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Money Metals News Alert
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December 30, 2024
– The stock market may finally be rolling over amid some weak economic
numbers coming in the door.
We've seen downward revisions of the
government's economic data from recent months.
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Also, there has been
unexpectedly persistent inflation numbers, increasing war drums, and some general
uncertainty about what policy changes will come from the new Administration.
Last week, gold was down
by a slight 0.1% and is trading lower on Monday. With less than two trading days
left in the year, gold is still showing a robust gain of about 25% in 2024.
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Meanwhile, silver fell 10 cents last
week and is down another 40 cents today. Like gold, silver has pulled back over
the last 8 to 10 weeks, but is still showing a yearly gain of $5 or about 20%
right now.
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Gold : Silver Ratio (as of
Friday's closing prices) – 75.4 to
1
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A Prior Fed Chair Admitted Gold's Competition
with Dollar; Powell Lies
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In his essay at MoneyMetals.com
this week marking the 50th anniversary of the re-legalization
of monetary gold in the United States in 1974, researcher and author Stuart
Englert noted the opposition by Arthur Burns, then chairman of the Federal Reserve
Board.
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That opposition remains
especially noteworthy today because of some details in Burns' testimony to
Congress about gold legalization on December 5, 1974, testimony Englert this week
called to our attention here
and here.
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Burns' opposition was weak as he
framed it himself – mainly a matter of fear that if private gold ownership
became legal again, Americans suddenly might move all their savings into the
metal, sparking speculation in silver and commodities and a wave of inflation.
Burns saved his true concern about the legislation for the end of his testimony.
Burns wrote:
"The risks associated
with a reopening of the gold market extend also to the exchange value of the
dollar in international markets. Apart from sales by the Treasury, any substantial
demand for gold by our citizens would have to be met by gold imports. The
consequence might be a worsening of our international balance of trade and
downward pressures on the dollar in foreign exchange markets.
"These pressures on the
dollar could, of course, be checked by sales of gold from our nation's monetary
reserves. But there are risks associated also with this course of action.
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"Since the
precise role of gold in the international monetary system is yet to be determined,
it would hardly be desirable to dispose of any sizable part of our reserve assets.
Clearly, therefore, various adverse consequences for our financial markets and our
economy may stem from a reopening of the gold market at the end of this month. No
one can now say with any confidence how serious these consequences are likely to
be.
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"The risks associated
with private ownership of gold are, however, postponable, and I see no material
advantage to the nation in incurring these risks under present
circumstances...
"We should be ready,
nevertheless, to make prudent use of the Treasury's holdings if demands for gold
threaten to have adverse economic or financial consequences.
"For example, if large
imports of gold exerted significant downward pressure on the exchange value of the
dollar, prices of imported products would rise, and this would tend to worsen our
inflationary problem. Sales from the Treasury's gold stock could lessen this
difficulty, and I therefore endorse the Treasury's intention to auction 2 million
ounces of gold early in January."
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That is, Burns first told Congress
that gold would compete with the dollar as a currency and store of value, and,
second, that this would compel the U.S. government to try to defeat the
competition by intervening in the gold market to knock the price down, as by
strategic sales from the U.S. gold reserve.
Contrast Burns' begrudging candor in
1974 with the assertion
made early this month by his latest successor as Fed chairman, Jerome Powell:
that gold and bitcoin compete with each other but not with the dollar:
What has changed since 1974 to prevent
gold from competing with and potentially disciplining the dollar's excesses?
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Nothing at all.
What has changed is only
that the highest government officials now regularly lie about gold, and that the
most important financial news organizations now refuse to ask critical questions
about government policy on gold.
Even a single critical
question could explode the whole racket.
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For example, the U.S. Commodity
Futures Trading Commission could be asked whether it has jurisdiction over
manipulative futures trading in the monetary metals undertaken by or at the behest
of the U.S. government, or whether such manipulative trading is outside the
commission's jurisdiction and perfectly legal.
GATA and U.S. Rep. Alex Mooney, R-West
Virginia, repeatedly have put that question to the commission and have repeatedly
been refused an answer.
Unfortunately the New York Times,
Washington Post, the Financial Times, and the Wall Street Journal, along with all
other mainstream financial news organizations, have not yet dared to ask and to
report the answer or refusal to answer.
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This week's Market Update was
authored by Chris Powell of the Gold Anti-Trust Action Committee.
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