08/30/10 Stockholm, Sweden – Gold remains in high demand among individual investors, hedge funds, and central banks all swapping cash for the yellow metal. This past weekend, an FT reportage looked into what the latest money flows into gold can tell us about it’s real importance.
Among others, the Financial Times spoke with Texas Republican Congressman Ron Paul:
“’We were in a financial crisis and inflation was high,’ Paul recalls. ‘But the Federal Reserve wasn’t interested. I remember Paul Volcker [then president of the Federal Reserve] walking into a room in 1980 – at the height of the financial crisis, when gold went up to more than $800 per ounce – and saying, “What’s the price of gold?”’ According to Paul, ‘Everyone knows a high gold price is a vote of no-confidence in paper. That is why governments will manipulate and try to give you an artificial price for gold.’
“In his book Gold, Peace and Prosperity, Paul decries the end of the gold standard – the practice of backing currencies with a fixed weighting in the metal, which took many forms through history. President Nixon brought an end to the gold standard in 1971, as part of his attempt to overcome the strain of funding the Vietnam war and the US’s mounting trade deficit. Paul thinks the system of fiat money facilitates ‘governments’ attempts to inflate, control the economy, run up deficits and fight senseless wars’. He worries, too, that both the supply of paper money and government debt levels are spiralling out of control.
“‘My beef is with the paper money,’ he says. ‘All the problems we’re having today were destined to happen. Gold plays an important role in the monetary system because it restrains government spending.’ Without it, Paul argues, central banks have the power to print money without pausing to consider the consequences, and more impetus to spend it.”
Also, according to the FT’s discussion with Ken Rogoff, Harvard professor and former head researcher at the IMF, “we are witnessing an international scramble for gold.” The shifts we’re beginning to see in central bank gold holdings could be one of the most clear signs of economic strength that China and India are displaying relative to the US and other developed nations.You can read more details in a Financial Times reportage on the true value of gold.
Best,
Rocky Vega,
The Daily Reckoning
Rocky Vega
Rocky Vega is publisher of The Daily Reckoning. Previously, he was founding publisher of UrbanTurf and RFID Update, which he operated from Brazil, Chile, and Puerto Rico, and associate publisher of FierceFinance. He specialized in direct marketing at MBI, facilitated MIT Sloan School of Management programs, and has been featured on CBS. Vega graduated with honors from Harvard University, where he was on the board of Let’s Go Publications and directed business programs involving McKinsey, Goldman Sachs, and Harvard Business School faculty. He is also enrolled at the Stockholm School of Economics.
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i can’t believe that the financial times would allow anyone like ron paul to speak about gold….i am sure that it is a setup for a hatchet job….
he who owns the gold makes the rules…
he who owns the gold market?
do some digging into the 100 to 1 leverage the LBMA is scrambling to cover
then report back
After five thousand years, there really is no other monetary standard. Everything else is just a temporary, illusionary, substitute.
Is there any doubt that the U.S. Govrenment will end up seizing the populations’ gold?
Gold has been money for 5,000 years… and it will be again.
Pure hogwash and Paul is the idiots complete idiot.
if Nixon has chosen a different course, history would have been rewritten. Global warming minus 5 degree celsius off, global urbanisation moves in snail pace, we breathe in oxygen-rich air and breathe out pure carbon dioxide for industrial recycle, deforestation minus 50%, woman- export trade in this world would not have existed and we find serenity and tranquility everywhere. Someone has done destruction of earth rather than construction. The dreadful consequences and repercussions!