Mystery of the missing Russian gold

Posted in Business, Current Affairs, European History, Gold Reserves, History, India, politics by Anuraag Sanghi on January 18, 2010

As the Soviet Empire crashed

In November 1991, the head of Gosbank the Central Bank of USSR, Viktor Geraschenko confirmed that USSR had less than 400 tons of gold reserves – and not the 1000-1500 tons as estimated. Russia, which has been one of the world’s Top 10 gold producers for the last 100 years, to have a paltry less than 400 tons of gold as reserves created a flutter in the IMF, World Bank, and the Western world. Where did this ‘estimated’ 1000 ‘extra’ gold go?

The declared gold reserves of Gosbank in mid-1937 were 374.6 tons. No additions were made after that, and the reserves were turned over to the People’s Commisariat of Finance. The size of of the reserve had been kept secret since the late 1930s. Geraschenko wrote to Gorbachev on November 15, 1991: “It was reported in October of this year that the official gold reserves of the country are only 240 tons. The declared level of official gold reserves, which is one of the most important indicators of a country’s solvency, is not commensurate with the status of a superpower and leading gold producer, according to experts. Reports of the size of the USSR gold created confusion among specialist on the gold market, who had previously estimated them to be 1,000-1,300 tons”. (via Collapse of an empire: lessons for modern Russia By Egor Timurovich Gaĭdar, page 238).

A preachy and superior writer about the Soviet implosion

A preachy and superior writer on the Soviet implosion

After Gorbachev’s ‘perestroika’ and ‘glasnost’, as the Russian economy was loosening the grip of the CCCP, the Russian Central Bank set-up an

“offshore firm, Financial Management Co., known as Fimaco, based in Jersey, the Channel Islands, to handle Russia’s foreign currency reserves. By one estimate, the offshore fund managed $37 billion between 1993 and 1998. The firm was a subsidiary of Eurobank of Paris, which is 78 percent owned by the Central Bank.”

The Washington Post revealed in another report how Russia,

funneled billions of dollars in Russia’s hard currency reserves through… Fimaco … Documents disclosed by The Washington Post showed that some of the money was then pumped back into Russia’s high-flying government bond market in 1996, in the months before President Boris Yeltsin’s reelection.

One of the few journals to get this story right was Businessweek – based ‘on-the-ground’ whispers.

Managing the Russian Central Bank during the mayhem

Described by Jeffery Sachs, repeated many times by Western bankers, as “the worst banker in the world”, Viktor Gerashchenko was chairman of the Russian Central Bank. Twice: the first time from 1992 to 1994, and the second time was after the default crisis of 1998 – upto 2002; resigning after “expressing opposition to proposed legislation that aimed to make the Central Bank subordinate to a new government led body, The National Banking Council.”

Without any conspiracy theories

For Russia, as one of the Top 10 producers of gold, to have 1000-1500 tons of gold would not be excessive. But between 1971, after the Nixon Chop, in little time, dollar value depreciated from US$35 per ounce of gold to US$800 in 1980. Over the next 20 years, through various clandestine methods (check out the Edmond Safra and the Yamashita stories below), gold prices were ‘managed’ and brought down to US$225 per ounce. Co-incidentally, along with oil prices. This reduction in gold and oil prices simultaneously, severely undermined the health of USSR’s economy – these two being the most valuable ‘hard currency’ exports from USSR.

A simple explanation may be that the central bankers of the erstwhile USSR used a lot of that gold to ‘support’ alliances. Much in the manner of the USA, which does the same with its USCAP system. To this add the possibility that Soviet apparatchiks did not want to divvy up Soviet gold with members of the CIS and the subsequent splinter countries of the USSR, or lose it to ‘impatient’ and ‘opportunistic’ Western creditors.

This ‘unexplained’ reduction in gold reserves, was done according to Gosbank head, Gerashchenko, to “to avoid the seizure of assets during talks with foreign governments and private creditors on the restructuring of Moscow’s Soviet-era debts.” Russian authorities also “questioned the $50 billion figure reported by Skuratov. They said $1.4 billion was the most FIMACO ever managed at one time, in 1994”. After his stint at Gosbank, Geraschenko became chairman of the Yukos board. Yukos is the company that belonged to the jailed billionaire, Mikhail B. Khodorkovsky.

 La Leopolda  at Villefranche sur Mer, France, the former home of King Leopold, Gianni Agnelli and Edmond Safra.

La Leopolda at Villefranche sur Mer, France, the former home of King Leopold, Gianni Agnelli and Edmond Safra.

Death Of Edmond Safra

Friday. December 3rd, 1999. TV channels (in India too) announced that Edmond Safra died in mysterious circumstances – at his villa in Monaco.

Based out of Monaco, a known off shore finance centre, Edmond Safra was reputed to have been in the know and arranged numerous gold dealings. His claim to fame was to ‘arrange’ the evacuation of Sephardic Jews, with their wealth from various West-Asian and Middle East countries between the 1920-1960s. He was ‘whispered’ to be behind the George Soros run-in with the Bank Of England gold sale and physical delivery.

The US FBI was conducting investigations about money laundering through Safra’s bank by the Russian ‘mafiya’, based on information given by Edmond Safra. Behind many of these money transfer and manipulation operations through Safra’s Bank, was the Russian ‘mafiya’ – and lubricating these transactions, were hundreds of tons of Russian-Soviet gold. Sold through Edmond Safra? Was it this investigation or a ‘double-cross’, that triggered Safra’s killing?

At the time of Edmond Safra’s death, he was negotiating the sale of his bank to The Hong Kong & Shanghai Banking Corporation.

Yamashita Gold – Underground gold from Japan

Korea claims that Japan plundered Korea of hundreds of tons of gold from 1937-1944. Philipines, Indonesia have all raised claims against Japan for war time gold loot.

Regardless, one American writer had definitely hit a jackpotGold Warriors: America’s Secret Recovery of Yamashita’s Gold (By Sterling Seagrave, Peggy Seagrave). Ian Fleming is supposed to have based his story on the Yamashita chapter of WW2.

Japan’s top underworld crime boss, Taisho (Admiral) Yoshio Kodama, (ranked as an admiral at 34 years) a major figure in the Japanese underworld was in charge of Project “Golden Lilly” – after one of Hirohito’s poems! Objective – looting gangsters in Japanese occupied territories. Supervising the operations was Emperor’s Hirohito’s brother, Prince Chicubi. Management – Japan’s top financial figures.

Central Bank - Gold Sales
Central Bank – Gold Sales

Subsequently, allegedly, a lot of this gold landed with Ferdinand Marcos; the Filipino dictator. Swiss banks, Macao criminals, American generals and politicians – all involved.

Glen Yeadon, writer of “The Nazi Hydra in America: Suppressed History of a Century” writes how Presscott Bush (grand-father of George Bush), Douglas MacArthur were involved in various launderings, diversions and subterfuge involving Nazi gold and Japanese gold after WW2.

After the Japanese surrender, Tomoyuki Yamashita, was tried by a kangaroo court, convicted of vague crimes and hung to death – which added to the rumours of Yamashita’s gold.

Recovery of Boticelli’s Venus

Sandro Botticelli’s Venus Rising, a ‘priceless’ renaissance period painting, now in the Ufizzi gallery, stolen and hidden, was ‘discovered’ by Indian soldiers, during WWII. This ‘discovery’ of Botticelli’s Venus was a highlight of the mopping up operations – and the role of the Indians soldiers has been wiped clean. No book review of a hagiographic account, The Venus Fixers: The Remarkable Story of the Allied Soldiers Who Saved Italy’s Art During World War II By Ilaria Dagnini Brey mentions this contribution by Indian soldiers. I wonder what would have happened if ‘others’ had found this painting. Blame the Nazis for the loot! The painting would never have been recovered, I presume!

Central Bank Gold Sales

Between 1999-2009, European Central Banks have sold more than 4000 tons of gold under the Central Bank Gold Agreement (CBGA).

Switzerland, which had held the most gold reserves per capita in Europe in 1999, has sold more than 1,300 tons of its gold reserves. Other major sellers in the past 10 years included France, the Netherlands, and the U.K.

Countries like France, where monetary policy is now set by the European Central Bank, still maintains its own central bank. The U.S. hasn’t sold gold.

In the past, abrupt selling has sometimes depressed gold prices. The Bank of England’s announcement in early 1999 that it was selling part of its reserves helped gold prices slump to a 20-year low. Gold traded at just above $250 an ounce by the summer of that year.

But efforts to coordinate those sales have reduced those shocks. On Sept. 26, 1999, 15 European central banks, led by the ECB, signed the first CBGA to take concerted moves on gold sales.

The banks agreed that in a five-year period, they will cap their total gold sales at around 400 tons a year, with sales in five years not exceeding 2,000 tons. The CBGA was renewed in 2004 for another five-year period. The second CBGA raised annual ceiling to 500 tons and the five-year limit to 2,500 tons.

The interesting bit was where did the European Central Banks get so much gold from! Was it the various gold hoards, that had disappeared from 1900-200o, making a re-appearance!

For long, these calls for accountability from ‘conspiracy theorists’ have been ignored. The good news. These ‘conspiracy theorists’ have not been able to locate any more of such extra sources of gold, which may disturb the market in the next few years.

Behind The Web Of Terror

“…one who knows the higher criminal world … for years …I have …been conscious of some power behind the malefactor, some deep organizing power which … stands in the way of the law, and throws its shield over the wrong-doer. Again and again …I have felt the presence of this force, …when I seized my thread and followed it, …it led me, …to ….” Arthur Conan Doyle – The Final Solution

Syria For Dessert

The Root Of All Terror

In today’s world, behind all terror you will similarly see another baleful influence. No, it is not Osama bin Laden. Osama is either a minor reactionary (in Marxist terms) or a diluted repetition of the Hashishi influence.

Hashishis were major source of terrorism in the Dark Ages in Europe and Middle East. Their influence was finally extirpated by Genghis Khan’s army – which systematically went after this band of mercenary killers. The English word assassin is derived from Hashishis.

The source of modern terrorism is the USA.

The formation of Israel

Similar to the Middle East carve-up after WW1, and the collapse of the Ottoman Empire, USA’s baleful story started immediately after WW2. The creation of the US cat’s paw in the Middle East – Israel. Less than 1,00,000 Jews were considered more important than the 5,00,000 Palestinian’s. This was American solution, aided by odious British legalities, (the Balfaour Declaration) to the Jewish persecution in Europe.

Just why, did Muslim Palestinians in Asia have to pay the price, for Christian persecution of Jews in Europe.

The Jews promptly forgot all about persecution – and started a new chapter in persecution. Palestinians became homeless – no passports. They could not go anywhere. Israel did not want them as Israeli citizens – but as a source of cheap labour, without rights. Jordan accepted a few. Syria was persuaded to accept some. They became stateless citizens – property of the UNHCR. And Palestinians started a new chapter in terrorism!

What Can Palestinians Do

The biggest successes in post WW2 world have been those that followed Gandhiji – Poland, South Africa, Martin Luther King and others. Odds are in favour of following the Gandhian way. The one unique military success in the last 60 years of struggle by emerging nations was Ho Chi Minh.

Ho Chi Minh from Time MagazineLike Haitian generals, time and again, Ho Chi Minh, drove back Western colonials – each time they went back on their word. The French had promised freedom and de-colonialisation after WW2. Thereafter, they tried wriggling. Ho Chi Minh wouldn’t let them move.

The French created a mess – before leaving in 1956. Just like Britain did in India (by creating a Pakistan and Kashmir). US decided that they could ‘clean up’ – and make Vietnam into another client state like other SEATO (now ASEAN) members. 20 years later, the US admitted defeat and decided to slink away. The Chinese decided to take swipe. Same story.

Three of the five permanent members of the Security Council, (supposed Super Powers or mini-Super Powers) tried their hand at Vietnam. All failed. And after defeating these ‘Super Powers’, the Viets did not flex their muscles with any of their neighbours.

Ho Chi Minh’s quiet leadership, his frugality, his unblemished personal life inspired the Viets to take on the world – and win. After becoming President of the Democratic Republic of Vietnam, he lived in a ‘gardener’s cottage and then a peasant house built on stilts beside a pond.’ Just like Gandhiji, he died just before seeing his dream came true. Ho Chi died in 1969 – a few years before the last of the colonialists was thrown out.

His was the kind of war that Gandhiji always believed in – ethical, moral. Without hate, rancour, ill-will or subjugative ambitions. Ho Chi Minh was truly the second coming of Gandhiji – the predicted Kalki. This is the success that Middle East freedom fighters need to learn from. Regressive practices by rag-tag terror outfits corrupt the freedom struggle – and dilute the stability of the outcome.

The Islamic DemonisationNext was Iran.

They foisted a corrupt Reza Shah Pahlavi in Iran. A king no one wanted. The Shah of Iran wrote new chapters in state repression.

In 1974, I was introduced to a visitor from Iran in Hyderabad, India – someone my father picked up an acquaintance with. He was afraid of speaking anything in our house in India – 2500 miles away. He was afraid as if the Savak (Shah’s secret police) was in the room next door. He was from an Iranian minority that spoke Aramaic – and the first time I came to know that Aramaic was one of the language in which the Bible was originally written (but that is another story).

The Shah of Iran worked against his own nationalist Prime Minister Mohammed Mossadeq – to protect Western Oil interests. To turn public opinion,

declassified documents detailing the 1953 U.S. overthrow of Iran’s Prime Minister Mohammed Mossadeq reveal that something actually called the “CIA Art Group” produced cartoons to turn public opinion against the democratically elected leader.

The CIA, led by Kermit Roosevelt Jr., and the British intelligence, launched Operation Ajax. Finally, in 1979, the Shah was replaced by the regressive regime of Ayatollah Khomeini, which has taken Iran out of the USA orbit – but kept Iran from progress for the last 30 years. Iran has become a source of de-stabilisation various parts of the world (Sudan, Iraq, Afghanistan, etc) – in its anti USA crusade.

US Targets Paula Abdul For Regime ChangePakistan – Old Story.

Pakistan was a part of the USA troika with Iran and Turkey in the CENTO alliance against USSR. Pakistan’s next ruler will be selected by the USA. During the Kargil war, India was talking to the USA. USA called the shots – and decided to replace Nawaz Sharif with Musharraf.

Pakistan was the training ground for New York sub-way bombing, 9/11 terrorists, for the Mujahiddin in Afghanistan and for the rogue trade in nuclear material with AQS Khan. India’s Kashmir and Khalistan problems – direct result of USA foreign policy.


Iraq started a war with Iran in 1980 (prodded by USA) against Iran. As a reward. Saddam wanted Kuwait. Before the Kuwaiti invasion, Saddam took USA “permission”. By the time USA realized what was happening, Kuwait was over. USA did a volte-face – and Saddam became a demon. Today, Iraq has become a quagmire of a civil war amongst Iraqis. The cost of an alliance with the USA. The war on terror has become another foray for the America-Australia-Britain-Canada (ABC) Axis – at a cost to the rest of the world.

“By God, we’ve kicked the Vietnam syndrome once and for all!” So said President George Bush in a euphoric victory statement at the end of the Gulf War. Did Iraq have to pay the price for exorcising the Vietnam ghost in the American mind?

Osama was operating from Afghanistan.

What did the USA have to do there!! It started with USSR. The King Of Afghanistan – Zahir Shah was replaced by a USSR backed group. A despotic, directionless regime replaced Zahir Shah. The secular voice of Khan Abdul Ghaffar Khan, an avowed Gandhian, in Afghanistan was silenced by Pakistan – an USA ally.

Afghanistan decayed into a regressive nation – which the USSR decided to change! The civil war between the mujahideen (armed by the USA) and the Russians pushed back the character of the Afghans by 1500 years. An USA supply agreement flooded Afghanistan and Peshawar with for arms and armaments. Waziristan in Pakistan, NWFP has practically been conquered by the Mujahideen. The touch that kills.

Teror Outsourcing?Who’s next?

Saudi Arabia? One of the Central Asian Republics! Anglo Saxon propaganda overdrive tells us that Islam is to be blamed. Hardly!

Three causes for this US policy.

Oil – Cheap oil. Never mind the cost to others.

Oil – All it can get. And then some more.

Oil – For no one else. Uncle Sam wants it all.

Three Monkeys – Toshogu Temple

Amazingly, one of the US presidential hopefuls, John McCain, even blames a Muslim for killing Gandhiji. This was demonisation of Muslims by the American political establishment at its best.

Post Script

The first step

On February 22nd, 2008, the Deoband Seminary, the most respected Islamic seminary in South and South East Asia, issued a anti-terrorism declaration at a huge public meeting attended by hundreds and thousands of people. This set up a new direction in Islamic social dialogue – where a non-establishment, Islamic theological group came out against terrorism. Subsequently, some other ‘liberals’ jumped onto this bandwagon.

And then …

In October 2008, Pakistan was sent on a cold turkey … by Saudi Arabia, China and the US. Pakistan has been forced to go to IMF which is prescribing a heavy cut back in defence spending.

But most interestingly …

On October 3rd, 2008, the Frontier Gandhi’s grandson was the target of suicide bomber. The terrorists are obviously worried that Khan Abdul Khan Ghaffar Khan’s sensibility may make a comeback. Suddenly the world has been reminded about Khan Abdul Khan Ghaffar Khan.

Coincidentally, in India, a film was made on Khan Abdul Ghaffar Khan. The LA Times recently ran an column on him. The answer to the Pakistani problems in the North West tribal areas was Khan Abdul Ghaffar Khan.

And the tribal chiefs of Pakistan and Afghanistan Pashtuns decided to call for a ‘mini-jirga’ on violence – to decide on the future of the two countries.

Hopefully, this a new beginning for Pakistan …

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