[Remarks 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.

By the way, for an example of the type of thinking that’s needed here, I refer you to Reg Howe’s comprehensive analysis of the Canadian situation, posted yesterday. See Saving Canada with Gold Grams (or for those who prefer to read in French, Québec Libre: Gramme par Gramme). Once you read it, you’ll see why he was unable to be with us today.

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. I hope the Austrians among you will forgive me; I can tackle only so many paradigms at one time.

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. Such is the power of the commodity paradigm. Yet the monetary paradigm has the distinct advantage, in my view, of being true.

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.

Under the monetary paradigm, gold is Banquo’s Ghost at the Jackson Hole Orgy. Once you accept it, official hostility toward gold, at least within the monetary Coalition of the Willing, is not just understandable. It is axiomatic.

Every good paradigm clash deserves a matrix.

Monetary Role Investment Function Principal Demand
Commodity N/A; Demonetized Inflation Hedge Ornamental
Monetary Permanent, natural, money Currency Hedge 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 designed to put lipstick on a pig, namely, 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

Let’s turn to the particulars of the commodity paradigm. Consider its central myth, demonetization.

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. You just heard Hugh Hendry refer to John Law’s Mississippi Bubble. This is the classic example of what I’m talking about.

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:

Gold is a currency nonsense
9/09/03 02:30 PM ET

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.[13]

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 Reserves
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 thousands f.g.grs.(*) EUR 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“ (www.Gold-Eagle.com, 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” (www.thestreet.com, September 9, 2003), cited by LeMetropole Café (same date).

7. Roy W. Jastram, The Golden Constant – The English and American Experience 1560 – 1976 (Wiley, 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
of Gold (%)
Prices(%) Purchasing Power
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
of Gold (%)
Prices(%) Purchasing Power
of Gold (%)
1808-1814 +58 -37
1814-1830 -50 +100
1843-1857 +48 -33
1861-1864/td> +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.