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The Gold-gate Case - Curiouser and Curiouser
(August 25, 2001) More evidence emerges about federal manipulation in the gold markets over the past few years. The Treasury publishes a denial on their website that the ESF deals in gold, but fails to mention their dwindling stock of SDRs, each representing 1/35th of an ounce of Treasury gold. Although for 30 years it’s been the avowed policy goal of the U.S. to render gold obsolete, the durable yellow stuff refuses to go away…
Long ago, we had the “Gold Panic of 1869,” which was a genuine financial calamity involving gold, speculators, the Grant Administration, and the U.S. Treasury. That led to monetary legislation that came to be known as the “Crime of ’73.” And when gold was eliminated from our everyday commerce in 1933, it was referred to as “The End of Western Civilization as We Know It.”

Today, as the story of recent federal manipulation of gold prices unfolds, we think that this scandal needs an appropriate name. We used “Gold-gate” in the title to this article just because we’ve heard it called that elsewhere. But the “-gate” suffix is a dated artifact from the "Watergate" scandal of the Nixon administration.

That’s history, as the kids say. Nixon's travails, which started this now shopworn habit of calling scandals such-and-such-gate, happened back when today’s 40-year-old was still in grade school.

Clearly, we need a pithy, 21st Century-style name for this most recent (roughly 1995-2000) gold scandal. If you have a suggestion as to a catchy title for the ongoing gold manipulation scheme revelations, please send us your suggestion via email. With the right moniker for this situation, people might start to understand it. Since this gold story has yet to receive wide national distribution, the catchy and appropriate name that you invent may just stick. Give it some thought.


The U.S. Treasury denial of involvement in gold trading can be found on their website ( Disengenuously, it states that the ESF doesn't “hold” gold or “transact in” gold, failing to mention that SDRs are gold. And that the ESF stock of SDRs (Special Drawing Rights) each representing 1/35th ounce of Treasury gold, has declined from a peak of 10.2 Billion SDRs to 2.2 billion SDRs as of the end of year 2000.

James Turk has done yeoman work in researching the arcane details of gold price manipulation by the Treasury and others. You can see his essay "The Mystery of the Disappearing SDR Certificates" (Copyright August 13, 2001, the Freemarket Gold and Money Report) at the GATA website ( In this essay, he states:

"As of December 1998, the ESF owned 10,603 million SDR's, but it had a liability for 6,899 million SDR's. What does this liability represent? Here's what Schedule B of the Articles of Agreement of the IMF says: "…0.888671 gram of fine gold shall be equivalent to one special drawing right." That means 35 SDR's equals one ounce of gold. So the US has the potential obligation as of December 2000 – if required to make good on SDR's issued – to pay to the IMF or its members 182.4 million ounces of gold, some 69.7% of the US Gold Reserve." (emphasis ours -ed.)

That's a lot of gold gone, spent by the ESF, supposedly in the cause of "currency stabilization." Yet here's the "Q&A" you can find on the abovementioned Treasury website:


“Question: I have heard about allegations that the Treasury Department manipulated the price of gold. What can you tell me about this?”

“On March 15, 2001, in response to a lawsuit initiated by Mr. Reginald Howe, the U.S. Attorney’s off in Boston filed a motion to dismiss. Mr. Howe’s complaint alleges that the Exchange Stabilization Fund(ESF) has been used over the past several years to manipulate the price of gold.”

“The ESF has not been used to manipulate gold prices. In fact, the ESF has not held gold since 1978. It does not engage in any transactions in the market for any metal such as gold, either in spot markets or in any of its various derivative forms. The holding of the ESF consist exclusively of foreign currency (euros and yen), Special Drawing Rights (SDRs) and dollars. These assets are reflected in weekly press releases that are indexed in our Topical Readings of Selected Treasury Documents About International Reserve Positions. The press release also reports information about Federal Reserve holdings of foreign exchange, Treasury holding of gold and the U.S reserve positions in the IMF, none of which are ESF assets. The ESF is audited annually and its financial statements are provided monthly to the Congress. We would like to emphasize that the Treasury Department does not seek to manipulate the price of gold or any other metal by intervening in or otherwise interfering with the market.”


In a few days, we’ll bring you John Hathaway’s latest enlightening essay on the gold manipulation issue. Whether you call it a conspiracy, a scandal, or just the normal “Clash of the Titans” involved in monetary and gold policy worldwide, it certainly makes for fascinating reading. It’s no wonder Hathaway entitled his essay “Gold as Theatre.”


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