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Recently by Richard Russell: The Only True Standard of Value


One of the questions that I’m most frequently asked is this: "Russell, do you think the US government will call in all the privately-held gold, just as Roosevelt did in 1933?"

I’ve thought about this at length, and I’ve arrived at what I believe to be the correct answer. The answer is – No, the government will definitely not call in the gold. The simple reason is that a tremendous amount of gold is held in very powerful hands. Gold (GLD) and gold bullion is held by pension funds, university endowment funds, large powerful hedge funds, corporate reserves, and state treasuries. Note the two paragraphs below.

AUSTIN – "Fearing unstable international financial markets and the possibility of high inflation, Texas’ higher education investment managers have bought more than $500 million in gold.

"The gold purchases represent only 3 percent of the University of Texas Investment Management Co.’s $22.3 billion in investment funds, but it indicates how deeply the fund managers are concerned about the global financial future."

In other words, my thesis is that gold is now in such powerful hands (much of it even political) that there’s no way that the US government would call in gold. Furthermore, what purpose would it serve if the US did call in the gold? In 1933 Roosevelt called in privately-held gold and then raised the price of gold from $20.22 to $35 an ounce, this in an effort to reinflate the depression-laden economy.

Gold Note – China has reserves of $3 trillion, of which almost half is in dollar denominated items. China is now the world’s biggest producer of gold. And the Chinese government is going all out to increase its production of gold. China also is encouraging its people to buy and accumulate gold.

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