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In G.O.D we trust
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My 1st employer.....
(such beautiful days, those were, in the late 90s, with just 4000 of us, at the red Keonics building off Hosur Road - did I spell that right? - When you could see nrn floating around keeping bathrooms clean in a matter-of-fact way and setting standards of conduct one would innately aspire to, and building greatness along the way, with the rest of the founders)
.....had this motto, way back in 1998:
"In GOD we trust,
All rest we test"
Its served them well, I would say.
In a strange coincidence, the first real threat to what I now call the Gold Oil Dollar trinity (GOD trinity) also came around that time – 1998-99
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But we first take a short detour before we continue with the above story:
(The origins of the GOD trinity go back,
To that fateful day of 15 Aug 1971 when Nixon “temporarily” demonetised Gold...
an action that took almost 8 years to fix___
___fix by reinstalling $ at the centre of global economics,
by basically ensuring that,
only through $ can the world get CHEAP oil, and
only through $ can oil sellers get CHEAP gold, at scale___
___an action led by many, such as Kissinger and Volcker, and
an action resisted by many incl De Gaulle, Zjilstra et al>>>
>>>these are all nice stories and important to know,
if one wishes to understand the GOD trinity properly –
it helps if you speak Dutch though (I don’t),
or else much of Zjilstra gets lost in translation~~~
~~~the deGaulle-Zjilstra resistance was finally nailed in the proverbial coffin,
by procuring the now famous "Blessing Letter",
and very strangely,
it was still up there on bundesbank website, last I checked a few years ago~~~
~~~To be sure, the resistance continued in shadow forms and sizzling nomenclature –
involving
the Snake,
the Tunnel inside the Snake,
the Gold Pool which broke the floor of Bank of England in its final days,
and much much much much more::::::
:::but overall, at least 50 years had been won by Heinz Alfred Kissinger & Paul Volcker by their brilliant re-alignment of the Saudis, the BIS, the Swiss, and the British, with some German Blessing of course, to set up what I call the GOD trinity, take rates to 20% to show Oil what happens if they bid for gold directly and not through the dollar
[and sold to public as fighting inflation at all costs - but that narrative fools nobody if one just looks at the constant change to monetary thought driving the Fed in the final years of that decade, with a stark change made only for about a year where rates of 20% were justified by Volcker by saying - freshly back from Belagarde to deal with this emergency, as the mythical story goes - that he is not targeting Rates, he is targeting something else and if that takes rates to 20%, its the markets' doing, not his own...Noice]
)
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....(so as I was saying, and paraphrasing from memory - before I took this maze-like circuitous detour –
the first credible threat to GOD trinity, came around the same time,) on 1st Jan 1999 with the launch of the Euro.
The Euro threat was dealt with severally - prior to and after its launch:
- The games began before the launch, starting with the leak of LBMA volumes by The Red Baron in Jan 1997 – it shook the world
- Much happened in 1997 & 1998 but recounting that would take several pages…so we fast fwd to launch day
- Soon after launch, in May 1999, Gordon Brown pledged to sell half of England’s Gold to defend a low price
- in response EU CBs in Sep 1999 reversed their 20-year stance of keeping gold low – and brought an end to the CB Gold Agreements
(CBGAs supplied – leased - CB gold to back paper gold and keep process low)
- soon thereafter, on 22 Sep 1999 the paper gold market imploded as Price rose 22% in 2 weeks
- this invoked a combined response from the Fed and the BoE to put a lid on price yet again
- the final step was taken in 2001, in various ways, including ascension of China to the WTO in Dec 2001
The tensions of that year are aptly captured by Eddie George, Governor of BoE in making the famously quoted statement:
"We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded.”
Succeed they did, but only temporarily as the problem kept popping back every 6-7 years...and had to be recurrently taken care of –
sometimes by war,
sometimes by financial crises,
sometimes by calamities,
sometimes this and
sometimes that - whatever can be politically explained to and acceptable to the public...
Fast forward to present day:
In Gold circles, its been discussed since 1997 (these discussions run into 20,000+ pages, if you are interested in reading - which I highly recommend) that the final showdown will be for the fealty of Oil…
And if one reads this along with what Mackinder & co have proposed, then the lands holding the keys are the mountains and valleys where Darius walked eons past – because geography is destiny (or so it was/is thought, before the MBAs and their ilk replaced ‘Geography” with ‘Demographics’):
True to these expectations from 29 years ago, and rolling forward:
It started last May but was curtailed.
It started this Feb but will it be curtailed? We do not know.
~~~~~~~~~~~
But the more it picks pace:
- the more will Gold go into hiding
(forcing MTM of CB balance sheets by declaring "sales" for public consumption
AND
resulting in screen price declining as people who understand gold exit paper promises - thereby calling into question the false understanding that sophisticated financial asset managers hold - of gold being a safe haven, of gold being a (read this carefully) HEDGE AGAINST INFLATION OF DOLLARS AND YET PRICED NOT ONLY IN-DOLLARS BUT ALSO BY-DOLLARS….or gold screen price falling due to CB sales - such distractions, I must say, these understandings are)
- the more will Oil go into hiding (under rational-sounding constraints of - oilfields burning, ports burning, waterways burning, carriers burning...whatever)
~~~~~~~~~~~
So does MTR (Marked to Reality) of TR, FR et al CB Gold books indicate gold going into hiding? I dont know yet.
Eventually, its inevitable. Its only a call on timing.
And when thy Kingdom come,
when G and O go subterranean,
world's D will head home
(as remember, foreigners collectively CANNOT get rid of their Ds - they can do so only individually, not collectively, its math - and hence all the talk of foreigners dumping USTs is...well...is non sequitur...for at least 3 clear reasons, which I will not go into now as this post is already too long...perhaps it should have been a memo with a more formal language and structure).
So we watch the current world with interest.
With context of history.
With an axiom that GOD trinity is the synonym of post ww2 world order.
And every major world event since then has largely been about this.
The night remains young...
but wont be so forever...
Paraphrasing from memory:
"As we learn,
so do we act.
As with most things in life,
it is better to follow a well walked path.
Many before you have walked the path of gold.
But, since no 2 persons can walk the same walk,
each must gather wealth as his understanding allows."
Gold is the only true wealth.
"Gold, get you some"
English
