there's more than meets the eye (1981, update 16.10.08)

INTRODUCTION

Phone tapping, myopically accomodating hidden agendas, alien laws and foreign judges, and letting fester both some claims related to WW2 bank deposits and some stealthily outsourced and absorbed Nazi assets (IG Farben) did not bode well. Neither for the Swiss banking industry as a whole, nor for the UBS/SBC mega Swiss bank merger in particular [which however, 8 years later, appears to turn out better than expected].

To be sure, the growing headaches experienced by Swiss bankers, fiduciaries and related professionals have been mostly home-grown. At least in as much as they have grown in an environment of nearly perfected mediocrity, coupled with an ever-more society-permeating compliance mentality with regard to whatever bureaucrats here and there may decide is in society's, the market and their own interest. As trustees of the citizens of the world, they have inherited a unique, globally envied and obligeing goodwill. To which they grew accustomed, with many of them, over an extended post WWII period, not needing or even maintaining the capacity to effectively fight for their clients and achievements. What was projected as noble restraint in fact often only covered up lack of vision and confusion of mere flat earth arrogance with genuine authority - if not sheer incompetence. They not only failed to join or support the battles against, but even facilitated the ever more arrogant onslaughts of unelected out-of-control international bureaucrats and their unconstitutional lawmaking - with correspondingly self-inflicted long-term damages. This, at least, has been the case with such recent fiscal aberrations as the OECD's tax harmonzation initiatives and the IRS' QI (Qualified Intermediary) agreements. Thus they have often been successful less because than despite of themselves. And their public growling - like the widely applauded frontpage outcry in a professional newspaper "Satellization of Switzerland?" - would be more credible and have a better chance of being heeded by the political decision-makers here and there, if its authors had not, during decades, turned their back to related alarm signals. If they, too started in earnest to put their money where their mouth is. And if they thus would be rightly suspected - if not seen - to be fighting on the side of tax competition, fiscal sovereignty and genuine privacy, i.e. in the vanguard of protecting their clients and Swiss taxpayers from foreign fiscal aggressions facilitated by - of all places - the OECD, its FATF and its other anti-enterpreneurial outgrowths.

As to our own initial analysis and predictions on the UBS - and assuming that none of the bizarre gold and other tales who emerged so far from the Balkans, Italy, the Near & Far East and South Africa, will ever check out or grow beyond the US$ 1.25 billion Settlement Agreement of 26 January 1999 -, we have no problem admitting that we may have goofed (subscribing, as we do, to what we consider a major progress factor, i.e. the new/old human right to error which, however, is inseparably linked to the obligation to admit error).

Drawing on a generation of active investor protection experiences, we have arrived at these conclusions through such seemingly unrelated events as Interhandel, Rees-Bericht, Interfipol, Haile Selassie, Reza Palehvi, Ferdinand Marcos, Santa Fe, RJR Nabisco, Sasea, Rinderknecht, Swissair, etc. Most of these events are seen to be linked to a few but influential Swiss bankers and their myopically self-serving - and now badly back-firing - neglect of fundamental principles and promotion of lex americana universalis.

Interestingly, that also points to some real remedies in harmony with the fundamentals. Like the Pillory, i.e. the Internet's most peculiar debt exchange and e-commerce site. Thus legitimate claimants - and not only victims of recent historical wrongs - might effectively turn the table on their solvent debtors, whatever their names and sizes, e.g. the successors to Czarist Russia, to Nazi Germany's IG Farben assets, etc.

www.FAME.org 1981 (full text in pdf format) extract:

How Americans Lost Their Right To Own Gold
And Became Criminals in the Process

By Henry Mark Holzer

About the Author:
Henry Mark Holzer is a Professor of Law. He teaches constitutional law, administrative law, and other courses. His practice is limited to appeals and constitutional litigation.
Prof. Holzer has lectured widely on a variety of legal and law-related topics, and his articles have appeared in newspapers, popular and professional magazines, and academic journals. His most recent books are The Gold Clause (1980) and Government's Money Monopoly (1981).

Introduction
    For the first time since [James] Bond had known Goldfinger, the big, bland face, always empty of expression. showed a trace of life . . . . "Mr. Bond, all my life I have been in love. I have been in love with gold. I love its colour, its brilliance, its divine heaviness . . . .I have worked all my life for gold . . . .I ask you . . . . is there any other substance on earth that so rewards its owner?"1
    For centuries, most people have shared the fictional Mr. Goldfinger?s attitude about gold, though not necessarily for the same reasons. While gold has been much sought after, both for ornamental and industrial purposes, modern times?or, more specifically, modern governments?have taught men to value it for one purpose above all others: as a hedge against the debasement of paper money. Monetary economist Charles Rist acknowledged this phenomenon when he wrote: ?[I]n the absence of governments capable of maintaining stable money, private individuals seek to assure it for themselves, hoarding a purchasing power [gold] more stable than that of any other merchandise . . . stable money is one of the last arms that remains at the disposal of the individual to direct his own affairs, whether it be an enterprise or a simple household.?2
    Indeed, during the monetary crisis of the last several years, the price of gold soared in free world markets as more and more individuals around the world acquired gold as a hedge against actual and potential currency devaluations.3 Unfortunately, while others scrambled to protect themselves from the instability of paper money, Americans had to watch from the sidelines. For them, owning gold has long been a criminal offense, punishable by up to ten years in jail and/or up to a $10,000 fine; they also risk confiscation of the gold and a penalty of twice its value.4
    Most Americans are unaware of the existence of these harsh criminal sanctions. Fewer still, including the legal community, are aware of how?and why?Americans lost their right to own gold in the first place. The facts, which should startle layman and lawyer alike, expose the shaky legal foundation on which the gold prohibition rests: an unconstitutional arrogation of congressional power and the improper delegation of that power to the President, leading to what can be called the ?endless
emergency? rationale.

World War I: The Seeds Are Sown
    The existence of a state of war between the United States and Germany in 1917 had prompted the passage of the Trading with the Enemy Act,5 one purpose of which was to make unlawful all dealings between Americans and the enemies of the United States.6 However, an obscure subsection of the Act7 authorized the President to regulate, investigate, and prohibit ?under such rules and regulations as he may prescribe . . . any transactions in foreign exchange, export or earmarkings of gold or silver coin or bullion or currency . . . by any person within the United States . . . ?8 These sweeping new presidential powers had teeth in them: elsewhere the Act provided for severe criminal sanctions of up to ten years in prison and/or up to a $10,000 fine for violation of any decrees which the President might make under the Act.9. The net result of the Act, vis-à-vis transactions in gold, was the arrogation by the Sixty-Fifth Congress of a money power not granted by the Constitution10-and further: the delegation of that power to the Executive branch of the Government.
    The war emergency and the President's duty to fight the war provided Congress with a convenient rationale for the Act. The fact is, however, that the Constitution nowhere empowers Congress to prohibit dealing in gold-much less authorizes Congress to delegate that power to a coordinate branch of government.
    Worst of all, the power which Congress delegated to the President enabled him to make criminals out of honest American citizens whose crime would consist only of trying to protect themselves from official debasement of their money. In more fundamental terms, Americans henceforth would be ?under the gun? for exercising a fundamental, inalienable right: the right to deal with their own property as they saw fit. Gold, no matter what its special characteristics, is, after all, just another form of
property.
    If there were those who feared that Congress had more in mind than merely prohibiting transactions in gold during the World War I emergency, their concern would have been justified. On September 24, 1918, less than a year after its original enactment, and virtually on the eve of the War?s end, the Trading with the Enemy Act was amended in two important respects: not only was the wartime Act extended ?[u]ntil the expiration of two years after the date of the termination of the war between the United States and the Imperial German Government. . . ,?11 but the amendment actually enlarged the Executive?s power to control private gold. Now, President Woodrow Wilson could also ?[i]nvestigate, regulate, or prohibit any hoarding . . . of gold . . . by any person within the United States.?12 Less than two months later, on November 11, 1918, the war ended, and two years later Wilson?s power over private gold expired. Once again, Americans were under no restraints with regard to what they did with their gold. Presumably, the emergency was over.

The New Deal and the New ?Emergency?
    Franklin D. Roosevelt was inaugurated as President on March 4, 1933. Throughout the country, banks were slamming their doors on depositors clamoring to withdraw their own money, preferably in gold. For people who were seeking to exchange soft paper currency for the more stable metal?as existing law allowed, and as the Government had solemnly pledged?the new President had other ideas. On March 5, 1933, one day after taking office, Roosevelt issued a Proclamation convening Congress in Extra Session at noon on March 9, 1933, a decision allegedly necessitated by what the Chief Executive referred to vaguely as ?public interests.?13
    But March 9 was still four days away, and Roosevelt apparently was impatient to stop bank depositors from withdrawing their paper money or converting it to gold. Accordingly, the next day, March 6,1933, he took an unprecedented step. For the first time in United States history, an American president closed the nation?s banks. By Proclamation,14 he stated the following: the recent gold and currency withdrawals had been ?unwarranted? and for the purpose of ?hoarding?; speculation
abroad had caused ?severe drains? on the ?Nation?s? gold stocks; the result was to create a national ?emergency?; further ?hoarding?; and ?speculation? must be prevented and ?appropriate measures? taken ?to protect the interests of our people?;
the Trading with the Enemy Act, as amended, had given the President certain powers over private gold; and therefore, ?to prevent the export, hoarding, or earmarking of gold,? the banks would take a ?holiday? from Monday, March 6, 1933, to and
including Thursday, March 9, 1933, and that during the holiday no bank would ?pay out, export, earmark, or permit the withdrawal or transfer in any manner or by any device whatsoever of any gold . . . or take any other action which might facilitate . . . hoarding.?15 Roosevelt?s action was devoid of even arguable legal justification.
    Nowhere in the Constitution is any branch of government, let alone the Executive, given the power to close privately owned banking institutions. Nor did the Proclamation even purport to invoke constitutional authority. And despite the Proclamation?s passing reference to an alleged ?national emergency,? no war conditions were present which could have enabled Roosevelt to argue that, under the Commander-in-Chief?s ?war powers,?16 he had the authority to place in suspended animation a huge, crucially important part of America?s commercial establishment.
    The Proclamation?s reference to the World War I Trading with the Enemy Act, which had long since expired, was a strained attempt to find some semblance of legal support for Roosevelt?s unprecedented assumption of complete control over
America?s banking system.
    It is no wonder that Roosevelt immediately sent to a docile and compliant 73rd Congress, a hastily drawn but comprehensive bill to amend the moribund Trading with the Enemy Act and to attempt to secure a legal basis for the unilateral action hehad already taken.17

Retroactive Rubberstamping: The Emergency Banking Act
    The House of Representatives convened at noon on March 9, 1933. After the customary opening prayer and the disposing of certain routine ?housekeeping? matters,18 a message was received from the President19 which requested passage of
H.R. 1491.
    The bill?s preamble dramatizes the haste with which the President?s minions sought to railroad the bill through both Houses of Congress: ?An Act to provide relief in the existing national emergency in banking, and for other purposes. Be it enacted . . . that the Congress hereby declares that a serious emergency exists and that it is imperatively necessary speedily to put into effect remedies of uniform national application.?20
    In the House, Majority Leader Joseph W. Byrns, Democrat of Tennessee, asked for immediate consideration of the bill and that debate be limited to forty minutes, twenty minutes for each party. Mr. Byrns expressed the hope that under the peculiar
circumstances and under the serious circumstances which confront the country, we agree to take this bill up now, pass it, send it to the Senate so it may become a law this evening, and thus enable the President of the United States to open the banks tomorrow.21
    Next rose House Minority Leader Bertrand H. Snell, Republican of New York. After noting that ?it is entirely out of the ordinary to pass legislation in this House that, as far as I know, is not even in print at the time it is offered,? Mr. Snell, in a burst
of bipartisanship, observed: The house is burning down, and the President of the United States says this is the way to put out the fire. [Applause.] And to me at this time there is only one answer to this question, and that is to give the President what he demands and says is necessary to meet the situation. I do not know that I am in favor of all the details carried in this bill,22 but whether I am or not, I am going to give the President of the United States today his way. He is the man responsible, and we
must at this time follow his lead. I hope no one on this side of the aisle will object to the consideration of the request. [Applause]23
    Someone then produced a copy of the bill, and it was read by the Clerk of the House.24 The bill was passed.25 After a short discussion, the spectacle of what had just transpired in the House in that hour-and-a-half session was best expressed by
Congressman Lundeen:

    Mr. LUNDEEN. Mr. Speaker, today the Chief Executive sent to this House of Representatives a banking bill for immediate enactment. The author of this bill seems to be unknown. No one has told us who drafted the bill. There appears to be a printed copy at the speakers desk, but no printed copies are available for the House Members. The bill has been driven through the House with cyclonic speed after 40 minutes debate, 20 minutes for the minority and 20 minutes for the majority.
    I have demanded a roll call, but have been unable to get the attention of the Chair. Others have done the same, notably Congressman SINCLAIR of North Dakota, and Congressman BILL LEMKE, of North Dakota, as well as some of our other
Farmer Labor Members. Fifteen men were standing, demanding a roll call, but that number is not sufficient; we therefore have the spectacle of the great House of Representatives of the United States of America passing, after a 40-minute debate, a bill its Members never read and never saw, a bill whose author is unknown. The great majority of the Members have been unable to get a minute?s time to discuss this bill; we have been refused a roll call; and we have been refused recognition by the Chair. I do not mean to say that the Speaker of the House of Representatives intended to ignore us, but everything was in such a turmoil and there was so much excitement that we simply were not recognized.
    I want to put myself on record against procedure of this kind and against the use of such methods in passing legislation affecting millions of lives and billions of dollars. It seems to me that under this bill thousands of small banks will be crushed and wiped out of existence, and that money and credit control will be still further concentrated in the hands of those who now hold the power.
    It is safe to say that in normal times, after careful study of a printed copy and after careful debate and consideration, this bill would never have passed this House or any other House. Its passage could be accomplished only by rapid procedure, hurried and hectic debate, and a general rush for voting without roll call.
    I believe in the House of Representatives. I believe in the power that was given us by the people. I believe that Congress is the greatest and most powerful body in America, and I believe that the people have vested in Congress their ultimate and final power in every great, vital question, and the Constitution bears me out in that.
    I am suspicious of this railroading of bills through our House of Representatives, and I refuse to vote for a measure unseen and unknown.
    I want the RECORD to show that I was, and am, against this bill and this method of procedure; and I believe no good will come out of it for America. We must not abdicate our power to exercise judgment. We must not allow ourselves to be swept off our feet by hysteria, and we must not let the power of the Executive paralyze our legislative action. If we do, it would be better for us to resign and go home?and save the people the salary they are paying us.
    I look forward to that day when we shall read the bill we are considering, and see the author of the bill stand before the House and explain it, and then, after calm deliberation and sober judgment?after full and free debate?I hope to see sane
and sensible legislation passed which will lift America out of this panic and disaster into which we were plunged by the World War.26

    Neither ?calm deliberation and sober judgment, nor ?full and free debate? characterized what took place next in the Senate,27 where H.R. 1491?which affected ?millions of lives and billions of dollars??spent the afternoon with at least eighty
United States Senators. Seventy-three of them voted ?yea?28 and the bill, which had originated in the House at noon, passed the Senate by 7:30 P.M. Later that same night, Roosevelt approved it and H.R. 1491 became the Emergency Banking Act.29
    Fundamentally, the Act accomplished three things. First, it retroactively approved the President?s illegal action of March 6, 1933.30 (If Roosevelt had thought himself to be on solid legal ground when he closed the banks, one could ask why he thought it necessary to go to Congress in the first place. This legislative ?rubber stamp? approach to past and future executive action would be used more than once in themonths ahead.)
    Second, it amended section 5(b) of the Trading with the Enemy Act, to provide that: During time of war or during any other period of national emergency declared bythe President, the President may, through any agency that he may designate, or
otherwise, investigate, regulate, or prohibit, under such rules and regulations as he may prescribe, by means of licenses or otherwise, any transactions in foreignexchange, transfers of credit between or payments by banking institutions as defined by the President, and exporting, hoarding, melting, or earmarking of gold or silver coin or bullion or currency, by any person within the United States or any place subject to the jurisdiction thereof; and the President may require any person engaged in any transaction referred to in this subdivision to furnish under oath, complete information relative thereto, including the production of any books of account, contracts, letters or other papers, in connection therewith in the custody or control of such person, either before or after such transaction is completed. Whoever willfully violates any of the provisions of this subdivision or of any license, order, rule of regulation issued thereunder, shall, upon conviction, be fined not more than $10,000, or, if a natural person, may be imprisoned for not more than ten years, or both, and any officer, director, or agent of any corporation who knowingly participates in such violation may be punished by a like fine, imprisonment, or both. As used in this subdivision the term ?person? means an individual, partnership, association, or corporation.31
    Finally, it added a new subsection (n) to the Federal Reserve Act, giving the Secretary of the Treasury virtually unfettered discretion to compel holders of gold coin, gold bullion, and gold certificates to surrender them to the Treasurer of the United States, and to accept paper money instead.32
    Ironically, while the Act ostensibly reflected Congress? alleged concern with gold withdrawals, Congress itself took no action at all. Instead, consonant with the remarks on the floor of each House, Congress gave the President sole authority to regulate all banks and financial transactions in general, and everything concerning gold in particular (with the Secretary of the Treasury acting as his ?Requisitioner-in-Waiting?). And more: Roosevelt?s new powers far surpassed those granted President
Wilson by the World War I Trading with the Enemy Act; Roosevelt?s authority extended beyond ?time of war? to ?any other period of national emergency declared by the President.? Needless to say, just as the Act contained no elaboration as to what
the current ?emergency? was, neither did it establish any criteria by which thePresident was to ascertain the existence of any emergency?an omission which was to prove crucially important to future presidents?and to future owners of gold.

Cashing In on the ?Emergency?: Confiscation
    Passage of the Emergency Banking Act on March 9, 1933 did not end that day?s hectic activities. Still later that night, under the authority given him only several hours earlier, Roosevelt issued a new Proclamation. This one continued, in full force and
effect, ?until further proclamation by the President,? the provisions of his March 6, 1933 bank holiday Proclamation33 and the regulations and orders which had been issued thereunder.34 However, a last loophole remained to be plugged: many individuals still had gold in their possession and no requisition had yet been made by the Government. Something had to be done to keep the gold where the Government could get at it when the time came.
    Accordingly, the next day, March 10, under the authority of the Emergency Banking Act and ?all other authority vested in me,? Roosevelt issued Executive Order No. 6073.31 In addition to authorizing the Secretary of the Treasury to decide which of the nation?s banks could open, the order prohibited owners of gold from exporting or otherwise removing it ?from the United States or any place subject to the jurisdiction thereof. . . except in accordance with regulations prescribed by or under license issued by the Secretary of the Treasury.?36
    Given this frozen state of financial affairs, the President could now turn his attention to what earlier he had deprecatingly referred to as ?hoarding??i.e., the holding of gold by the people who owned it. It took Roosevelt a month. Acting under
the authority he thought had been given him by the Emergency Banking Act, the President, on April 5, 1933, issued Executive Order No. 6l02.37 Its title clearly discloses how Roosevelt intended to deal with ?hoarding?: ?Executive Order Forbidding the Hoarding of Gold Coin, Gold Bullion, and Gold Certificates.?
    There were exceptions to this general prohibition: every American could retain a maximum of one hundred dollars in gold coin and gold certificates, rare coins were excepted altogether, and reasonable amounts of gold could be retained for use in
industry and the arts. Banks, however, were required to turn over gold coin, gold bullion, and gold certificates ?owned or received by them,? to the Federal Reserve Bank. This included not only gold owned by the banks, but also gold owned by their depositors. In short, on or before May 1, 1933, all privately owned gold in the United States (subject to a few minor exceptions) was to be confiscated by the Government.
    As compensation, the owners were to receive paper money, whether they liked it or not.38 Willful failure to submit to the confiscation was punishable by up to ten years in jail and/or up to a $10,000 fine.39
    During the next two months, additional steps were taken to implement the government?s confiscatory policy. On April 19, the Secretary of the Treasury advised that, until further notice, no further licenses would be granted to export gold for the
purpose of supporting the dollar in foreign exchange.40 On April 20, the President went one giant step further: he issued an Executive Order prohibiting the earmarking for foreign account, and the export, of gold coin, gold bullion, or gold certificates,
while, at the same time, authorizing the Secretary of the Treasury to issue licenses permitting such export under certain conditions.41 On April 29, the Secretary of the Treasury issued supplementary regulations relating to the Executive Orders of April 5 and 20, with respect to gold hoarding and the gold export embargo.42 Article 5, section 1, of those regulations provided that:
    any person showing the need for gold coin or gold bullion for a proper transaction not involving hoarding, or for gold coin or gold bullion for purposes specified in the Executive Order of April 5 1933, and not covered by the foregoing Articles of these regulations may make application to the Secretary of the Treasury for a license to purchase, or if such coin or bullion is already in his possession to retain such coin or bullion.43
    However, just the day before, on April 28, Acting Secretary of the Treasury Ballantine had established a precondition for all applicants: first, the gold had to be turned in. This precondition was, of course, couched in more legalistic terminology:
Until further notice the Secretary of the Treasury will grant no licenses for the acquisition of gold, gold coin, or bullion by persons making application for the same under the Executive order of April 5, 1933, for the purpose of meeting maturing obligations calling for payment in gold coin or bullion, within the United States or elsewhere, except where such applicants have surrendered gold coin, gold bullion, or gold certificates in obedience to the Executive order of April 5, l933.44
(full text in pdf format)

October 24, 2005

The Cost of Gold
Behind Gold's Glitter: Torn Lands and Pointed Questions

By JANE PERLEZ and KIRK JOHNSON

There has always been an element of madness to gold's allure.

For thousands of years, something in the eternally lustrous metal has driven people to the outer edges of desire - to have it and hoard it, to kill or conquer for it, to possess it like a lover.

In the early 1500's, King Ferdinand of Spain laid down the priorities as his conquistadors set out for the New World. "Get gold," he told them, "Humanely if possible, but at all costs, get gold."

In that long and tortuous history, gold has now arrived at a new moment of opportunity and peril.

The price of gold is higher than it has been in 17 years - pushing $500 an ounce. But much of the gold left to be mined is microscopic and is being wrung from the earth at enormous environmental cost, often in some of the poorest corners of the world.

And unlike past gold manias, from the time of the pharoahs to the forty-niners, this one has little to do with girding empires, economies or currencies. It is almost all about the soaring demand for jewelry, which consumes 80 percent or more of the gold mined today.

The extravagance of the moment is provoking a storm among environmental groups and communities near the mines, and forcing even some at Tiffany & Company and the world's largest mining companies to confront uncomfortable questions about the real costs of mining gold.

"The biggest challenge we face is the absence of a set of clearly defined, broadly accepted standards for environmentally and socially responsible mining," said Tiffany's chairman, Michael Kowalski. He took out a full-page advertisement last year urging miners to make "urgently needed" reforms.

Consider a ring. For that one ounce of gold, miners dig up and haul away 30 tons of rock and sprinkle it with diluted cyanide, which separates the gold from the rock. Before they are through, miners at some of the largest mines move a half million tons of earth a day, pile it in mounds that can rival the Great Pyramids, and drizzle the ore with the poisonous solution for years.

The scars of open-pit mining on this scale endure.

A months-long examination by The New York Times, including tours of gold mines in the American West, Latin America, Africa and Europe, provided a rare look inside an insular industry with a troubled environmental legacy and an uncertain future.

Some metal mines, including gold mines, have become the near-equivalent of nuclear waste dumps that must be tended in perpetuity. Hard-rock mining generates more toxic waste than any other industry in the United States, according to the Environmental Protection Agency. The agency estimated last year that the cost of cleaning up metal mines could reach $54 billion.

A recent report from the Government Accountability Office chastised the agency and said legal loopholes, corporate shells and weak federal oversight had compounded the costs and increased the chances that mining companies could walk away without paying for cleanups and pass the bill to taxpayers.

"Mining problems weren't considered a very high priority" in past decades, Thomas P. Dunne, the agency's acting assistant administrator for solid waste and emergency response, said in an interview. "But they are a concern now."

With the costs and scrutiny of mining on the rise in rich countries, where the best ores have been depleted, 70 percent of gold is now mined in developing countries like Guatemala and Ghana. It is there, miners and critics agree, that the real battle over gold's future is being waged.

Gold companies say they are bringing good jobs, tighter environmental rules and time-tested technologies to their new frontiers. With the help of the World Bank, they have opened huge mines promising development. Governments have welcomed the investment.

But environmental groups say companies are mining in ways that would never be tolerated in wealthier nations, such as dumping tons of waste into rivers, bays and oceans. People who live closest to the mines say they see too few of mining's benefits and bear too much of its burden. In Guatemala and Peru, people have mounted protests to push miners out. Other communities are taking companies to court.

This month a Philippine province sued the world's fifth-largest gold company, Canada-based Placer Dome, charging that it had ruined a river, bay and coral reef by dumping enough waste to fill a convoy of trucks that would circle the globe three times.

Placer Dome, which also runs three major mines in Nevada, answered by saying that it had "contained the problem" and already spent $70 million in remediation and another $1.5 million in compensation.

Some in the industry have paused to consider whether it is worth the cost - to the environment, their bottom line or their reputations - to mine gold, which generates more waste per ounce than any other metal and yet has few industrial uses.

The world's biggest mining company, Australia-based BHP Billiton, sold its profitable Ok Tedi mine in Papua New Guinea in 2001 after having destroyed more than 2,400 acres of rainforest. Upon leaving, the company said the mine was "not compatible with our environmental values."

After tough lessons, other companies, like Newmont Mining, the world's largest gold producer, are paying for more schools and housing, trying harder to ease social problems around its mines.

"I don't think any of our members want to be associated with a bad operation - notwithstanding it would hurt their ability to open new facilities," said Carol L. Raulston, spokeswoman for the National Mining Association. "News goes around the world quickly now and there is no place to hide."

Critics say corporate miners have been cloistered from scrutiny because of their anonymity to consumers, unlike, say, oil companies, which also extract resources but hang their name over the pump.

Last year the mine watchdog group Earthworks began a "No Dirty Gold" campaign, marching protesters in front of fashionable Fifth Avenue storefronts, trying to change gold mining by lobbying gold consumers.

"They just said to ask where the gold was coming from and whether it caused social or environmental damage," said Michael E. Conroy, senior lecturer and research scholar at the Yale University School of Forestry and Environmental Studies. "The repercussions in the mining media were huge - some said it was all lies, but retailers began to realize what their vulnerability was."

Mr. Kowalski, Tiffany's chairman, has tried to stay ahead of the controversy. He has broken new ground by buying Tiffany's gold from a mine in Utah that does not use cyanide.

But the largest sellers of gold are not luxury outlets like his, but rather Wal-Mart stores, and even Mr. Kowalski, a trustee of the Wildlife Conservation Society, hesitated to call any gold entirely "clean."

Asia's Insatiable Appetite

Amrita Raj, a 25-year-old bride, was shopping for her wedding trousseau on a recent Saturday in New Delhi. There was a "wedding set" to be bought that day, with its requisite gold necklace, matching earrings and two sets of bangles.

For the sake of family honor, the new in-laws would have to receive gold gifts as well - a "light set" for the mother-in-law, plus a gold ring or a watch for the bridegroom, and earrings for a sister-in-law.

"Without gold, it's not a wedding - at least not for Indians," Ms. Raj said.

For thousands of years, gold has lent itself to ceremony and celebration. But now old ways have met new prosperity. The newly moneyed consumers who line the malls of Shanghai and the bazaars of Mumbai sent jewelry sales shooting to a record $38 billion this year, according to the World Gold Council, the industry trade group.

Over the last year, sales surged 11 percent in China and 47 percent in India, a country of a billion people whose seemingly insatiable appetite for gold - for jewelry, temples and dowries - has traditionally made it gold's largest consumer.

That kind of demand leads many in and out of the industry to argue that gold's value is cultural and should not be questioned. The desire to hoard gold is not limited to households in India or the Middle East, either.

The United States, the world's second-largest consumer of gold, is also the world's largest holder of gold reserves. The government has 8,134 tons secured in vaults, about $122 billion worth. The Federal Reserve and other major central banks renewed an agreement last year to severely restrict sales from their reserves, offering, in effect, a price support to gold.

That price is not simply a matter of supply and demand, but of market psychology. Gold is bought by anxious investors when the dollar is weak and the economy uncertain. That is a big reason for gold's high price today.

For miners that price determines virtually everything - where gold is mined, how much is mined, and how tiny are the flecks worth going after.

"You can mine gold ore at a lower grade than any other metal," said Mike Wireman, a mine specialist at the Denver office of the E.P.A. "That means big open pits. But it must also be easy and cheap to be profitable, and that means cyanide."

That kind of massive operation can be seen at Yanacocha, a sprawling mine in northern Peru run by Newmont. In a region of pastures and peasants, the rolling green hills have been carved into sandy-colored mesas, looking more like the American West than the Andean highlands.

Mountains have been systematically blasted, carted off by groaning trucks the size of houses and restacked into ziggurats of chunky ore. These new man-made mountains are lined with irrigation hoses that silently trickle millions of gallons of cyanide solution over the rock for years. The cyanide dissolves the gold so it can be separated and smelted.

At sites like Yanacocha, one ounce of gold is sprinkled in 30 tons of ore. But to get at that ore, many more tons of earth have to be moved, then left as waste. At some mines in Nevada, 100 tons or more of earth have to be excavated for a single ounce of gold, said Ann Maest, a geochemist who consults on mining issues.

Mining companies say they are meeting a demand and that this kind of gold mining, called cyanide heap leaching, is as good a use of the land as any, or better.

Cyanide is not the only option. But it is considered the most cost-effective way to retrieve microscopic bits of "invisible gold." Profit margins are too thin, miners say, and the gold left in the world too scarce to mine it any other way.

"The heap is cheaper," said Shannon W. Dunlap, an environmental manager with Placer Dome. "Our ore wouldn't work without the heap."

But much of those masses of disturbed rock, exposed to the rain and air for the first time, are also the source of mining's multibillion-dollar environmental time bomb. Sulfides in that rock will react with oxygen, making sulfuric acid.

That acid pollutes and it also frees heavy metals like cadmium, lead and mercury, which are harmful to people and fish even at low concentrations. The chain reaction can go on for centuries.

Many industry officials, reluctant to utter the word pollution, protest that much of what they leave behind is not waste at all but ground-up rock. The best-run mines reclaim land along the way, they say, "capping" the rock piles with soil and using lime to try to forestall acid generation.

But stopping pollution forever is difficult. Even rock piles that are capped, in an attempt to keep out air and rain, can release pollutants, particularly in wet climates.

Cyanide can present long-term problems, too. Most scientists agree that cyanide decomposes in sunlight and is not dangerous if greatly diluted. But a study by the United States Geological Survey in 2000 said that cyanide can convert to other toxic forms and persist, particularly in cold climates.

And just as cyanide dissolves gold out of the rock, it releases harmful metals, too.

There have also been significant accidents involving cyanide. From 1985 to 2000, more than a dozen reservoirs containing cyanide-laden mine waste collapsed, the United Nations Environment Program reported.

The most severe disaster occurred in Romania in 2000, when mine waste spilled into a tributary of the Danube River, killing more than a thousand tons of fish and issuing a plume of cyanide that reached 1,600 miles to the Black Sea.

That spill led to calls for the gold industry to improve its handling of cyanide. After five years of discussion, the industry unveiled a new code this month. It sets standards for transporting and storing cyanide and calls on companies to submit to inspections by a new industry body.

But the cyanide code is voluntary and not enforced by government. And Glenn Miller, a professor of environmental science at the University of Nevada, says it does not adequately deal with one of mining's most important, unattended questions: What happens when the mine closes?

A Rocky Mountain Disaster

One answer can be found in a rural, rugged area of northeastern Montana called the Little Rocky Mountains.

There, Dale Ployhar often comes to the high bare slopes around the abandoned Zortman-Landusky gold mine to plant pine seedlings on a silent hillside that has been reclaimed by little more than grasses.

"I bring lodgepole seeds and scatter them around, hoping they'll come back," he said, looking out over the tiny town of Zortman, population 50.

Zortman-Landusky was the first large-scale, open-pit cyanide operation in the United States when it opened in 1979. The imprint it left on the environment, psyche and politics of Montana continues today.

What happened there - a cacophonous, multilayered disaster involving bankruptcy, bad science, environmental havoc and regulatory gaps - foreshadowed the risky road that gold has taken in the years since, mining experts, government regulators and environmentalists say.

"There's a lot of bitterness left," said Mr. Ployhar, 65, a heavy equipment operator, whose son bought some of the mine lands at a bankruptcy auction four years ago.

Some mining experts say that Zortman-Landusky - a combination of two open pits near Zortman and the neighboring village of Landusky - offered a steep learning curve on how chemical mining worked, and didn't.

Others say that overly ambitious production schedules by the mine's owner, Pegasus Gold, based in Canada, were to blame. A bonus package of more than $5 million for top executives, announced after the company filed for bankruptcy protection in 1998, did not help.

Mining with cyanide can be tricky even in the best conditions. At Zortman, the company made the mistake of building their cyanide heaps atop rock that turned acidic. The cyanide and the acid mixed in a toxic cocktail that seeped from the mounds.

Mining stopped in 1996, and company officials insisted in their public comments over the next year that they wanted to be responsible corporate citizens and stay to clean up the property. But the price of gold was falling, then below $280 an ounce, and Pegasus closed its doors.

"This became one of the worst cases in Montana," said Wayne E. Jepson, manager of the Zortman project at the Montana Department of Environmental Quality. "But even as late as 1990, one of the last studies for Landusky predicted no acid in any significant amounts."

Environmental risks from hard-rock mines often turn out to be understated and underreported, according to two recent studies.

Robert Repetto, an economist at the University of Colorado, examined 10 mines in the United States and abroad run by publicly traded companies. All but one, he wrote in a June report, had failed to fully disclose "risks and liabilities" to investors.

The environmental group Earthworks examined 22 mines for a report it will publish in November. Almost all of them had water problems, leading it to conclude that "water quality impacts are almost always underestimated" before mining begins.

"The combination of the regulatory approach and the science is what creates inaccurate predictions," said James R. Kuipers, a consultant and former mining engineer, one of the authors of the study.

At Zortman-Landusky, the state wrote the environmental impact study itself, based primarily on information from the company, Mr. Kuipers said.

Montana and other big mining states still often depend on mining companies for much of the scientific data about environmental impact, or the money to pay for the studies, state and federal regulators say, mainly because government agencies generally lack the resources to do expensive, in-depth research themselves.

Some mine regulators defend the practice, saying that having scientific data supplied by companies with a financial interest in the outcome is not necessarily bad if the review is stringent.

"What is important to make the system work is that state and federal agencies have the wherewithal and expertise to look at the information," said Mr. Wireman of the Denver E.P.A. office.

But one lesson of Zortman is that good information is sometimes ignored.

In the early 1990's, an E.P.A. consultant and former mining engineer, Orville Kiehn, warned in a memo to his bosses that not enough money was being set aside by the mine for water treatment.

Mr. Kiehn's opinion, vindicated today, went nowhere. The environmental agency had little legal authority then - and no more today - to protect the public from an operating mine except by filing a lawsuit, as it did in 1995 after Pegasus had already violated federal clean water standards.

The company settled the suit in 1996 and agreed to pay $32.3 million mostly to upgrade and expand water treatment.

At the time, state officials rejected the idea of squeezing Pegasus to put up more money. This spring, Montana's legislature created a special fund for water treatment to make up for it, for the next 120 years, at a cost of more than $19 million.

Washington is also coming to grips with the failure to plan for the cost of mining. The Government Accountability Office, the investigative arm of Congress, sharply criticized the E.P.A. in August for not requiring metal mines to provide assurances that they can pay for cleanups, a failure that it said had exposed taxpayers to potentially billions of dollars in liabilities.

For Montana, the Zortman experience was chilling. In 1998, as the catastrophe was making headlines across the state, voters approved the nation's first statewide ban on cyanide mining, halting any new gold projects. They renewed the ban last year.

Profit and Poverty

Today gold companies are striking out to remote corners of the globe led by a powerful guide: the World Bank.

The bank, the pre-eminent institution for alleviating world poverty, has argued that multinational mining companies would bring investment, as well as roads, schools and jobs, to countries with little else to offer than their natural resources. For the bank, which tries to draw private investment to underdeveloped lands, the logic was simple.

"We invest to help reduce poverty and help improve people's lives," said Rashad-Rudolf Kaldany, head of oil, gas and mining at the bank's profit-making arm, the International Finance Corporation.

The bank has worked both ends of the equation. At its urging, more than 100 cash-strapped governments have agreed to cut taxes and royalties to lure big mining companies, said James Otto, an adjunct professor at the University of Denver law school.

At the same time, the bank put up money for or insured more than 30 gold-mining projects, looking for profits.

Though mining was a small part of the bank's portfolio, it was not without controversy as accidents mounted. In one of the worst disasters, in 1995, a mine in Guyana insured by the bank spilled more than 790,000 gallons of cyanide-laced mine waste into a tributary of the Essequibo River, the country's main water source.

By 2001, the World Bank president, James D. Wolfensohn, imposed a two-year moratorium on mining investments and ordered a review of its involvement in the industry.

Emil Salim, a former minister of environment of Indonesia, led the study. "I said, up to now the International Finance Corporation was only listening to business," he said in an interview in Jakarta. "I said, so now let's give some voice to civil society."

Mr. Salim recommended reducing the use of cyanide, banning the disposal of waste in rivers and oceans, and giving communities veto power over mining company plans.

But the industry complained. And developing country governments said they liked the bank's loans to gold mines. In the end, the bank settled on more modest goals.

It pledged to make environmental impact statements understandable to villagers and to back only projects with broad community support. It also urged governments to spend mining companies' taxes and royalties in the communities near the mines.

But critics and environmental groups say the bank demands little from the mining companies in return for its money and its seal of approval.

The bank's guidelines for arsenic in drinking water are less stringent than those of the World Health Organization, and mercury contamination levels are more lenient than those permitted by the E.P.A., said Andrea Durbin, a consultant to nongovernmental groups pressing for tougher standards.

The International Finance Corporation is drafting new guidelines that will clarify what it expects from miners, said Rachel Kyte, its director of environment and social development.

But the draft rules give mining companies even more latitude, said Manish Bapna, the executive director of the Bank Information Center, a group that monitors the bank. They will make it easier for companies to evict indigenous people and to mine in some of the globe's most treasured habitats, he said.

Despite the World Bank's two-year review, little has changed, said Robert Goodland, a former director of environment at the bank who was an adviser on the study. "The bank insists on business as usual," he said.

Resistance in Guatemala

The first piece of new mining business the bank invested in after its review can be found today in the humid, green hills of western Guatemala.

Bishop Alvaro Ramazzini, a big burly man who mixes politics and religion with ease, doesn't understand why the World Bank lent $45 million to a rich multinational company for a gold mine in his impoverished region of Mayan farmers.

"Why not spend the money directly to help the people?" he asked.

Sprawled across a deep wooded valley, a new mine built by Glamis Gold, a Canadian company, was chosen by the World Bank last year as a new model for how gold mining could help poor people.

But the mine has faced protest at every turn.

At the June 2004 board meeting of the International Finance Corporation, there was considerable skepticism about its $45 million loan to Glamis.

Members questioned why a $261 million project was creating only 160 long-term jobs and giving money to a "well capitalized" company like Glamis at all, according to minutes of the meeting provided to The Times by a nongovernmental group opposed to the project.

Others were worried that the I.F.C. was relying too heavily on information from Glamis about the potential for pollution.

The World Bank had pledged to back only mines with broad local support. But on the ground in Guatemala, opposition boiled over last December.

Angry farmers set up a roadblock to stop trailers carrying huge grinding machines for the mine. After 40 days, and battles between police and protesters, the equipment had to be escorted by soldiers.

To persuade the villagers of the mine's benefits, Glamis flew 19 planeloads of farmers to a mine it runs in Honduras.

But the villagers of Sipicapa still wanted their voices heard. On a cool Saturday morning in June, more than 2,600 men and women dressed in their weekend best, with children in tow, crowded into the community's yards, churches and verandas to vote in a nonbinding referendum.

"We are already regretting that our forefathers allowed the Spaniards to buy our land for trinkets and mirrors," said Fructuoso López Pérez, a local mayor. "So we should vote so our children will thank us for doing right."

At that, a church full of local people raised their hands in a unanimous show of opposition to the mine.

Much of the peasants' fury was informed by Robert E. Moran, an American hydrogeologist, who was asked by Madre Selva, a Guatemalan nongovernmental organization, to visit the mine and review its environmental impact statement.

Mr. Moran, who was on the advisory board of the bank's mining study, found it badly lacking. It did not address the "very large quantities of water" the mine would use, or give basic information on the "massive volumes" of waste the mine would produce, he said.

Tim Miller, vice president of Central American operations for Glamis, said the environmental impact statement had been a "working document."

In Guatemala City, the Vice Minister of Mining, Jorge Antonio García Chiu, defended approval of the mine, saying it followed four months of consultation.

Mr. Kaldany, the I.F.C. official, said the investment and the environmental impact statement were both sound. "We are a bank," he said. "We go on the basis of a business development project. Then, as well, the bank asks: Are we needed? Are we adding any value?"

Glamis had already spent $1.3 million on social programs in the villages as part of the bank's requirements, Mr. Kaldany said.

At the mine, the grinding and churning of new machinery being tested already echoes across the valley. Production could begin as early as November.

Mr. Miller, of Glamis, said the mine was a winner for the people, and his company. In fact, he said, Glamis didn't need the bank, the bank came to Glamis.

Bank officials "were anxious to make some investments" in the region, he said. The company is expecting to gross $1 billion over the life of the mine, with profits of $200 to $300 million.

"That's a return of about 25 to 30 percent," he said.

Ghana: The Social Costs

The men of Binsre on Ghana's ancient Gold Coast carry on their own hunt for gold. Nearly naked, their arms and legs slathered in gray ooze, they sift through the muck in a large pit, using buckets and hard hats, looking for any last scrap.

So far industrial mining has not lived up to its promise for these men and their families. They are illegal miners who find work not inside the highly mechanized mines of Ghana's first-world investors, but on the fringes, scavenging the waste left behind by AngloGold Ashanti, the world's second-largest gold company, based in South Africa.

Six miners have died in the last several years, most of them overcome by fumes when waste from the mine gushed into the pit, said Hannah Owusu-Koranteng, an advocate for the illegal miners. The mine tried to keep the men out.

"We used to use dogs," said AngloGold Ashanti's chief financial officer, Kwaku Akosah-Bempah. "Then they said we were using dogs to bite them." So the mine stopped using the dogs and the men returned.

In the nearby village of Sanso, a few men said they had lost their land to the mine. Now they carve shafts into a mountain of waste rock, where they haul, hammer, chip and sift.

"You wake up one day and you realize your farm is destroyed," said Assemblyman Benjamin Annan, a local politician. "They say they will compensate but it takes one or two years. So people are compelled to go to illegal mining, the way our ancestors did."

Industrial-size shaft mining has existed in Ghana for 100 years, but with the price of gold soaring, more companies are arriving now, this time bringing open-pit cyanide mines. The investment has been greeted warmly by the government.

Newmont is set to spend a billion dollars on a new mine next year and on a second mine - in one of the badly deforested country's last remaining forest preserves - in 2007.

The World Bank is here, too, preparing to lend the company $75 million. Together, the bank and Newmont say, they aim to show how social development and gold mining can be married.

Newmont compensated the farmers who were moved off their land. It is offering training for new jobs, like growing edible snails and making soap. It built new concrete and tin-roofed houses to replace homes made of mud.

But the mine will create just 450 full-time jobs. More than 8,000 people will be displaced.

"The house is O.K.," said Gyinabu Ali, 35, a divorced mother of five children, who recently moved into her gaily painted two-room house, with a toilet out back, that overlooks several dozen similar units resembling a poor man's Levittown. "I miss my land where I could grow my own food."

Near the mine of Newmont's competitor, AngloGold Ashanti, in Obuasi, only half of the homes have an indoor bathroom, and 20 percent have running water. With the exception of the brick villas of the company executives, Obuasi today looks like a vast and squalid shanty town.

The chief financial officer, Mr. Akosah-Bempah, said he was offended by the poor conditions. Most of the company's taxes and royalties had stayed in the capital, he said, leaving the ramshackle town bereft of the benefits of gold mining.

"Sometimes we feel embarrassed by going to Obuasi," he said. "Not enough has gone back into the community."

Somini Sengupta contributed reporting from New Delhi for this article.

October 25, 2005

The Cost of Gold | Treasure of Yanacocha
Tangled Strands in Fight Over Peru Gold Mine

By JANE PERLEZ and LOWELL BERGMAN

SAN CERILLO, Peru - The Rev. Marco Arana drove his beige pickup over the curves of a dirt road 13,000 feet high in the Andes. Spread out below lay the Yanacocha gold mine, an American-run operation of mammoth open pits and towering heaps of cyanide-laced ore. Ahead loomed the pristine green of untouched hills.

Then, an unmistakable sign that this land, too, may soon be devoured: Policemen with black masks and automatic rifles guarding workers exploring ground that the mine's owner, Newmont Mining Corporation, has deemed the next best hope.

"This is the Roman peace the company has with the people: They put in an army and say we have peace," said Father Arana as he surveyed the land where gold lies beneath the surface like tiny beads on a string.

Yanacocha is Newmont's prize possession, the most productive gold mine in the world. But if history holds one lesson, it is that where there is gold, there is conflict, and the more gold, the more conflict.

Newmont, which has pulled more than 19 million ounces of gold from these gently sloping Peruvian hills - over $7 billion worth - believes that they hold several million ounces more. But where Newmont sees a new reserve of wealth - to keep Yanacocha profitable and to stay ahead of its competitors - the local farmers and cattle grazers see sacred mountains, cradles of the water that sustains their highland lives.

The armed guards are here because of what happened in the fall of 2004 at a nearby mountain called Cerro Quilish. For two weeks, fearing that the company's plans to expand Yanacocha would mean Quilish's desecration and destruction, thousands of local people laid siege to the mine. Women and children were arrested, tear gas was thrown, the wounded hospitalized after clashes with the police.

In the end, the world's No. 1 gold-mining company backed down. Father Arana, who runs a local group formed to challenge the mine, helped negotiate the terms of surrender. Newmont withdrew its drilling equipment from Quilish - and the promised reserves from its books. Now, in large part because of the loss of Quilish, the company says production at Yanacocha may fall 35 percent or more in two years.

The forced retreat, a culmination of years of distrust between the peasants and the mine, was a chastening blow for an industry in the midst of a boom. It underscored the environmental and social costs of the technologies needed to extract the ever-more-valuable ore from modern mines. And it showed how a rising global backlash against those costs was forcing mining companies to negotiate what has come to be known as "social license" if that boom was to go on.

But the history of Yanacocha, pieced together in a six-month examination by The New York Times and the PBS television program "FrontlineWorld," is also an excursion into the moral ambiguities that often attend when a first-world company does business in a third-world land.

Gold miners say they have no choice but to go where the ore is; they cannot choose the governments they deal with. Yanacocha shows how one company maneuvered in a country, Peru, dominated by a secret web of power under a corrupt autocracy.

Newmont gained undisputed control of Yanacocha in 2000 after years of back-room legal wrangling. Behind the scenes, Newmont and its adversaries - a French company and its Australian ally - reached into the upper levels of the American, French and Peruvian governments, employing a cast of former and active intelligence officials, including Peru's ruthless secret police chief, Vladimiro Montesinos.

Much of that arm-twisting has been dragged into the light, in secret recordings by the spy chief. The tapes, apparently intended to blackmail and manipulate Peru's powerbrokers, surfaced in 2000 and led to the downfall of Mr. Montesinos and the president he served, Alberto K. Fujimori.

The tapes captured everything from plotting to fix elections to shopping bags of money being unloaded for payoffs in Mr. Montesinos's office at the Peruvian National Intelligence Agency.

They captured Newmont's maneuverings, too. In one audio recording, the No. 3 Newmont executive at the time, Lawrence T. Kurlander, is heard offering to do a favor for Mr. Montesinos.

"Now you have a friend for life," Mr. Kurlander tells the spy chief.

"You have a friend for life also," Mr. Montesinos replies.

Last year, a Justice Department investigation into whether Newmont's victory resulted from bribing foreign officials was dropped after the Peruvian government failed to cooperate fully and the statute of limitations expired, according to law enforcement officials familiar with the case. The Peruvian government investigated the Yanacocha affair without bringing charges.

Mr. Kurlander has agreed to speak out publicly about his meeting for the first time. He says he regrets seeking out Mr. Montesinos, now in jail charged with everything from corruption to gun running and drug trafficking. But Mr. Kurlander and Newmont are adamant that no bribes were paid, nothing illicit done, at least not by them or their allies.

"Everybody involved on the American side, in the American government, that went to see him or spoke to him, asked for a level playing field," said Mr. Kurlander, who retired in 2002. "Not a single person asked for him to influence the outcome of the case."

Newmont's senior executives declined repeated requests for interviews for this article, though they did allow Times reporters to make an extensive visit to the Yanacocha mine. But in a written statement, Newmont said of its legal battle for the mine, "We are satisfied that the company complied in all respects with applicable laws."

Whatever the past environmental problems, Newmont says Yanacocha now meets all Peruvian and international standards. And the company says it is committed to gaining and maintaining the approval of the community.

Still, to many of the local people, the continuing struggle for Yanacocha evokes a tale of treachery nearly any Peruvian school child can recite.

In 1532, the Spanish conquistador Francisco Pizarro captured the last Inca emperor, Atahualpa, in Cajamarca, the provincial capital 28 miles from Yanacocha. The young Inca, a god to his people, was held for months while he scrambled to amass a ransom: enough gold to fill a room as high as his arm could reach.

He turned over his gold, expecting to be freed. But Pizarro killed him anyway.

Living on Water

At first, people here saw possibility in the mine. Yanacocha - "black lake" in the indigenous Quechua tongue - sits in one of the poorest agricultural regions of Peru.

"When Yanacocha began its operations, we would only hear about how everyone was happy," Father Arana said. "The mine was going to bring jobs, improve roads." No one thought much, he said, about the inevitable collisions.

The collisions began almost immediately.

In the Andean peasants' universe, water is the heart of the land. The people depend on it - for their animals, for drinking, for bathing. Community life is organized around it.

But the mine lives on water, too. The bits of gold here, so small they are called "invisible gold," can be mined profitably only by blasting mountains, then culling the gold with vast quantities of cyanide diluted with similarly vast quantities of water.

It was not long before the peasants began to complain. Streams and canals were drying up, they said. They were filled with murky sediment. The water smelled foul.

But on the ledger books, Yanacocha was a fast success.

The mine had started with 1.3 million ounces of reserves in the ground. Within a year, it claimed over 3 million. It was the biggest foreign investment in Peru.

"Everywhere we drilled and looked, there was gold," said Len Harris, Yanacocha's first general manager.

Dueling Companies

Celebration soon gave way to strife.

A year before, a partnership had been formed to develop the mine: Newmont; a Peruvian partner, Buenaventura; and a French government-owned company, Bureau de Recherches Géologiques et Minières (BRGM). No partner had a controlling interest. The World Bank's investment arm, the International Finance Corporation, later took a 5 percent stake, hoping to promote development in a country plagued by economic chaos and roiled by a Maoist insurgent group, Shining Path.

With the mine expanding and the guerrilla leader captured, BRGM announced plans to sell a large part of its increasingly valuable stake to an Australia-based company, Normandy Poseidon. Newmont, considering the involvement of another major mining company unacceptable, sued, arguing that the partnership agreement gave it and Buenaventura first right of refusal on any sale.

Twice, Peruvian courts agreed. Then, in September of 1997, the Peruvian Supreme Court issued a startling ruling, agreeing to review a case Newmont thought it had definitively won. Stunned and suspicious, the company called in Mr. Kurlander.

Mr. Kurlander, then 56, had spent most of his life in government, as a prosecutor and as chief criminal-justice adviser to Gov. Mario M. Cuomo in New York. He later moved to corporate work and was recruited by Newmont in 1994. He had no experience in mining, but in an industry known for its rough edges, he became a top Newmont executive, valued for his political contacts and easy ability to walk between the halls of government and the corporate suite.

On his arrival in Peru, Mr. Kurlander says, he was told by Newmont's lawyers and security chief that the French were "behaving inappropriately in the litigation."

"The mere fact that they were doing this," he said in an interview, "was unseemly at best and corrupt at worst."

Newmont, he said, was at a distinct disadvantage: the Foreign Corrupt Practices Act forbids American companies to pay anything of value to a foreign official in exchange for a "result." By contrast, in 1997, most European countries, France included, did not prohibit paying bribes.

The French ambassador to Peru at the time, Antoine Blanca, said in an interview that no one connected to the embassy had ever offered bribes or otherwise acted improperly.

Still, what emerges from documents and interviews with participants is a picture of three years of increasing pressure and intimated threats by Normandy and the government of France.

In the Peruvian press, the French ambassador insinuated corruption of the judiciary; French government emissaries suggested to Peruvian officials that there would be consequences if Newmont was awarded the disputed shares.

Normandy recruited Patrick Maugein, a well-connected French businessman. By phone, fax and letter, Mr. Maugein placed Newmont and Buenaventura on notice that the dispute had become a "matter of state"; the French, he warned, "had every intention of fighting it to the bitter end." Mr. Maugein had ties to the French president, Jacques Chirac, and soon Mr. Chirac wrote to President Fujimori, urging a Supreme Court review and his personal intervention.

Mr. Maugein declined to be interviewed for this article, but in a letter wrote that any allegations of illicit activity "come from people who have been paid to make them."

From Lima, in the days after the Supreme Court agreed to take the case, Mr. Kurlander headed to Washington to enlist help on the American side. By the end of October 1997, Stuart E. Eizenstat, under secretary of state for economic affairs, wrote Peru's prime minister to press for "a fair and impartial hearing," according to documents released under the Freedom of Information Act.

"A politically tainted decision would adversely affect U.S. investment in Peru," he wrote

On Jan. 5, 1998, Peru's Supreme Court came back with a preliminary decision; 3 to 2 for the French, one vote shy of victory.

As the Peruvians prepared to assign two more judges to the case, Mr. Kurlander says, he and Buenaventura's chief, Alberto Benavides, appealed to Mr. Fujimori.

Soon after, Mr. Kurlander said, the president's office sent word about the man to see.

Spy Chief's Favor Bank

Vladimiro Montesinos's titles never matched his stature. Officially, he was "counselor" to Mr. Fujimori and de facto head of the National Intelligence Service. In reality, he was the second-most-powerful man in Peru - "Rasputin, Darth Vadar, Torquemada and Cardinal Richelieu" rolled into one, according to an American Army intelligence report.

The National Intelligence Service was also on the payroll of the C.I.A., which gave Mr. Montesinos a million dollars a year for his supposed help in combating the narcotics trade, according to former C.I.A. officials who approved the payments.

This was the man Mr. Kurlander headed to see alone on Feb. 26, 1998. While he says he knew that Mr. Montesinos was "an extremely bad man," he maintains that the extent of the government's corruption and human rights abuses were not well known at the time. There was, however, one case he was aware of.

Not long before, the Fujimori government had seized the television station of a Peruvian-Israeli businessman, Baruch Ivcher, after it began broadcasting reports tying the intelligence chief to drug trafficking and corruption. Mr. Kurlander knew that publicity about the case was threatening to become a headache for Peru's government.

As the secret tape rolls, Mr. Montesinos says he is aware of Mr. Kurlander's problems and is "very glad to do whatever I can for you."

Mr. Kurlander describes his own links to the intelligence community and how he has enlisted "friends" - two former C.I.A. officials - to assist him, because the French side "has been acting quite strangely."

Their conversation is interpreted by Grace Riggs, a lawyer and former lover of the spy chief who had a child with him.

Soon Mr. Kurlander raises the Ivcher case. Mr. Montesinos assures him that the pursuit of Mr. Ivcher is not an anti-Semitic "persecution," and Mr. Kurlander offers to help by lobbying his fellow Jews in the United States and abroad.

"Tell him I going to help him with the voting," Mr. Montesinos directs his translator. He is well aware of the "tricky practices of the French government," he says, making a joke about "The French Connection."

The reference, in English, gets the men laughing. Soon spy chief and executive are pledging friendship for life.

The spy chief then proceeds to discuss with another man, who has never been identified, the lawyers and judges who may need to be influenced. The conversation is in Spanish, which Ms. Riggs does not translate.

Finally, she tells Mr. Kurlander that because he helps Mr. Montesinos "without expecting anything in return," the spy chef "wants to do the same thing for you."

"I appreciate that," Mr. Kurlander replies.

"Amor con amor se paga," Mr. Montesinos exclaims.

Love is repaid with love.

Washington Is Heard From

Still, Mr. Kurlander says, he had doubts. In the following weeks, "nothing happened," he said. "I was very worried that we were lost." In fact, the channel between Mr. Montesinos and the Americans was open and bustling.

Peter Romero, then assistant secretary of state for Western Hemisphere affairs, acknowledged in an interview that he had twice called Mr. Montesinos to show that the case was being "monitored" in Washington.

"He seemed to be a nice enough fellow," he recalled.

The "compelling reason" to get involved, he said, came from Peruvian and American Embassy officials who confirmed the direct involvement of President Chirac and others at the top of the French government.

"We wanted to ensure that that was neutralized," Mr. Romero said.

Two and a half years later, Mr. Romero left government and was hired by Mr. Kurlander as a consultant on Peru for Newmont, where he remained for 18 months.

On April 14, six weeks after the Montesinos-Kurlander meeting, the video cameras were rolling for a visit from the C.I.A. station chief, Don Arabian.

As the meeting nears its end, Mr. Montesinos says he has been collecting information on the French attempt to influence the case and will not let them use "extortion, blackmail and other gangster" methods.

"I'm not working with the telephones, but we will if necessary," Mr. Montesinos says, an apparent reference to wiretapping. "We'll sort out the technical support." The men laugh.

Mr. Arabian, who recently retired, declined a request for an interview.

On May 8, the sixth Supreme Court justice voted in favor of Newmont and Buenaventura. With the vote deadlocked, 3-3, the court administrator appointed a final judge, Jaime Beltrán Quiroga. He was summoned the next day by Mr. Montesinos.

A videotape shows the justice settled on the couch as Mr. Montesinos talks about how, as a lawyer he, too, would normally "keep a distance" from events. But "in these cases," he says, "one has to intervene directly."

Mr. Montesinos avoids direct pressure - "as if we are imposing on you" - but reminds the judge that the case is a matter of national interest: the United States is a key guarantor of coming deliberations over Peru's border conflict with Ecuador.

There is no discussion of payoffs, but the spy chief does question the judge about his professional ambitions. The men reminisce.

"Well, doctor, you have a friend here," Judge Beltrán says.

"My dear, Jaime, then, a pleasure to see you, brother," Mr. Montesinos replies, assuring his guest that he will soon be transferred to Peru's Constitutional Court.

Judge Beltrán's vote was announced two weeks later: Newmont and Buenaventura were awarded BRGM's share - at the purchase price set in 1993: $109.7 million.

When the final transfer was negotiated a year later, the stake was valued at more than five times that.

Today Mr. Kurlander says that whatever his reservations at the time about meeting Mr. Montesinos, he went ahead because nearly everyone told him, "If the French were to be stopped, he was the only one in Peru who would dare to do it."

The transcript is "terribly unfair," Mr. Kurlander says, and leaves out a number of his statements that all he wanted was a "level playing field."

Mr. Kurlander's name has been attached to the meeting and his reputation harmed, he says, though he insists the meeting was no secret. He says his Newmont superiors and his partners in the Benavides family were thoroughly briefed.

"It was my government who recommended - strongly - that we speak with him," Mr. Kurlander said at his home outside Denver. "Tell me what my option is at that point. Do I lay down and just fold, fold up and go home? Or do I fight for what I think is right and fair and just?"

In an interview at his Lima offices, Mr. Benavides, now Buenaventura's chief executive, insisted, "We didn't know what Mr. Kurlander was doing," and added that he did not learn about the Montesinos meeting until the tape was made public several years later.

The Mercury Spill

At Yanacocha, year after year, the mine's geologists had kept striking gold. And with every ton of earth sifted, it became ever clearer that the mine had not just ripped up the landscape; it had remade the social architecture, too.

There were growing class divisions, between the many campesinos who had received well-paying jobs - Yanacocha would eventually employ as many as 2,200 people, two-thirds locals, full time, and up to 6,000 on shorter-term contracts - and the tens of thousands more who had not. People migrating to the region in pursuit of work brought overcrowding and rising crime.

In June 2000, a truck contracted to carry canisters of mercury, a byproduct of mining, spilled 330 pounds of the poisonous metal over 25 miles of road around Choropampa, 53 miles from the mine.

The villagers believed that the mercury was mixed with gold. They scooped it up. Some took it home to cook on their stoves. A World Bank report later said the mine delayed reporting the accident to the national authorities and initially played down its seriousness to the bank.

In the end, the Peruvian government fined the mine $500,000; the company says it has paid $18 million more. A class-action suit has been filed against Newmont in Denver, charging that more than 1,000 people were harmed, some for life.

The extent of that damage has been in dispute from the start. Even so, the spill left deep psychic scars. It became common mythology that mercury had killed newborn babies and caused cancer and other diseases, Dante Vera, a former Peruvian Interior Ministry official hired in 2004 as an adviser to Newmont, wrote in a report to company executives.

At Newmont, it was becoming increasingly clear that the social turmoil was a business problem. The spill, Mr. Kurlander said in a speech a year later, "served as a wake-up call for us."

Soon, he was headed back to Peru, to lead an environmental audit of the mine.

Newmont kept the audit's results within the company, never acknowledging them publicly - either to its shareholders or to the local people. Mr. Kurlander found "a high level of mistrust" of the mine.

But the 44 findings of Mr. Kurlander's audit, which was given to The Times, also confirmed many of the villagers' specific complaints: that fish were disappearing and that lakes, streams and canals were being contaminated, at least one with cyanide.

One stream, Quebrada Honda, had 13 fish per kilometer in 1997, but none by 2000, the audit said. Thousand of tons of rock not processed for gold recovery were generating dangerous acidic runoffs.

In a letter after the audit, Mr. Kurlander says that as the mine expanded, "we eliminated many environmental safeguards that were in the construction and environmental management plans." In all, he wrote to Newmont's new chief executive, Wayne Murdy, the findings were so serious that they could jeopardize the mine's continued operation and leave senior executives subject to "criminal prosecution and imprisonment."

Mr. Kurlander's tough words came on the heels of another memo to Mr. Murdy about the spill: On Jan. 18, 2001, Mr. Kurlander recommended that all the top executives, including himself and his boss, take cuts in their bonuses, of 50 to 100 percent, and that the punishment be made public. Mr. Kurlander singled out the company's environmental team, saying that despite public pledges, Newmont had failed to adhere to American environmental standards.

To his disappointment, Mr. Kurlander said, some bonuses were indeed reduced, but without public notice and much more modestly than he had recommended.

In a letter to Mr. Kurlander three years later, Mr. Murdy said the company had learned from the accident and the audit. Newmont, he said, spent $100 million to fix the environmental problems, including $50 million for a water-treatment plant and $20 million on two dams to prevent sediment from clogging streams and canals. Mercury is now shipped inside triple-sealed, stainless-steel containers and escorted by a convoy of cars.

To Mr. Kurlander, the spill showed the folly of a company ignoring the people, particularly the people most set against the mine. In a memo, he warned that with the mine sunk so low in the peasants' esteem, Newmont would never be able to mine Quilish.

"We have come to this because we have been in denial," he wrote. "We have not heeded the voices of those most intimate with our mine - those who live and work nearby."

It was less than a year after the audit that he retired.

The Peasants Protest

The protests began not long after people began seeing the drilling machines up on the cone-shaped hill above Cajamarca.

Quilish had long been on Newmont's drawing boards. Last year, Newmont mined three million ounces at Yanacocha, its most profitable single source of gold. But the more it pulls from the ground, the more it must replace to remain No. 1.

Back in 2000, the local government had passed an ordinance declaring Quilish and its watershed a protected natural reserve. But Newmont had persuaded a Peruvian court that it had the right to mine because it had acquired the concession years before. In August 2004, the machines moved in.

To many people, that was the final betrayal, said Mr. Vera, the former Newmont consultant. He quit this summer, saying his advice had been ignored.

On Sept. 2, deploying boulders, vehicles, anything they could find, hundreds of campesinos blockaded the narrow mountain road that runs from Cajamarca to the mine.

Several hundred armed officers, including 150 special operations police officers from Lima, were sent in to guard the mine.

The first day was the most violent; protesters were arrested, many of them women and old people, according to Father Arana's colleague, Jorge Camacho. At times during the siege, the police used tear gas. One man was shot in the leg. The company kept the gold coming out of Yanacocha, but only by helicoptering the workers in.

On Sept. 15, there was a regionwide strike, with street demonstrations in Cajamarca. The message, on one of the blizzard of placards in town, was: "Listen Yanacocha. Cajamarca is to be respected."

The protests were organized by the peasants themselves, Mr. Camacho and others say. But the 43-year-old Father Arana, son of teachers from Cajamarca, had been nurturing the movement for many years, even before he founded his group, Grufides, in the late 1990's. (These days, it receives financial assistance from Oxfam.)

The campesinos call him Father Marco, and he is a devoted adherent of liberation theology and its doctrine of social activism for the poor.

He is not the easiest of men. Last spring, he met Newmont's chief, Mr. Murdy, on the sidelines of the company's annual general meeting in Denver. As the priest recalls it, Mr. Murdy tried to be conciliatory, saying he lived by his mother's motto: "We are given one mouth but two ears to listen with." Father Marco says he rebuffed the overture, replying, "In the Bible, there is a saying about some people have eyes that don't see and ears that don't hear."

As the siege ran on at Yanacocha, the priest became a key negotiator between Newmont, the peasants and the Ministry of Mines. It was not long after the demonstrations in Cajamarca that the company surrendered. The machines came down from Quilish. At Newmont's request, the ministry withdrew its permit, too.

What remains up on the mountain is a symbolic wall of mud and straw that the campesinos built to keep the miners at bay.

More Gold Needed

Standing down at Quilish, with its 3.8 million ounces of reserves, has only intensified the need for new reserves.

"The pressure feels like you're laying track and knowing there's a locomotive right behind you," said the mine's exploration manager, Lewis Teal.

So Newmont is looking elsewhere, in the highlands near San Cerillo, where the jade-green lagoons and peaty grasses act as a store of water for the peasants below.

Many people there worry about the effects of a new mine. Which is why, after Quilish, Newmont is paying for the Peruvian police units protecting the drilling team, said the mine's manager, Brant Hinze.

Even so, Mr. Hinze said, leaving Quilish was the right thing to do. "The thing that the company did - both Newmont and Buenaventura - is listen to the communities, and they said this is something we want you to stay away from," he said.

Newmont's Peruvian partner, Mr. Benavides, argued that exploration of Quilish had not been abandoned, simply suspended.

"We have the concession, and we have the land," he said. He added: "I do not understand what social license means. I expect a license from the authorities, from the minister of mines. I expect a license from the regional government. I don't expect a license from the whole community."

Still, the idea of social license is at the heart of the agreement that ended the siege: If Newmont hopes ever to mine Quilish, it first must win the community's consent.

So to promote Yanacocha's well-being and expansion, Mr. Hinze has become the kind of mine manager he never imagined being. He says he had asked for the job running Yanacocha because of its sheer scale - "it's big, it's profitable," is how he puts it. Fifty years old, silver-haired and steely eyed, 6 foot 3 and 255 pounds, he is a man of scale himself. His idea of recreation, he says, is riding his Harley or swimming with hammerhead sharks.

Now, he says, he spends 70 to 80 percent of his working time on social issues. On a recent day, he ate roasted guinea pig at a lunch with a peasant group. A few days later, he attended a ceremony celebrating a gift of $500,000 for a new road around San Cerillo.

"Modern mining can coexist with cattle, agriculture and tourism," he told one gathering. "Today we begin a new history for communities around here."

Newmont says that it paid $180 million in taxes to Peru's government last year, and that under a new law, half was returned to the Cajamarca region. But to its frustration, the company says, the local government has largely been unable to use the money to benefit the people - and most of the people here remain achingly poor.

So the company, albeit ambivalently, has become something of a surrogate government. It is contributing money for schools and clinics and building some small water treatment plants in the villages. In all, the company says it will spend nearly $20 million this year on social programs.

Water remains a divisive issue: Father Arana and his allies argue that a new, every-three-weeks testing protocol is insufficiently independent. The peasants continue to complain.

But company and local officials say there have been no environmental accidents at Yanacocha in more than two years, and the mine says it manages its water to ensure there is enough for the community.

But the biggest issue is the one looming over every modern industrial gold mine: What happens when the ore that lured the miners here is gone?

Over 13 years, Newmont has moved mountains for gold - 30 tons of rock and earth for every ounce. By the time it is through, the company will have dug up a billion tons of earth. Much of it will be laced with acids and heavy metals.

Three years ago, after Newmont acknowledged that 36,700 fish were missing from a river contaminated by the mine, the World Bank hired an American geochemist, Ann Maest, to study the streams and canals flowing from the mine.

In the short term, she concluded, the water was safe for human use. But long term, she said in an interview, the company's own tests show that all the components are in place for the huge piles of rock to leak acids that will pollute surface and groundwater.

The only preventive, she said, would be "perpetual treatment."

Mr. Hinze, who was recently appointed head of Newmont's North American operations, insists that the company's plan for closing the mine will take care of long-term treatment and cleanup.

"We plan on being here a very long time," he said.

Newmont has yet to put aside money for long-term treatment, though it says it will comply with a Peruvian government requirement due to take effect in 2007. But to pay for cleanups, the company needs to keep profits high. To keep profits high, it needs to keep finding and mining more gold. Yet increasingly, the unmovable reality is that to keep mining more gold, it has to make peace with the people who will be here long after the miners leave.

Mr. Hinze and Newmont insist that that can - in fact, must - be done, even if some people may never be won over. "There will always be a level of mistrust," he said. "Unfortunately, we can't please everyone."

Mr. Vera, the former Newmont consultant, is not so confident. He says he sometimes thinks that the clash between the mine and the peasants is so fundamental as to be beyond even the best intentions.

"Mining negatively affects the Andean cosmic vision of the unity of nature," he said. "The conflict cannot be settled with money. Mining generates resentments that are difficult to heal."

Marlena Telvick and Natasha Del Toro contributed reporting for this article.

Citizen-State Relations in Review
Dear Henry Mark Holzer,

25 December 2005 - I just discovered your most informative, eye-opening & in many ways saddening study "How Americans Lost Their Right To Own Gold And Became Criminals in the Process". This while doing background research on the evolution - from ancient time to now - of the citizens/state relationship as reflected in their abilities to effectively challenge each other (i.e. citizen vs state) for acquiring, holding onto, and utilizing such private property as gold, land, information, etc.

    Seen from this peculiar perspective, the history of man takes on a look, dimension and content which in many ways are different from what we ordinarily discuss. It may be summarized as a history of ego-, gut- or intelligence-driven resources redistribution by conquest, looting or imposed sharing, i.e. of endlessly changing fortunes - for both the citizens and the community they live in and adhere to. And it seems to offer rare insights into the mechanics of mankind and its component parts, from the individual human as an integral part of the devine creation, to their combinations in the current form of national states which are organized and governed in line with the current dominent understanding of devine design, be it - as in pharaonic times - by devine birth, or by way of the current, more or less "vox populi, vox dei". To wit:
-    The Pharao who introduced monotheism may not have done so for "religious", but primarily for political & economic reasons. For that may have been the most effective, if not the only way to overcome the resistance of his economy-controlling priests - i.e. the thus powerful earthly representatives of a plethora of gods. I.e. resistance to his plans to effectively prepare for and provide for the upcoming 7 lean years by raising from the traditional 10 to the temporarily elevated 20% the harvest contributions the thus "nationalized" religious estates were to deliver to Pharao's national graneries. By no longer recognizing their gods, he thus drew the carpet from under his egocentric priests and freed his hands to successfully execute his visionary plans (www.solami.com/a1.htm).
-    The French kings - and their more recent republican successors - may have regranted their citizens the right to anonymous gold possession only when their war-depleated treasuries could be filled again by amnesties for past & current gold hoardings.
-    Some - particularly Western - U.S. States, as well as Turkey, Tajikistan and other countries are known to have adopted the Swiss Civil Code of 1907, where the first ten articles reflect fundamental principles and achievements of civilized society, perhaps drawing inspiration from the Avesta, the Ten Commandments and other ancient writings. Also, the universally postulated presumption of innocence until proven guilty, provides a helpful guideline when considering the above question of citizen/state relation - not least in fiscal matters. Yet, when looking around, I find myself to travel on the wrong train, and perhaps even to live in the wrong time period with my view that taxmen here and there, preposterously, have managed over the last decades to stealthily shove the burden of proof from their office onto the taxpayers' shoulders. For a Swiss employee, e.g., it isn't sufficient anymore to turn in his tax declaration in time and, with his signature, to engage his penal responsibility for false declarations; the law now obliges him to attach the salary certificate (.../lohnausweis.htm) as proof of what he declares, thus not only diminishing his signature but also - in law and effect - submitting him to state tutelage. This is seen to be in direct contradiction to article 8 of the Swiss Civil Code, which explicitly provides that it is incombant on each party to prove the facts from which it deducts its claims. And it is all but clear why, of all entities, the relatively much more powerful state should be exempted from this fundamental rule, particularly in fiscal matters.
-    Of course, I am not sure what, if any influence a more benevolant reception of Silvio Gesell's monetary ideas might have had on the course of events leading up to and beyond the demise of the Weimar Republic. But neither can I rule out a link between both academia's and the national monetary authorities' manifest failure to-date to explore and develop those ideas and such watershed events as the 1929 Crash (.../1929.htm), Roosevelt's 1933 bank holiday & gold criminalization, Hitler's comprehensive looting of Jewish properties culminating in the Holocaust, Nixon's 1971 closing of the gold window, Bush's disaster-prone flat-earth "policies" on Iraq and elsewhere, and the forthcoming financial tsunamis & the ensuing political upheavals.

As of now, I have little to offer in the way of ready-made solutions. And I am in no position to really make a dent anywhere - even if some of the ideas taking shape in my mind were of any current use to anybody. Nevertheless, I'd appreciate your comments on some related observations, as summarized: .../costbenefit.htm ¦ .../swissbanks.htm#Titanic ¦ .../1929.htm ¦ .../bubbles.htm ¦ .../hedge.htm ¦ .../warfare.htm ¦ .../swift.htm. While looking forward to hearing from you at your earliest convenience, I remain, with Season's Greetings

Anton Keller, Geneva - 0114122-7400362 - swissbit@solami.com ¦ url: www.solami.com/goldies.htm
.../capitalism.htm ¦ .../buccaneers.htm¦ .../1929.htm ¦ .../hedge.htm ¦ .../bubbles.htm¦ .../swissbanks.htm ¦ .../warfare.htm ¦ .../oecdmandate.htm ¦ .../costbenefit.htm ¦ .../crime.htm

Roosevelt Quote: "The United States Constitution has proved itself the most marvelously elastic compilation of rules of government ever written."

Editorial

January 9, 2006

Recklessness in Indonesia

Freeport-McMoRan, an American company that operates a giant open-pit copper and gold mine in Papua, is a major contributor to Indonesia's economy. The company is also one of Indonesia's most reckless polluters and a source of hard cash - cash the company concedes is protection money - for the Indonesian military, which has one of the worst human rights records anywhere.

A recent report in The Times by Jane Perlez and Raymond Bonner described Freeport's activities in great detail. The report was part of a series of articles over the past year detailing environmental and other abuses by American mining companies at home and abroad.

Several of these companies are being sued by local governments that argue that these companies' environmental practices would never be tolerated in America and that local citizens are seeing too few of mining's benefits while paying too heavy a price. Newmont Mining, based in Denver, has been sued by the Indonesian government for dumping poisoned wastes in local waters, and Placer Dome, based in Canada, has been sued by a Philippine province for similar infractions.

Freeport's activities are particularly disheartening. Over the past decade, the company has built what amounts to an industrial city in Indonesia's easternmost province. On the plus side, the company provides jobs for 18,000 people and, according to company estimates, has provided Indonesia with $33 billion in direct and indirect benefits from 1992 to 2004, almost 2 percent of the country's gross domestic product.

The environmental damage, however, has been breathtaking. So far, the company has produced about one billion tons of waste, with five billion more tons to come before the operation shuts down. Some of this waste has been dumped into the mountains surrounding the mine, and some into a system of rivers that descend steeply into the island's low-lying wetlands and coastal estuaries. The damage has been enough to render the rivers, wetlands and parts of the estuaries - all critical to the food chain - unsuitable for aquatic life.

Meanwhile, records show that between 1998 and 2004, Freeport gave officers in the police and military nearly $20 million in direct payments in addition to tens of millions more for military infrastructure like barracks and roads. The company told The Times that the payments were necessary to provide a secure working environment for its employees, and that "there is no alternative to our reliance on the Indonesian military and police."

Papua has long been home to a low-level, separatist insurgency against the central government, which made the company nervous. Yet what is missing from the company's response is any recognition that its environmental practices contributed to the unrest and allowed the military to establish a strong presence in a region where it had barely a toehold before Freeport arrived.

Freeport's environmental record and its support for the Indonesian military have caused rumbles in Washington, particularly among human rights advocates like Patrick Leahy, a Democratic senator from Vermont. Citing human rights abuses, Congress in 1992 restricted arms sales and most American training for Indonesian officers, and it enacted new prohibitions in 1999 after a rampage by army-backed militia in what was then East Timor Province. Mr. Leahy sharply criticized Secretary of State Condoleezza Rice's decision to resume aid last year, which the administration described as a reward for Indonesia's improved human rights record and its cooperation with the post-Sept. 11 counterterrorism campaign.

Indonesia's critics say that the present government is an improvement over the authoritarian rule of President Suharto, who ran the country for three decades ending in 1998. Yet the military continues its abusive practices. Setting aside for the moment Freeport's environmental horror show, the company is not doing Indonesia's civilian authorities any favors by underwriting the generals. Freeport describes its payments as an essential cost of doing business. But it appears not to have measured the costs to democracy.

Liebes Ratsmitglied,
    Unter dem Suchbegriff "Gold" finden sich in der Curia Vista derzeit 115 parlamentarische Vorstösse. Hinter einzelnen Titeln, die manchmal einen Zusammenhang mit Gold nicht einmal vermuten lassen, verbergen sich mitunter echte Informationsperlen - wie dem nachfolgenden Chronologieauszug zu entnehmen ist: "Nabelschnurblut", "Strategische Rohölreserven im Ausland", "100 Millionen Franken zur Beschleunigung der Bildungsoffensive im Jahre 2001", "Amerikanisches Abhörzentrum Shakarchi?", "Der Bundesrat und das Völkerrecht", "Wo ist unser Gold?", "Goldreserven der SNB in den USA", "Wiedereinführung des Goldstandards", und "Primat der Politik beim Verwalten der Goldreserven". Es ist dies sodann ein aufschlussreicher & anregender Querschnitt - auch bezüglich der sich abzeichnenden gesellschaftlichen, wirtschaftlichen & aussenpolitischen Fragestellungen und Entwicklungen.
    Und ohne den derzeitigen Mitgliedern des Bundesrates zu nahe treten zu wollen: ich kann mir die schon wiederholt von Ratskollegen gestellte Frage der verfassungs- und gesetzmässigen Zuständigkeit nicht verkneifen. Nämlich wer hierzulande real die politische Verantwortung trägt, wenigstens für's Eingemachte (dem Vernehmen nach sogar im Notfall), d.h. für den aussenpolitischen & -wirtschaftlichen strategischen Einsatz unserer Goldreserven, deren Schutz vor Erpressung und Terroranschlägen im Ausland, und für entsprechende Umdisponierungen, welche gemäss Verfassung (Art. 54 Abs. 1, 174, 184, 185, 187 Abs. 1a), und Nationalbankgesetz (Art. 5 Abs. 3, 7 NBG) allesamt der bundesrätlichen Domäne unterstehen soweit sie die Aussenbeziehungen der Schweiz betreffen. Und da gemäss Art.6 NBG die Unabhängigkeit der Nationalbank sich wesentlich auf innerstaatliche technische Fragen beschränkt, ernüchtert die Aussage des damaligen Finanzministers im Nationalrat: "Wo diese Goldbarren nun genau liegen, kann ich Ihnen leider nicht sagen, weil ich es auch nicht weiss, es nicht wissen muss und es nicht wissen will." (AB 2003 N 156; Frage Günter 04.5154).
    Allzuoft noch zeichnen sich die vom Bundesrat auf der punktierten Linie unterzeichneten Antworten auf parlamentarische Vorstösse aus durch verwaltungs-typische Abwehrhaltungen, Engstirnigkeit & ARIGIN-Phänomena (für: ARroganz, IGnoranz, INkompetenz). Bei der bisherigen Verarbeitung der völkerrechtswidrigen Verarrestierung der ausgeliehenen Gemälde des russischen Puschkin-Museums ist dies besonders deutlich zum Ausdruck gekommen (www.solami.com/arrest.htm ¦ .../arrestabwehr.htm ¦ .../initiative.htm). Von einem mehr als punktuell erleuchteten, zukunftsweisenden & hoffnungs-trächtigen Heft-in-die-Hand-Nehmen durch den Bundesrat kann m.E. jedenfalls erst ausnahms- & ansatzweise die Rede sein. Z.B. in der eben vom Bundesgericht gestützten, und vom Postulat Stähelin 04.3464 vorgespurten Wiederbelebung unseres in Vergessenheit geratenen Handels- und Niederlassungsvertrags mit Russland von 1872. Nicht aber im Verhältnis zu den USA, wo allen Warnungen zum Trotz mehr Spiegelbilder verfolgt als vergessene & neue Gelegenheiten wahr genommen werden (.../europa.htm ¦ .../extradition.htm ¦ .../ciaprisons.htm). Und schon gar nicht im ebenfalls durch Verdrängung geprägten Verhältnis zu Europa (.../europae.htm ¦ .../regiogenevensis.htm ¦ .../wasser.htm ¦ .../swissbanks.htm).
    Aber vielleicht ergeht es auch unseren Bundesräten so: ob der allgemeinen Saturierung - und internet-technologisch noch zugespitzten Überlastung - kommen sie, einmal im Amt, kaum mehr dazu, die eigenen Adrenalin-Erfahrungen mit Bundesratsantworten zu berücksichtigen. Dies lässt sich z.B. an den pre- und post-referenda Vorstössen des damaligen Vertreters des Standes Appenzell A.-Rh. zur "Verwendung der Goldreserven" aufzeigen. Aber auch an den Folgen seiner seitherigen Abkapselung und seltener gewordenen Erleuchtung (.../merz.htm), die trotz hartnäckiger Vorstösse aus Parlamentskreisen i.S. Goldreserven-Verwaltung den Eindruck einer erstaunlichen und wenig Gutes verheissenden Abgehobenheit vermitteln - wenigstens im Falle der Anfrage Kaufmann. Dies ganz im Gegensatz zu seinen vorausgegangenen Bemühungen zur zwar diskreten aber entschieden politisch bestimmten, proaktiven Verminderung unserer Exponierung gegenüber den traditionell rücksichtslosen, konfiskatorischen und goldeigentums-feindlichen amerikanischen Goldpraktiken: siehe dazu auch Henry Mark Holzer's bemerkenswert anschauliche Studie "How Americans Lost Their Right To Own Gold And Became Criminals in the Process" ¦ .../goldpossession.htm ¦ .../costbenefit.htm ¦ .../oecdmandate.htm).
    In diesem Sinne wünsche ich Ihnen alles Gute im Neuen Jahr, bedanke mich für das mir bisher bezeugte Vertrauen, und stehe für weitergehende Fragen nach Kräften gerne zur Verfügung.

Anton Keller, Genf 022-7400362 swissbit@solami.com ¦ url: www.solami.com/cvgold.htm ¦ .../a2.htm (3.1.06, update 17.6.07)

Chronologie

08.3718 - Motion.    Freysinger Oskar
Bretton Woods-Nachfolgekonferenz und Währungs-Selbstschutz
"Der Bundesrat wird beauftragt, die Einberufung einer Bretton Woods-Nachfolgekonferenz zu prüfen, und in Absprache mit interessierten ausländischen Regierungen vorzubereiten. Im Interesse der Schweizer Wirtschaft ist die Nationalbank anzuhalten, die von ihr gepflegte Praxis der faktischen Anbindung des Schweizer Frankens an den amerikanischen Dollar unverzüglich aufzuheben. Und es sind alle Abklärungen und Vorbereitungsmassnahmen zu treffen, welche für eine allfällige Rückkehr zu einer beständigen schweizerischen Realwert-Währung geeignet sein mögen, inklusive sofortige Unterbindung aller Goldverkäufe der Nationalbank zur Stützung der amerikanischen Währung." (English translation)
08.491 - Parlamentarische Initiative.    Stamm Luzi
Stopp weiterer Goldverkäufe durch die Nationalbank
08.489 - Parlamentarische Initiative.    Stamm Luzi
Gold-Währungsreserven der Nationalbank schrittweise erhöhen
08.469 - Parlamentarische Initiative.    SVP-Fraktion
Lagerung der Goldreserven der Nationalbank in der Schweiz
"Gestützt auf Artikel 160 Absatz 1 der Bundesverfassung und Artikel 107 des Parlamentsgesetzes reichen wir folgende parlamentarische Initiative ein:
Artikel 99 der Bundesverfassung ist mit einem zusätzlichen Absatz mit folgendem Text zu ergänzen: 'Die Goldreserven der Nationalbank werden in der Schweiz gelagert.'"
08.404 - Parlamentarische Initiative.     SVP-Fraktion
Schutz der Goldreserven im Interesse unseres Landes
07.3709 - Interpellation.    Stamm Luzi
Wo liegt das Nationalbankgold?
07.3708 - Postulat.     Stamm Luzi
Hintergründe des Goldverkaufs der Nationalbank
"Der Bundesrat wird beauftragt, dem Parlament einen Bericht über die Hintergründe des Goldverkaufs der Nationalbank vorzulegen. Wer hat wann - und aus welchen Gründen - die verschiedenen Goldverkäufe vorgeschlagen? Im Speziellen ist die Frage zu beantworten, ob es Abmachungen mit ausländischen Nationalbanken zum koordinierten Verkauf von Gold gibt."
07.481 - Parlamentarische Initiative.     Stamm Luzi
Wahrung von Goldbeständen in der Schweiz
07.5267 - Fragestunde.     Kunz Josef
Goldverkäufe der Nationalbank
06.5115 - Fragestunde. Frage. Bührer Gerold
Will die Nationalbank weitere Goldreserven verteilen?
"Gemessen an der Grösse und an der Bedeutung des Schweizer Finanzsystems sind die Währungsreserven unseres Landes sogar knapp dotiert. Es besteht daher kein Spielraum für eine weitere Reduktion der Währungsreserven beziehungsweise für weitere ausserordentliche Goldverkäufe der Nationalbank." Bundesrat H.R.Merz (AB 2006 N 865)
05.5117 - Fragestunde. Frage. Kaufmann Hans
Verfügungsgewalt über SNB-Gold im Ausland
05.3172 - Postulat. Freysinger Oskar
Strategische Rohölreserven im Ausland
05.3166 - Interpellation.    Freysinger Oskar (Abgeschrieben, weil seit mehr als zwei Jahren hängig.)
Primat der Politik beim Verwalten der Goldreserven
"Das Nationalbankgesetz (SR 951.11) bestimmt die Aufgaben, Kompetenzen und Vorrechte der Nationalbank. Im Gesamtinteresse des Landes führt sie die Geld- und Währungspolitik und gewährleistet die Preisstabilität unter Berücksichtigung der konjunkturellen Entwicklung (Art. 5 Abs. 1 NBG).
In den auswärtigen Beziehungen, deren Handhabung gemäss Bundesverfassung dem Bundesrat untersteht (Art. 54 Abs. 1, 174, 184, 185, 187 Abs. 1a), ist die Nationalbank in der Wahrnehmung ihrer Aufgaben gehalten, mit dem Bundesrat zusammenzuarbeiten (Art. 5 Abs. 3 NBG). Zur Wirtschaftslage, zur Geld- und Währungspolitik sowie zu aktuellen Fragen der Wirtschaftspolitik des Bundes erfüllt die Nationalbank ihre Pflicht zur Rechenschaftsablegung und Information durch regelmässige Kontakte mit dem Bundesrat. Und "vor Entscheidungen von wesentlicher wirtschaftspolitischer und monetärer Bedeutung" unterrichten sich der Bundesrat und die Nationalbank gegenseitig (Art. 7 NBG).
Die in Artikel 6 NBG umschriebene Unabhängigkeit der Nationalbank beschränkt sich demnach auf innerstaatliche technische Fragen. Im Sinne des verfassungsmässigen Gesetzgebers vermindert diese technische Unabhängigkeit keineswegs die Informations- und Konsultationspflichten der Nationalbank gegenüber dem Bundesrat in einschlägigen politischen, vor allem aussenpolitischen Fragen. Dazu gehören nicht zuletzt die Wahl, die fortlaufende Beobachtung und die politische Einschätzung der ausländischen Standorte, sich daraus allenfalls ergebende Standortwechsel sowie insgesamt die Verwaltung und Aufteilung der Goldreserven auf die in- und ausländischen Depotorte." NR Freysinger (AB 2005 N 964)
04.5154 - Fragestunde. Frage. Günter Paul
Wo ist unser Gold?
04.3283 - Postulat. Grüne Fraktion
Begrenzte Ölvorräte. Szenarien
03.5101 - Fragestunde. Frage. Scherer Marcel
Stopp des Goldverkaufes aus den Währungsreserven der SNB
03.5038 - Fragestunde. Frage.    Günter Paul
Schweizer Gold in den USA
03.3213 - Interpellation. Abate Fabio
Nationalbankgold für Eisenbahn-Grossprojekte?
03.2004 - Petition. Hirt Walter
Goldverkäufe der SNB sind einzustellen
02.447 - Parlamentarische Initiative. Dupraz John
Goldreserven der Nationalbank. Ausgewogene Verteilung
02.3593 - Interpellation. Steiner Rudolf
Fehlende Depeschen im EDA
02.3452 - Motion. Merz Hans-Rudolf
Verwendung der veräusserten Goldreserven
02.3089 - Interpellation.    Merz Hans-Rudolf
Verwendung der Goldreserven nach dem 22. September 2002
02.1159 - Einfache Anfrage. Baumann J. Alexander
Verunstaltung des schweizerischen Hoheitszeichens
00.3560 - Motion. Riklin Kathy
100 Millionen Franken zur Beschleunigung der Bildungsoffensive im Jahre 2001
00.3298 - Motion. Freisinnig-demokratische Fraktion
E-Switzerland. Gesetzesänderungen, Zeitplan und Mittel
00.3293 - Motion. Zisyadis Josef
Eidgenössische Pensionskasse für die Landwirtschaft
00.3149 - Interpellation. Guisan Yves
Stiftung solidarische Schweiz. Wie weiter?
98.3495 - Interpellation. Stamm Luzi
Kritik an der Bergier-Kommission
98.3476 - Interpellation. Gusset Wilfried Ernest
Goldreserven der SNB in den USA
98.3244 - Interpellation. Schlüer Ulrich
Der Bundesrat und das Völkerrecht
98.3137 - Interpellation. Hollenstein Pia
Aufklärung bezüglich Mobutugelder
98.2016 - Petition. Wahl Edouard
Revision aller Todesurteile sowie Revision aller weiteren existenzbrechenden Strafurteile wegen Landesverrat sowie Petition für die Revision des Washingtoner Abkommens von 1946
98.1145 - Einfache Anfrage.    Gusset Wilfried Ernest
Einsatz der Nationalbank-Währungsreserven für die Grossbanken
97.5037 - Fra. Schmied Walter.
Golddeckung des Frankens
97.3629 - Interpellation. Sozialdemokratische Fraktion
Raubgold und die Schweiz
97.3364 - Interpellation. Felten Margrith
Nabelschnurblut
97.3073 - Interpellation. Spielmann Jean
Nutzung des Nationalbankvermögens
97.3027 - Interpellation. Aguet Pierre
Verschlechterung des Image der Schweiz und der Schweizer Wirtschaft. Rolle der Banken
97.1148 - Einfache Anfrage.Dardel Jean-Nils
Gestohlenes Gold aus Südafrika
97.1116 - Dringliche Einfache Anfrage. Rechsteiner Paul
Die Schweiz und das Raubgold
96.3016 - Interpellation. Tschopp Peter
Währungsreserven. Änderung der Politik
91.5033 - Fra. Ziegler Jean.
Kriegskasse der P-26
90.5157 - Fra. Hafner Rudolf.
Einlösungspflicht für Banknoten
88.1078 - Einfache Anfrage. Weder Hansjürg
Amerikanisches Abhörzentrum Shakarchi?
86.928 - Interpellation. Salvioni Sergio
Entgegennahme von Geldern zweifelhafter Herkunft
86.568 - Interpellation. Oehen Valentin
Wiedereinführung des Goldstandards
85.512 - Motion. Bürgi Jakob
Finanzplatz Schweiz. Förderung

url: www.solami.com/cvgold.htm (3.1.06)

Weltwoche 29.Juni 2006

Zur Sache, Schatz

Von Claude Baumann

Zuerst die schlechte Nachricht: Die Goldreserven der Schweiz werden zu einem fast lächerlichen Preis verkauft. Und nun die noch schlechtere: 300 Tonnen sollen nicht mehr dort sein, wo sie sein müssten. Von Claude Baumann (Text) und Dirk Fellenberg (Bild)

Würde man alles Gold zusammenschmelzen, das je gefördert wurde und in Tempeln und Tresoren, in Museen und auf dem Meeresboden liegt, entstünde ein Würfel mit einer Kantenlänge von gerade mal zwanzig Metern. Man könnte ihn in einem Öltanker versorgen oder unter den Eiffelturm schieben, wie die Deutsche Bank errechnet hat. So dicht und so knapp ist Gold.
Der Würfel hätte ein Gewicht von 150 000 Tonnen und wäre zu aktuellen Preisen etwa 3750 Milliarden Franken wert. Einen kleinen Teil davon besitzt die Schweiz: 1290 Tonnen. Dieses Gold im Wert von derzeit rund 32 Milliarden Franken gehört zu den Währungsreserven der Schweizerischen Nationalbank (SNB) und gibt aktuell wieder Anlass für heftigste Kontroversen. Denn in den vergangenen fünf Jahren hat sich der Goldpreis fast verdreifacht. Während dieser Zeit verkaufte die SNB die Hälfte ihrer Goldreserven und löste dafür zwanzig Milliarden F ranken. Damit wollte sie allfälligen Klumpenrisiken in ihrer Bilanz vorbeugen. Eine fragwürdige Spekulation, wie sich herausgestellt hat, denn inzwischen wäre dieses Gold gut dreissig Milliarden Franken wert.
Ungeachtet dessen erschallen bereits neue Forderungen, die Goldreserven zu beschneiden. Unlängst sprach die Geschäftsprüfungskommission des Nationalrats davon, eine weitere Tranche dieses Staatsschatzes zu veräussern. Letzte Woche plädierte der Lausanner Wirtschaftsprofessor Thomas von Ungern-Sternberg einmal mehr dafür, das gesamte Gold der Eidgenossenschaft zu verkaufen und den Erlös in lukrativere Anlagen zu investieren. Und im nächsten September kommt eine Volksinitiative (Kosa) zur Abstimmung, die einen Teil der Nationalbank-Gewinne - und damit auch des Goldes - in die Kassen der AHV überweisen will. Das alles ist paradox, denn die meisten Auguren gehen davon aus, dass der Goldpreis in den nächsten Jahren noch erheblich steiler ansteigen wird.

Den Schatz in der Heimat hüten
    Viele Schweizerinnen und Schweizer gehen davon aus, dass unser Gold noch immer im amerikanischen Fort Knox im Bundesstaat Kentucky gelagert sei, wo während des Zweiten Weltkriegs zahlreiche europäische Staaten ihre Goldvorräte in Sicherheit brachten. Andere Vermutungen gehen dahin, dass das Gold in einem unterirdischen Bunker in New York liegt. Doch die Nationalbank, so haben Recherchen der Weltwoche ergeben, baute in den letzten Jahren ihre Goldbestände in jenen Ländern ab, wo der Schutz von Staatsguthaben nicht mehr gesichert ist. Dazu zählen auch die USA. Das dortige Rechtsverständnis wird wegen seiner Unwägbarkeiten als Risikofaktor betrachtet - «weil es eine Realität des amerikanischen Systems ist, dass ein Richter einfach kommen und aufgrund einer Klage irgendwelche Vermögenswerte konfiszieren kann», sagt ein hoher Mitarbeiter der SNB. Mehrheitlich repatriierten die Notenbanker das Gold, wie inoffiziell eingeräumt wird: «Der grosse Teil unseres Goldvolumens lagert nun an verschiedenen Orten in der Schweiz.» Und: «Von den informierten Kreisen geht niemand mehr davon aus, dass Schweizer Gold in den USA liegt.» Den kleinen Teil, der sich noch im Ausland befindet, hat die SNB in sogenannte Triple-A-Länder transferiert. Gemeint sind damit Länder, in denen ein historisch gewachsenes Rechtsverständnis existiert, das Staatsguthaben zuverlässig schützt. Dazu zählen vor allem Kanada und Grossbritannien, wie es bei der SNB intern heisst.
    Das ist ein Paradigmenwechsel: Über Jahrzehnte hinweg verliess sich die Schweiz auf die Dienste der USA. Heute, in einer Welt mit veränderten geopolitischen Akzenten, ist das nicht länger der Fall. «Wenn irgendwo auf der Welt etwas passiert, das unsere Goldbestände tangiert, rufen wir die Vorräte ab, schicken sie anderswohin oder bringen sie heim», lautet nun die Devise der SNB. Oder mit anderen Worten: Die Schweiz will ihren Goldschatz nicht länger dem latenten Zugriffsrisiko amerikanischer Richter aussetzen.
    Offiziell macht die SNB dazu keine Angaben - «aus Sicherheitsgründen», wie Nationalbank-Sprecher Werner Abegg anfügt. Ein Staatsgeheimnis? Selbst dem eher besonnenen früheren Bundesrat Kaspar Villiger platzte einmal im Nationalrat deswegen der Kragen. Entnervt erklärte er: «Wo diese Goldbarren nun genau liegen, kann ich Ihnen leider nicht sagen, weil ich es auch nicht weiss, es nicht wissen muss und es nicht wissen will.»
    Wie gross der Schweizer Goldschatz nun tatsächlich ist, darüber gehen die Meinungen auseinander. Offiziell besitzt die Schweiz 1290 Tonnen. Mit einem Wert von rund dreissig Milliarden Franken machen sie einen Drittel der SNB-Aktiven aus. Ob das Gold aber auch physisch vorhanden ist, bleibt umstritten. «Zwischen den ausgewiesenen und den tatsächlich vorhandenen Goldbeständen besteht keine Differenz», sagt Werner Abegg. Manche bezweifeln dies. In der Vergangenheit waren das vor allem die sogenannten Goldbugs. Jene Leute also, die das gelbe Edelmetall seit Jahr und Tag vergöttern, viele Goldbarren in ihren Tresoren horten und sich an die Zeiten erinnern, als die Welt noch in Ordnung war, weil alle wichtigen Währungen mit Gold gedeckt sein müssten und die Notenbanken nur so viel Papiergeld drucken konnten, wie sie dafür Gold zur Deckung hatten.
    Heute ist das passe; selbst die Schweiz hob mit einem Parlamentsbeschluss von 1999 die Goldbindung des Frankens auf. Der im vergangenen Jahr verstorbene Zürcher Privatbankier Ferdinand Lips zählte bis zu seinem Tod zu den Verfechtern des Goldstandards, weil er davon ausging, dass das Papiergeld dereinst wertlos werden würde. Umso wichtiger seien daher hohe und gesicherte Goldbestände. Lips' Publikationen gelten heute als Offenbarung für viele Goldbugs, die davon besessen sind, dass ein Grossteil der Reserven der Zentralbanken gar nicht mehr vorhanden ist.

Abnehmende Bestände
    Anfang Jahr nun erhielten sie überraschend Sukkurs vom französischen Finanzkonzern Credit Agricole, der mit einer 56-seitigen Studie für Aufsehen sorgte: Darin heisst es, dass die westlichen Zentralbanken - und damit auch die schweizerische - heute nachweislich 10 000 bis 15 000 Tonnen Gold weniger besitzen als die offiziell gemeldeten 31 000 Tonnen. Autor der Studie ist der britische Metall- und Minenexperte Paul Mylchreest von Cheuvreux, einem Brokerhaus, das zum Credit Agricole gehört. Für seine Berechnungen stützte er sich auf historische Daten, er untersuchte die Aktivitäten mit Derivaten aus den Berichten der Bank für Internationalen Zahlungsausgleich (BIZ), und er besorgte sich Ein- und Ausfuhrzahlen von Goldtransfers von und nach Grossbritannien, einer der wichtigsten Drehscheiben für das gelbe Metall. Tiefere Goldbestände hätten die Zentralbanken deshalb, weil sie einen Teil davon fahrlässig ausgeliehen haben, sagt Mylchreest. Als der Goldpreis zwischen 1980 und 1999 von 850 auf 250 Dollar pro Unze absackte, hätten zahlreiche westliche Notenbanken einen Teil ihrer Reserven gegen eine bescheidene Kommission (rund ein Prozent) an grosse Geschäftsbanken wie JP Morgan, UBS, Goldman Sachs oder die Deutsche Bank ausgeliehen. So Hesse sich das Gold rentabler bewirtschaften, als wenn es in den Tresoren lag, argumentierten die Zentralbanker. Die Geschäftsbanken verkauften das Gold weiter an andere Finanzinstitute oder an Schmuckhersteller und legten den Erlös in besser rentierende Staatsanleihen zu etwa vier Prozent an. Das war leicht verdientes Geld, solange der Goldpreis tief blieb oder sank. Sobald die Finanzinstitute ihren Verbindlichkeiten gegenüber den Zentralbanken nachkommen mussten, beschafften sie sich das benötigte Gold zu tieferen Preisen am Markt. So funktionierte der Gold-Carry-Trade, wie Experten diese Transaktion nennen.
    Nach dem Börsenkrach von 2001 und 2002 veränderte sich die Ausgangslage jedoch drastisch, da der Goldpreis nachhaltig zu steigen begann. Viele Investoren entdeckten im Gold eine Anlagealternative zu den Aktien. Gleichzeitig begannen asiatische Zentralbanken, Edelmetall zu kaufen, um ihre Währungsreserven aus der Abhängigkeit des Dollars zu befreien. Für die im Gold-Carry-Trade involvierten Banken hatte das ungeahnte Folgen. Sie konnten sich nicht mehr am Markt zu günstigeren Preisen mit dem benötigten Gold eindecken. Und das effektiv ausgeliehene Gold hatten die Schmuckhersteller längst zu Ringen und Halsketten verarbeitet, oder es lagerte in den Tresoren der Käufer. Mit dem weiteren Anstieg des Goldpreises in den letzten drei Jahren hat sich die Situation so zugespitzt, dass die Geschäftsbanken den Zentralbanken bis zu 15 000 Tonnen Gold schulden. Zu viel, als dass sie es jemals physisch wieder zurückbezahlen könnten, resümiert Paul Mylchreest.
    Zu ähnlichen Schlussfolgerungen kommt auch der Zürcher Publizist und Finanzexperte Walter Hirt in Bezug auf die Schweizerische Nationalbank. Er geht davon aus, dass die physischen Goldreserven der SNB nicht 1290 Tonnen betragen, sondern bis zu 300 Tonnen tiefer sein könnten - was immerhin einer Differenz von aktuell 7,5 Milliarden Franken entspräche. Walter Hirt stützt seine Annahmen auf Hinweise in den Geschäftsberichten der SNB, wonach mehrere hundert Tonnen Gold ausgeliehen seien.
    Selbst heute, nachdem die Gold-Carry-Trades aller Zentralbanken aufgrund des gestiegenen Goldpreises massiv rückläufig sind, weist die SNB per Ende 2005 immer noch 135 Tonnen Gold aus, das physisch an in- und ausländische Finanzinstitute ausgeliehen ist. Ein Risiko? Als Sicherheit habe die SNB dafür «Effekten» - gemeint sind erstklassige Obligationen - erhalten, sagt Nationalbank-Sprecher Werner Abegg.

Tiefere Reserven, explodierende Preise
    Walter Hirt, der bereits 2002 mit einer Petition das Parlament in Bern auch dazu aufrief, die Goldverkäufe der SNB einzustellen, weist indessen daraufhin, dass sowohl die deutsche wie auch die britische Zentralbank als Folge von Carry-Trades in den letzten Jahren die Höhe ihres ausgeliehenen Goldes nachträglich korrigieren mussten. Das ist brisant. «Wenn sich die Erkenntnis weiter durchsetzt, dass die Goldreserven westlicher Zentralbanken tatsächlich tiefer sind, wird der Preis explodieren», sagt Marc Gugerli. Der vierzigjährige Zürcher zählt in der Schweiz zu den profundesten Kennern der Materie. Mit seinem Know-how berät er so renommierte Finanzhäuser wie die Bank Julius Bär, die Zürcher Kantonalbank oder Lombard Odier Darier Hentsch. Daneben betreibt er mit einigen Partnern einen eigenen Goldfonds. Insgesamt verwaltet er eine Milliarde Franken, die in physisches Gold (Barren) und in Goldminenaktien investiert ist.
    Als sich Marc Gugerli vor bald zehn Jahren «aus einem Bauchgefühl heraus» für das Edelmetall zu interessieren begann, kostete die Unze 250 Dollar. In den Neunzigern habe sich niemand für Gold interessiert, erinnert er sich. Die Welt stand im Bann der New Economy und des Aktienbooms. Er fand aber, dass eine Anlageklasse wie Gold, die jahrhundertelang als Gegenwert für Papiergeld gedient hatte, nicht einfach verschwinden konnte. Darum machte sich der UBS-Banker selbständig. Inzwischen ist Gugerli überzeugt, dass der Preis für eine Unze Gold in den nächsten Jahren «auf 1000, 2000, möglicherweise sogar auf 5000 Dollar» steigen wird. Wenn er das sagt, wirkt er so gelassen, dass seinen Projektionen etwas Selbstverständliches anmutet. Derzeit kostet die Unze Gold knapp 600 Dollar, umgerechnet etwa 750 Franken.
    «Gold ist extrem knapp», sagt Gugerli. «Der globalen Nachfrage von jährlich knapp 4000 Tonnen steht ein Angebot von 2500 Tonnen gegenüber. Bisher konnte die Lücke durch die Ausleihungen und Verkäufe der Zentralbanken grösstenteils ausgeglichen werden. Doch je stärker die Nachfrage zunimmt, desto weniger wird das möglich sein.» Von der Angebotsseite ist auch nicht viel zu erwarten, da viele Explorationsfirmen es versäumten, neue Vorkommen zu fördern. Aufgrund des tiefen Preises lohnte sich das gar nicht mehr. «Das Fehlen neuer grösserer Goldfunde wird darum auch künftig den Preis stark beeinflussen», bestätigt SNB-Direktor Philipp Hildebrand.
    Gold, lange verschmäht, avanciert damit vom Rohstoff zum hochlukrativen Investment. An der Börse hat sich das noch kaum niedergeschlagen. Die existierenden Reserven, inklusive offizieller Bestände der Zentralbanken (31 000 Tonnen), machen heute 1,4 Prozent der globalen Marktkapitalisierung aller Finanzprodukte aus. Zum Vergleich: Im Jahr 1934 machte das Gold gut 20 Prozent der weltweiten Börsenkapitalisierung aus, 1982 waren es sogar 25 Prozent. Auch der Wert aller Goldminenfirmen ist mit rund 200 Milliarden Dollar ein Klacks. Er entspricht gerade einmal jenem eines Blue-Chip-Unternehmens wie Shell oder Toyota.
    Gold als heisseste Anlage der Zukunft? Selbst wenn die Volatilität wie bei allen anderen Rohstoffen überdurchschnittlich hoch ist und es dadurch auch immer wieder zu Kurseinbrüchen kommt, zweifeln die Experten kaum am langfristigen Kurspotenzial des Edelmetalls. Der Amerikaner Jim Rogers, der in den siebziger Jahren als Finanzpartner von Investor George Soros ein Vermögen machte, geht davon aus, dass sich die Welt erst am Anfang einer fünfzehn- bis zwanzigjährigen Rohstoffhausse befindet. Einmal mit dem Motorrad und später mit einem umgebauten Mercedes reiste er um die Welt und verschaffte sich einen Eindruck vom riesigen Rohstoffbedarf in den Schwellenländern. Weil der Aufbau neuer Förderanlagen noch Jahre in Anspruch nehme, dauere der Rohstoffboom länger als jede andere Hausse, betont Rogers. «Dass sich der Ölpreis wieder abschwächt, erwartet ja auch niemand.»
    Der Amerikaner John C. Hathaway von der Firma Tocqueville Asset Management zählt zu jenen Menschen, die als Fondsmanager täglich grösste Mengen Gold bewegen. Auch er geht von einem Unzenpreis in vierstelliger Höhe aus. Seine Gründe für den Anstieg: «Im globalen Finanzsystem mit seinen vielen Derivaten stecken mittlerweile enorme Risiken. Auch die Höhe der Verschuldung amerikanischer Haushalte und die Blase im Immobiliensektor beunruhigt», sagt Hathaway. Als weiteren Unsicherheitsfaktor wertet er die Tatsache, dass mehr als vierzig Prozent der amerikanischen Staatsanleihen von ausländischen Schuldnern, darunter zahlreiche asiatische Zentralbanken, gehalten werden. Besinnen sich nur wenige Notenbanker darauf, dieses Dollar-Engagement zu reduzieren und stattdessen in Gold zu investieren, wie das in den vergangenen Jahren der Fall war, steigt der Unzenpreis weiter.
    Als das Gold im vergangenen Mai auf 730 Dollar kletterte, verglichen zahlreiche Auguren diese Entwicklung mit dem Höchststand von 1980, als es bis auf 850 Dollar gestiegen war - auch damals in einer Zeit, die von Inflationsängsten, politischen Konflikten und einem hohen Ölpreis geprägt war. Was allerdings viele Marktbeobachter vor Monatsfrist nicht berücksichtigten: Relativ gesehen entsprächen die 850 Dollar von damals einem heutigen Wert von 1700 Dollar. So besehen hat der Goldpreis noch viel Potenzial. Darum erstaunt es kaum, wenn Analyst Paul Mylchreest seinem Goldreport den Titel gab: «Start Hoarding!» - (Fangt an zu horten!)
    Angesichts steigender Preise hat auch die Finanzwelt in den letzten Jahren reagiert und eine Unmenge von Produkten und Indizes lanciert. Weit verbreitet sind sogenannte Exchange-Traded-Funds (ETF). Dabei werden mehrere Goldminenaktien zusammengefasst und gemäss einem Börsenindex angelegt. Bezogen sich solche ETF Ende 2003 noch auf rund zwanzig Tonnen Gold, haben sie heute die Grenze von fünfhundert Tonnen überschritten. Das belegt, welcher Nachfrage sich das Edelmetall bei Anlegern bereits erfreut.

Verkaufen? Reines Wunschdenken
    Nachdem die Schweizerische Nationalbank die Hälfte ihres Goldes verkauft hat, kommt den verbliebenen Reserven eine umso grössere Bedeutung zu. Schliesslich geht es bei den Goldreserven um eine Art Notgroschen unseres Landes, selbst wenn der Schweizer Franken heute nicht mehr durch das Edelmetall gedeckt sein muss. Die 1290 Tonnen entsprechen einem Anteil am Bruttoinlandprodukt von 12,5 Prozent. Im internationalen Vergleich liegt die Schweiz damit im Mittelfeld, gemeinsam mit Dänemark etwa. Allerdings besitzt der skandinavische Staat keinen bedeutenden Finanzplatz wie die Schweiz. «Deshalb entbehrt die Auffassung jeglicher Grundlage, wir verfügten noch über <überschüssige> Währungsreserven», sagt Hansueli Raggenbass, Präsident des Bankrats der SNB. Umso unverständlicher ist es, wenn Politiker von SP bis SVP weitere Gold verkaufe suggerieren. Der Bundesrat und die SNB haben sich davon distanziert. «Weitere Verkäufe sind reines Wunschdenken», sagt SNB-Direktor Philipp Hildebrand.
    Mehr Sorge bereitet den Währungshütern die im September zur Abstimmung gelangende Kosa-Volksinitiative. Sie fordert, dass Gewinne der Nationalbank der AHV zugeführt werden. Allerdings gehen die Initianten von einem gleichbleibenden Gewinn der SNB aus, der in den letzten Jahren gerade dank der Goldverkäufe überdurchschnittlich hoch ausfiel. Um solch einen weiterhin zu garantieren, müsste die SNB ihre Aktiven riskanter bewirtschaften. Damit verlöre sie aber ihre Unabhängigkeit und würde zum Spielball politischer Begehrlichkeiten. In einer Zeit, in der sich geopolitische Akzente verschieben und sich manche Staaten veranlasst sehen könnten, Restriktionen beim Goldbesitz zu erlassen, weil kein anderer Rohstoff in der Menschheitsgeschichte eine längere Beständigkeit besitzt, kann sich die SNB das nicht leisten. Wie haushälterisch man mittlerweile mit dem Gold umgeht, beweist die Zürcher Kantonalbank (ZKB). Vor kurzem lancierte sie einen ETF, der sich darauf beschränkt, in physisches Gold zu investieren. Mit anderen Worten: Jede Einzahlung in den Fonds wird mit Goldbarren unterlegt, so dass der Investor sein Investment jederzeit in Bargeld oder auch in physischem Gold zurückfordern kann. Damit hat der Anleger die Gewähr, dass er seine Einlage, selbst wenn es weltweit zu einschneidenden Restriktionen im Goldhandel käme, zurückfordern kann.
    Für die ZKB setzt das voraus, dass sie für den finanziellen Gegen wert des Fonds laufend neues Gold am Markt, namentlich in Zürich, London und New York, beschaffen muss. Darum fährt auch regelmässig ein gepanzerter Lieferwagen am Hauptsitz der ZKB an der Zürcher Bahnhofstrasse vor und liefert neue Barren ein. So stapelt sich das Gold in den Tresoranlagen der Zürcher Staatsbank. Bleibt zu hoffen, dass dafür nicht bei der Schweizerischen Nationalbank auf der anderen Strassenseite einige Tonnen im Tresor fehlen.

Literatur:
Peter L. Bernstein: Die Macht des Goldes. Finanzbuch, 2005.454 S., Fr. 69.40
Ferdinand Lips: Die Gold-Verschwörung. Kopp, 2003.382 S., Fr. 33.60
Robert Nef, Walter Hirt: Eigenständig. Die Schweiz - ein Sonderfall. Moderne Industrie, 2002. 362 S., Fr. 45.60
Jim Rogers: Investment Biker. Börsenmedien, 1998.497 S., Fr. 74.50
Petition gegen Goldverkäufe:www.walterhirt.ch/gold—snb.html
Gold-Studie von Cheuvreu im Internet: www.gata.org/CheuvreuxGoldReport.pdf

17.Juni 2007

BNS: 250t d'or à vendre!
Goldbürgerstreich II: SNB will weitere 250t Gold abbauen!
Email an die Mitglieder der Eidgenössischen Räte

Sehr geehrtes Ratsmitglied,

"Die Schweizerische Nationalbank passt die Struktur ihrer Währungsreserven an. Sie wird bis Ende September 2009 250 Tonnen Gold verkaufen und ihre Devisenreserven entsprechend aufstocken." So gemäss SNB-Direktionsmitglied Thomas Jordan anlässlich des SNB-Pressegsprächs vom 14.Juni 2007.

Cher Membre des Chambres fédérales,

"La Banque nationale suisse adaptera la structure de ses réserves monétaires. Jusqu'à fin septembre 2009, elle vendra 250 tonnes d'or et accroîtra ainsi ses réserves de devises." (spns). Décision communiquée à l'occasion de la Conférence de presse de la BNS du 14 juin 2007 par Thomas Jordan, Membre de la direction.

Der hierzulande gemäss Verfassung und SNB-Gesetz für solche Verfügungsentscheidungen über das Eingemachte allein zuständige Bundesrat hat vor einem Jahr - also noch vor der erhöhten Einstufung der Gefahr von systemischen Riskiken als Folge von Hedge Funds- & anderen prädatorischen Operationen - in der Fragestunde vom 12.6.06 Herrn NR Bührer wie folgt geantwortet:
"Gemessen an der Grösse und an der Bedeutung des Schweizer Finanzsystems sind die Währungsreserven unseres Landes sogar knapp dotiert. Es besteht daher kein Spielraum für eine weitere Reduktion der Währungsreserven beziehungsweise für weitere ausserordentliche Goldverkäufe der Nationalbank."
Bundesrat H.R.Merz (AB 2006 N 865)

Inzwischen sind im Mittleren Osten mehrer Krisenherde in bürgerkriegsähnliche Wirrnisse umgekippt, und weist einiges darauf hin, dass wir mit einem grösseren und unmittelbar vorausstehenden (Nuklear-)Waffengang gegen den Iran rechnen müssen. Allen voran die USA, aber auch Russland, China, Japan und die arabischen Staaten sind dementsprechend daran, ihre Papierwerte in Goldreserven umzuwandeln. Fehlte also nur noch, dass die Nationalbank von einem Hedge Fund übernommen werden könnte, und auch deren blauäugige Manager gegen die Attraktivitätskraft von goldenen Fallschirmen sich als zuwenig wiederstandfähig erweisen würden.

Bei dieser bedenklichen Sachlage gebietet sich ein unverzügliches Machtwort seitens der verfassungsmässigen Hüter der nationalen Goldreserven, sowie eine Überprüfung der einschlägigen Praktiken, Strukturen und Kompetenzen der Nationalbank.

Mit freundlichen Grüssen und besten Wünschen für eine erholsame Sommerpause.

Anton Keller, Sekretär, Schweiz. Investorenschutz-Vereinigung
022-7400362 swissbit@solami.com

PS: Zum CH/USA-Rechtshilfeabkommen (06.069) empfehle ich Ihnen angemessene begleitende Massnahmen zu beschliessen, z.B. in Form der Reaktivierung der "Beratenden Kommission" zum verlässlicheren Schutz der "Souveränität, Sicherheit oder ähnlicher wesentlicher Interessen" der Schweiz. Dies in Anlehnung an die entsprechende Formulierung im CH-USA Vertrag von 1850, wonach Rechtshilfegesuchen in Strafsachen u.a. nur dann stattgegeben werden mögen, wenn sie "genügend begründet und durch die nöthigen Aktenstücke unterstüzt" sind. Womit auch endlich der PUK-Kritik einer selbstschädigenden und "willfährigen Haltung" unserer Behörden insbesondere gegenüber den USA Nachachtung verschafft, und die Lehren aus den Aerospatiale-, Marc Rich-, und CIA-Überflugs-Affairen gezogen würden. Und womit den mahnenden Worten von Carlo Schmid nachgelebt würde:
"die USA sind im Moment kein Rechtsstaat nach unserem Standard. Von daher muss man aufpassen, was man macht. Es ist ein heikles Thema, ein heikles Gebiet. Die USA dehnen ihre Kompetenzen enorm aus und fahren die Rechte der Betroffenen enorm zurück. Hier sind wir mit unserer Auffassung natürlich noch 'altmodisch', und daher ist die Aufsicht über dieses ganze Thema von extremer Bedeutung."
(AB 2004 S 174: .../owa.htm#Schmid).

commentaire

18 juin 2007

BNS: vente de 250t d'or = affaiblissement du pays
Jean-René H. Mermoud

La leçon n'a pas suffit. Le franc suisse comme monnaie refuge est désormais un mythe : plus aucune banque centrale sérieuse ne conserve de francs suisses. La part de cette monnaie comme réserve est passée de 6 % des réserves mondiale à presque rien du tout. Le franc suisse baisse continuellement depuis l'entrée en service de l'Euro. En fonction directe des ventes d'or. Non seulement le franc suisse perd du terrain face à l'Euro, mais face à pratiquement toutes les monnaies : Livre sterling, couronne suédoise etc. Il n'y a bientôt plus que Thomas Jordan (de la BNS) pour y croire.

Pour les chinois, l'or a une importance particulière. Le franc suisse était considéré aussi longtemps qu'il correspondait à une importante réserve d'or. La BNS a perdu cette clientèle. La Russie a clairement annoncé que ses excédents seront désormais consacré non plus à l'achat de monnaies étrangères, mais à l'investissement dans le redressement de son industrie et dans le redéploiement de sa position pétrolière. Quand à l'excédent algérien, il va directement de là où il provient : aux USA. Sur quoi repose donc la valeur du franc ? sur la force de notre économie ? avec Sulzer qui a perdu sa division fonte et celle de la construction des moteurs de bateaux ? avec Castolin qui s'est expatrié en allemagne ? avec Phillip Morris qui n'est venu que pour les économies fiscales et qui met les chômeurs qu'elle produit à la charge de la caisse publique ? avec Oerlikon B qui est incapable de concéder une part de son capital en échange d'un des plus gros marché mondiaux, préférant ménager la susceptibilité nombriliste de quelqus gnomes qui n'ont plus d'autres interlocuteurs qu'eux-mêmes ! C'est vrai, les gnomes ont sauvé Saurer d'une prise de participation "sauvage". Qu'ont-ils sauvé en réalité : le nombril hélvétique, sinon son
destin.

Comble de la privatisation, la SIC AG, notre clearstream à nous, est géré sous forme de ... société privée. Comme si la monnaie était une marchandise comparable au gruyère. Le cours CHF/big mac en quelque sorte. Un vrai modèle de gestion selon les bonnes vieilles recettes Swissair. Tout le monde est innocent, peu importe les cadavres. Vendez M. Jordan. Vendez-nous, vendez-vous. Notre pays n'aura absolument plus aucun avenir.

Today's Zaman, AP April 9, 2008

IMF approves sale of 400 tons of gold to close budget gap

The International Monetary Fund's executive board approved on Monday a broad financial overhaul plan that envisages the eventual sale of 403.3 tons of its substantial gold supplies. The sale cannot occur without approval by the US Congress and legislative action in many of the 184 other member nations of the Washington-based lending institution.

IMF Managing Director Dominique Strauss-Kahn welcomed the board's decision to propose a new income and expenditure framework for the fund designed to close a projected $400 million budget deficit over the next four years.

It is "a landmark agreement that will put the institution on a solid financial footing and modernize the IMF's structure and operations," he said in a statement.

The budget proposal includes sharp spending cuts of $100 million over the next three years that will include up to 100 staff dismissals.

"We have made difficult but necessary choices to close the projected income shortfall and put the fund's finances on a sustainable basis, but in the end it will make the fund more focused, efficient and cost-effective in serving our members," said Strauss-Kahn, a former French finance minister.

The IMF said the board agreed to revamp the fund's income model from one that primarily relies on lending to one that generates money from various sources.

During the 1990s the IMF lent billions to countries in Asia and Latin America that were facing financial crises and financed its operations on interest from those loans. In recent years, IMF lending has dried up as many of those countries have built up reserves to prevent them from having to borrow again from the IMF, which often puts severe restrictions and conditions on its loans. The declining interest payments led to the IMF's budget gap.

Actual sale of the gold cannot start because the US member on the IMF board cannot vote for it until Congress approves. Congress has made approval conditional on a broad range of operational changes that Strauss-Khan has pledged to carry out to preserve the relevancy of the 64-year-old organization, whose mission is to promote global financial stability.

Under the plan, the IMF would sell the 403 tons, or nearly 13 million ounces, of gold for about $11 billion over several years. The IMF would keep $4.4 billion on its books, and the remaining $6.6 billion would go into an investment account.

The IMF, which has sold gold before, said it would coordinate the sales with central banks in an effort to prevent market disruptions.

"Gold sales would be conducted in a transparent manner with strong safeguards to ensure that they do not add to official sales and avoid any risk of market disruption," the IMF said in a statement.

The Bush administration said in February it could support selling a limited amount of IMF gold as away to ensure the agency's long-term financial stability, but US Treasury officials realized this would be a hard sell. In 1999 Congress rejected a previous proposal to sell IMF gold, and the current majority leader of the Senate, Democrat Harry Reid, comes from the gold-mining state of Nevada.

Strauss-Khan, who took over last November as head of the IMF, said the financial overhaul was another major step in the organization's reform process. It followed a decision last month to increase slightly the voting power of rapidly developing countries such as China, India and Brazil, who are playing a growing role in the world economy. Since its founding, the United States, the largest shareholder, and European nations have dominated IMF decision-making.

Besides using the gold sales to produce an income stream, the fund's narrow investment authority will be broadened.

September 24, 2008

The Buck Stopped Then
By JAMES GRANT

CRITICS of the administration’s Wall Street bailout condemn the waste of taxpayer dollars. But the taxpayers aren’t the weightiest American financial constituency, even in this election year. The dollar is the world’s currency. And it is on the world’s opinion of the dollar that the Treasury’s plan ultimately hangs.

It hangs by a thread, if Monday’s steep drop of the greenback against the euro is any indication. We Americans, constitutionally inattentive to developments in the foreign exchange markets, should be grateful for what we have. That a piece of paper of no intrinsic value should pass for good money the world over is nothing less than a secular miracle. We pay our bills with it. And our creditors not only accept it, they also obligingly invest it in American securities, including our slightly shop-soiled mortgage-backed securities. Every year but one since 1982, this country has consumed much more than it has produced, and it has managed to discharge its debts with the money that it alone can lawfully print.

No other nation ever had it quite so good. Before the dollar, the pound sterling was the pre-eminent monetary brand. But when Britannia ruled the waves, the pound was backed by gold. You could exchange pound notes for gold coin, and vice versa, at the fixed statutory rate.

Today’s dollar, in contrast, is faith-based. Since 1971, nothing has stood behind it except the world’s good opinion of the United States. And now, watching the largest American financial institutions quake, and the administration fly from one emergency stopgap to the next, the world is changing its mind.

“Not since the Great Depression,” news reports keep repeating, has America’s banking machinery been quite so jammed up. The comparison is hardly flattering to this generation of financiers. From 1929 to 1933, the American economy shrank by 46 percent. The wonder is that any bank, any corporate borrower, any mortgagor could have remained solvent, not that so many defaulted. There is not the faintest shadow of that kind of hardship today. Even on the question of whether the nation has entered a recession, the cyclical jury is still out. Yet Wall Street shudders.

The remote cause of its troubles is the paper dollar itself — the dollar and the growth in the immense piles of debt it has facilitated. The age of paper money brought with it an increasingly uninhibited style of doing business.

The dollar emerged at the center of the monetary system that took its name from the 1944 convention in Bretton Woods, N.H. The American currency alone was made exchangeable into gold. The other currencies, when they got their peacetime legs back under them, were made exchangeable into the dollar.

All was well for a time — indeed, for one of the most prosperous times in modern history. Under the system of fixed exchange rates and a gold-anchored dollar, world trade boomed (albeit from a low, war-ravaged base). Employment was strong and inflation dormant. The early 1960s were a kind of macroeconomic heaven on earth.

However, by the middle of that decade it had come to the attention of America’s creditors that this country, fighting the war in Vietnam, was emitting a worryingly high volume of dollars into the world’s payment channels. Foreign central banks, nervously eyeing the ratio of dollars outstanding to gold in the Treasury’s vaults, began prudently exchanging greenbacks for bullion at the posted rate of $35 per ounce. In 1965, William McChesney Martin, chairman of the Federal Reserve, sought to reassure the quavering dollar holders. He lectured the House Banking Committee on the importance of maintaining the dollar’s credibility “down to the last bar of gold, if that be necessary.”

Necessary, it might have been, but expedient, it was not, and the Nixon administration, on Aug. 15, 1971, decreed that the dollar would henceforth be convertible into nothing except small change. The age of the pure paper dollar was fairly launched.

In the absence of a golden anchor, the United States produced as many dollars as the world cared to absorb. And the world’s appetite was prodigious. “Balance of payments” crises were now, for this country, things of the past. “Liquidity,” that bubbly speculative elixir, gurgled from the founts of the world’s central banks.

It was the very lack of gold-standard inhibition that permitted the buildup of titanic dollar balances overseas. At the end of 2007, no less than $9.4 trillion in dollar-denominated securities were sitting in the vaults of foreign investors. Not a few of these trillions were the property of Asian central banks. So, although the United States has run heavy and persistent current account deficits — $6.7 trillion in total since 1982 — they have been “deficits without tears,” to quote the French economist Jacques Rueff. The dollars American debtors sent abroad America’s creditors sent right back in the shape of investments in American stocks, bonds and factories.

Under the Bretton Woods system, worried foreign creditors would long ago have cleaned out Fort Knox. But, conveniently, the dollar is uncollateralized and unconvertible. America’s overseas creditors hold it for many reasons. Some — notably Asian central banks — acquire dollars simply to help make their exports grow. But even the governments that scoop up dollars for no better reason than to manipulate their own currency’s value presumably put some store in the integrity of American finance.

As never before, that trust is being put to the test. In the best of times, the Treasury and the Federal Reserve pretended as if the dollar were America’s currency alone. Now, in some of the worst of times, Washington is treating its vital overseas dollar constituency as if it weren’t even there.

Which failing financial institution will the administration pluck from the flames of crisis? Which will it let roast? Which market, or investment technique, will the regulators bless? Which — in a capricious change of the rules — will it condemn or outlaw? Just how shall the Treasury secretary spend the $700 billion he’s begging for? Viewed from Wall Street, the administration’s recent actions appear erratic enough. Seen from the perch of a foreign investor, they must look very much like “political risk,” a phrase we Americans usually associate with so-called emerging markets, not with our own very developed one.

Where all this might end, nobody can say. But it is unlikely that either the dollar, or the post-Bretton Woods system of which it is the beating heart, will emerge whole. It behooves Barack Obama and John McCain to do a little monetary planning. In the absence of faith, what stands behind a faith-based currency?

James Grant, the editor of Grant’s Interest Rate Observer, is the author of the forthcoming “Mr. Market Miscalculates: The Bubble Years and Beyond.”