Who can refute Ned Schmidt's sneer?

12:01a ET Wednesday, October 14, 2009

Dear Friend of GATA and Gold:

"Who," the old philosopher asked, "can refute a sneer?"

That is, a sneer is not an argument, and not being an argument, it is not so much beyond refuting as beneath it. But a sneer still may be worth noting for impugning the sneerer, suggesting that he is not willing to argue or not capable of argument.

That's the story with the commentary posted Tuesday at Kitco by Ned W. Schmidt, publisher of the Value View Gold Report, who writes: "Those fanning emotions with stories about cabals, price suppression, and manipulation may now have to find some other drivel to peddle. GATA, the Gullible And Truly Amateurish, has now firmly been proven a purveyor of fantasy."

Of course Schmidt declines to address any of the specific documentation GATA has pressed over the years, most recently the Federal Reserve's own written admission that it has gold swap agreements with foreign banks that must not be disclosed:

http://www.gata.org/files/GATAFedResponse-09-17-2009.pdf

Has Schmidt tried asking the Fed about these gold swap agreements and their purposes? His commentary doesn't say. But his sneering indicates that he follows the first principle of mainstream financial journalism: Never put the right question to the right person.

Schmidt goes on to produce bank credit data to argue that deflation is now a greater risk than inflation. Indeed it may be, and some gold advocates would prefer it that way. But Schmidt overlooks a point often made by GoldMoney founder and GATA consultant James Turk: that inflation can result even as supply of a currency falls if demand for that currency falls faster. And surely a few countries with huge surpluses of ever-more-suspect dollars are in a position to return them to the United States to offset any decline in the domestic money supply.

That is, data on charts doesn't tell the whole story in markets today, or even half of it, for today there isn't much left of markets. No, today what are quaintly perceived as markets are actually just the fields where political decisions manifest themselves. To determine whether there will be inflation or deflation in the United States, one can't stop with the charts; one must also get inside the heads of political leaders and central bankers in Beijing, Tokyo, Moscow, Seoul, Singapore, and even a few European capitals. And if Schmidt hasn't bothered to call the Fed, what are the chances that he has called anyone abroad?

For whatever it's worth, you can find Schmidt's commentary, headlined "Schmidt's Gold Thoughts," at Kitco here:

http://www.kitco.com/ind/Schmidt/oct132009.html#

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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