Gold yesterday, today and tomorrow
By Hugo Salinas Price
plata.com.mx
Let's think about economic life around the world, as it was one hundred
years ago - a very short time ago, in historical terms.
The first thing that comes to my mind, is how difficult it was to
accumulate any quantity of gold. My maternal grandfather was a
schoolteacher and a minister; I guess he made some $600 dollars a year, and
he raised a family of eleven on that wage. I doubt very much, that he ever
owned a $20 dollar gold piece for any length of time. A silver
quarter-dollar was an adequate birthday present for his children.
Businessmen did not accumulate gold. Paper dollars, redeemable in gold,
were quite adequate and physical gold accumulation would have meant idling
resources that could be deployed profitably in the business.
Gold as money was taken for granted, at least in the U.S. It was because of
this social situation, that essays such as "Silas Marner" were written. If
you haven't read it - I was obliged to read and comment on this essay in
High School, over fifty years ago - it's about a miser who accumulated
gold; the essay was not kind to him and his ilk. Of course, in those days,
why should anyone in his right mind accumulate gold, when there were useful
things to be done for society by working and using gold, instead of
hoarding it away? The economy was sound, gold was simply money, and money
is to be used, it is not to be regarded as an end in itself. A sound
economy produced a sound morality - or was it viceversa, the morality was
reflected in the money?
Gold circulated through the economy, as it should. Paper bills,
unquestionably redeemable, were a completely acceptable substitute, and
gold was actually rarely seen. Silver change circulated, because gold was
overvalued with regard to silver. (See Mundell's "Uses and Abuses of
Gresham's Law in the History of Money")
Large accumulations of gold were a rarity, because it was uneconomic for
businesses to accumulate more than necessary, and because individuals had
better ways of providing for their future needs through savings, namely, by
investing in bonds and bank deposits, which were payable in redeemable
dollars in any case, and paid interest in those same dollars.
Gold moved very little between countries. It was extremely difficult for a
country without gold, to obtain it. As soon as a country would begin to
export its gold, to settle its trade balance, interest rates in the country
would rise, and imports of merchandise would decline. Every country tried
to attract gold, but this same attraction all over the world, implied very
little international movement in what gold there was.
Gold mining in a country was very definitively, a great asset. In order for
a country to increase its gold stock, and thus allow a sound expansion of
its financial system and the consequent real prosperity of its people, it
was important to have some particular export which was absolutely
indispensable to other nations. Superior technology in manufactures was
therefore of great importance. But always, there was the counterbalancing
effect of interest rates in other nations, which responded to exports of
gold, and held down exports of manufactures from the gold-hungry nations,
to their clients.
War was a simple way to obtain the all-important gold stocks. Another, was
to create uncertainty and fear amongst the inhabitants of weaker states, by
stoking through covert means, the fires of party strife and revolution, and
thus causing flight of gold to safer havens. Destabilization, we call it
nowadays - nothing new under the sun.
So gold has always been very scarce and highly prized; extremely difficult
to accumulate in any quantity. I shall not repeat what hundreds of writers
have said before, and more eloquently, regarding the barbaric savagery that
has accompanied the quest for gold, throughout history.
This passion for gold will not be erradicated by any New World Order, in my
opinion. Rather, if the New World Order which is being established at
present tries to erradicate gold, it will find itself up against an
intractable feature of mankind - something as impossible to suppress as sex
itself. The day that the way of a man with a woman can no longer be helped
along by offering a present of gold, then I will believe the New World
Order has triumphed. I am confident that day is far, far off, indeed.
Let us now turn our attention to the present.
Gold is extremely cheap! A mere $9,130,000 U.S. dollars will buy you - one
tonne! Think of it: one tonne of this metal, for which men have strained,
struggled, fought and died to attain in quantities of a few ounces, during
uncounted centuries in the past! This is a remarkable period, indeed! I say
"a mere $9,130,000" because such a quantity is but a pittance in today's
reckoning of wealth - or what passes for it - in the U.S. I read where Mr.
Lay of the deceased Enron is putting up for sale one of his cottages at
Snowmass in Aspen, for - $6,5 million. A cottage for skiing and summer
recreation, a pile of stone and wood in the mountains, an afterthought as
an investment, and it is "worth" over two thirds of a tonne of solid gold!
What a extraordinary age we are living in!
It is my conviction that the shady characters who are behind the scenes in
this world, and who really run things, a la Disraeli's "Coningsby", have a
plan which they have been carrying out over the past decades. These are the
individuals who give orders to Central Banks, of their own, and of other
nations. They have the power to do so. We have been witnessing a new way of
accumulating gold, never before seen in the world: accumulation through
mass-deception, through manipulation of the mass-mind, which was never
before possible.
These unidentified characters have used the dollar to accumulate wealth,
and they have been going after the gold. They can well see, that the
present international monetary system is doomed. It was a visible fact to
them, long ago. If we, the little spectators, can see this is happening,
it most certainly cannot have escaped the observation of the movers and
shakers in this world. We private, small-time spectators count for little,
and though we can see what is happening, we have not the means to convince
the masses. Perhaps the world rulers will deal with us, one by one, at
their leisure. Or perhaps not. Don't mess with the Mafia, and they will let
you alone. Killing is messy and preferably avoided. Let us hope this is the
outcome.
A new system will have to come into existence, when this present system
passes away in disorder and revolution. And lo and behold! Gold will figure
prominently in it. Gold amassed while the Central Banks of the world were
being coerced to dishoard it. The propaganda regarding the "death of gold"
has been effective. It has allowed the Central Banks to sell off their
stocks, painfully acquired through centuries, at cheap, very cheap prices,
to the characters operating in the shadows. In a sense these past decades
have been one long bankruptcy sale on the part of the world's Central
Banks, where the banks have been selling off their best assets - to their
owners! - at rock bottom prices. Of course, at fire-sale prices, otherwise,
it would be next to impossible to accumulate it in any quantity.
There is a precedent for this surprising action: Adam Smith believed
implicitly in the integrity of the Bank of Amsterdam, the premier banking
institution of his day. The bank's notes are solidly backed by gold in its
vaults, he wrote, and the committee of honest burghers who oversees the
gold stocks, is made up of the most prominent and trustworthy merchants of
the city; the committee is made up of men who hold their position in it for
a time only, and are replaced by new auditors. The Bank of Amsterdam, the
model institution. Well, Adam Smith was duped! When Napoleon entered the
city, and went directly to the Bank of Amsterdam, he found the fabled
vaults - empty!
When the re-distribution of gold in the world is accomplished, then we - or
our descendants - will see what will surprise some: that there are huge
amounts of gold, in the hands of the new rulers. Gold placed in the hands
of new institutions, which will respond to the orders of their masters, the
owners of the gold. And gold will be once again, extremely hard to come by,
the metal of kings and queens.
As the French say: "Plus ca change, plus c'est la meme chose" - the more
things change, the more they remain the same.
Let us not be deceived by all the shenanigans; get some gold while it is
cheap. Participate in the fire-sale! Be assured, men will struggle to own
it, a thousand years from today. |
