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
