On January 18, no less a paragon of the US establishment media than the Washington Post newspaper published an article with this startling title: "Ron Paul wins support urging end to the Fed, pushing the gold standard. But is that possible?"
The Post didn't answer that question. It simply quoted the usual "experts". Their conclusion was predictable enough. Absolutely not, almost three millennia of Gold as money notwithstanding. As the Post put it: "...most experts dismiss the scheme as completely unfeasible in the modern global economy." Besides - "...there's not enough gold in the world to cover the value of global transactions and thus alleviate the need for paper currency." So there!
Our "Gold Pages" were first uploaded to the internet well over a decade ago in 2001. Take a moment to go back and read what we had to say then. We have not changed a word since the page was first uploaded. As you can see, the argument hasn't changed since then. What has changed is the volume of global transactions which are "financed" by paper money. What has also changed, as a result of that hugely increased volume, is a big change in the exchange ratio between gold and the bedrock of all paper money - the US Dollar.
We've all heard the old one about a PhD - Piled higher (and) Deeper. But my father had a much better one, a definition of an "expert" in the context used in the Post article:
"An expert is a person who knows more and more about less and less until ultimately he or she knows everything there is to know about nothing at all."
I have always found that definition very useful. Could aything, for example, better describe Ben Bernanke?
But while the "experts" pontificate, it is business as usual on what are so piquanatly called the "Gold markets". On January 17, the precious metals consultancy Thomson Reuters GFMS reported that in 2011, global central banks increased their Gold lending for the first time since 2000. The reason for the lending was stated as being to assist the commercial banks (notably the European commercial banks) to raise US Dollars. One of the great fears of the latter few months of last year is that the commercial banks were going to have to raise a lot more capital in a market which was refusing to buy bank paper of any description. Since the banks couldn't sell their own IOUs, they would have to sell somebody elses IOUs, most of which were and are denominated in US Dollars. Can't have that! If the real "value" of this paper ever came to light the fictional valuations would be revealed. Along came the Fed with their "Dollar swap" agreements. And along came the central banks with their gold lending.
About a week before this report on central bank Gold leasing came out, the Asian press were reporting that Chinese Gold imports from Hong Kong were breaking records in the lead up to the Chinese New Year holidays which begin on January 23. And ZeroHedge was reporting that in the first few days of 2012, there was more physical silver sold in the US than in any MONTH of 2011 except January and September. There is no slackening of physical demand. Neither is there any slackening of the propaganda against Gold and the manipulations of the paper precious metals "markets".
That should come as no surprise, both of these have been prominent features of the entire bull market to date.
(Chart appears here in original analysis)
The significance of the table above is that it shows the all time high for Gold denominated in what is probably the most representative major "commodity currency" in the world - the Australian Dollar. That high was set on February 20, 2009, a month before the US Fed embarked on QE1 for the express purpose of rescuing the global market for US paper assets.
Gold in terms of the other three major currencies shown in the table had since gone on to set major new highs considerably above the levels reached in February 2009. At the end of July 2011, Gold hit new all time highs in terms of US Dollars, Euros, Canadian Dollars, Pounds and many other currencies. By August 4, 2011, there was a BIG change in the table as the Aussie Dollar Gold price took out its February 2009 high. It maintained those levels until the last week of 2011
When Gold reached its all time high in Aussie Dollar terms in February 2009, the Aussie Dollar was trading at $US 0.6377. This was at the height of the huge US Dollar rally which took place in the aftermath of the Lehman Brothers crisis of September/October 2008. The Aussie Dollar gained parity with the US Dollar (for the first time in nearly 30 years) on November 3, 2010, the day that the US Fed officially announced QE2. It then climbed steadily and accelerated in April 2011. On April 29, the Aussie Dollar reached almost $US 1.10. Over the last week of July 2011, it hit that level for a second time. Then the combination of a falling Aussie Dollar and a rampant $US Gold price pushed the $A Gold price into the black on the table above.
Gold in terms of the other three currencies in the table is a long way above the level it reached in February 2009. As we enter 2012, Gold's percentage gain in Euro terms has almost caught up with its US Dollar gains. In Australian Dollars, Gold is once again in the black after having slipped below its February 2009 levels over the last week of 2011.