Gold Holds Steady as Stock Market Weakens

Mike Maharrey: Greetings, I'm Mike Maharrey. I'm a reporter and analyst here at Money Metals and I'm here today with Chris Powell. He is a political columnist, a longtime newspaper editor, and the co-founder of the Gold Anti-Trust Action League, where he currently serves as the secretary and the treasurer. How are you doing today, Chris?

Chris Powell: Very good to be with you, Mike.

Mike Maharrey: Well, I really appreciate you taking a little bit of time to chat, and I thought we'd kind of start out and talk a little bit about GATA and the work that you guys are doing, and I want to start off this way. I think a lot of people, just your average guy on the street, if I go and say the gold market is rigged, that there's price manipulation going on in the gold market, I think a lot of people are skeptical of that and they're going to say, "Oh, conspiracy theory." And I'm curious from your perspective, if you're talking to somebody – you've got just a quick time, what is the most compelling evidence that you would present to somebody to show them the reality of what happens in these markets?

Chris Powell: Well, I would explain that our work for more than 20 years has been to collect the documentation of gold market manipulation and intervention. If I was going to refer to a single document, I mean, I have lots of favorites, but one that I think is probably as compelling as any other is the speech that was given by the head of the Monetary and Economic Department of the Bank for International Settlements, William White back in, oh, I don't know, 2010 or something, it's on our internet site, he was giving a speech to a BIS conference at the bank's headquarters in Basel Switzerland, and he was talking about the four or five major purposes of international central bank cooperation, and one of those purposes was to influence asset prices, especially gold and foreign exchange in circumstances where this might be felt useful. That's on the record. That's what central banks do. Central banks rig the gold price. Why do they rig the gold price? They rig the gold price to defend their own currencies because gold is the prospective alternative international reserve currency, and if gold ever gets out of the box, they're through.

Mike Maharrey: Yeah, and that was actually going to be my next question. What's the motivation? And I think you summed that up perfectly. Gold is real money and it's a challenge to the paper fiat that they can't seem to quit producing. I almost feel like I'm drowning in paper. In fact, I think Thomas Jefferson actually talked about being buried under a deluge of paper way back in the 17, 1800's. So yeah.

Chris Powell: Oh, it's money without counterparty risk and it's money that's very hard to devalue. Well, central banking is largely a matter of cheating the public through inflation, and if there's any escape valve from that, escape hatch from that, any fire escape, people will take it. And gold is the fire escape. That's why they've always tried to control the gold price. So it does not reflect the inflation that central banks are inflicting on the world.

Mike Maharrey: Do you think the kind of movement that we've seen, and it seems like to me that it's accelerated a little bit over the last year or so, this kind of movement of gold from the West to the West, where we're seeing a lot of demand for gold, not just from central banks, but also from individual investors, much more so in Asia, China, emerging market economies. Do you think that the central banking cartel in the west could be in danger of losing the control of what's going on, and do you see this as maybe a political move from some of these eastern countries…

Chris Powell: Oh, absolutely. I think the western central banks have already lost control of the gold price. Look, if they still had control of the gold price, it wouldn't be at $2,500 today. There would be … a Louis d'Or would be the prize in every Cracker Jack box if central banks in the West had their way. Look, since I got involved in this crazy business, gold has gone from $250 an ounce to $2,500 an ounce in really just 25 years of my paying attention to it. That's not something central banks are very happy about, though I think in the end they may revalue gold. We'll talk about that just when they think that's going to serve their own purposes.

But yeah, really the Western central banks here I think have kind of shot themselves in the foot. I mean, I would like to be able to take credit for raising the gold price from 10 times over the last 25 years, but I think it is, to a great extent, a matter of the stupidity of Western government policy and particularly US government policy, which has started to make other governments and central banks realize that, look, if the United States can confiscate Russia's dollar-based assets, it can confiscate anybody’s. So the security and safety of the dollar have been destroyed but have been destroyed by the US government.

Mike Maharrey: Yeah, I've written quite a bit over the last year or so about the weaponization of the dollar and they put that into hyperdrive when Russia invaded Ukraine. And I'm curious from your perspective, they have to know, right? Or is it just a matter of arrogance that, "Oh, we can do this and we can get away with it." What's the mindset that says we're going to keep weaponizing our currency to our own detriment, or do they really not see it as their detriment? What do you think?

Chris Powell: I think in the end, that as the US economists Paul Brodsky and Lee Quaintance wrote a decade ago, I think there is a general understanding among central banks coordinated through the BIS that the gold price is going to have to be revalued for a number of reasons. International politics is one of them. The debt burden on government and society is another one. But I think all central banks know this. They know it now, they might not have known it 10 or 20 years ago. I'm convinced that GATA was responsible for informing the Bank of Russia about Western gold price suppression policy. The deputy chairman of the Bank of Russia Oleg Mozeskov gave a speech to an LBMA conference in Moscow, oh, when was it? 15 years or so ago, in which the only words of English he spoke were Gold Antitrust Action Committee. To the best of my knowledge, up to that point, we had never had any contact with anybody in Russia.

Mozeskov's speech was an indication that quite to our surprise, the Bank of Russia was paying very close attention to our work. We know from the WikiLeaks cables of Bradley Manning and the guy who ran WikiLeaks and has just been given a plea bargain, that China long has known about Western gold price suppression policy. The WikiLeaks cables are full of Chinese news organization reports, reports from news organizations that are controlled by the Chinese government, which reported about gold market rigging by the West and particularly by the United States.

Those cables, which WikiLeaks disclosed were sent from the US Embassy in Beijing to the State Department of Washington, many cables talking about gold market manipulation by the west in order to support and sustain the dollar. Well, the WikiLeaks cables show that not only has China known all about Western gold price suppression policy for years, but the US government knows that China knows because the reports were cabled to the State Department. Now, I've had some face-to-face contact with some other central banks and some correspondence with them, and while most of them don't want to have anything to do with me, I did get a couple meetings with Central Banks who beautifully heard me out, and some Central bank people around the world are on GATA's mailing list.

And I think we have informed, I think, a few people who wouldn't necessarily have known about it otherwise. But as a general matter, Mike, insofar as most major central banks are members of the Bank for International Settlements and they have directors and meetings every month, to which you and I are not invited, I am very confident that most of the central banks around the world are fully aware of Western Central Bank price suppression policy and that they are coordinating their response to a change in this policy.

Mike Maharrey: Did you see the report? I think it came out of TASS out of Russia, that the Russians are apparently planning on ramping up gold purchases here.

Chris Powell: Yes starting tomorrow.

Mike Maharrey: Yeah. What do you of that?

Chris Powell: What do I make of it? What the hell took them so long!? Russia is a commodity producing country, has a lot of gold in the ground. I think this should have been apparent to them long before they learned about it from us. I mean, certainly their intelligence agencies are better than our work, but it makes perfect sense. Gold in hand can't be sanctioned. Gold is the only plausible alternative to the dollar as a reserve currency, as an alternate reserve currency. Yeah. The Russians have finally figured this out.

Look, not long after GATA had its conference up in Dawson City in the Yukon back in what, 2006, something like that. We had a very prominent Russian, supposedly a confidant of President Putin at that conference. He told us that it was the greatest conference he ever attended, and a few weeks later, president Putin was photographed at a gold conference in the Russian Far East holding a gold bar, and he was quoted as saying he had instructed the Bank of Russia to start buying gold on all markets. The world has figured this out. I mean, I despair of retail investors ever figuring this out in a big way, and certainly I despair of mainstream financial news of organizations ever telling the truth about gold and about market rigging. But all the major, and I think some of the minor central banks around the world know, and I think they are preparing a world in which gold is the reserve currency, the once and future money.

Mike Maharrey: Yeah, I was going to ask you about that if you thought that, because there's a lot of proposals that seem to be floating out there about competing currencies. You've got the cryptocurrencies, you've got the Zimbabwe, they've got their ZiG now, which is a gold backed currency. You've got BRICS talking about a currency. You think the gold is what's ultimately going to win the day?

Chris Powell: Well, what else are you going to use? I mean, if people want to believe in cryptocurrency, I welcome anybody who wants to get into the currency business, let currencies compete. That's really the fair and democratic thing to do. I do not have much faith in crypto. I mean, I have to rely on somebody to tell me that the crypto program really does what everybody says it does. How do I know that? I mean, crypto is a phantom to me. Maybe it'll work, maybe it won't work, but gold is tangible.

If you're holding it, you're holding it. You don't have to understand any computer programs or anything like that. It's been money for thousands of years because it met of all of Aristotle's prerequisites for money, it's money today because it has no counterparty risk when you're holding it yourself and it's accepted everywhere as even Alan Greenspan said, it's better than an American Express card. So what else are you going to go to? I can't see them resorting to anything else but gold. It has universal recognition as money. It's real. It's not going to disappear when the power goes out or the internet services is cut off. Now, if you have more faith in something else, good luck to you.

Mike Maharrey: Yeah, I agree with you completely. I'm a big fan of let the market sort it out, but I'm inclined to agree with you as well. Adam Glapinski, and I probably just butchered his name, but he's the governor of the Central Bank of Poland, had a great quote. This was a couple of years ago, and incidentally, Poland for folks who don't know, has been one of the biggest central bank gold buyers this year. And he said basically exactly what you said about the fact that it is the one thing that we can hold on to that nobody can turn it off, right? There's no switch that can be flipped. There's no electronic thing that can happen that can wipe it out. It is a tangible physical thing, and that's exactly why Poland is seeking to, at least according to their public plans, increase their reserves to at least 20% of gold.

Chris Powell: Yeah, well, JP Morgan said that gold was money and everything else is credit. And if he meant by that everything else is counterparty risk, I'd go along with him completely.

Mike Maharrey: Yeah, yeah, absolutely. And for folks who maybe don't know what counterparty risk is, it's basically just the fact that on most assets, somebody is standing on the other side that could conceivably default or make it go bad. And gold doesn't, it is what it is. So I wanted to talk a little bit about an article that you wrote that we published over at Moneymetals.com/News, and you talked about the, it was actually in context of this trillion dollar coin, which is an idea that seems to not ever want to go away, but you pointed out that it's feasible to do exactly the same thing by revaluating Gold, and it's something that you've already mentioned in the course of our conversation. And in that article you pointed out that there actually is already a kind of a process in place at the treasury to make this happen. Can you kind of explain to folks what, first off, what is gold revaluation and what would it do? And second off, how could it be done conceivably?

Chris Powell: One of my favorite documents, which I think was discovered, well, it was either by Ronan Manley or Jan Niemanhuis some years ago, is the transcript of a conversation in US Secretary of State Henry Kissinger's office in April 1974 with his deputy assistant secretary Thomas O. Enders, in which Enders is explaining to Kissinger why the US must keep its European allies from remonetizing gold or giving gold any more of a role in the world financial system. Enders is telling Kissinger that the Europeans now have more gold than the United States does. Collectively, they had more gold than the United States did, and that whoever has the most gold has the power to revalue it from time to time and thereby change all asset and currency valuations in the world. Enders told Kissinger that gold is what he called the reserve creating instrument. If you can assign gold's value, you can create more money reserves for yourself.

You can change the value of all currencies and assets and goods and services in the world if you control the gold price. Hence, Enders told Kissinger, we can't let the Europeans control the gold price. We have to control the gold price in order that we can control the value of the dollar and the value of everything else. That's the point. Gold is the great reserve creating instrument. You can assign values to it and thereby create money if you want. I mean, the United States could do this now, we technically, the Treasury technically values our gold at $42 and 22 cents per ounce for all those 8,133 tons. We supposedly still have possession of. If the United States wanted to change the valuation of that gold, it could just change the valuation of it and give orders to the Federal Reserve that the gold certificates you now hold are now worth trillions and trillions more than you're carrying them on the books.

Please credit the gain to our account and issue a lot of currency against that gold. It's the reserve creating instrument. It's an accounting mechanism by which you can create money. That was what was the behind the platinum coin idea, that they wanted to use the obscure law about the Treasury's authority to mint platinum coins in any denomination. Well, that was thought to be a thing for collectors, but they looked at the law carefully a few years ago and realized, wait a minute, you could make any denomination of a platinum coin? Well, you could tell the Treasury to have them make a trillion dollar coin, deposit that trillion dollar coin over at the Fed and tell them, we want to cash this coin.

And the Fed would create a trillion dollars or 10 trillion, however you wanted to denominate the coin. The benefit to the United States of using a platinum coin for reserve creation rather than gold is that the platinum coin with the high denomination deposited at the Fed would create reserves only for the United States. But if you revalue gold, every nation in the world that has a gold reserve, if the gold is to be revalued upward, is going to benefit from that revaluation and the revaluation of gold suddenly would be more democratic. That's why I think certain elements in the United States would much prefer the platinum coin denomination at a trillion dollars rather than gold revaluation, because then the United States would get all the reserve creation.

Mike Maharrey: Right, right, and that's effectively what Franklin D. Roosevelt did back in the 1930s, right? I mean, he tried to get more gold by taking it from the public, and then he simply valued it higher and in effect created a bunch of currency.

Chris Powell: You wrote the definitive essay on that the other day, didn't you? The reason Roosevelt did that was because the law at the time required a, what, 40% gold backing for the dollar, and Roosevelt was sitting in the middle of a catastrophic deflation. He wanted, I think rightly, he wanted more money circulating in the economy. Under the law, he couldn't create it unless the Treasury had more gold reserves. That's why Roosevelt wanted the gold. He wanted the gold to put it into the government so that the government could create more money against it. Again, gold in that circumstance was the reserve creating instrument.

Mike Maharrey: I think people don't understand, or most people out there don't understand the fact that central banking and their ability to create money, I call it the engine that drives the biggest government in history of the world. If it wasn't able to create money out of thin air, if it was really even restrained, much less actually having where gold actually is money, there's no way that they could borrow and spend to the extent that it does, and without the ability to borrow and spend that takes power away from politicians. And I think really, if you want to get into the psychology of the whole thing, that's it right there. It's a matter of power. I mean, you could literally say gold is power.

Chris Powell: Yes, infinite money is infinite power, and you don't want that floating around for God's sake. That's the end of humanity. It's the end of democracy. But I would never say that central banks are creating money out of nothing. Every currency is backed by something. It's backed first by the economic production of the country that's issuing the money, and secondly, it's backed by the tax power of the government issuing that money.

There's a great essay, I forget the guy's name right now, but I can look it up. Back in the forties. The essay was titled, I guess, Taxation for Revenue is Obsolete. It was written by the president of the New York Fed at the time, and he was explaining that modern governments, when you're relieved of a commodity standard for your money, if you're not on a gold standard anymore, if there's no fixed rate of convertibility from your currency into gold, they can create as much money as they want, and they don't tax because they need revenue, they can just print it up, they can type it in, they tax to give value to their currency, they tax to create demand for their currency. If you didn't have to pay your taxes in dollars, well, people might start using almost anything else for money, especially if the dollar was being inflated away.

Mike Maharrey: Right.

Chris Powell: So, fiat currencies do have some backing. They have the economic production of the country whose goods and services of purchasable in that currency, and they have the tax power which is backing, but they don't have enough goods and services and production of tax power to support all the money they've been issuing in the last few years, at least not without running the currency down to zero.

Mike Maharrey: Right, exactly. And I'll wrap up on this, and this is a little bit of speculation. Well, no, it's a lot of speculation, but obviously we've seen situations in history, Zimbabwe comes to mind, we've seen it in Venezuela where you have hyperinflation where the currency just completely collapses, and sometimes you'll hear people say, "Well, that could happen here in the United States." Do you think that the government or any major Western government is in danger of overplaying its hand and collapsing its currency, or is that kind of something that's maybe a scare tactic?

Chris Powell: I think we're on that very brink right now, Mike. I think, I did a little calculation the other day that United States is spending, I believe, 27% more money than it's taking in tax revenue. Now, you can get away with that for a while, but we are living off the rest of the world because we rely on the rest of the world to lend us money, and the rest of the world is beginning to wake up that that's not such a good bet, that the dollar is being devalued by inflation, so why are buying long-dated US government bonds? If the rest of the world ever decided, no, we don't want to buy your bonds anymore, and all of a sudden the US bond market crashed, well, the dollar would crash soon afterwards.

So I think we're at that point already. We have alienated much of the rest of the world and we're living off the rest of the world borrowing its money. That's one thing that Mozeskov in his speech 15, 20 years ago said, he noted the irony of the richest country in the world, the United States, living off borrowing from poorer countries. That was a moral wrong, and here's an Russian telling us about a moral wrong. And he was absolutely right. We think of ourselves as the good guys. We're exploiting the rest of the world, especially the poor countries.

Mike Maharrey: I saw today along those lines that the US trade deficit was, excuse me, at the highest level since May 2022. So we're giving them dollars and we're taking their stuff.

Chris Powell: We get oil and electronics and commodities from them, and we pay them in colored paper and electrons.

Mike Maharrey: Yeah.

Chris Powell: It's a nice racket while it lasts.

Mike Maharrey: I was going to say it's a good gig if you can get it. Unfortunately, we can't do that. We'll end up in prison. So before we wrap up, why don't you let people know how they can follow the work that you're doing over at GATA and get the information that you're handing out? And one thing I would highly recommend folks, just get on your email list and get your emails because you guys send out a lot of great information thats not necessarily out there on CNBC or Fox Business, but how can people follow what you're doing?

Chris Powell: Well, thank you, Mike. Yeah, our internet site is GATA.org. We have a daily newsletter. Sometimes I'll send out several dispatches a day, then some days we don't really have much to say, but getting on our dispatch list is free. You can sign up for our dispatches, put the mechanism in the top right column of our internet site. You can subscribe to the daily dispatches to get all of them at once. You can subscribe to a summary to dispatch so your email box doesn't get quite as cluttered. We're a non-profit educational and civil rights organization. We're recognized as tax-exempt by the US Internal Revenue Service or a 501c3 organization. We survive off contributions from anybody who cares to support us. We have a little support from the mining industry, though I think 99% of the mining industry is brain-dead, doesn't have any idea that it's in the money business.

Mike Maharrey: I know, they're digging money out of the ground and then they sell it for fiat.

Chris Powell: Yeah, well, I've lost that battle. They're never going to understand that. But we do see contributions from anybody who wants to help the struggle for transparency and limited government and sound money and all that. We welcome checks payable to GATA sent to our corporate address here in Manchester Connecticut. And if it really wasn't for people who, I guess they're dreamers like us, we wouldn't be here. But we survive on generous donations from the public, and I think we could use some more today.

Mike Maharrey: Yeah, absolutely. And I want to reiterate something that you just mentioned. If you are a person who cares about limited government, if that's a thing and that's important to you, I would argue that you're probably not going to get that by voting for the next great president or whatever. I think limited government is really going to come through reforming this monetary system because again, that's the rocket fuel that makes the whole thing go. So if you're a limited government person-

Chris Powell: You can't have limited government without limited money. Infinite money is infinite government.

Mike Maharrey: Perfect.

Chris Powell: And that's the road to hell.

Mike Maharrey: Yeah, absolutely. That's a great quote. I'm going to write that one down and keep it. Well, I appreciate you taking the time out of your day and appreciate your insights and we'll definitely have you back on again as we move on, and we'll try to keep people informed and make people more informed.

Chris Powell: Thanks for your work too, Mike.

Mike Maharrey: Thank you. Bye-bye.