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In Defense of Gold - Michael Pento - Delta Global Advisors

In 1933, President Roosevelt outlawed the ownership or possession of monetary gold by any

US individual, partnership, association or corporation. Executive Order 6102 required all US citizens

to deliver on or before May 1, 1933, all but a small amount of gold coin, gold bullion, and gold

certificates owned by them to the Federal Reserve, in exchange for $20.67 per troy ounce. A year

later, the Gold Reserve Act revalued the price of gold to $35.00 per ounce (effectively devaluing the

US dollar). This was an immediate 69 % profit for foreign holders of gold, at the expense of U.S.

citizens whose gold holdings had been confiscated.

By 1971, the US dollar had become increasingly overvalued. Other nations began to demand redemption of

their dollars for gold at the $35 dollar an ounce price. Nixon finally suspended the convertibility of

the dollar into gold or other reserve assets. The eventual effect was that the price of gold rose to

around $195.00 in 1974. This again benefitted foreign individual and state holders of gold, while US

investors still could not own gold bullion.

Effective 31 December 1974, at the peak of the market, it again became legal for US citizens to own

gold. The price of gold soon began a decline to $100.00 an ounce in August 1976, when many US investors

who bought near the peak lost hope and sold. It then rose to $850 an ounce in 1980.

From 1999 to 2002, England's Chacellor of the Exchequer Gordon Brown sold about half of England's gold

reserves. This was done pretty close to the market bottom in the mid $200s an ounce. Worse, he

announced the sales in advance, further lowering the price. The phrase "barbarous relic" was commonly

used to refer to gold at that time.

It then rose to another peak of $1921.50 in September 2011.

How many US investors will sell out their gold at the present low price, even as gold has been

increasing in terms of nondollar currencies? What is the U.S. government, and perhaps other

governments, prepared to do in the current global crisis? Will their actions affect the legality or

price of individual gold ownership? Will gold be revalued again to save world currencies? Given the

above history, I would not give up on Gold at its current bargain price.

Commented 3123 days ago

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Beginning of the headline :There has been an unprecedented attack on gold and mining shares over the past three years emanating from financial institutions in order to support the government's supposed success in bringing the economy back to health. And even though gold mining shares are down 85% during this tenure, the case for owning gold-related investments have never been more compelling. The reason to own gold is the same today as it has been for thousands of years: it is the perfect store of wealth. Gold i... Read More

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