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A newsletter from the folks at www.dailyreckoning.com contains some interesting comments from a Fed Spokesperson confirming the FED's affinity for gold...
*** This past Sunday's edition of The New York Times featured an article, "Believing (and Believing and Believing) in Bullion." The writer, Stephen Metcalf, describes his trip to the Federal Reserve Bank of New York's vault that holds the world's largest stash of gold - totaling almost $100 billion.
Metcalf was given a tour by a Fed spokesperson, and he tells of an interesting exchange that went on in the vault when Metcalf remarked that gold represented an "anachronism."
The spokesman agreed emphatically - until Metcalf commented, "And yet, all these nations, they hold on to this anachronism, just in case..."
"'I don't think anyone in a policy-making position,' he explained to me politely, 'seriously believes that everything else of value could disappear, leaving only gold.'"
Maybe the "policy-makers" over at the Fed don't believe that gold is ultimate monetary insurance...but we'll still hold it - just in case. Like we wrote yesterday, we don't want to get caught in a downpour without our umbrellas.
[Ed. Note: The NY Times piece takes a look into the gold community... and picks the brain of our favorite gold enthusiast/libertarian - The Daily Reckoning's editor-in-chief, Addison Wiggin. You can read the whole article here:
: First some comment on WILL GOLD HIT $ 5000 p.Oz? AL MARTIN
: MADE UP INTERVIEW?
:
Robertson, like the majority, is forecasting the
: future based upon THEIR understanding of history .
: But what if all the OLD rules no longer apply? Such as
: "free markets." If gold has been demonetized and
: the notice is still in the mail, then ALL BETS ARE OFF.
: Best...
: -HADASHI-
: And now read this revealing piece: A Look at Central Bank
: Gold Reserves
: By Ed Wener
: Last week in a Midas commentary we saw a brief paragraph with
: a quote from the CPM group. I have not seen any reaction
: to this news. I believe the message from the CPM Group is
: important to Gold investors so I decided to do a little
: research into the opaque world of Central Bank Gold and
: share it with you. Here is the CPM quote. To maintain
: consistency throughout this article I’ve added (in
: brackets) the Gold equivalents in tonnes :
: “The likelihood of lower central bank gold sales could keep
: prices firm. These banks sold an average of 14-mil oz/year
: (435 tonnes) since 1989. For 2005, net central bank sales
: may be 6-mil to 8-mil oz (186 to 248 tonnes), about half of
: the 12.5-mil oz (388 tonnes) sold last year and less than
: half of what has been coming into the market on average
: over the past 15 years. "This reduction in physical
: gold sales by central banks should contribute to tighter
: physical markets, and exert some upward pressure on
: prices," said CPM. " While central banks still
: own more than 1-bil oz of gold (31,100 tonnes), most appear
: content to hold on to most of what they have. There are a
: few small sales from smaller European national banks, and
: the French commitment to sell, announced last April. Other
: than that, however, there is no clear source for massive
: gold sales from official inventories this year, or in the
: near future." Also, the potential sale of IMF gold has
: been bogged down in international politics and is unlikely
: to occur any time soon.”
: What is the CPM group telling us? Well, implicit in the first
: sentence is the fact that Gold was NOT FIRM because of
: previous Gold sales. In other words, it was these Central
: Banks that kept the Gold price from rising.
: (snip)
: What I’ve done is check the historical record over the past
: 25 years and prepared a series of Tables. I’ve divided
: the World into a series of Blocs with some loose parameters
: such as geography or political allegiance. Each table shows
: Central Bank Gold Reserves in Tonnes for 1980, 1990 and
: March 2005. At the bottom of each table are the Bloc Totals
: in Tonnes and then in US Dollars converted at $420 per oz.
: All the numbers come from Tables found at the World Gold
: Council Website . The numbers are derived from Official
: Central Bank releases that may or may not be accurate. I
: doubt all of them are accurate. For example, we know a lot
: of Gold leasing has taken place yet leased Gold can be
: included in the Reserve reports according to IMF rules .
: Gata has circumstantial evidence that many thousands of
: tonnes have been leased but we do not known by whom .
: (snip)
: [Ed.Comm: You can see all the tables on:
: http://gata.org/Wener.html , onby just a summary by the
: evaluated groups given by Mr.Wener]
: Muslim nations:
: The most striking thing about these numbers is the lack of
: change. Many of the holdings have not changed in 25 years.
: But neither have their rulers. In many traditional
: societies, and this includes nations in the Middle East,
: the Indian subcontinent and South East Asia, Gold has never
: lost its lustre. Their Central Bank Gold Reserves are
: untouchable precisely because Gold is a proven store of
: Value.
: Eastern Europe, Russian Bloc:
: Although many of the Nations listed above are now (or soon
: will be) members of the European Union I listed them with
: Russia because I believe their Gold reserves are not in
: play for similar reasons. Unlike many Western European
: countries, these ex Soviet nations have minimal Gold
: Reserves. Compare France with 51% of its Reserves in Gold
: with Poland (only 3.9% ) or Russia (with 4.1%). In fact,
: one could argue that as these nations prosper they will
: become Gold buyers as Russia certainly is.
: Latin America Bloc:
: This bloc is mainly the story of Venezuela and Argentina.
: Brazil, Chile, Columbia and Uruguay are in the USA bloc
: (see below). Until 2003 Argentina would have been in the
: USA bloc as its Gold reserves had dropped to less than a
: tonne. But now it is buying Gold and its currency no longer
: is tied to the US Dollar. Venezuela has had such turmoil
: over the years one wonders whether or not those 357 tonnes
: are really there. If not, they cannot be sold twice. If
: they are there, given the current government, I do not
: think they are in play.
: Asian Bloc:
: This Table does not include Indonesia and Malaysia which are
: in the Muslim Bloc. Like the peoples of the Middle East,
: Asians place great trust in Gold. Their cities have
: thriving Gold Markets. China now dominates Asia with India
: growing quickly. Both nations are adding to their Gold
: reserves and will continue to do so. Japan, which has the
: largest Asian economy, has been in and out of recession for
: 15 years now. Given this and especially their ultra low
: interest rates, I find it hard to believe Japan has
: retained all the Gold it had in 1980 but that’s what they
: claim. Taiwan added Gold until 1990 and then stopped. We
: know that thousands of tonnes of Gold have been leased but
: we do not know by whom. Japan and Taiwan would be good
: candidates.
: Europe Bloc:
: Here we have the Challenger. The Europeans wants the Euro to
: be a Reserve Currency. The Euro has some Gold backing.
: Europeans own half the Official Gold in the whole world.
: To the 13,650 tonnes listed above we must add their portion
: of IMF (3217 tonnes) and BIS (206 tonnes) Gold. During the
: past 15 years, while the Euro project was in its formative
: stage this Bloc sold over 3800 tonnes of Gold. This
: stabilized the US dominated system. However, the Europeans
: are now claiming they will sell very little Gold going
: forward.
: USA Bloc:
: Finally we come to the USA Bloc. This is an amazing Table.
: All of America’s closest allies are SOLD OUT. Australia
: claims to have 80 tonnes but it is probably encumbered. The
: UK may still have 312 tonnes but, assuming it isn’t
: already encumbered, this Gold may be required to obtain
: currency union with the Euro zone.
: The key figure of course is the American Deep Storage Gold. If
: that Gold does not exist or is encumbered then the USA bloc
: is broke!
: CONCLUSION:
: We can summarize Global Central Bank reserves by Bloc
: BLOC...........RESERVES.........GOLD FOR SALE
: Muslim.......................1328.3.........not likely
: East.Europe-Russia...729.1.........not likely
: Latin.............................537.5.........not likely
: Asian...........................2624.9.........possibly 1188.5
: (Jap.+Taiw)
: Europe......................13681.7.........less than 250 this
: year
: USA............................8698.2.........perhaps UK 312.2
: tonnes?
: IMF..............................3217.3.........has THIS been
: leased?
: BIS................................206.2.........---
:
: Assuming most of the American Deep Storage Gold is no longer
: available the only real source of future Gold is Europe.
: But Europe has a tricky role to play. They want to be part
: of a dual currency Reserve System but they mustn’t
: destroy the Dollar and bring down the whole thing. European
: respect for Gold is deep rooted. The key nations are France
: and Germany. The French regard financial instruments with
: great suspicion. They all know the story about someone’s
: great uncle who papered the water closest with Imperial
: Russian bonds. Further back there is the cultural memory of
: John Law and the Mississippi Bubble and then the
: Revolutionary Assignats. In Germany too this feeling runs
: deep for the country was ruined by fiat paper only 80 years
: ago....
: (snip)
: The United States is desperate to maintain the privileges
: associated with the global Reserve currency but has
: recklessly disregarded the responsibility of guarding the
: Dollar’s purchasing power. It has called upon allies to
: support the Dollar either by selling their Gold Reserves as
: shown in the USA table or by buying US Debt paper as the
: Asian Central banks have done. They have now reached a dead
: end. Those who once had Gold Reserves now have empty vaults
: and the Asians now realize their vaults are full of
: irredeemable debt.
: Doesn't this conclude with what lots of our agents are stating
: here? Reporting further...
:
: "Give me control of a nation's money
: and I care not
: who makes her laws."
: Baron Meyer v. Rothschild, 1838
:
: I think this sentence says it all. Also along with what
: happened in Europa lately with the "rejection" of
: the EU-Constitution: Two steps forward monetarywise, one
: step back "politically" . But as Rotschild said,
: Who really cares about politics, when the money is "in
: place" already...
