Markets and Myths: Gold and ECU. September 1, 2008

There are several definitions of the word “myth” all the way from being a story about the deeds of gods…... to a false belief. So, the concept itself is somewhat confusing. Thus it would follow that myths can surely be used as a medium to perpetuate that which is far from the truth, to disguise the truth behind the mystic veil of a source which is suggestive of descending from that of a higher order. The very old legend of turning lead into gold is alchemy. The myth of denying gold it’s true value, trying to turn gold into lead so to speak, is imaginary to say the least. How about the myth of turning it in to paper?

For the last ten years or more, gold (and silver) have been the subject of perpetuated myths, imaginary and fictitious stories designed as an attempt to hide the truth even in the bold face of the fundamentals. But what was the genesis? Of course we can always go back to 1913 and the “Creature from Jekyll Island”, but let us move it up a touch for the sake of brevity. During the Clinton administration Robert Rubin (from Goldman Sachs), Assistant to the President for Economic Policy, then Secretary of the Treasury, initiated the “strong dollar policy” in order to maintain the US dollar as the reserve currency of the world. So began the serious effort to undermine gold, the only true currency in the history of man and the only real threat to the world’s most proliferating paper IOU, the $US (debt). The seed of that myth soon spawned a Medusa’s head; multiple, snaking tentacles breeding lies built upon lies, ritualizing ever more myth(s), culminating into the disaster that is today’s disjointed, disingenuous, convoluted, highly leveraged PM markets buried within a monstrous $Quadrillion global derivatives market. The power behind the myths boasts a virtual army of sycophants of greed and abused power who do not hesitate to use whatever tortuous tool, nefarious power or illegal financial lever (naked shorting) to suit their purpose. It has names like the PPT, The Exchange Stabilization Fund, the Gold Cartel, The Secretary of the Treasury, and it involves organizations such as the Fed., Investment Banks (Goldman, JP Morgan, HBS, Merrill, Lehmann etc.), CFTC, SEC, COMEX, bullion Banks, Brokers, Hedge Funds, Insurers, Rating Agencies, The World Gold Council, the Silver User’s Association, the IMF, BIS, GFMS, Barrick Gold and many more. It is supported daily by a cacophony of suspicious gold doubt creators, with a supporting cast of frequent stand-ins such as Nadler, Gartman, Shedlock and a host of analysts, media, economists, columnists, letter writers, advisers, fund managers, assorted “experts”, and ignominious BB bashers… all shrieking in front of a luminous backdrop of incredibly, counterintuitive trading patterns.

Of course not only have the physical markets been the object of the dissemination of all this mythology, more latterly, so too have the gold/silver stocks. Allow me to appoint ECU as a representative of the JPMs in this little labour day narrative about myths. One merely has to read the 150 plus news releases and the fundamental FACTS found on annual/quarterly reports, SEDAR reports, understand the ten year history, and the integrity of the management in order to reasonably come to the obvious conclusion that, as an example of what has happened to JPM markets, so to has it relatively happened to ECU with respect to it’s real value. Talk about the power of myth!

The late, preeminent American scholar, Joseph Campbell was and expert on the power of myth (“The Power of Myth” with Bill Moyers) and knew that mythological themes are rooted in human need (we all know you don’t have a sale until a need is realized). In order to have real authority though, power must be ritualized, mythologized. For instance the power of a judge must be ritualized, (so too must the power of the office of the President of The United States). He must be respected for the role he is playing in his robe (Office). But as an individual he must have the “integrity” that makes him worthy of the principles of that role (I refer to all those ritualized roles and offices above mentioned). Joseph Campbell illustrated this as an example of mythological principle. So, with the role it is “assumed” that the integrity is present. But what happens when a myth is created and perpetuated for the purpose of subversion?

Professor Campbell recants the myth of the man who killed the bird because he did not want to feed it; in doing so he killed the song, and with the song, himself. He reminds us that this is what happens when we destroy our environment, our nature, our song. I ask, what happens when we (“they”) attempt to destroy a truth with a myth? The truth I speak of is the truth represented by gold, a truth that does not allow for the unlimited expansion of credit. It is a truth that can not be confiscated by a warped mythology created for the circumstances of need for greed and power by those at the apex.

Joseph Campbell reflects that myths have often been created for the purposes of current circumstances, such as a subverted religion (cause?) or…. how about subverted markets? When nature is thought of as evil, man attempts to control it, subjugate it “because we have contempt for it, because we see it only as something to service us”. (1) So our reason is destroyed by passion “and the principle of passion in politics is greed. That is what pulls you down” (2). Those who are here aforementioned have indeed subverted the markets, or have knowingly been party to that subversion for their own misguided cause, and their own need for greed and power at the very cruel expense of those by whom they have been given the power to represent.

Isn’t all this so ironic when we look at history? The United States is the only nation in history that was founded on the basis of reason instead of simply only warfare. It was founded on a mythical model that was supposed to “identify the individual not with the local group but with the planet”. (3) Thirteen colonies decided to act on this mutual interest, but still with a regard to each of their individual interests. That is what the Great Seal of The United Sates represents on the US dollar. It is the voice of reason that the mythological symbols (Great Seal, Pyramid, Eagle, the “Eye of God”) on the US dollar represent. Joseph Campbell cautioned us all (to repeat) that reason is destroyed by passion and “the principles of passion in politics is great. That is what pulls you down”.

How much further down can individual interests be pulled? How much longer can the perverted myths be perpetrated?

(1) The Power of Myth, p.29. (2) p. 36. (3) p. 30