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Gold investment risks are higher in countries without U.S. currency swaps, Marin Katusa says
10:53p ET Tuesday, June 23, 2020
Dear Friend of GATA and Gold:
Where has market analyst Marin Katusa been for the last 50 years?
The question arises because of his commentary posted today at OilPrice.com. It's headlined "The War on Gold Has Begun":
Has Katusa never heard of the London Gold Pool of the 1960s, or the gold sales by the United States and International Monetary Fund of the 1970s, or the Bank of England's gold dump of 1999-2002, or the various admissions by central bankers summarized by GATA here --
-- or the surreptitious intervention in the gold market undertaken every month by the Bank for International Settlements, intervention that now stands at a three-year high?:
What's Katusa going to tell investors next -- that Japan has attacked Pearl Harbor?
... Dispatch continues below ...
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Even so, maybe Katusa's belated acknowledgment of the war on gold is progress, since maybe now discussion about it will be allowed at the Cambridge House financial conferences in Canada (presuming, of course, that in-person financial conferences ever resume), those conferences having prohibited GATA's participation ever since Katusa took over the company a few years ago.
And Katusa's commentary today also may be worth noting for his contention that U.S.-based gold-mining companies will be in greater danger of higher taxation and expropriation in countries that have not been given currency swap lines by the U.S. government.
Such swap lines have been given to 15 countries, Katusa notes, and his premise is that being so obliged to the U.S. government, those countries won't dare to mess with U.S.-based companies. But countries without currency swap lines with the U.S., Katusa contends, may not care about alienating the U.S. government by expropriating U.S.-based gold-mining companies.
There may be something to this hypothesis, but it strikes your secretary/treasurer as weak. For if gold goes to the moon in some sort of international currency reset, it is hard to imagine any country, regardless of U.S. swap lines, not at least revising upward its mining royalty requirements.
But even then there might be plenty of money for the miners and their host governments alike. After all, governments are not terribly skilled at managing industrial operations -- even communist China, whose government is said to purchase all domestic gold production, permits some foreign investment in its gold mines.
And upon a price reset how secure would gold mining be even in the United States? After all, the U.S. government already has attempted gold confiscation once, in 1933, and in 2005 GATA extracted from the U.S. Treasury Department what may be the only definitive statement of its current position on confiscation, which is not exactly reassuring:
That is, the Treasury Department says that under the Trading With the Enemy Act of 1917 and the International Emergency Economic Powers Act of 1977, upon proclamation of an emergency by the president, the department can seize or freeze any gold or gold-related asset.
The Treasury official conveying this position urged GATA not to get too paranoid about it, because, he added, under those same laws, upon a proclamation by the president, the department can seize or freeze any damned thing it wants.
That interpretation of the law is not exactly why "The Star-Spangled Banner" hails "the land of the free and the home of the brave," but similar laws are in place in other countries, and many countries might undertake expropriation quite without reference to law.
So Katusa's premise about swap lines insuring certain gold mine investments may be worth keeping in mind.
For whatever it may be worth, your secretary/treasurer's premise is that you should acquire all the monetary metal you can, find a safe planet to keep it on, and, when you do, call me so I may join you.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
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