His appearance was so positive that they end up telling him that he should come on the show as a special guest (as they have from time to time) for the full 2 hours of the show. Paul makes a joke in response. Check it out below.

This morning in London the gold price hit an all-time high in non-inflation-adjusted dollars of $1047.

While some who hold gold might be rejoicing, I do not view this as good news at all.  The campaign still has plenty of people to reach in this district, and may run out of time since we certainly do not have the funds to launch a major ad campaign.

The all-time high in the gold price is a warning of dire times to come as it merely indicates that the dollar’s purchasing power is at an all-time low.  The next phase of the dollar crisis may be on the doorstep.

For those of you who would shout “au contraire!!” and are excited about the stock markets gains since the spring, please take a look at the following chart.  Note that maximums in the P/E (price-to-earnings) ratio often precede market crashes, as the stock is overvalued as compared to its dividends/earnings.  This S&P 500 chart is from 1935-present.

Notice anything strange?  We are way out of historical means.  I do not believe that such absurdly high P/E ratios are possible to maintain over the long-term.

And note that the Dow Jones Industrial Average would be far worse if AIG, Citicorp, and General Motors were not removed from this index in the past year.

The campaign is extremely busy and continuing to pick up steam, but we need your help to spread the word.  The above should not be taken as investment advice, merely facts.

It is also a fact the commercial real estate bubble is only just beginning to burst at the seams, as the Wall Street Journal reported this morning.

I refer you to two presentations from my campaign.

The Problem with the Dollar (viewable at the bottom of the page)

and Lecture on the Financial Crisis.

On October 15th, I will be presenting at Moravian College in Prosser Auditorium at 7 PM a talk on “Why the Stimulus Plan Won’t Work”.  Details are here.

Let’s hope I am not too late.  The incumbent Congressman certainly will not be issuing warnings, but I am a bit of an annoying alarm clock.

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Jake Towne is running for U.S. Congress in Pennsylvania’s 15th District in the 2010 election as a citizen unaffiliated with any political parties.  Jake also writes at www.LibertyMaven.com and www.CampaignForLiberty.com.  A novel campaign website where you can comment on articles and start discussions is available at TowneForCongress.com. [Reach the Author Here!]

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Summary of Articles and Bibliography for Jake Towne, the Champion of the Constitution (8/7/2009)

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Other Recent Articles by the Author

America’s Military Empire (UPDATED)

THE OPEN OFFICE – An Open Letter to Congressman Dent

Jake Towne’s Bailout and Corporatism Plank

Jake Towne’s Veterans Plank

Transparency and Accountability – Jake Towne’s ‘Our Open Office’ Plank

NAIS – An Open Letter to Congressman Dent from Jake Towne

Jake Towne’s Income Tax Plank

Roosevelt understood that he must apply the full force of federal power to suppress the natural desire for gold in troubled times. The Emergency Banking Act, signed into law March 9, amended the Federal Reserve Act by adding a new subsection (n), which empowered the secretary of the Treasury to demand that all Americans surrender their gold and receive paper money. The following day, Roosevelt issued Executive Order 6073, which made it illegal for Americans to take gold out of the country.

In his first “fireside chat,” delivered on March 12, Roosevelt didn’t say a word about his backstage maneuvering to seize gold. He remarked that “hoarding during the past week has become an exceedingly unfashionable pastime.”

Less than a month later, on April 5, 1933, Roosevelt issued Executive Order 6012, which expropriated privately owned gold. He ordered Americans to surrender their gold to the government by May 1, 1933. Violators would be subject to a $10,000 fine or as many as 10 years in prison.

Read the article here.

But how much do we really know about what goes on inside the Fed? Even with the newest round of bailouts, journalists had difficulty determining where the money was coming from and where it was headed. From its founding in 1913, secrecy and inside deals have been part of the way the Fed works.

It says that its job is to keep inflation in check. But this is like the car industry claiming to control road congestion. The Fed might attempt to stop the effects of inflation, namely rising prices. But under the old definition of inflation—an artificial increase in the supply of money and credit—the reason for its existence is to generate more, not less.

The banking industry has always had trouble with the idea of a free market that provides opportunities for both profits and losses. The first part, the industry likes. The second is another matter. That is the reason for the constant drive in American history toward the centralization of money, a trend that not only benefits the largest banks with the most to lose from a sound-money system, but also the government, which is able to use an elastic system as an alternative form of revenue support.

Whenever instability turns up, we see efforts to socialize the losses, but rarely do people question the source of instability. Economist Jesús Huerta de Soto places the blame on the institution of fractional-reserve banking. This is the notion that depositors’ money in use as cash may also be loaned out for speculative projects, then re-deposited. The system works as long as people do not attempt to withdraw their money all at once. In the face of such a demand, banks turn to other banks to provide liquidity. But when the failure becomes system-wide, they turn to government.

Read the full excerpt here, and then purchase the hardcover version of End the Fed for only $12.09 here.

Quote of the Day: The government called three accountants to testify. The defense asked each one, “What is the proper way to calculate income for purposes of the Internal Revenue Code if you are paid in a gold coin that has a $50 face value on it?” All three of them responded, “I do not know; I’ll have to research that.” — Mike Zigler, reporting on the 2007 case against Robert Kahre that ended in a hung jury

First, some background . . .

* The face value of the U.S. Mint’s gold and silver coins are legal tender, meaning they must be accepted in payment of debt
* But a Gold Eagle coin that has “$50″ printed on it is legal tender only up to $50, while its gold content is worth about $1,000 in Federal Reserve notes
* No law or IRS regulation requires that receivers of Gold Eagles and other U.S. Mint coins must report the market value of the coins instead of the legal tender value

After extensively researching the issue, Kahre . . .

* hired workers as independent contractors, so he would not pay the payroll tax for their labor
* paid them in gold and silver coins, whose face value – that is, legal tender value – was so low that the workers legally didn’t have to report it as income to the IRS

For instance, if a worker was annually paid in gold coins with a legal tender face value of $2,000, the market value of the gold content in those coins could be $40,000, but only the legal tender face value of $2,000 would theoretically count as taxable income. That face value of $2,000 is low enough to be non-reportable to the IRS. But . . .

Even though the coins Kahre used were legal tender, the Justice Department alleged that Kahre’s system was a fraudulent, tax-evading scam.

We agree with Jacob Hornberger who asserts that the federal government’s prosecution of Kahre is self-contradictory . . .

* if you owe $100 in taxes and pay with gold coins with face values totalling $100, the IRS will accept the payment as $100; it could then sell the coins on the market for twenty times that amount and keep the difference. The government will accept your payment as “legal tender.”
* but if YOU receive gold coins from someone else in a private transaction, the IRS says you must report the market value of the coins, not the face value. That is, YOU CANNOT TREAT THE COINS AS LEGAL TENDER.

The government fears that if more people took the law at its word and behaved like Kahre . . .

* people would demand payment in the Mint’s gold and silver coins and have far fewer reportable “dollars” in income, meaning fewer people would pay income taxes
* the market would soon prefer the coins produced by the Treasury Department’s Mint that are regulated by law – not the inflated dollars created by order of the independent Federal Reserve Board
* good money (gold and silver) would drive out the bad (paper Federal Reserve Notes and electronic keyboard strokes), whereas the federal government needs inflated, deficit-driven money to pay for its endless wars, failed welfare schemes, and expanding police state

No wonder the government views Kahre as a threat, and is willing to made a mockery of its own legal tender laws to destroy him!

DownsizeDC.org, however, believes Kahre was on to something. That’s why we endorse the “Honest Money Act,” which would repeal the legal tender law that gives the Federal Reserve a monopoly over the money supply. This bill, along with the “Tax-Free Gold Act” and the “Free Competition in Currency Act,” is a plank in our End the Inflation Tax Campaign.

Repealing the legal tender law would foster the creation of HONEST free market money, and protect people from the Federal Reserve’s endless onslaught of legalized counterfeiting, which constantly reduces the value of your money.

Tell Congress to pass the bills in our End the Inflation Tax Campaign.

Use your personal comments to mention the hypocrisy involved in the Kahre case. If the feds are going to make it a crime to FOLLOW the legal tender law, then that’s just one more argument for repealing it. You can send your message here.

Thank you for being a DC Downsizer.

James Wilson
Assistant to the President
DownsizeDC.org

D o w n s i z e r – D i s p a t c h
is the official email list of DownsizeDC.org, Inc. & Downsize DC Foundation

by Jake Towne, the Champion of the Constitution

Originally published Saturday, July 25, 2009 at http://www.nolanchart.com/article6666.html

Douglas Gnazzo’s 2008 book, Honest Money: A History of United States Gold and Silver Currency, is an essential add to the reading list of any serious student of monetary systems. Far shorter than the massive tome of Edwin Vieira’s hopefully-soon-to-be-reprinted Pieces of Eight at 226 pages, Gnazzo takes the reader on a pleasurable blitzkrieg through our country’s rich monetary history, from the founders and the Constitution to modern times. Perhaps the most enthralling section of the book is the closing chapters where Gnazzo’s gives his thoughts on a future commodity-based currency and, more importantly, how to transition there from where we are now. Like myself, Gnazzo has called for a national debate on the subject before it is too late.

Gnazzo splashes all the colors of the truth on the wall for his readers. He relates how our money was slowly debased by the politicians’ wars and those pesky central bankers who weeviled their way back into power after America’s first two central banks were destroyed. He relates how the destructive virus of public debt was sown in during the founding of our country chiefly by Alexander Hamilton, the Revolutionary war hero and mercantilistic servant of the aristocracy in America.

With patience, Gnazzo carefully explains the legal differences between currency, bills of credit, lawful money (still coins of gold and silver per the Constitution to this very day), and the public debt. He relates how Hamilton as Secretary of the Treasury, deliberately confused the bills of credit and public debt with lawful money, a distinction that should never have been made.

The key points he lists to remember when dealing with the national debt are:

• Federal Reserve Notes (bills of credit) circulate as currency by “fiat,” or decree
• Federal Reserve Notes are secured by U.S. Treasury Bonds (also bills of credit)
• Federal Reserve Notes “pay off” U.S. T-Bond principle & interest

His accurate conclusion? It is “all one big circular game of musical chairs.” Gnazzo is also quite the philosopher, and just one of the many insights I took from his book was the subject of this article “What is Wealth?”

Honest Money is available here in both PDF and audio book formats. I don’t wish to delve too deeply into the book, but I will say I have read a lot of literature on monetary systems over the past year, from Adam Smith’s Wealth of Nations, Thomas Paine, the 1894 Coin’s Financial School from the silver Populist movement, to plenty of more modern authors like Rothbard’s critical works, Cleon Skousen, Milton Friedman, Antal Fekete, the Bill Bonner crew, Ferdinand Lips and Gary North. Gnazzo’s books tops them all for its combination of quality of research, intensity, and brevity. If I had to pick a single, medium-length 200-page book for the willing student of honest money to read/listen to, this would be the one. The prologue to the book can be read for free here.

The next installment of my Money Matrix series will attempt to synthesize learnings from Gnazzo’s book with Mises’ Human Action and current events in the US Treasury market.  For me, the implications derived from my studies have been profound.

P.S. What about a 50 pager version, you ask? Free download from Rothbard here. Please note I have made no financial gains (nor stand to make any!) from this book review.

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Jake Towne is running for U.S. Congress in Pennsylvania’s 15th District in the 2010 election as a citizen unaffiliated with any political parties.  Jake also writes at www.LibertyMaven.com and www.CampaignForLiberty.com.  A master campaign presentation for internet viewing is available.  A novel campaign website built by Raging Debate, TowneForCongress.com has recently opened. [Reach the Author Here!]

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Summary of Articles and Bibliography for Jake Towne, the Champion of the Constitution (7/2/2009)

In those early years and up until the economic crisis of last year Ron Paul was brushed off as crazy whenever he brought up the unchecked powers of the Federal Reserve. Once the bailouts began and continued it became politically expedient to be more like Ron Paul. That is, as long as you are talking about economics. On foreign policy Ron Paul is still apparently crazy for firmly believing in non-intervention.

I am not alone among the Ron Paul faithful when I say that I’m very tired of reading articles with any of the following labels attributed to Ron Paul:

I apologize for the poor audio, but that’s how the stream came across.

by Jake Towne, the Champion of the Constitution

Originally published Monday, July 13, 2009 at http://www.nolanchart.com/article6588.html

July 24, 1998, was an epic day for the global financial system. In “The Money Matrix – Bring Light to Dark Derivatives! (PART 11/15),” we reviewed the consequences of FED Chairman Alan Greenspan’s decision to allow negotiation of OTC derivative contracts without the use of an exchange to make transactions transparent and reduce counterparty risk. (emblem)

Greenspan also stated:

“Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise.”

Translated, this comment simply means that the international central banks will suppress the gold price by releasing central bank gold reserves. Why is the gold price so important? Isn’t it just a yellow metal mostly used for jewelry? How exactly is this manipulation accomplished? These are the questions this article will answer.

THE LONDON GOLD POOL AND THE “REAL RATE OF INTEREST”

Before proceeding, I recognize that many hearing this for the first time may be incredulous. To that end, please read “R.I.P. – The London Gold Pool, 1961-1968“. This article painstakingly demonstrates – using the FED’s own documentation – that the international central bankers secretly colluded to manipulate the gold price in the 1960s to hide the dollar’s debasement. Note the severe aftermath: the London Gold Pool was utterly destroyed in 1968 and the end result was the national bankruptcy of the United States in 1971 when President Nixon blocked the redemption of dollars for gold by foreigners. The collapse of the London Gold Pool heralded the era of free-floating fiat currency. If additional proof is please read this 1961 FED document and analysis by James Turk from the Gold Anti-Trust Action Committee (GATA) entitled “The FED’s Blueprint for Market Intervention.”

In the recessions and energy crises of the 1970s, the gold price rose from $35 to $875 per troy ounce. With the vast increase of powers granted by the Monetary Control Act of 1980, FED Chairman Paul Volker jacked interest rates into the stratosphere to squeeze the inflation out of the dollar. In 1981, the federal funds rate reached a maximum of 19%, and would not subside to single digits until 1985. [And what was Volker's only regret from his memoirs? That "Joint intervention in gold sales to prevent a steep rise in the price of gold, however, was not undertaken. That was a mistake."]

The next part is crucial to the plot. In 1988, a young economist out Harvard, Larry Summers wrote a verbose paper entitled “Gibson’s Paradox and the Gold Standard.” In the paper, Summers explains that when the real interest rate is positive, the gold price will not increase and even decrease as parties will prefer fiat currency that increases in purchasing power. However, when the real interest rate is negative, the price of gold will increase as parties will seek to preserve their purchasing power. Gold serves as “the canary in the coal mine” for all fiat currencies. When the price of gold rises, this is the prime signal that the currency is being debased.

Summers well understands the world gold market and the axiom “at all times, in all places, gold is money.” Few today recognize that gold (XAU) and silver (XAG) are internationally recognized currencies and compete with the USD, EUR, and all others. Few recognize that the daily trading of gold on the London Bullion Market Association exceeds $80 billion USD per trading day. To put this in perspective, the London market accounted for $20 trillion USD in 2007 which by itself is larger than the $14 trillion GDP of the United States, which is the trade from all the goods and services our country produced. Gold is not just a currency, not just money, gold is a commodity that is the world’s smallest major financial market.

Now, the real interest rate remained positive until 1990 due to Volker’s draconian inflation-fighting measures. As explained in “Unlocking the Money Matrix – The Real Interest Rate (PART 12/15)“, the real interest rate not only went negative, but it kept plummeting. The prime reason for this is the massive creation of new dollars that debased the currency by the FED, or classical Austrian monetary inflation of the money supply.

In the 1990s, the American government in collusion with the central bankers decided to execute the Summers’ scheme although they may have simply been building on his mentor Robert Rubin’s gold trading practices at Goldman Sachs. By suppressing the price of gold AND silver – a far smaller and easier-to-manipulate market than gold – and publishing rigged CPI numbers, they could slowly and steadily confiscate the purchasing power of their populations while masking the debasement of the dollar and hence all other fiat currencies while not causing a loss of consumer confidence.

THE SUMMERS GOLD PRICE SUPPRESSION SCHEME

Here is how the scheme works:

1. Central banks, like the FED, takes gold bars from their vaults and leases them to cartel entities like Goldman Sachs at a low rate typically around 1%. Unless the sale is announced like Gordon Brown’s infamous sale of 60% of England’s gold reserves from 1999-2002 at $275/oz., the central bank continues to carry gold on lease and gold in the vault as one line item on their balance sheet.
2. The cartel then sells the physical gold into the futures market at spot price. The spot and future prices were suppressed by this extra supply. Large dumps can be orchestrated to cause “waterfalls” in the price due to algorithm or stop-loss trading.
3. Now the cartel has plenty of capital which could be leveraged by an investment bank at 30:1 or higher and used for ANY transaction. (Similar plays on interest rate mismatches were also executed on fiat currencies, most infamously the Japanese Yen-US Treasury carry trade, but these plays were made far easier with the golden ‘canary’ silenced.)
4. The physical gold bars leave the exchanges. Most of the central bank gold is melted down to meet the supply deficit, and now adorns the necks of Indian women or rests in the vaults of investors.

There are approximately 160,000 metric tons of aboveground gold stock. The World Gold Council reports that the world’s central bank gold reserves are at 29,698 metric tons as of June 2009, and this is a fall from the 35,582 metric tons reported in 1990 while the world’s money supply has more than tripled since then. However, the WGC statistics do not have the rigor of independent audits and are incorrect as shown by the abrupt doubling of China’s disclosed reserves overnight. As Ed Wener of GATA reported in 2005 and James Turk related in 2009, it is highly probable that 12,000 to 15,000 additional metric tons has been leased by the central banks into the marketplace.

In the March 2001 audit of the Exchange Stabilization Fund (ESF), the Treasury refers its (unconstitutional) powers to “deal in gold, foreign exchange, and other instruments of credit and securities the Secretary considers necessary” to promote “orderly exchange arrangements and a stable system of exchange rates.” Along with the blatant remark by Greenspan above, this appears to me to be a carte blanche to trade in the gold market, and as late as 2000 the FED still publicly reported the ESF as controlling an unspecified portion of our nation’s gold.  To this day, the US government and the FED report gold stock on lease and gold in the vault as a single line item.

It is not outside the realm of possibility – though unproven – that the US government completed a gold swap transaction with Germany, where we traded gold stored in the US for gold stored in Germany as Turk surmised in “Behind Closed Doors,” which was based on FED meeting minutes in 2001. Of course, the swapped gold from Germany would then have been used by the US government to dump gold on the London market. Recent events with Germany and subsequent Obama-Merkel meetings hint that they may be calling for the return of their gold. The Bundesbank even published a document back in 2000 that gave a hypothetical example of a gold swap with the FED, see page 37/56.

THE COMMITTEE THAT COULD DESTROY THE WORLD

In February 1999, Time magazine published a cover with the bold title “The Committee to Save the World.” In the future, the truth may be revealed as quite the opposite. Now, almost certainly, Summers, Rubin, Greenspan and the rest of the cartel believed in the mid-1990s that the gold suppression scheme could be carried out for 40-50 years before its failure enough time for either a new solution to be found or to see the Keynesian wet dream of one or very few regional fiat currencies realized.  Unfortunately, if the global monetary system melts down, the entire world will be adversely affected.  (Photo Rubin Summers Greenspan)

A key component of the plan was also psychological. Robert Rubin, Treasury Secretary from 1995-1999, first coined the “Strong Dollar” policy. When these words needed to be turned into action, Greenspan over at the FED could manipulate interest rates, create dollars, and conduct foreign currency operations. Summers worked under Rubin and continued the policy as Treasury Secretary until 2001. Summer’s successor was Paul O’Neill who had this to say in 2008:

“When I was Secretary of the Treasury I was not supposed to say anything but “strong dollar, strong dollar.” I argued then and would argue now that the idea of a strong dollar policy is a vacuous notion… When people say strong dollar, if they don’t mean that “we believe intervention can work and we’re prepared to intervene,” then strong dollar is ridiculous.”

Any veteran investor also realizes the powerful effect of FED statements by Greenspan and now Bernanke have had on stock and bond market volatility. In 2001, the gold price began its slow upward march, starting at $275/oz. As James Turk has documented, gold has risen eight years in a row, with an annual average gain of 16%. The gold cartel has been beating a retreat.

However, the plan to quietly confiscate the wealth of the American people has an Achilles heel, the same which destroyed the London Gold Pool. If physical gold becomes too scarce on the futures exchange and enters backwardation, or if the fiat currency debasement becomes too obvious, the gold price will skyrocket in response and the exchange will lose all its metal and the cartel will default. Furthermore, the gold on lease cannot be repaid to the central banks without causing the gold price to soar, and as more people realize the scam worldwide, or become more alarmed by the price rising, the more physical gold is saved.

THE WILES OF “PAPER GOLD” AND “PAPER SILVER”

As previously stated, Gold is the world’s smallest major market. In 2007, the last reported year, the London Bullion Market Association (LBMA) exchanged over $20 Trillion USD in gold. This was larger than America’s GDP of $14 Trillion USD, and the LBMA trading only represents about 75% of the world totals. Furthermore, the IFSL estimates the LBMA’s volume is quite likely three-to-five times larger since much of the transactions are increasingly netted out and cleared without appearing in the statistics. This is despite the fact that all of the aboveground gold stock 160,000 metric tons melted down would fit inside of a cube roughly 20 meters to a side.

Due to industrial consumption, a shocking surprise to many is that silver’s aboveground stocks are far less than gold’s.  The best estimates range from 30,000 metric tons on the low end to 60,000 metric tons on the high end – a cube that is at most 18 meters to a side. As seen in the graph, the market capitalization of silver is just a small fraction of gold’s which makes it far easier to manipulate.

In 1974, New York’s COMEX futures market was opened to gold trading, paving the way to the “paper gold” derivatives and ETF’s of our modern day. In December 2008, the notional value of all gold derivative contracts was $395 billion USD, or roughly equivalent to 15,000 metric tons of gold. To put this in perspective consider than futures markets are typically used as hedging operations for commodity producers, trading basis risk for price risk. Since the annual production of gold is around 2,500 metric tons, and the contracts are all within a year, the large notional value becomes questionable. And to put this in perspective with silver, in 2007 the equivalent of the entire aboveground stock of gold was exchanged every 269 trading days while the equivalent of the entire aboveground stock of silver is exchanged every 9 trading days.

Here is another little known fact I dare not omit since gold is saved and not consumed, it’s stocks-to-flow ratio is about 60. This means that there is the equivalent of ~60 years worth of production in aboveground stock for every year of mine production. This is in stark contrast to all other commodities, where the stock-to-flow ratio hovers around 1. Please see the graph. This ratio is the key reason why gold is money and a currency.

Perhaps this chart Theodore Butler graciously allowed me to publish from his article “Making the Case” most aptly the gold and silver manipulation by U.S. Banks most clearly below.

Furthermore, in a 2003 lawsuit against the world’s largest gold producer, Blanchard and Company charged Barrick Gold with manipulation of the gold price by using central bank gold, Barrick replied that they could not be sued without the central bank and other bullion dealers present as necessary parties, and that the central banks had sovereign immunity. Barrick’s motion to dismiss was also a confession of the state of the gold market.

“Termination of the forward sales contracts would leave the bullion banks with no right to recover the promised gold from the gold producers; yet, they will remain obligated to repay the borrowed gold to the central banks. In order to satisfy their obligations to the central banks, the bullion banks would have to purchase gold on the spot market at prices that may be substantially higher than the price at which they sold the borrowed gold… It would expose the bullion banks to monumental financial losses.” (p. 20-21/24)

Barrick’s motion to dismiss was settled out of court, and shortly thereafter Barrick announced its hedging operations were terminated.

The Barrick Gold case was preceded by Howe vs. BIS, where, as a BIS shareholder, Reginald Howe charged the Bank of International Settlements, Alan Greenspan, Treasury Secretary Larry Summers, Goldman Sachs, Deutsche Bank, and others with fraud and manipulation of the gold price in the derivatives market and on the COMEX in 2000. In a long, twisting decision, U.S. federal Judge dismissed the case due to lack of standing. However, none of the claims were refuted and Lindsay resorted to questionable logic that Greenspan and Summers were above the law and unable to be sued in 2002. James Turk picks apart the decision in his commentary here.

One final but quite important note that due to the nature of futures markets, the gold cartel just as easily can profit when the price rises as when it falls.  It is typically rare (~1%) for a paper gold futures contract to be settled in gold.  Most often, it is simply rolled over.  The game of golden musical chairs stops when the expected deliveries of physical metal off the exchange shake the confidence that metal will be delivered, resulting in a heightening of counterparty risk.

CONCLUSION

It took me extensive amounts of research to conclude that the gold and silver prices are manipulated, and GATA was the first and prime source of this information. For many seeing this for the first time, I apologize if the above is too complex. Looking back, it should have been much easier – if you listen to the central banks, they literally state they doing this.

One must not forget that central banks are simply government-sanctioned tools of the elite to debase and manipulate the currency in an orderly and politically-expedient manner, regardless of their claims to maintain “political independence.” The simple truth is that the central banks were designed to control the “money power” which eventually MUST and WILL BE returned to We the People.

However, I expect no one to believe the same as I without doing the same research as I have, and to that effect, please see the below source list. Any questions, especially feedback to the contrary, please ask them below and I will do my best in replying in a timely fashion.

Lastly, let’s ask what if I am wrong, what are the consequences? Nothing.

But what about the possibility that GATA, myself, and many others are correct? Then Larry Summers, the director of the Obama administration National Economic Council, should receive a trial by jury, not left free to continue to meddle with the world economy. As individuals, we must end this charade and help destroy the gold cartel or the gold cartel will proceed to annihilate what’s left of the free market in our America, the greatest nation to ever be conceived in the liberty of the individual by the minds of men.

Got physical gold? Physical silver? (Please note ETF funds like GLD and SLV, run by cartel members HSBC Bank and JP Morgan Chase Bank, do not count.)

SOURCE LIST

Butler, Theodore. 2009. “Making the Case.” Butler’s archive is here.

Douglas, Adrian. 2008. “Major GATA Battle Victories in the Gold War.” See p. 3-5 on the BIS and Barrick cases.

Douglas, Adrian. 2009.  “The Alchemists.“  On gold and silver ETF’s (Exchange Traded Funds) and redemption of COMEX contracts.

Greenspan, Alan. 1998. Testimony to Congress on the regulation of OTC derivatives.  “Central banks stand ready to lease gold in increasing quantities should the price rise.”

Greenspan, Alan. 1966. “Gold and Economic Freedom.”

Hepburn, Andrew. 2002. “An Examination of Evidence Indicating Exchange Stabilization and Federal Reserve Gold Market Activity.”

Howe, Reginald. 2000. Complaint for U.S. District Court Civil Action 00-CV-12485-RCL. Howe sues Summers, Greenspan, the BIS, Goldman Sachs, JP Morgan, and others for suppression of the gold price. See also the dismissal by Judge Lindsay and below analysis by James Turk.

Howe, Reginald. 2001. “Gibson’s Paradox Revisited.” Analysis of Summer’s essay.

Murphy, Bill. 2009. “GATA’s Tenth Anniversary: Gold Manipulation Evidence Mounts.“  Bill’s column is available for a free two-week trial at www.LemetropoleCafe.com.

Summers, Lawrence. 1988. “Gibson’s Paradox and the Gold Standard.”

Powell, Chris. 2008. “A New Summary of GATA’s Work.”

Towne, Jake. 2008. “How the FED Works.”

Towne, Jake. 2009. “R.I.P. – The London Gold Pool, 1961-1968.” Proof from the FED they manipulated the gold market with other central banks in the 1960s.

Towne, Jake. 2009. “Ron Paul’s rEVOLution Versus the “One Ring” of the Federal Reserve.”

Towne, Jake. 2009. “Silver and Gold ARE Money.” Summary of gold and silver market facts.

Towne, Jake. 2008.  “The End for the Dollar and All Fiat Currencies.” Beginning of a six-part educational series on futures markets and gold.

Towne, Jake. 2009. “The Real Interest Rate.” Demonstrates the confiscation of the purchasing power of the American people by the U.S. government.

Towne, Jake. 2008. “What the Heck are Derivatives?” Introduction to derivatives and futures markets.

Turk, James. 2009. “A Short History of the Gold Cartel.”

Turk, James. 2001. “Behind Closed Doors.“  On the mobilization of US gold reserves and possibility of gold swaps with the Bundesbank.

Turk, James. 2002. “Howe vs. BIS.”  Analysis of Judge Lindsay’s dismissal statement.

Turk, James. 2009. “The FED’s Blueprint for Market Intervention.”

US Treasury Department. 2001. “Audit of the Exchange Stabilization Fund’s Fiscal Years 2000 and 1999 Financial Statements.”

Wener, Ed. 2005. “A Look at Central Bank Reserves.”

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Jake Towne is running for U.S. Congress in Pennsylvania’s 15th District in the 2010 election as a citizen unaffiliated with any political parties.  Jake also writes at www.LibertyMaven.com and www.CampaignForLiberty.com.  A master campaign presentation for internet viewing is available. [Reach the Author Here!]

An interim campaign website is here while a dot com is being setup, due for release on July 15, 2009.

P.S. – The “Towne for Congress” Youtube Channel has just opened, you can view me give a speech on “Regaining Our Individual Rights” at the local July 3rd Tea Party rally here.  Text is here

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The Money Matrix Series

1. The Money Matrix – Prelude (PART 1/15)
2. The Money Matrix – What is a Dollar Bill Worth? (PART 2/15)
3. The Money Matrix – What Makes Money Money? (PART 3/15)
4. The Money Matrix – What is Honest Money? (PART 4/15)
5. The Money Matrix on the Grand Deception of Seigniorage (PART 5/15)
6. The Money Matrix – How the FED Works (PART 6/15)
7. The Money Matrix – Who Owns the FED (UPDATED PART 7/15)
8. The Money Matrix on “Credetary” Inflation and Deflation (PART 9/15)
9. The Money Matrix – What the Heck Are Derivatives? (PART 10/15)
10. The Money Matrix – Bring Light to Dark Derivatives! (PART 11/15)
11. Unlocking the Money Matrix – The Real Interest Rate (PART 12/15)

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Summary of Articles and Bibliography for Jake Towne, the Champion of the Constitution (7/2/2009)

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Gold and Silver Investigation Source List

A Quick History of Gold

GO GATA! The premise of the Gold Anti-Trust Action Committee that the world gold market is artificially suppressed by central banks in order to make their currencies look stronger.  25 minute introductory “Gold Rush 21″ movie.

Gnazzo, Douglas. 2008.  Honest Money.  The prelude to the book can be read here “Is America Broke?”  Part 1.  Part 2.

www.GoldMoney.com – GoldMoney is an international gold and silver warehouse with insured vaults in London and Zurich.  Ability to hold and pay interest on six major fiat currencies, issue electronic payments in goldgrams, silver ounces, etc.  Gold can be removed in 100 gram, 1000 gram, or ~400 oz. bars.  Silver can be redeemed in ~1000 oz bars.

The World Gold Council – A wealth of information on central bank holding, gold derivatives, supply and demand statistics and more.  Free login required.

Rothbard, Murray N. “What has the Government Done with Our Money?” (1990) A 50-page document that describes Austrian economics.  Rothbard has written a host of other great sources as well, like the 1994 work “The Case Against the Fed.”

www.jsmineset.com Expert Jim Sinclair shares his thoughts on gold investing, financial markets, and trading.  For free!

www.DollarCollapse.com This site’s main use is as a newsfeed for dollar, gold, and housing market current events.  They explain their dollar collapse theory here, which I partly agree with.

www.SilverSeek.com I particularly enjoy reading the columns of Theodore Butler and Jason Hommel

www.GoldSeek.com The sister site of SilverSeek.  The Mogambu Guru’s (aka Richard Daughty) column has tunnel vision but hilarious and educational..

www.SilverAxis.com – Tom Szabo writes a highly knowledgeable column and is a useful counterargument to GATA and Butler.

www.professorfekete.com A seriously pro-gold scholar.

www.lemetropolecafe.com Offers timely gold market advice and a daily “Midas” column.  Try the 2-week free trial.

Paul, Ron. “Pillars of Prosperity.” (2008) A 400+ page compilation of Dr. Paul’s writings. After reading these, one realizes that Dr. Paul did very little recent work in putting together his best-selling “The Revolution” as most of this book was written 20+ years ago.

Millar, Peter. “The Relevance and Importance of Gold in the World Monetary System.” (2006). Self-explanatory title. Understanding Graph 2 on page 3 is key.

Paul specifically discusses why he doesn’t think the way to get HR1207 to a House vote is through a discharge petition. He suggests continuing to drum up grassroots support for HR1207 is the best method.

Grams allowed Ron Paul to speak until he was done on each topic. He even pointed out that his niece convinced him that Paul was a great candidate during the 2008 election.

Listen to the interview in it’s entirety below.

Download audio file (ronpaul-jasonlewis-06292009.mp3)

If you want to learn a bit more about how the Federal Reserve operates this is a must see.

UPDATE: CATO has put a segment of Ron Paul’s speech at the event up on youtube. It is embedded below.

by Jake Towne, the Champion of the Constitution
Originally published on Sunday, June 14, 2009 at http://www.nolanchart.com/article6535.html

“When gold speaks, all tongues are silent.” – Italian proverb

This article will briefly review the history and aftermath of the infamous London Gold Pool. For those unfamiliar with monetary history, let me quickly establish the events framing the London Gold Pool.

In 1933, the FED’s monetary inflation caused the Great Depression which was also America’s first bankruptcy. FDR plundered the American people’s gold and one month later outlawed the private possession of gold, an illegal act that existed until 1975. From 1933 onwards, America was on a “gold bullion standard.” A “gold bullion standard” exists when gold coins are not minted and owned by the people, but large international transactions with foreigners are handled in gold bar. However, the FED, America’s central bank, continued inflating the monetary supply which debases the currency and likewise increases the foreigner’s redemption of gold.  (emblem)

Following the chaos of World War II, the heads of the world’s 44 industrialized nations gathered in New Hampshire, and made the Bretton Woods agreement. The Bretton Woods agreement made the dollar the world’s reserve currency, and stipulated that all member nations’ reserves had to consist of either physical gold or currency convertible into into gold (domestically the private ownership of  “monetary” gold remained a felony until 1975). These member countries then had a “gold exchange standard” and manipulated their currencies on their national level, often trying to devalue their currencies at the same or slightly higher rates than what the dollar was being devalued, or inflated, at.

The Bretton Woods system began to break down very quickly. In the 1950s, the United States found itself having to redeem vast sums of gold. In the recession of 1958, the FED created $2.25 billion of excess credit, which was redeemed by foreign central banks. This annual loss of 2,000 metric tons of gold still remains the largest known loss of gold in one year by any nation in history – currently, on paper the United States is still the largest official owner of gold at about 8,100 metric tons categorized as “Custodial Deep Storage Gold.” (see note 1)

By 1971, President Nixon had declared America’s second bankruptcy.  The FED had inflated the money supply by too much to fund the Vietnam War and President Johnson’s “Great Society,” and America was no longer able to redeem foreign-held dollars into gold. The world entered the twilight zone of freely floating exchange rates. In between 1958 and 1971, the several governments and central banks fiendishly created the London Gold Pool to suppress the price of gold.

THE LONDON GOLD POOL

In October of 1960, gold trading on the London gold exchange reached $40/ounce, which was $5 higher then the central bank’s target price. Rampant speculation that a Kennedy presidency would lead to more inflation, along with the building of the Berlin Wall and the U-2 spy plane incident, triggered fears about economic stability.

To curtail these fears, President Kennedy pledged in February 1961 that America would maintain the official price to our foreign creditors, and the price of gold fell to $35/ounce. Fearing a relapse, the international bankers of the BIS and the FED-US Treasury secretly formed the London Gold Pool. Each member of the Pool would pledge some of their gold to keep the London market suppressed. The Bank of England would dump their gold on the London market whenever necessary, and at the end of each month the other members would reimburse the BoE in accordance with the percentage of the pool they owned. The members were:

• 50% – United States of America with $135 million, or 120 metric tons
• 11% – Germany with $30 million, or 27 metric tons
• 9% – England with $25 million, or 22 metric tons
• 9% – Italy with $25 million, or 22 metric tons
• 9% – France with $25 million, or 22 metric tons
• 4% – Switzerland with $10 million, or 9 metric tons
• 4% – Netherlands with $10 million, or 9 metric tons
• 4% – Belgium with $10 million, or 9 metric tons  (Photo)

By acting in secret, the governments hoped to stagnate the market and keep potential buyers away. In 1962, a series of events involving Soviet sales of gold led to a change in strategy by the Pool. They found themselves able to profit off the changes in gold supply, and at one time in 1965 the Pool even reached $1.5 billion, or a five-fold increase over the initial Pool gold. However, the Vietnam War expenses after 1965 combined with the French shipping its’ $3 billion in gold from the New York FED to Paris, and leaving the Pool in 1967 led to catastrophic losses.

The FED’s meeting minutes from December 12, 1967 reveal the full extent of the central bank’s panic. Here are several excerpts:

“The announcement on Thursday, December 7, of a $475 million drop [422 metric tons - auth] in the Treasury’s gold stock seemed to have been accepted by the markets as about in line with prior expectations of the costs of the gold rush following sterling’s devaluation. What the market did not know, of course, was that only a $250 million purchase of gold from the United Kingdom saved the United States from a still larger loss in the face of some foreign central bank buying… The logistical acrobatics of providing sufficient gold in London were performed with a minimum of mishaps, although the accounting niceties were still being ironed out.

“Of greater concern, however, was the fact that the drain on the pool was accelerating again… the measures taken by the Swiss commercial banks and by some other continental banks to impede private demand for gold worked quite well, although it was clear from the start that such measures could serve only as a stop-gap until some fundamental change was agreed upon. Persistent newspaper leaks–mainly from Paris–about current discussions on this subject and their reflection in gold market activity Monday and today pointed up the need for speed in reaching a decision. ” (3-4/107) (photo of then-FED Chairman William Martin)

On page 15/107, the group then discusses placing “restraints on access to the London gold market” and it was commented that Italy and Belgium were “not prepared to stay in the gold pool indefinitely if that would mean continued substantial gold losses.” The group did agree to then implement “some program of restraints on demand, particularly in the London market, should be worked out; in the meantime, all of the participating countries were willing to stay in the pool… In particular, the British were concerned that limitations on access to the London market, by diverting demand elsewhere, would work to the detriment of that market which for the past 13 years had been the world’s principal market for gold.”

These excerpts also serve to remind us all that the central banks love their hold on the money power. However, from some of their perspectives, they may well believe they are simply doing “what’s best,” blindly disregarding the fact that all of their interventions and controls are only made necessary from their prior meddling with the free market:

“Although the German case was the most striking example of central bank operations following the meeting in Frankfurt, the availability of forward cover into guilders and Belgian francs at reasonable rates had also helped to reassure the [gold] market.” (7/107)

“Under Secretary [of Treasury] Deming, who had led the U.S. delegation to Frankfurt, made the necessary arrangements, and the group met with him in Basle yesterday. Meanwhile, representatives of the countries in the gold pool met in Washington last week to make a preliminary review of possible additional measures to keep the gold market situation under control. Not unexpectedly, the gold pool also was the main topic of conversation at the regular Basle [Switzerland, the home of the BIS - auth.] meeting on Saturday and Sunday, and it was discussed in detail by the governors on Sunday evening.” (12-13/107) (see note 2)

On pages 13-14, the FED also mentions the “gold certificate plan” which I personally believe is a likely prototype for the emergency fall-back position of today’s gold cartel after the price of gold spikes on the modern futures market. A particularly damning passage concerning the erosion of America’s sovereignty from Congress to the unelected Treasury Department to the cabal of international bankers is here:

“Governmental structures differed among countries, and the United States was almost unique in assigning to the Treasury sole responsibility for external matters involving gold. In many countries the central banks had primary responsibility in that area, although they often were required to consult with their governments. Moreover, central bankers commonly felt that they had greater knowledge and understanding of the practicalities of gold markets than did officials of their governments. Accordingly, it was probably the view in most countries that a meeting of central bank governors was the most appropriate forum for discussions of the type in question. The governors recognized, of course, that in the United States the Treasury had central responsibility with respect to gold, and accordingly they were willing to meet with Mr. Deming yesterday.” [Deming, of course, was quite literally a FED stooge, just like today's Timothy "Turbo Tax" Geithner, see note 2]

Following these minutes, on Sunday, March 17, 1968, the London Gold Pool collapsed and the global gold markets were closed for several weeks. The central bankers then decreed a “two-tier” gold price for “monetary” gold at $35/oz. and “non-monetary” gold. This system remains in place to this day, although it is clearly just an accounting sham. (see notes 3 and 7)

THE AFTERMATH OF THE LONDON GOLD POOL

On Monday, March 18, 1968, Congress removed the 25% gold reserve backing requirement for Federal Reserve Notes. In April, despite further panicked attempts to suppress it, the gold price reached $44/oz. The price was then kept bottled up by actions by the Swiss, American, and English central banks, including massive gold sales from the Soviets to the Swiss and gold redemptions by America.

By 1971, more than half of the gold illegally stoled by FDR from the people had been delivered overseas, mostly winding up in the vaults of European central banks. On August 15, 1971, President Nixon was forced to declare national bankruptcy and closed the Gold Window. This meant foreigners could no longer redeem dollars for gold.

The world’s central bankers and governments rushed to Washington, D.C. and made the Smithsonian Agreement, where, against all reason, all parties agreed to go on pretending as if the gold window had never been closed and merely set new fixed exchange rates. Finally, with the gold price at $90 and the turmoil resulting from the debasement of the dollar leading to a major recession, the system of fixed exchange rates completely collapsed, marking the final nail in the coffin of the Bretton Woods monetary system. From this point onward, all currencies “floated” against each other, opening wide the door to non-stop currency debasement, inflation, and FOREX market speculation. (note 4)

In 1974, New York’s COMEX futures market was opened to gold trading, paving the way to the “paper gold” derivatives and ETF’s of our modern day. In December 2008, the nominal value of all gold derivative contracts was $395 billion USD, or roughly equivalent to 15,000 metric tons of gold. In 2007, the last reported year, the LBMA, or the London gold market, exchanged over $20 Trillion USD in gold – the 2008-9 annual market turnover will likely dwarf this.

My message is a third American, possibly global, possibly even final, bankruptcy is imminent in the coming years as I first clearly denoted in this series. Similar to the closing of the gold window in 1971 being preceded by the demise of the London Gold Pool, this bankruptcy has been preceded by former Treasury Secretary and current Director of the National Economic Council Larry Summer’s gold price suppression plan enacted in the 1990s. (photo) (see note 5 and 6)

The “Summers Suppression Plan” has been bolder, more clever and more clandestine than the London Gold Pool, but may well be on its last legs. Though they may wear Brooks Brother suits and meet in corporate boardrooms and the highest political offices in the land, those who suppress gold are no different than mafia thugs in suits. For in doing so, they also suppress the free market and the prosperity it could deliver if the “money power” once more resides with We the People. More on Summers Suppression Plan in the upcoming parts of the Money Matrix series.

In the meantime, please mark my words. When gold speaks again, the Summers Suppression Plan will be no more.  As sure as night follows day, its fate is the same as that of the London Gold Pool.

Jake Towne is running for U.S. Congress in Pennsylvania’s 15th District in the 2010 election as a citizen unaffiliated with any political parties.  Jake also writes at www.LibertyMaven.com and www.CampaignForLiberty.com.  A master campaign presentation for internet viewing is available. [Reach the Author Here!]

For further reading on this subject, please see:

Lips, Ferdinand. 2001.  Gold Wars.  New York: The Foundation for the Advancement of Monetary Education.  Amazing perspective on gold from an ex-Rothschild banker.  The main source for the above information on the London Gold Pool.

Powell, Chris. “There Are No Markets Anymore; Just Interventions.” (2008) Article focused on the modern suppression of the gold market.

Gold Anti-Trust Action Committee. 2008. “A New Summary of GATA’s Work.”

Note 1 – The suspicious re-categorization of America’s gold hoard as “Custodial Gold,” then “Custodial Deep Storage Gold” is a critical topic in its own right and has been left unchallenged save for the efforts of a valiant few, Reginald Howe and the Gold Anti-Trust Action Committee (GATA). See  the US Mint’s 2008 gold audit, “Howe vs. BIS” and “The “Smoking Gun”” for more details.

Note 2 – Of course, Treasury Under-Secretary Frederick Deming was handpicked by the FED, which is similar to having NY FED President Timothy Geithner become Treasury Secretary.  In this “Memorandum for the President” from FED Chairman William Martin in 1964, Martin recommended Deming be named as a Federal Reserve Governor, but was instead assigned to the critical “gold” position in the Treasury in 1965.

Note 3 – The FED’s reported “gold stock” of 261 million ounces is currently listed as an asset of $11 billion USD, or $42.22/oz. At current market prices, this gold would be valued at nearly $250 billion.

Note 4 – Even though the government paper of today’s fiat currencies are completely unchecked by the discipline of gold, the below quote is from the same above FED meeting minutes. Back then central bankers at least attempted to not drink from the same punch bowl they served the financial markets:

“The excessive demands for goods and services and the accompanying rise in interest rates were, once again, beginning to curtail the availability of funds for mortgage financing. The longer the excessive demands persisted, the more certain it was that a serious “credit crunch” would come. Temporarily pacifying the financial markets by rapid injections of bank reserves, bank credit, and money was no real solution. Continued provision of bank reserves at the recent rapid pace only reinforced the excessive spending and market expectations and induced even more urgent demands for credit.

“Unfortunately… vigorous fiscal action to help reduce total spending, huge credit demands, high interest rates, and inflationary pressures had not been forthcoming. Economic stabilization depended on avoiding further excessive monetary expansion. Both domestic needs and the international balance of payments position of the United States called for the same policy prescriptions. Restraint on total spending was essential to relieve financial market pressures, to foster sound economic growth, and to protect the strength of the dollar at home and abroad. Moderate monetary restraint could contribute to achievement of balanced economic expansion.” (54/107)

Note 5 – In his paper “Gibson’s Paradox and the Gold Standard” from 1988, Summers realized that when real interest rates are positive, the price of gold declines as people prefer the government’s paper currencies.  The converse is also true – when real interest rates are negative, the price of gold increases.  Therefore, when the government embarked on a lengthy period of negative interest rates, they were aware that the price of gold must be suppressed.  This isn’t exactly the work of a genius, but Summers is no dummy either.

Note 6 – In the interests of fairness, Summers claims in his June 12 address to the CFR (Council on Foreign Relations) that “we only act when necessary to avert unacceptable — and in some cases dire — outcomes… Our objective is not to supplant or replace markets.  Rather, the objective is to save them from their own excesses and improve our market-based system going forward.” in relation to his actions for the Obama administration.

Note 7 - In the March 14, 1968 FED minutes (page 3/28) “the international financial system was moving toward a crisis more dangerous than any since 1931. The hurricane of speculation that had occurred on the gold market was likely to be succeeded by a similar hurricane on the exchange markets.”  The FED then made plans to increase swap lines and ‘inject liquidity’ – or print money and extend massive amounts of credit – to continue the scheme.

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Nolan Chart Facebook Group Page Created

Summary of Articles and Bibliography for Jake Towne, the Champion of the Constitution (6/8/2009)