GoldCore's Mark O'Byrne this week calls attention to commentary written
this month by Harvard economics professor Kenneth Rogoff recommending that
countries diversify their foreign exchange holdings away from the government
bonds of developed countries and into gold.
Rogoff's argument seems to be that with interest rates already effectively
at zero or below, there's nothing to be gained through the purchase of such
bonds, while gold is a "low-risk asset" that offers the possibility
of capital appreciation.
But then Rogoff makes what from anyone else would be considered the rookie
mistake of asserting that "gold does not pay interest," as if gold
isn't leased for interest by Western governments every day in huge amounts
and as if gold leasing isn't a primary mechanism of gold price suppression by
those governments, the governments whose bonds Rogoff acknowledges are
becoming less attractive as investments.
This rookie mistake is a little surprising since Rogoff's biography
identifies him as having been the chief economist for the International
Monetary Fund from 2001 to 2003, a period beginning just two years after the
agency's staff reported secretly to the agency's board that major IMF member
governments were concealing their gold leases and swaps to facilitate their
surreptitious interventions in the gold and currency markets:
http://www.gata.org/node/12016
Rogoff's biography also identifies him as the 2011 recipient of the Deutsche
Bank Prize for Financial Economics. It does not say whether he returned the
prize since then upon any of the bank's admissions of market rigging and
other misconduct.
But then maybe Rogoff can be forgiven that stuff because he concludes his
commentary with an observation as politically incorrect as anything ever
likely to be offered by someone associated with Harvard, the IMF, and
Deutsche Bank: "There has never been a compelling reason for emerging
markets to buy into the rich-country case for completely demonetizing gold.
And there isn't one now."
If only he could have said as much publicly while serving at the IMF.
Rogoff's commentary is headlined "Emerging Markets Should Go for the
Gold" and it's posted at Project Syndicate's Internet site here:
https://www.project-syndicate.org/commentary/...g-market-res...
O'Byrne's commentary arguing that Rogoff's commentary is important is
posted at GoldCore here:
http://www.goldcore.com/us/gold-blog/buy-g...ow-risk-asse...
