Taylor on Gold & Stocks

December 17, 2001

Congressman Ron Paul, M.D. says U.S. Treasury confiscation of gold would be illegal.

Several months ago, I received a part of an article that stated that the Secretary of the Treasury could confiscate private gold any time he so chooses. The article referred to U.S. Code (12 U.S.C. 248(n)). In November I finally got around to writing to Congressman Ron Paul to ask him this were true.

Earlier today, I received Dr. Paul's answer to my question. He said "Congressional Research Service, statutory authority for the Treasury Secretary to confiscate gold was repealed in 1982." But then, Dr. Paul stated, "Of course, the Treasury probably intervenes in the gold and silver markets through the Exchange Stabilization Fund. I am working on legislation that would restrict the Exchange Stabilization Fund's ability to interfere in, and thus distort, the gold market."

In my letter to Congressman Paul, I also gave him a brief eye witness account of the move to dismiss Reginald Howe's anti-gold price fixing case that took place on November 5, 2001. Dr. Paul responded by saying "Thanks also for updating me on Reginald Howe's lawsuit. While I wish Mr. Howe well in his efforts, I must confess that I am skeptical of whether the federal judiciary will limit federal power absent clear indications of public support for a return to constitutional government. This is why I believe defenders of liberty must continue to concentrate on educating our fellow citizens of the benefits of a free society."

To that I would like to respond to Congressman Paul that at least part of what GATA and Reginald Howe are trying to do is educate people about the problems caused when constitutional freedoms are being abolished by the government. To be sure, many if not most people associated with GATA have a self interest at heart. But it is clear to those of us who have studied the gold rigging mess, how destructive our government is to cause of freedom by this intervention.

Of course, in my view, no elected official in Washington comes closer to educating Americans about the libertarian values instituted by our founding fathers and the need to retain those values than Dr. Paul. If ever there was a politician who has gone to Washington to serve his country rather than to be served, it is Dr. Paul. As a physician who has delivered 4,000 babies he doesn't need a job in Washington. He ran for office because of his passion for liberty and the need to help others understand why we MUST hold on to it if we are going to retain any semblance of freedom that our Founding Fathers envisioned when they framed our Constitution. Dr. Paul understands how printing money undercuts our liberties and leads to the formation of a rich, powerful ruling elite who uses their power gained via the printing press to effectively rob hard working Americans who actually produce our nation's wealth. And, much to his credit, he has been very concerned that certain policies instituted post September 11th, may erode the very values we are supposedly fighting for.

You can tell Dr. Paul is an honest statesman who loves his country because he takes on positions that are not politically correct, but those which he so passionately believes in. I thank God for Dr. Paul. If we had 434 more like him - in terms of a willingness to selflessly serve America -- our democratic republic would not be facing the demise it is now facing. And with respect to the much smaller issue about a rigged gold market, GATA and Reginald Howe would not need to spend so much time fighting for something they should never, under our Constitution ever need to contest.

I would strongly suggest investors visit Dr. Paul's web site at http://www.house.gov/paul to keep up with his latest speeches and bills he is sponsoring in the House of Representatives. And Oh yes! I believe I recently saw someone on the Internet suggesting that a "Ron Paul for President" move should begin. I'm not sure it would be fair to Dr. Paul to subject him to the indignities of running for that office. He's much too kind and decent of a man to put up with the pernicious sniping aimed at anyone who seeks that office. But if he were willing to run again (I believe he ran on the Libertarian ticket some years ago), whoever it was that suggested a draft "Ron Paul for President" you can count on my support, for what ever that is worth.

When the Kondratieff blizzard really hits our nation with its full force, the thing I fear more than loss of material comfort is that the U.S. is likely to turn toward a dictatorship of some strip or another. At a time like that, who knows. Ron Paul may be predestined to play a more prominent role in defending liberty than he now plays as a Congressman.

CARTEL CAPITULATION WATCH HIGH ALERT !!

Following were some very important comments from GATA this past week that I think spell a very bullish scenario for gold.

"Standard & Poor's downgraded its rating of J.P. Morgan Chase from "positive" to "stable" this afternoon. That fits right into the Midas financial scene scenario presented to the Café for many weeks. I suggest it is only at matter of time before Morgan is rated "unstable" due to their 23 trillion interest rate derivative position - one that has to be threatened by the current chaos in the bond market.

"Both the stock market AND bond market were hammered in the U.S. The long bond closed at 99-21/32, down 24 ticks, while the S&P closed at 1123, up 4 points.

http://www.tfc-charts2.w2d.com/charts/TR32.GIF

http://www.tfc-charts2.w2d.com/charts/SP32.GIF

"The bond and stock technicals are terrible. What is worse is the spin coming from the CNBC/Wall Street crowd on the 'raison d' etre' for the price action of both. It is inept, pitiful and irresponsible in some cases. They seem to be lost in "Wally World," refusing to look beyond their nose at serious problems financial issues staring right at them.

"Yes, something is "very wrong in financial land." Can't use that line enough!

"The following headlines appeared one after the other on Bloomberg this morning:

"*Lucent Sees First-Quarter Sales Falling as Much as 35% From Fourth Quarter *Ciena Has Fourth-Quarter Loss of $1.8 Billion on Write-down; Shares Slide *Retail Sales in U.S. Dropped 3.7% in November; Excluding Autos Fell 0.5% *Aetna to Eliminate 6,000 Jobs; Earnings Will Be Reduced by $125 Million *Qwest Will Cut 7,000 Jobs, Expects $400 Million to $600 Million in Cost.

"For back to back headlines, they are about as bad as I have seen and does anything but portend the vigorous economic recovery called for by Wall Streeters analyzing the rising bond yields.

"Almost unbelievably, the spin on CNBC today from one "out of it" pundit was the job layoff news was really good news because it means the Fed will liquefy the financial system even more. Great!

"Then, we have the requited Enron story:

"New York, Dec. 13 (Bloomberg) -- "Energy companies such as Enron Corp. and Calpine Corp. have borrowed money to bolster their electricity trading and generation, sometimes keeping their loans off the books to impress credit ratings companies. Now the credit raters are asking questions about off-book debts."

"Looks to me like the energy companies have taken a cue from the IMF. The august IMF instructs its member central banks to account for gold reserves that are swapped out of the central bank to leave them on their books as if the gold reserves were still in the bank. The only purpose I can think of for such a curious maneuver is to deceive the general public.

"No wonder the financial scene has begun to disintegrate!

"Bulletin-type info just in to The Cafe from the New York money manager scene: Word is spreading - "The Enron debacle is worse than the LTCM nightmare and extends far and wide into the world financial system."

"Gold and silver were not allowed to trade today according to the dictum of the troubled Gold Cartel. Same óle, same óle.

"While the U.S. stock and bond market were battered, the dollar (which broke down technically yesterday and should have followed through on the downside based on the financial market action and news in the U.S.) suddenly rose 50 points late in the day, led by a fall in the euro. ????

"Can only come to one conclusion: the Working Group on Financial Markets pulled out its magnet and intervened again, trying to avert a complete rout of the U.S. markets. Thus, the dollar rose up to 116.33, basis the March dollar contract. That defies everything that happened today in the U.S. financial scene. It is like an apple falling off a tree and going up towards the sky.

"How can one U.S. political/government official after another keep on praising our free markets? If nothing else, their timing stinks.

"The rigging of the U.S. financial markets, set in motion by the rigging of the gold market 7 years ago, is starting to fall apart.

"The action of the bond market is telling us the "jig is up." The Gold Cartel is in big, big trouble. This is a bad lot, this cabal. The pain they have inflicted on others and are going to inflict on Joe and Jane public in the future is horrifying.

"They must pay for what they have done. One does not have to wish "bad" on anyone. The outrage emanating from public disclosure of the gold scandal will do in The Gold Cartel scoundrels."

The volume of all the gold ever mined can occupy a cube 63 feet on each side.

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