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NY Post''s John Dizard on Gold and Conspiracy
10:30p EDT Monday, May 17, 1999
Dear Friends of GATA and Gold:
A couple of things on a day that seems to have been
without much news in the precious metals....
1) That scandal story we've been expecting out of
London hasn't quite broken but there have been open
references to it. It seems to be that Prime Minister
Blair's economics adviser is an official of Goldman
Sachs, the great shorter of gold, and so there is
suspicion that this connection has something to do with
the Bank of England's announcement of its plan to sell
some of its gold reserves.
2) My attempts to respond to Martin Armstrong of
Princeton Economics and John Dizard of the New York
Post have drawn some response from GATA's egroup
members. I'll take the liberty of sharing them with you
Secretary, Gold Anti-Trust Action Committee Inc.
* * *
CLIFF NEELY writes:
.... For me it is not a question of the international
financial system's de-facto demonetization of gold.
Many economists have argued for a long time that this
was the way to go. My concern is that there has been no
open debate on abandoning physical reserves for paper
money. Instead our Treasury, with cooperation from
central banks, has worked hugger-mugger to bring the
gold price down. The objective is to claim that free
markets have decided that physical reserves aren't
But free markets haven't made this decision at all. That
is the issue.
What I would say to those claiming that nothing illegal
has been done is that there was no public announcement
by officialdom anywhere that concerted policies would be
directed toward selling central bank gold to keep the
price of gold from rising. What likely happened is that a
handful of people were told privately and that these people
have profited by going short on insider information.
Fed Chairman Alan Greenspan's infamous statement that
central banks would lease as much gold as necessary to
suppress the price came very late in the game. Why did
it come in 1998 instead of 1993 or 1994 or 1995?
* * *
DON STOTT of Colorado Gold writes:
... I am new to the GATA egroup but have been a metals
broker for 22 years. I won't get into an argument about
collusion, but Martin Armstrong is dead wrong about
Money is used to exchange value or store value. To be
legitimate, "money" must have some value in the first
place, which no currency in the world does and no
currency has had for many years. Imagine "storing" 40
hours of labor for a few pieces of paper that have no
value and cannot be converted into anything of value
other than merchandise.
Those pieces of paper can be, and are, manipulated
every day by currency traders and governments, thereby
destroying the pseudo-value those "legal tenders" may
Until the world went off the gold standard, money was
indeed valuable. Until we had the Federal Reserve
system, gold was held by U.S. banks to back the
currencies they issued. When President Franklin D.
Roosevelt made owning gold actually illegal and ordered
everyone to surrender it and then raised the price to $35
an ounce, it was perhaps the greatest swindle in history.
People like Armstrong hate gold because it threatens
their ability to increase the money supply without
limit. This "helps" those who should not be helped and
redistributes wealth, which the Constitution does not
Actually, as the central banks sell their gold, the
gold is being transferered from the banks to citizens,
who had it in the first place.
Suppose everyone discovered that their dollars, francs,
pesos, etc. had no actual value and were merely a sham
perpetrated by governments to enrich themselves and
stay in office.
Everyone discovered in 1929 that the stock market was
overpriced, as they soon will discover again. Who is to say
that people won't discover that their currencies are merely
pieces of paper with ink on them? If people came to that
realization and demanded that their "money" have actual
value, governments would fall and civilizations collapse
and we would return to the gold standard.
Gold and silver have actual value, as they require
capital and effort to produce. When salt coins were
used as money, it was because salt was scarce.
William Jennings Bryan wasn't wrong, as gold and silver
and even platinum as well have actual value, whereas
there is no limit to mere paper currency and government
If gold is so worthless, why do people buy it when they
want a "flight to safety"?
Actually, if you took all the "economists" and placed
them in a bag and let Niagara Falls do them in, the
world would be far better off.
Ludwig Vov Mises was correct when he said a quick
definition of economics is that "people act,"
especially when everyone isn't throttled by huge
central governments. (I had the privilege of selling
Mrs. Von Mises some gold in the late 1970s.)
* * *
PERRY TAKA writes:
Money is not quot;whatever the majority believes it to be,quot;
as stated by Martin Armstrong. In Chapter 5 of quot;The
Wealth of Nations,quot; Adam Smith states clearly what
money is: quot;What is bought with money or with goods is
purchased by labor as much as what we acquire by the
toil of our own body.quot;
Gold is the store of labor. It requires a certain
amount of labor to get the gold out of the ground, in
contradistinction to simply rolling the presses, which
devalues that store of labor. Rentiers like Armstrong
are the debasers of this principle, as his cavalier
comments demonstrate. Economism, like reductionism,
simply will not fly.
Gold is the par excellent political commodity since it
stands in contradiction to the printing of money.
What's going on with gold now is a clearly political
manipulation of markets that will still yet rein in the
arrogance of central banks.
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