Reprinted with Permission
The Last Train Out
Because Rick made the last train out of Paris, he lived to
fight another day, and in the interim provided grist for a great
movie, Casablanca. Those were years when prescient men
and women all over Europe were running for the proverbial last
train out, sometimes just a few steps ahead of the Gestapo. Some
made it, as in The Sound of Music. Some did not, among
them Natalie Jastram Henry in Herman Wouk's The Winds of War.
Some chose to stay in place and await their fate. But most only
dimly understood, if at all, the historic currents about to redirect
their lives. Only later did they appreciate that of all the trains
then chugging over the Continent, some were vehicles of escape
to freedom and life while others bore their passengers to unbelievable
depravity and death.
It is human nature to think that tomorrow will be much like
today, that history progresses in a more or less linear fashion.
Great discontinuities boggle the mind. My friend Adam Hamilton
has just written a piece, Gold
Prepares to Erupt, comparing the current monetary and investment
climate to ancient Pompeii just before its immolation by the
eruption of Mount Vesuvius. Adam concludes: "We are now
observing initial pressure-blowoff warning signs in gold, and
the great financial lessons of history coupled with the immutable
laws of free-market economics ensure gold is preparing for a
spectacular price eruption."
Market or volcanic eruptions are notoriously difficult to
predict. The forces that lead to them, however, are somewhat
easier to observe. Anyone interested in gold who has not yet
read Frank Veneroso's presentation
at the GATA conference in Durban on May 10, 2001, should
do so at once. Gold speaks primarily through flows of physical
metal, gold prices in various world markets, lease rates, and
general conditions in the gold mining industry. Frank is almost
certainly the world's leading authority on gold flows, including
the huge amount of gold that central banks have recklessly loaned
out over the past decade and that now represents an alarmingly
large short physical position overhanging the world financial
system.
In recent months my commentaries have been limited by the
demands of my litigation against the gold price fixing cabal.
Last Friday government lawyers for Paul O'Neill, Secretary of
the Treasury, and Alan Greenspan, Chairman of the Federal Reserve,
dropped on me some weekend reading consisting of reply briefs
they want to file in response to the opposition that I filed
to their motions to dismiss. I understand that the Bank for International
Settlements may also move for leave to file a reply brief. These
reply briefs, which are not allowed as of right, come more than
five weeks after I filed my opposition. In the appellate courts,
reply briefs that are allowed as of right must usually be filed
within two weeks of the principal brief to which they respond.
So I ask myself: What has suddenly prompted this urge to file
reply briefs? Is it just the government moving at its typical
glacial pace, or is something else going on?
On Saturday, May 26, GATA chairman Bill Murphy received a
second
letter from Lawrence B. Lindsay, Assistant to the President
for Economic Policy, and generally regarded as President Bush's
top economic adviser. While Bill has not revealed publicly the
exact contents of the letter, he has revealed its date: May 30,
2001. A postdated letter from the White House strikes me as a
bit unusual.
These strange emanations from Washington may be nothing more
than government doing what it does best: chasing its own tail.
But they could reflect some more rational purpose that cannot
yet be fully discerned. Over the past few weeks, amidst talk
of a Gold Syndicate taking on the Gold Cabal, the gold market
has displayed a decidedly different and more bullish tone. Rumor
has it that the Gold Syndicate includes the Chinese, Middle Eastern
interests and George Soros, who apparently plans to make another
billion dollars at the expense of the Bank of England. Certainly
there has been increased media coverage of GATA, much but not
all of it generated by the conference in Durban. Lease rates
have displayed unusual volatility and inversions. The possibility
of a delivery squeeze on the COMEX June gold contract looms ever
larger.
Given the fundamentals of the current international financial
picture, gold looks ready to resume its historic role as the
financial asset of last resort, the only financial asset that
is not another's liability. All these recent straws in the wind
sound like the gold train blowing its whistle and preparing to
leave the station. When it does, the dollar-dominated financial
world we have come to assume will change forever. Its great hero,
Alan Greenspan, will take his rightful place in history alongside
John Law. Don't miss the gold train. It is one train that even
my FJ1200 superbike can't catch.
Reg Howe
row@ix.netcom.com
http://www.goldensextant.com
May 31, 2001
Printer Friendly Version
Email this Article