Volcker advocated gold price suppression in 1973

8:25p ET Monday, October 20, 2008

Dear Friend of GATA and Gold:

The Wall Street Journal reports tomorrow that former Federal Reserve Board Chairman Paul Volcker has become a close adviser to the Democratic presidential candidate, Sen. Barack Obama. So it may be good for gold’s friends to see the following quotation from Volcker’s memoirs, which, as far as we can tell, have been published only in excerpts and only in The Nikkei Weekly in Japan, this particular excerpt having been published on November 15, 2004. Volcker wrote of the events of February 12, 1973:

“That day the U.S. announced that the dollar would be devalued by 10 percent. By switching the yen to a floating exchange rate, the Japanese currency appreciated, and a sufficient realignment in exchange rates was realized. Joint intervention in gold sales to prevent a steep rise in the price of gold, however, was not undertaken. That was a mistake.”

Of course maybe Volcker’s wonderful idea will not have as much utility now, since there already long has been “joint intervention in gold sales” by Western central banks, to the point where the gold seems to be running out. But at least Volcker’s reminiscence is one more piece of evidence that rigging currency markets and the gold market in particular is seldom far from the thoughts of central bankers, even as some of their admirers in the financial press keep denying that they’d ever do such a thing.

The relevant excerpt from Volcker’s memoirs can be found here:

http://www.gata.org/files/VolckerMemoirs.doc

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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