GATA Sues Federal Reserve to Disclose Gold Market Intervention Records

Commentary by Michael McKay:

This is a significant event that all users of money, which all of us, should be made aware of.

The Federal Reserve is being sued to disclose how it has manipulated the Gold Markets.


It is encouraging that this lawsuit has traction.

The Fed is also currently being sued by Bloomberg for the Fed’s refusal to disclose $2Trillion (yes, Trillion) that it has (created out of thin air and) allocated to various favored banks, businesses, or other entities. In August 2009 the Fed lost that case and it is currently being appealed.

It is valuable to see how the Fed is being pulled out from behind the curtain into the light of greater transparency.

Now all we need is for the Public to understand – better – what all these machinations mean.

Please read this article by William Murphy of the the Gold Anti-Trust Action Committee (GATA). Following his article I have made a few comments that you may find useful.

************************************************************

1/2/2010 – by William Murphy, published on www.thedailybell.com

The Gold Anti-Trust Action Committee Inc. today (Dec. 30th, 2009) brought suit against the U.S. Federal Reserve Board, seeking a court order for disclosure of the central bank’s records of its surreptitious market intervention to suppress the monetary metal’s price.

The suit was filed in U.S. District Court for the District of Columbia and targets Fed records involving gold swaps, exchanges of gold with foreign financial institutions. In a letter dated September 17 this year to GATA’s law firm, William J. Olson P.C. of Vienna, Virginia, (http://www.lawandfreedom.com) Fed Board of Governors member Kevin M. Warsh acknowledged that the Fed has gold swap agreements with foreign banks but insisted that such documents remain secret. To read the Fed response, click here.

The lawsuit follows two years of GATA’s efforts to obtain from the Federal Reserve and the U.S. Treasury Department a candid accounting of the U.S. government’s involvement in the gold market. These efforts parallel those of U.S. Rep. Ron Paul, R-Texas, who long has been proposing legislation to audit the Fed. The Fed has been criticized for secrecy in its massive intervention in the markets over the last year, and Paul’s legislation recently was approved by the U.S. House of Representatives.

In correspondence with GATA’s lawyers, the Fed has claimed that its gold swap records involve “trade secrets” exempt from disclosure under the U.S. Freedom of Information Act.

GATA Secretary/Treasurer Chris Powell said:

“While GATA has produced many U.S. government records showing both open and surreptitious intervention in the gold market in recent decades (for more information, click here), Fed Governor Warsh’s letter is confirmation that the government is surreptitiously operating in the gold market in the present as well. That intervention constitutes a huge deception of financial markets as well as expropriation of precious metals miners and investors particularly. This deception and expropriation are what GATA was established in 1999 to expose and oppose.”

Of course GATA’s lawsuit against the Fed will take months if not years to resolve. We think we have a good chance of winning it in court. But we can win it outside court, and much sooner, if the suit can gain enough publicity from the financial news media and market analysts and prompt enough inquiry from them and from the public, the mining industry, and members of Congress.

So GATA urges its friends to publicize the suit and to urge journalists, market analysts, mining companies, and members of Congress to join us in seeking disclosure of the Fed’s gold market intervention records. If enough clamor is directed at the Fed about these records, the gold price suppression scheme will lose its surreptitiousness and fail.

These interventions powerfully influence not only gold’s price but the prices of government bonds and currencies, as well as interest rates generally and the value of all capital and labor in the world. There is no more important issue in the world economy than gold price suppression.

GATA’s lawsuit against the Fed is listed in federal court records as civil case No. 09-2436 ESH, the letters being the initials of the district court judge assigned to it, Ellen S. Huvelle.

For more details about the lawsuit, click here
William Murphy is the chairman of the Gold Anti-Trust Action Committee (GATA, http://www.gata.org/ ), which he founded in 1999 to expose what he judged to be the active manipulation of the gold market.

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Michael McKay again:

Please note in particular the section that I have highlighted from the article:

These interventions powerfully influence not only gold’s price but the prices of government bonds and currencies, as well as interest rates generally and the value of all capital and labor in the world. There is no more important issue in the world economy than gold price suppression.

This is a key comment.

Please note:

a) All World Currencies are currently Fiat Money backed by nothing, and

b) All Interest Rates (which are the Price which is paid for the use of Money) are set and manipulated by Central Banks around the world and NOT the Market of Buyers and Sellers,

Those who control the issuing of non-backed fiat money and the setting of interest rates (ie the Central Bankers) fear Gold and a free market in currencies, as it could put them out of business.

Gold is Money. Silver is Money as well.

We have all grown up being taught that Gold & Silver are a Commodity – only.

When folks, en masse, start realizing that Money, in order to be a really useful money, must retain its Value over time and be a Real Store of Value, they will turn to Gold & Silver as Money.

News Flash: This has started to happen already.

The Chicago Mercantile Exchange on October 19, 2009 changed their rules such that those who trade in futures may now hold Physical Gold, as well as Cash and US Treasuries as MONEY for trading collateral.

As of today, January 4, 2010, the significance of this action is just starting to be appreciated by the many managers of Commodity Funds, Mutual Funds, Banks, Pension Funds, etc.

This will grow and expand.

When the public finally understands that Gold and Silver are Money then we will see Gold
& Silver really take off in dollar ‘Price’. Right now only about 1% of the USA population holds ANY physical Gold or Silver.

When the population wakes up and Demand kicks in it will be like Niagara Falls is trying to flow into a garden hose.

The Fed and Government do not want Gold & Silver to be understood as Money because:

1. Gold & Silver, commodity based money, imposes spending discipline on governments which means they cannot deficitly-spend. This greatly impairs their ability to wage war or to finance their Welfare State agendas, and,

2. They want a monopoly over what can be used as money because that Centralizes their Control and reduces the real power of the electorate. Do you ever wonder why you feel so powerless in the face of all the insanity happening in Washington? Now you know.

This is why Hayek and now Ron Paul advocate Competitive Monies in the Market.  This puts control back into the hands of all market participants.

They do not advocate Gold & Silver being the ONLY money. They simply know that if the Market can decide and DISCOVER what money works best, that eventually a Free and Unencumbered Market will discover that Gold & Silver will be the best monies to use…..
AND they will then be used most widely.

The Fed and Government have tried, successfully so far, to take Gold & Silver Money ‘off the table of choices’ in the minds of most of the population.

But the world is waking up that their Fiat Money is no longer working very well.

It is not retaining its value and our Savings are being eroded. Our Purchasing Power is constantly being reduced.

WE and our children are left holding the bag.

So what can we do?

The answer is get educated and help others get educated.

How?

There are two excellent options.

1. If you can please attend one, or both, of the coming conferences held by the Mises Institute in the coming months (follow the links to read more about each event).

The first is

The Birth and Death of the Fed with Ron Paul

February 26-27, 2010
Jekyll Island, Georgia


and the second is

Austrian Scholars Conference 2010

March 11-13, 2010
Mises Institute · Auburn, Alabama

If you cannot attend either then you can educate yourself for free by reading the excellent resources available at www.mises.org . This will only cost you your time.

There are three books that will give you a deep education on this issue that I highly recommend. The first two are ‘The Mystery of Banking’ and ‘What Has Government Done to Our Money‘ by Murray Rothbard. The third is ‘The Ethics of Money Production‘ by Jorg Guido Hulsmann. Follow the links to read them for free or you can purchase them at www.mises.org.

Even if you do not read these books Gold & Silver are going to continue to be understood AND USED as Money. The good news I am reporting today is that the process has started in earnest and is, in my opinion, likely to continue. 

What will insure it’s expansion is an ever growing number of people become aware of this.

The advantage you will gain from reading these books, or attending these conferences, is to give yourself a deeper Systemic Understanding of WHY and HOW this all works, which will be to your enormous personal advantage.

Education and Awareness will serve you.

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