From Deep in the Woods the Golden Bull came Charging Part – 3
The Golden Bull In 1971, a serious movement to restore America’s right to once again own it emerged, led by James Ulysses Blanchard 111, who co-founded the National Committee to Legalize Gold. He held press conferences while brandishing illegal gold bars, publicly defying the federal authorities to throw him in jail. In 1973 he hired a biplane to tow a “Legalize Gold” banner over President Nixon’s inauguration ceremony. He worked tirelessly lobbying Congress to get bills introduced and his reward came on 31 December 1974, when President Gerald Ford signed the bill that made it legal for U.S. citizens to once again own gold. In June 1979, Times magazine ran an article titled “Ingot we Trust”, which said “Quick- Buck speculators, long-haul investors and just plain inflation-scared savers have put so much money into gold that last week it ballooned to a record $277.15 an ounce…Predictions that gold could hit $300 an ounce by midsummer….are becoming self-fulfilling.” People started lining up in front of coin shops, phones were ringing off the hook at the commodity exchanges. America had gold fever. The gold fever was now turning into a twentieth-century gold rush. Just look at what Times magazine had to say in the article “Stampede for Precious Metal” from January 1980: “It was one of the most dazzling run-ups in history and it underscored the enduring psychological lure of the yellow metal as the most consistently sought-after possession in times of strife and uncertainty….In cities throughout the U.S. and Europe, people by the thousands lined up at jewellery and coin shops, lured by newspaper headlines of eye-popping new prices for gold and silver, and even by hourly news broadcasts on the radio. From January 1975 through to 1978 there were plenty of opportunities to buy gold between $100 and $200, but very few people did. It wasn’t till gold hit $400 or more that the public caught on. The strategy is simple: Buy low and sell high. If you buy low, you don’t need to try to time the exact top of a commodity upswing. Back in the 1970s, an investor who bought gold below $200 an ounce would have done amazingly well in just a couple of years and would have had plenty of time to sell at over $600. Throughout history, governments and the banking system start with a certain amount of gold and silver. Then they make things “easier” on the population by storing the heavy gold and silver for us and printing receipts for us to use as currency. But the trouble is that they never stop printing. They produce more and more receipts until, one day, the public senses the debasement and suddenly, in an explosive move, the gold and silver values catch up to all the receipts. Gold did what it has always done. In a move that saw it rise more than twenty-four times (2.328.5 percent) from its Bretton Woods price of $35 per ounce, it revalued itself and accounted for all the paper dollars that had been printed since the last time it revalued itself in January 1934, and all the credit card debt. But the most amazing this is that, once again, for a short while the U.S. had an opportunity to go back to the gold standard. But for investors, it’s a good thing that the Federal Reserve and the U.S. government chose not to go back to a Gold Standard. If they had, the greatest wealth transfer in the history of mankind would not be happening, and so the opportunity to have wealth transferred toward you would also not exist. But it is happening, and the wealth can be transferred to you. From the book: “Guide to Investing in Gold and Silver” by Michael Maloney
From Deep in the Woods the Golden Bull came Charging Part – 2
The Collapse of the Bretton Woods System By 1971 the Bretton Woods system had been completely overwhelmed by the will of the public and the free markets. Gold had once again forced the government’s hand and, on 15 August 1971, President Richard Nixon was forced to close the gold window. The U.S. dollar was no longer convertible to gold and all currencies became free-floating. For the first time in U.S. history, the currency supply was entirely fiat. And since the Bretton Wood system had pegged all the world’s currencies to gold through the dollar, all currencies on the planet became fiat currencies simultaneously. This was tantamount to the U.S. declaring bankruptcy. Gold had won this match and it was now free to set its own value on the open market. At this point, most countries and central banks were now on a dollar standard and were using dollars for international trade instead of gold. So with the end of the Bretton Woods system in 1971, the dollar was freed from the fiscal constraints, allowing the U.S. to print as much paper “gold” as it wanted. A power it still holds today. No other country has this hidden advantage and now U.S. politicians seem to consider it their birthright. This advantage gives the U.S. the ability to run budget, trade and other deficits and imbalances far in excess of anything the world has ever seen. It also gives the U.S. the ability to tax not only its own population but also the population of the entire world through the inflation caused by its deficit spending. Inflation of a currency supply respects no borders. Therefore every new dollar that is printed, devalues all other dollars everywhere in the world. Yes, the dollar was free from the fiscal constraints of gold, but gold was also freed from the dollar. On 15 August 1971, gold became its own free-floating international money, no longer bound to any country. From the book: “Guide to Investing in Gold and Silver” by Michael Maloney
From Deep in the Woods the Golden Bull came Charging Part – 1
Bretton Woods What got us out of the Great Depression wasn’t the government’s spending and work programs of the Roosevelt administration, or even World War 11, as most people think. No. What got us out of the Great Depression was the tremendous influx of gold from Europe. When the U.S. raised the price of gold by nearly 70 percent to $35 per ounce, prices of goods and services in the U.S. didn’t immediately jump by the same 70 percent. Remember, thanks to the Roosevelt administration, the dollar was devalued by over 40 percent. So its purchasing power overseas fell by the same amount, slowing our imports drastically. But countries, buying from the U.S. now found their currency purchased 70 percent more U.S . stuff than it used to. Also, when a country fixes its currency to gold, it has to buy or sell as much gold as is offered or demanded to maintain the currency price. Suddenly, all the gold mining companies around the world were selling their gold to one buyer, the U.S. Government. So this, plus a tremendous trade surplus accounted for most of the gold inflows from 1934 through 1937. But in 1938, a new dimension was added. When Germany’s Adolf Hitler annexed Austria, the rest of Europe panicked, fearing the looming threat of war. And there was a transfer of wealth from European investments to U.S. investments as Europe braced for the ravages of war. European consumer goods factories were used to produce guns, ammunition, airplanes and tanks. Thus most Europeans had to obtain everyday items from U.S. So, in reality, gold inflows, foreign investments, and war profiteering, not social programs, were what lifted the U.S. out of the Depression. About a year before the end of the war representatives from forty-four countries met in July of 1944 at Bretton Woods, New Hampshire, to figure out how they were going to make the world of International trade and finance work again. They needed a system of international payments that permitted trade without the wild fluctuations in currency exchange rates or the fear of sudden currency depreciation that crippled international trade during the Great Depression. It was decided that all countries would peg their currencies to the U.S. dollar and the U.S. would make the dollar redeemable in gold, to foreign central banks only, at a rate of $35 per ounce. This meant that, from World War 11 on, all foreign central banks had to hold dollars instead of, or in addition to, what was left of their gold reserves. From the book: “Guide to Investing in Gold and Silver” by Michael Maloney
Greed, War and the Dollar’s Demise Part – 4
Executive Order On 4 March 1933, Roosevelt was inaugurated and within days he signed executive proclamations closing all banks for a “bank holiday” freezing foreign exchange and preventing banks from paying out gold coin when they reopened. A month later he signed an executive order requiring U.S. citizens to turn over their private property (gold) to the Federal Reserve, in exchange for Federal Reserve notes. On 20 April, he signed another executive order, ending the right of U.S. citizens to buy, or trade-in, foreign currencies, and/or transfer currency to accounts outside the U.S. On 28 August 1933, Roosevelt signed Executive Order 6260, outlawing the constitutional rights of U.S. citizens to own gold. To keep from having to default on its commitments (declare bankruptcy) and to keep concealed the fraud of fractional reserve banking, the banking system’s only choice was to get the government to make gold (the legal money of our constitution, an inert, inanimate element) illegal for U.S. citizens to own. Roosevelt gladly obliged. The government was no longer a government of the people, by the people, for the people. Instead, it was a government of the bankers, by the bankers, for the bankers. Weight Watchers On 31 January 1934, Roosevelt signed an executive proclamation effectively devaluing the dollar. Before this proclamation, it took $20.67 to buy one troy ounce of gold. But now, since the dollar instantly had 40.09 percent less purchasing power, it took $35 to buy the same amount of gold. This also meant that, with regard to international trade, the government had just stolen 40.09 percent of the purchasing power of the entire currency supply of the people of the U.S. – all with the stroke of a pen. That is the power of fiat currency. But despite the efforts of the U.S. government, gold won in the end. Gold and the will of the public forced the government’s hand. By forbidding the U.S. population from laying claim to any of its own gold, and by devaluing the U.S. dollar, the U.S. was able to avert international runs on the dollar and was able to continue international trade under the gold standard. By declaring the claim checks from foreign central banks to purchase each unit of gold, there was now a far lower multiple of claim checks to gold, and the fractional reserve system was once again manageable. But all the pain and suffering could have been avoided. Gold and silver require discipline and constraint from banks and governments, and both banks and governments resent gold for it. Numerous factors contributed to the Great Depression, but there was only one root cause. Governments around the world, along with the Federal Reserve, foreign central banks and commercial banks, all tried to cheat gold. From the book: “Guide to Investing in Gold and Silver” by Michael Maloney
