As we all recall, the Fed issued nearly half a trillion in foreign CB liquidity swap lines whose primary reason was to make sure that foreign banks which were all massively short the dollar did not collapse, as the dollar skyrocketed into the end of 2008, after the capital markets became paralyzed and the dollar-short trade promptly became unwound. Could gold swaps be a comparable method for the Fed to explicitly permit foreign entities to keep gold prices low?
The other question of whether or not this confirmation needs an depth investigation over potential prior contradictory disclosure is left for the proper authorities. Of course, when it pertain to the Fed, there are no proper authorities. After all, the Fed is accountable to no one.
Dear Friend of GATA and Gold:
The Federal Reserve System has disclosed to GATA that it has gold swap arrangements with foreign banks that it does not want the public to know about.
The disclosure contradicts denials provided by the Fed to GATA in 2001 and suggests that the Fed is indeed very much involved in the surreptitious international central bank manipulation of the gold price particularly and the currency markets generally.
The Fed's disclosure came this week in a letter to GATA's Washington-area lawyer, William J. Olson of Vienna, Virginia (http://www.lawandfreedom.com), denying GATA's administrative appeal of a freedom-of-information request to the Fed for information about gold swaps, transactions in which monetary gold is temporarily exchanged between central banks or between central banks and bullion banks. (See the International Monetary Fund's treatise on gold swaps here:http://www.imf.org/external/bopage/pdf/99-10.pdf.)
The letter, dated September 17 and written by Federal Reserve Board member Kevin M. Warsh (seehttp://www.federalreserve.gov/aboutthefed/bios/board/warsh.htm), formerly a member of the President's Working Group on Financial Markets, detailed the Fed's position that the gold swap records sought by GATA are exempt from disclosure under the U.S. Freedom of Information Act.
Warsh wrote in part: "In connection with your appeal, I have confirmed that the information withheld under Exemption 4 consists of confidential commercial or financial information relating to the operations of the Federal Reserve Banks that was obtained within the meaning of Exemption 4. This includes information relating to swap arrangements with foreign banks on behalf of the Federal Reserve System and is not the type of information that is customarily disclosed to the public. This information was properly withheld from you."
When, in 2001, GATA discovered a reference to gold swaps in the minutes of the January 31-February 1, 1995, meeting of the Federal Reserve's Federal Open Market Committee and pressed the Fed, through two U.S. senators, for an explanation, Fed Chairman Alan Greenspan denied that the Fed was involved in gold swaps in any way. Greenspan also produced a memorandum written by the Fed official who had been quoted about gold swaps in the FOMC minutes, FOMC General Counsel J. Virgil Mattingly, in which Mattingly denied making any such comments. (Seehttp://www.gata.org/node/1181.)
The Fed's September 17 letter to GATA confirming that the Fed has gold swap arrangements can be found here: