A friend, C.S., wrote to your secretary/treasurer today asking for comment on the beating gold has taken in the last few weeks. Your secretary/treasurer is no market analyst but couldn't leave her hanging and so offered the following.
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And the multitudes asked him, 'What then must we do?' -- Luke 3:10.
The smashdown of the last couple of weeks, while maybe not unprecedented since I began following the monetary metals in 1998, may be the most demoralizing. And yet the world financial system never has been more unhinged, which may explain the smashdown in large part if it represents the increasing desperation and intervention of central banks.
At GATA's conference in Washington almost five years ago I said that there are no markets anymore, just interventions by central banks and governments:
http://www.gata.org/node/6242
If that is correct, then short- and medium-term investment strategy is entirely a matter of anticipating the next intervention, and of course the Federal Reserve doesn't call or e-mail me with any notice -- just the heads of the investment houses that act as agents for the U.S. government in the markets. So what is left for ordinary people to invest in if all values are manipulations, illusions, or just political calculations subject to change in an instant? What is there left to invest in if the British economist Peter Warburton was right in 2001 when he wrote that the main objective of central bank policy is to deprive the world of any standard of financial measurement?:
http://www.gata.org/node/8303
My answer to that question would be: the monetary metals, insofar as they are real at least and have and always will have recognized value throughout the world, even if we cannot rely on the ratio of their value to the value of government currencies.
But we can review history, and doing so we find that over the long term currencies have always been devalued against the monetary metals and the rigging of the monetary metals markets has always failed, if only when the metal available to the market riggers ran out. The most recent example of that is the story of the London Gold Pool, which collapsed in March 1968 because of a shortage of metal:
http://en.wikipedia.org/wiki/London_Gold_Pool
But Bill Buckler's Privateer newsletter has wonderfully summarized the rest of the modern war against gold and the market rigging involved:
http://www.the-privateer.com/gold2.html
I will bet -- have bet -- my life that the current war against the monetary metals will fail eventually as all the other such wars have failed and that the metals will be revalued upward as governments continue to retreat to a more defensible level for their ever-depreciating currencies. But will this happen in my lifetime? Two good friends of GATA, Ferdinand Lips and Adrian Douglas, bet their lives on the same proposition and while they saw some vindication they did not see the victory they deserved. Even if we too deserve victory, will we live to see it?
If GATA obtains sufficient resources, we may be able to hasten the day considerably by bringing new freedom-of-information litigation against the U.S. Federal Reserve, the Treasury Department, and the State Department:
http://www.gata.org/node/11606
In any case I think the revaluation will come in the next five years or so. If enough governments around the world want to drag the struggle out longer than that, maybe they can. But even so we may be able to depart confident that we have protected our families. And as much as we want to get rich, that is of no importance beyond ourselves. GATA is in this struggle not because of that or because we worship the golden calf or silver bull -- we are not idolaters -- but because we believe in limited, transparent, accountable, democratic government and free markets as the indispensable mechanisms for progress, liberty, and happiness.
Sorry to get cosmic on you; for the moment it may be all we have left. But it's still enough.
