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

UpsideToday.com on gold and GATA

By cpowell
Created 1999-08-13 07:00

1a EDT Saturday, August 21, 1999

Dear Friend of GATA and Gold:

You may enjoy this article from www.upsidetoday.com [1].
While it is hardly favorable to gold or to GATA, it
does show GATA's leadership of the gold cause in the
world.

Please post this wherever it seems useful.

With good wishes.

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

* * *

Downside: Giving Gold the Finger

By David Futrelle
www.upsidetoday.com [2]

July 19, 1999

Occasionally, as I wander about Chicago's Loop on some
fruitless expedition or another, I run across the
LaRouchies. I don't know if they do this in your city
as well, but here they've taken to driving around the
main thoroughfares in a car with a loudspeaker attached
to the top, a little bit like the supporters of the
Replacement Party in the movie "Nashville." I can never
quite make out what they're saying, and the signs they
have plastered on the car are rather too text-rich for
anyone on the sidewalk to be able to decipher them. But
I suspect that, somehow, it involves the Trilateral
Commission, the queen of England, and gold. The crazies,
they always come back to gold.

It's fair to say that, for everyone other than the nuts
and the goldbugs (not that these categories don't have
a bit of overlap), gold has lost a bit of its luster in
recent years. It's hard to imagine a modern-day Pussy
Galore wasting her considerable talents, and those of
her special flying squadron, on anything as manifestly
unprofitable as an assault on Fort Knox. Hell, even the
rappers have abandoned those giant gold chains they
used to wear with such pride. And why not? After all,
they're only worth their weight in gold -- and that's
not much these days. Still, gold retains a powerful
ideological appeal.

It's probably the ultimate anti-technology investment,
a favorite of crazy old codgers who think the world's
gone all to hell since Richard Nixon took us off the
gold standard in 1971. And gold is, of course, highly
popular with the Y2K crowd; after you've stocked up on
canned corned beef hash, the Y2Kers say you should
throw what remains of your money into gold.

Back in May, when the price of gold was heading rapidly
upwards, the World Gold Counsel launched a series of
ads that was a not-so-subtle jab at the Netmania that
grips investors. "A portfolio without gold is a luxury
you can no longer afford," the ads suggested --
contrasting speculative manias with the supposed
security of gold. The ads encouraged "smart investors"
to "keep a portion of their portfolios in the asset
that retains its value over time: gold."

Unfortunately, the timing of the ads was a little less
than perfect: As The Wall Street Journal acidly
observed, "gold hasn't even retained its value over the
course of the ad campaign itself." On May 7, only a few
days into the ad campaign, the Bank of England
announced that it would be selling off the bulk of its
gold reserves over the next several years.
Consequently, the price of gold plunged like that of an
out-of-fashion tulip bulb, dropping from nearly $290 an
ounce in early May to a 20-year low of $254 an ounce
last week.

Meanwhile, the NASDAQ index has risen well over 300
points. You might think the gold types would live in
self-imposed exile, punching out mimeographed
newsletters on manual typewriters with ribbons worn
nearly through in their basements. You'd think they'd
be the last people on earth to make effective use of
something as of-the-moment as the Internet. But when
you talk about gold these days, you almost inevitably
end up talking about conspiracy -- and not without
reason.

After all, the laws of supply and demand don't quite
explain what's happened to gold in recent months:
Almost all observers agree it's an overreaction. So why
does something always happen when the price of gold (or
POG, as the goldbugs like to put it) gets near $300 an
ounce? Is the current sell-off the result of bad luck
or something more sinister?

Now you can see why the goldbugs turn to the Net -- to
commiserate and to share their particular
conspiratorial visions. If gold is a decidedly retro
passion, so too are the conspiracies alleged by the
goldbugs.

The basic charge, as far as I can tell, is that there
is a systematic campaign among a strange and powerful
cabal of bankers and world leaders to keep down the
price of gold, or at least to spike its rise when it
starts to get too uppity.

This conspiracy theory, most famously expounded by Bill
Murphy, chairman of something called the Gold Anti-
Trust Action Committee, is a vast one ... as most
imaginary conspiracies tend to be. It suffices to say
it involves what Murphy calls the "bullion banks" of
Wall Street, with Goldman Sachs being singled out for
special opprobrium. Alan Greenspan and (but of course!)
the would-be hedge fund wizards of Long-Term Capital
Management, Murphy claims, had a big short position in
gold at the time of its, ahem, little troubles.

The goldbugs speak a language all their own -- a
melodramatic, moralistic melange of code words and
private jokes. "'Something IS rotten in the state of
Denmark' and in Washington," writes someone calling
himself Midas du Metropole, but who is in fact Bill
Murphy, at the decidedly retro goldbug hot spot "Le
Metropole" (www.lemetropolecafe.com [3]), a self-described
"cyberspace cafe for investors and intellectuals" that
tries (a little too hard) to evoke the spirit of the
Montparnasse in the '20s.

"The people in the gold industry are paying the price
for the errant ways of the financial community and what
they have wrought. These ducks in Washington talk out
of two sides of their mouths. They talk integrity, and
practice hypocrisy and skullduggery. The 'Goon Squad'
and fellow ducks had better start their buybacks soon
though or they will be caught up in a 'Scandale Gold'
of epic proportions down the road."

Other Metropoleans have their own explanations for
gold's troubles -- some of which, because all great
conspiracy theories converge in the end, have to do
with a little something called Y2K.

"Maybe gold is not allowed to rise before the year
2000," suggests Metropolean Peter Jungbeck. "Why?
Because it could start a self-reinforcing gold rally
that in the end will lead people to withdraw their
money from their accounts in panic. This coupled with
the media can be the end of our financial system...
Gold is rising, our paper money gets worthless, mass
bankruptcies, people run for the exits.... Maybe they
are trying to reassure people everything is fine before
the Y2K, and the way of doing it is with the POG."

Outside Le Metropole, in online hot spots ranging from
the USAGold Forum to comp.software.year-2000, other
goldbugs and freelance conspiracy theorists attempt to
nail down villains.

"The Big Guns are playing the paper game," alleges
Canuck on the USAGold Web page. "They're providing
supplies to keep the price of gold down in their own
self-interests; dare not the bubble burst. They are
playing their game, I am playing mine. ... When the
almighty Supply and Demand cycle reverses, I will
gladly sell my 'reserves' to the central banks at a
$1,000/oz.!"

Maybe he's got a point. True contrarians, of course,
recommend investing at the point of maximum pessimism.
If you believe this, now might just be the time. The
British continued to unload their gold, and other
countries from Switzerland to Canada are doing the
same.

Meanwhile, the International Monetary Fund is weighing
plans to sell off even more of the international gold
reserves to help offset the accumulated debts of some
of the world's poorest nations. The World Gold Council,
of course, has strenuously objected to all of these
plans, and they may not all come to pass.

But it is clear that today only the most fanatical
goldbugs have much hope for recovery any time soon, and
even some of them are a bit dubious that gold will
stage a comeback any time this century. In the
meantime, the goldbugs unwillingly continue to support
the silicon economy they so distrust, logging onto the
Net to convey their continued dissociation from a world
that seems to have overthrown the reign of matter. Were
she alive today (and not fictional), Pussy Galore would
almost certainly appreciate the irony. Then she'd kick
some butt.


Source URL:
http://www.gata.org/node/463