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The value of Gold
has been subject to intense debate for centuries. Nathan Mayer Rothschild was
once the richest man in Britain and probably in the world. In 1840, his
company, - NM Rothschild was appointed as the bullion broker to the Bank of
England and went on to operate the Royal Mint Refinery in 1852. When asked
what the value of the barbaric metal was worth, Nathan used to reply, "I
only know of two men who really understand the true value of gold - an
obscure clerk in the basement vault of the Banque de Paris and one of the
directors of the Bank of England. Unfortunately, they disagree."
NM Rothschild &
Sons rose to prominence in areas that included lending, underwriting
government bonds, discounting commercial bills, direct trading in
commodities, foreign exchange trading and arbitrage, and dealing in gold
bullion. It was the brilliance and cunning of Nathan, who paved the way for
the firm to become the first international banking cartel.
In 1870, the
Rothschilds formed the world's second largest oil producer, the Caspian and
Black Sea Petroleum Company. The Rothschild's financed DeBeers Diamonds,
becoming the biggest shareholder, and financed the railroad system of Europe
and the Suez Canal for Britain. By 1905, the Rothschild interest in copper
miner Rio Tinto amounted to 30-percent.
NM Rothschild was
heavily involved in the gold market for nearly two decades. In 1919,
Rothschild was appointed to chair the London meetings of the five principal
market makers that performed the daily gold fixing, and executed trades on
behalf of customers, and as a principal, trading gold directly with
customers.
So it was of great interest
to bullion traders, when on April 15th 2004, with the price of gold trading
at $402 /ounce, NM Rothschild & Sons, which had fixed the price of gold
twice a day for 85-years, suddenly announced its withdrawal from the London
Gold Pool. By withdrawing from the Gold Pool, NM Rothschild was no longer
obligated to sell its gold to anyone, including central banks. Were the
Rothschilds anticipating some new dynamics that would send the yellow metal
soaring to new heights?
Since then, the
yellow metal has tripled in value to around $1,250 /oz. Central bankers
overseeing emerging economies have become net buyers of gold, and mergers and
acquisitions in the gold mining industry, have put more of the yellow metal's
supply into fewer hands. Also tilting the balance into gold's favor is the
biggest explosion of the global fiat money supply in history.
Central bankers have
monetized trillions of dollars worth of government bonds and mortgage debt,
in Euros, British pounds, Japanese yen, and US-dollars. In response,
investors from all corners of the globe, including central banks in China,
India, Russia, and Saudi Arabia, have been accumulating vast quantities of
gold, as a hedge to protect their purchasing power of their national reserves
or savings.
Extract from What’s behind the
global flight to Gold
Gary Dorsch
Editor, Global Money Trends
www.sirchartsalot.com
This article is just
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Mr Dorsch
worked on the trading floor of the Chicago Mercantile Exchange for nine years
as the chief Financial Futures Analyst for three clearing firms, Oppenheimer
Rouse Futures Inc, GH Miller and Company, and a commodity fund at the LNS
Financial Group.
As a
transactional broker for Charles Schwab's Global Investment Services department,
Mr Dorsch handled thousands of customer trades in 45 stock exchanges around
the world, including Australia, Canada, Japan, Hong Kong, the Euro zone,
London, Toronto, South Africa, Mexico, and New Zealand, and Canadian oil
trusts, ADR's and Exchange Traded Funds.
He wrote a
weekly newsletter from 2000 thru September 2005 called, "Foreign
Currency Trends" for Charles Schwab's Global Investment department,
featuring inter-market technical analysis, to understand the dynamic
inter-relationships between the foreign exchange, global bond and stock
markets, and key industrial commodities.
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