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An informal arrangement of "gentlemen's agreement" established in the autumn of 1961 among the U.S. and the seven major industrial nations of Western Europe (Belgium, France, West Germany, Italy, the Netherlands, Switzerland, and the United Kingdom) that provided for the central banks of these nations to share the burden of intervention in the London gold market in order to keep price fluctuations within a reasonable range. The Bank of England was appointed operating agent with authority to draw on the pool of gold contributed according to agreed quotas, the U.S. taking a 50% share in the consortium.
As characterized by the U.S. Treasury, the Gold Pool was one of the first of many co-operative multilateral arrangements to be worked out during the 1960s to deal with speculative attacks on the markets involving gold and currencies. The pool continued to operate in the markets from late 1961 until mid-March of 1968. Until the devaluation of sterling in November, 1967, it is considered to have successfully carried out its objectives of smoothing out market movements and providing an orderly way for residual supplies of newly mined gold to enter the monetary system.In March, 1968, the pool supplied another $1.5 billion to the gold market in efforts to cool off the "gold fever," but this was not effective in restoring stability. Therefore, with the new special drawing rights of the international monetary fund close to agreement, the central bank governors of the seven active member nations of the then existing Gold Pool agreed on the two-tier system of gold transactions, under which the central banks involved generally have neither bought nor sold gold in private gold markets. By the close of 1969, the London market price for gold was back to about the official level ($35 per ounce), reflecting observance of the two-tier agreement by central banks, and resolution of the remaining question of handling of newly mined South African gold and reserves within the two-tier system.
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