The public prior to 1914 trusted the banks because the banks promised to redeem gold at a fixed price. This promise was backed up by the courts -- contract law. When World War I broke out, the politicians broke the law on behalf of the banks, authorizing the banks' confiscation of the depositors' gold. Then the politicians confiscated this gold on behalf of their respective central banks, turning the gold over to their central banks. In short, the politicians lied.
Governments and central banks confiscated the public's gold in 1914 (Europe) and 1933 (United States). In 1971, Richard Nixon unilaterally "closed the gold window," i.e., he told the Treasury Department to cease delivering gold to foreign central banks at the promised price of $35/ounce.
This report provides background material for my department on Precious Metals. It's in the FOR MEMBERS ONLY section. (For information on how you can gain access to this section of my site, click here.)
Gold is the most effective way to shield yourself from the lies of politicians and the digital printing presses of the central banks. But when the Federal Reserve is deflating, gold comes under selling pressure. In the week of September 15, the FED started inflation.
Which form of gold is best to own for emergencies? In what form? That's the 64-ounce question. I will help you answer it.
Gold is a political metal. Governments and central banks confiscated the public's gold in 1914 (Europe) and 1933 (United States). In 1971, Richard Nixon unilaterally "closed the gold window," i.e., he told the Treasury Department to cease delivering gold to foreign central banks at the promised price of $35/ounce. The dollar is no longer connected to gold.
To hold down the price of gold, thereby forestalling the public's awareness of the fiat money/gold ratio, central banks are today "leasing" their gold. They deliver it to large gold brokerage houses, called bullion banks. The bullion banks pay central banks about one-quarter of one percent interest per year on the market value of the gold on the day they leased it. Then they sell the gold and invest the money at rates 15 times (or more) higher than they pay central banks. This transfer of gold out of central bank vaults is not counted as a sale by the central banks.
If the bullion banks were told to return the gold, they would have to buy it in the open market. This would drive up the price of gold. They are not asked by central bankers to return this gold.
[Note: I had the following on this page from the first day.] Gold is not a recession hedge. Don't believe anyone who says that gold does well in recessions. It hasn't in the post-1971 era, after Nixon closed the gold window.
I have written a manual on monetary theory and policy. It explains why the fiat money system that exists today is so dangerous. Today's monetary system is literally an immoral system. Learn why here:
Honest Money
Here are some free sample articles on gold. . . . The Dow/Gold Ratio Gary North This ratio indicates how many ounces of gold you can buy with one unit of the Dow Jones Industrial Average. . . . keep reading How the World's Central Bankers Stole the Public's Gold, Beginning in 1914. Gary North The international gold standard was always a government-created fraud waiting to happen. Shortly after World War I began, this fraud was consummated. Lesson: a government promise is never as good as gold. . . . keep reading Why a Thick Layer of Dust on Top of a Nation's Gold Reserves Is a Good Thing. Selling the Gold to Private Buyers Is Even Better. Gary North The Opponents of Gold Hate the Fact That It Restricts Government Spending. They Love Government Spending -- Even the Monetarists. . . . keep reading The Day the Bank of England Ran Gold Down to $256 -- Selling Its Gold at the Bottom. Here's Why. Gary North A seller of any commodity does not announce his sale in advance, for that might drive down the price. Yet central bankers always announce such sales. The reason is obvious: to drive down gold's price. This is not irrational behavior, if you understand their peculiar situation. . . . keep reading Gold Is the Public's Veto on Central Bank Monetary Policy. Gold Allows Us to Short the World's Fiat Currencies. Gary North Central banks have held down the price of gold by inflating less and by selling off their gold reserves under the cover of calling this "leasing gold." They cannot pursue either policy indefinitely without breinging on a worldwide depression. . . . keep reading http://www.garynorth.com/public/330.cfm?sd=32
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