Greenspan vs. gold's anti-salesman

1:38p ET Thursday, September 16, 2010

Dear Friend of GATA and Gold:

An editorial in yesterday's New York Sun reports on remarks made about gold that day to the Council on Foreign Relations by former Chairman Alan Greenspan, who is quoted as saying:

-- "Fiat money has no place to go but gold."

-- And, "If all currencies are moving up or down together, the question is: relative to what? Gold is the canary in the coal mine. It signals problems with respect to currency markets. Central banks should pay attention to it."

The phrase "canary in the coal mine" is, coincidentally, the one used about gold for many years by GATA Chairman Bill Murphy. That Greenspan should pick up Murphy's phrasing may puzzle mainstream gold market analysts like Kitco's Jon Nadler, who insists that central banks have "no interest" in interfering with the gold market.

But of course over the years Greenspan many times has acknowledged central bank interest in the gold market and even central bank interest in manipulating the gold market, such as his famous testimony to Congress in July 1998 that "central banks stand ready to lease gold in increasing quantities should the price rise" (http://www.federalreserve.gov/boarddocs/testimony/1998/19980724.htm) and his musing at the May 1993 meeting of the Federal Open Market Committee about the potential for central bank gold sales to change the psychology of the gold market, remarks disclosed and analyzed by GATA consultant Dimitri Speck here:

http://www.gata.org/node/8208

So with Greenspan's remarks this week to the Council on Foreign Relations, Nadler is once again contradicted about the most import factor in the gold market, the interest of central banks in controlling the price of a competitive currency that profoundly influences not only currency values but interest rates and the value of government bonds and equities generally.

You can find the New York Sun's editorial quoting Greenspan's latest remarks, headlined "Greenspan's Warning on Gold," here:

http://www.nysun.com/editorials/greenspans-warning-on-gold/87080/

Though Kitco is nominally in the business of retailing precious metal, Nadler has spent years as a sort of anti-salesman there. While he always maintains that investment portfolios should include gold, he never advocates buying it now. With Nadler there's no danger of being misled by the enthusiasm that infects real estate, where "now" is always the time to buy. With gold's anti-salesman, the time to buy has not yet arrived or is so far in the distant past that it might be remembered only by those who helped British Chancellor Gordon Brown empty the Bank of England's vaults to rescue the short-squeezed bullion banks.

Having perpetrated most of them, Greenspan knows all the tricks of central banking and is now an adviser to the Paulson & Co. hedge fund, which taken a huge position in gold. Apparently the anti-salesman didn't dissuade them from finding a time to buy.

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

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