FRBNY - THE KEY TO T H E GOLD VAULT

T H E F E D E R A L R E S E R V E B A N K O F N E W Y O R K

THE KEY TO T H E GOLD VAULT



"...Today, all gold transactions occur at the market price of gold, but prior to 1971 gold transactions between nations were made at an official fixed price. The official U.S. government price of gold has changed only four times during the past 200 years. Since the passage of the Gold Reserve Act of 1934, which raised the official price of gold to $35 a troy ounce, the price has been raised twice: to $38 in 1972, and in 1973, to its current price of $42.2222 an ounce.

Because of the large disparity between the official price and the market price of gold, the official price has become irrelevant from a transactions perspective.

Today, no nation is willing to sell gold at the official price, which is used by governments only for bookkeeping and reporting purposes..."

[Mrt: Interesting description and reasoning :o) Well, some must sell.]
...

A PHENOMENAL ASSET

For centuries, gold had a profound impact on history, as a symbol and a storehouse of wealth accepted universally around the world. Gold functions as a medium of exchange, particularly in areas where currencies are distrusted. Yet gold has not been without controversy. The influential economist, John Maynard Keynes, referred to gold as a “barbarous relic.” Later in the 20th century, former Chairman of the Federal Reserve’s Board of Governors, William McChesney Martin, praised gold as “a beautiful and noble metal. What is barbarous,” Martin said, “is man’s enslavement to gold for monetary purposes.”

[Mrt: Yes Mr. W.Martin, indeed.]

Source: http://www.newyorkfed.org/education/addpub/goldvault.pdf