FOMC Minutes Answer Eric Sprott’s Questions Regarding Source of US Gold Exports!

Bernanke-Dimon-Fed-TunnelAhead of today’s FOMC statement (and in light of Eric Sprott’s 2nd installment of Do Western Central Bankers Have Any Gold Left?), we thought it a good time to recall a conversation between Alan Greenspan and others made at a December 1992 FOMC meeting in which key secrets were revealed regarding manipulation of the gold market by Western Central bankers.

As The Doc discussed with Eric Sprott in our recent interview, the US exported $4 billion in gold in December.   Eric pointed out that $4 billion is 2.5 million ounces of gold exported in a single month, when the US produces 8.8 million ounces annually.  Eric asked rhetorically where 2.5 million ounces of gold were coming from.
Courtesy Former Chairman Alan Greenspan and the minutes from a Dec 1992 FOMC meeting, we just may have the answer for Mr. Sprott…


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CHAIRMAN GREENSPAN. Did I hear you correctly when you said that the gold exports in October appear to have come from the coffers of the Federal Reserve Bank of New York? Has anyone looked lately?
MR. TRUMAN. Well, I didn’t want to tell too many secrets in this temple!
VICE CHAIRMAN CORRIGAN. Obviously, we knew what happened to the gold, but I don’t think we knew what it did to exports.
MR. TRUMAN. What happens in the Census data is that the Federal Reserve Bank of New York is treated as a foreign country. [Laughter] And when a real foreign country takes some of the gold out of New York and ships it abroad, it counts first as imports and then as exports. However, the import side is not picked up in the Census data. So there you get the export side of it.
MR. LAWARE. Great accounting!
MR. BOEHNE. Great confidence building!
MR. TRUMAN. That’s because you haven’t been filling out your import documents!
MR. ANGELL. Let me run this by again. You mean a country owns gold and has it stored in the Federal Reserve Bank of New York and if they ship it out, that’s an export?
MR. TRUMAN. And in the balance of payments accounts it also counts as an import, so it washes out.
CHAIRMAN GREENSPAN. The Federal Reserve Bank’s basement is a foreign country. When they move it out of the basement into the United States, it’s an import. Then, when they ship it out again, it’s an export.
MR. ANGELL. That makes sense!
MR. TRUMAN. And sometimes when they sell the gold, it might be sold into the United States, so it should count as an import. It doesn’t necessarily always show up as an export.
MR. BOEHNE. That really clarifies it!
MR. KELLEY. Does it have to get out of your vault at all in order to be considered an import and an export?
VICE CHAIRMAN CORRIGAN. Well, I’m not even going to try to answer that. In this particular case I know what happened, so I think the description you have is correct.
Is there any question remaining as to the source of $4 billion in US gold exports in December?

Full Dec 1992 FOMC meeting minutes can be found in the Fed archives:

http://www.federalreserve.gov/monetarypolicy/files/FOMC19921222meeting.pdf