Jeremy Warner: When money dies, gold comes into its own

Jeremy Warner: When money dies, gold comes into its own by Chris Powell for GATA

Dear Friend of GATA and Gold:

Today’s London Telegraph has a surprisingly if begrudgingly favorable commentary on gold by the newspaper’s assistant editor and economics columnist, Jeremy Warner. Those who follow GATA and gold may find his main point only obvious — that gold performs splendidly when government-issued money is being devalued — but then such devaluation is yet to be widely understood by the great mass of users of government money.

Those who do follow gold may be most interested by Warner’s acknowledgment that the British government’s gold sales that began in 1999 were meant to “rescue a number of banks from ruinous short positions in the metal.” This point was made at the time by gold price manipulation litigator and GATA consultant Reginald Howe —

— but has yet to be accepted by other establishment market analysts.

Unfortunately Warner repeats a common error, asserting that the economist John Maynard Keynes called gold a “barbarous relic” when in fact Keynes reserved that term for the gold standard in currencies.

Warner concludes: “A rising gold price reflects, above all other things, a loss of trust in the value of fiat currencies, for which there is good reason right now. But for the metal to really come into its own requires a prolonged period of relatively high inflation, similar to what occurred in the 1970s after the United States came off the gold standard and President Nixon effectively opted for money printing and inflation over tax rises to pay for the Vietnam war.

“For the moment, the presiding consensus view remains the opposite — that we are heading into a great deflation. I’m not so sure. The least painful way of dealing with a big debt overhang is to inflate it away. Who knows? The gold bugs might actually be on to something.”

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Chris Powell

The Gold Anti-Trust Action Committee was organized in the fall of 1998 to expose, oppose, and litigate against collusion to control the price and supply of gold and related financial instruments. The committee arose from essays by Bill Murphy, a financial commentator on the Internet (, and by Chris Powell, a newspaper editor in Connecticut. Murphy's essays reported evidence of collusion among financial institutions to suppress the price of gold. Powell, whose newspaper had been involved in antitrust litigation, replied with an essay proposing that gold mining and investor interests should act on Murphy's essays by bringing antitrust lawsuits against financial institutions involved in the collusion against gold. The response to these essays was so favorable that the committee was formed and formally incorporated in Delaware in January 1999. Murphy became chairman and Powell secretary and treasurer.