You are here
Three disastrously false but enduring premises about gold
4:47p ET Friday, June 14, 2013
Dear Friend of GATA and Gold:
Commentary about gold suffers from a few disastrously false but enduring premises.
One, perpetrated famously two years ago by Federal Reserve Chairman Ben Bernanke, is that central banks hold gold not because it's money but because it is just an "asset" and "tradition":
http://www.youtube.com/watch?v=2Dj9v9s9buk
Bernanke must dearly wish that it were so. But the Bank for International Settlements confirms otherwise, that gold is "a financial instrument":
http://www.gata.org/node/11502
Another disastrously false premise is that gold doesn't pay interest. But gold pays interest just as money does -- when it is lent:
http://www.kitco.com/lease.chart.html
In commentary posted today at Resource Investor, the financial letter writer Przemyslaw Radomski repeats another disastrously false premise -- that "gold cannot be printed or manufactured."
... Dispatch continues below ...
Is your gold safe, secure, and guaranteed?
Why storing it in Canada may be right for you
Canada is one of the safest places to store bullion because of its prosperity and economic and political stability. By vaulting your bullion with Sprott Money's Canadian storage program, you guarantee that your metals are stored securely and privately with little risk.
-- We store with Brink's, a private and non-bank storage facility renowned for its integrity, security, and efficiency.
-- Your precious metals will be safe under the protection of Brink's world-class technology and infrastructure.
-- Your precious metals will be fully insured by Brink's and Sprott Money. In the unlikely event of loss, theft, or physical damage to your metal, you will be fully compensated.
Sprott Money is a recognized and trusted name in the precious metals industry. For more information, please visit:
http://www.sprottmoney.com/store-with-us
In fact, of course, gold can be printed to infinity thanks to "paper gold," the issuance of claims to gold that doesn't exist, claims against bullion banks that are never exercised and probably cannot be honored without supportive dishoarding and leasing from central bank gold reserves:
http://www.gata.org/node/12016
Working from this false premise, Radomski proceeds to try to answer the question "Have gold and silver stopped responding to the dollar's price action?" without ever considering the likely price-suppressive effect of "paper gold":
http://www.resourceinvestor.com/2013/06/14/have-gold-and-silver-stopped-...?
Indeed, this is the longstanding disparagement about gold in recent years -- that even with its great appreciation over the last decade, the gold price has not kept pace with inflation, even as other tangibles have kept pace and even as there has been no substantial increase in gold mine production.
But somehow Radomski has managed to write a long commentary about the prospects for gold, complete with charts, without ever mentioning the involvement of the gold market's largest participants, central banks, and their agent, the Bank for International Settlements, which appears to be trading gold, gold options, and gold derivatives on their behalf every day --
http://www.gata.org/node/11622
-- and which even advertises secret gold market interventions as being among its services to its members:
http://www.gata.org/node/11012
http://www.gata.org/node/11257
Given such surreptitious trading and intervention, if gold, as Radomski wonders, has stopped responding to variations in the value of the U.S. dollar, the explanation is not likely to be found in his or anyone's price charts, which are mere holograms being projected onto what only used to be markets, interpreted by what only used to be financial journalists, writers whose first principle seems to have become: Never put a critical question to the primary source.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
Join GATA here:
Liberty Mastermind Symposium
Double Tree Hotel, Dallas-Fort Worth Airport
Friday-Saturday, June 28-29, 2013
http://www.libertymastermind.us/
* * *
Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006:
http://www.goldrush21.com/order.html
Or by purchasing a colorful GATA T-shirt:
Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:
http://gata.org/node/wallstreetjournal
Help keep GATA going
GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:
To contribute to GATA, please visit:
