9:48a ET Saturday, August 18, 2001 Dear Friend of GATA and Gold: GATA consultant Michael Bolser has found that the rules of the International Monetary Fund in regard to gold are contradictory, putting the IMF in the gold lending business even as they forbid that business to the IMF. His memo to a financial journalist follows. The chart contained in the memo cannot be reproduced here, but it should be posted soon at www.GATA.org. CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. * * * By Michael Bolser [EMAIL PROTECTED] August 17, 2001 To: A major financial news service journalist familiar with GATA, Washington, DC RE: A Depleted SDR Account is a Depleted Gold Account, and More on Gold Swaps and Gold Loans in the International Monetary Fund As James Turk has reported in his essay, "The Mystery of the Disappearing SDRs," SDRs and SDR Certificates represent claims against U.S. gold reserves. Reading further in the operative International Monetary Fund document, "Classification of Financial Assets" contained in the IMF Monetary and Financial Statistics Manual at Section 123, Page 37, one finds that "SDR holdings represent unconditional rights to obtain foreign exchange or other reserve assets from other IMF members." Combine this with Turk's observation in Section 121 that "monetary gold and SDRs issued by the IMF are financial assets for which there are no corresponding financial liabilities." We can now confidently state that the depleted SDR account of the U.S. Treasury Department's Exchange Stabilization Fund, shown below in the associated chart, represents a depleted gold account, since the new owners of these transferred ESF SDRs have a valid claim against ESF gold. [CHART OMITTED] Why has the United States sold its gold? Why are the Federal Reserve and Treasury denying the obvious? Also in the IMF "Classification of Financial Assets" document cited above, I find much more about the "gold swaps" about which Federal Reserve lawyer Virgil Mattingly says the Federal Open Market Committee transcribers misquoted him. Indeed, there are nine substantial paragraphs covering gold swaps (154, 155), gold loans, collateralization of gold loans, and gold as repos, etc. (156, 157,159,160,161,163, and 164). Referring briefly to the gold swap example shown in 161: "Consequently, for repos and gold swaps, four financial transactions would be recorded: a loan (payable/receivable) with a commensurate change in currency and deposits, plus a transaction in the asset, coupled with the recognition of the obligation (right) to return (receive) the asset at the termination of the repo's life as an entry in accounts receivable/payable. For security lending and gold loans, a transaction in the underlying asset would be recorded, coupled with the recognition of the obligation (right) to return (receive) the underlying asset at the termination of the borrower's (lender's) life as an entry in the accounts receivable/payable." The above procedural excerpt stands in direct conflict with the IMF policy listed below regarding gold operations, from Appendix I: Role of Gold in the IMF, http://www.imf.org/external/pubs/ft/pam/pam45/APPENDIX/API.htm. "Gold is reported as an asset in the IMF's balance sheet and financial statements but is not used in its regular operations and transactions. The IMF does not have the authority to buy gold; it may only accept payments from a member in gold at a price agreed upon for each operation or transaction on the basis of market prices, with Executive Board approval by a majority of 85 percent of the total voting power. With the same majority, the IMF may decide to sell gold at market prices (see Box 4) or to 'restitute' gold. 75 In any operation or transaction in gold, the IMF must avoid managing its price or establishing a fixed price in the gold market. Furthermore, the IMF may not engage in such gold transactions as loans, leases, or swaps and may not use gold as collateral. 76" We now know the ESF's gold account is substantially encumbered by equivalent gold sales (SDRs) and we also know that the IMF has rules for engaging in varied gold operations -- operations it formally denies. Empty denials by the Treasury, Federal Reserve, and the IMF should raise journalistic red flags. Which of the above IMF gold procedures is valid? The one that sets out the IMF rules for gold swaps, etc., or the one that forbids the gold activity? -END- Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/
