MARCH 2004

Gold Is Money - Deal with It!

[Speech by Robert K. Landis to the Association of Mining Analysts, London, England, October 2, 2003]


Gold bugs don’t get out much. And it’s very rare that we get an opportunity to address mainstream opinion makers. So it’s a great honor indeed to speak to an organization that counts among its members some of the world’s most influential mining analysts. I’m grateful to the Association, and to Chairman Michael Coulson, for inviting me here to talk today.

As the title of my remarks suggests, I’m not here to discuss the dissident theory of undisclosed official intervention in the gold market. Or to introduce or expand upon some new piece of evidence in support of that theory. Rather, I’d like to focus on the mainstream view of gold itself. I have two reasons for doing so. First, because I think as long as you hold that view, there’s no way you can even hear the dissident message.

Second, and more important, I think it’s time for influential people to begin thinking about what comes next. The dissident message, after all, is just one facet of a much bigger issue: the current monetary system is rotten to the core. So the question arises, where do we turn when the dikes break? The gold bugs’ answer is simple: we’ll have no choice; it’ll be back to gold. But as long as the mainstream view is in place, it will continue to mask the true nature of the problem and prevent us from thinking constructively about a solution.

The Clash of the Paradigms

Two paradigms are at war in the gold world. The dominant set of received beliefs, those that shape the way most of us look at gold, is the “gold as commodity” paradigm. This view, with few exceptions, is held by all the major players - official sources, the media, analysts, the miners, and even a lot of gold bugs who ought to know better.

The commodity paradigm has three basic elements:

1. Gold was “demonetized” in the 1970’s.

2. Gold, like other commodities, is a hedge against inflation.

Here I bow to superior numbers and use the term “inflation” in its popular, and incorrect, sense: a rising price level. This is the sense in which the term is understood under the commodity paradigm, and also the sense in which it is used in the leading empirical study of gold, which I’ll come to later.

3. There is no monetary demand for gold. The demand for gold is principally ornamental. Above-ground supply is abundant, and the bulk of it is held by central banks, who are indifferent and accidental owners. The market is always at risk of disruption from a mobilization of that supply.

The commodity paradigm is almost universally held, and it appears consistent with actual experience over the past 30 years. It’s no wonder the dissident message can’t get through. Under the governing paradigm, our allegations of official intervention make no sense. Why would central banks try to hold down the price of a mere commodity?

Enter the challenger paradigm, struggling to get a hearing. Call it “gold as money”. It is a minority position, to say the least.

Its core elements are as follows:

1. Gold is permanent, natural money. Politicians can no more demonetize it than King Canute could order out the tide.

2. Gold is not a hedge against a rising price level. It is a hedge against a currency collapse.

3. Demand for gold is principally monetary. Unlike other commodities, it is produced for accumulation, not consumption. The threat to an orderly market posed by the central banks is at this point largely bluster.

Every good paradigm clash deserves a matrix.

Commodity:Monetary Role:N/A; Demonetized//Investment Function:Inflation Hedge//Principal Demand:Ornamental
Monetary :
Monetary Role:Permanent, natural money//Investment Function :Currency hedge//Principal Demand:Monetary

Now I must concede that to call this a clash of paradigms is a bit of a stretch.

For one thing, it flatters both sides. We are no Galileo; Gold Fields Minerals Services is no Vatican.

For another, it implicitly mischaracterizes our positions. We are the conservatives, the defenders of an organic tradition that spans thousands of years and informs all cultures and all history. The mainstreamers are the jacobins. They profess a radical ideology that is all of 30 years old.

Liar, Liar

But its greatest failing is that it treats the two paradigms as morally equivalent. They are not.

The commodity paradigm, I submit, is not a paradigm at all, but rather a running fraud. It is the paradigm of a laboratory animal’s association of a bell with a dinner that never comes.

I say this because the commodity paradigm is false in its conception, and false in its particulars. It is false in its conception because it did not arise as the result of a “paradigm shift”, in which the monetary paradigm was displaced by a newer model better able to account for anomalies.

Rather, it arose as spin,the default by the United States on its obligation to redeem its currency in gold. Prior to August 15, 1971, the US Dollar was convertible, at some level, into gold. After that date it was not. The link between gold and the reserve currency was severed for the convenience of the United States. In connection with this default, the commodity paradigm was hatched as propaganda, to serve as suppressing fire for a raid on the global treasury.[1]

Funky Money

Ever since the Great Default, we have been instructed to believe the fiction that notes issued by the defaulting debtor are actually more valuable than the money that formerly backed them. That it was the state that conferred value on gold by fixing a price for it in dollars. This absurd notion is belied by the fact that, despite all the propaganda, gold’s price in dollars did not fall after the link with the dollar was severed. It rose. Substantially.[2]

Equally absurd is an implicit corollary that stems from the assertion of “demonetization”:

Money itself is a form of credit. It is not a thing, but an abstraction, a category of information created by the state that embodies a claim on society.

We see this in a simple colloquy:

Question: With respect to what, precisely, was gold demonetized?

Answer: Irredeemable notes, a weak form of sovereign credit, hiding behind what Murray Rothbard called the “accounting fiction” of an ostensibly independent central bank.[3]

But if these irredeemable notes are money, then money itself must be a form of credit. The theory must fit the facts.

So why haven’t we seen the emergence and adoption of a new theory of money that calls a spade a spade? Why, indeed, haven’t we seen a constitutional amendment in the United States that explicitly declares the obligations of the United States to be lawful money? Because fraud hates sunlight.

Those with the sophistication to do so shy away from embracing a theory of money that actually corresponds to the facts.[4] They know that the conflation of money and credit lies at the heart of the greatest monetary catastrophes in human history.

Similarly, politicians know better than to conform the law to the truth, that ours is now a system not of laws but of men. The subjective and malleable judgment of politicians and bureaucrats has displaced the requirement that our currency be exchangeable for money at a price fixed by law.[5]

So rather than adjust to the reality of the current monetary regime, mainstream terminology pretends that nothing has changed. It still clings to the old forms, still speaks of money as a thing, a medium of exchange. And our highest law still reflects the monetary paradigm of the Founders.

If you accept the theory of money as credit that lurks behind our so-called managed currency system, then I invite you to drag it into the sunlight. Articulate it in your work.

But if you believe that money must be a thing not an abstraction, then you’re either a gold bug already, or you’re due for a paradigm shift. Because if money is a thing, there is simply no escaping the teaching of 5,000 years of trial and error: that there is no thing better than gold that can serve as money.

Gold is rare; it is indestructible; it is compact; it is malleable; it is divisible; and its rate of expansion is not subject to the vagaries of political pressure or bureaucratic intuition.

Yet today, the notion of a monetary use for gold elicits derision from mainstream commentators. I quote one, in a dispatch dated September 9:


Funny, don't remember the last time I saw someone paying for groceries with gold bars, or booking a plane reservation over the Internet with gold and not the gold card. This gold is a currency talk is nonsense. Nowadays it is a simple thing to move money into other highly liquid and interest paying real currencies with the stroke of a keyboard. Even backward Saudi Arabia puts money into bonds and other currencies rather than gold these days. Gold is about as much a currency as horse and buggies are good transportation. None.[6]

This is the sort of drivel you come up with when you labor under a faulty paradigm. Yes, it is the case that you cannot buy gas with gold in Little Rock. The same, of course, can be said of euros and yen. Wherever you are, you must use as currency whatever passes for legal tender within that jurisdiction. Big deal. This says nothing about the monetary nature of gold.

But this attack on a straw man is analytically helpful, as it points us to the correct interpretation of what actually happened in 1971. The Great Default was not the demonetization of gold. It was, in fact, the demonetization of the dollar.

Some Investment

Let’s turn to the second leg of the commodity paradigm, the Investment Function. Gold, it holds, is a hedge against inflation, meaning a rising price level.

Like other commodities, we’re told, gold’s price goes up in inflationary periods, and down in deflationary periods. We hear it all the time: inflationary expectations drive the price up; deflationary expectations drive it down. Gold as anti-bonds.

The only problem with the inflation hedge theory is that it doesn’t work. Throughout history, both at times when gold was tied to legal tender, and at times when it wasn’t, gold has been a poor hedge against inflation. Indeed, it has consistently lost purchasing power during periods of inflation, and gained it during periods of deflation. This was the impeccably supported conclusion of the late Roy Jastram, who, in a book entitled The Golden Constant,[7] rigorously analyzed the purchasing power of gold in England and the United States from 1560 to 1976.

Professor Jastram concluded that while gold does not match commodity prices in their cyclical swings, over the longer run, it does hold its purchasing power remarkably well. He concluded that gold prices do not chase after commodities, but rather that commodity prices return to the index level of gold, over and over. Hence the title of his book.

He also noted that gold is a financial refuge in political, economic and personal catastrophes.

He acknowledged that “[a]nyone who fears the collapse of his country’s currency is acting rationally when he shelters his assets in gold.” He cited some interesting examples:[8]

- The Latifundia, the great landowners of the Roman Empire, passed gold bars secretly to their heirs who thus survived the barbarian invasions to become nobility under the Merovingian kings of the fourth century.

- White Russians who escaped the Bolsheviks survived on treasures they carried in flight.

- Austrian refugees, escaping Hitler’s storm troopers, often owed their survival in a new country to the gold and jewels they could carry on their persons.

The problem, he observed, arises when these defense mechanisms are translated into a mechanism for protecting against recurring price inflations. He called this an example of faulty inductive reasoning. One, I might add, that’s been incorporated wholesale into the commodity paradigm.

There was just one exception to the pattern he observed over the four hundred years he studied. This was the experience in the United States from 1951 to 1976. Although this exceptional period followed the typical pattern up until 1970, after 1970, the price level rose, and so did gold’s purchasing power. This had never happened before. He attributed this to pent up pressure released by the collapse of the London Gold Pool in 1968, which had held the dollar price of gold at an artificially low level.

Now, from our vantage point we see that the Great Default was a defining event that ushered in a new period, one that is still unfolding. One that includes the spike in the dollar price of gold at the end of the 70’s, as well as the dramatic decline in the 90’s, two events that occurred after his book was published in 1977.

I’m not aware of any scholarship that applies Professor Jastram’s methodology to a period that starts with the Great Default and extends through the recent bottom in the gold market, marked by the Bank of England auctions.[9]

So we’ll just have to wing it, and note simply that to the layman’s eye, once again gold appears to have been a lousy hedge against inflation. This impression is all the more striking if we take our cue from the government and adjust the components of the price series to suit our requirements: That is, to capture the bubbles in financial asset prices, against which gold’s dollar price performance has clearly lagged.

But I think the important thing to take away from Professor Jastram’s study is not what a bad job gold historically does as an inflation hedge, but rather what a good job it does as a hedge against currency collapse. Gold has recently begun to stir. But this has nothing to do with inflation as commonly understood. It’s about the dollar. Analysis that misses this distinction will ultimately prove dangerous to consumers, as it assumes a linear world in which the reserve currency can’t collapse.

Let’s turn now to the third leg of the commodity paradigm, the Supply/Demand Theory. This has three related elements:

First, the current and future dollar price of gold is a simple function of supply and demand. Looking at demand statistics now published jointly by the World Gold Council/ Gold Fields Minerals Services, we see that there’s no such thing as monetary demand for gold. The only recognized categories are jewelry, retail investment, industrial and dental.[10]

Second, the supply is abundant, because central banks still hold about 32,000 tonnes.

Third, these central banks have itchy trigger fingers. Their gold is residue from a more primitive era when gold was deemed to have monetary significance. They hold so much that they effectively control the gold market. But they no longer need or want gold. They have moved on to more modern backing for their currencies.

So, the theory holds, implicitly, they would all sell at the drop of a hat, which puts the market constantly at risk of disruption.

To prevent a total collapse in the market from all this selling, the leading central banks adopted the Washington Agreement, which attempts to make their rush to the exit a little more orderly. This Agreement props up the gold market. So it is of vital importance for analysts to get the inside scoop on whether the Washington Agreement will be extended, and if so, how much gold the signatories will be allowed to sell. A typical Reuters headline from September 18 captures the spirit: “Big rise in bank sales would hurt gold price-JP Morgan.”

Let’s take these elements in turn.

What’s in a Name?

First, how do we know which purchases belong in which category? Do purchasers of gold fill out customer surveys? Hardly. As GFMS itself noted in its year 2000 study on retail investment and private stocks, “…purchase motivation is extremely difficult to measure on a scientific basis.”[11] Indeed, GFMS went on to say that it “…tentatively estimate[d] that probably over 60% of global jewelry demand in 2000 had a distinct investment motive behind it.” [Emphasis supplied.][12]

Here are the figures for the past two calendar years as presented by GFMS:

                      2001     2002
Total Consumer       3413.2   3067.4
 Jewellery           3064.0   2726.7
 Retail Investment    349.2    340.7
Industrial            287.8    278.4
Dental                 69.0     68.7
                     ------   ------
Total                3770.0   3414.5

For 2002, the World Gold Council, using GFMS numbers, put total demand for gold worldwide, excluding only institutional investment demand, at about 3,400 tonnes. Retail investment demand, at only about 341 tonnes, was a paltry 10%. Jewelry demand, at about 2,700 tonnes, was about 80%.

But look what happens if we simply assume that 60% of the jewelry number for the year 2002 was actually investment motivated, as was estimated for the year 2000. We’d get another 1,600 tonnes of investment, which would take the investment total from around 10% to about 57% of total demand. That’s quite a swing.

It’s even bigger if we gross up the numbers to account for the missing institutional investment demand, which I make out to be about another 180 tonnes.[

So you can see how sensitive our understanding of the total demand picture is to some very subjective and imprecise categorization. It doesn’t take much mental energy to move a lot of metal from one category to another.

But the real problem is with the categories themselves. Where do they come from? What do we mean by “investment” demand? Are we to understand that people who buy high carat gold by weight in the souks of the East seek a 7% after tax return? Is that what the questionnaires indicate? I doubt it. I haven’t quizzed them either, but I have to believe these buyers want to preserve their liquidity and purchasing power, not get an investment return. Theirs is a monetary motivation, and it recognizes that what we call the return on investment in gold is just a measure of the rate of debasement of the paper currencies. I quote James Turk, who wrote the definitive piece on this issue 10 years ago:[14]

A portfolio in the broadest sense has two classes of assets, those held for investment (such as stocks and bonds) and those held for liquidity (i.e., money, which is held until the decision is made to purchase a suitable investment). Gold in a portfolio clearly fulfills the latter purpose; it is money. Gold is not an investment because it does not generate a rate of return.

The distinction is important. In a financial crisis, the demand for money is deeper and stronger than the demand for any investment. When we experience the fear associated with a currency collapse, we will see just how much deeper and stronger.

Promises, Promises

The second element of the supply and demand leg of the commodity paradigm is the ominously large amount of gold held by the central banks, some 32,000 tonnes, according to the World Gold Council’s most recent compilation.[15] Now here’s where the dissident message would kick in. We think the reported holdings of the central banks are bogus, because they include gold that has actually been leased or swapped out. Take Portugal. The bulletin shows Portugal holding 517 tonnes (footnotes omitted):

                     Tonnes    Gold's %
                               Share of

1. United States     8,135.4    56.9%
2. Germany           3,439.5    43.4%
3. IMF               3,217.0      N/A
4. France            3,024.8    54.1%
5. Italy             2,451.8    45.9%
6. Switzerland       1,722.8    31.1%
7. Netherlands         842.5    48.6%
8. ECB                 766.9      N/A
9. Japan               765.2     1.6%
10. China (Mainland)   600.3     1.9%
11. Spain              523.4    16.7%
12. Portugal           517.2    45.0%

But the Bank of Portugal’s Annual Reports for the past few years show they actually hold, in the vault, about 173 tonnes, about 33% of the reported figure. Here’s the relevant footnote from its 2002 report,[16] which also covers 2001:

NOTE 2: Gold and gold receivables
                                 31 / 12 / 2002              31 / 12 / 2001       
                                  f.g.grs.(*)    EUR          f.g.grs.(*)    EUR
                                                 thousands                   thousands

Gold in storage at the Bank     172,657,095.59   1,814,250   172,657,095.59  1,748,527
Gold sight accounts              10,880,877.99     114,334    10,799,611.92    109,369
Gold term deposits               48,789,479.90     512,671    41,825,840.38    423,577
Gold related to swap operations 359,508,010.00   3,777,646   381,439,536.68  3,862,902

Gold reserve                    591,835,463.48   6,218,901   606,722,084.57  6,144,376

(*) 1 ounce of fine gold = 31.103481 fine gold grams (f.g.grs.).

Everything but the 173 tonnes is on deposit somewhere else, out on lease, or swapped. It has been for years. Every so often a sale is announced, which reduces the gold already marked as outside the vault. We think there’s a big difference between gold somebody’s promised to return to you and gold you hold in your hot little hand. That difference is called credit risk. And we think there’s a big difference between a sale of gold you actually hold, and a journal entry relating to gold you’ve moved out long ago.

Now not every central bank is as forthcoming as Portugal’s. And we can’t prove that the gold actually held by the central banks in aggregate is just a fraction of what they claim. So let’s just assume for the sake of argument they all still hold all the gold they are said to hold. And by the way, I don’t mean to pick on the World Gold Council here. They get their official numbers from the IMF, whose accounting rules expressly permit the banks to have it both ways.[17]

Buffaloed Soldiers

This assumption leads us directly to the third element of the supply and demand leg of the commodity paradigm: the market power and intentions of the central banks. The myth is a lot scarier than the reality.

Because even if the banks do hold the gold, they can’t control the market. While 32,000 tonnes is indeed a big number, it is dwarfed by the more than 90,000 tonnes now in private hands. But let’s quantify the threat. At 32,151 ounces per metric tonne, 32,000 tonnes comes out to just over a billion ounces.

At an exchange rate of $400 per ounce -- and this assumes the clearing price in dollars of a trade of this magnitude would not be substantially lower -- we’re looking at a total nominal dollar amount of a little over $400 billion.

Now that seems like a big number. But put it in perspective. The Financial Times reports that China now holds foreign exchange reserves of $364.7 billion. Asia as a whole has forex reserves of about $1.6 trillion.[18] And even if the central banks hold as much as they claim, and even if they disdain gold as much as they pretend, are they likely to sell down to zero? We think not. For all the noise, they’ve only sold a net 3,000 tonnes over the last 10 years. So our worst case exposure has to be something less than all 32,000 tonnes. Say, for the sake of argument, half. OK, there we’d be talking a little over $200 billion. That’s about 12% of the forex reserves held by the Asian nations. A little under 20% of the daily turnover in the global forex market. A little more than half of 1% of aggregate US debt. In a period of competitive currency devaluation, is the threat really all that dire?

Indeed, I submit that open sales by central banks would be good for the gold market. They’ll feed the beast. Supply begets demand.

No attempt to calm the gold market with conspicuous official selling has ever enjoyed more than fleeting success, from the London Gold Pool of the 60’s, to the US Treasury and IMF auctions of the 70’s, to the Bank of England auctions of the late 90’s.

In this connection, it may be helpful to recall that on a single day, March 14, 1968, the central banks in the London Gold Pool lost 400 tonnes to private buyers.[19]

Bring ‘em on

So I would urge the analyst community to heed the advice of the late Bob Marley, and emancipate yourselves from mental slavery. Stop salivating when the bell rings. Gold needs central bank support like a volcano needs stoking. Drop this fixation on the Washington Agreement. Call the bankers’ bluff. Tell them to sell it all. The sooner, and the lower the price in dollars, the better.

Unfortunately, what I expect will happen is the opposite: a sudden rush to buy, not to sell. There will be a belated recognition among all market participants, including the central banks, that paper currencies are garbage. When that happens, we’ll have what we call a discontinuous event. The ultimate black swan. We’ll all wake up one morning to learn that gold is 5,000 dollars bid in Asia, none offered. That tinkling sound you’ll hear will be scales dropping from the eyes of analysts all over the City. By then, however, the big money -- and I use the term very, very loosely -- will have already been made. More important, the opportunity to contribute some fresh thinking regarding monetary reform in a period of relative calm will have been missed.

So don’t get caught with your paradigms down.

Thank you.


1. Viewed in the context of the Cold War, the Great Default is at least defensible as a wartime expedient.

Less defensible is the failure to rectify the situation after the War was won. The collapse of the Soviet Union gave the West the opportunity to set its house in order. There was good precedent: Britain went back on gold after the Napoleonic Wars; the US redeemed greenbacks in gold after the Civil War. The West should have seized the day. Instead, it chose to perpetuate the fraud. Only now the Europeans bellied up to the trough for their own piece of the action. The failure to reform the system stemmed not from a need to meet a mortal threat, but from a desire to let the good times roll.

2. See Anatole Fekete, “The Gold-Demonetization Hoax” (, September 5, 2003).

3. Murray N. Rothbard, The Case Against the Fed (Ludwig von Mises Institute, Auburn, 1994), p. 147.

4. I am aware of only one lonely academic voice that has proposed to follow the logic of the managed currency system to its theoretical conclusion. See Mostafa Moini, “Toward a General Theory of Credit and Money,” The Review of Austrian Economics (vol. 14, no. 4, pp. 267-317, 2001).

5. This point was made by Professor Roy W. Jastram in Remarks to the Security Analysts Society of San Fransisco on December 2, 1981.

6. See “Time for My Daily Punishment: Mike Norman on Gold” (, September 9, 2003), cited by LeMetropole Café (same date).

7. Roy W. Jastram, The Golden Constant - The English and American Experience 1560 - 1976 (University of California, Berkeley, 1977). Professor Jastram utilized a meticulous methodology, in which he:

- constructed a unified series of the price of gold since 1560;

- constructed a unified series representing the level of wholesale commodity prices in every year since 1560;

- determined the statistical relationship between these two series in such a way as to measure the purchasing power of gold since 1560;

- analyzed the behavior of that purchasing power in periods of inflation and deflation; and

- assessed the extent to which gold served as a hedge during inflationary periods and a conservator of purchasing power during deflationary periods.

In England, Professor Jastram identified 7 inflationary periods and 4 deflationary periods from 1560 to 1976 [Jastram, p. 125]:

English Experience
                   Inflation                     Deflation 
          Prices(%) Purchasing Power   Prices (%) Purchasing Power
                       of Gold (%)                   of Gold (%)
1623-1658   +51           -34
1658-1669                                -21            +42
1675-1695   +27           -21
1702-1723   +25           -22
1752-1776   +27           -21
1792-1813   +92           -27
1813-1851                                -58            +70
1873-1896                                -45            +82
1897-1920   +305          -67
1920-1933                                -69            +251
1934-1976   +1434         -25

In the United States, Professor Jastram identified 6 inflationary periods and 3 deflationary periods from 1800 to 1976 [Jastram, p. 171]:

American Experience
                   Inflation                     Deflation 
          Prices(%) Purchasing Power   Prices (%) Purchasing Power
                       of Gold (%)                   of Gold (%)
1808-1814   +58           -37
1814-1830                                -50            +100
1843-1857   +48           -33
1861-1864   +117          -6
1864-1897                                -65            +40
1897-1920   +232          -70
1929-1933                                -31            +44
1933-1951   +168          -37
1951-1976   +101          +80

8. Ibid., p. 178.

9. I am not sure it is even possible, given the changes in the measurement of price data that have occurred since 1976. Moreover, any attempt to analyze the period commencing 1971 before the introduction of a successor monetary regime would likely suffer from a similar truncation of historical perspective. See, e.g., Stephen Harmston, “Gold As a Store of Value” (World Gold Council, Research Study No. 22, November 1998). Finally, any such study would have to make a number of critical assumptions regarding the proper starting point and the proper starting price to give effect to the sharp but lagged repricing of gold in dollar terms in the years immediately following the Great Default.

10. See, e.g., World Gold Council and GFMS Ltd., Gold Demand Trends, Issue No. 42 (March 2003).

11. Gold Fields Minerals Services, “Retail Gold Investment and Private Investor Stocks - A Review” (World Gold Council, November 2001), p. 17

12. Ibid.

13. Institutional investment is inferred from Gold Demand Trends, Issue No. 42, op. cit., Notes and Definitions: “Institutional investment (including most purchase by high-net-worth individuals) is not currently included. The categories included cover at least 95% of overall gold demand.” By simply dividing the consumer demand total of 3,414.5 tonnes by .95, I get the revised total demand figure of 3,594.21 tonnes. The difference, 179.71 tonnes, I ascribe to institutional demand.

14. James Turk, “Do Central Banks Control The Gold Market?” (Monograph published by Jefferson Financial, Inc., 1994), p. 47, note 70.

15. World Gold Council, World Official Gold Holdings (September 2003).

16. Banco de Portugal, 2002 Annual Report, p. 297.

17. See, e.g., Statistics Department, International Monetary Fund, “The Macroeconomic Statistical Treatment of Reverse Transactions” (Thirteenth Meeting of the IMF Committee on Balance of Payments Statistics, Washington, D.C., October 23-27, 2000).

18. “China’s reserves reach record $364.7 bn,” Financial Times (London) (September 29, 2003).

19. Antony C. Sutton, The War on Gold (’76 Press, 1977), p. 111.

Robert Landis© site takes its name from its proprietor's 1992 essay of the same name. The Golden Sextant won the first Bank Lips AG International Currency Prize.The subtitle of this site is MPEG, standing here for Money, Politics, Economics and Gold. It offers commentary by the proprietor on these topics and occasionally on other subjects. But its raison d'être is to carry on the fight for sound, constitutional money.

It is magnetic anomalies that precede mining interests!

Range River Gold (ASX: RNG 30c) has farmed out to Sedimentary Holdings Ltd (Newmont's partner in the Cracow project) a portion of its interest in the Foster Project (Exploration Licenses 3706 and 4614) in South Gippsland, Victoria. Sedimentary can earn an 80% interest in RNG's tenements by spending $700,000 on exploration. Sedimentary has committed to a $150,000 spend in the first year. RNG states that "recent aeromagnetic surveys have shown a strong magnetic trend existing under younger sediments that is interpreted to be related to the mineral rich Mount Read Volcanics of Western Tasmania and the million ounce gold deposits of the Woods Point Dyke Swarm in Victoria. Exploration will be focused on drilling the magnetic anomalies testing the interpretation and seeking fault related gold mineralisation similar to Walhalla in Victoria and Henty in Tasmania. Sedimentary anticipates starting exploration activities in the March quarter of 2004."

Real Money Rides Again  
By James Turk editor of Freemarket Gold & Money Report (from Letter #339 of February 9 2004)

New Hampshire made history this week becoming the first state since President Roosevelt's gold confiscation in 1933 to attempt the praiseworthy goal of returning to constitutional money: gold and silver coin.
  State Rep. Henry McElroy introduced HB 1342, which has been dubbed the New Hampshire Sound Money Bill. This bill enables people to transact with the state of New Hampshire in terms of U.S.-minted gold and silver coin. In other words, if this bill is passed and signed into law, people will be given a choice. People who needs to transact with state government can continue to transact with it in terms of fiat currency: Federal Reserve dollars. Or they can demand that the state transact in gold and silver coin, as provided in Article I, Section 10 of the Constitution: "No State shall … make any Thing but gold and silver Coin a Tender in Payment of Debts." Therefore, those who need to pay money to the state (in taxes, for example) and people who receive payments from the state (such as employees, suppliers, and contractors) could, under this bill, ask the state of New Hampshire to pay to them U.S.-minted gold and silver coin. This bill would enable gold and silver coin to circulate once again as currency, at least in regard to transactions with the state. The rate of exchange used in a transaction would depend on the prevailing market rate of exchange between Federal Reserve dollars and gold and silver at the time of the transaction. The dollar face value stamped onto the gold or silver coin (for example, the $50 "value" stamped on a U.S. gold eagle coin) would be ignored. The coin's value in exchange for Federal Reserve dollars would be determined solely by the weight of gold or silver in the coin. Though it is clear from the Constitution that the states may use only gold and silver coin in the payment of their debts, this provision is ignored. Federal Reserve fiat dollars are now exclusively used by the states, which is being done in
obvious contravention to this constitutional requirement. But until now there has been no way under New Hampshire law to enforce the constitutional provision on the state. In other words, this bill would remedy this deficiency in New Hampshire state law, which is the bill's objective and purpose. It would empower the people to force the state to deal in constitutional money. Therefore, this bill not only is a step in the right direction not only for constitutional money but also shows that people can indeed require government to adhere to the law -­ assuming
of course that this bill is passed and signed into law. And though the bill has supporters among the state representatives, like all bills this one has to pass the New Hampshire House and Senate as well as be signed into law by the governor. So it is an uphill journey, but one worth taking. This past Monday I participated in a press conference at the state Capitol in Concord to explain the difference between fiat Federal Reserve dollars and to announce my support for the bill, which was drafted by my good friend, Edwin Vieira, who is this country's leading scholar on legal and constitutional money issues. I have written in these letters before about his monumental book, "Pieces of Eight," which I said "will without any doubt stand throughout time as the definitive account of the descent in the United States from the sound money imparted by the Constitution to the unsound debt-contract that is the inferior, unconstitutional unit of account that today passes as the 'dollar'." (See: Vieira has crafted a simple, straightforward bill.  If you would like to read more about it, the following link provides an informative overview of it by answering 20 frequently asked questions about the bill: Perhaps if New Hampshire is successful in enacting this bill into law, other states mindful and respectful of their constitutional obligations may choose to enact similar laws.

DEAR SIR......

Dear Sir
I am writing to thank you for bouncing my check with which I endeavored to pay my plumber last month. By my calculations some three nanoseconds must have elapsed between his presenting the check and the arrival in my account of the funds needed to honor it. I refer, of course, to the automatic monthly deposit of my entire salary, an arrangement which, I admit, has only been in place for eight years. You are to be commended for seizing that brief window of opportunity, and also for debiting my account by $50 by way of penalty for their convenience I caused to your bank. My thankfulness springs from the manner in which this incident has caused me to rethink my errant financial ways. You have set me on the path of fiscal righteousness.
No more will our relationship be blighted by these unpleasant incidents, for I am restructuring my affairs in 2003, taking as my model, the procedures, attitudes, and conduct of your very bank. I can think of no greater compliment and I know you will be excited and proud. I have noticed that whereas I personally attend to your telephone calls and letters, when I try to contact you, I am confronted by the impersonal, ever-changing, pre-recorded, faceless entity which your bank has become. From now on, I, like you, choose only to deal with a flesh-and-blood person. My mortgage and loan repayments will, therefore and hereafter, no longer be automatic, but will arrive at your bank, by check, addressed personally and confidentially to an employee at your branch whom you must nominate. You will be aware that it is an offense under the Postal Act for any other person to open such an envelope. Please find attached an Application Contact Status form which require your chosen employee to complete. I am sorry it runs to eight pages, but in order that I know as much about him or her as your bank knows about me, there is no alternative.
Please note that all copies of his or her medical history must be countersigned by a Notary Public, and the mandatory details of his/her financial situation (income, debts, assets and liabilities) must be accompanied by documented proof. In due course I will issue your employee with a PIN number which he/she must quote in dealings with me. I regret that it cannot be shorter than 28digits but, again, I have modeled it on the number of button presses required to access my account balance on your phone bank service. As they say, imitation is the sincerest form of flattery. Let me level the playing field even further by introducing you to my new telephone system, which you will notice, is very much like yours. My Authorised Contact at your bank, the only person with whom I will have any dealings, may call me at any time and will be answered by an automated voice service: Press buttons as follows:
1. To make an appointment to see me.
2. To query a missing payment.
3. To transfer the call to my living room in case I am there.
4. To transfer the call to my bedroom in case I am sleeping.
5. To transfer the call to my toilet in case I am attending to nature.
6. To transfer the call to my mobile phone if I am not at home.
7. To leave a message on my computer, a password to access computer is required. Password will be communicated at a later date to the Authorised Contact.
8. To return to the main menu and to listen to options 1 through 7.
9. To make a general complaint or inquiry.
  The contact will then be put on hold, pending the attention of my automated answering service .While this may on occasion involve a lengthy wait, uplifting music will play for the duration of the call. This month I've chosen a refrain from "The Best of Woody Guthrie": "Oh, the banks are made of marble, With a guard at every door, And the vaults are filled with silver, That the miners sweated for."
On a more serious note, we come to the matter of cost. As your bank has often pointed out, the ongoing drive for greater efficiency comes at a cost which you have always been quick to pass on to me. Let me repay your kindness by passing some costs back. First, there is a matter of advertising material you send me. This I will read for a fee of $20 per page. Inquiries from the Authorised Contact will be billed at $5 per minute of my time spent in response. Any debits to my account, as, for example, in the matter of the penalty for the dishonored check, will be passed back to you. New phone service runs at 75 cents a minute. You will be well advised to keep your inquiries brief and to the point.
  Regrettably, but again following your example, I must also levy an establishment fee to cover the setting up of this new arrangement. May I wish you a happy, if ever-so-slightly less prosperous, New Year.
Your Humble Client,