Has the BIS gold pool succeeded the London Gold Pool? |  |
Dear Friend of GATA and Gold:
An inquiry tonight about the Bank for International Settlements led your secretary/treasurer back into GATA's documentation archive --
http://www.gata.org/taxonomy/term/21
-- where the bank has figured prominently over the last year.
First there was GATA's disclosure of the presentation made to central banks that were recruited for membership in the BIS during a meeting at the bank's headquarters in Basel, Switzerland, in June 2008, a presentation advertising BIS services including secret interventions in the gold market:
http://www.gata.org/node/11012
Then there was Zero Hedge's disclosure of a BIS gold trader's attempt to remove from his official biography a reference to his responsibility for those secret interventions:
http://www.gata.org/node/11257
And then there was the discovery by our Dutch friend, the economist Jaco Schipper of MarketUpdate.nl, of the memoirs of the late president of the Netherlands central bank and president of the BIS itself, Jelle Zijlstra, who wrote that, because of the insistence of the United States, "Gold is artificially kept at a far too low price":
http://www.gata.org/node/11304
But there was also something else from a bit farther back -- an extraordinary profile of the BIS by the investigative journalist Edward Jay Epstein, published in Harper's magazine in November 1983 after Epstein was given what appears to have been unprecedented access to the bank. Epstein described the BIS as running practically the whole world financially in virtual contempt of elected governments and in near-complete secrecy. But Epstein's references to the bank's involvement in the gold market are of greatest interest to GATA's work.
Epstein reported that BIS headquarters in Basel has a floor of gold traders "constantly on the telephone arranging loans of the bank's gold to international arbitrageurs, thus allowing central banks to make interest on gold deposits."
Was the only purpose of that trading really just to earn a little interest on those gold deposits, as that sentence suggests?
The rest of Epstein's essay about the BIS suggests otherwise.
"The membership of this club," Epstein writes, "is restricted to a handful of powerful men who determine daily the interest rate, the availability of credit, and the money supply of the banks in their own countries. ... It was in the wood-paneled rooms above the shop and the hotel that decisions were reached to devalue or defend currencies, to fix the price of gold, to regulate offshore banking, and to raise or lower short-term interest rates."
Epstein goes on to quote the president of the BIS, Karl Otto Pohl, then also president of the German Bundesbank, complaining "about the repetitiousness of the meetings during the 'Basel weekend.'" Pohl says: "First there is the meeting on the Gold Pool. Then, after lunch, the same faces show up at the G-10, and the next day there is the board, which excludes the U.S., Japan, and Canada, and the European Community meeting, which excludes Sweden and Switzerland."
Of course the "gold pool" with which many gold market followers are familiar is the London Gold Pool, the mechanism by which the United States, United Kingdom, and six of their Western European allies co-ordinated, through the Bank of England, the dishoarding of their gold reserves to hold the dollar gold price at $35 per ounce from 1961 through March 1968, when the gold pool collapsed:
http://en.wikipedia.org/wiki/London_Gold_Pool
But Epstein is writing 15 years later, interviewing BIS President Pohl in 1983, so Pohl is talking about another gold pool, one operated by the BIS itself -- only, unlike the London Gold Pool, entirely in secret.
GATA's gold market rigging litigator, Reginald H. Howe, targeted the BIS in his groundbreaking lawsuit in U.S. District Court in Boston in 2000:
http://www.goldensextant.com/
And a month ago GATA consultant Robert Lambourne, a student of the BIS, reported that 41 percent of the bank's comprehensive income for fiscal 2011-12 came from gold:
http://www.gata.org/node/11502
Of course respectable people in the gold world may say that the BIS' involvement in the gold market is completely innocent. (To respectable people, everything is completely innocent, even today as corruption abounds.) But Epstein concludes that the great value of the BIS to its member central banks is that of a "convenient cloak" and a "disguise."
If there was any serious journalism about gold -- or, for that matter, any serious financial journalism at all today -- the BIS would be a ripe subject, plainly the center of vast and unaccountable power. But the bank's acknowledged secret dealings in the gold market may be enough to establish the general probability of market manipulation.
Epstein's report on the BIS is appended for safety's sake, lest it disappear from his own Internet site, from which it is copied.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
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