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Welcome to USAGOLD's "Gilded Opinion" pages. We invite you to browse our index of outstanding gold-based commentary. Each article or essay is selected on the basis of its long-term relevance for understanding the role gold plays in the individual's portfolio, the overall political economy, or both.
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Speech: Gold is magnificent at the
museum but is no museum piece
By Chris Powell
Educators' Evening -- Gold Exhibition
American Museum of Natural History
79th Street at Central Park West
New York, New York
Wednesday, December 6, 2006
I was touched by your invitation
because 50 years ago my beloved great aunt would bring me to this
wonderful place and the Hayden Planetarium. (Tonight I have brought
my daughter with me in the faint hope that someday she also may
think well of her father.) You have instilled in generations of
young people a great wonder about the natural world and the love
of learning. I'm lucky to have this chance to thank you.
Your gold exhibition is magnificent, but its inevitable implication
is that gold is an antique, a museum piece, a relic -- like the
dinosaurs just down the hall.
To the contrary -- gold
is central to the world financial system even today, even
as the shroud of antiquity is so painstakingly woven around it
to deceive. Indeed, gold is not just central but the very center
of the world financial system.
Why is this?
The question was examined by the Gold Anti-Trust Action Committee
in August 2005 at its Gold Rush 21 conference, held in Dawson
City, Yukon Territory, Canada, scene of the gold rush of the late
1800s and early 1900s. I'd like to show you a brief video of excerpts
from that conference.
Gold is at the center of things even now because it is, has been,
and probably always will be MONEY -- and not just money but the
only independent money, the only money of intrinsic value, the
only money that is not also someone else's liability, the only
money that, once in possession, cannot default.
As such gold is the deadly competitor of the money issued by governments.
Every bit of strength in government currencies comes at the expense
of gold, and every bit of strength in gold comes at the expense
of government currencies. That is, gold is a measure of inflation,
monetary debasement.
Governments always have been at war with gold to some extent --
the more so since the 1970s, when the International Monetary Fund forbade member nations
from fixing their currencies to a fixed amount of gold, thereby
escaping gold's restraint on the money supply.
This gold war intensified in the 1990s as Western governments
began to dishoard their gold reserves or lend them, openly and
surreptitiously, to suppress gold's price.
If we had more time tonight or if anyone here was interested,
I could review with you the mechanisms by which governments lately
have been suppressing the gold price -- or, to be more accurate,
controlling the rise of the gold price as the central banks begin
to exhaust their gold reserves.
Maybe it is enough to note that annual gold mine production is
estimated at 2,600 tonnes and is FALLING, while annual world gold
demand is estimated at 3,600 tonnes and is RISING. That gap of
about 1,000 tonnes is being filled only by central bank dishoarding
and lending. Central banks claim to hold 32,000 tonnes of gold
but much and perhaps most of that has been sold or lent out and
for practical purposes is simply gone. This year central bank
gold sales began to decline -- and the price of gold rose sharply.
That is, gold is remonetizing itself, despite the great pressure
against it from the central banks, because the ratio between the
gold supply and the supply of government-issued money and money
substitutes is now so explosively out of whack.
When central banks stop their dishoarding or simply run out of
gold, there may not be enough zeroes to put behind the gold price
-- for gold is the world's refuge from the vast monetary debasement
that already has been accomplished.
The next gold
rush is already under way.
Is this gold rush good or bad?
From the previous speakers tonight we have heard a lot about the
environmental damage that can be done by gold mining. There's
no denying it. I saw some of it myself in the Yukon last year.
But we don't hear about the damage done to the world by the CURRENT
financial system, a system of virtually infinite money and inflation
so rampant that government must constantly change its consumer
price index formulas and even then must falsify the data.
Don't believe me? Then, if you own your own home, calculate the
increase in its value over the last five years and see how it
compares with a Consumer Price Index of only 2 percent. Then ask
yourself about the half of the population that has been priced
out of home ownership by inflation in that time, priced out by
the great gap between the increase in housing prices and the decline
in real wages.
But housing is only a small part of it.
The gold issue is actually just the old issue of money, which
was the main political issue of the United States a little more
than a hundred years ago: What IS money? How much should there
be? Who should control its creation?
Few Americans have a clue about these questions anymore. Money
comes out of the ATM machine -- end of story.
The United States has led the world into the Age of Infinite Money,
enabling pervasive government and what U.S.
Rep Ron Paul has called the "welfare-warfare state,"
That is, with infinite money government is empowered to do things
the people would never permit it to do if money was more real
to them, more scarce, and had to be drawn from taxes in the here
and now -- do things like subsidizing childbearing outside marriage
and waging imperial wars.
If you disagree, look at Iraq and ask yourself: Would the American
people have let that disaster continue so long if they had had
to pay for it, if the money for it was not being borrowed into
existence -- and from foreigners besides -- worsening the debasement
of all world currencies?
Anyway, some governments around the world, particularly Russia's
and China's,
and a few conscientious investors are realizing that, far from
being a quaint antique, gold remains not just basic to the world
financial system but, in fact, the
secret knowledge of the financial universe -- the substance
by which everything else financial is revealed and measured. As
gold breaks the chains that laboriously have been imposed on it,
others may come to see how everything that has been considered
normal has actually been distorted grotesquely by central bank
intervention in markets and really doesn't add up -- may see,
to their shock, that, as Kipling wrote in The Gods of the Copybook Headings, "all
is NOT gold that glitters, and two and two make FOUR."
When that day comes and the real world reasserts itself with a
vengeance, people will need the real thing -- or the real things,
ANYTHING that is real. Kipling foresaw it this way:
... Then the Gods of the Market tumbled,
...... and their smooth-tongued wizards withdrew,
... And the hearts of the meanest were humbled
...... and began to believe it was true
... That All is not Gold that Glitters,
...... and Two and Two make Four --
... And the Gods of the Copybook Headings
...... limped up to explain it once more.
... As it will be in the future,
...... it was at the birth of Man --
... There are only four things certain
...... since Social Progress began: --
... That the Dog returns to his Vomit
...... and the Sow returns to her Mire,
... And the burnt Fool's bandaged finger
...... goes wabbling back to the Fire;
... And that after this is accomplished,
...... and the brave new world begins
... When all men are paid for existing
...... and no man must pay for his sins,
... As surely as Water will wet us,
...... as surely as Fire will burn,
... The Gods of the Copybook Headings
...... with terror and slaughter return!
December 6, 2006, remarks by
Chris Powell
Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
http://www.gata.org/node/4584
This article is reprinted with permission from the author. All rights reserved.
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