The Wall Street Journal has agreed to publish a full-page ad in which the Gold Anti-Trust Action Committee charges
the U.S. government surreptitiously utilizes gold reserves to engage in
international swaps and other market manipulations.
Our Gold?" is the title of the ad, which alleges U.S. gold reserves
held at depositories such as Fort Knox and West Point may have been
seriously depleted. GATA asserts U.S. gold reserves are being shipped
overseas to settle complex transactions utilized by the Federal Reserve and the U.S. Treasury to suppress the price of the precious metal.
of this manipulation is to conceal the mismanagement of the U.S. dollar
so that it might retain its function as the world's reserve currency," the ad copy reads in a pre-publication version GATA provided.
The U.S. Treasury denies the claim, insisting the stock is accounted for regularly.
chairman, William J. Murphy III, told WND his group was willing to pay
the Wall Street Journal's cost of $264,000 to run the ad "to get the
message out that the U.S. enters world markets without public
disclosure to prop up the dollar and depress the price of gold."
GATA cites as
evidence the Federal Reserve Open Market Committee reports dating back
to Jan. 31, 1995, showing the U.S. Treasury Department's Exchange
Stabilization Fund had undertaken gold swaps.
non-profit 501 headquartered in Manchester, Conn., further asserts the
federal government strategy to manipulate the price of gold has begun
rise toward $900 per ounce shows that the price suppression scheme is
faltering," the GATA ad reads. "When it is widely understood how
central banks have been suppressing gold, its price may rise to $3,000
or $5,000 an ounce or more."
"The gold reserves of the United States have not been independently audited for half a century," the ad charges.
The U.S. Treasury disagrees.
"While the entire gold stock is
not physically re-counted in any one year, over a period of years, by
our continuous sampling process, the entire stock has been counted, and
is effectively re-inventoried," Rich Delmar, counsel to Treasury's
inspector general, told WND in an e-mail.
Delmar explained that the annual Office of Inspector General audits of
mint facilities involves a physical inspection of certain vaults, which
are subject to a 100-percent bar count and assaying. At the end of the
inspection, each vault is sealed.
visit, all previously sealed vaults are checked to ensure that the
seals have not been compromised or tampered with," he wrote. "This
process is the basis for the conclusion that there has been a complete
Delmar said the OIG's work consists of more than reviewing documents.
physically observe the inventory work done at the mint facilities, and
we are responsible for the assay sampling process," he said.
WND asked the
Treasury if there is a comprehensive listing and accounting of any
encumbrances or other restrictions on the gold in the U.S. Mint that
may affect ownership.
"This is not within OIG's purview," Delmar responded. "You may want to ask the mint directly."
'Dodging the question'
Murphy called the response "ridiculous."
"The mint does
not make complex gold transactions with other countries," he said.
"That is the role for the U.S. Treasury. The mint just houses the gold.
The Treasury is dodging the question."
GATA has filed
a Freedom of Information Request asking the Fed and Treasury to
disclose information on encumbrances and swapping or leasing of U.S.
"The Fed and
Treasury have not even acknowledged receiving our FOIA request," Murphy
said. "It's idiotic to tell you that the mint would have that
"Is the gold in the mint truly U.S. gold reserves or is it just
'custodial gold' held for some other country? That's why we need to
know what encumbrances there are on the gold as well as whether any
U.S. gold has been shipped overseas to fulfill swap obligations."
The 2006 annual report published on the website of the U.S. Mint lists KPMG as outside auditor.
The KPMG signed
audit report in the 2006 Annual Report of the U.S. Mint takes full
responsibility for auditing the balance sheets and includes a statement
of the custodial activity of U.S. gold reserves.
According to the balance sheets, custodial gold and silver reserves make up 90 percent of the U.S. Mint's total assets.
Still, there is
no specific statement in the U.S. Mint's annual report or the KPMG
audit report describing any KPMG involvement in a physical inspection
of the gold reserves.
KPMG's role as independent auditor for the U.S. Mint is also confirmed in the 2006 audit report prepared by the Office of Inspector General of the Treasury.
Dan Ginsburg, a
KPMG spokesman, declined to provide any detail to WND concerning his
company's audit procedures for the U.S. Mint, citing client
Craig R. Smith, founder of Swiss America Trading Corp., said he accepts the GATA arguments because "there has to be a force greater than normal market conditions that has repressed the price of gold."
Smith noted any
number of financial crises since the late 1980s that "should have
propelled gold way beyond the 1980 high of $850," including the savings
and loan debacle and the birth of the Resolution Trust Corporation, as
well as the on-going devaluation of the U.S. dollar against virtually
all major foreign currencies.
"Gold has been
playing catch-up with current world economic conditions, and future movements should easily prove gold to be
a great value at $900 an ounce. That price will look cheap going
forward as the world starts to turn its back on debt-laden currencies
and returns to money with a real value."
But the U.S. Treasury, in a statement on its website, denies the Exchange Stabilization Fund has been used to manipulate gold prices.
"The ESF does
not engage in any transactions in the market for any metal such as
gold, either in spot markets or in any of its derivative forms," the
Treasury statement declares. "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
advertising sales representative for the Wall Street Journal in New
York City, said the GATA ad has been approved by the
Journal's lawyers and is being prepared to be run next week.
Gold yesterday closed at an all-time high of $911 an ounce, up $28, on a weaker dollar and higher oil prices.
"I KILLED THE BANK!" Andrew Jackson