Here is the speech of Ferdinand Lips, veteran gold banker and chairman of Top-Gold AG of Switzerland, to GATA's Gold Rush 21 conference in Dawson City, Yukon Territory, Canada, on Monday, August 8. It was presented by Lips' partner at Top-Gold, J.P. Schumacher. GATA is deeply grateful to Lips for his praise of our work and will be considering his advice.
CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc.
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THREE REVOLUTIONS
Remarks by Ferdinand Lips at the Gold Rush 21 conference of the Gold Anti-Trust Action Committee Inc. Dawson City, Yukon Territory, Canada Monday, August 8, 2005
It is an honor and a pleasure for me to talk to you at the site of the greatest gold discovery in history. We are in Dawson City, the place of the Klondike Gold Rush of 1896.
As a young man I spent two years of my life in Toronto. So almost 50 years later I made a visit this legendary country of the Yukon. In this wild place destiny played unbelievably dramatic roles in many thousands of lives. There is no fever like gold fever.
This June gold bullion posted a dramatic rise against all major currencies. Another cycle in this bull market seems to be beginning. The curtain of this present-day drama is soon going to lifted as investors all over the world start to notice what is going on.
Let me talk about how I see the gold and the world situation from Dawson City.
In short: Because the world has forgotten the monetary role of gold, our world is in serious trouble. That is the one major reason for the worrisome state of the world. The abandonment of gold as money, of the discipline of gold, is the major reason if not the only reason why our world has become a very dangerous place. In my opinion, it is the biggest tragedy in world history.
Some years ago I heard that the Mayan calendar will end on the 23rd of December 2012. There is no more Mayan calendar afterwards. That is only about seven years away.
The Mayans were a people of great culture and they loved gold. They have to be taken seriously.
What could that mean? What is going to happen?
Is it the end of the world?
No, it can't be that. We hope not.
However, we are facing an economic situation that could easily end in a debacle of epic proportions.
Will there be another world war? Well, that is quite possible. There are so many wars already. In the 20th century there have been two world wars, thousands of smaller wars, even gold wars and currency wars. They would never have happened under a gold standard. Impossible.
What else could it be, then?
I have come to several conclusions. Conclusions usually come at the end of a speech. But I won't keep you waiting.
George Bernard Shaw said: "It's difficult to make forecasts, especially about the future." But I will try anyway. I'll tell you my conclusions right now.
First conclusion: There will be no more Federal Reserve. Yes, there will be no more Fed. Believe me.
It may come as a surprise to some of you to hear that the Federal Reserve System is already America's fourth central bank. There were three others before that and the result was always the same -- a disaster. We have had nearly a hundred years of the Fed and that is enough.
Why? Because this organization has tragically failed. It was set up to keep the dollar strong and the financial system sound. It was founded by powerful and supposedly very intelligent men. Within a hundred years they have succeeded in running the dollar down to 5 percent of its 1913 value. Maybe even below that.
The Fed has created stock market bubbles. Right now it is creating the biggest housing bubble in history. This may lead to economic collapse.
I expect that a revolution will one day take place against the Fed. It must be abolished. After all, its founders were not that intelligent but rather stupid men. Or they were devils. It is a tragedy. Not only that: It is the biggest tragedy in world history, even worse than wars. Yes, worse than wars. It made most people poor. It damaged America. It caused wars and then helped to finance them.
Second conclusion: Most other central banks will go too. The central banks invented this terrible monster of "the lender of last resort," which allows irresponsible banks and the wealthy financial folk to speculate without real risk of their own. It led to an incredible buildup of financial leverage. And at the end it leaves ordinary people holding the bag.
None of this would occur if we had an honest monetary structure. We don't need central banks. The once mighty Bundesbank, the bank that ruled Europe, has already lost all its power. All central banks must and will be abolished.
Why? Because they were so stupid and fraudulently sold their citizens' gold and bought paper money instead, mostly U.S. dollars. You know -- those dollars that lost 95 percent of their value over 100 years.
Yes, there is now the euro. But is that currency cocktail any better? Somebody called it the Esperanto currency, meaning the hopeful currency. Before the creation of the euro all the central banks of the world held all their monetary reserves in U.S. dollars, a currency backed by nothing. After the dollar crashed in recent years, they shifted their paper dollars into euros. How clever -- they sold gold at the bottom and then they sold dollars at the bottom.
I hope all is not lost. I suspect that some central bankers are beginning to find out that gold is the only real money -- the only alternative to worthless paper money reserves.
My forecast: Beginning in 2006 the same central bankers who dumped gold at much lower prices will repurchase that gold at much higher prices.
Third conclusion: The United States will have Latin American conditions but without Latin charm.
I am extremely worried about the future of the United States. Its manufacturing industry is dying. The United States is bleeding to death with these endless wars. As far as I know, America has no enemies from outside that threaten it. In my view, the enemy comes from inside. The United States will face economic collapse and destruction of its currency. But people are not informed about what is going on. I also hear that U.S. citizens are losing their freedom. That is, of course, the consequence.
Americans should remember their heritage. They should remember the principles of their founding fathers. These wonderful men created a great and successful country that was admired by the whole world. This is all gone. The leaders of the U.S. government are thinking only about teaching everybody what democracy is. The leaders of the U.S. government want to rule a world they don't understand. They want to manage the markets they no longer dominate and then go to war when nothing helps.
Fourth conclusion: China will probably become the biggest economy in the world.
China has a long history. The timeless value of the wisdom of a Confucius, almost 3,000 years old, is again remembered. Believe me, this is far superior to Disneyland. China will become the most important country. China will have a great future as long as it can master the speed at which it is changing and growing. That will be difficult.
China's economic progress creates not only wealth but also tensions. It should not be built on the American consumer, who consumes that much only because he thinks the housing boom makes him rich. So China and the other Asian countries will one day need to have their own integrated markets. They will no longer depend so heavily on an American consumer drowning in debt.
If political tensions become too tense, the country could split up in three Chinas. It has happened before. That would not be too bad. Smaller countries can be better managed. In the case of China, these three countries would still be big enough.
Fifth conclusion: India will get wealthier and more successful. But I wonder if a country is really successful if it has that many poor people. Most important insight: In spite of all the forecasts, India will buy more and more gold. The Indians will never change. They have lots of history and experience with paper money.
In the Middle Ages there was a "silk road" going from Turkey to Kazakhstan. Now we are seeing the building of the "gold road." It starts in Dubai. Dubai is building the biggest gold refineries in the world. They buy and refine the gold that flows over the "gold road" to India and all of Asia.
Sixth conclusion: Russia could become the greatest power. Russia may have the biggest gold reserves. In 1917 under the tsar the Bank of Russia had the biggest gold stock of all central banks, including the Bank of England. Russia has many well-educated, hard-working, and decent people. They just need to abolish their enormous bureaucracy, forget their Marxist nightmare, and learn the principles of a free-market economy. Russia is a fabulously rich country with enormous resources, a lot of good people, and a lot of culture.
Seventh conclusion: Together with Russia, Europe could again be the center of the world. But this is far from sure. It can be achieved only if we drop socialism and the welfare state. We should learn from the Chinese. Hard work and little welfare state.
But in order to succeed, the euro needs a link to gold. The miracle can be accomplished only if Europeans replace Keynes with the thinking of men like Röpke, von Mises, von Hayek, et al. Röpke, Eucken, and Erhard were the fathers of the German miracle. These policies could again be the source of a European miracle. The European Union of Brussels, the European Union in its present form, should be abolished.
The Brussels bureaucracy of unelected officials is a monster. The French and the Dutch just voted against it.
The EU in its present form will fail and maybe the euro will fail as well. That would not be the end of Europe. As General Charles de Gaulle recommended, the ideal would be the Europe of the Nations, a Europe where the individuality of every nation and region is respected. A Europe from the Atlantic to the Urals.
A bit more religion would also help. The word "God" was not even included in this new European constitution. The unelected masters of Europe wanted to do it without God. They are destined to fail.
Eighth conclusion: Gold and Silver prices will be much, much higher. Oil prices too. There is not enough gold. Who wants to produce gold and silver as long as prices are held artificially low? This whole manipulation of the gold market has to end. It will end like the London Gold Pool in 1968. Just collapse. The gold pool was created in 1960 by the central banks to keep the price of gold at $35. It could not last. Gold was stronger than the central banks. And gold will also be stronger than the hedge fund boys who are criminally borrowing and shorting stocks of small gold-rich exploration companies just to bring them to their knees.
Only this time the explosion of prices will be more spectacular. The prices will go to the moon. And the manipulators will be hit by a real boomerang. Also, the central banks will start buying in 2006. Nobody will be able to stop that future gold rush. Gold will take its revenge.
Ninth conclusion: If the price of gold and silver were left to free- market forces, nearly everybody would benefit. South America. Most countries of Africa. South Africa would benefit most. Even the United States would greatly benefit because it is the No. 3 producer of gold. There could be a renaissance of mining generally, with all the beneficial effects on national economies.
Tenth conclusion: My most important forecast is the following: I forecast a return to the gold standard.
Without a return to the gold standard, you can forget it. I repeat: Forget everything. Then the calendar of the Mayans and their wisdom will have proved to be greater than that of Nostradamus.
If we go back to the gold standard I could see the best scenario for the future of mankind. Everybody would benefit from sound money. The United States again could become a great economic power and nation. Gold-rich Asia may benefit most. The world economy would run on its full potential. There would be full employment everywhere. The young could again find jobs. Peace would return to the world.
How can this be achieved?
By three revolutions.
1. The GATA revolution.
2. The education revolution.
3. The mining revolution.
... The GATA revolution.
I came to this historic place to tell you how we Europeans admire the work of GATA.
For seven years now GATA, under the leadership of Bill Murphy and Chris Powell, has been fighting for free markets, for a free gold market. Bill's courage is without example.
It is a fight of David against Goliath. Day after day Bill is hammering out his message for transparency through honesty. Day after day he informs us how honest people are robbed by arrogant governments, bureaucrats, useless central banks, and an almighty banking system.
It is a total crime if you manipulate markets, depress the price of assets of other people, destroy the economies of whole nations (primarily in Africa), and drive hundreds of millions of people into poverty. It is a crime.
GATA courageously fights for free markets, better markets, honesty, and a better world. GATA therefore deserves our full support.
The mining industry has often been criticized by GATA and rightly so. GATA criticized it for not protesting against the obvious manipulation. The mining people do not realize what is happening to their product, to them and to their shareholders. The mining industry is mostly engineers and they don't understand what some dark, obscure characters on commodities exchange are doing to them. Or else they are just closing their eyes.
If you realize how much effort it takes to get a few grams of gold out of the ground, then it is obvious that this manipulation is a major crime.
It can only be in the interest of mining people to support GATA. Actually the defense of the mining industry was the job of the World Gold Council. But they failed. That is one of the strangest organizations I ever met. In any case the World Gold Council is not the friend of the gold-mining industry. Rather it is serving its biggest sponsors, who incidentally were also the biggest gold hedgers. Those sponsors are dictating the World Gold Council's policy.
All gold and silver mines should voluntarily give GATA an annual contribution, not based on ounces produced but what they think is right. All investors, but primarily those with interests in gold and silver mines, must subscribe to GATA's dispatches. Each day they will get high-class and honest information.
GATA is the only organization that is fighting for miners and investors. Fighting for their rights and their money.
GATA and Bill Murphy's own Internet site, LeMetropoleCafe.com, should now be put on a broader basis. A group of friends should meet with them and work out a plan for how GATA can be institutionalized and structured. It should become a structured business corporation.
The benefits for everybody will be enormous, not just for a few stock market gains but for the whole economy, countries, mines, shareholders, workers, and for freedom.
Can it be done? Yes, it can. It is needed because the gold cabal cannot endlessly steal our money. GATA must live and grow. Let's build GATA into to a powerful organization. Bill deserves it. He is a pioneer. GATA has to become a viable business corporation.
This reminds me in a way of the foundation of Switzerland. In 1291, 30 men from the Swiss mountains assembled one night in a meadow near the Lake Lucerne in Switzerland. They wanted to be free. At that time Europe was ruled by kings and princes and other nobles who were not always nice to the common man. The common man had to pay taxes and had to fight on the battlefields for the glory of the kings. They had to fight and die for the feudal system.
The mountain farmers decided that they could manage their own destiny. They were determined not to bow to any oppressor but rather to die than live in chains. And they had to go to war. In three decisive battles they beat the army of the Austrian Hapsburg empire. But before they went into the battle, the farmers went down on their knees and prayed to God Almighty for help.
Other cantons joined the original three cantons. Today Switzerland, a country without natural resources, is the country with the highest per capita income in the world. Switzerland is still the only direct democracy in the world.
This, my friends, is my first message. Now to the second message:
... The education revolution.
If we want to change the monetary non-system, then we must have a plan. We need a plan to inform people about sound money. For a century people have been brainwashed that gold is finished and fiat paper money will rule. The politicians are full of lies and the media is full of lies. There is not one university in the world where monetary history and science are taught.
From history we know how fiat money systems end. Look at the American Continental and the John Law experiment. They all finished badly. The present paper money experiment is even worse. It's the worst because it is worldwide. For the first time in history all the currencies of the world are backed by nothing. It is the worst system ever invented. It is the Tower of Babel of irredeemable money.
Let me cite Professor Antal Fekete from my book "Gold Wars." Fekete said:
"This book is much more than a chronicle of gold wars. It is also an account of the historic failure of 'Esperanto money.' Over a hundred years ago a Polish physician by the name of Ludovik Lazarus Zamenhof (1859-1917) created a synthetic language in the hope of removing the curse of Babel from mankind. According to the Bible, man had become so conceited as to challenge God by proposing to build a tower that was to reach high heaven. The tower could never be completed because of failures of communication due to the confusion of different languages. Zamenhof called his new language 'Esperanto,' meaning 'the hopeful.' However, the hope was in vain as other synthetic languages, such as 'Ido,' sprang up. The confusion of tongues and the curse of Babel have remained."
Calling irredeemable currency "Esperanto money" is apt. The Biblical story may be interpreted allegorically as an admonition not to challenge God by attempting to build a tower of irredeemable debt that is to reach high heaven. But the admonition fell upon deaf ears. Now God's wrath is upon us.
Currencies of nations have been confused. The tower of Babel is in vain. Other synthetic currencies spring up such as the Special Drawing Right, the euro, and so on. The confusion of currencies, and the curse of Babel, remain.
How could this tower of irredeemable money come into existence? Because there is no gold standard. Because people do not know what money is, what sound money is and means. The lessons of history are forgotten.
In the 19th century every peasant knew what money is. So you have to educate people again.
How can it be done?
You create a worldwide monetary institute. We organize conferences but with a system. You invite the young people and everybody who wants to learn. You have three-year courses about monetary history, about mining, about the influence of sound money on the economy, in history and in the future. An organization such as FAME (www.Fame.org) could play an enormous role. I am a trustee of this organization and a friend of its director, Dr. Larry Parks.
You do not need a building for this. You may organize it at various places, in various countries: Switzerland to begin with, Toronto, Singapore, Dubai, Kyoto, Shanghai, Cape Town, Buenos Aires -- any place you can think of. In a few years millions of people will know what sound money is, and millions of people will want to go back to the gold standard. And millions of people will want to buy gold.
The free market will overwhelm the manipulators. The free market will decide the right price for gold.
Thanks to the wonderful instrument of the Internet, the message will spread rapidly. I tell you that within three years the world will be ready for a new gold standard, for sound money, law and order, freedom, and no wars. Maybe it will take more than three years, maybe it will take seven years, until 2012 when the Mayan calendar ends and a new calendar starts.
How can this be achieved?
This reminds me of another example in history, the victory of Christendom over the Roman Empire. The missionaries did it without money, without the Internet. They travelled on donkeys and spoke to the crowds, told them about God, convinced them of the importance of love and peace. And they won. It was the Judeo-Christian philosophy that there is only one God that defeated the Roman Empire without weapons.
That is why I tell you it can be done. It can be done fast. We have the Internet.
My daughter Barbara and I have worked out a plan for a monetary institute. It was easy. I sent the plan to 10 people I thought would be receptive. When I asked their opinion, they found it excellent. For now it is still in the drawer in Switzerland, waiting to be put in practice for the benefit of mankind.
But who will do this? Who has enough enthusiasm to create such a monetary institute? It cannot be Ferdi Lips. I am over 74. But there should be plenty of candidates. In May I was in the Middle East, in Dubai, where I had spoke at the Gulf Research Center. Last year I was in Bahrain. I spoke at a university. They were so interested they wanted me to help them work out a program for universities in all other Arabic-speaking countries taking "Gold Wars" as a basis.
Today it is easy to spread the message with the help of the computer.
... The Mining Revolution
Before closing I am going to speak to you as a representative of the gold-mining industry. The gold-mining industry is in a big squeeze. It is in big trouble. It is a miracle that it still exists. Actually it should make huge profits and pay rich dividends.
Thirty years ago gold-mining companies paid dividends to their shareholders because gold in the ground is a wasting asset. Today they do not and cannot pay dividends. Why?
Because the low price of gold does not allow them to. We need a healthy mining industry. It is good for the world economy. Today the price of gold should be 50 percent higher. The mines, the shareholders, and the workers would prosper. But it is not only the low price of gold that hurts them. There is also a currency war going on, producing huge currency fluctuations, while energy costs are rising, prices of commodities are rising, labor costs are increasing, and in many cases gold grades are declining.
The conclusion is that the gold mining industry needs a higher gold price. I have been active for 10 years in the gold-mining industry in South Africa and Canada, and never have I seen an industry that does so little for marketing its own product. Nor does the South African government or its finance minister ever raise their voice. They just watch how their mining industry is criminally destroyed. And the unions actually think that the mining companies are doing a bad job.
Of course, if you think it over, they ARE doing a bad job. Why? Well, they just watch how their product is destroyed.
The shareholders of the mining companies should make their respective managements responsible for selling gold for $300 or more below its right price and thus squandering their precious assets.
Unfortunately most shareholders also don't know what is going on either.
Most mining executives are engineers. Most of them do not even know that the price of gold is managed. It is irresponsible. Every cheese manufacturer does more for his product. But what can the miners do? Well, they have done enough cost cutting, closing down unprofitable mines and firing workers. What they should do is simply withhold 10 percent of their production from the market.
That is about 200 tonnes per year. It is only one half of what the central banks are selling each year under the Washington Agreement. It is only one half of what the central banks are selling in order to keep the price low.
If the central banks are allowed to do everything to destroy the mining industry, then the mining industry has the right to fight back. Now is the time to stand up and withhold 200 tonnes of production. Two hundred tonnes are not much but it would help immediately.
So we finally come to the conclusions:
1. We need a strong, powerful GATA. It is a necessity -- a GATA that is structured, organized, and institutionalized. It has to become a going corporation.
2. We need to teach the people of the world what gold is. Gold is money, the only money and the best money. It insures that our world will again be prosperous. We need a monetary institute on a worldwide basis.
3. The mining industry must prosper again. It must withhold gold from the market until the central banks end their gold sales.
4. It is of the utmost importance to get rid of the restriction that the International Monetary Fund has placed in its articles of agreement that prohibits member countries from linking their currencies to gold. Or else the countries have to quit the IMF.
5. In his essay "Can Gold Producers Survive By Promoting Jewelry?," Larry Parks of FAME said: "At the end of the day, to revive the fortunes of the gold producers, it is necessary and sufficient to restore gold as the choice of free markets and free people all over the world as money that doesn't depreciate at home or abroad; as money that is as steady as the stars; as money that is as faithful as the tides or, as the American Federation of Labor put it at the turn of the last century: 'Gold is the standard of every great civilization.'"
That is the salvation of the gold-mining industry: Gold as the standard of every great civilization!
This is my message.
Conquer the fiat money non-system with knowledge, just as Christendom conquered the pagan Roman Empire. Conquer it with gold. If we do this, then by the 23rd of December 2012 a new golden Mayan calendar will be born and the world will experience a renaissance and prosperity for all.
But if we don't do it, the calendar of the Mayans will have truly been prophetic. We will face global economic collapse and believe me -- the end of the world as we know it.
