If those words sounds familiar, that’s because you may have read it somewhere on the Web some time in January of 2011. “Not owning gold is a form of insanity,” Robin Griffiths of Cazenove Capital (believed to be the private broker for the British royal family) told CNBC on Jan. 11. “It may even show unhealthy masochistic tendencies, which might need medical attention.”
Though Griffith’s apparent flare for offering up salacious soundbites for financial journalists, his diagnosis directed at investors who worry whether their financial future is intact, yet, don’t hold a meaningful portion of their wealth in gold may not have wandered too far from making a valid point, especially considering that since January 2011 the world’s unresolved issues have only mounted rapidly in quantity and severity. Sign-up for my 100% FREE Alerts
Consider the news of just the past two weeks, alone, and never mind the events that have shaped the world’s radical change in public consciousness since the fall of Lehman Brothers in 2009. Griffith’s seemingly flippant remark of more than a year ago appears more and more worthy of repeating as the endgame to the crisis unfolds.
On the Feb. 29, the European Central Bank announced a massive QE program in the amount of $712 billion for approximately 800 European banks—a move so audacious that Mr. Gold, Jim Sinclair, felt compelled to alert investors of the troubling event, underscoring the desperate manner by which the announcement was obviously camouflaged, obfuscated and provisioned in the hopes of not triggering a panic into the gold market.
“Today does qualify as one of the biggest injections of liquidity into the system in the history of the system,” Sinclair told King World News. “Today was a cover-up by the U.S. Federal Reserve and by the mainstream media of one of the largest injections of liquidity into the system that has ever occurred.”
Sinclair continued to explain that, in essence, the Fed has embarked on a course as the buyer-of-last-resort to, not only the U.S. debt market, but Europe’s equally-sized debt market, as well. In total, the U.S. dollar and euro represent approximately 88 percent of central bank currency reserves (excluding gold reserves). These reserves have been debased at a staggering rate, with no end in site.
“This money flows, in order, through these entities—Federal Reserve to the IMF; IMF to the ECB; ECB to the member banks. This is pure QE on a global scale,” he said.
On Thursday, following the decision by the ECB to maintain its member bank rate at one percent, reporters ask ECB president Mario Draghi about contingency plans for the euro in the event of a Troika failure in dealing with the European sovereign debt crisis. Draghi said, pointedly, “We have no Plan B. Having a Plan B means to admit defeat.”
Translation: The ECB will print, print and print more money (or get it in a circuitous way from the Fed)—or die.
Again, on Thursday, in response to the ECB’s latest $712 billion injection of capital into the European banking system, former ECB executive member Juergen Stark told the Frankfurter Allgemeine “. . . the balance sheet of the euro system, isn’t only gigantic in size but also shocking in quality.”
In total, the ECB’s balance sheet now stands at more than (euro)3 trillion, or nearly one-third larger than the Fed’s ‘official’ balance sheet, with more to come, according to some prominent analysts.
On March 8, German newspaper BILD ran with a story about the rumblings in Germany regarding the status of its 3,401 tons of gold reserves. A growing mistrust of the United States as the custodian of Germany’s gold has reached critical mass, according to BILD sources. Many Germans wonder if they’ll get their gold back.
According to the article, German politicians are feeling heat from a growing concern among the German people regarding the euro and Germany’s financial obligations to a failed euro experiment. Germans wants an audit of its gold and repatriation to Frankfurt in the event of a euro collapse and an emergency reinstatement of a gold-backed deutsche mark.
When elected member of the Bundestag, Phillip Missfelder, made an inquiry of the Bundesbank as to why Germany’s gold was not audited in 2010 as required by law, the Bundesbank’s response sent chills throughout Germany’s fiscally conservative electorate.
“I was shocked,” Missfelder told BILD. “First they said that there was no list [of gold bars]. Then there were lists that are secret. Then I was told, demands endanger the trust between alliance bank and the Fed. [Google translation]”
On the heals of the BILD article comes another article about a country and a people known for prudent fiscal behavior: the Swiss. They, too, have come to the realization that the euro is sinking and that a Swiss franc peg to the euro will take the franc down with it. They want their gold.
Zerohedge posted on Thursday:
“Gold Initiative”: A Swiss Initiative to Secure the Swiss National Bank’s Gold Reserves initiative, launched recently by four members of the Swiss parliament, the Swiss people should have a right to vote on 3 simple things: i) keeping the Swiss gold physically in Switzerland; ii) forbidding the SNB from selling any more of its gold reserves, and iii) the SNB has to hold at least 20% of its assets in gold.
Contrary to propaganda spewed by the Fed, U.S. media and America’s unofficial spokesman and cheerleader for a broken Bretton Woods scheme, Warren Buffett, in the end, it all comes down to the gold. How much. Where it is?
And if the two countries known for their level-headed approach and reputation for maintaining a strong currency are now lurching for the gold, it’s most likely that other Western countries will follow suit—and quickly.
While the news turns from the latest scheme to bailout Greece, to gold, why then would an investor put off acquiring a 3,000-year-old, tried-and-true asset that holds value under the most dire of financial and geopolitical circumstances—such real-time textbook examples of profound currency debauchery from each G-7 nation, imminent war and political upheaval?
Obvious to a long-awakened bunch, crunch time approaches, and, as Swiss economist and money manager Marc Faber has said in the recent past, it’s also time for each investor to become “your own central bank.” And if investors cannot or will not see the consequences and market reaction to bizarre policy actions taken by the stewards of 88 percent of the world’s reserve currencies, Cazenove Capital’s Robin Griffiths’ characterization of “masochistic” investors knowingly taking no action in response to this abomination won’t seem so sensationalist after all. Sign-up for my 100% FREE Alerts