Ted Butler: Silver, silver everywhere

Section:

11:58p ET Wednesday, April 5, 2005

Dear Friend of GATA and Gold:

The Bloomberg story appended here shows that the
statement of U.S. Rep. James Saxton, chairman of
the Joint Economic Committee of Congress,
opposing the sale of gold by the International
Monetary Fund has gotten a lot of notice even as
it has raised some questions.

-- The United States and Britain are allies, so
would the British finance minister be agitating
so much for selling the IMF's gold if the United
States was really against it?

-- Saxton says selling the IMF gold "would amount to
a hidden appropriation from the donor countries that
were the original source of the gold." But wouldn't
the object of selling the gold -- forgiveness of the
IMF's bad loans -- amount to the same thing, a tax
on the IMF's donor countries, no matter how the loans
were written off?

-- Indeed, isn't the link between forgiving debt for
poor countries and selling the IMF's gold completely
bogus in a fiat economic system? After all, the IMF's
member nations could simply print new money to
compensate the IMF for any debts written off. And if
the IMF wants to sell gold -- to exchange it for
other currencies -- it can just sell gold; it hardly
needs the pretext of forgiving the debt of poor
countries.

-- Since the U.S. government has been the
underwriter of the worldwide gold price suppression
scheme, what explains its opposition to the IMF
gold sales? Is the U.S. just setting itself up to
be persuaded otherwise at the last minute, going
along with gold sales to smash the gold price
again, this time extra-hard? Or has the IMF gold,
presumably long in the U.S. government's custody,
already been largely expended in the gold price
suppression scheme without the knowledge of the
IMF and its other members? If so, a decision to
sell it would only disclose that it wasn't there
anymore. That would be embarrassing.

Damned if GATA knows. But we do know three things:

First, in a fiat money regime the only purpose of
government gold reserves is manipulation of
currency values and the gold price. At least the
Reserve Bank of Australia has admitted as much.

Second, the whole world economic order is built
on making sure that the markets never know
exactly who really owns how much gold, gold being
the most powerful stuff.

And third, gold doesn't really care who owns it.
Get some and stash it in your basement and you
soon might find yourself more powerful than a
central bank that loaned all its gold to
JPMorganChase.

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

* * *

Gold Prices Rise; U.S. May Veto Proposed Bullion Sale by IMF

By Choy Leng Yeong
Bloomberg News Service
Wednesday, April 6, 2005

http://www.bloomberg.com/apps/news?
pid=10000081&sid=aN4Tr.BVm79Y&refer=australia

Gold prices in New York rose for the second day in a row on
speculation the United States will any attempt to sell gold owned by
the International Monetary Fund, the third- largest bullion owner
after the U.S. and Germany.

Gold fell to a three-month low on Feb. 3 after U.K. Chancellor of
the Exchequer Gordon Brown said a revaluation of IMF's gold reserves
can provide debt relief for some of the poorest countries. Congress
will block any attempt to sell the IMF's 3,217 metric tons of gold,
U.S. Rep. James Saxton said yesterday.

"The statement was good for gold," said Tom Boustead, an analyst at
Refco LLC in New York. Investors "were uncertain exactly what is
going to happen to the IMF gold, and that's one of the things that
has been pressing down on gold."

Gold futures for June delivery rose $2.60, or 0.6 percent, to
$429.20 an ounce on the Comex division of the New York Mercantile
Exchange. Prices gained 60 cents yesterday. The metal still has
dropped 2.1 percent this year. A futures contract is an obligation
to buy or sell a commodity at a set price for delivery by a specific
date.

The IMF owns 2.1 percent of the world's bullion, worth about $44
billion at current market prices. The fund has kept the value of its
gold at less than $41 an ounce since 1971. A revaluation would
enable the IMF to forgive debts or suspend loan repayments to combat
poverty in Africa.

If member countries want to use gold for debt relief, they should
sell instead of revaluing the bullion to free real resources, IMF
Managing Director Rodrigo Rato said, according to the Financial
Times on March 31.

"The potential profit on IMF gold sales rightfully belong to the
original donor countries and their taxpayers," Saxton said in a
statement yesterday. "These IMF gold sales would amount to a hidden
appropriation from the donor countries that were the original source
of the gold."

The U.S. is the largest shareholder of the IMF with a 17 percent
voting stake, enough to block the 85 percent majority required to
approve a gold sale.

"Congress has an obligation to protect the taxpayers and reject any
proposed IMF gold sales," Saxton said.

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