This is the section on gold, which still needs explanations, but is otherwise done.
… it is little wonder that gold has been chosen in most nations as an inflation hedge. South African gold marketers — in an attempt to sell the popular South African rand, a coin, containing precisely one troy ounce of gold — trace the march of inflation 400 year back.
Specifically, between 1560 and 1974, the South Africans say that the cost of living increased by 7,653 per cent. During that period, they say, the price of gold increased by 7,690 per cent. Says a proposed ad, “you could call it a good hedge against inflation.”
Dollar Crisis Weathered
Milwaukee Journal - Google News Archive - Sep 18, 1962
A mood of cautious optimism about the dollar appears to prevail at this week' s meetings of the international Monetary Fund (IMF) and World bank in Washington.
The world' s money managers and financial experts are being told that the key currency is in better shape than it has been in two years. The root difficulty—the persistent deficit in this country' s international balance of payments—is becoming less severe. By the end of next year, the Kennedy administration hopes to eliminate the deficit completely. This would slow down or halt increases in foreign holdings of dollars.
The current good health of the dollar is a partial tribute to the new spirit of co-operation in international monetary circles. The United States now can turn to foreign central banks and fiscal authorities for help in easing the damaging shifts of capital between countries. Foreign banks have established a gold pool to fight speculation on the London gold market. The IMF stands ready to use its reserves to help cushion the dollar if the United States should suddenly be hit by an outflow of short term funds. All of these measures help maintain calm and stability in the international money markets.
The battle of the dollar is not won, however. The American economy has yet to prove that it can grow at a rate fast enough to restore complete confidence in the currency. This involves keeping the lid on inflation, maintaining a favorable trade balance, winning greater access to new markets in wester Europe.
See Federal Reserve Archival System results for London "gold pool"
Quiet Pooling of Resources Stabilizes the Gold Market
Fort Scott Tribune - Google News Archive - Feb 26, 1963
By SAM DAWSO?'
AP Businss News Analyst
NEW YORK (AP) United States money transactions with the rest of the world have taken a turn for the worse in recent months. But there' s been nothing that could be called a new raid on its gold reserves, Times have changed.
… the stability of gold and the evident strength of the dollar in world financial markets is cause of considerable satisfaction.
Much of the thanks goes to the group of central bankers, American and foreigners, who have rigged up a device to halt the raids that in the past unsettled one or another currency and for a brief period put the American dollar under strain to the surprise of most Americans who thought it as good as gold.
The group acts quietly. In fact, American money managers have never officially said the United States was taking part. But the success of this quiet pooling of international financial resources to protect currencies against the stress of temporary ups and downs of trade and financial balances shows plainly in the stable gold market as reported daily from London. This week prices have been below $35.08 an ounce, making any buying of U.S. government gold unprofitable.
This very real, if officially unannounced, international gold pool keeps the London free market stable simply by buying when the price is below the official U.S. Treasury figure. When the price goes above that figure the pool can step in and sell.
This swells the amount of gold available and as the supply goes up the demand is met and the price returns to the desired level.
The pool doesn' t pretend it can protect the dollar forever if the balance of payments deficit keeps mounting. That is why the United States has taken many measures to boost the total U.S. exports on one hand and to discourage the outflow of dollars on the other. The measures have fallen short of their goal.
Gold Still Drains Off
Miami News - Google News Archive - Jul 6, 1965
VAS11iNGTON — Private gold hoarding and speculation in the first quarter of this year drained off nil the newly mined gold and an estimated $250 million from official monetary reserves as well.
Most of this drain almost certainly occurred through the operations of the gold "pool" in London. Acting for a group of the leading financial nations the Bank of England controls the London gold market, selling to hold down the price when demand is heavy and buying for the account of the pool when demand is light.
The Bank of England uses newly mined gold from South Africa for its sales and can also call upon the official reserves of the members of the pool when necessary. The United States' share in the pool is 50 per cent.
Thus it is probable that upwards of $100 million of the U. S. gold loss this year has gone straight into the hands of gold speculators, not into other countries' reserves.
Gold speculation was heavy in the early months this year, largely because the crisis of the British pound led to fears of a general currency upheaval, including fears of a devaluation of the dollar. A dollar devaluation means an increase in the price of gold.
Gold Data: Lesson in Artful Dodging
Wall Street Journal - Aug 1, 1967
By RICHARD F. JANSSEN
WASHINGTON -- "In this business, you have to choose between lying to people or scaring them to death.” The speaker isn' t a doctor or a nuclear bomb expert but a Johnson Administration official coping with the balance of payments problem. His choice is usually clear: Don' t public or more pertinently the nervous bankers abroad who could cash in their dollars and touch off a run on the nation' s gold supply...
Illustrating the uncertainty among outside analysts is this year' s decision of the New York based National Foreign Trade Council to halt its long practice of forecasting of payments deficit. Instead the respected council estimated most components individually and stopped right there cautioning that it no longer dared predict such items as the dollar inflows.
AII the shadowy activities revolve around the persistent payments deficit—which has as foreigners acquired more dollars than they returned to the U.S. … With $29 billion of foreign owned dollars stacked up as potential claims on $13.2 billion gold stock figure, they have ample reason for what's left as best unsaid...
Since international high finance is so subtle, ... the dilemma rarely has to be resolved with the outright lie either. Instead the Administration is ever more shrewdly guarding the dollar' s value abroad and intelligence about it through little known techniques that range from doublecounting gold bars to tinkering with of otherwise routine Government securities. The result is a web of statistics that mask almost as much they display about the dollar outflow.
… Some of this double counting dates back to the 1950s when the IMF made gold investments in interest earning short-term Treasury securities. The fund can reclaim this $800 million gold whenever it wants. And 5228 million more is gold the U.S sold outright for dollars in the last year or so to smaller nations so they in turn could make their mandatory quota payments to the IMF. Swiftly before these show up in Government data, the IMF restored this gold to the Treasury as a special deposit. The purpose was clearly by both parties. Mitigation of the original sales effect on the U.S. statistics…
Only a discreet footnote following in Government statistical publications brings these double countings to light. But because they were openly announced when they were initiated, Washington officials contend they aren' t really deceptive...
Happily for officials anxious to put the best face on the figures, there' s no simple standard for deciding just what is a dollar going into foreign hands and thus swelling the payments deficit. Few of them are greenbacks carried out of the country the basic measure comes from major banks reports of how foreigners checking accounts went up or down during a reporting period. These dollar deposits are considered liquid liabilities. Also counting as liquid liabilities are the dollars foreigners invest in most Treasury securities regardless of their maturity and dollars they invest in other Federal securities and bank certificates of deposit having original maturities of less than one year. But the self-imposed accounting standards that class these as liquid liabilities are sterner than those in most other nations, so Administration men argue that it' s not dishonest to bend events around them to America's best advantage. Thus it was that, because a single day' s added maturity would make these short-term investments count as a favorable dollar inflow, a recent a 400 million debenture offer by the Federal National Mortgage Association appeared with maturity of one year and two days. If foreigners should chance to buy some it would help rather than hurt the payments position.
Privately foreign financial officials are delighted to see Walther Lederer, the Department's chief payments economist, persistently pointing out that there' s no real advantage for the U.S. in getting foreigners to put dollars in securities that are just barely over an arbitrary line. The Treasury is very clever but Walther spoils it by being so honest one embassy aide snickers.
… foreign purchases of such securities aren' t being left entirely to chance. Other governments are frequently coaxed to rechannel their dollar investments into the most statistically soothing forms. It's partly because the Treasury can quietly arrange such investments at the last minute before a balance of payments reporting period ends of course that forecasting the deficits has become so much less attractive to private predictors. In the first 1967 quarter for instance it was largely a spate of foreign official purchases that spared the Government from having to report a deficit close to $900 million instead the figure was roughly $540 million...
It's not all arm-twisting a State Department official insists arguing that interest rates on short-term Federal securities and bank certificates of deposit have been high enough to inspire such purchases voluntarily. Even so, the growing awareness in Washington that pressures are applied makes the topic a sensitive one.
The discreet dissembling is squarely in the public interest officials are convinced. To give the world a glimpse at raw payments deficit figures for just a single month or at one day' s actual gold outflow they argue could prove disastrous. While U.S. authorities might take an immensely adverse number calmly knowing a big inflow is on the way, such a figure might so frighten outsiders that greater exodus of dollars would result.
Even a prominent private financier who helped create the Government's dollar defenses confesses that he can' t tell anymore what our balance of payments trend is. Since he has left Washington ho says the dodges have become even more artful. The Treasury's credibility problem is becoming terrible...
U.S. Looked To For More Gold Action
Daytona Beach Morning Journal - Google News Archive - Dec 18, 1967
LONDON (AP) — Financial experts in London looked to the United States Sunday for measures to halt panic buying of gold, which is expected here to continue in the world' s bullion markets.
The London experts expressed doubt of U.S. ability to stem the flood of buying orders which have poured in on all bullion markets since Britain' s Nov. 18 devaluation of the pound.
Authoritative estimates put the amount of the metal that has moved out since then through the international gold pool in London at more than 1,000 tons worth about $1.1 billion.
Nearly 60 per cent of that gold came from the United States.
The experts explained the gold rush as a coincidence of widespread loss of faith in paper money as a result of the pound' s devaluation, inflation in much of the world, and a broad belief held by international speculators that the price of gold must rise.
Some British economists and politicians add to this their feeling that President charles do Gaulle of France may have had a hand in fomenting the gold rush. The French, however, strenuously deny this.
France withdrew from active participation in the eight-nation international gold pool, which operates out of London, in June when Paris refused to supply more gold. The pool was set tip in 1961 to stabilize the gold market by buying or selling the metal as needed to satisfy demand.
The dollar came under pressure Friday in Europe' s money markets, except in London, after showing strength all week despite the gold rush.
The sale of dollars by European holders showed the fear of many on this side of the Atlantic that the dollar was weak because of the continuing—and increasing—deficit in the American balance of foreign payments.
The TIME article below was written in March 1968, as the "London Gold Pool" collapsed under a speculative gold stampede.
Friday, Mar. 22, 1968
Quietly and secretly, technicians at Fort Knox, Ky., loaded an estimated $450 million worth of gold ingots [about 410 tons of gold] onto a heavily armed convoy. The convoy proceeded to a nearby U.S. Air Force base, where the gold was loaded aboard a transport plane and flown to Britain.
There, it was sent to the Bank of England, to be transported by Swissair and British European Airways flights to the coffers of Swiss banks. The influx of gold became so bulging, in fact, that one Swiss bank had to reinforce the walls of its vault to contain it. It was all part of the largest gold rush in history, a frenetic, speculative stampede that last week threatened the Western world with its greatest financial crisis since the Depression.
Socks & Mattresses. Telephone and telex lines to London, the world's largest gold market, were swamped as buyers throughout Europe demanded gold, gold and more gold. More than 200 tons, or $220 million worth, changed hands on the London gold market in one day to establish a new single-day trading record. Where gold could be bought directly, mob scenes erupted and the price soared. Ten times the usual number of buyers jammed the gold pit in the cellar of the Paris Bourse, and fist fights broke out as the price on one day rose to $44.36 an ounce v. the official price of $35. In Hong Kong, frantic trading drove the price up to $40.71, and around the world investors and banks bought gold certificates and gold stocks. Many refused to accept the U.S. dollar in payment.
In dozens of nations, from Austria and Italy to Sweden and Ireland, ordinary citizens rushed out to buy gold coins to stuff socks and mattresses, cleaning out numismatic stocks virtually overnight. In London, a $20 U.S. gold piece sold for $56, a £ 1 British sovereign for $10.20. In Geneva, the Swiss lined up at tellers' windows to convert their savings to gold bars. There was even a run in Hong Kong on gold jewelry. All told, between $1 billion [910 tons] and $2.5 billion [2270 tons] in gold may have changed hands within ten days in London—as much as 10% of the total gold in the seven-nation Gold Pool, whose bullion reserves are the cushion for the $35 international price of gold. No estimate was possible of all the other trading in gold around the world, except that it was colossal.
Lost World? The rush was on because speculators—some avaricious, some panicky, some merely prudent—had become convinced that the U.S. and its partners could not much longer maintain the $35 price. With a balance of payments deficit of $3.6 billion last year and a war in Viet Nam that is costing some $30 billion annually, the U.S. has seen its gold reserves shrink by 50% from a postwar peak of $24.6 billion. Now, believed the speculators, the U.S. was nearing the end of its gold tether. If the U.S. could no longer sell gold to all takers at $35 an ounce and the price were allowed to rise to meet the demand, the speculators stood to make a handsome profit, just as they had in the devaluation of the pound sterling last November. Having tasted blood then, many scented another kill —and, in their wild buying, ripped and clawed at the remaining gold stocks in the Gold Pool.
Who were the speculators? The identity of most was veiled in the secrecy of Swiss bankers' files, but they were situated throughout the world. Perhaps as much as 40% of Swiss bank purchases were destined for safekeeping in the coffers of Middle Eastern sheiks and oil potentates. Latin American businessmen, affluent overseas Chinese, Asian generals—all claimed a piece of the action. The central banks of many smaller nations with precarious national reserve margins, including some Communist Eastern European countries, had undoubtedly joined in to protect themselves. More in sorrow than in greed, European corporations moved into the buying to hedge their foreign-currency holdings. So did some wealthy Americans with numbered Swiss accounts, although it is illegal for U.S. citizens to own gold bullion.
For the men who understood the situation best, the spectacle was appalling. "The world is lost," said London Economist John Vaizey. "A rise in the price of gold is inevitable now. It's like a grand opera of which the overture is over, and we're in the first act of a world depression." A usually unemotional Swiss banker warned that "in participating in gold speculation, capitalists are doing their best to destroy the capitalist system. If they win the battle in London, the probability is that the whole present international monetary system will come crashing down." French Economist Jacques Rueff, who has long predicted a crisis and argued for a rise in the price of gold, saw his worst jeremiads vindicated. "Whether one wants a gold price increase or not," said Rueff, "it will soon be achieved."
Two-Tier Price. Finally, the pressure grew so great that the U.S. refused to continue to feed gold to satisfy speculators' greed. In a telephoned message to British Chancellor of the Exchequer Roy Jenkins, the U.S. asked Britain to close the London gold market and shut off the flow from the Gold Pool. Prime Minister Harold Wilson hurried to Buckingham Palace for a midnight meeting with Queen Elizabeth, who declared a bank holiday in foreign-exchange trading. That shut off the Gold Pool's dealing, and money markets from Singapore to Lusaka followed suit. The Paris market alone stayed open.
The U.S. then invited representatives of the Gold Pool nations to Washington for a weekend conference. There was little doubt that the speculators had succeeded in wrecking at least part of the world's monetary system, and that the U.S. and the other members of the Gold Pool would no longer sell gold to all takers at $35 an ounce. What would likely be decided in Washington was a "two-tier" pricing system for gold, by which the speculators would have to conduct their transactions in a free market. …
What Dollar Gold Crisis Means To You
Herald-Tribune Google News Archive Mar 19, 1968
By SYLVIA PORTER
Late Sunday afternoon, the leading central banks of the free world — with the conspicuous exception of France—gave their answer to the speculators who have been staging an historic run on gold in an attempt to force the U.S. to raise its officials gold price above $35 an ounce and thereby devalue the dollar. That answer, hammered out by the U.S., Belgium, the Netherlands, West Germany, italy, Switzerland, and Britain during weekend emergency meetings in Washington is The U.S. will not change the official price and quanfied foreign holders of dollars will be able to continue turning in their dollars on demand for our gold' at $35 an ounce.
Meaning To You
Your cost of living will continue to climb to all-time peaks, though, because none of the restraints on the way can eliminate war-inspired price-wage pressures. Your dollar' s buying power will continue to sink to all-time lows.
— You will face a rising possibility of wartime price-wage credit controls. The last pretense that we can afford all the butter along with the guns was pulverized by the gold speculators last week — and Sunday our friends among the free nations made sure we realize that.
— You could find buying imported goods more expensive — despite the fact that a round of tariff cuts is under way. A surtax on imports is a possibility to discourage our buying.
Some of these implications to our pocketbook may seem far removed from a run on gold in markets 3000 miles away from New York, but they are in fact directly and closely connected.
For bluntly what happened to our dollar — meaning us — last week was this:
The world gave our policies abroad and at home a massive vote of no-confidence — and for the first time in our modern history, we were put on the defensive.
With the help of the six nations that with us formed the now disbanded ”gold pool,” we temporarily shored up the international monetary system Sunday and bought more time for us to act to defend our dollar.
Now a new transition phase in world monetary affairs opens. Now we either come through and restore confidence in the dollar by actions which count — or we invite a breakdown in the monetary system and resulting chaos.
Slump pleases planners
U.S. to guard gold
Montreal Gazette - Google News Archive - Nov 12, 1969
WASHiNGTON — (DJ) — A scheme being secretively shaped here to guard the Treasury' s gold stock helps warrant the plummeting of private-market gold prices in Europe, U.S. officials said yesterday.
Already, the clearly pleased planners say, inklings that it is to be forthcoming are buttressing such other factors as shadowy but sizable new South African sales in driving down the London gold price.
The afternoon gold fixing price in London yesterday was $37.75, down 32½ cents from the morning and down 60 cents from Tuesday afternoon.
The plan, being negotiated with financial allies, is intended to insulate the U.S. gold stock of $11,160,000,000 from a potential drain of hundreds of millions of dollars worth posed by smaller nations' needs to contribute extra amounts of the metal to the international Monetary Fund.
It is understood the broad strategy includes shortchanging the 113-country IMF on the metal itself, in return for the prospect of the IMF obtaining off-setting amounts of hard currencies several years hence.
More important from the standpoint of private speculators, sources indicate, is that the operation can be carried out without bringing any newly mined gold from South Africa into official channels — and thus without damaging the two-tier gold price system.
A precedent for at least one aspect of the plan, analysts note, lies in an almost unnoticed tactic employed in the previous IMF quota or contribution increase initiated in 1965. Likely to be repeated with some variation as one part of a multifaceted effort in 1970, they say, are dealings along these lines:
Denmark, for example, finds that it can' t comply with the rule requiring that 25 per cent of its quota increase must be in gold (75 per cent is regularly in a country' s own currency) unless it buys gold from someone else. Usually the U.S. Treasury would be the source since the U.S. underpins the value of the dollar by generally standing ready to pay out gold in return for dollars from other governments at the fixed price of $35 an ounce.
If Denmark turned to South Africa, it would violate the March 1968 pact intended to freeze the total gold holdings of all governments and official institutions at their existing level, while leaving the private market to receive all the fresh supply at a freely-moving price.
Instead of taking either of these system-weakening avenues, Denmark would turn to the IMF for a loan, receiving for instance German marks. Denmark would use the marks to buy gold at the official price from the German government and deposit the gold with the IMF, thereby meeting its obligation.
But the IMF would sell the gold right back to Germany in return for marks, thus replenishing its holdings of that currency.
The steady ebb of confidence
Sydney Morning Herald - Google News Archive - Aug 15, 1971
From PETER LONG in LONDON
It is as difficult to operate a monetary system with a low level of confidence as it is to with a roast beef candle.
The turmoil in currency and gold markets over the past two weeks again warned that the confidence, which keeps the international monetary system sizzling, is in real danger of being snuffed out.
Just as no candle means no roast beef, so no confidence, no system. In both cases the result is equally unpalatable, unless you happen to like steak tartare.
Gold soars again, U.S. dollar takes beating
Pittsburgh Press - Google News Archive - May 15, 1973
LONDON — (AP-UPT) — Speculation that the Watergate scandals may force President Nixon to resign helped drive the U.S. dollar to record lows in Europe yesterday and pushed gold prices to all-time highs.
The dollar plunged to new lows in Paris, Frankfurt, Zurich and Oslo. It weakened in other European centres, but in late trading there was a slight improvement in dollar rates, cutting a small fraction off the day' s losses.
Gold rocketed $7 an ounce in the first hour of trading, setting record prices of $113 an ounce in Zurich and $112.50 an ounce in London, the two biggest bullion markets in the world. The metal held nearly all the gain, closing at $112 an ounce in both centres.
Dealers called the gold and money markets extremely nervous…
Dealers here and on the continent suggested that even without the speculation on Nixon' s future, confidence in the U.S. dollar was at a low ebb any way.
“Name me a single reason why the dollar should be stronger,” a Zurich banker said.
Market sources agreed confidence in the twice-devalued dollar has been sapped by fears of a new inflationary pressure in the United States, the continuing U.S. balance of payments deficit, and concern that Watergate has weakened Nixon' s ability to bring off trade and monetary reforms.
Gold and dollar markets are related. Investors lacking confidence in the dollar have been getting out of the U.S. currency and buying gold.
U.S. Stabilizing World Gold Prices
Ocala Star-Banner - Google News Archive - Jun 9, 1975
WASHiNGTON (AP) — Virtually overnight, the United States has become almost self-sufficient in gold and able to exert considerable influence over world gold prices.
The development has been at least partially responsible for a decline in world gold prices from a peak of $199 an ounce late last year to around $165 an ounce recently.
In addition, the United States has not needed to import any gold so far this year, compared with net imports of about 4.5 million ounces in 1974.
The supply of gold that has made the United States self-sufficient has come from the U.S. Treasury, which possesses the world' s largest gold stockpile. Treasury officials say a government gold auction later this month will help reduce the amount of imports and thus help keep U.S. dollars from flowing out of the country.
The gold, accumulated over the years, formerly was the government' s chief monetary asset and used to back up U.S. currency and to settle international debts.
The treasury held its first public gold auction last January, a few days after Americans received the right to own gold for the first time in more than 40 years.
The treasury has scheduled another gold auction for June 30 when it hopes to sell 500,000 oun ces and officials say additional auctions may be held.
Without any more sales of treasury gold, the United States might need to import 2.5 million ounces during the remainder of this year, officials said.
Since the United States traditionally has purchased about 15 to 20 per cent of the annual world supply of gold, the elimination of U.S. gold purchases on world markets for even the past six months has had a depressing effect on prices.
See Google archive news results for treasury gold auctions
U.S. boosts gold sales to strengthen its dollar
Montreal Gazette - Google News Archive - Aug 23, 1978
WASHINGTON (AP) — The government took its second major step in less than a week to support the U.S. dollar yesterday by announcing plans to sell three million more ounces of gold from its stockpile.
The sale is intended to bring more money into the US, and reduce the country' s balance-of-payments deficit, which is a major cause of the dollar' s decline. it is also intended to reduce U.S. Imports of gold.
The decline of the dollar overseas worries economists because it contributes to inflation in the US and weakens the dollar as a worldwide currency.
The dollar has lost more than 30 per cent of its value during the last year against the Japanese yen, 33 per cent against the Swiss franc and 15 pet cent against the German mark.
The basic problem with the dollar is there are too many in the hands of foreigners.
US Revamps Gold Selling Methods
U.S. Revamps Gold Selling Methods To Discourage World Speculation
Schenectady Gazette - Google News Archive - Oct 16, 1979
Sy 1AMS HILDR!T11
WASTITNOTON (UPI) In an effort to discourage sperulators and strengthen the dollar, the United States Tuesday revamped its methods for selling gold from the huge U.S. stockpile.
Future sales of gold held by the Treasury “will be subject to variations in amounts and dates of offering.” an announcement said.
Under the new procedures. “auctions can be held within a few days of an announcement and the amounts to be auctioned can be varied as may be appropriate at the tlme,” the Treasury said.
“Basically, what we are trying to do is to provide a little more flexibility and, hopefully, to deter speculation,” said a Treasury official.
The Treasury move drew Immediate praise from one of Congress' leading economic experts, Chairman Henry Reuss. DWis., of the House Banking Committee. who called It “a good move.”
The old policy of selling preannounced amounts on a certain day each month “plays into the hands of the gold speculators by showing all the cards once a month.” Reuss said.
Now, he said. “We' ll keep the speculators guessing and thus benefit both the dollar and world economic stability.”
Gold has soared to levels that many experts believed were unthinkable just a few weeks ago because of lack of confidence in the U S. dollar and American economic policy.
Plan Told For Dealing With Gold Speculators
Times Daily - Google News Archive - Oct 15, 1979
By TAKES BILDRETH
WASHiNGTON (UPI) — The administration, seeking to supplement the Federal Resere Board' s tight credit policy, has unveiled a new strategy for dealing with gold speculators — keep ‘em guessing.
From now on, the Treasury Department will not tell anyone until the last minute when they will hold a gold sale and how much may be bought from the U.S. stockpile of 265 million ounces.
The Treasury has held regularly scheduled monthly gold sales since May 1978.
Originally, the monthly sales were limited to 300,000 ounces. That went to 750,000 ounces last November and to 1.5 mIllion ounces in December as part of the government' s dollar-rescue package.
‘Surprise' gold auctions coming
Miami News - Google News Archive - Oct 17, 1979
The Treasury Department, in another move to support the dollar, says it will keep gold buyers guessing on future sales by no longer giving advance notice of the amounts or dates of its gold auctions. The average price of gold yesterday at the Treasury auction was a record high $391.98 per ounce. The decision to drop the regular monthly auctions was made to “deter speculation” in gold buying which has undermined confidence in the dollar and the ability of the United States to control inflation, a Treasury official said.
Gold continues record rise
Star-News - Google News Archive - Jan 17, 1980
LONDON — Gold prices soared as high as $770 an ounce in major bullion markets Wednesday as worries about international events were compounded by concerns about shrinking supplies.
The greatest danger to Americans would occur if the rising price of gold pushed down the value of the dollar, which could worsen inflation. Although this happened in 1978 and part of 1979, the dollar hasn' t budged at all in recent months.
One said that whereas the rising price of gold in earlier months reflected in part a lack of confidence in the U.S. dollar, the recent price surge, coming agaInst the background of widespread turmoil in the world, reflects a loss of confidence in all currencies.
The U.S. government has retreated to the sidelines during the current wild upward price spiral that took gold to $765 per ounce on Wednesday, an increase of $50 in a single day.
The price of gold has more than doubled since the last Treasury Department gold auction on Nov. I. when gold sold for $372 an ounce.
Price of Gold Falls Rapidly
Reading Eagle - Google News Archive - Jan 23, 1980
LONDON (UPI) — The price of gold tumbled on world markets today in falls every bit as spectacular as the recent massive gains.
Gold plummeted by an “unheard of” $132 overnight in Zurich, from $732 an ounce to open at $600 an ounce. In London, the price fell by $65, from $690 to $625 an ounce.
The price of gold has fallen $225 in London since Monday afternoon when it peaked at a record $850 an ounce.
The collapse of the gold spiral followed further rapid price drops overnight in New York and Hong Kong.
The opening Hong Kong price was $670 an ounce, a decline of $166.50 from Tuesday' s closing price en the exchange. By the close it was down to $645 an ounce.
Hong Kong dealers said the plunge from Tuesday' s close of $836.50 was in response to lower prices on the New York and London exchanges.
Monday, Feb. 16, 1981
Gold and the Dollar in a Flip-Flop
By BRUCE VAN VOORST; Christopher Byron; Frederick Ungeheuer
During the past four years the American dollar has sagged deeper and deeper, while the price of gold tended to soar higher and higher. In the past two weeks it has been the other way round. Gold has lurched lower, as the dollar has risen.
The effect of this role reversal has been to discombobulate money markets everywhere, and last week the turmoil intensified. In Frankfurt, the deutsche mark slumped to a three-year low of 2.16 to the dollar, forcing the West German Bundesbank and the U.S. Federal Reserve into an unusual rescue mission of the mark. The two central banks each sold $500 million in dollars at midweek to prop up the weakening West German currency. In Zurich, the Swiss franc dropped into a two-year trough of 1.95 to the dollar, and in Milan the Italian lira plunged to a record low of 1,019 against the dollar. At the same time, the declining value of gold pushed bullion to $500.50 an ounce at week's end, or a little more than half the all time peak of $850 an ounce reached one year ago.
The renewed volatility in currency values was unsettling because such gyrations make it difficult for international businessmen to negotiate a loan or sales contract, or even to project the cost of a company payroll. The bulk of international transactions is made in dollars, and an unstable currency makes all planning difficult. Moreover, some experts wondered if the new situation of a strengthening dollar would quickly be followed by a weakening of the U.S. currency. But Italian Economist Luigi Spaventa challenges this view, arguing: "The underlying causes appear to be far stronger than in previous cycles of the dollar."
At least some of the dollar's appeal and gold's weakness is coming from what European bankers are calling the "Reagan euphoria." Just as the value of the dollar fell because world moneymen did not believe that Jimmy Carter was serious about battling inflation, it is now rising because the new Administration looks more determined. Said Beryl Sprinkel, the Under Secretary of the Treasury-designate for Monetary Affairs: "We're getting on top of this inflation problem, and the markets are beginning to believe it."
U.S. Gold Ponders its Stockpiled
Palm Beach Post - Google News Archive - Sep 27, 1981
By Andrew Mollison
Why not sell off the gold today?
“That' s policy, and I can' t comment on what the commission would recommend,” one Treasury official said.
“My goodness,” said another Treasury official, “It would probably lower the price if you started selling it in large quantities. Imagine the psychological impact. It would have a negative impact on the dollar.”
The last time the government sold large quantities of gold — raising $4.2 billion by selling 15.8 millIon ounces of gold in 1978 and 1979 — it did so for the opposite reason: to support the dollar.
“You don' t really want to get into that, do you?” a treasury official asked.
Did those sales help balance the budget?
“When we sold the gold we retired the gold certificates we had issued to federal reserve banks in order to purchase the gold, and the profit went into the general receipts of the government,” he said. “It' s a way of financing the deficit instead of issuing treasury certificates, we had the receipts from those gold sales.”
Why did the United States stop selling gold?
“We never said.” a Treasury official replied. “In October of 1979 we simply announced that future sales of gold would be subject to variations in amounts and dates of offerings, held one more sale after that and kept our mouth shut from then on.”