The Year the United States Sold Over 700 Tons of Gold

The United States sold 22,571,428 ounces (702.0498 tons) in 1970.

South Africa Sold More Than Twice as Much Gold in 1970 as the United States.

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The State of the Gold Market According to the CIA – 1969-1971

Last week in “When the CIA Suspected Gold Market Manipulation“, we
reviewed the CIA SECRET memorandum “The World Gold Market in 1969 and prospects for 1970”. In that memorandum, the CIA characterized the gold market as subject to manipulation, by Swiss bullion dealers. The CIA also referenced an agreement between the International Monetary Fund (IMF*) and South Africa whereby South Africa could sell gold to the IMF at the “official” price of $35 an ounce, thus protecting South Africa from market fluctuation in the price of gold and setting a floor on the price of gold at $35.

We also reviewed a September 1970 SECRET CIA memorandum “Special Drawing Rights: Paper Gold In Action ” that noted declining US gold balances and the potential for the newly created SDR to provide liquidity for the international markets where gold and the dollar might fall short.

You can view the video covering the aforementioned topics here

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The CIA Discusses the Gold Market Before the Closing of the Gold Window

The World Gold Market in 1970 and prospects for 1971

CIA classification: SECRET

Warning: This document contains information affecting the national defense of the United States, within the meaning of Title 18, sections 793 and 794, of the US Code as amended. Its transmission or revelation of its contents to or receipt by an unauthorized person is prohibited by law.

This report was issued in March of 1971 just five months prior to Richard Nixon’s announcement that the United States was abandoning the gold standard.

U.S. Gold Sales in 1970

According to the CIA memorandum, the United States sold $790 million worth of gold (at $35 an ounce) from the end of 1969 to the of 1970 or 22,571,428 million ounces (702.05) tons.

Gold To the IMF

The bulk of the United States gold sales were to the IMF. The U.S. made two large gold sales to the IMF in 1970 totaling $706 million equaling 20,171,428 ounces or 627.5 tons of gold. The first sale of 9,171,428 ounce (285.263 tons) took place in September 1971. The IMF had cashed in $400 million in T bonds that it used to purchase the gold.

The second U.S. sale of gold to the IMF took place in December 1970 in the form of a “deposit” of gold to the IMF worth $385 million or 11,000,000 ounces (342.138) tons. The memorandum notes that according to an IMF resolution in February 1970. members were required to increase their gold holdings at the IMF.**

The CIA memorandum explains the mechanics of this transaction:

“In late December the US “deposited” $385m or 11 million ounces, 342.1382448 tons representing an amount required under the quota increase. Normally, this type of reduction in gold reserves would be reflected in an offsetting increase in a country’s gold position with the IMF. In this case however, the United States acted as gold supplier for other countries, seeking additional amounts of gold to cover their gold tranche increases, including France, Japan, India and Mexico.”

The IMF sold that deposited gold to other IMF members including the U.S.– the amount the U.S. bought back is not disclosed.

The report also notes that the “United States sold $218 million of gold (at $35 an ounce) to other countries in 1970 and bought $135 million from other countries for a net approximately $83 million in sales” or approximately 2.38 million ounces (approximately 75 tons), making the total gold sold by the United States in 1970 about 702 tons.

The IMF Drains South Africa of its Gold

The memorandum notes: “Faced with a record payments deficit for the second year in a row, South Africa in 1970 sold its entire output of newly mined gold as well as some previously accumulated. Total sales of $1.6 billion exceeded current out put by nearly $480 million”

Thus, South Africa sold its entire 1970 gold production plus some of its gold reserves -much of it to the IMF because of price dropped below $35. In 1970, South Africa sold $1.6 billion or 45,714,285 million ounces (1,421.87) tons of gold

Another Swiss Manipulation Reference

The CIA noted again in their 1970 gold market review that they suspected Swiss gold market manipulation:

“Thus, unless the Zurich banks are able to manipulate the market successfully, the free market price seems likely to remain under $40 an ounce during 1971.”

The Writing on the Wall Re the End of the Bretton Woods Agreement

U.S. gold reserves were depleting at a rapid rate in 1970. European central banks were upping their redemption requests to exchange their dollars for gold as was their right under the Bretton Woods Agreements of 1944.

An Ominous Note re Gold Redemptions

“Impatience with large US balance of payments deficits which seems certain to occur again in 1971, has increased abroad, particularly among European central bankers. They are likely to redeem dollars for gold at a much faster rate in 1971 than was the case in 1970.

Five months after the CIA’s “The World Gold Market in 1970 and prospects for 1971” memorandum was published, President Richard Nixon closed the gold window, “temporarily” suspending signatories to the Bretton Woods Agreements from exchanging their dollars for gold held at the U.S. Treasury.

Further Reading and Listening:



The CIA and Gold – You Tube Playlist

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* The IMF was formed December 27, 1945, Bretton Woods, NH
** for more on the IMF and gold see: How the IMF Acquired its Gold Holdings

Special thanks to Vijay @vijinho for alerting me to these documents.

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