The monetary gadfly behind the Liberty Dollar, Bernard von NotHaus, declared over the weekend that he expects to be criminally charged over his currency and is vowing "a spectacular trial" that will "put this country's monetary system on trial."
Mr. von NotHaus was interviewed by The New York Sun via telephone on Saturday following disclosures that the Liberty Dollar, a gold- and silver-based currency marketed by anti-government activists as an alternative to the greenback, drew the federal government's scrutiny because the coins resembled official currency produced by the U.S. Mint.
After a two-year undercover investigation of the currency, federal agents last week raided the Idaho mint where the Liberty Dollar was produced and the Indiana offices that served as its marketing headquarters. Tens of thousands of gold, silver, and copper coins were seized, including a special edition bearing the image of a Republican presidential candidate, Rep. Ron Paul, a supporter of the gold standard. It is the standard edition of the Liberty Dollar, which features a profile of a crowned Lady Liberty as well as the lettering USA and "Trust In God," which federal authorities say is illegal.
These symbols and language are similar enough to coinage from the U.S. Mint that the Liberty Dollars "are easily confused with legitimate United States Currency," a purported affidavit apparently filed last week in support of the search warrant claims.
The apparent affidavit was posted on the Internet on Friday by the libertarian think tank, the Reason Foundation. A spokeswoman for the U.S. attorney's office in Charlotte, N.C., told the Washington Post that a court clerk had mistakenly made court documents in the case public.
Signed by an FBI special agent, Andrew Romagnuolo, the affidavit says the Liberty Dollar operation was in essence a counterfeiting operation motivated by an ideological desire to undermine American currency and to make a profit. The affidavit claims there is probable cause to believe Mr. von NotHaus, along with his office manager and a North Carolina retailer of the coins, had conspired to pass off the Liberty Dollar as government currency.
Mr. von NotHaus, a critic of the Federal Reserve who retired from a career at a private mint in Hawaii, denied introducing the Liberty Dollar for personal gain. He said the Federal Reserve is pursuing a ruinous and unconstitutional monetary policy, and is recommending his currency as being inflation-resistant.
"I never took a penny during the first five years and got only a small amount of gratuity over the past five years," he said.
He declined to say exactly how much money he had made from the Liberty Dollar.
Financial statements from the operation were not immediately available. But in 2001, when Mr. von NotHaus put an ad in the Liberty Dollar's newsletter for an executive director to take over his duties, he promised a salary of "well over $5,000 cash per month, no withholding."
The Liberty Dollar, which has been produced since 1998, has more than $20 million in circulation across the country. Coin enthusiasts and libertarians who support the venture have convinced a variety of retailers to accept the medallions, sometimes by offering it to them at slightly less than face value.
One longtime Liberty Dollar supporter says the venture is largely a failure.
"It never did do what the organization really wanted it to do -- become widely accepted as a medium of exchange," a Liberty Dollar distributor in Michigan who is mentioned in the affidavit, Ron Goodger, said by telephone. "It's a tremendous amount of work to get the public to accept something it wasn't familiar with."
Liberty Dollars are circulated across the country through regional agents such as Mr. Goodger, who get to purchase the coinage at a slightly discounted rate. According to the affidavit, the FBI has managed to get three undercover employees to sign up as Liberty Dollar agents. The investigation began in July 2005 and lasted until this month, according to the affidavit.
The affidavit includes details such as how at informational sessions intended to drum up interest in the currency -- called Liberty Dollar University -- attendees could buy shirts with the wording "The US Mint can bite me."
Based on the up-close view of how Liberty Dollars are distributed, the FBI alleges that "a multi-level marketing scheme" was in place whose main purpose is to enrich those involved in distributing the coins.
The heart of that charge is that Liberty Dollars are sold for slightly more than the value of the silver and gold inside of the coin. Until recently, the silver ounce Liberty Dollar was marketed at $20, several dollars above silver's spot price. And Mr. von NotHaus was in the process of revaluing it at $50 a piece, according to the affidavit.
What the affidavit describes as a "scheme," Mr. von NotHaus defends as sound economic policy.
"It's the only way the Liberty Dollar could perform. Doesn't it make sense that as the underlying commodity appreciates in value, the purchasing power should appreciate in value?" Mr. von NotHaus said. "They're really just opposed to my economic theory. Where's the fraud?"
A 1999 report by the Southern Poverty Law Center said that many of the participating merchants "are run by men and women connected to the radical right."
Mr. Goodger described the supporters of the currency as "concerned people who believe our government is out of control."
Mr. Goodger said that as far as he knew no one connected to distributing the currency advocated armed resistance against the federal government.
"In the end all the organization is doing is getting precious metals out there in the hands of the people, and that's something that's got to be done," he said.
"It's a peaceful operation," the office manager for currency operation, Sarah Bledsoe, said by telephone. "We just want the government to give us a better currency, because what we have is not working. We don't want another Depression."
Ms. Bledsoe, who was present at the raid in Evansville, Ind., is named in the affidavit as part of the alleged conspiracy.
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BECK: Well, some people would tell you that the U.S. dollar isn't worth the paper it's printed on. Well, have you seen the Jay-Z video where he is flashing euros in his latest rap video? You've got to ask yourself, if Jay-Z is doing that, how bad is this going to get?
Well, have no fear. The Liberty Dollar is here, in denominations of one, five, and 10 dollars. The Liberty Dollar already has $20 million in paper currency printed and is ready to replace the dollar or not.
Bernard Von Nothaus is a monetary architect and driving force behind the Liberty Dollar and, apparently, in big trouble with the feds, because they say you were trying to collapse the U.S. dollar, which is pretty much the charge that you have made against the feds. Is it not?
VON NOTHAUS: It's something like that, Glenn.
BECK: Yes. Now, how do you -- why do you believe that the federal government is trying to collapse the dollar?
VON NOTHAUS: Well, I don't really think they're trying to collapse the dollar, but I think that we have a very strong history since 1913 of the collapse of the dollar, because if you look at the charts that the government puts out, since 1913 to 2001, the U.S. dollar has lost 96 percent of its purchasing power.
BECK: Yes. Now, as I -- as I understand this, you`ve been making the Liberty Dollar. And it's a barter system, if I understand it right. Where you can buy it and, if you can convince people to take the gold or the silver at the face value, they'll barter for it. What is the problem of the federal government with you doing this?
VON NOTHAUS: That's what we got -- that's what we're asking the federal government. I mean, the U.S. Mint posted this warning a year and a half ago, saying that what we were doing was illegal. And we said, "No, it isn't illegal." You know? And then they didn't take any action after that, Glenn.
And so what's a poor boy to do? But I sued the government because I want them to tell me what am I doing illegal?
BECK: OK. Let me play devil's advocate with you. Because you know, there are a lot of people in the crazy tree here on the government is going to collapse and, you know, whatever. And from time to time, you know, I get into the shade of that crazy tree myself.
But the -- the government is -- is saying that you are trying to compete with our own currency, that you are trying to fool people into thinking that this is U.S. currency. And quite honestly, if I looked at that -- can we show that again? If I looked at that with the Statue of Liberty, and it says "Liberty" and "USA" on the bottom and then "trust in God," not "in God we trust," it does look like a -- a U.S.-minted coin.
VON NOTHAUS: I beg to differ with you, Glenn. Similitude is what you're alluding to there. And it is not in violation of any of the similitude statutes at all.
BECK: I believe...
VON NOTHAUS: And...
BECK: I believe there's a jail sentence if you are trying to print your own currency.
VON NOTHAUS: No, sir. We've been printing our own currency for ten years. And I don`t believe there's a jail sentence here at all. Because we're not trying to fool people into thinking this is U.S. currency at all. We have built our whole marketing campaign on the simple fact that it is not government currency.
BECK: OK. Real quick, because I've only got about 10 seconds for you to answer this. I just want to make this clear. You printed Ron Paul's face on the back of one of these coins. He says he wasn't involved in that at all. Did you ask permission? Was he involved in that?
VON NOTHAUS: No, sir. We did not ask his permission at all because, according to the Federal Election Commission rules, to make it an independent contribution, we could not have his support.
BECK: OK.
VON NOTHAUS: So it was a surprise.
BECK: What a surprise it is. Your face is on a coin.
Bernard, thank you very much. ...
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====
RE: u.s.a. is strating to have many problems to solve - spec. to be a copycat of bolshevikz ussr -
9/11 destrutions Freedom and Liberty in America - continue? - like it did in Great Russia? -
the ussr bolsheviks gaining lots of red power again? -
Gold Conference held in London - an impressive event attracting top executives from many of the world's major gold mining companies to present ‘in conversation' with an analyst, particularly familiar with the company concerned asking probing questions - and interspersing this with questions from the audience.
Most of the majors presented in the morning session, while the afternoon was largely devoted to smaller companies making company presentations in the manner more common to the host of investment conferences held around the world.
Opening the conference, Anthony S. Fell, Chairman, RBC Capital Markets commented: "The timing of this conference is excellent; we have a perfect storm which favours investment in gold bullion and gold shares as far as the eye can see. The past few years have been a major long-term positive turning point in the fundamentals for gold, and the current systemic risk in the global financial system is now a very serious and real concern which will also bring renewed focus on gold as a store of value.
"This trend will continue and accelerate as events in this credit supercycle unfold, with this prolonged bull market lasting another decade or more. In this climate, I believe gold bullion is re-emerging as an accepted alterative investment and currency."
First up was Greg Wilkins, President & CEO of Barrick Gold Corporation: "Our recent strategic acquisitions have given us a much bigger global footprint, not only in gold, but also in copper, platinum and nickel. Although the company's focus is gold and will continue to be, this strong portfolio of high quality non-core assets allows us to deliver real value to our shareholders, as we seek ways to monetise our broad range of assets, using those proceeds to re-invest cash back into gold."
Commenting on the gold price he added: "It's hard to say where it will actually go. However, I do believe that the cost structure of the industry has changed so substantially in the past few years, that the sector would be in real trouble if we saw prices go down to $500/oz." He also felt that global gold mine supply was actually decreasing at a faster rate than people believe.
Wilkins also gave some interesting insights into Barrick's views on to where to invest. "There are certain countries Barrick won't go to" he said - "Particularly anywhere which puts anyone in harm's way". That applied to countries like the DRC and some other particularly African nations. And he then went on to comment on security of tenure and potential political interference saying "We are more likely nowadays to be taking countries off the list, rather than adding to it". He cited specifically Venezuela under President Chavez as being a place they wouldn't look at, and also those other Latin American countries, like Ecuador, which were trending in the same direction. Interestingly he saw Russia as a country where he felt the investment climate to be deteriorating which looks like foreshadowing some changes in Barrick policy in the region.
Wilkins was followed by Kevin McArthur of Goldcorp - a company operating and investing almost exclusively in the Americas and focusing entirely on developing new mines with low cash operating costs. He was predicting a 56% growth for the company over the next five years on operations with cash costs of around $175 to $200 an ounce. He felt Goldcorp's outlook was good after some stickier moments earlier in the year. The third quarter results were good and the fourth quarter "looks great"
Again on risk - physical and political - "We won't build a mine where we wouldn't go on holiday" he said. Goldcorp was primarily interested in building new mines in areas in which they were already working and cited plenty of scope for this - noting particularly Penasquito in Mexico and operations in Quebec around the developing Eleonore property, which he reckons is a major new gold sistrict.
McArthur said there had been a definite change of culture at Goldcorp since the merger with Glamis Gold, but overall the transition had gone pretty well. On the gold price, he, like other speakers, was looking to four digit gold in the near future.
Ian Cockerill, CEO of Gold Fields, also concurred on the four digit gold price expectation and confirmed the company's commitment to its international strategy, especially in China, commenting: "We see China as a long-term investment. The country is likely to be the world's largest gold producer this year; however, that production is coming from hundreds of different mines, so the opportunities for consolidation are huge. Furthermore, prospecting in China has hitherto been over large areas at shallow depths, so we are looking forward to working in this region extensively to drive Gold Fields' growth.
"Along with the company's unhedged profile, an increase in production from new projects and large resource base, we are well-placed to see improved earnings growth and cash flow in the future."
Graham Briggs, acting CEO of Harmony, and hoping to be confirmed in that position next month, has the challenging task of turning round a gold major built up on a "mixed bag" of relatively low grade marginal operations. The company has had some well documented recent difficulties and the task now is to turn it around, which is being helped by the high gold price.
Currently the company is addressing cost overruns and is going through a period of high capital spend. High cost uneconomic operations are being phased out and the company was one of the only one's at the event predicting an actual fall in gold output over the next year or two as restructuring takes place.
Evgueni Ivanov, General Director of Polyus Gold, was remarkably open in discussing the difficulties associated with major disagreements between the company's two principal shareholders, Mikhail Prokhorov and Vladimir Potanin. In a separation of their assets it looks now that Prokhorov will head Polyus, leaving Norilsk Nickel, from which Polyus was floated, in the hands of Potanin. "The company's Board is committed to delivering on the promises it has made to the market, and recent shareholder activity will not undermine the development of Polyus." he said.
Polyus is the leading gold producer in Russia and Ivanov discussed the company's growth strategy: "Growing organically rather than by acquisition will be the primary driver over the forthcoming years, as Polyus works to the approved strategy of four times growth by 2015, resulting in 3.9m oz of production annually. Our announcement yesterday updated the market on two major projects in the Krasnoyarsk region, Blagodatnoye, the largest gold discovery in Russia with reserves of 7.2m oz, and Titimukhta. Alongside our other projects and driven by an ambitious exploration programme, we expect our stated reserves of 68.6m oz to grow even further. We are always looking for acquisition opportunities; however, we are seeing few good, value-creating deals out there at the moment."
In particular, Ivanov singled out the Natalka deposit which he reckoned was the world's third largest, as being a major focus for the company. He also felt though, that the company would be looking for western jv partners to help develop the area because of its size. It has not yet been fully explored. He also disagreed with Greg Wilkins view of Russia as a risky mining environment reckoning it to be one of the world's best legislations in which to work - a view at least partly taken by Tye Burt of Kinross later in the day.
One very interesting aside to come from the talk was of a meeting between Russian President, Vladimir Putin, and the heads of the country's gold mining companies who suggested that the Russian Central Bank should consider increasing the gold element of its foreign currency reserves. He suggested that the Russian Central Bank may have been buying gold quite actively in the market and it will be see if this is actually the case when the Bank publishes its next statement.
The final morning presenter was Richard O'Brien, CEO of Newmont, another company which has seen some recent problems materialise with higher operating costs and reduced production at some of its major operations. O'Brien came to the CEO position recently and has already made some strong changes in moving to divest some of what he considers non-core assets and its gold hedges. This includes selling off its big royalty division - in part because a proportion of this related to non-gold assets and will use the money received in gold mining acquisitions where they can find those which meet its investment parameters - Miramar being the first of these.
On Newmont's money sapping Phoenix project, O'Brien thinks the mine planners and developers perhaps got things wrong in trying to push the mine into production too fast. In retrospect he felt that taking a bit more time could have alleviated some of the problems which have since occurred and are only now being addressed.
Overall O'Brien feels that Newmont needs to get back to using its extremely strong mining technical expertise to regain/rejuvenate its position through a more bottom line/cahflow oriented approach and is looking to build shareholder value strongly over the next five years.
The only Tier 1 producer presenting under the "in conversation" format in the afternoon was Kinross Gold, represented by Tye Burt where a takeover of Bema Gold has been successfully implemented over the past year. The company is looking to bring on three new projects with even lower cash costs than the company manages at the moment, and all of these present different kinds of challenges - these are Paracatu in Brazil where production is being tripled and is thus a straight expansion project.
Second is the Russian Kupol high grade gold/silver project - 80 percent complete - which is challenging climatically and geographically being in the icy north, but, as Burt says, probably no more difficult than developing a project in northern Canada or Alaska where similar constraints apply. He feels this is potentially one of the world's best gold mines with cash costs likely to be around $225 an ounce of gold sold.
The third project is the Buckhorn mine in Washington State where problems to be overcome are largely legislative and environmental. This is expected to add 160,000 low cost ounces a year to Kinross' production - also commencing in 2008.
To access the RBC Capital Markets' Global Gold Mining Conference webcast please click on http://www.wsw.com/webcast/rbc83/ The webcast will be available for 30 days.
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