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A series of declassified memos from 1970 has been released by the CIA, the memos relate to the newly created SDR and the gold market. The memos provide a lot of insight on how the CIA viewed the gold market including the perceived manipulation of gold and the potential for the SDR to become a gold substitute in the international monetary system.
It’s worth noting that the classification of the documents is significant since the second highest classification used by the CIA is termed “secret”. As denoted by the CIA, the unauthorized disclosure of secret information is likely to cause serious damage to national security.
The declassified SDR and gold documents was marked “SECRET” including a warning stating that the document contains information that affects the national defense of the United States within the meaning of Title 18 sections 793 and 794 of the US Code.
The CIA memorandum of 1971 shows that the CIA is concerned about gold market manipulation by the Swiss whom they characterize as being in an ideal position to influence the London free market fixing. Circumstantial evidence that Zurich bullion dealers, under the leadership of the Union Bank of Switzerland were again manipulating the gold markets is pointed out by the memorandum.
The IMF agreement with South Africa to sell its gold to the IMF under certain conditions when it could not sell its newly mined out put on the free market was adversely affected by the manipulation. The memo states that while the IMF agreement essentially provides a floor of $35 an ounce for South African gold, it guarantees a free market supply large enough to keep the free market price at or near the floor until 1970 is over.
One of the memos shows that the CIA emphasizing that the only available means of increasing reserves abroad was through continued deficits in the US balance of payments.
