By Dr. Fred Goldstein, Senior Broker
Swiss America Trading Corp., Phoenix, Arizona
Friday, August 19, 2011
Nearly 400 people from 38 countries attended GATA's historic Gold Rush 21 2011 conference in London August 4-6, listening to more than 20 speakers as well as participating in panel discussions. After two days of stimulating presentations, the conference concluded with a social gathering and cruise on the Thames River.
GATA Chairman Bill Murphy and Secretary/Treasurer Chris Powell invited many of the brightest minds on the planet to discuss hard assets and macro-economics. The dominant theme of most speakers was summed up perfectly by Jim Sinclair: "Right now gold must be your central investment."
The stellar lineup of speakers included; geopolitical analyst James Rickards; Hugo Salinas Price, president of the Mexican Civic Association for Silver; Sinclair, the gold mining entrepreneur, metals trader, and Wall Street legend; Eric Sprott, CEO of Sprott Asset Management in Toronto; GoldMoney founder James Turk; Market Force Analysis letter editor and GATA board member Adrian Douglas; John Embry, chief investment strategist for Sprott Asset Management; Alasdair Macleod, economist and market analyst; Andrew Maguire, futures trader and silver market rigging whistleblower; and South African gold mining expert Peter George.
Turk, who predicted this summer's gold rally, said: "Gold is just as good a value today as when it was at $300 per ounce. Gold has been money for 5,000 years, while our fiat money experiment has lasted only 40 years. The amazing attributes of gold have been ignored but are very viable today. When politicians get involved in money creation, currency values drop. Gold is money, not an investment, as well as a tangible asset. Gold is not like a commodity that is produced and then disappears.”
Turk believes that the U.S. dollar is being hyperinflated.
Peter George held the view that sovereign debt would cause both bank and central bank defaults leading to $5,000 gold in three years. He believes that South African gold production will double and as a result the rand will surpass both the euro and dollar in value.
Ben Davies of Hinde Capital in London was too cerebral for some in the audience but he predicted $2,000 gold by February 2012, using the mathematical formula of Benfor's Law.
Sinclair captivated the audience. This was his first appearance at a conference in eight years. He blasted bankers for using over-the-counter derivatives totaling more than a quadrillion dollars. He explained that this was profit for the bankers at the expense of everyone. As consumers and citizens, Sinclair said, we are defending ourselves against runaway greed.
Sinclair also said the Federal Reserve has no choice but to create more paper money. He emphasized that you must maintain your gold hedges as "there is no solution" to the problems of the world financial system. Gold must be your central investment and it "protects you against things you cannot protect yourself against." He believes that the price of gold will not fall, as it did in 1980, and that gold will be a part of a new world reserve currency.
He said once gold breaches $1,764, the price could run significantly higher. He discouraged owning leveraged gold. He said that as hedge funds recognize value, they will move into gold mining shares.
Jeff Dahl, CEO of Samex Mining, had a poignant comment: "Gold is heaven-sent, a store of wealth."
GATA Chairman Murphy said the gold cartel (a group of bullion banks manipulating the gold price) is in trouble, no longer able to suppress the gold price, as gold did not drop recently at the gold futures option expiration date. When asked by the audience for a year-end gold price prediction, he said simply: "Higher."
Alasdair Macleod believes that Keynesian economics is failing and that we are heading for a collapse of paper money and hyperinflation. He said Keynesian policies pursue social objectives by economic means and that "bad economists and government prefer paper money." He quoted Ludwig Van Mises: "So inflation is part and parcel to imperialism, militarism, protectionism, statism, and socialism."
MacLeod believes that the chains of inflation today are too weak to be felt and too strong to be broken. I agree.
Hugo Salinas Price believes that silver must be remonitized and brought back into circulation. This must be sanctioned by the U.S. government, he said, not just by the public owning silver coins and bars. He said unequivocally, "There is no question the metals are going up."
Adrian Douglas believes that the current price of gold could be $53,000, based on the money supply and total U.S. sovereign gold. Douglas explained that the London PM gold fix has been manipulated down as part of the control mechanism on the price of gold. He also showed how silver has been manipulated and its price correlated with gold's. But the correlation broke down after the March 25, 2010, hearing of the U.S. Commodity Futures Trading Commission and the subsequent filing of lawsuits against the bullion banks. At the CFTC hearings, Douglas exposed the many unallocated gold accounts at members of the London Bullion Market Association.
Eric Sprott's company purchased several million ounces of silver last fall and he correctly predicted higher prices as silver rose from $17 per ounce to a recent high of $49. Sprott believes that the fundamentals for higher silver prices are excellent and that silver could be one of the best investments this decade.
Rickards titled his presentation, "The End Game -- Paper, Gold, or Chaos." He said we have not seen a major inflation yet because money velocity is slowing while money growth is increasing. The Fed is trying to stimulate lending and spending with negative real interest rates. This is not working and money velocity is not increasing. Rickards said, "We have eighty years of junk science in economics." He projected a gold price of $44,552, using global monetary aggregates (GM2) with 100 percent gold backing. He is about to publish a book titled "Currency Wars."
Andrew Maguire received a standing ovation at the end of his talk. He explained how the CFTC ignored his warnings and the proof he compiled of silver futures manipulation by the traders at the London office of J.P. Morgan Chase.
After GATA's Murphy and Douglas exposed this manipulation and revealed Maguire's evidence at the March 2010 CFTC hearing, an attempt was made on the lives of Maguire and his wife in London. Maguire continues to fight the manipulators by trading long silver futures for hedge funds and large investors at critical times. The audience recognized his bravery.
A few speakers discussed the possibility of gold confiscation in the United States as economic conditions deteriorate. Most agreed that hyperinflation in the United States is inevitable.
Many in the audience were very much concerned over future social chaos. As a result many believe we will enter a period of severe government restrictions on our personal freedoms. Many already have established domiciles and gold storage outside the United States.
The Gold Rush 2011 conference created an environment of intellectual and economic stimulation. Now it is up to each of us to use the knowledge acquired there and adopt a plan of action. In my opinion one cannot just acquire precious metals and coins; one must also formulate a survival plan that includes community education in preparation for future economic turbulence.