They say gold is the safe haven in a bad economy, but the British government sold off most of their supply years ago. Now, a group has formed to try and buy it back, and James Delingpole sits them down to find out why. Ralph Hazell, Jan Skoyles and Will Bancroft of the Real Asset Company discuss their campaign, Buy Britain’s Gold Back.

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There are 18 comments.

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  1. Jim Ixtian Inactive
    Joseph Eagar: By the way, a fun little fact, the volume of all gold ever mined in the history of humankind is about the same as a small office building, or a large town house. There isn’t enough to back the currencies of the world economy. 

    Nor silver, platinum, or palladium. I’ve some ‘junk’ silver(pre-1965 quarters, dimes, half dollars) and silver eagles, but that’s the extent of it. Gold/PM’s seem to be a negative investment and asset. If a TEOTWAKI scenario happens, gold isn’t that convertible. If the economy goes to hell and all you’ve got is a 1oz gold coin to buy food and water, guess how much that food & water is going to cost? That’s right, that 1oz gold coin w/ no change back. A pretty poor return at $1600/oz. It would be better to have small bills or silver coins in that situation or something to barter with like whisky. Better yet, learn how to brew/distil your own whisky or other skill like beekeeping. There are better asset classes to invest in than PM’s right now and much to be optimistic about.

    • #1
    • June 28, 2012, at 1:22 AM PDT
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  2. flownover Member

    Auric Goldfinger indeed !Imagine today’s casting possibilities with Queen Latifah replacing Gert Frobe. Pussy Galore replaced with a ambisextrous Lindsay Lohan ?The DB5 wouldn’t even make it out of the garage.ps Oddjob played by Melissa McCarthy ??

    • #2
    • June 28, 2012, at 4:51 AM PDT
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  3. Robert E. Lee Member
    Robert E. LeeJoined in the first year of Ricochet Ricochet Charter Member

    I hear about what a good, safe investment gold is all the time; then I think of Presidential Executive Order 6102.

    • #3
    • June 28, 2012, at 5:22 AM PDT
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  4. Sean Inactive

    The Niall Ferguson article/lecture that James mentioned briefly?

    http://www.foreignaffairs.com/articles/65987/niall-ferguson/complexity-and-collapse

    http://fora.tv/2010/07/28/Niall_Ferguson_Empires_on_the_Edge_of_Chaos

    • #4
    • June 28, 2012, at 6:41 AM PDT
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  5. Nick Stuart Inactive

    Your consideration of holding physical gold should include a quick read of Solzhenitsyn’s Gulag, Book 1 (pages 52-55) about how the state wrung gold out of private hands. Excerpts:

    “Who was arrested in the “gold”wave? All those who, at one time or another, fifteen years before, had had a private “business,” had been involved in retail trade, had earned wages at a craft, and could have, according to the GPU’s deductions, hoarded gold.”

    “Give up your gold, viper! The state needs gold and you don’t. The interrogators had neither voice nor strength left to threaten and torture; they had one universal method: feed the prisoners nothing but salty food and give them no water. Whoever coughed up gold got water! One gold piece for a cup of fresh water!”

    One of the Tatar draymen endured all thetortures: he had no gold!They imprisoned his wife, too, and tortured her, but the Tatar stuck to his story: no gold! Then they arrested his daughter: the Tatar couldn’t take it anymore. He coughed up 100,000 rubles. At this point they let his family go, but slapped a prison term on him.”

    • #5
    • June 28, 2012, at 6:53 AM PDT
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  6. Joseph Eagar Member
    Joseph EagarJoined in the first year of Ricochet Ricochet Charter Member

    I’m not sure I can get through a podcast on libertarian gold bugs (a contradiction in terms if ever there was one), but I’ll try. I imagine the Brits are torn between the obvious failure of fixed exchange rates and monetary union on the Continent, and their own ongoing process of structural devaluation (and the inflation that implies).

    There is a reason Milton Friedman opposed fixed exchange rates; for much of his academic life rates were fixed, under the quasi-gold Bretton Woods system. The level of government intervention necessary to make that system work was truly amazing; we should all be thankful Nixon nuked it.

    • #6
    • June 28, 2012, at 8:08 AM PDT
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  7. Joseph Eagar Member
    Joseph EagarJoined in the first year of Ricochet Ricochet Charter Member

    By the way, a fun little fact, the volume of all gold ever mined in the history of humankind is about the same as a small office building, or a large town house. There isn’t enough to back the currencies of the world economy.

    • #7
    • June 28, 2012, at 8:13 AM PDT
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  8. Foxfier Inactive

    Ex-Marine friend? Hope he’s a good friend or you’re in trouble…. (Marine Vet is a good way to put it; it’s like baptism and confirmation, you’ve got to do a lot to get out of it! Even “former Marine” usually results in loud denials.)

    • #8
    • June 29, 2012, at 2:31 AM PDT
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  9. Chris Johnson Inactive

    I love the concept, and look forward to listening to this, but, for what it is worth, here are my thoughts.

    Acquire needed hard assets, at a reasonable price. Silver certainly applies, as a more generally useful product that will be in demand, as the U.S. economy recovers. Platinum would be an interesting place to look, as it is an extremely valuable catalyst. For example, for now, platinum is the only practicable catalyst for converting natural gas to methanol and methanol is the only practicable way to package the energy in natural gas into a transportable fuel.

    Copper would be nice. Lots of real assets out there that don’t attract the attention of gold. I’ve heard somewhere that all the gold mined in human history would barely fill an olympic-sized pool. Something a bit more abundant (and affordable), and less attention-getting may be attractive. And useful during an economic boom; useful would be good.

    • #9
    • June 29, 2012, at 5:26 AM PDT
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  10. Steve MacDonald Inactive

    James, i enjoyed the podcast very much…….but then I own more than the 10% allocation they suggested so could be accused of being biased. It will be interesting to see how this works out when the bond markets begin to fail beyond the current Greece/Spain/Italy debacles.

    For those above viewing Gold as a more or less worthless asset, I offer:

    – Basel 3 considering making Gold a tier 1 asset.

    – Central Banks around the world (especially China) are buying Gold like crazy to back their currencies. 

    For those blessing our current Fiat scheme or saying Gold in existance + that being mined provide insufficient coverage for currencies:

    – Depends on the price.

    – Is a system that doubles debt/money every 10 years (current system), far ahead of economic growth, more sustainable than one that increases by around 2% per year? Which do you think has better long term prospects? 

    – There has never been a Fiat currency system that survived long term. The average life span is around 40 years – versus Gold that has been the base standard for most of the last 5,000 years. Why do you think that this time is different? Govt. wisdom/competence?

    • #10
    • June 29, 2012, at 6:54 AM PDT
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  11. Joseph Eagar Member
    Joseph EagarJoined in the first year of Ricochet Ricochet Charter Member
    Steve MacDonald:

    – There has never been a Fiat currency system that survived long term. The average life span is around 40 years – versus Gold that has been the base standard for most of the last 5,000 years. Why do you think that this time is different? Govt. wisdom/competence? · 7 minutes ago

    That is completely false. I believe the longest a gold standard has ever lasted was 70 years, from the late 19th century until World War I. Fiat regimes did not invent devaluation, and sovereigns changed the gold content of their currencies for thousands of years before banknotes came onto the scene.

    Fixed exchange rates do not work, which is what a gold standard really is. Preventing a currency from changing in value is an anti-market intervention, and like all anti-market interventions the market, over the long run, always wins.

    • #11
    • June 29, 2012, at 7:07 AM PDT
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  12. Joseph Eagar Member
    Joseph EagarJoined in the first year of Ricochet Ricochet Charter Member
    Steve MacDonald:

    – Is a system that doubles debt/money every 10 years (current system), far ahead of economic growth, more sustainable than one that increases by around 2% per year? Which do you think has better long term prospects? 

    That’s not a feature of fiat money, it’s a feature of foreign capital inflows. Debt financed by money printing tends to neutralize itself through inflation–remember, money printing does not create the new goods people will want to buy with all that debt.

    On the other hand, foreigners do have that stuff, and when they lend us money, the value of the dollar goes up, making foreign goods cheaper and allowing U.S. borrorwers to consume more than the U.S. is producing.

    • #12
    • June 29, 2012, at 7:11 AM PDT
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  13. FloppyDisk90 Member
    Joseph Eagar: By the way, a fun little fact, the volume of all gold ever mined in the history of humankind is about the same as a small office building, or a large town house. There isn’t enough to back the currencies of the world economy. · Jun 27 at 8:13pm

    So exactly how does the physical quantity of gold relate to its ability to back a “hard” currency system?

    • #13
    • June 30, 2012, at 2:04 AM PDT
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  14. Steve MacDonald Inactive

    Joseph – A Gold, backed currency assuredly does not prevent devaluation – but it does mean that Governments must be transparent or commit fraud. Under the Fiat system, governments devalue their currencies under the radar – which citizens do not discover until the damage is done. You speak of inflation as if it were a good or acceptable thing. I can not see the benefits.

    Our currently devaluating, debt demanding, growth inhibiting, Fiat system is devastating to the middle class and pensioners who have played by the rules.

    Debt doubling every ten years as is currently the case, is clearly a function of the Fiat system + regulation that permits and encourages excessive leverage.

    Resulting debt growth is and will continue to be, highly destructive. It has also created a system where every major developed country (except perhaps Germany) has accumulated sufficient debt to be either insolvent, rapidly approaching insolvency, or at a minimum, severely limiting growth. 

    While money growth and velocity is theoretically possible under a Fiat system (E.G. Switzerland up to last Sept.), this throughout history has proven to be a political impossibility.

    • #14
    • June 30, 2012, at 4:53 AM PDT
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  15. Joseph Eagar Member
    Joseph EagarJoined in the first year of Ricochet Ricochet Charter Member

    Steve, you’re missing my point. Fiat systems and debt dependence do not go together, since debt financed by money creation neutralizes itself through inflation. Again, creating money does not make more goods and services appear out of thin air. 

    The only way for net real indebtedness to rise is by foreign borrowing, specifically foreigners in countries with high savings rates. Someone, somewhere, must save for net indebtedness to rise–otherwise people will simply bid up prices, as indeed happened in the 1970s.

    • #15
    • July 1, 2012, at 11:53 AM PDT
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  16. Joseph Eagar Member
    Joseph EagarJoined in the first year of Ricochet Ricochet Charter Member

    And I don’t believe inflation is necessarily a good thing. But devaluation is another matter; Milton Friedman made the case for devaluation of currencies in trade deficit sixty years ago, and his arguments are as true today as they were then. Trade deficits require economy-wide wage cuts, and devaluations solve the difficult coordination problem of whose wages falls first, and in what order.

    • #16
    • July 1, 2012, at 11:56 AM PDT
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  17. Gojira's Hejira Member

    Is the Vatican truly not even worth a mention in this discussion?

    • #17
    • July 7, 2012, at 12:19 PM PDT
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  18. Umbra Fractus Coolidge
    Umbra FractusJoined in the first year of Ricochet Ricochet Charter Member
    Steve MacDonald: – There has never been a Fiat currency system that survived long term. The average life span is around 40 years – versus Gold that has been the base standard for most of the last 5,000 years. Why do you think that this time is different? Govt. wisdom/competence? · Jun 28 at 6:54pm

    There has never been a fiat currency system. Period. If there were, then Zimbabwe would be a major economic power; over half that country are multi-trillionaires, after all.

    Leaving the gold standard did not leave us with a currency backed by nothing, but a currency backed by the economy as a whole instead of a single commodity. If the currency were truly backed by nothing, then printing would not be a problem.

    Also, a return to the gold standard would make true one of the conceits of leftism, that prosperity is a zero sum game in which no one can get richer without making someone else poorer. Under a gold standard it would be impossible to “create wealth,” the most common conservative alternative to redistribution, without mining more gold.

    • #18
    • July 8, 2012, at 9:05 AM PDT
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