Between 1962 and 1968, a cartel of central banks from the US and Europe ran a price manipulation scheme in London, aiming to keep the price of gold at $35 per ounce. They did this by constant intervention into the market, pooling their gold reserves to sell down the market. Conceived and coordinated at the Bank for International Settlements (BIS) in Switzerland by the G10 central bank governors, the dirty work of actual gold market intervention was done by the Pool’s agent, the Bank of England gold trading desk in London.
The syndicate, known as the London Gold Pool was successful until it wasn’t, with the beginning of the end in early March 1968 as the huge run on gold became a tidal wave with sterling and US dollar weakness. On 10 March 1968, a Sunday, the consortium released a statement claiming that: “the London Gold Pool reaffirm their determination to support the pool at a fixed price of $35 per ounce”. At the same time, Fed chairman William McChesney Martin even vowed that the US would defend the Pool “to the last ingot”.
The Pool then proceeded to airlift hundreds of tonnes of gold bars from the US Treasury’s Fort Knox to RAF Mildenhall, which they dumped into the London market for the rest of the week (March 11 -14). With all the Good Delivery Gold siphoned off to the Market (actually a consortium of European merchant banks), the Rothschild and the Bank of England pulled the plug, and the London Gold Pool collapsed on the evening of 14 March 1968, ushering in an era of free market gold prices.
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