The interview below was copied from the daily issue of
MIDAS from GATA:
Protecting Your Portfolio with Gold
Edited by Francesco D'Arco
Editorial staff Bluerating.com
"The price of gold is manipulated
by governments. The Bush administration
has ignored a document that demonstrates the risk of a
banking crisis and if
we do not return to the gold standard we will not avoid
the risk of
inflation. And much less risk deflation." These are
some of the theories of
Ferdinand Lips in his book Gold Wars. Mr. Lips is a private
Swiss banker, a
non-executive director of Randgold Resources Limited and
of The Afrikaner
Lease Limited. He manages a precious metals fund (www.topgoldinvest.com)
in an interview released to Bluerating.com he explains
why it is important
to have a portion of one's portfolio, 10 to 15%, invested
Q: Why did you select the title
of "Gold Wars" for
A: I chose the title "Gold Wars" because
the central banks, and in
particular the US Federal Reserve, with the help of some
of the Wall Street
banks, since 1984 have tried to hold down the price of
gold. They are still
manipulating it today.
Q: What do you mean when you say, "manipulating the
price of gold"?
A: When you speak of the price of gold you have to realize
that it's a
political metal." In this sense therefore the price
can be considered
governed". Gold is incompatible with the modern financial
August 15, 1971 there was never a period of time in history
in which no
value was tied to the precious metal. In all other historical
could always escape to currency protected by gold. Since
1971, this "escape
hatch" has not been possible.
The whole economy, monetary and financial, for the last
30 years is a direct
consequence of this. The only event that can change this
situation is the
rapid increase in the price of gold in dollars.
At the beginning of the Bush administration, GATA, a private
organization, showed to members of the US Congress research
the risk of a banking crisis as a consequence of this situation.
Bush has seen the document, but no one has seriously considered
and they have gone forward with their politics as if no
Q: After the Washington Agreement in 1999 the central
banks, who were in the
process of liquidating part of their gold reserves, agreed
not to sell more
than 2000 tonnes of gold in 5 years, losing part of their
influence on the
gold market. The treaty will expire in September 2004.
How do you think it
should be modified? What benefits has it brought to the
A: The Washington Agreement was realized as a consequence
of the European
central banks not wanting to see the price of gold fall
too much, in other
words they did not want to see the value of their reserves
Some reliable sources maintain that, if the agreement
is not renewed, it
will represent an "official" sell of gold. The
same sources exclude the
possibility of a renewal at a higher level than before.
The purpose is the
increase the price of gold in an orderly fashion. So far
Agreement has obtained the proposed results.
Q: In the last few years some funds have invested part
of their asset
allocation in gold. In general, the maximum exposure has
been equal to 5%.
Is this a correct percentage or should this exposure be
A: For the US stock market, as well as in Europe, I see
a long bear market,
probably more than 10 years. It will repeat the situation
more of less
analogous to the experience seen in Japan. Surely there
will be occasional
rallies but to better protect your portfolio, everyone
should have between
10 and 15% positioned in gold investments.
Q: What do you see for the future of the gold industry?
Are we at the
beginning of a period of strong growth or are there factors
that could stop
the demand of the precious metal?
A: This period is similar to the 70s, when the stock markets
were in a bear
market and there was an on-going war. During these years
there was a strong
investment demand in gold because the savers did not trust
the stock markets
and were looking to protect their savings from inflation.
There are now
investors that are demanding gold in Japan and India, but
in the west the
demand is low.
The price of gold has recovered from the low-level reached
two years ago
(252 dollars). In the last few years there has been a certain
of the global gold industry, that has concealed the stagnation
however the industry has urgent needs of new discoveries.
For this reason
they must point to areas that have prospects ma that are
not yet tapped.
Q: According to you, what are the advantages of a growth
in the gold
industry? In your book you speak of the capacity of the
precious metal to
stop inflation. How so?
A: The actual monetary order is a fraud. It punishes the
workers and the
pensioners. It is destroying the middle class. Now inflation
is not the
biggest problem but rather it is deflation.
To avoid both, the world must return to a gold standard.
The gold standard
is the only "honest money." It can restart the
world economy at the maximum
of its potential guaranteeing the savings and increasing
the level of
investment. Furthermore, during times of a gold standard,
are fewer wars.