Gold's
Rise Dependent On How Low US Dollar Will Go: Ron Paul By Daniela Cambone
Of Kitco News | 13 September 2010, 9:06 a.m.
Kitco News--Gold will continue its rise
since the US dollar could potentially be defaulted on completely,
said U.S. Rep. Ron Paul, R-Tex., a keynote speaker at the
Kitco Metals eConference Sunday.
During the question-and-answer period, the
congressman was asked where gold was headed, “Well
it depends how low you expect the dollar to go,” he
said.
Most likely the Federal Reserve will eventually
stop the dollar from sinking and save it, “but if
they keep doing what they are doing it is virtually impossible
to predict [where gold is headed],” Paul said. “Under
today`s circumstance I think gold will continue to go up
in the thousands of dollars in my best estimation,”
Paul said.
Paul spoke during the inaugural Kitco Metals
eConference that began Sunday Sept. 12 and concludes Monday
Sept. 13; the entire conference takes place online.
The congressman said that when he thinks
of a position in gold, he thinks ownership of the physical
metal. “I like for people to hold their gold as an
insurance policy and not so much as an investment,”
he said.
He said that central bankers watch gold
carefully and might be keeping prices lower. “They
know high gold prices are a vote against the job they are
doing and I believe they are very much in the business of
making sure gold prices are lower. They kept [gold] under
US$35 for a long time and then they had to throw in the
towel,” he said.
As for silver, Paul said that the explosion
in price of this market has been anticipated for quite some
time. While before he was doubtful, Paul said it now seems
silver, currently sitting at $20 an ounce, might be poised
to take off.
¨The atmosphere today is so much different
than when people tried to corner the silver market in the
1970s, $20 silver today looks to me as being very solid,¨
he said.
Paul said he is having a hard time figuring
out which is a better investment, silver or gold. “If
I had to predict what metal would be better in two to three
years time – I think silver might do somewhat better,”
he added.
Proposed Gold Audit, Hard Sell
In a pre-conference interview with Kitco
News, Paul dropped the news that he will unveil a bill that
would audit US gold reserves.
However, during the eConference Paul said
his proposed bill will have difficulty passing. The bill
does not have an official name yet but will be unveiled
at the start of the new US Congress said Paul in the earlier
interview with Kitco News.
“I hope we will have success with
getting co-sponsors on this. There should be no reason in
the world that a single person in this country or a single
member of congress shouldn`t say ‘transparency of
government is good and we ought to know how much gold is
there, we might need it someday,’” he said.
Paul said that even if he saw the gold with
his own eyes he would still need to find out who really
owns it. “Western banks have sold and bought a lot
of gold, I won’t know how many agreements they have
had or how many swaps they did – so you would need
to internally audit what the Treasury and Fed do to find
out who owns that gold,” he added.
The gold audit follows his crusade last year looking to
audit the Federal Reserve, which he says is the chief culprit
behind the economic crisis.
During the question-and-answer period, an
attendee argued that the Fed helped stabilize the economy
with its decision to bail out the US financial industry.
Paul responded that the Fed did have a stabilizing effect
solely because it restored a bit of the bubble, it didn’t
liquidate the debt.
“People who didn’t deserve to
be bailed out, got bailed out - that is the Freddie Macs
and people holding securities,” Paul said. “You
might argue there was stabilization but for whom? What about
people that lost their houses?”
The created stability will not last. “That
kind of stability is nothing more than a cancer patient
coming in and the hospital says, ‘we don’t want
to give you a serious operation we’ll just dope you
up with morphine and you’ll feel better,’ I
think that `feel better` is limited,” he said.
More Regulations Not Answer
The economy’s downward spiral began
in 2000 and things have not improved, Paul said.
“The individuals who predicted the ongoing crisis
were never listened to and those individuals were able to
protect themselves individually, they knew about the significance
of investing in gold and other commodities,” Paul
said.
The crisis escalated because of the disbelief
that more regulations would solve the problems, he said.
“So what have we done since 2008?
We spent much more, we borrowed much more, we inflated much
more and then we pass this financial reform package with
massive amounts of regulations in there,” Paul said.
The $3.7 trillion injection by the Fed and
Congress has not helped the economy. “There has been
no significant increase in the GDP from two years ago; in
real terms it is actually down,” he said.
Question Washington
During his 30-minute presentation, Paul
said people need to challenge what is happening in Washington,
“out of self-defense.”
“The real enemies are those people,
that been taught, endorsed and believe whole heartedly in
Keynesian intervention…I am an advocate of free market
economics, I believe in Austrian economics. I believe in
the gold standard, I don’t believe in central banks
or fiat money, I believe the answer to problems will be
found with sound economic policy,” said the former
US presidential candidate.
There is also a tendency for people in Washington
to blame others for their problems, Paul said.
“There is a strong movement in Congress
that demands the Chinese raise the value of the renminbi.
That will restore trade balances with China, so is said,”
Paul remarked.
The renminbi may be artificially strong,
but the US cannot pass judgment since it has an artificially
weak currency, Paul said.
“We are manipulating our currency
all the time. We are the reserve currency and we are destroying
the value of the currency - so for us to be telling people
what do with their currency is beyond me,” he said.
Punishing mainland China will not serve
the US’ interest long-term. “Our tax on goods
will go up; Chinese would end up with fewer dollars and
less likely to buy our debt,” he said.