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Everyone knows that renowned economist John Maynard Keynes
called gold "a barbarous relic." This sound bite is unfailingly
quoted from the hazy, distant past whenever gold is disparaged
in the popular media.
Recently, in the January 22nd "Fact and Comment" column in
Forbes magazine, Steve Forbes goes even further than misquoting
Mr. Keynes, and asserts that Keynes "mistakenly" called the
yellow metal itself a "barbarous relic."
Now, plainly gold is not a relic at all, much less barbarous. In
fact, it is a vital and timeless form of wealth, as Mr. Forbes
would agree.
But Forbes takes the poor departed Mr. Keynes to task for
something he never said. Not fair, since Keynes is not around
today to defend himself.
So to strighten out this ‘barbarous relic’ business, let's take
down from the shelf, and blow the dust off, our old reliable
source in such matters, "A Retrospective on the Classical Gold
Standard, 1821-1931." In it, we find John Maynard Keynes in 1931
writing specifically about the post-WWI restoration of the gold
standard by the Bank of England
Here's how Keynes actually used the infamous phrase:
"In truth, the gold standard is already a barbarous relic. All
of us, from the Governor of the Bank of England downwards, are
now primarily interested in preserving the stability of
business, prices, and employment, and are not likely, when the
choice is forced on us, deliberately to sacrifice these to
outworn dogma, which had its value once, of 3 pounds, 17 shill
ings, 10 1/2 pence per ounce. Advocates of the ancient standard
do not observe how remote it now is from the spirit and the
requirements of the age. A regulated nonmetallic standard has
slipped in unnoticed. It exists."
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Having settled that, on to the present. There’s a long
controversy over mining on U.S. public lands. Gold mining in
particular comes under attack because so much of it involves
pouring massive quantities of cyanide over crushed ore in order
to extract the gold – a messy business, to say the least.
Messy it may be, but this form of gold mining, particularly as
practiced in Nevada and much of the western states, has made the
U.S. the world’s third largest producer of gold, up from 8th
place a scant twenty years ago.
Much can be said about the economic, safety, legal and
environmental issues of gold mining in the West. This
controversy over use of public lands has been news for years. We
reprint here this BLM press release that crossed our desk last
week:
For Immediate Release: Friday, January 14, 2000 Contact: Jan
Bedrosian (916) 978-4616 or John Dearing (916) 978-4622
BLM RECEIVES IMPORTANT LEGAL OPINION INVOLVING PROPOSED GLAMIS
IMPERIAL MINE IN CALIFORNIA DESERT
The U.S. Bureau of Land Management's (BLM) California State
Director has received an important legal opinion approved by
Secretary of the Interior Bruce Babbitt involving a
controversial proposal for a large gold mine in eastern Imperial
County.
The legal opinion, prepared by Secretary Babbitt's Solicitor,
John Leshy, was requested by BLM's Acting State Director Al
Wright, regarding the mining proposal located about 45 miles
northeast of El Centro. The project, called the Glamis Imperial
Mine, proposes a cyanide heap-leach gold mine using three open
pits on 1,650 acres of public lands administered by BLM. The BLM
is in the process of preparing a final environmental impact
statement (EIS) on the project, first proposed and submitted for
public comment in November 1996.
The BLM had requested the legal opinion based on numerous public
comments concerned about the potential impact of the proposed
mine on cultural resources of religious significance to the
nearby Quechan Indian Tribe. The public lands involved are
located within the Indian Pass-Running Man Area of Traditional
Cultural Concern as well as a BLM-designated Area of Critical
Environmental Concern and a Class L (limited use) area
designated by the California Desert Plan under the Federal Land
Policy and Management Act of 1976.
The 19-page opinion notes that BLM also requested that the
National Advisory Council on Historic Preservation, a
Presidential-level advisory group, review the significance of
the cultural values identified and the mine's potential impacts.
The Advisory Council completed that requested review and advised
BLM on October 19, 1999, that the cultural values were critical
to sustaining the Tribe's traditional religion and culture, that
the mine would unduly degrade the area, and that no available
mitigation measures were adequate to compensate for the loss of
these cultural values.
The Solicitor's opinion does not specify or direct a decision on
the mining project, but is important to BLM in making a final
decision on whether to approve or deny the proposed plan of
operations to develop a mine on mining claims the company has
filed on the BLM public lands.(more) The opinion outlines and
interprets detailed legal authorities which BLM is responsible
for complying with, including:
• the Mining Law of 1872 which allows miners to secure exclusive
rights to mine public lands through location of valid mining
claims;
•the First Amendment's guarantees of the free exercise of
religion;
•the President's Executive Order on Sacred Sites (EO 13007, May
24, 1996) which requires BLM, to the extent practicable, to
accommodate Native Americans' access and use of the public lands
for religious uses and to avoid adversely affecting such sacred
sites;
•the Federal Land Policy and Management Act's requirement that
BLM prevent undue and unnecessary degradation of all the public
lands under its jurisdiction nationwide;
•the added requirement in that law that BLM must prevent undue
impairment specifically for lands BLM administers in the
California Desert Conservation Area, which covers nine million
acres of lands in Southern California, including public lands in
Imperial County;
•and finally, the protection requirements under the California
Desert Plan of special resources, such as scenic, environmental
and cultural values identified in that plan, as required by the
Federal Land Policy and Management Act.
The opinion outlines the conflicts inherent in these statutes,
regulations, and policies and concludes that BLM's ultimate
decision on this project, taking all these all factors into
account, is a "difficult task." It advises, however, that "in
the end, what is determined to be ‘undue' is founded in the
nature of the particular resources at stake and the individual
project proposal. If the BLM agrees with the Advisory Council,
it has, in our view, the authority to deny approval of the plan
of operations."
Wright said the BLM is currently preparing the EIS as required
by the National Environmental Policy Act. He said BLM expects to
issue the final EIS sometime this spring and a final decision on
the mining proposal later this year. He stated, considering this
legal opinion, BLM will be evaluating whether or not to proceed
with the validity examination it had initiated in 1998 to
determine whether or not the project was based on valid mining
claims. The validity of those claims was questioned by public
comments in the draft EIS and that question will be answered as
the law requires in the Final EIS, he said.
Copies of the Solicitor's legal opinion can be obtained from BLM
in Sacramento (916) 978-4360, Riverside (909) 697-5200, or El
Centro (760) 337-4400.
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Lastly, we would refer those who are deeply interested in gold
conspiracy issues to an article entitled “New York Strangulation
of World Gold Market – 1 Year,” an article to be found on the
Gold-eagle.com website. Mr. Harry Clawar comes up with some
surprising statistics on gold price changes in London versus New
York. He opines a conspiracy is afoot. Lenny Kaplan brought
these interesting points about these two largest gold markets to
our attention:
*...About 3 out of 4 of all change in prices are positive from
the N.Y. spot close to the London A.M. Fix.
*If someone (a) bought at the NY close, then sold at the London
A.M. Fix and (b) placed a put (he really means going short or
reversing the position) at the London A.M. Fix, then covered at
the NY close, they would have earned, before commissions,
$1.33/oz per ounce per day over the 12 month period.
*Trading the first half of the time cycle would have yielded
much greater success, $1.51 per cycle vs. only $1.16 per cycle
for the later 6 months.
*During the first half of the 12-month period overseas buying
strength produced a net increase of $1.55/oz in the price of
gold. During the second period, NY selling pressure resulted in
a net loss of $14.50 oz.
So, in a nutshell, gold prices tend lower in New York. Why is
that? Kaplan says that the large (mostly short) speculative
funds exercise their great leverage in New York, and also that
the U.S. bullion banks which have done the greatest amount of
producer (mining) hedging are also U.S. based. Whereas London
serves an area of greater gold demand – Europe, India, and the
Far East. Therefore, New York gold prices tend to be lower than
those in London.
Where selling is strongest, gold prices are lower. Where buyers
predominate, gold prices are higher. Hmmm...
Some call that evidence of a conspiracy. To us, it looks like
free markets at work.
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