I wish to present, in just a few charts, a remarkable monetary phenomenon that almost no one is discussing publicly.
As you can see below, the central banks of the world, largely those of the West led by the US and the UK, were net sellers of gold throughout the 1990’s and through the turn of the century. Â
As the Bankers to the world’s reserve currency and sole global superpower, the Western central banks will make no major international policy decisions without the involvement of the Treasury, and especially the Federal Reserve and its constituent global banking machinery including the behemoth
Banks and the SWIFT system
Gold purchases by central banks, at least those they were willing to publicly acknowledge, turned positive by 2010 at most.
The pundits did not expect this change to continue, as is shown in the ‘forecast section’ for 2012 and after in this first chart from RBC/Bloomberg below.
This chart shows most clearly perhaps how the Western central banks stepped up their gold selling attempting to control and then crush the price of gold, driving it down to a low of $250 in 1999-2001.
Interestingly enough this came to be known as Brown’s Bottom.
England, under the leadership of Gordon Brown, then UK Chancellor of the Exchequer, very publicly sold 400 tonnes of its sovereign gold starting in late 1999 and 2001, reportedly to bail out some of the Banks who had gotten over their heads on short sale positions.
The largest net sales amount of gold reserves was in 2005, as the central banks attempted to dampen the price of gold which had risen from $250 to $450. This selling was co-ordinated under the Washington Agreement, which was a so-called gentleman’s agreement amongst some of the Western central banks, first created in 1999 and thereafter revised and extended in 2004.
The banks included the ECB, Sweden, Switzerland, the UK. Although it was not a signatory, the Federal Reserve was obviously involved. In August 2009 this agreement amongst 19 central banks was extended for another five years.
