No More Answers from Mr. Volcker

After former Federal Reserve Chairman Paul Volcker told me recently that he did not think the United States had intervened in the gold market in more than 40 years, financial analyst Rob Kirby disagreed by offering good evidence to the contrary. Unfortunately, Mr. Volcker did not respond to further reasonable questions since then.

By Lars Schall

On Tuesday, the 31st of January, Rob Kirby of Kirby Analytics in Toronto published an essay entitled “ Manifest Destiny Derailed: Treason from Within,“ in which he offered good evidence that the government of the United States of America did intervene in the gold market during the last 40 years. If true, this would contradict the opinion of Paul A. Volcker, who told me on the 26th of January: “The U.S. has not, to the best of my knowledge, intervened in the gold market for more than 40 years.“

Therefore, I did send the following e-mail to Mr. Volcker’s wife and long-time assistent, Anke Dening, after I talked to Rob Kirby about the matter. Furthermore, I included another response that I had received related to Mr. Kirby’s essay.

Dear Ms. Dening,
could you forward this message to Mr. Volcker, please?

Danke schoen!

Dear Mr. Volcker,
my friend Rob Kirby, who’s a financial analyst from Toronto, Canada, will publish this today at some widely read websites:

Manifest Destiny Derailed: Treason from Within

He writes in that article that you were not exactly telling the truth by stating that the government of the U.S. hasn’t “intervened in the gold market for more than 40 years.“

Do you stick to your opinion?

Mr. Kirby has also this to say directly to you:

Mr. Volcker,
the seeds of the grand Keynesian experiment – which you and your legacy are so much a part of and which was foisted upon humanity – these seeds are now bearing fruit. The tainted fruit has poisoned the world economy. Do you ever intend to come clean and admit the ill deeds that have truly been perpetrated against gold or do you intend to take those secrets to your grave with you?

Rob Kirby.

Moreover, another friend of mine, Philip Pilkington, who is an Irish journalist and writer, had this to say related to Mr. Kirby’s and your remarks:

„Volcker’s words TODAY show that – despite President Nixon closing the gold window back in 1971 – gold price action [speculation], or perhaps better stated, PUBLIC PERCEPTION of GOLD – still underpins exchange rates [ie. the sanctity of th…e U.S. Dollar as the world’s reserve currency].“

I don’t see how. Volcker was worried that a speculative bubble would inflate in the gold market and this might lead to exchange rate instability.

„It pertained to the possibility of speculation in the gold market leading to exchange rate instability at a critical point.“

I assume that Volcker was worried about other countries holding gold as a means to defend their currency. This is a perfectly legitimate practice, but if a major bubble inflates in the gold market these countries would then have significant amounts of leverage to maintain exchange rate pegs that could only be considered unnatural and counterproductive.

Volcker was right, of course. Speculation took place in the gold market a few years later and a major bubble inflated that rivaled the NASDAQ bubble a few years back:

So, no. Gold does not underpin exchange rates, per se. But a country with gold reserves at a time when gold is in a bubble (like now?) could certainly use their reserves to maintain highly questionable foreign currency pegs. So I’m saying that Volcker was probably right. I’m also saying that any country that uses a gold bubble to prop up the value of its currency will probably bankrupt itself when the gold bubble pops…

Well, Mr. Volcker, could you be in all those regards a bit more specific so that people are not forced to speculate what you really mean? As you have seen here (and please note that I am not responsible for the headline and the interpretation):

Volcker confirms central bank need to suppress gold to stabilize exchange rates at ‚critical point‘,

one might still “misunderstand“ you.

Furthermore, do you think that gold swaps aren’t, as Mr. Kirby thinks, very nefarious – or even very interesting? As you know, recently they’ve been undertaken as liquidity maintenance operations:,

and the press offices of the New York Fed, the Federal Reserve in Washington DC, and the U.S. Treasury / Exchange Stabilization Fund continuesly don’t like to talk with me about that topic – see here:,

and here:

Best regards,
Lars Schall.

Then on Wednesday, the 1st of February, just one day later, Rob Kirby and I were informed by Chris Powell, the Secretary/Treasurer of the Gold Anti-Trust Action Committee (GATA), that the website of the U.N. had removed the pages that Kirby’s article referenced regarding specific documentation of U.S. Treasury / Bank of England gold swaps.

That’s a bit strange, isn’t it?

So I wrote again to Anke Dening / Paul Volcker with an attachment – just in case they wanted to examine that treaty betwenn the U.S. and the United Kingdom:

Dear Ms. Dening,
I was informed this morning that the good folks over at the U.N. have removed the pages [shut down the links] that Rob Kirby’s article referenced re: Documentation of U.S. / Bk. of England gold swaps. But GATA has sent me a PDF copy of the treaty. One copy is attached for your husband.

Best regards,
Lars Schall.

Very soon, I was also able to send another e-mail to Anke Dening / Paul Volcker, which said:

Dear Ms. Dening,
GATA has posted a link for the PDF:

US-UK gold swap treaty disappears from UN Internet site, reappears at GATA’s

Best regards,
Lars Schall.

Today is Sunday, the 5th of February, and I haven’t seen any response from Mr. Volcker since my last e-mail. Mr. Kirby’s hope that Mr. Volcker would take the time to respond once more was in vain.

Moreover, I think if what my friend Philip Pilkington says is correct, then it should be very easy for him (and more important: others) to offer a reason why all the lies have been told and interventions have been executed against gold. In my persoal view, the only position that adequately speaks to these issues, is the position (or one very much like it) that Mr. Kirby has put forward. It is not for nothing that in a fairly candid speech (titled „Past and Future of Central Bank Cooperation“) by the head of the monetary and economic department of the Bank for International Settlements, William R. White, you can find this sentence about the „(varied) intermediate objectives of central bank cooperation“:

„(T)he provision of international credits and joint efforts to influence asset prices (especially gold and foreign exchange) in circumstances where this might be thought useful.“

There should be more honest, fair and balanced debate on this issue for the sake of transparency. But at least Mr. Volcker isn’t really interested in it, so it seems. Could it be that he has indeed not exactly told the truth – and that he knows it?


Compare: “BIS Cooperation Report“, Fourth Annual BIS Conference, Basel, Switzerland , June 27-29, 2005, Past and Future of Central Bank Cooperation / Opening Remarks by William R. White under:

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