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About Ferdinand Lips:
Born in Switzerland in 1931,
Ferdinand Lips, is a well-established and respected authority on gold and the
gold market. His roots are in banking where he started his career, and became
a co-founder and a managing director of Rothschild Bank AG in Zurich.
In 1987 he opened his own bank,
Bank Lips AG, also in Zurich. He retired in 1998 when he sold his equity interest
in the bank. Not being one to sit around idly, Mr. Lips continues to be very
active in the banking, gold and financial fields. He is on the Board of
various companies, among them African gold mining companies. He is also a
Trustee of the Foundation for the Advancement of Monetary Education (FAME) in
New York.
He has written two books previously
(Das Buch der Geldanlage in 1981 and Geld, Gold und die Wahrheit in 1991).
Gold Wars is his third book and expresses his views on gold, the gold
standard and the gold exchange standard as well as the various attempts to
manipulate gold and eventually push it aside. As a Swiss, he dedicates an
important part of the book to the events leading up to the partial, but
substantial, sale of Swiss gold reserves.“ (see www.fame.org)
The interview took place in May 2005 in German language.
The following is a translation by www.silberinfo.de. If you wish to distribute the interview
to other websites, please contact team@silberinfo.de
silberinfo:
Your book „Gold Wars“ which was updated with various
chapters and translated into German (“Die Gold
Verschwörung”; “The Gold Conspiracy”; translated and
revised by Stephan Bogner from www.silberinfo.de) was received 2003 with great applause among the
German speaking Gold investment scene. We anticipate that your timeless opus
will go through a boom in the upcoming years and that your year long work
already timelessly illuminated the obscure gold market from which the events
of history ally themselves as mosaics to “the big picture” and
start making sense.
How was the response of the German version of “Gold Wars”
compared to the USA? How many books were sold so far?
F. Lips:
The book is now in its 4th edition and virtually
20,000 books have been sold so far. The American book “Gold Wars”
is running well too, but I had the disadvantage that I did not have a
publisher but an Organization with the name FAME (Foundation for the
Advancement of Monetary Education) in New York (www.FAME.com) which issues the book.
Unfortunately, the book was never sold in a book store. But I am delighted
that my book will come into the markets in French and Japanese this
September.
silberinfo:
If a friend asks you how high his share shall be in physical Silver
compared to Gold, what would you recommend him for the long term?
F. Lips:
Difficult to answer. It depends on the individual financial
situation of the person. Meanwhile, silver offers bigger capital profit
chances than gold.
silberinfo:
What ratio of physical exposure to mining shares would you recommend a
friend?
F. Lips:
This I would answer in the same manner as the previous
question. Especially for the capital profit looking investor, mining shares
are the far most interesting vehicle, particularly shares from companies that
focus on exploration.
silberinfo:
Your investment fonds TOP-GOLD-INVEST (www.topgoldinvest.com) enjoys a significant well reputation in the investment
scene. Currently it is the second best performing Gold-Fonds worldwide and
after thorough analysis we anticipate it becoming the No. 1 Top-Gold Fonds
outperforming all the others by large in future. In what gold investment
forms is being invested?
F. Lips:
Gold and silver shares, which do not hedge, have a strong
reserve basis and a sound Management. Thereby we concentrate ourselves on
successful exploration companies. Furthermore, the portefeuille includes
physical gold and silver. One of the gold mines also has a high share of
uranium.
silberinfo:
What do you think about derived paper Gold issued by banks such as
certificates, options, etc.? Could one recommend this form of investment with
a good conscious to a friend?
F. Lips:
As the name already says, it is „PAPER“. These
instruments are speculative. I can not recommend them as an investment at
all. Further, the purchase of certificates is linked with a big agio/premium
when issued.
silberinfo:
What do you think about the „ticking timebomb
derivatives market” which positions already grow exponentially? In the
long term rather a risk or a chance for the gold market?
F. Lips:
Both – but ultimately a chance. Those investors, who
have invested in „paper gold“ will lose their money with high
probability when the bomb detonates. It is possible that the gold price makes
a short diver as well, because in panic everything is being sold. This
phenomenon could be observed as well on the Black Monday 1987. Admittedly, the gold price then recovered
far stronger than the popular stock markets. Whereas at the LTCM debacle the
gold price immediately made a big jump to the upside. I am convinced that
this time will be different. I believe that gold will already rise gradually
in the forefront of a big financial collapse and then explode to the upside.
I justify my perception with the fact that we live in a time today where the
broad public begins to see slowly but surely. The trust in our paper money
system is shrinking virtually daily. Gold is the only currency on which no
debts are linked to. I wish that
one day we all will live with a new and healthy currency system in which gold
again is anchored as a solid fundament.
silberinfo:
For how likely do you see a banking crisis (possibly in the “domino
effect”?) because of the derivatives markets? When and how fast one
could come? Would well-informed paper gold investors have enough time to sell
their derived paper or could an impairment of these “assets” come
“over night”? Why is it safer to hold mining shares during those
times?
F. Lips:
A banking crisis along with a potential domino effect is as
certain as the “Amen” at church. Unfortunately, nobody knows how
long the timebomb is ticking. By all means, such a crisis can come
“over night” and the investors will not have enough time to
separate themselves from paper gold or the popular share markets. I recommend
the investors to position themselves early enough. A farmer as well is
seeding in spring-time to harvest in autumn!
silberinfo:
At the end of 2004, the „Office of the Comptroller of
the Currency“ (O.C.C.), a department of the U.S. Treasury, indicated
the total notional derivative positions of U.S. commercial banks (not
including investment banks such as Goldman Sachs, etc.) having reached 220
trillions U.S. Dollar (20-fold increase in 13 years), whereas 86% of these
positions represent interest rate contracts. How do you judge this dominant
share of interest rate contracts? How far do you think that the FED is
influenced by these positions regarding their power to increase interest
rates? Kindly substantiate the danger for the globalized financial markets
because of the huge derivative positions in general.
F. Lips:
The concentration in the interest rate contracts has many
reasons to which I here can not go into detail. But I want to emphasize that
because of the freewheeling money politics of the American central banks, the
interest rates were kept low “artificially” for a long time to
stimulate economic growth. Thereby big money flowed into this sector from
Hedge-Fonds and banks, because fat profits could be made virtually
“risk free” (“Greenspan put”) and the future
contracts feature an enormous leverage (respectively the margins are very
low). An investor only needs $1,500 to acquire a $100,000 future contract of
10 year U.S. Treasury bonds. It
is an open secret that thereby big investment banks such as Goldman Sachs
could increase their profits strongly. The central bank knows very well about
the enormous danger that comes from this gigantic balloon. Alan Greenspan
pointed to that direction in his speech to the committee. The market has
evolved to a huge casino in which central banks, Hedge-Fonds and speculators
are cavorting. The weak U.S. Dollar has destroyed the lion’s share of
the profits of foreign investors and there existed the danger of a panic
Dollar sell-off with strongly rising interest rates as a consequence.
Greenspan has tried to slow down the fall and gradually increased the
interest rates in the past six months. But I think that he would have to
increase the interest rates much stronger to slow down the Dollar weakness
sustainable. Thereby the danger would be that he kills the engine of the
economy again. I consider the recent recovery of the U.S. valuta as a temporary
rally within the long term downtrend. The confidence in the Dollar is
decreasing ceaselessly. Slowly but surely the U.S. Dollar is on its way to
its intrinsic value – namely ZERO!
silberinfo:
JP Morgan Chase is holding derivative positions that are seven times as
big as their business equity. The revenues of these positions were only 3.9%
of the total gross revenues of the entire company. Why do you think such big
(and therefore risky) positions are being made, eventhough the revenues out
of this business would be neglectable and do not represent a core business
field regarding profit?
F. Lips:
JP Morgan Chase is the prime example and one of the biggest
players in the market. The company has consulted, among others, Barrick Gold
in the composition of their derivative positions (hedge-book). There are
rumors in the market that the U.S. central bank took over part of their
derivative positions, because the situation is so desolate and that the merger
between JP Morgan and Chase Manhattan Bank was decided over night, because of
misbalances in derivative positions. None of this was made official. But when
there is smoke, mostly there is a fire as well. The greed on Wall Street is
just big.
silberinfo:
Do you think that Gold will regain an official monetary role in the
upcoming years? What about silver?
F. Lips:
It is desirable, because it is the only way out of the
present currency chaos which I have always constituted as a Non-System. I
have lived in a time when silver coins peacefully circulated next to paper
money. I see the possibilities for a currency reform farthest away, because
there is nobody left who knows how it works. I don’t know one
University at which currency lessons are being taught.
silberinfo:
The IMF recently decided not to sale any Gold. It is widely known that
the USA officially owns most of the Gold worldwide and have (in big contrast
to other central banks) not sold any Gold in the past years. What do you
think about the assumption that the USA deliberately do not sell Gold, but
push others to do so, as to have most of the Gold “in the end”
– to be able not to lose its “empire status” in the case of
a remonetization of Gold? Is it imaginable that the USA are deliberately inflating
their horrendous foreign debts with a collapsing U.S. Dollar as to settle
these debts with a highly appreciated Gold price and after a new Gold
Standard has been established? What are your scenarios?
F. Lips:
I have no idea about how much Gold reserves the USA really
have. There was no audit of these stocks since Eisenhower. There is great
uncertainness regarding these reserves. Regarding the huge internal and
external debts, the official politics at the moment rather seems to be in
inflating off the debts.
silberinfo:
In general, do you see the possibility of a Gold Standard or a coupling
of the major currencie(s) to an index or even a new innovative attempt to
anchor fiat-money in the system (i.e. Euro-Dollar)? What would you recommend?
F. Lips:
I have always recommended the return to the pure Gold
Standard.
silberinfo:
What do you say about the following predication: Gold and Silver will
continue not to play an official role after the next worldwide currency
reform, because a completely new electronic money system will be installed
which not even requires paper.
F. Lips:
There can be no real currency reform without gold. Silver
could also play a role.
silberinfo:
How do you assess the current state of „the Gold
Conspiracy“? Is Switzerland already free of Gold?
F. Lips:
Switzerland sold 1,300 tons and recently stopped the sales.
She still owns almost 1,300 tons of Gold.
Since the book „Not Free, Not Fair: The Long-Term
Manipulation of the Gold Price” of John Embry and Andrew Hepburn from
the company Sprott Asset Management, Toronto, was published in August of
2004, the manipulation rather increased. The European Central Bank even sold
47 tons in the last weeks. However, one day the authorities will run out of
munition and the gold price will shoot up then. Incidentally, the mine
production is declining and will stay like this for the next time as hardly
any exploration has taken place in the last years.
silberinfo:
What do you think about the work of GATA (www.gata.org) – the organization fighting
for free markets?
F. Lips:
GATA is accomplishing an outstanding work by daily
informing the investment public about the manipulation of all markets,
especially the gold and silver markets. More, they are bringing out many
interesting articles and information. To inform about the gold market
actually would be the job of the World Gold Council (WGC). But this
organization fails completely. Since a long time there are rumors that the
politics of the WGC are influenced by Barrick, the biggest financier of this
organization. Literally, the GATA should be institutionalized and take over
the work of the WGC. My opinion is that the World Gold Council is worthless
and even works against the interests of the gold mining industry.
silberinfo:
On the 15th April last year, the Rothschild Bank withdrew
from the gold fixing in London. Did this come as a surprise for you? How do
you judge this step, what could have been the reasons?
F. Lips:
I don’t work at Rothschild anymore and I am no
insider anymore. I suspect that the business was not interesting enough
anymore but became too risky. I assume as well that Rothschild has nothing to
do with this manipulation scandal. Because this is a colossal scandal and if
these backgrounds are being recognized by the public there will be deaths.
silberinfo:
What is your opinion to the remonetization of Silver in Mexico? Would
this be realizable at all with regard to the low Silver stocks worldwide?
F. Lips:
The Silver Peso is a very good idea. The man who represents
this idea is a very affluent Mexican with the name of Hugo Salinas Price, who
– like me – is pleading for healthy currency measures. However,
the lot was blocked by the banks.
silberinfo:
You possess yearlong experience in regard to the mining industry in
Africa and today are advising various African and Canadian mining companies
via board positions and consulting functions. The South-African Central Bank
recently lowered the interest rates. Do you think that the time is now right
to invest in African mining businesses? How do you see the developments in
the African mining industry?
F. Lips:
At the moment I am in the directorate of Aflease Gold and Uranium
Resources Limited, Johannesburg. To answer your question: We have always
expected the Rand to weaken in the medium term. But this is very difficult as
foreign countries invest very strongly in South-Africa. The English Barclays
Bank is due to buy the South-African Bank ABSA for $10 billion. That way, the
Rand can not really get weak. The mining shares are of course undervalued but
what they need primarily is a higher gold price. Then the situation looks
different again. Then the Rand can even get stronger. The foreign investor
then is profiting in a double fashion, namely from the stronger currency and
from higher share prices. I could imagine that the share prices then
literally explode. Nonetheless, one needs to be selective of course and know
what to buy.
silberinfo:
The share price of Durban Deep respectively DRD Gold dramatically
crashed in the previous weeks. Do you think that now is the time to invest
anti-cyclically as there is “blood flowing in the streets/shafts of
Durban”? How high do you estimate the chances of insolvency? Even if
Durban survives, would you invest in a company that is looking for Gold 3000 meters
deep?
F. Lips:
Durban Deep has enormous problems, besides the Rand also
problems because of the Management. Presumably, the company will completely
withdraw from South-Africa and the single interesting pieces will be taken
over by other companies. The deepness of sources is a technical issue and big
improvements have been made in this respect, take the example of Western Area
Ltd.
silberinfo:
If Gold & Silver are appreciating noticeably, will the
greediness of governments/countries increase to gain control of their own
(and/or foreign) natural resources? Do you see such a development?
F. Lips:
As far as I know, at no time in history were gold mines
being nationalized – with the exception of communist countries. Not
even in Zimbabwe.
silberinfo:
At a certain amount, one is a facing a stocking problem
when buying physical Silver. Can you recommend an alternative? Mr Dr Bandulet
is mentioning a „metal account“ – what do you think of
that?
F. Lips:
Gold and silver must be held physical. I am against metal
accounts. However, big amounts of silver are neither easy to buy nor easy to
stock.
silberinfo:
Who is mastering whom: the USA – via their Dollar – the
Chinese and Japanese; or the Chinese and Japanese – via their Dollar
reserves – the USA? Who will be the stronger one in the long term?
F. Lips:
Both are interdependent from each other at the moment. In
the long-term the Asians will prove to be the stronger ones. You see, America
destroyed its own manufacturing industry – among other times –
during the Clinton/Rubin era with their strong Dollar policy. Yesterday, the
papers of the former biggest car manufacturers General Motors and Ford were
declared as junk.
Very good future chances I see for Russia which is rich in
resources. Its currency reserves are increasing every week.
silberinfo:
The European Union is on its best way to soften their stability
principles. If this trend continues to accelerate what could be the
consequences?
F. Lips:
They have already been soaked, namely by the biggest
countries: France, Germany and Italy. The EU could break apart and the Euro
would be replaced by national currencies again. We might know more when the
referendum about the European Constitution in France and Holland is behind
us. The sentiment in France is said to be not so well. Just recently, a new
book came out from the French currency expert Pierre Leconte with the title
“Le Grand Echec Européen” (in English: The big European
checkmate). In the book he recommends with sound arguments that France should
leave the EU. In the last moment the French might say to themselves that
maybe the EU is not the worst and vote with a majority “yes”. As
a solid Swiss, I was always against a joining of Switzerland at the EU. I
emphasize solid Swiss, because there are many Swiss who are blind and wanted
to join the EU long time ago. Even the majority of our government thinks like
that. The Socialists are advocates in any event.
I always liked General de Gaulle’s idea of a Europe
of Nations in a Europe from the Atlantic to the Ural. But that we shall be
ruled by non-elected public officials in Brussels, I can not accept.
Initially, I was against the Euro, but found it as an
alternative to the Dollar quite useful. Unconditionally, the Euro should have
a real gold link – without, it will remain an Esperanto currency.
Otherwise, the entire Euro-Experiment looks endangered to me. Everyone should
necessarily read Bernard Connolly’s book „Thee Rotten Heart of
Europe – The Dirty War for Europe’s”, because there you can
follow back the adventurous history step by step of how the Euro was set up.
silberinfo:
The U.S. real estate prices are reaching new highs, the
debts levels continue to widen and the air for the popular stockmarkets is
getting increasingly thinner. How do you judge the recent developments? Does
now come “the” stockmarket crash or do you see higher
probabilities for a Dow Jones at lets say >20,000 points in line with
strong inflation?
F. Lips:
I can not assess the real estate situation so well. If the
house prices rise, people calculate themselves rich and consume. This is what
the FED is really aiming at with its policy of cheap money. I don’t
want to predict crashs, eventhough they are possible any time due to the
“Derivatives Neutron Bomb”. But I give you now the following
prognosis: In 3 to 5 years we could see a Dow Jones at 3,000, a gold price of
3,000 per ounce (in 1980, the Dow Jones was at 850 and Gold as well at 850;
therefore 1 : 1) and a silver price of $200 per ounce. In both cases, crashs
undoubtedly might occur. In the case of hyperinflation the Dow could, as you
said, shoot to 20,000 and a gold ounce to $20,000 as well.
silberinfo:
Thank you, Mr Lips for this interview. We wish you all the
best. Concluding, you can write about a topic of your choice.
F. Lips:
I don’t want to further enlarge the complexity of
this interview, but solely emphasize the following:
I am an advocate of the Gold Standard. Without one it will
not work. In this respect I would like to point out to three interviews,
speeches and book revisions from me which you can find on www.TopGoldinvest.com, namely:
“Gold Wars, Battles, Gold and Currency Crisis”
“Prominence of the Gold Standard” and
“Interview to Gold Wars”
Thank you for your interest.
With best wishes.
Ferdinand Lips
--- On August 8th and 9th, Mr Lips
will be a key speaker at the “GATA Gold
Conference” in Dawson City, Yukon, Canada, where the Gold Rush
shall commence – once again. This conference is set to get attention
and become historic…
Visit www.goldrush21.com to find out more about the
conference.
By : Silberinfo.de
www.silberinfo.de
.
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