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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Enigma who wrote (46225)	12/23/1999 11:11:00 AM
From: Richnorth	Read Replies (1) \| Respond to of 116791

Why should I have to prove anything. You have not made any attempt to prove that gold is not being manipulated. By contrast, Bill Murphy attempts to prove his point. The transcript gives a record of his efforts to try to prove something. Proof is necessary. Otherwise what you say is just plain opinion, for whatever it is worth.

To: Enigma who wrote (46225)	12/23/1999 8:36:00 PM
From: long-gone	Read Replies (1) \| Respond to of 116791

Need more proof than this? The Exchange Stabilization Fund: How It Works by William P. Osterberg and James B. Thomson Increasingly controversial, the Exchange Stabilization Fund is used to influence the international value of the U.S. dollar and to provide aid to foreign countries. The debate surrounding the Fund will become more informed, suggest the authors, when observers understand how to calculate the total amount of resources available to the Fund. This Economic Commentary explains how the ESF?s balance sheet figures must be adjusted to produce an accurate account of those resources. The increased turmoil in international financial markets, starting with the Asian crises of 1997, has led to calls for financial assistance from the wealthier nations. In December 1997, the United States announced a $5 billion commitment toward an international package of financial assistance for South Korea. Two months earlier the United States pledged $3 billion for assistance to Indonesia. In both instances, the Exchange Stabilization Fund (ESF) was to be involved. Established by Congress in 1934 to help stabilize the international value of the dollar, the ESF received little public attention until it was used in the provision of financial assistance to Mexico in the wake of the peso crisis of 1995. Indeed, greater scrutiny may have been inevitable given the ESF?s expansion beyond its original mandate.1 Despite the recent attention, the full range of ESF activities and the actual amount of available ESF resources are not well understood. This impedes an informed public discussion of ESF operations. A major goal of this Economic Commentary is to facilitate accurate assessments of the amount of resources available to the ESF. First, in order to understand the uses of ESF resources, we provide an overview of ESF operations. Second, we examine the ESF balance sheet to show how ?total assets? is a poor measure of the resources available to the ESF for one of its major activities, foreign-exchange intervention. Third, we discuss how any measure of ESF resources must take account of warehousing and swap lines. Finally, we suggest a better procedure for assessing the amount of resources available to the ESF. An Overview of the ESF The ESF began operations on April 27, 1934, with capital of $2 billion. Initially, $1.8 billion of the ESF?s reserves were maintained in the Treasury?s gold account. The remaining $200 million was deposited in a special account at the Federal Reserve Bank of New York as the working balance for investing in gold and foreign exchange.2 The working fund of the ESF has expanded over time, reaching as high as $42 billion in mid-1995.3 As documented by Schwartz (1997), most of the growth in ESF assets has occurred since 1960 and has comprised increases in foreign exchange and securities. As of June 30, 1998, almost 60 percent of the asset total had been financed by cumulative net income, mainly reflecting interest earnings and capital gains on foreign currencies. The Gold Reserve Act of 1934 excluded the ESF from the congressional appropriations process and explicitly authorized it to operate without congressional oversight and accountability. In other words, Congress gave exclusive control of the ESF to the executive branch. All decisions regarding the ESF are made by the Secretary of the Treasury, subject to the approval of the President. Legislative changes in the late 1970s reduced somewhat the secrecy under which the ESF operates and made it more accountable to the Congress. For instance, since 1979 the administrative expenses of the ESF have been subject to the budget process. Moreover, a 1977 amendment to Section 10 of the Gold Reserve Act provides that: ?? a loan or credit to a foreign entity or government of a foreign country may be made for more than 6 months in a 12-month period only if the President gives Congress a written statement that unique or emergency circumstances require the loan or credit be for more than 6 months (31 U.S.C. 5302(b)).? Finally, 1978 legislation requires the Treasury to provide monthly statements of ESF activities to the House and Senate Banking Committees. Nevertheless, none of these legislative changes has reduced the discretion of the Treasury Secretary in operating the ESF. All of his decisions are final and not subject to approval by the Congress. The Size of the ESF A common misperception about the ESF is that its size is adequately measured by the ?total assets? number reported(cont) clev.frb.org