Gold
Published: Last updated: March 5 2010 15:37
Gentlemen, please check your tinfoil hats at the door. Later this month, America’s commodities markets regulator will hold what should prove to be one of its more colourful hearings to address the gripes of an enthusiastic group of precious metals owners. Not content with having trounced most other investors over the past decade, they claim they have been deprived of far larger gains in, among other things, a ”gold price suppression” conspiracy coordinated by the federal government and large banks.
Concrete action is unlikely – similar hearings in 2004 and 2008 yielded none – but do not expect the gadflies to be mollified either. Their claims that US government gold reserves have been sold without public knowledge to force down prices and support its fiat currency are tough to disprove categorically. Persistent net short positions on US futures exchanges would suggest something fishy if one believed there were no private contracts to offset them elsewhere.
This mix of fact and innuendo has long energised a small, impassioned audience but record deficits and central bank money-printing make their concerns resonate more broadly. They have also found an outlet among some right-wing radio stars, many of whom are also shills for bullion brokers. A comedian recently lampooned the connection in an advertisement for a fictional firm using apocalyptic imagery urging customers to buy ”gold, women and sheep”.
But there is no such thing as bad publicity. A sceptical mention in this newspaper encouraged one group to rejoice, noting that this ”just takes a while when you’re fighting all the power and money in the world”. Readers who laugh should remember that goldbugs are laughing all the way to the bank. In the words of tycoon Howard Hughes, ”I’m not a paranoid deranged millionaire. Dammit, I’m a billionaire.”
Copyright The Financial Times Limited 2010.
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