Greenspan Ponders Gold Market Interventions

We first want to take a look at the subsequent Fed meeting. On 6 and 7 July 1993, the meeting discussed in Chapter 20 took place; on 5 August 1993, the interventions began. Twelve days later, on 17 August 1993, the next FOMC meeting took place. Angell said: ‘I recognize that the price of gold has come down from $400 to $371 and that really is a factor that parallels the move that took place in the bond market; and that has worked very, very well.’63 That sounds like a success message. It hasn’t merely worked well, not very well, but very, very well – which raises the question of what precisely it is that is supposed to have worked so well. Gold market interventions are the only thing that can be meant – after all, the method proposed by him at the previous meeting, namely to hike interest rates, had been rejected. He establishes the connection with the lowering of bond market yields that happened in parallel. In the preceding FOMC meeting Angell only mentioned this facet; here he shows that he thinks of the decline in yields, in other words rising bond prices, as an effect of the ‘holding’ of the gold price. It is also worth noting that Angell mentions the round number of $400 (despite the fact that gold had been above that price for several days), whereas he mentioned the $371 level precisely (even though it was a fluctuating market).