One, perpetrated famously two years ago by Federal Reserve Chairman Ben Bernanke, is that central banks hold gold not because it’s money but because it is just an “asset” and “tradition”:
Bernanke must dearly wish that it were so. But the Bank for International Settlements confirms otherwise, that gold is “a financial instrument”:
Another disastrously false premise is that gold doesn’t pay interest. But gold pays interest just as money does — when it is lent:
In commentary posted today at Resource Investor, the financial letter writer Przemyslaw Radomski repeats another disastrously false premise — that “gold cannot be printed or manufactured.”
In fact, of course, gold can be printed to infinity thanks to “paper gold,” the issuance of claims to gold that doesn’t exist, claims against bullion banks that are never exercised and probably cannot be honored without supportive dishoarding and leasing from central bank gold reserves:
Working from this false premise, Radomski proceeds to try to answer the question “Have gold and silver stopped responding to the dollar’s price action?” without ever considering the likely price-suppressive effect of “paper gold”:
Indeed, this is the longstanding disparagement about gold in recent years — that even with its great appreciation over the last decade, the gold price has not kept pace with inflation, even as other tangibles have kept pace and even as there has been no substantial increase in gold mine production.
But somehow Radomski has managed to write a long commentary about the prospects for gold, complete with charts, without ever mentioning the involvement of the gold market’s largest participants, central banks, and their agent, the Bank for International Settlements, which appears to be trading gold, gold options, and gold derivatives on their behalf every day —
— and which even advertises secret gold market interventions as being among its services to its members:
Given such surreptitious trading and intervention, if gold, as Radomski wonders, has stopped responding to variations in the value of the U.S. dollar, the explanation is not likely to be found in his or anyone’s price charts, which are mere holograms being projected onto what only used to be markets, interpreted by what only used to be financial journalists, writers whose first principle seems to have become: Never put a critical question to the primary source.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.