11/13 Ed Steer - When Irish Eyes Are Smiling

Started: 20:01 25 September 2002


At 8:00 p.m. Eastern Standard Time on December 11, 1979 the Honourable John Crosbie, the newly minted Finance Minister in Prime Minister Joe Clark’s minority Progressive Conservative government of Canada, rose from his seat in the House of Commons in Ottawa to give his first (and last) budget speech.

The Conservatives had just come to power in May when the Liberal government under Prime Minister Pierre Elliott Trudeau was forced to call an election because its five-year mandate was nearly up. The Liberals had been in power since 1968 and the country (especially western Canada) had had belly full of them (and him). Trudeau (like the U.S.S.R. at the time) was a mystery, wrapped in an enigma. A lawyer, he was intellectual, aloof, and arrogant. It took another Quebecer, Rene Levesque, the Premier of Quebec, to describe him best…. “As for P.E.T., how can one define the indefinable? He was extremely cultivated, certainly, but almost exclusively only in matters of jurisprudence and politics. I had the impression that, except for show, the additional baggage he had accumulated from studies in the humanities left him supremely indifferent, like seed fallen on rock.”…Rene Levesque/Memoirs, McClelland and Stewart, 1986…Page 150.

The Conservative government picked up the reigns of power and tried to govern as if they had a majority government instead of something less that the Canadian voter had given them. John Crosbie was appointed Finance Minister and tried to salvage the mess left behind after more than a decade of Liberal mismanagement.

Without question, John Crosbie was one of the most well liked and well-respected parliamentarians that ever served this country, at least in my lifetime. A sharp mind, a sharp tongue...and never lost for words or the turn of a phrase, he was not what you would call in today’s vernacular… “politically correct”. But he was totally dedicated to serving the people of Newfoundland and Labrador in particular…and the people of Canada in general. And he was an honest man to boot. How could one ask for any more from their political representative than that?

The Honourable member for St. John’s West (Newfoundland & Labrador) was never one to mince words or suffer fools gladly. The “hoary parliamentary tradition that the Minister of Finance must buy and wear a new pair of shoes when he presents his Budget Speech” went out the window. John showed up in the Commons “in a new pair of grey and black sealskin mukluks made by an aboriginal woman in Happy Valley-Goose Bay, Labrador. I thought it would add a bit of interest to the occasion if I wore something other than the conventional black wing tips. Besides, the mukluks demonstrated support for the seal hunt and for Newfoundland.”…No Holds Barred/My Life in Politics, John C. Crosbie, McClelland & Stewart, 1997…Page 178.

This was the first time that the sale of Canada’s gold was ever mentioned in a budget speech. At the bottom of page eight in his speech, Mr. Crosbie had this to say: “At this point I wish to make an announcement with respect to Canada’s gold holdings. The great rise in the price of gold in the last three years, at a time when the other components of our official international reserves have been declining, has led to a substantial shift in the composition of our reserves portfolio. At the current market price, the 22 million ounces of gold held by the Exchange Fund now constitutes almost 75% of our reserves. This is a far higher proportion than we have held in the past. It is also higher than the proportion now held by other industrial countries, with the exception of the United States, which holds only small amounts of foreign currencies. From the standpoint of the efficient management of our reserve assets, I think it would be more appropriate if this proportion were reduced somewhat. This would provide a more balanced portfolio and allow us to invest more funds in interest-earning assets. Accordingly, I plan to sell up to one million ounces of gold in the relatively near future if the market for gold continues to be firm. Part of this may be purchase by the Mint in connection with its “Maple Leaf” program. The balance will be sold in the market.”

John’s plan to sell some of Canada’s gold never came to fruition. The Conservative government fell when the budget went down to defeat just two days later. In the next election on February 18, 1980, Trudeau and Liberals were returned to power with a majority government, and Trudeau’s “Welcome to the 1980’s” speech infuriated Progressive Conservatives from one end of the country to the other.

But it would take another leader, Brian Mulroney, as head of the Progressive Conservatives party to finally bury the Liberals once and for all…four years later…and the real story of Canada’s gold begins there.

Back in 1980, when John Crosbie gave this speech, and when gold and silver were in their final speculative blow-off phase, the Hunt Brothers tried to corner the silver market, and got their heads handed to them when the NYMEX/COMEX changed the rules. I was part of the speculative fury that was trying to cash in on high silver prices at the time. I think I made about $3,000, which was a lot of money back in those days. I had no interest in politics, and little interest in either gold or silver, for that matter. But I do remember there being a furor in parliament during the Mulroney years about Canada selling its gold reserves.

When I was a small child, I had been introduced to gold and silver coins by my Grandfather, who, from time to time, would show me his small collection that he’d accumulated during WWI, while he fought in France and Belgium. He sold it long before he died, and (except for 1980) my interest in precious metals, or the specie that sprang from them, came to an end.

In 1999 however, I discovered that my interest in gold and silver had not died, but had only been laying in wait to strike again when the time was right. It occurred when my stockbroker faxed me a copy of John Hathaway’s famous essay “The Golden Pyramid”.

For at least a year prior, my broker had been trying to talk me out of buying mutual funds, or any stocks of any kind, because he felt that the market was terribly overvalued, and that bad things were about to happen. So I asked him what he would recommend in the place of buying tech stocks, and he sent me “The Essay”…and the rest, as they say, is history.

From a technical standpoint, I had virtually no understanding of what Hathaway was saying. But in the broad strokes, it was abundantly clear that bullion banks (whatever or whoever they were) were never going to pay back their gold loans made to them by the Central Banks. This looked liked an investment opportunity extraordinaire. At that time, I had no idea of the vast conspiracy by the central banks, governments, and other powerful organizations that had lined themselves up against that “ancient metal of Kings”.

Being of the old school, the computer age arrived late in our household, and our IBM Aptiva had been set up in the basement family room for about six months prior to “The Essay” arriving on the scene. Kids being what they are nowadays were doing their thing with it, while Dad watched with deep suspicion from the sidelines.

But with the Gold Bug biting hard, it was only a matter of time before I had mastered some of the rudimentary skills of surfing the net. What I found was revolutionary. There was a whole world out there full of the most incredible knowledge sources available. The term “World Wide Web” is exactly correct, and it didn’t take me long to put this knowledge to good use.

I was always a news junkie, and knowledge that I didn’t know existed was everywhere for the taking, either for free, or very close to it. It was heaven. Since then, I’ve cancelled all my magazines, business newspapers and the like. What mankind needs to know to survive, comprehend, and prosper is on the Net.

By January 2000 I had sent my first donation off to an organization called GATA ( that was attempting to expose the rigging of the gold market by what is now known as “the gold cartel”. I’ve now been a member for almost three years, and my knowledge of how the world works and who runs it, has totally changed. I’ve learned more on the Internet in three years than I have in the rest of my life combined.

As I’ve followed along in the footsteps of some of the giants of the financial world, I have, from time to time (and only recently), put forth my own views on what I see happening. I’m a voracious reader. I consume vast amounts of material from many different web sites on a daily and weekly basis. And it was reading one article in particular, that got me started on the search for what happened to Canada’s huge gold reserves.

As luck would have it, the essay showed up on The essay was entitled “How the Soviet Empire’s Fall was Engineered”. It was written by Dana Allen, President of American Media Revolution… on August 17, 2001. Let me quote one of the key paragraphs… “Remember the 2nd prong in bankrupting the Soviets, reducing their Foreign Exchange income? The first step on that was to determine where the Soviets income mostly came from. It turned out to be Oil and Gold. Then Browne said that this is where the CIA came in. They, in a very sophisticated manner, went around the world and manipulated markets to drive down the price of both Oil and Gold. Remember where Oil and Gold were when Reagan took over? They were in the neighborhood of $30 a barrel and $500 an ounce. Both fell dramatically under Reagan. As Browne made this and other points, I would look across the patio and look at Mrs. Casey and Al Haig, and both would be nodding in agreement with Browne's points.”

Before progressing further with this essay of mine, you must read Dana Allen’s entire essay, which is hyperlinked here. I have no doubt as to the veracity of this work, as it was written from personal experience. This is not hearsay…he was there. It might also be useful to print a hard copy, as you will find yourself referring back to it as my essay proceeds…

So the C.I.A went all over the world and engineered a fall in the price of oil. I can believe that. George Bush Sr., Reagan’s handpicked Vice Presidential running mate, was Director of the C.I.A. from 1976 to 1980, so Ron didn’t have to go far to find someone qualified for that kind of work.

They also managed to manipulate the price of gold. Knowing what I know now, that works for me too. But where did they get the gold to sell? It would take huge sales over an extended period of time to bring about the desired results. The effort between gold and oil was obviously co-ordinated at the highest levels. Gold sales could have come from more than one country or central bank, however my first thought was Canada’s gold…but was there any proof?

I made a list of information that I would have to get if I was going to be able to even come remotely close to linking Canada’s gold sales to “The Fall of the Soviet Empire”. Remember that when I started this essay (more than a year ago) I was not sure that there was any proof, or that any evidence would still be available. So, starting in the fall of 2001, I went to work.

The list included the following key facts:

1) A chronology of world events (involving the Soviet Union) from Ronald Reagan’s election as President, right up to where the Berlin Wall fell...or maybe even later.

2) The price of oil from 1980 to 2000

3) The price of gold from 1980 to 2000

4) Canada’s gold inventory from 1980 to 2000

5) The chain of events that started Canada down the road to selling it’s gold.

Item one was a lot of work. Thank heavens for search engines. Thanks to Adam Hamilton at items two and three were a snap. The good folks in the public relations department at the Bank of Canada in Ottawa were more than delighted to provide me with the answer to item four.

Then there was item five.

I was kind of hoping that the friendly folks at the Bank of Canada were going to have the answers to #5 for me as well, but that was not to be. Any questions of this nature had to be directed to The Department of Finance of the Federal Government.

Two e-mail enquiries spaced over two weeks only received the obligatory automatic answer that “they would look into the matter and contact me”. After a month of hearing nothing, I picked up the phone and called them. Yes, they had received my e-mails and were investigating, but it had been such a long time ago that they didn’t have any records available that went that far back. That was a pretty good answer, and there was probably a lot of truth in it. Another month went by.

The second time I called, and after talking to the public relations department again, I ended up talking to a person in foreign exchange who said that the Department of Finance did not need any authorization from the government to sell gold, as it was just another part of Canada’s reserve assets.

I was then transferred to someone in “risk management” who said they would get back to me.

It took more than three months of constant prodding, ten different people, and four different departments, to find out that the first record of any gold sales by the government was on page eight of John Crosbie’s budget speech in 1980. They could not provide a copy of that speech, but suggested that my local library here in Edmonton might have one.

But in the dying seconds of that last phone conversation with the “risk management” department, the person I was speaking to dropped a bombshell! We had spoken twice before, and he was a real decent and honourable fellow. This is what I remember him saying; “Well Ed, you may not be happy with the answer you got, but I can tell you that your enquiries regarding what happened to Canada’s gold, set off alarm bells all over the Department of Finance. There are two things that this department is extremely sensitive about, and that is one of them.” If he hadn’t said that, this article would never have been written.

From that point on, I knew I was on to something. I was also curious as to what the “other thing” was that the Finance Department was so touchy about. I’ll probably never know, but it’s painfully obvious that they’ve got another skeleton in their closet somewhere that they don’t want the rest of the world (or the Canadian tax payers) to know anything about.

The fine staff at the Edmonton Public Library were even more astonished than I was, that they had a copy of the speech. The next day it was in my hands, and true to their word, right at the bottom of page eight were the magic words. The golden trail that started with John Crosbie would end there. I knew that former Prime Minister Trudeau (who defeated the Clark government after John Crosbie’s budget) was never a fan of the United States at the best of times. Giving away Canada’s gold would not be something that he would he would consider even briefly, no matter what the cause.

But Brian Mulroney, the man who replaced Joe Clark as the new leader of the Progressive Conservative Party, and who became the Prime Minister of Canada on September 17, 1984 was a horse of an entirely different colour.

Before becoming a politician, Mulroney started life as a lawyer, and was President of the Iron Ore Company of Canada when he first ran for the leadership of the Progressive Conservative party. After many years of Trudeau, Mulroney was a pleasant change for all Canadians, including myself. Within the Conservative government, Mulroney worked hard to be a good leader, and for the most part he was. But when he failed at it, it was more to do with the kind of people who associated with him and worked in the Prime Minister’s Office that caused him the most problems. The liberal press did not help him or his party either. Where they would forgive Trudeau, they were all over Mulroney and the Tories like a cheap suit. Into his second term as Prime Minister it was obvious that his popularity was coming to an end.

Mulroney, like Trudeau, was an enigma. Trudeau was a brooding intellectual…not afraid to speak his mind, and would take anyone on…and never lose. Mulroney was smooth, a charmer, a glad hander…too clever by half…wanted to be liked. John Crosbie, on page 232 of his book says this about Mulroney… “Many Progressive Conservatives---most of them, probably---had serious misgivings about Brian Mulroney. We’d heard all the stories. We’d see the way he’d used drifters and homeless people to pack delegate-selection meetings, and we’d noted (unhappily) all the fawning cronies who hung around him, flattering him, waiting for scraps from the banquet tables of the state.”

“I’d known Brian years earlier, when I was in the Newfoundland cabinet and he was president of the Iron Ore Company of Canada. He would come to Newfoundland fairly regularly to deal with our government. He wasn’t my type---too smooth, too suave, too much the mover and shaker. He wasn’t someone I would naturally cotton to, and I was on guard whenever I met him. I didn’t trust him. I didn’t support him when he ran for the leadership the first time in 1976. The people around him struck me as “fixer” types, and there’s not much those types won’t stoop to if they think it’s to their advantage.”

As I said before, Mulroney and his Tories had their share of problems, which was not helped by the press. They were there to make sure that any open wound was constantly picked at, and never allowed to heal. This wore on him and his government after a while.

John Crosbie continues his comments on Mulroney: “Then there’s the fact that Mulroney started out as a working man’s son and he obviously came to enjoy the good life. He liked good clothes, good food, and having multi-millionaire friends. Mila, his wife, liked these things too, and she loved shopping. So what!”

Crosbie, of course, was absolutely right. We Canadians, living next door to the ultra-rich Americans have the world’s largest inferiority complex…penis envy on a national scale.

As Crosbie says…the Mulroney’s “were friendly and decent people with a lovely family. Their three children were magnificent, well brought up and well mannered. But the public couldn’t see all this. They got a very different impression from the media.”

But, like all of us (including this writer), Brian had his faults. To start with, he was not a forgiving type; and in the first few years of his term, “his problems stemmed from the fact that the traditional British-style, decentralized cabinet government that Canada practices, did not coincide with the American style of centralized “executive government” favoured by Mulroney and practiced (zealously) by his cohorts in the Prime Minister’s Office. They believed that all power flowed from the centre, from the office of the prime minister, and that the PMO could (and should) be directly involved in all activities of the government, with (or without) reference to the minister responsible. They regarded cabinet ministers as impotent appendages.”…John Crosbie “No Holds Barred” Page 249.

The people surround Brian Mulroney were “control freaks”. “The staff of the PMO treated the staffs of ordinary ministers as aristocrats used to treat servants---they were there, but they weren’t there. The PMO people were arrogant, heavy-handed, seldom thoughtful, and not particularly insightful.”…Crosbie adds, Page 255.

Being a loyal member of the Progressive Conservative party myself, I have met both Joe Clark and Brian Mulroney. I’d been to a couple of big fund-raising dinners for Brian when he was in Edmonton…still have the invitations…plus the Christmas cards that Brian and Mila (and Joe and Maureen Clark) sent out every year.

From personal experience, I would have to agree with Mr. Crosbie’s comments on Brian Mulroney when they first met in Newfoundland when Brian was still running the Iron Ore Company of Canada. But Mulroney was a very personable guy, and really wanted people to like him. He loved power, and he loved the limelight. I won’t fault the guy for that.

You may wonder why I’m giving you all this information about Canadian Prime Ministers from 1979 to 1988. Well, I’m trying to set the stage for something. It’s important that you know a fair amount about former Prime Minister Mulroney before I lay out the evidence I have collected. Canadians now hate this man with a passion. A great deal of this is totally undeserved, but history has already judged him, and found him guilty as charged. Too bad…he deserved better than that.

With the stage set, and your printed copy of “How the Soviet Empire’s Fall was Engineered” beside you, let’s rewind the clock back to March 1985.

What happened in March of 1985? There was a conference in Quebec City between our newly minted Prime Minister and President Ronald Reagan. Here’s what John Crosbie had to say about it on page 307 of his book; “I don’t know when Mulroney came to embrace free trade, but his support for the concept was revealed at his so-called Shamrock Summit with President Ronald Reagan in March 1985 in Quebec City, where the two leaders declared they would seek “a more secure climate for our mutual trade.” We’d been in office for six months by then, and there had been no discussion in cabinet or in the Conservative caucus about pursuing a free-trade deal with the Americans. As far as any of us knew, Mulroney was still opposed to free trade, as he was during the 1983 Tory leadership campaign.”

That’s John’s version. Here’s another written by John Lawrence of Southam News in 1999, fourteen years after the fact. Like I said before, search engines are the most wonderful things.

The Praises of Mulroney - Memos just released by the White House show the election of Mulroney marked a big change in relations between the two countries. The Reagan administration was delighted with Brian Mulroney when he was Prime Minister of Canada, describing him as “ideologically on our wave length”, and said that he should be thrown a bone or two to ensure he didn’t look like a “lackey” on his own turf.

Mr. Mulroney’s highly co-operative approach on trade and investment, military spending, and American foreign policy led Tyrus Cobb, a top Canada desk official at the National Security Council in Washington to write in 1985: “we have what amounts to a revolution in U.S.-Canadian affairs.”

George Shultz, then Secretary of State, called it “a potential watershed.”

The memos were among White House documents released under the U.S. Freedom of Information Act, eight years (emphasis is mine) after the request was made. They cover relations between Mr. Mulroney, Prime Minister from 1984 to 1993, and Ronald Reagan, President from 1981 to 1989.

The documents confirm that, in American eyes, Canada’s move from Pierre Trudeau to Mr. Mulroney was a change from the “worst of time to the best of times”.

An internal Security Council study prepared for Mr. Reagan said that Mr. Trudeau’s protectionist policies “led to a massive capital flight out of Canada”. The same study accused Mr. Trudeau of overseeing “16 years of neglect of Canada’s military structure”. As a result, Mr. Trudeau “sharply reduced Canada’s ability to play a security role commensurate with its resources”.

In minutes of a high-level meeting, Secretary of State Shultz described Mr. Trudeau as “particularly obstinate on North-South matters.” Memos decry his penchant for trying to play the role of “interpreter” between the Soviets and the U.S.

Many of the documents cover American preparations for the 1985 Quebec City meeting between Mr. Reagan and Mr. Mulroney, dubbed the Shamrock Summit.

A declaration of intent on liberalized trade was agreed to even before the summit took place. “The declaration on trade came together nicely and represents a major victory for the United States,” wrote Mr. Cobb.

Bill Brock, U.S. trade ambassador, expressed similar enthusiasm, telling Mr. Reagan at a cabinet session that the trade declaration was “an exceptional agreement” from the U.S. standpoint.

The Americans agonized about giving Mr. Mulroney something in return so that he would look good on his home turf. The matter is raised repeatedly in the memoranda, particularly in respect to the issue of acid rain.

“It is imperative that we demonstrate sufficient flexibility in Quebec on this issue to permit Mr. Mulroney to claim that he can influence our actions,” reads a memo to Robin McFarlane, National Security Council director. “Unless we can make some accommodations, Mulroney will be seriously embarrassed, public reaction in Canada will likely focus disproportionately on his failure, and his ability to deliver in the future on other issues of concern to us will be damaged.”

At the same time as they recognized that Mr. Mulroney did not want to be seen “as a ‘lackey’ of Washington,” the Americans were not exactly prepared to trade favours. “We will also wish to disabuse the Canadians of any expectations that recent policy changes which accommodate U.S. interest necessarily entail corresponding reciprocity from our side,” read the National Security Council study.

At Quebec City, the two sides appointed special envoys to study the acid rain problem. The Americans saw this as being enough to mollify Ottawa at that time. Mr. Reagan wasn’t convinced acid rain was a problem. At a National Security Council meeting he pointed out “we haven’t had air as clean as we now have for decades.”

The correspondence suggests that the two overriding priorities of the Americans were to drive Canada towards open markets and to push it towards a much larger military and defense role.

At a meeting on February 19, 1985, Richard Darman, deputy treasury secretary at the time, told Mr. Reagan “he should attempt to move the Canadians even further towards a market economy.”

The National Security Council internal report recommends, “the president may wish to put forward our view that a Canadian economy completely free and open to outside investors is a major avenue available for improving Canada’s economic situation.”

The Americans were delighted with Mr. Mulroney’s accommodations on military matters. They saluted him for increasing military spending and his “courageous” effort in supporting, unlike other NATO allies, some aspects of Mr. Regan’s Strategic Defence Initiative, or “Star Wars” program.

Minutes of a National Security Council meeting record that Mr. Reagan pointed out that “the Prime Minister recently announced a significant increase in Canada’s troop commitment to Europe---something on the order of 1,200 additional troops. This is the sort of positive direction we want to encourage with Canada. For that reason he (Reagan) indicated he was not inclined to lean too heavily on the Prime Minister in areas where they were not as forthcoming as we would wish, such as investment and energy.”

During the Quebec City summit, Mr. Mulroney called Mr. Reagan down on stage for their celebrated rendition of “When Irish Eyes are Smiling”. Briefing papers for Mr. Reagan didn’t specify the singsong would take place, but advised him to prepare for something. “In the last act, you and Mulroney will appear on stage with performers, so you might want to practice your ‘buck and wing’.”

Mr. Mulroney had come to power only seven months prior to the Shamrock Summit. As is indicated in a memo from Mr. McFarlane to Mr. Reagan on the eve of the summit, the turnaround in relations was not only sudden, but also unprecedented.

“Your trip should open a new chapter in Canadian-American relations, building on your excellent personal relationship with the Prime Minister. Mulroney has increasingly taken a pro-U.S. stance in foreign affairs and has been more forthcoming on many bilateral issues. The result has been the establishment of a greater degree of harmony in our ties that ever existed before.”

Please take particular note of that last paragraph. I remember the Quebec Conference (immediately dubbed “The Shamrock Summit”) like it was yesterday, as I knew at the time, that it redefined our nation’s future from what it had been under Prime Minister Trudeau, to what I thought it should be; and our new Conservative Prime Minister was leading the way.

It may not have happened during the conference, but the groundwork had been laid to bring Canada’s gold onto the world stage to play its part in the downfall of the Soviet Union.

In earlier commentary it had been noted, “A declaration of intent to liberalize trade was agreed to even before the summit book place.” So it was either at the conference, or very shortly thereafter…and it’s even remotely possibly that it could have happened before the conference…the plan to bring down the Soviet Union was presented to Mulroney. I’m only guessing at the details, but I’m sure that he spent a fair amount of time discussing this with both Ronald Reagan and Margaret Thatcher.

At that juncture, I’m sure that the sale of Canada’s gold would have been something that would have given Mulroney pause at the outset, especially if it had to be done without explaining the real reason to Canada (and the world) why Canada was selling it. These were probably the parliamentary arguments that I remember hearing back in the 1980’s when all this transpired.

But the thought of being a major player on the international stage in bringing down that “evil empire”…the Soviet Union, was too much to pass up for the “boy from Baie-Comeau, Quebec”…Brian’s home town. And even though his (and Canada’s) contribution could not be made public, “the powers that be” in the world would be more than happy to pat him on the back and hand out a few “attaboys” along the way.

How could he refuse? It fit his character like a hand in a glove. The U.S. certainly knew their man. No wonder they were “delighted” with Brian Mulroney.

But in all fairness, if it had been me in the same position, or anyone else for that matter, would we have acted differently? Probably not. If President Ronald Reagan (or Prime Minister Margaret Thatcher) were talking to me on the phone or in person, or if President Reagan were to put his hand on my shoulder and say, “Ed…Margaret and I, plus a few others in this world…including the Vatican, have hatched this plan to bring down the Soviet Union and destroy communism forever, and we need your help”…what would my probable response be? “You bet…what do you need?”

That this happened between Reagan, Thatcher and Mulroney is pure conjecture on my part. I do not have a shred of evidence that these conversations ever happened. But I highly suspect it.

Besides Dana Allen’s essay, here are the facts that I do have. The graph below shows three things. The black line is the price of oil from 1980 to 2000 inclusive, and is slaved to the right axis. The gold price (in yellow) and Canada’s gold inventory in metric tonnes (in blue), are slaved to the left axis.

As you can see, in 1980 the price of oil was well north of $30, gold around $670, and Canada was sitting on 660 tonnes of gold.

There are eleven numbers on the graph; each coincides with an important event in history, as it has to do with Soviet/American relations.

They are as follows:

1) March 23, 1983 Ronald Reagan introduces the “Strategic Defence Initiative”, now commonly known as “Star Wars”.

2) March 17, 1985 Ronald Reagan and Brian Mulroney meet at the Quebec Conference, now called the “Shamrock Summit”.

3) November 19, 1985 Ronald Reagan and Mikhail Gorbachev meet at the Geneva Summit.

4) October 11, 1986 Reagan and Gorbachev meet in Reykjavik, Iceland. Reagan says “nyet” and walks! The world is stunned.

5) December 8, 1987 This is the Washington Summit where Reagan/Gorbachev sign the INF (Intermediate Nuclear Force) Treaty.

6) May 29, 1988 Reagan and Gorbachev meet at the Moscow Summit

7) November 9, 1989 The Berlin Wall falls

8) August 19, 1991 Attempted coup d’etat against Gorbachev

9) December 21, 1991 The Soviet Union ceases to exist

10) October 4, 1993 The assault on the Russian “Whitehouse”. Russian troops put down a revolt against Yeltsin.

11) December 1, 1994 The Russian army invades Chechnya

What can we deduce from this graph? The two most obvious ones are that the price of oil and Canada’s gold inventory head south at the end of 1985, early 1986…especially the price of oil. The oil price cratered at virtually the same time as the Geneva Summit. If someone wishes to check out the summit date vs. the day oil price plunged, I would love to know. The timing appears to be beyond exquisite.

The price of oil declined to just over $10/barrel, and except for the Gulf War, was rarely over $20/barrel until the middle of 1996…a ten-year stretch. Don’t forget, that from 1980 to 1986, oil averaged well over $30/barrel, and was heading north of $30 again, until someone pulled the plug in late 1985.

Canada’s gold sales continued to accelerate, and by the end of 1987, began to have an effect. At that point, gold had reached a price of about $500/ounce and then started a steady five year decline that ended at the start of 1993 at a price of somewhere under $350/ounce.

From that point, gold rose quickly to almost $400/ounce, and stayed there until Robert Rubin showed up in Washington (with Lawrence Summer’s “Gibson’s Paradox” in his briefcase), and was sworn in as the 70th Secretary of the Treasury on January 10, 1995.

Oil prices continued to decline until the beginning of 1994, and rose after that.

But the damage had been done. From an oil price averaging over $30/barrel in the six years prior to the Geneva Summit, to an average oil price of about $18/barrel in the ten years following that; was a huge drop. And for a cash-strapped country that counted on oil and gold for its hard currency…in a race against President Ronald Reagan’s “Star Wars” program…it proved fatal.

The gold price is a little harder to read then oil. But if you look at late 1984 as a bottom for both oil and gold, it is plain to see that the recovery in oil prices was aborted in late 1985, followed by gold in late 1987, as the trend lines were obviously up at the time.

The co-relation of oil to gold has a long history of fact. Adam Hamilton at his web site of has many examples of this relationship. His two essays regarding “Gold Boiling in Oil, Parts I & 2” shows the graphs and tells all.

We are all keenly aware how this relationship has fallen apart in the last number of years. But until now, there has been no explanation as to why this relationship fell apart starting at the end of 1985. I believe that I may have a large part of the answer here.

After the “crash” in oil prices at the end of 1985, the gold and oil re-establish the gold/oil relationship, but with the oil price at a large fraction less than where it was prior to that. Then from the later part of 1988 to late 1996, there is virtually no relationship at all.

So was this “How the Soviet Empire’s Fall was Engineered”? Remember it was John Browne, Prime Minister Margaret Thatcher’s Foreign Policy Advisor who was giving this speech to a very select group where Dana Allen, the President of America Media Revolution ( was present. And as Dana said… “The conclusion of the speech was that it worked, and the Soviets ran out of money and fell.

It should be remembered that throughout the entire chain of events starting with the Geneva Summit in November 1985, Ronald Reagan’s presidency ended on January 20, 1989 when Vice President (and ex CIA Director) George W. Bush Sr. became president, and after him, Bill Clinton became president on January 20, 1993. All during this time the price of oil averaged well under $20/barrel and Canada’s gold inventory kept declining.

Here in Canada, the Conservative Party had changed leaders. On June 25, 1993, Kim Campbell took over as leader of the P.C. party, and she and the Conservatives were virtually annihilated in the following Federal election that brought the Liberals (under Prime Minister Jean Chrétien) to power on November 4, 1993. Both Canada’s heavy selling of its gold, and world oil price declines ended in 1994.

So there you have it. Who am I to argue with John Browne…or Dana Allen? The “powers that be” that run this world used oil and gold as a weapon against the former Soviet Union. I wonder if the oil producers and gold miners of the world had any idea that their products were being used as such.

To this day, the price of oil and gold are still being controlled and used as weapons of both domestic and foreign policy. Robert Rubin and Larry Summers have seen to the gold price in support of Clinton’s “strong dollar” policy, to hide domestic inflation at home, and to mask the upcoming collapse of the world’s fiat-based currency system. Both times in the last couple of years that Saddam Hussein has stopped shipping crude oil, the price has crashed. Check out Adam Hamilton “Saddam-ized Crude” for more details. This manipulation of the oil price under these circumstances was a clear warning to Saddam and others who might try to use oil as a weapon that this sort of behavior would blow up in their faces.

American forces going into Afghanistan after 9/11 had a lot to do with oil…especially pipeline rights-of-way. For the moment, this didn’t work out as well as they had hoped, so they have now concocted a new “enemy of the state” in Saddam Hussein and Iraq. See my “War Drums” essay for further details on that.

What we are looking at are “the powers that be” backed by British and American (and Israeli) military might, pushing for control of the world’s oil supply to the detriment of the people who already have legal title to it. It is raw, naked power…ruthlessly projected. The United Nations Security Council has just approved the plan, which means that this whole farce is now turning out to be little more than ‘legalized’ stealing. Public opinion be damned.

We were all wondering about America’s lack of a coherent energy policy…well, this is probably it…along with whatever plans they have for Kuwait and Saudi Arabia…and then Iran.

It looks like George Bush and Dick Cheney have been brushing up on Samuel P. Hungtington’s epic work “The Clash of Civilizations” and have their action plan ready to go. After the events of 9/11…which a lot of people feel was allowed to happen…it didn’t take long for the drama to begin unfolding, and they are now taking the fight right into front yard of the Islamic countries.

G. Edward Griffin in his epic work “The Creature From Jekyll Island” describes in minute detail the “aggravate, insulate, facilitate” mechanism that “the powers that be” have used in the past with respect to both the sinking of the Lusitania that brought the United States into WWI, and how they placed Japan in the untenable position where they were forced to attack America at Pearl Harbor…and it looks like they’ve used this mechanism again to build support for the war on Islam.

I wonder if this is the reason that the Golden Dinar and Silver Dirham have suddenly popped up? Just asking.

But, I digress...

Let’s get back to Canada’s gold for a moment. Even though sales of our gold dropped off substantially after 1994, our inventory declined every year after that, to where it is today...around 35 tonnes at the end of September 2002.

In my conversations with the good folks at the Bank of Canada earlier this year, they advised me that Canada does not really own this gold at all (at the time we had about 40 tonnes). What was left of it had been leased out to various bullion banks years ago…and yes, it is being accounted for as requested by IMF accounting rules regarding leased gold. Canada’s gold cupboard is bare…not a 400 oz. good delivery bar in sight.

So, even with a change of government from the Conservatives to the Liberals under Prime Minister Jean Chrétien, who came to power on November 4, 1993, the Finance Department (and the Bank of Canada) have continued to sell off what little remained of Canada’s gold reserves.

Former Prime Minister Brian Mulroney wasn’t looking for work for very long. His political career came to an end in June of 1993 when the ill-fated Kim Campbell took over as Prime Minister and leader of the Progressive Conservatives. Very shortly thereafter, Brian was appointed to the board of Barrick Gold. He is currently Chairman of the prestigious International Advisory Board.

The people who have come and gone on this advisory board are a real “who’s who” of the political and financial world. To find out who is (and has) been on the board for the last five years, check out their archives of annual financial statements at Some of the names are pretty well know to me, and some aren’t. I would suspect that other readers of this essay would easily identify the names I don’t recognize.

As a “for instance”…former President George Bush (Sr.) was appointed to Barrick’s board as “Honourary Senior Advisor” on May 3, 1995. He held this position until sometime in 1997. Another person appointed to Barrick’s board on that day was Bill Clinton’s personal lawyer…Vernon Jordan. He’s still there.

As another interesting coincidence in this golden odyssey, it’s my understanding that Barrick’s favorite derivatives partner is that rock solid financial institution, J.P. Morgan. Their offices in Toronto are five floors below Barrick’s in the south tower of the Royal Bank Plaza.

The story of the price of oil and gold as related by Mr. Browne in Dana Allen’s story certainly is enlightening. From the Geneva Summit to the invasion of Chechnya, it is an incredible tale of international intrigue and financial subterfuge.

If Canada’s gold was instrumental, it is certainly understandable why neither Brian Mulroney nor his finance minister, Michael Wilson, would want to talk about it publicly. It would not have been helpful for our trading relationship with our ‘Soviet comrades’, if either of these esteemed gentlemen had risen in the House of Commons and announced that Canada was selling its gold in an internationally co-ordinated effort to bring an end to communist regime in the U.S.S.R.

I wonder if this is the other “skeleton” in the Finance Department’s closet. I thought it was bad enough when Reg Howe pointed out the skeleton in the new Bush administration’s closet, but there’s a chance that we here in Canada have a golden skeleton of our own.

Is there any truth to any of this? Is Brian…and by extension, all of Canada…a hero/heroes, for doing his/our part back then? Depends who you ask I guess. I’m sure that the government and citizens of both Russia and the United States would have varying opinions.

But even more importantly, does the truth pass the duck test, and how does it make out on the smell test? Check the facts again…mine and Dana’s.

My decision is already made. You’ll have to draw your own conclusions.

Ed Steer
Edmonton, Alberta

Copyright 1999 - 2017 Le Metropole Cafe. All rights reserved.