June 30, 2012
Today’s Radio Free Delingpole is dedicated to one of my new obsessions: gold. Partly I’m interested in it for the same reason Gollum was in the ring – because it’s shiny and precious and makes me feel like I can control all Middle Earth. But mainly it’s because I think our global economic policies are steering us inexorably towards monetary collapse. Gold, historically, has a proved a useful store of value in times of inflation or hyperinflation. I see no reason why this shouldn’t happen again WTSHTF (as we Austrian-survivalist-anarcho-capitalist types like to call the coming event).
Which is yet another reason, of course, why we should all so viscerally loathe Gordon Brown – and never ever forgive him for what he did to our gold reserves. Not only did he sell them off at a pittance – 395 tonnes of the stuff at a rock bottom $275 an ounce – but he actually got even less than he could have done by “butchering the trade.” This is the City phrase for telegraphing your sale in advance. In other words, if you announce to the world that you’re going to sell large quantities of your gold reserves – as Gordon did – gold holders will naturally sell off their own reserves beforehand, anticipating the inevitable price drop. As I detail in this Spectator article, what this also meant is that Britain has dropped way down the league of gold-owning nations.
The Chinese are surreptitiously building up their reserves; so too are basket cases like Venezuela. Britain, however, now languishes at a mere 17th in the international bullion-owning league table. And when it comes to gold holdings per capita we don’t even make the top 20. (The Swiss come top with – in 2011 figures – $6,000 worth of gold per person; the Lebanese are next; then the Germans. Britain has the lowest per capita holding in the EU).
This is why I think it’s such a totally brilliant idea that my friends Ralph, Jan and Will from the Real Asset Company are campaigning for us to Buy Britain’s Gold Back. Well, obviously, being a company where you can buy gold bullion that’s just the sort of thing they would say. And if you are going to buy gold, let me warn you right now, it’s not a one-way bet: I bought a thousand quid’s worth last year on the understanding that by this time the world’s economy would collapse and my bullion would be worth at least double. Instead, the world economy didn’t collapse and my shiny precious is now worth less than one thousand quid.
Nonetheless, for what my ignorant amateur’s opinion is worth, I do agree with those who argue that gold (currently priced around the $1500 dollar mark) is going to hit $2,000 an ounce before it hits $1000 an ounce. Partly, this will be because of the inflationary effects of Quantitative Easing (of which, insanely, our government for one is planning more). Partly, it will be because of intriguing – and under-reported – policy shifts like the US Federal Reserve’s proposals to have gold bullion declared a “zero-risk-weighted” asset (currently it has a 50 per cent risk-weighting), making it less likely that in future capital-impaired banks will feel the need to dump their gold holdings.
Anyway, you can take or leave this stuff, as you will. I’m not trying to turn you all into goldbugs. In fact I hope you don’t become goldbugs because you’ll only end up weird and obsessive and shunned by people at parties. But if you want to read further, I do recommend the excellent Cobden Centre (“for honest money and social progress”) or Bogpaper.com (“Getting you out of the s**t since 2012”) or, if you really want to freak yourself out and live every day like it’s the last before the world ends, there’s the monumentally depressing Zero Hedge.
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- Radio Free Delingpole: Stupid Liberal Things
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