"And never brought to mind!". Yes, we know that we're jumping the gun by a month. Auld Lang Syne is for December 31, not November 30. But for those of us who maintain an "old acquaintance" with Gold as it once functioned, the song is appropriate at any time of year. And as the momentous year of 2001 winds down, it has seldom been more appropriate.
The old acquaintance between Gold and what circulates as money is something that MOST Central Bankers want to extinguish utterly. After all, Gold and what circulates as money have had NO "acquaintance" at all since August 1971. Central Bankers have been working assiduously at this task for many decades. For a while in the late 1990s and into the year 2000, it appeared as if they had succeeded. Gold did not even register on the investment radar. Why bother with it, when such huge profits were there for the taking in the stock markets.
And now again, in the period since the week of Sept. 17 - 21 when the stock market "crashed" back into action after 9/11, there have been profits to be taken. That is, of course unless you had the misfortune to buy into a stock like ENRON.
The Dow has worked its way back to almost 10000 from the 8235 it plummeted to on September 21. By November 26, spot future Gold had given back all but $US 0.20 of the $US 20.70 it gained in the aftermath of 9/11. For the past three weeks, the Dow has been at a MAJOR resistance point while $US Gold has been at or about a major SUPPORT point.
That is talking in technical terms - talking in terms of charts. In "fundamental" or "economic" terms, the Gold price is grossly oversold while U.S. stocks, bonds, and the currency itself are grossly overbought. The bad economic news was beginning to flow in before 9/11. The flow has become a flood after 9/11. Tragic and dastardly as the terrorist attack was, it has had only a minor effect on this increasing flood.
The fact of the matter is that the U.S. and world economies were vastly over-extended before 9/11. The debt already built up was clearly unsustainable. After 9/11 this condition was made hugely worse by Central Banks accelerating their liquidity provision, by massive interest rate cuts, and by governments diving headlong into deficit spending, or vastly increasing the deficit spending they were already doing.
All of this is not, strictly speaking, "economic" or "fundamental" at all. What it is is increasingly desperate actions by those in a position to take them, all of which fly directly in the face of any sane economic course of action. The problem is that the world is not facing a "technical" or "fundamental" or even "economic" problem - it is facing a POLITICAL problem.
Before 9/11, the political power to intervene in the lives and fortunes of supposedly free people existed in every nation. After 9/11, the political power to do these things has emerged from the potential to the actual, and its scope has become all encompassing. In the U.S., the "Patriot Act" gives the U.S. Administration (Congress has little or no voice in this) carte blanche to meddle in EVERY aspect in the lives of its citizens. In Australia, the recently re-elected Howard government is busily preparing their own version of the same thing.
Those of us who remember what it was like to live in a comparatively free country cannot avoid being hit with "Auld Lang Syne". Sure, even in the 1950s and 60s, government had the potential to dictate our entire lives (in the U.S., for example, via Executive Orders). But most Western governments, at least, were not yet so debauched that they dared to exercise these powers to their full potential extent.
But political debauchery has steadily worsened since then, and no sooner did the U.S. suffer the first actual attack on its own mainland in modern times, than it became all encompassing. It was always going to happen. Once Gold was completely removed from financial interaction more than 30 years ago, the route to complete governmental takeover was cleared.
Forget any "old acquaintance" with honest money, with voluntary interaction in FREE markets, with adherence to promise or contract, or with self respect or respect for others. As the late, great Robert Heinlein was fond of saying, you can't cheat an honest man. Nor can you rule him.
Gold used to be "controlled" because it was politically expedient to do so. Now, it is controlled because the political survival of those who wield political power is at stake. The control, and debunking, of Gold as the circulating medium of exchange is one of the most NECESSARY pre-requisites of those who would weild total political power.
Look at the recent Gold "action". Physical demand continues to grow. Lease rates are increasing. Volume on the paper Gold markets is going up. Large gold producing companies, even those sitting on large Gold hedge books, are being desperately pursued. And still the $US price stays dormant - even this week with the U.S. Dollar falling almost 2% against a basket of the currencies of its major trading partners.
For anyone who values his or her political FREEDOM, the old economic acquaintance with Gold used as MONEY must NEVER be forgotten. It is one of the major purposes of these Gold commentaries to bring it to mind, and introduce it to other minds, on a regular basis.
Gold as money and economic and POLITICAL freedom are indivisible. You can't have any of them without having ALL of them. At a time when political freedom is in even greater danger than it was during the "Cold War", because this time it is the VICTOR in the Cold War that is the greatest threat to it, Gold has a VITAL role to play.
Gold must be re-established as money, nothing less will do. The present tragic irony is that nations which have recently emerged from Totalitarianism - like Russia and Eastern Europe - understand this. The so-called "free world", with many honorable and eloquent exceptions, does not. They need to re-learn some old lessons. Their freedom, and yours, and mine, is at stake.