Paul Mylchreest: Gold War: "Gold is money and nothing else" – Gold is sending a warning

Conflict between governments and gold

Its role as the ultimate form of money puts gold into a situation of permanent competition with unbacked (by precious metals) fiat currencies created by governments and, consequently, with the governments themselves.

This conflict is still unappreciated by many, although not those from the 'Austrian School' of economics, like Ludwig von Mises:

"The struggle against gold, which is one of the main concerns of all contemporary governments, must not be looked upon as an isolated phenomenon. It is but one item in the gigantic process of destruction which is the mark of our time."

The lesson of history is that paper currencies that are not backed by precious metals ultimately tend towards their intrinsic value, i.e. zero.

It cannot be refuted that at times of maximum economic or financial crisis for the US economy during the last century, or when the dollar's status as the reserve currency has come under severe stress, the US Government (aided by other governments in some cases) has tried to manipulate the gold price. The three most obvious examples are:

> The Great Depression of the early 1930s: President Roosevelt confiscated gold from US citizens who were hoarding it ahead of an anticipated devaluation of the US dollar (US citizens could not legally own gold again until the beginning of 1975).

> The collapse of the London Gold Pool and the Bretton Woods system in the late 1960s/early 1970s. The Federal Reserve and eight European central banks pooled their gold resources in an unsuccessful attempt to suppress the price of gold
and preserve the dollar's value at US$35/oz versus gold.

> The runaway inflation of the late-1970s. The US Treasury and the IMF sold approximately 1,200 tonnes of gold during 1976-80; nevertheless the gold price reached its all-time high of US$850/oz in January 1980. In April 1978, the IMF took
further action to demonetize gold. In the Second Amendment of the Articles of Agreement of the IMF, gold was removed as a means of inter-nation settlement.

In a 1981 American Institute for Economic Research essay, the economist, Ernest P Welker stated:

"Beginning in 1975, the United States, aided by the principal members of the International Monetary Fund (IMF), began a 'bear raid' on the gold markets of the world. It was a raid of unprecedented proportions and duration. The underlying purpose of this raid was to convince the citizens of the major nations that paper currencies are better than gold. Success of the operation would ensure that inflating by excessive issues of paper currencies could continue indefinitely."