 
  • Between 1980 and 1996: Canada sold 594 tonnes, leaving just 81 tonnes. Other source:
    Between 1980 and 1999: Canada sold 634 tonnes of gold.
  • 1980: Declining levels of gold stocks held by investors and the official sector, lower investment demand higher jewelry demand.
  • 1980 January 21: Gold prices peak at $850 per ounce, a rise of 340% since November 1978
  • 1980 April: G10 governors entrust Euro-Currency Standing Committee (ECSC) with regular and systematic monitoring of international banking developments
  • 1980 April 17: The People's Republic of China replaces Taiwan at IMF and at the World Bank
  • 1981 January 1: Greece joins the EC
  • 1981 March 23: EMS realignment: Italian lira devalued by 6%
  • 1981 October: First meeting at the BIS of the Group of Payment System Experts
  • 1981 October 5: EMS realignment: Dutch guilder and Deutsche mark revalued by 3% and 5.5% vis-à-vis other currencies
  • 1981 November: Hungary and Poland apply for IMF membership
  • 1983: The United Kingdom reclassified Hong Kong from a British crown colony to a dependent territory, the governments of the United Kingdom and China were already discussing the issue of Hong Kong's sovereignty due to the impending expiry (within two decades) of the lease of the New Territories. 
  • 1983: Barrick Gold Corporation evolved from a privately held North American oil and gas company, Barrick Resources. After suffering huge financial losses in oil and gas, principal Peter Munk decided to focus on gold. Barrick Resources Corporation became a publicly traded company on May 2, 1983, listing on the Toronto Stock Exchange. (ABX)
  • 1984: The Sino-British Joint Declaration – an agreement to transfer sovereignty to the People's Republic of China in 1997 – was signed. It stipulated that Hong Kong would be governed as a special administrative region, retaining its laws and a high degree of autonomy for at least 50 years after the transfer. The Hong Kong Basic Law, which would serve as the constitutional document after the transfer, was ratified in 1990.
  • 1985: Under the Gold Bullion Coin Act of 1985 (31 U.S.C. s. 5112, as amended by Pub. L. 99-185, 99 Stat. 1177), Congress authorized the United States to resume issuing gold coins having a legal tender face value but to be sold to the public at a price equal to the market value of the bullion at the time of sale plus costs of minting and distribution.
  • 1989 end: France extracted German commitment to the Monetary Union in return for support for German reunification.
  • 1989 The Delors report sets out a plan to introduce the EMU in three stages
  • FOA: (Trail Guide 08/21/00) "Our dollar has had a usage period that corresponds with the society that interacts with it. Yes, just like people, currencies travel through seasons of life. Even gold currencies, in both metal and paper form have their "time of use". Search the history books and we find that all "OFFICIAL" moneys have at one time come and gone with the human society that created them. Fortunately, raw gold has the ability to be melted so it may flow into the next nations accounts as "their new money".
    This ebb and flow of all currencies can be described as their "timeline". We could argue and debate the finer points, but it seems that all currencies age mostly from their debt build up. In a very simple way of seeing it, once a currency must be forcefully manipulated to maintain it's value, it is entering the winter of it's years. At this stage the quality of manipulation and debt service become the foremost determinant of how markets value said money. Suddenly, the entire society values their currency wealth on the strength and power of the state's ability to control, not on the actual value of the money itself. Even today our dollar moves more on Mr. Greenspan's directions than from the horrendous value dilution it is receiving in the hands of the US treasury.
    This is where the dollar has drifted into dangerous waters these last ten or twenty years. If you have read most of Another's and my posts, it comes apparent that preparation has been underway for some time to engineer a new currency system. A system that will evolve into the dollars slot once it dies.
    Out here, in deep water, we can feel what the Euro makers are after. No one is looking for another gold standard, or even something that will match the long life and success of the dollar. We only know that the dollar's timeline is ending and a new young currency must replace it. No great ideals, nor can we save the world! But a reserve currency void is not acceptable"... "
    Our dollar has already entered a massive hyperinflation. It's timeline is ending and there will be no deflation to save it. The currency and all the multitude of derivative instruments that make up our money system have expanded rapidly over the last 20 years. Even at a super hyper rate for the last five years or so. We cannot read it because much of what we "Western" savers call paper wealth has really become money substitutes that's value is supported by the government. This paper wealth creation cannot reverse and is beginning to enter the "natural world" of real things. The best sign that the currency has entered it's last, final inflation is seen in the manipulated price gauges. Truly, this is only the beginning. Eventually we will see roaring price increases in everything, even as our government indicates level prices or perhaps a deflation in our price structure. This has to happen, because there is no saving a society's currency that has debted itself beyond any known example in man's past.
    In our time we will all see the Euro become very strong. You will read and hear this. But, Another and I have know for some time that it will be the dollar falling away that will make the illusion complete. I say this because all currencies are but an illusion of value.
    Eventually, either before of after the dollars transition, the illusion that makes currencies real will also undergo a change. That illusion / vision is the current world paper gold market. Often known as the dollar gold market. This marketplace will fail with the dollar's timeline and so too will it's use to value gold. In this time gold will not soar in value, rather all currencies will seek their true relationship to a "FreeGold" market."

  • FOA (TrailGuide: 8/26/2000): "most of this maneuvering took place prior to the Euro being secure. There was a lot at stake if the Euro fell apart at that time. Politically it went something like this:"
    • a.(late 80s early to early 90s)
      US and Europe worked together to bring gold prices down:
      to make the dollar good in gold for oil and others
      to allow some cheap physical purchases
      to allow some long term contracts to be established
      to allow the continued flow of oil at reasonable, economy supporting rates

      paper gold had not inflated to anywhere near these current levels
      - so contracts were seen as supportable
      - so contracts and physical were seen on almost equal footing
    • b. (early 90s to mid 90s)the supply of freegold on the official level was beginning to run short
      so CBs sold openly mostly to each other to create gold selling impression
      so mine forward selling was encouraged originally engaging mostly CB gold
      - major gold buyers were ready buyers with cash or lend able natural resources
      - so naked paper selling began to imitate CB supplied gold
      - so same naked paper selling supplied some mines forward sales contracts
      - so falling paper gold prices drew out old line/ non oil physical bullion in exchange for paper
      - so falling paper prices brought in cheap financiers to sell into this paper demand

      market is flooded with new paper and begins to override it's original purpose
      by now US knows the Euro will succeed and benefit from a rising physical gold price 

    • c. (mid 90s to date)
      US and Europe split,,,, BIS takes Euro side
      US encourages London to join it in dollar support,,,, print more paper
      Europe and BIS stand to enter the world physical markets if gold falls below $280 before Euro is born
      Euro comes online
      Oil gold buyers don't like paper gold inflation
      Oil stands to raise dollar oil prices if gold markets stay below $280
      Europe stands aside and watches knowing what rising oil will eventually do to US dollar / economy
      Europe adopts policy of "Freegold" by quarterly marking to the market bullion prices
      Europe and BIS stand aside and endorse a flood of paper gold
      Eventual demise of dollar contract gold markets draws oil to Euro support
      Oil and Europe force Washington Agreement
      Oil begins to raise dollar oil prices in effort to crush paper gold markets with inflation induced physical gold demand

A5/ BigTrader

  • 1990: Commission meets for 1000th time. European Bank for Reconstruction and Development established. Schengen agreement signed. Reunification of Germany.
  • 1990 October 8: The United Kingdom entered the ERM.
  • 1990 August 2 – 1991 February28: Persian Gulf War "Well a funny thing happened right after the Gulf war ended. What looked like big money before turned out to be little money as some HK people, I'll call them "Big Trader" for short, moved in and started buying all the notes and physical the market offered. The rub was that they only bought low, and lower and cheaper. They never ran the price and they never ran out of money. Seeing this, some people (Middle-East) started to exchange their existing paper gold for the real stuff. From that time, early 1997 LBMA was running full speed just to stay in one spot! In other words paper volume had to increase to the physical volume on a worldwide scale, and that was going to be one hell of a jump. It could not be hidden from the news any longer. This was not far from the time that "Big Trader" said that "if gold drops below $370 the world would see trading volume like never before seen". The rest is history. Now the CBs will have to sell 1/3 to 1/2 of their gold just to cover what's out there. To use the Queens English "it ain't gonna happen dude"!(~Another, Oct 12 1997)
  • 1990+ Another: As for the old agreement of oil/gold ratio, it went out the window after the Gulf war. (~Another, Fri Nov 28 1997)
  • 1991: USSR dissolves.
  • 1993: Elf was awarded the exclusive contract to the Iraqi Oil Fields by then-Iraqi leader Saddam Hussein. 
  • 1993: Single European Market enters force. Maastricht is ratified and enters into force.
  • 1993: June 18: Alan Greenspan: "I have one other issue I'd like to throw on the table. I hesitate to do it, but let me tell you some of the issues that are involved here. If we are dealing with psychology, then the thermometers one uses to measure it have an effect. I was raising the question on the side with Governor Mullins of what would happen if the Treasury sold a little gold in this market. There’s an interesting question here because if the gold price broke in that context, the thermometer would not be just a measuring tool. It would basically affect the underlying psychology.” 
  • 1993 August 5: G.Speck - 1st phave of Gold Price Intervention - In the first phase, the central banks prevented an increase in price above the threshold of 400 dollars. (Lasts Until 1996 November 21)
  • 1994: European Monetary Institute established.
  • 1994 May: The European Commission set up the Expert Group on the changeover to the single currency with the remit of advising the Commission on the technical preparations for introducing the single currency into the European Union. The Expert Group was also requested to initiate the preparations needed to bring about a common currency. The Expert Group consists of representatives of major sectors and sections of the community in Europe and is under the chairmanship of Mr Cees Maas. The Expert Group completed its interim report which was presented to EU vice-president Christophersen. (Maas Group)
  • 1995 January 31 - February 1: Meeting of the Federal Open Market Committee
  • 1995 May 19: Publication of the Progress Report of the MAAS Group on "The preparation of the changeover to the single European currency"
  • 1995 The Oil-for-Food Programme (OFF), established by the United Nations (under UN Security Council Resolution 986 ~wiki, Resolution 986 )
  • 1995 November:  Oracle of Alberta - "Gordon Thiessen (Governor of the Bank of Canada) suggested before a Canadian parliamentary commission in that the "multiplier" effect (the proportion of credit created by our banks to their legal tender) no longer exists.
  • 1995 end_Sometime prior to Dec. 3, 1996 - Big Trader 1 says on Kitco: "If gold drops below $370 the world would see trading volume like never before seen".
  • Between 1980 and 1996: Canada sold 594 tonnes, leaving just 81 tonnes. Other source:
    Between 1980 and 1999: Canada sold 634 tonnes of gold.
  • 1996: IMF launches HIPC initiative.
  • 1996: LME's biggest client scandal -  Summimoto copper affair description about this case and modern manipulation here.
  • 1996 Spring: "A big change in the gold market actually started in spring. You couldn't tell by the charts or news stories but it had the CB trading rooms going nuts. Up untill then they were using 3rd party transactions to sell, then the boomshell hit that the Merchant Banks were doing deals for 10 to 20 times what was offered! Well "boys will be boys" and someone is now stuck, big time! That's why "Big Trader" and his bunch closed out all paper and pulled in bullion. Don't worry about the CBs selling everything, the market is huge compared TO WHAT THEY HAVE! And Comex is nothing, if "only a silly game". Worldwide trading in gold could be cut in half and still equal all the metal in existance!"  (~Another: Date: Fri Oct 10 1997 17:26 , ID#60253:)
  • 1996 November 21: G.Speck - 2nd phave of Gold Price Intervention - In the second phase private leasing was key and the prices fell mainly because of their desire for profits. (Lasts Until 1998 May 18)
  • 1996 December 2: Gold drops below $370 , 6 weeks later the huge volume surfaces (!)

A6/ LBMA Leak

  • 1997 January: The Netherlands announces that it has sold 300 tonnes of its gold in
    the previous year.
  • 1997 June: The US Federal Treasury releases a discussion paper analysing the impacts of alternative sales strategies for US Federal Reserve Holdings.
  • 1997 March: Switzerland announced that it was to revalue its gold reserves to 60% of the market value, and consider releasing some of the surplus. This was expected to take many years, as Swiss law necessitates a referendum, which took place only in April 1999. They also reduced the gold reserve requirements for banknote issues from 40% gold backing to 25%.
  • 1997 January 30: Volume explosion on LBMA leaked. (Note RedBaron 3 writing about it later, plus details.) "The London Financial Times - - Gold global market revealed - THURSDAY JANUARY 30 1997 -  By Kenneth Gooding, Mining Correspondent - Deals involving about 30 million troy ounces, or 930 tonnes, of gold valued at more than $10 billion are cleared every working day in London, the international settlement centre for gold bullion. This is the first authoritative indication of the size of the global gold market, and was revealed yesterday by the London Bullion Market Association."
  • 1997 June: Germany revalued its gold reserves, 2954 tonnes, from DM 144 per ounce to 60% of market value which was DM 590 at the time. 
  • 1997 July 1: handover of Hong Kong sovereignty
  • 1997 July: The Asian financial crisis  
  • 1997 July: The Royal Bank of Australia sold 167 tonnes, about two thirds of its holdings.
  • 1997 July: Oracle of Alberta wrote Oct.5: "Need I remind the reader that it was N.M. Rothschild & Sons which in a July 1997 Toronto Globe & Mail article quoted Rothschild's primary business as the trading of treasuries and gold. Perhaps they failed to mention oil trading as well, as ANOTHER has alluded to and has confirmed my own suspicions."
  • 1997 July: The very original public announcement of the London Bullion Marketing Association's (LBMA) EXPOSÉ:: "Monday July 14 7:05 AM EDT: "London daily gold turnover just down in June - LBMA: LONDON, July 14 (Reuters) - The average daily turnover of gold cleared through London fell slightly in June to 32.2 million ounces per day from 32.4 in May, according to figures issued by the London Bullion marketing Association on Monday. In value terms the daily average was also lower at $11.0 billion, from $11.1 billion in May. It was the lowest average daily value since December last year. The average daily silver volume cleared in June rose sharply to 270.5 million ounces from 236.6 million in May, while the average daily value cleared rose to $1.3 billion from $1.1 billion in May. The average number of transfers in June for gold was 1,105 compared with 1,154 in May. There were 513 silver transfers on average up from 455 in May. The average afternoon gold fixing in June was $340.76 per ounce, down from May's $343.84, and silver's average fixing was $4.755 versus $4.759 in May." (Note RedBaron 3 writing about it later.) 
  • 1997 July: Red Baron: "Since late-1993 U.S. financial and commodity markets have experienced notable price inflation - as measured by the S&P 500, the CRB and Goldman Sachs Commodity (GSCI) Indexes. The financial markets demonstrate unprecedented "IRRATIONAL EXUBERANCE" - as the Fed Chairman aptly describes it - while the CRB and GSCI display only very modest appreciation. Specifically, the stock market has risen 116% to an all-time high greater than 940 (S&P 500). And the agriculturally oriented CRB is up a mere 9%, while the energy weighted GSCI has done a little better, rising 15% during the same period In sharp contrast gold has been prevented from reflecting the general, across the board increase in values enjoyed by all other types of investment assets. With a short respite of rising gold prices in early 1996, the yellow metal has on-balance dwindled in value. From late-1993 the Midas metal has indeed declined by 3% from $333 to $324.
    What is holding the gold price down vis-à-vis relentlessly rising financial assets and most commodities? The supply/demand dynamics of the yellow metal are at the best levels in memory - so why is its value so prostrate? Why is gold's price so stagnant, and why is volatility low and falling in the face of accelerating yearly production deficits - now between 1,000-1,400 tons per reputable international experts? Why is gold's volatility at all-time record low levels versus the normal or extremely high volatility of all other types of investments? How can gold's Open Interest (COMEX) be at near record high levels with diminishing volume and practically no price volatility?"

A7/ Another
  • 1997 September 14: by "ANOTHER" (an answer?): This could be an answer directed to the "Red Baron"?
    "The CBs are becoming "primary suppliers" to the gold market. Understand that they are not doing this because they want to, they have to. The words are spoken to show a need to raise capital but we knew that was a screen from long ago. You will find the answer to the LBMA problem if you follow a route that connects South Africa, The middle east, India and then into Asia!
    Remember this; the western world uses paper as a real value, but oil and gold will never flow in the same direction. Big Trader" [Mrt: ?needs to be checked  what was by A what by RB, BT]
  • 1997 October 05, Sunday: Another 2: starts to post. [Mrt: ?needs to be rechecked when really, are there archives when he posted as "Another writer"]
  • 1997 October: Another: "Gold is the only money the world has ever known" Sounds like a simple thought but it isn't." & "From the start, one thing most thinkers can't quite grasp is that "money does not have to circulate"!" & "What of the LBMA mess? Gold is cornered. Plain and simple. No complicated theories, no options problems. The commodity value of gold was forced so low in paper currency terms that all of the new mined gold, going out some 10 years is spoken for." & "One last note: No form of paper wealth will survive the financial crush once the CBs stop selling! NOTHING!"
  • 1997 October: Another: "If the current price of oil doesn't change soon we will no doubt run out of gold.
  • 1997 October 9: Another: What of the LBMA mess? Gold is cornered. Plain and simple. No complicated theories, no options problems. The commodity value of gold was forced so low in paper currency terms that all of the new mined gold, going out some 10 years is spoken for. Between the third world buying physical gold and the jewelry industry ( same people buying ) there is none left for the oil states! They do value oil in terms of gold, but not IN the paper currency price of gold! How much is gold worth in terms of oil value? Just stop supplying gold to them in ultra cheep US$ terms and you will find out by watching the currency price of oil! In any event, LBMA has traded so much paper/oil/gold that any rise in the currency price of gold will implode them. The CBs must become the full primary suppliers of gold or the system as we know it is done. One last note: No form of paper wealth will survive the financial crush once the CBs stop selling!
  • 1997 October 9: Another: The market is changing now,,, it will go up but you will not be happy with the outcome.  
  • 1997 October 9: Another: It's more complicated than this but here is a close explanation. In the beginning the CBs didn't sell their own gold. They ( thru third party ) found someone else who had bullion. That "party" sold to a broker who sold forward for a mine or speculator or government ) . In the end the 3rd party had the backing from the broker that he had backing from the CB to supply physical if needed to put out a fire. The CB held a very private note from the broker as insurance and was paid a small fee. This process mobilized free standing bullion outside the government stockpiles. The world currency gold price was kept down as large existing physical stockpiles were replaced by notes of future delivery from the merchant banks ( and anyone else who wanted to play ) .
    This whole game was not lost on some very large buyers WHO WANTED GOLD BUT DIDN'T WANT IT'S MOVEMENT TO BE SEEN! Why not move a little closer to the action by offering cash directly to the broker/bank ( to be lent out ) in return for a future gold note that was indirectly backed by the CBs. That "paper gold" was just like gold in the bank. The CBs liked it because no one had to move gold and it took BIG buying power off the market that would have gunned the price! It also worked well as a vehicle to cycle oil wealth for gold as a complete paper deal.
    Are you with me?
    Well a funny thing happened right after the Gulf war ended. What looked like big money before turned out to be little money as some HK people, I'll call them "Big Trader" for short, moved in and started buying all the notes and physical the market offered. The rub was that they only bought low, and lower and cheaper. They never ran the price and they never ran out of money. Seeing this, some people ( middle east ) started to exchange their existing paper gold for the real stuff. From that time, early 1997 LBMA was running full speed just to stay in one spot! In other words paper volume had to increase to the physical volume on a worldwide scale, and that was going to be one hell of a jump. It could not be hidden from the news any longer.
    This was not far from the time that "Big Trader" said that "if gold drops below $370 the world would see trading volume like never before seen". The rest is history. Now the CBs will have to sell 1/3 to 1/2 of their gold just to cover whats out there. To use the Queens English "it ain't gona happen dude"!
    Everything is now upside down and reversed. The more the CBs sell outright the more the price will rise.
    It's not a bearish sign anymore. They will now sell to keep the price rising slowly. 
  • 1997 October 19: Another: "Over time the forward sales, such as ABX's should have worked. But LBMA went nuts with the game and the whole mess has now accelerated.
  • 1997 October 20: vronsky: "This study gives material support to "ANOTHERs" hypothesis that there is a definite relationship between stable oil prices and gold's dwindling value in past years"
  • 1997 October 20: Sheik Abu Bekr al-Rashid: Cold cost of oil.
  • 1997 November: Switzerland and Germany officially enter the gold leasing market.
  • 1997 November 25: Another: The US$ is today, backed by oil. As all other currencies are but "digital units" tied directly to the dollar, they are indirectly on the oil standard also. This world currency position is supported thru the BIS. In CB circles, it is well known that the world debt markets as we know them, can only be maintained with cheap and cheaper oil! Without cheap oil the entire system fails and reverts back to pay as you go economies. This is the central reason for "two price gold". With gold discounted to it's production cost and below, those that have it can trade it for it's monetary value. Make no mistake, the BIS knows gold in the many thousands. The future "reset value" of gold is the key. "support the dollar with oil and the currency system works" "fail the currencies and the dollar will come off the oil standard and the BIS will reset gold to $10,000+ with many conditions" That is why they continue to accept the dollar as a reserve.
  • 1997 November 12: Another: "A BIS meeting was held and from those doors the world did change. The Bundesbank has now made clear to all what will now be policy for CBs. A crisis is at hand! All physical gold sales will stop. All gold lending will wind down. We will see the results of this as a massive scramble to cover open positions slowly unfolds. All of us will see the destruction of the gold market as we know it, LBMA will be no more!"
  • 1997 November 30: Another: As a large tanker takes time to turn, so will the coming change in oil values take time to see. We have seen the last of cheap oil in US$ as the oil states are no longer taking paper gold! This change in trading will have a great future impact on oil/gold/US$. I think a large purchase of bullion was just made by them. It should have been paper. The BIS must soon take a stand!
  • 1997 December: Argentina sold almost its entire gold reserve of 124.8 tonnes. 
  • 1997: Russia sold 31 tonnes. 
  • 1997: Gold was ranked as Australia’s second largest export sector in 1997-98, accounting for around 11 per cent of Australia’s total commodity exports.
  • 1998 April: BIS co-sponsors Year 2000 Round Table to help the financial industry prepare for the possible effects on information processing systems of the date changeover on 1 January 2000 
  • 1998 March: Belgium sold 299 tonnes of gold, about half its gold reserves on foward basis.
  • 1998 May: Another: Polloa, I think, many will "cross this bridge at the last moment". It is a well known, considered problem that, if not fixed, will take the "Western World" back in time many years. Perhaps, luxury will be lost, and many will live as "third world countries". Some may find this a "better outcome" in life? However: Our world economic system does survive many problems. Humankind must battle the war and distrust with great intensity. Always, we find, it is the honest person of simple means that leads the lost! These same citizens will find a security for the future that comes from the past. History has shown the physical gold does hold true against all odds. If gold can stand against war, it will carry your wealth during the time of Y2K.
  • 1998 May 21: Another: I think, the currency of a country does no longer hold "backing". This term, it is used often, but is not correct. Today, all modern money does have "reserves", and such is used only for "the dirty float" in currency warfare. As in war, the larger and better equipped army in "reserve" does rule over the lesser force. Perhaps we should think in this way: in "cold war" of modern exchange rates, "digital currencies from reserves are used", however, when "hot war" of major default does begin, "nuclear weapons of GOLD" are deployed!
    As in real war defense, of today, some countries hold a much lesser army, and depend on "the alliance" with other stronger nations to defend them. Such it is with the currencies! Many states hold but a few "digital currencies" as reserves for currency wars and see no need for "gold nuclear weapons". They sell off these weapons and do join "the currency alliance" of stronger nations. We see this in Europe, yes?
    Time does record, that many young persons do mature without a history of "currency defeat" in money wars. These same do attain positions of authority with respect, to handling the currency "reserves" of a nation. It is in their "education" that the private citizens do lose much wealth. We proceed to such a time today, as gold loans hold only paper collateral! The motives of all Central Banks be not the same, with respect to "gold loans". A small number do travel the road of "monetary union" and sell gold as a commodity for funds to reduce debt. These officials thatsell for this purpose alone will be viewed as "much the fool" by voters, as gold does become a "great value" in the future. Some CBs also "lend" gold for a small return, as they see little difference in this metal to holding the Yen reserves and also receiving , perhaps 2%! These Central Banks place the gold with a private Bullion Bank. The gold is sold and the proceeds wait in this BB and draw market interest. The CB does have a "letter" claim to this "proceeds" and views it as "the same" as other "lent out currency reserves". The BB uses this "proceeds" as collateral to create contract with gold mine for future purchase of "new mined gold". The CB does also "attach" this "future gold" and views it as "lent out bullion reserves". This "attach" , it could claim the entire assets of mine in default, yes? Perhaps, we can see that "default" can also occur from other than "low gold price"? In currency wars of future, workers walk from doing job, as in Indonesia? A mine of few workers has little value, but often we see banks do claim "things of little value".
    The key for this "new gold market" is found not in the process of gold loans and sales, but in the "who is the new owner of this metal"? Noone did see clearly, "the other side of this". Always the view was, "see how the fools sell the gold and drive price low", not "who is buying all of this new supply at such cheap prices and giving up interest on currency also"? One should consider, "how much currency has flowed thru gold" over these past years! It is a great deal of wealth! Can not one see the clear view, "has not gold made the dollar strong as world reserve currency"? This happens in a time that all say the dollar would fail! Perhaps, "this new gold supply", it was for the purchase of "time".
    If oil was about to go off the "dollar reserve standard" and allow pricing in all currencies, and "the physical gold currency" was to be the most economical way to purchase, then I would say, "time was a valued purchase", yes? It is in this "purchased time", the world finds the creation of a "new reserve currency". The dollar, is today, strong in nature of a low gold price. Tomorrow, it will be the Euro that will find strength in a low gold price! Perhaps, these dollar "gold loans" will be called in to become "Euro gold loans"? "Gold priced in the thousands of USDs does not change this currency, it changes your perception of wealth"
  • 1998 May 22: Another: Sir, Yes. I do look for much destruction of the gold market as this progresses. I think, much of this "fight of money" will happen between 1999 and 2000, as the "gold trading center" in the middle east will be completed by then. (Mrt: Another referring to the Dubai Gold Souk - ...India is Dubai's largest buyer of gold, accounting for approximately 23% of the emirate's total gold trade in 2005. Switzerland was Dubai's largest supplier of gold ingots, wastes and scrap. ~wiki)
  • 1998 May 27: Michael Portillo: "European elites are embracing federalism and European integration as the primary means to ensure post-cold war security on the Continent. Michael Portillo argues that this is the wrong route. European integration is being designed in such a way that it sharply reduces democratic control, stirs up nationalism, and endangers the transatlantic link. Only a renewed and revitalized atlanticism will, in Mr. Portillo's view, guarantee European security. Mr. Portillo was secretary of state for defense in Britain from 1995 to 1997." - The forum was titled, "America and Europe: Will European Monetary Union Fracture the Alliance?"
    Answer: 1998 June 2: FOA:
    "I have a person in Washington that could find out more about this. However, I think this excerpt (I sent you) is open knowledge. It just has a nice connection to European thinking in regards to the new currency. The Middle Eastern bullion holdings are well hidden from official records. They control the gold market through the London/European gold paper markets. It was the BIS that handed them the market when it created the Central Bank lending deals. They were the prime buyers right off the bat! I didn't understand until about a year ago, how they were gaining control without cash. The answer is they don't buy the paper gold with cash! The Bullion Banks take oil reserves as collateral for it. The money that ends up in the account for a typical mining company forward deal is really a loan against oil in the ground. That's why the CBs lend the gold so cheap, it's not for the mines, it's for the producers! Now you know how we buy cheap oil prices. The world thinks the CBs are doing this for a 1% return. Truth is, the mining industry is going to pay full interest in the end. It's one hell of a complicated affair, with the politics and all. Needless to say, as the events open up and expose some of this, the public is going to be very interested. As for the SNB selling half of their gold. If they do, it will be for Euros, you can bet on it!"
  • 1998 June 4: Another:  In the past many of my "Thoughts" were offered for open discussion and debate. When I posted that "a large purchase was in progress" and "we should see this in several days", the intent was to focus persons on the public announcement, soon to be released. I also offered that we would see $320 - $360. I add to this, for your question.
    Many, not all, Central Banks offered gold loans in support of the expanding paper gold market. This major new trading market could not exist without some "addition" of existing gold, placed on the market from time to time. This addition of forward sales to the "existing physical gold market" expanded the "gold trading arena" .
    Because the Central Bank loans and sales offered "credibility" to any outstanding "short gold paper", a large derivatives market was built around this "gold trading arena". The CBs, along with the Bank For International Settlements (BIS), wanted gold to fall into the low to mid $300 range as this made the dollar (US$) strong in gold. It also made much of the "old" gold paper "good for delivery" as the Bullion Banks could supply the physical by purchasing on the "outside market" at lower prices! Had many of the early paper buyers (year or so ago) called for delivery, there be no supply as the physical market was spoken for. A falling dollar gold price made good on past paper deals as existing private supply was made free. In this light, I think few do truly understand how much trading in done in the world "gold trading arena" by LBMA! To understand this, is to know, "the CBs could never supply it! To think that gold is not wanted or not traded or "is a dead asset", it does become the foolish thought, yes?
    I think, over time, the gold derivatives market did "break" the control of the BIS. Gold is held by many world class entities, as a capital asset. These "Giants" did understand the purpose for $350 gold. In this range, the gold mining industry and many capital reserve gold assets would survive. Gold below $300 was not wanted, as even the BIS would be forced to move with the price much below $280. The last small gold war ended in the early 1980s, as the choice was to use the US$ or go to a gold based economy. No other reserve currency existed, and gold lost the war as all continued to buy dollar reserves.
    Today, a new currency is formed. It offers a way to break the dollar valuation of gold without the total destruction of worldwide currency markets and economies. In time, oil producers can offer their low cost reserves at true valuations, that support industry and commerce in exchange for a revaluing of real money, gold, in a real currency, Euros!
    The Belgium government did state " The National Bank does not intend to sell any further gold and this sale completes its programme of gold sales which started in 1989". Mr. Cole, in this statement you may read, that the "paper gold" of "the modern gold trading arena" will no longer be supported with "Euro Group Supply"! They did also state "After the start of European Economic and Monetary Union (EMU) in January 1999 Belgium will hold close to 300 tonnes of gold which is expected to be equivalent to around one third of its external reserves"! Sir, you may also read this as, once the Euro is formed, all "new" sales of "external reserve gold" will be done in: EUROs! They will have little use to sell gold for US$ reserves as they will have "much of that currency" already.
    As events progress, all/most "external gold reserves" of the "Euro Group Countries" will move towards the ECB and be settled in Euros. As gold will always be traded and denominated in the world currency that settles oil sales. Even Swiss gold will be sold to European Central Bank (ECB) for Euros for defense against the falling dollar. Yes, most dollar derivatives will fail as "worldwide gold trading in US$" stops from "contract default"! Will the dollar be weak in gold? Indeed, it may not exist as a market for gold!
    The Belgium CB does also state "gold will continue to play a role in the international financial system"! Some say these CBs are fools because they lower the value of their own reserve asset. This is done as a new world reserve oil currency is produced. Perhaps the perception of value is an ever changing, fools game? And to this I ask, what kind of fools are we?
  • 1998 June 9-11: Wim Duisenberg: FT - "These official reserves in non-EU currencies are gold constituting 10-15 percent of the total reserves."
  • 1998 June 14: Another: ...Once the Euro is created and begins to effect world trade (late 1999 perhaps), the gold market will begin a transition as never before! I think it will be interesting to follow the politics of this change, yes?
    Your question of Euro gold backing? The Euro will not be backed or fixed in gold. It will, as Michael Kosares (USAGOLD) notes, be the first "modern currency" to hold true "exchange reserves" in gold. It is important to understand that "exchange reserves" of gold are much more powerful a tool for currency defense than gold backing! In this system, gold must be traded in a "public physical market", in that currency, Euros! As such, the Euro can "devalue gold" (Euro price of gold falls) thereby making it strong in gold! In today's world, this will happen as a "strong Euro physical market" displaces and defaults " the old dollar settlement paper gold market"! The dollar will become"weak in gold"!
  • 1998 June 17: FOA: Another believes the BIS has actually entered the gold physical market. It was purchased through a Euro bank, not UBS and is continuing. It is not for the account of any country, but for BIS capital. They may announce this outright through the news services before he can write next week? My understanding is it was not for Japan! They were used as a diversion. For what purpose, I do not know? It could be they see the banks in Japan are about to fall under the capitol ratio rules as their market and economy takes a hit? The BIS may need the gold to cover any unpaid GF (gold Franc) reserve capitol due from BOJ? This is most likely the reason. Besides, during a crisis, it will be to late to patch up reserve ratios. If Asia falls before the Euro is in effect, Jan 1, it will take oil down with it in currency terms, along with an ensuing major reallocation of assets into gold.
  • 1998 June 24: Another: Mr. Kosares, Your post of (6/23/98 Daily Market Report), it speaks of a market not of the past. I agree. Many persons in this industry try to analysis price movements using "supply and demand" of gold. This information is of public knowledge and shown to all. What cannot be seen is the "currency of gold" in the form of "derivative positions "market. The "supply and demand" in this trade, it is much different, yes? Many of these "positions" find not a beginning in the mine industry, but they do make the physical dollar price of the metal "much different"! The trading of this new currency as a form of "dollar/gold" cross was born in the Euro Central Banks. It was offered as a means to escape the "political" dollar valuations of major commodities. Oil? The Central Banks make much news of their good use of gold thru lending and leasing. They often add an "also" to this thought in the form of "and this process adds liquidity to the market"! Many accept these statements as "for the mining industry", as it creates a good market for mining forward loans. I say, even the mine loans are part of the "adding of liquidity", as the "currency of gold" market is many times the "gold mined and sold as a commodity" market!
    Some wish to see the "inside" of this "currency of gold" trading? It was somewhat shown to many with the LBMA trading volume. This volume has "no explanation" from any analysis? The "supply and demand", it does not work as "good reason" for this trading, yes? Soon, the true nature and use of this new gold market will be in "good view" with "good reason" for all to see. Even today, the Euro Group Central banks, thru the BIS are trading gold in Euros! I think Mr. Fava offers only the beginning of the fire that comes to London: ( a small part of this article)
    "LONDON, June 23 (Reuters) London Bullion Marketing Association (LBMA) chairman Peter Fava earlier said in an interview with Reuters Television that he expected gold to reach $320 an ounce by the end of the year. Fava said this would be due to central banks becoming net buyers of gold."
    Yes, the Euro already exists in the form of the currencies that are now part of the ECB. These currencies change little between themselves as Jan 1, 1999 approaches. This withdraw of "dollar liquidity" from the"currency of gold market" will begin to effect the dollar price of gold. It will be the "currency of gold" "derivative positions " that will be forced to convert to Euro positions, first! The existence of "exchange reserves" of gold in the ECB does increase the Euro currency value in dollar terms as the dollar falls against the "currency of gold derivative positions ". To hedge these positions, physical gold and Euros must be purchased. Today, the BIS does do both for ECB customers. No longer does the dollar price of gold fall for the benefit of oil, as the Euro has been chosen for oil settlement in future. The dollar price of oil will now move for a different story: "oil was priced to low in dollars and to high in ounces of gold"! I think, the price of gasoline will be a "good deal" in Europe soon.
    We will now see China walk the trail to Berlin as the Japan does rush for the American dollar! Indeed, the Yen will seek much more US debt as they are, locked out! The Mr. Alan Greenspan will attend a board meeting of the Bank for International Settlements in Tokyo next month. I think the markets will see "much change" of spirit after this meeting. It will be the end of the past and the start of the future for trading gold! We watch this new market together, yes?
  • 1998 June 30: Inauguration of European Central Bank in Frankfurt; Wim F. Duisenberg first President.
  • 1998 July:  The European Union Commission released a directive to harmonize all existing value added gold taxes in EU member states and to set the tax at zero on gold used for purely ‘financial’ transactions
  • 1998 July: Luxembourg sold 11 tonnes out of 12 tonnes of its gold reserves.
  • 1998 July: the European Central Bank announced that 15% of its currency reserves will be held in gold.
  • 1998 July: Opening of the BIS Representative Office for Asia and the Pacific in Hong Kong SAR; Host Country Agreement with China
  • 1998 July: BIS and BCBS set up the Financial Stability Institute (FSI)
  • 1998 July 1: The European Central Bank was inaugurated with headquarters in Frankfurt under Pres. Wim Duisenberg.
  • 1998 July 20: IMF finances a SDR 6.3 billion extended fund facility arrangement for Russia
  • 1998 July 24: Alan Greenspan: “Central banks stand ready to lease gold in increasing quantities should the price rise.” 
  • 1998 July 30: Alan Greenspan who said he would control the gold market if he had to in little-noticed testimony before the House Banking Committee. The Fed Chairman was trying to downplay the risk that some derivative contracts might produce a squeeze on short sellers. He explained that there was no danger that the supply of oil to fulfill derivative contracts could be restricted. Then, he added, "Nor can private counterparts 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." Mr. Greenspan said "CENTRAL BANKS," bankS, like in the plural. Without one iota of doubt he was referring to a collusion of Central Banks acting in concert with the specific objective of CONTROLLING THE PRICE OF GOLD, so it could not rise. ",,, ready to lease gold in increasing quantities should the price rise." ~RB [Mrt: needs to be rechecked which is correct]
  • 1998 August: Russia defaults on its GKO (government short-term bonds) debt and devalues the rouble
  • 1998 September: Long Term Capital Management (LTCM) hedge fund nearly collapses.
  • 1998 September 3: Last post by ANOTHER on USAGold
  • 1998 September 7:  The Tripartite Gold Commission closed. It was set up in 1946 by Britain, France and the United States to oversee the return of some $4 billion in gold plundered by the Nazis from European treasuries.
  • 1998 September: The Czech Republic sold 31 tonnes, leaving 14 tonnes.
  • 1998 November 12: VAT: special scheme for gold introduced in EU. 
  • 1998 December 31: As a result of the euro's introduction, the BIS ceases to act as Agent for the private ECU clearing and settlement system set up on 21 March 1986  
  • 1998 December 31:  the European Currency Unit (ECU) exchange rates of the Eurozone countries were frozen and the value of the euro, which then superseded the ECU at par, was thus established.
  • IMF - HIPC:  "A comprehensive review of the Initiative allowed the Fund to provide faster, deeper, and broader debt relief and strengthened the links between debt relief, poverty reduction, and social policies."
  • 1999 January: the Eurosystem, which comprises the ECB and the eleven member's national central banks, held 12,574 tonnes of gold making it the world's largest holder of gold, with over one third of total world reserve holdings, a total of about 34,000 tonnes.
  • 1999 January 1: The euro was introduced to world financial markets as an accounting currency, replacing the former European Currency Unit (ECU) at a ratio of 1:1.
  • 1999 January 13: EU Commission adopts a recommendation (1999/63/EC) concerning collector coins, medals and tokens. In order to facilitate the transition to the euro and to reduce the risk of confusion for citizens during the transitional period (1 January 1999 to 31 December 2001), when the euro will exist only as book money, the Commission recommends that Member States should prohibit on the territory of the European Union throughout this period all collector coins denominated in euro and all medals and tokens which bear the word 'euro' or 'euro cent' or show a design which is similar to the design which appears on the common side of the euro coin.
  • 1999 February: Creation of the Financial Stability Forum (FSF) by G7 finance ministers and central bank governors; BIS General Manager Andrew D Crockett appointed Chairman in a personal capacity
  • 1999 February: The G10 ECSC, established on 18 April 1971 (see), is renamed "Committee on the Global Financial System" (CGFS)
  • 1999 February 15: NY Times: article The commitee to save the world. 
  • 1999 March: BIS, IMF, World Bank, and OECD jointly publish, for the first time, creditor-based measures of countries' external debt  
  • 1999 March: A former IMF proposal to sell 150–300 tonnes of gold to finance debt relief of poor nations (which was rejected in late 1996 by Germany) resurfaces, with supportive statements from Germany, France, the United Kingdom, the United States and Japan.
  • 1999 April: A proposal by the former President of the Schweizerische Nationalbank (SNB), Hans Meyer, 1300 tons of gold have been declared to be no longer needed as a reserve and been earmarked for public disposal. This has been made possible by a popular referendum changing the Swiss constitution in April 1999.

A8/ UK Treasury gold sales

  • 1999 May 7: The UK Treasury announces a plan to sell 415 tonnes (around 60 per cent) of UK gold reserves over the medium term. The Bank of England states that initial sales of 125 tonnes over 1999-2000 will be undertaken through a series of auctions every two months.
  • 1999 May 8: FOA (May 8, 1999 Msg ID:5772) When Central Banks (mostly the European, at first) began to lease / lend gold, they were beginning what was to become "the master plan". The creation of a broad, liquid paper gold market that would ulltementally undermine the dollar, in time. As I said above, initially it was offered as an "appeasement" for continued dollar use. However, even the IMF / dollar faction never expected the successful creation of another competing reserve currency, the Euro! Right up to it's offering, the political money was on the side of a complete failure, 100% with ten to one odds.
    Not only did they lose, the Euro even accepted a percentage of gold as Euro reserves. If that wasn't enough, the ECB also instituted a policy of "marking to the market" it's gold reserves and effectively blocking any new sales or leases. These actions, as subtle and misunderstood as they were have had the effect of officially making gold money again. Yes, this new broadly traded paper gold market, standing side by side with the physical market has become a world currency.
    The problem this creates for the IMF / dollar is that most, if not all of this new gold market is settled in dollars! Dollars that broke a contract with the world in 1971 and went off the "gold exchange standard" at $41 to the ounce. The same dollar reserve currency that is not supported when the gold price rises. If the ECB does nothing but stand firm by not allowing physical out of it's vaults, the dollar will be trapped by gold. The US treasury cannot use gold as a backing reserve as the ECB does, because the BIS would claim it at $41 to settle trade imbalances. They
    have that authority and as such it leaves the US the only option of outright gold sales. However, with the dollar as "the" reserve currency, we can expect many nations to bid "aggressively" for any US gold. China, among others comes to mind! That is what America found when they tried to auction it's gold in 1978. The Euro carries no such baggage.
    This all leaves us in the present political situation, where the IMF entity, that was formed to replace the gold standard, is now trying to back the present paper gold with physical to prevent a run on the dollar. It is a futile effort as the ECB / BIS have grown the gold market into massive proportions by encouraging the many year expansion of holders through paper securities. All denominated, ultimately, in dollars. We will see $10,000 gold, count on it! It's the only way this can be resolved. That same figure will create massive backing for the Euro and hasten it's journey into world reserve currency status. Expect most of the ECB liability for gold to be easily converted into Euros at the dollars expense.
    Now, the BOE action clearly shows the split between them and the IMF / Dollar faction. They have given up on freeing up IMF gold to support the dollar and are actively trying to help their LBMA. England will be forced into the EURO as they abandon ship. I expect an explosion in open interest on Comex as major players try to hedge themselves against short gold. The US now has no choice but to encourage gold to rise and use that action as a political ploy. They will no doubt try to gain much mileage out of the fact that the treasury has 8,000 tonnes of gold for dollar backing or outright sales. It will be a political discussion, only. As the gold market becomes more dynamic and gains media attention, many congressional investigations will target the short funds. After all, with gold killing the dollar, something must be done.
  • 1999 June: BCBS releases a first consultative paper setting out a proposed reform of the 1988 Basel Capital Accord  
  • 1999 Jul-Sep: US hedge fund LTCM collapses
  • 1999 September:BoE: Sir Eddie George: "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 US Fed was very active in getting the gold price down. So was the U.K."
  • 1999 September 26: WGA signed, known as "Joint statement on gold". 
  • FOA (Trail Guide, 8/26/2000) "The Washington Agreement has placed us "on the road" to one of the most exciting changes for our current physical gold market in it's short 25 year history. This part of the world reserve currency system was about to radically evolve with respect to the world dollar gold values. To date, the ongoing dramatic fall off of LBMA trading from it's (also) short public life is leading to an eventual official evaporation of dollar based paper gold banking.
    Someone in Another's group pointed to that spike in paper trading long before most had ever heard of LBMA,,,, and did so by saying that a drop below $360 would cause it. That ensuing round of massive paper playing was but a backstop to maintain the dollar reputation with low paper prices prior to Euro presentation.
    I point this out because many new watchers of our gold wars have no knowledge of this important play on the political currency chess board.
    This paper game got out of hand before the Euro was born and the BIS was ready to hold the gold line at $280 if needed. But, the Euro was born and is now a functioning currency. Today our paper gold game has come full circle and most of the players that know anything are shaking at the prospect of a pure physical market that will stand next to the Euro. Forget the gross volumes of derivatives on the books of majors, they don't mean a thing. They can keep writing contracts all they want but with trading volume falling away, eventually there will be no market to value these assets.
    If this process is allowed to mature fully, major pain is coming to paper hard money investors worldwide. They have hitched their wagon to assets that require an operating paper system to sell into. Outside the private markets for existing and circulating bullion and coins, the entire industry will shutter to a halt as the mess is worked out. Investors will be kicking themselves as bullion soars
    while an extended workout phase brings their asset values to almost zero. Sure, something will give,,,, maybe? Maybe we are at the paper price lows now?" 

  • 1999 October 21: Central Bank of KUWAIT's decision to lend gold - Kuwait - Kuwait's Central Bank announced today that it had decided to deposit 79 tonnes of its gold reserves with "reputable" international finance institutions. Central bank governor Sheikh Salem Abdul-Aziz al-Sabah said the bank would invest its gold through limited-term deposits, without giving up the ownership of the reserves. 
  • 1999 October: Establishment of central bank governance network at the BIS 
  • 1999 October 29: Another: Something interesting happened just ago that will, in time impact the price of gold in US$. A proposal was offered to borrow in broken lots, 3.5 and 5.5 million ozs for resale. It was turned down. The owner offered to sell only, no lease. What turned heads was that someone else stepped in and took it all, at a premium! (about 85t+155t)
  • 1999 May 7:  The UK government's announced intention to sell of part of the UK gold reserves (1999 - 2002 in total of 395t) and reinvest the proceeds in foreign currency deposits, including euros.
  • 1999 December 9: The European Central Bank becomes a member of the BIS 
  • 1999 December 24: The Central Bank of Malaysia becomes a member of the BIS
  • 1999: Malaysia sells 36t of gold. 
  • Between 1980 and 1996: Canada sold 594 tonnes, leaving just 81 tonnes. Other source:
    Between 1980 and 1999: Canada sold 634 tonnes of gold.
  • 1992 - 2000 February: Netherlands sells 813 tons of gold  
  • 2000 January 19: Mr. Greenspan elaborated on his 1998 congressional testimony: "This observation simply describes the limited capacity of private parties to influence the gold market by restricting the supply of gold, given the observed willingness of some foreign central banks -- not the Federal Reserve -- to lease gold in response to price increases."
  • 2000 June: BdF: The Banque de France’s view on gold and comments on the euro 
  • 2000 September 22: the ECB, together with the monetary authorities of the United States, Japan, the United Kingdom and Canada, initiated concerted intervention in the foreign exchange markets. 
  • 2000 November: ECB intervened again in early November 2000.
  • 2000 to end of November: Switzerland sells 160t of gold.
  • 2001 March 7: The BOE surprisingly announcing a reduction to 20 tonnes for the final six auctions beginning May 15, 2001 and ending March 5, 2002. (two days before March 9)  (For the previous 11 auctions, they sold 25 tonnes six times a year or every other month.),
  • 2001 May 6, Sunday: repost - BASEL, Switzerland (Reuters) - U.S. Federal Reserve Board Chairman Alan Greenspan and European Central Bank President Wim Duisenberg will both take part in a meeting of central bankers on Monday at the Bank for International Settlements in Switzerland. Greenspan and Duisenberg attended a dinner on Sunday along with Bank of England Governor Sir Edward George and other members of the Group of 10 central bankers. As he left the dinner, Greenspan was asked by reporters whether he was there to urge the ECB to cut interest rates. He replied only: "I am here because I am a member of this group." Duisenberg, who left the dinner a few minutes after Greenspan, declined to say what had been discussed during the evening. The chairmen of the central banks of the Group of 10 countries meet periodically at the Bank for International Settlements in Basel, Switzerland, to discuss the world economic situation.
  • 2001 May 14, Monday: a message sent by Bill Murphey (GATA)  Our intelligence sources have informed us that Fed Chairman Alan Greenspan has given the bullion banks until the end of May to clear up their hedging and outstanding gold derivative positions. Evidentially this process has been going on for some time. Further, British Prime Minister Tony Blair will try to make available, at the upcoming British gold auction, additional gold that will go to banks designated by Greenspan. We were also told that AngloGold will sell forward a designated amount of gold to banks also specified by Greenspan. Our source for this intelligence has been very accurate in the past. They also said they thought that gold would break out over $275 an ounce by Friday.."
  • 2001 May 15 Tuesday: BOE's 12th "Brown's Bottom" gold auction, but the first one with a new, smaller amount being auctioned off.
    2001 May 15 Tuesday: May 15 was the first reduced-size 20 tonne auction and by Friday there was speculation in the media that the BOE might further reduce the size or eliminate the auctions altogether:
    Market Update;; May 18, 2001: "One hour remaining to trade and the indices continue to look listless. The June contract on gold has truly taken off at this point bidding up $12.50 (4.6%) intraday to $286.50. This morning, noted that the Bank of England had reduced the size of its gold auction to 20 tonnes this Tuesday from 25 tonnes at the prior 11 auctions. There is speculation now that the BOE might reduce or eliminate the sale of its reserves altogether. Gold-related equities are spiking on price action in the commodity with the XAU is posting a 5.6% intraday gain."
    Of course the BOE did not reduce the size of the auctions below 20 tonnes and they continued the rest of the planned auctions ending on March 5, 2002, less than a month after beginning of Gold bull began (see bellow).
  • 2001 May 18: price of gold spiked 5%.
  • 2001 May 22, Tuesday: The Commitment of Traders Report (COT) - "The position of the 'Large Commercial' dealers changed from neutral on average to short 20% the open interest, and this change has been permanent and still persists today. Similarly, according to the CFTC Bank Participation Report, the share of the four largest banks in the COMEX open interest increases from 20% to 30%, and this change has been permanent until early 2008 when it increases to about 50%."
    [According to the reported rumors, the short parties being squeezed were Goldman Sachs and Chase Manhattan (now part of JP Morgan).]
  • 2001: The price increase over that weekend was 9% ($273 to $298)
  • 2001: Are 5t missing or how to explain this? 
  • 2001 December 1: China was admitted into the World Trade Organization


  • 2002 January 1: Euro cash was introduced
  • 2002 February 8: Gold bull reached $300.
  • 2002 March 5: BoE ends gold auctions.
  • 2004: Norges Bank sold 33.5 tons of gold bars in the first quarter of 2004 
  • 2005: IMF: The HIPC Initiative was supplemented by the Multilateral Debt Relief Initiative (MDRI). The MDRI allows for 100 percent relief on eligible debts by three multilateral institutions—the IMF, the World Bank, and the African Development Fund (AfDF)—for countries completing the HIPC Initiative process.
  • 2006: Vladimir Putin: “The ruble must become a more widespread means of international transactions,” Putin said. “To this end, we need to open a stock exchange in Russia to trade in oil, gas, and other goods to be paid for in rubles."
  • 2007: IMF/IaDB: The Inter-American Development Bank (IaDB) also decided to provide additional (“beyond HIPC”) debt relief to the five HIPCs in the Western Hemisphere.
  • 2009 September - 2010 December 2010: IMF sold 403t "on market".
  • 2009 end: CBs became net buyers of gold for the first time since 1989! 

A11/ In the footsteps of Giants

  • 2010 March: BIS: "Our projections of public debt ratios lead us to conclude that the path pursued by fiscal authorities in a number of industrial countries is unsustainable. Drastic measures are necessary to check the rapid growth of current and future liabilities of governments and reduce their adverse consequences for long-term growth and monetary stability."
  • 2010 March 24: The Chiang Mai Initiative (CMI) is a multilateral currency swap arrangement among the ten members of the Association of Southeast Asian Nations (ASEAN), the People's Republic of China (including Hong Kong), Japan, and South Korea. It draws from a foreign exchange reserves pool worth US$120 billion.

2011 onward...
  • ...

B/ Notes, Attachments


The pound did not join the Second European Exchange Rate Mechanism (ERM II) after the Euro was created. Denmark and the UK have opt-outs from entry to the Euro. Technically, every other EU nation must eventually sign up.  


It seems that UK has decided to go its way.

CB Gold holdings 1999 - source

ECB foreign reserves - substitution

ECB foreign reserves - value

ECB gold holdings - volume provided by DP -> Thanks!

Gold bull:
2002 Friday, February 8 - GOLD ABOVE $300
2003 Monday, December 1 - GOLD ABOVE $400
2005 Thursday December 1 - GOLD ABOVE $500
2006 Monday, April 17 - GOLD ABOVE $600
2006 Tuesday, May 9 - GOLD ABOVE $700
2007 Friday, November 2 - GOLD ABOVE $800
2008 Monday, January 14 - GOLD ABOVE $900
2008 Monday, March 17 - GOLD ABOVE $1000
2009 Monday, November 9 - GOLD ABOVE $1100
2009 Tuesday, December 1 - GOLD ABOVE $1200
2010 Tuesday, September 28 - GOLD ABOVE $1300
2010 Wednesday, November 9 - GOLD ABOVE $1400
2011 Wednesday, April 20 - GOLD ABOVE $1500
2011 Monday, July 18 - GOLD ABOVE $1600
2011 Monday, August 8 - GOLD ABOVE $1700

Oil prices1947 - 2011: here
    [Mrt: please keep small font]
    1 "Big trader" (one of the non-oil-producing giants)
    2 "Another"
    3 "RedBaron"
    4 ...whenever... search on your own! ...verify!




    1. I am trying to catch those "moves" :o)

    2. Wow. When did you guys start construction on this library? I love what you've done with the place!

    3. Mrt has been working on this for, like, a week or so I think. He has had just about no help so far AFAIK. He does have a massive amount of work and experience behind him at his other blog, but still, it's an impressive amount of progress already isn't it. :)

    4. You aren't kidding DP. This list is amazing.

      My two personal favorites:

      #1 1997 Octoner 9: Another:The market is changing now,,, it will go up but you will not be happy with the outcome.

      #2 Now the CBs will have to sell 1/3 to 1/2 of their gold just to cover whats out there. To use the Queens English "it ain't gona happen dude"!

      Thank you Mortymer. This compendium can only increase in value as time passes.

    5. Wow.Thats a lot of detail.
      So ,Mortymer.If ,say you were going to condense all that because you had to tell it to someone in a hurry;and you knew that someone was too lazy,err, i mean busy, to read it all.
      How would you do that?

    6. OK I'll try to comment again ......

      WOW mortymer, I'll have to read again and think long and hard on this

    7. Ozzy,
      Far from finished,
      A good question.

      I do not know. To throw the ball to the other side, to make them interested?
      As I see it there are many ways how to come to the same outcome. Very short? DP´s visual one perhaps? For example the last 3 pictures of Euro reserves + the gold trend for last 30y. Print them and show them what is happening and make them space to think independently.

    8. Adding the US Gov policy papers - section Prelude II. based on timeline.

    9. Added an opening file to: A4/ EuroThinkers -> by Henri Simonet 1974.

    10. Hi,
      Notes, I will be brief and short, no time to write details at work. We were discussing this issue quite some time ago and then few months ago. Will C/P bit.

      *The HK gold market was freed in 1974:

      *The CB have since Zeits (or later) had a "ceeling" on total holdings. I am not sure how it is now but in seventies there was established the one way membrane between the CB and private gold market. The total of CB gold was not supposed to be increased, could demonetize and sell but not net purchase over the total CB limit, there were many docs about this, I do not have the final version but I suppose it was in Zeist, Martinique or Jamaica when it was finalized.
      Note: CB do not care about the preserving of the wealth as much as they care about the stability of the system. CHina was in seventies actually in a bad position and had to take some gold loans and there were wiki reports about CHina attempt to sell gold via London (not all cables were disclosed, positions and CB holdings are still off limit).

      -> So IMO it was not straight the CBs (HK+China) as their hands were tied by int. regulations. It was as you mentioned CITIC or similar. What evidence I have found (following the rich HK people and what I could find about them, that it was some kind of consorcium behind a company or more.)

      - In BIS archives I have found a doc mentioning one big HK company "large securities firm"... Peregrine (this was the only I have found in BIS archives)

    11. Now back to the cables, some background:



      - December 31: CABLE FROM MR. COOPER - 1974HONGK13981_b
      (private, not CB level, also GER, FRA, Kuwait - wanted to participate on the US gold sale).

      In this BIS doc:

      Joint report by the Basle Committee on Banking Supervision
      and the
      Technical Committee of the International Organisation of Securities Commissions
      November 1997

      "This survey of disclosures about trading and derivatives activities presented in the annual reports of 79 large banks and securities firms located in the G-10 countries and one large securities firm located in Hong Kong, reveals that while trading and derivatives disclosures of many banks and securities firms have improved in recent years, there are still some institutions that disclose little or nothing about key aspects of their trading and derivatives activities.

      went bust later:

      Peregrine Fixed Income Limited (in liquidation)
      Peregrine Investments Holdings Limited (in liquidation)
      Pursuant to the appointment by the Financial Secretary of Richard Farrant as
      Inspector under section 143(1)(a) of the Companies Ordinance (Chapter 32).
      12th February 2000


    12. in the wiki link there is a link to the:

      VtC: "Interesting. Rong Yiren's son! Just speculating, if Peregrine was one of the vehicles through which they traded their long forwards/unallocated, then they were successfully taken out of business by the Asian financial crisis in fall 1997 (except that someone removed almost 2500 tonnes of physical gold from London - i.e. they kept their precious, but went broke in terms of paper).

      Btw, we now know that the Bundesbank relocated almost 950 tonnes from London to Frankfurt in 1999-2001. This doesn't show up on the import/export statistics (see my gold leasing article), and so someone else must have sold a similar amount loco London at the same time."

      " the company lost all liquidity and after unsuccessful negotiations with would-be suitors and white knights, and closed in January 1998.[2] The Greater China team stumbled into the arms of BNP Paribas, while a substantial portion of the Asia team (ex-China) was hired by Banco Santander." wiki


      Here is the connection between CITIC and Peregrine:

      Philip Tose, one of Peregrine's two founders, wrote the first-ever "western"research report on a Chinese-run firm. The firm, Cheung Kong, was headed by a reticent entrepreneur named Ki Ka-Shing. Mr Ki is now one of Hong Kong's richest and most influential businessmen. In 1988 when Mr Tose and a colleague, Francis Leung, launched Peregrine, the firm's backers included not only Mr Li but also several other Chinese bigwigs: Gordon Wu's Hopewell, what is now CITIC Pacific, run by Larry Yung, and interests associated with Stanley Ho, a Macau casino operator.
      Just as Hong Kong's new establishment has forged ties with China's budding class of "cadre capitalists" so Peregrine has turned its Hong Kong connections to advantage on the mainland. Its ties to CITIC Pacific are especially valuable, because this "red-chip" company is the Hong Kong arm of the China International Trust & Investment Corporation, China's biggest holding company, which was chaired until last year by Mr Yung's father, Rong Yiren, a longstanding intimate of Deng Xiaoping.

      Other ties with China include a trading partnership with the Beijing municipality, a joint venture with Jiangsu's provincial government and a foreign-exchange business with the authorities in Guangzhou. Peregrine also has a clutch of mainland shareholders. Not surprisingly, it has been the busiest broker bringing Chinese enterprises to the Hong Kong market, as well as tot he markets in Shanghai and SHenzhen. Peregrine is the only house to have got round the rules that bar foreigners from seats on the Shanghai exchange.

      Some of Peregrine's private clients may have represented hot money from Taiwan and China in search of hot stocks. Yet among institutional investors that take the less frothy stuff, Peregrine has a loyal following. The Templeton group of funds and George Soros have both invested in the firm itself.
      "Peregrine is unashamedly blunt about where its political loyalties lie. Mr Tose once offered Britain's Conservative Party--perhaps in jest--5 million pounds (US$7.5 million) to sack Chris Patten as Hong Kong's governor. Mr Tose is not bothered by his close ties with such nasty governments as China's."

    13. Brown's Gold Sale was another bank bailout, we just were not told by the u\k government, unlike in 2008

    14. Jeff, the truth is out there, don't be scared.