This is probably the only "unknown" Bible manuscript where the question of genuineness has not yet been fully determined. The story is quite complicated but nevertheless interesting enough to merit an attempt at explanation.
One reason to give some small credibility to this alleged document is that the find was made by a renowned Bible scholar, professor Morton Smith of Columbia University, New York. Another reason is that he does not claim to have found the actual gospel document, only traces of it in a letter -- which is nevertheless very interesting if it can prove that an otherwise unknown gospel once existed.
In 1958 Smith visited the St Saba monastery in the desert of Juda, some 20 km southeast of Jerusalem. The monastery library is not normally open to visitors, but Smith was given a special permission to work there for two weeks in order to study and catalogue the manuscripts. Among the books was a copy of the Ignatius letters in the printed edition from 1646. On the two last blank pages and the inner back cover Smith found the document we are talking about here.
In Greek lettering of the type used in the 18th century, someone has written what seems to be a letter from Clemens of Alexandria (ca 200 AD). Smith photographed the pages. Since he left the monastery, no more visitors have been allowed and the manuscript has not been seen again. A linguistic analysis of the text indicated that it was consistent with other known letters by Clemens; his choice of words, the structure of the text and other circumstances confirmed that it might be genuine.
Here is where it gets complicated. The purpose of the letter is to denounce alterations (a Biblical hoax!) which have been made by a Gnostic sect to a gospel text. The text from this gospel is quoted (with the alterations) and the errors are pointed out. What makes this letter interesting is that the quoted gospel text is otherwise unknown. The question was raised whether this was a fragment of an old, lost gospel manuscript, perhaps a source used by the Biblical writers?
The alterations which Clemens accuses a Gnostic sect (the Karpocratians) of making are such that the media made a big sensation of the find. Fat headlines pronounced that a manuscript had been found which proved that Jesus was a homosexual, a magician, a libertine and a practitioner of religious ecstasy. Smith himself actively contributed to the sensationalism and probably made a few bucks with books and articles where he exaggerated the importance of the find. Smith's conclusions from the fragment are far-reaching and in the opinion of most other scholars, far-fetched. You need a very vivid imagination to draw these conclusions from the text as it stands. It has also been pointed out that Smith was an ex-Christian, a man disgruntled with his religion and possibly with a desire to paint a shocking image of Jesus, to annoy the Christians.
There are three possible explanations for the manuscript:
A textual analysis of the alleged gospel fragment reveals that it consists of short, isolated quotes from the gospels of Mark and John, assembled together to form a story. If the manuscript is not a hoax by Smith, this would indicate a later date, possibly an edition combining those two gospels, written later than them, possibly in the 2nd century. However, the combination of quotes from Mark and John gives a strange impression, the context is lost and many expressions become nonsensical in the story such as it is told. In other words, the genuineness of the document is very questionable and no final verdict can be made until the actual manuscript is produced.