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Gold and Fortress America
Hullo GATA Egroup!
I hope you will come back at me on this G O G A T A VIEWPOINT,
or come forward with your own G O G A T A VIEWPOINT on current
affairs as they effect gold supply and the gold price.
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THE U.S. AND U.K. WANT THE I.M.F. TO SELL OFF MORE GOLDTO WHOM?
The finance ministers of the G7 countries are meeting in Bonn today,
with world debt, the potential for further meltdown, and gold on the
The latest word from Midas (Bill Murphy, GATA chairperson) at the James
Joyce Table, www.lemetropolecafe.com, is that the finance minister from
Britain, Gordon Brown, is going to propose that the I.M.F. sell more
than five million ounces of its gold, to "provide debt relief for the
poor." What hypocrisy. Debt relief from the I.M.F. is presented as aid,
but is in fact new debt with which to service old debts. If anything, it
is a gift to the I.M.F. itself and the U.S./Japanese/European banks that
own the debt being serviced. No, what Gordon Brown is really after in
Bonn is to support those who would suppress the price of gold, among
them Robert Rubin. RR is at the G7 meeting in his official capacity as
U.S. treasury secretary, but also as champion of the Wall Street
investment houses, led by Goldman Sachs, his old firm.
"There has never been any doubt that the British officialdom is strongly
in the bear camp" about gold, Midas writes. "They are certainly
determined to do what they can to keep the price of gold down. GATA is
just as determined to let the world know how short the gold-borrowing,
colluding crowd really is, so that we get the price of gold up. Should
be quite the battle. It is nice that we have the truth on our side."
The World Gold Council recently put out its gold demand report showing
strong physical demand for gold. The fourth quarter of 1998 was the
strongest quarter ever for gold demand, and 6 percent above the fourth
quarter of 1997. The supply/demand deficit is growing. "Where are new
supplies coming from?" Midas asks.
I have taken a look at the gold holdings of central banks and the I.M.F.
again. Remarkably the I.M.F. holdings, at some 104 million ounces, are
about 900 million ounces down from what they were in 1983. That year the
I.M.F. was holding over a billion ounces and gold was selling at from
$380 to $511 -- prices that, adjusted for inflation, were at least
double what they are today. That may give you a feel for what today's
prices could be, were it not for the machinations of speculators wanting
a cheap gold carry.
An interesting question: What has happened to the 900 million-plus
ounces that the I.M.F. has offloaded since 1983? After all, 900
million-plus ounces is equal to almost the total gold reserves of all
central banks today, and it is some three times the also-dwindling U.S.
That's a lot of precious metal.
An economist friend in Canada is sure that the I.M.F. has lost much of
its gold to the Bank for International Settlements (BIS), and I think
she is partly right. One does not hear much about the big gold franc
holdings of the BIS, nor indeed much about the role of the BIS, as
controller of the world's money system -- officially on behalf of 35
central banks, but more realistically on behalf of the top 10 national
G10 central banks of the world.
One hears much talk about dollar imperialism, but who is actually
orchestrating that imperialism for whose benefit? The U.S. government,
one assumes, for the benefit of the people. But no. The people of the
United States may be the real victims (from the hindsight of history) of
their own currency -- having been hoodwinked into a fool's consumer
paradise, to soak up the surplus production of other nations.
President Clinton, and, you know, the whole bag of rattlesnakes, the
whole can of worms -- all this is not part of the American vision at
heart but is part of the transnational world disorder of a very small
coterie of people from many different places, people who, you may be
sure, have growing interests in gold.
In gold terms, the real money power was with the United States after
World War II, when the United States had more than two-thirds of all
central bank holdings. Then the power shifted to the IMF, which in the
1970s may have held more than all the central banks combined. Through
the 1980s and '90s the power shifted again, now into private hands and
to the BIS, which has gold holdings equal to more than twice those of
the United States and more than 50 percent of those of all central banks
My friend from Canada (by name, "backseat driver") writes: "I think,
from what I've read, that the IMF, got 'uppity' and had plans of
replacing the B.I.S. as Central Bank of Central Banks, so there might be
a feud going on twixt the two. Remember it was the Bretton Woods
Conference that was responsible for the IMF. Whereas the B.I.S. was a
creation of the Young Act in 1930, it's stated purpose being to manage
German War Reparation payments and schedules. It's first President (how
interesting) was Paul Warburg, the "father" of the Federal Reserve Act,
its first Chairman, and who was run out of office because of his
financing of the bolsheviks."
This is a subject I will be looking into more fully for you in the next
weeks; along with "backseat Driver" I trust.
Meanwhile, back at the money ranch in Bonn, the servants to the world's
misfortune are at this moment perhaps talking very seriously indeed
about the growing demand for gold.
What is actually happening, as I see it, is that the real power behind
money -- the gold power -- is to some extent being centralized in the
BIS, as the world's bankers have long planned that it should. But it is
also slipping out of the hands of these bankers into the hands of a new
generation of speculators, East and West, and probably more in the East,
who are riding on the back of the pension funds and so forth that are
fuelling the global stock and bond markets. This new generation of money
makers will use banking services, but have no big plan for the world
like the Rothchilds and Rockefellers and other Bilderburgers have had.
What this new lot care about is how to organise a soft landing for
themselves on a gold floor after riding high with the credit bubble.
Boudewijn Wegerif, GATA Egroup Moderator
Here follows another G O G A T A VIEWPOINT about the G7 meeting of
Finance Ministers in Bonn today-- From David Kieffer McGarvey
(DKMCG@prodigy.net). I have added a comment from my economist friend in
Canada ("Backseat Driver") that should interest you.
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GREENSPAN AND RUBIN MUST UNDERSTAND "A CHANGE IN TREND"
U.S. Treasury Secretary Robert Rubin has stated that the United States
will oppose any move to target currency rates or manage exchange rates,
saying defense of currency levels could lead to higher interest rates,
which could stunt growth.
Please disabuse me of this notion if I am incorrect, but it is my belief
that the U.S. dollar price of gold is being managed by the central bank
so that gold is confined to a narrow band around the dollar. The German
proposal sets up target areas, within which the dollar, yen, and euro
would fluctuate. Japan backs this idea.
I believe that this proposal would be a hinderance to U.S. dollar
imperialism, as it would establish a definite relationship between the
major currencies and therefore make any adjustment to the price of gold
much more difficult, as the gold managers would have to ride herd on all
three major currencies, rather than the dollar alone.
Rubin says currencies should be managed through the use of fundamental
income policies that create demand-driven economies. To me, this means
that he is hoping that Europe and Japan will want to copy our
debt-driven society to the extreme levels we are seeing in every facet
of life. Had such bands been in place throughout the world, the world
currency situation might well be a good deal less serious.
I believe that Rubin and Federal Reserve Chairman Greenspan and their
advisers must learn to understand the the concept of "a change in
trend." Whether it is currencies, gold, or share prices, a change in
trend is not something to fear. It is only when managers are hell-bent
on the continuation of the present that trouble arises.
At such times I like to think of my favorite comment from Abraham
Lincoln, made just before his assassination: "Corporations have been
enthroned, an era of corruption in high places will follow, and the
money power of the country will endeavor to prolong its reign by working
upon the prejudices of the people, until the wealth is aggregated in a
few hands and the Republic destroyed."
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BACKSEAT DRIVER COMMENTS:
The US dollar price of gold floats free, supposedly through the factor
of supply and demand, but really through manipulation (hoarding etc).
The US Government has set an official price on gold and that official
price hasn't changed since Nixon. It was originally $32 per ounce in the
1930's. I think it is now $42 per ounce. What that really means is, if
the government decides again to confiscategold as it did in 1933, all it
has to pay is $42 per ounce to the holder of the gold. Otherwise the
Central Bank does not manage the price of gold. All the Central Bank
does is manage the credit of the nation, by setting interest rates and
fixing reserve levels.
Come on all you G O G A T A s out there, let's have your VIEWPOINTS!