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Published on Gold Anti-Trust Action Committee (http://www.gata.org)

Alasdair Macleod: Markets, not Paul van Eeden, determine value

By cpowell
Created 2012-12-09 18:22

1:24 ET Sunday, December 9, 2012

Dear Friend of GATA and Gold:

GoldMoney research director Alasdair Macleod can't resist replying today to the recent assertion of Cranberry Capital's Paul van Eeden that the true value of gold is about $900 per ounce, a little more than half the current price. (GATA called attention to van Eeden's calculation 10 days ago: http://www.gata.org/node/11976 [1].)

"According to the glossary of von Mises' 'Human Action,'" Macleod writes, "value is 'always relative, subjective, and human, never absolute, objective, or divine.' It is reflected in human conduct, placing value in the same subjective category as fairness and morality. So all Mr. van Eeden is basically doing is expressing a personal subjective opinion when he talks about the value of gold. ... If Mr. van Eeden's view of value was fundamentally justified, one would expect foreigners, particularly central banks and over three billion Asians, to cash in their gold for dollars. Instead they are keen gold buyers, and we get no explanation why, other than the implication that they are all wrong and Mr. van Eeden is right."

... Dispatch continues below ...



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When Deutschebank calls gold "good money" and paper "bad money". ...

http://www.gata.org/node/11765 [2]

When the president of the German central bank, the Bundesbank, pays tribute to gold as "a timeless classic". ...

http://www.forbes.com/sites/ralphbenko/2012/09/24/signs-of-the-gold-stan... [3]

When a leading member of the policy committee of the People's Bank of China calls the gold standard "an excellent monetary system". ...

http://www.forbes.com/sites/ralphbenko/2012/10/01/signs-of-the-gold-stan... [4]

When a CNN reporter writes in The China Post that the "gold commission" plank in the 2012 Republican platform will "reverberate around the world". ...

http://www.thegoldstandardnow.org/key-blogs/1563-china-post-the-gop-gold... [5]

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Macleod adds, "The dollar only has value because the foreign exchange markets and the people who use it assume it has value, vaguely based on the standing of the issuer." Actually the dollar has value for a little more than that; it has value in large part because the residents of a great industrial country are required to pay their taxes with it. But even that is a subjective value to some extent, a matter of how many people want to keep residing in that country.

Of course Billy Rose and Sophie Tucker notwithstanding, 50 million Frenchmen can be wrong --

http://www.youtube.com/watch?v=u-IP0DE2kTI [7]

-- as can three billion Asians, and overwhelming numbers of people all around the world have been wrong at one time or another throughout history, such as in the famous controversies over whether the Earth is flat and whether it revolves around the sun or vice-versa. But if determinations of market value are made by purchasing power and the willingness to exercise it, then, happily for once, might makes right.

Macleod's commentary is headlined "The Value of the Dollar" and it's posted at GoldMoney's Internet site here:

http://www.goldmoney.com/gold-research/alasdair-macleod/the-value-of-the... [8]

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

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http://gata.org/node/wallstreetjournal [12]

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http://www.gata.org/node/16 [14]



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