Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
One of the UK’s leading broadsheets has castigated the manipulation of gold prices by key market players, saying that the issue could explode into a bigger scandal than the Libor rate manipulation controversy which has recently engulfed the international finance world.
Thomas Pascoe writing in the Telegraph last week said that despite the immense gravity of fraudulent Libor manipulation, “gold market manipulation is more serious still” and warns that it “may well be the next big scandal to break.”
According to Pascoe, the concurrent use of quantitative easing and the manipulation of gold prices undermines the fundamental bases of a sound monetary system, by simultaneously eroding the value of both paper money and a key investment commodity.
While the printing of money, which quantitative easing entails, deprives fiat currency of meaning in order to finance the government’s existing debt, manipulation of gold prices undermines the value of one of the key commodities in which investors seek refuge when paper money is sapped of value.
“If gold has been manipulated downwards and if that process continues then all recourse to a store of value (other than land and property) has been taken from the individual,” writes Pascoe.
“The value of our money is falling thanks to Quantitative Easing. Fixing in the gold market takes away one of the key hedges for those with cash assets but no property.”
Pascoe has been a vociferous critic of the UK government’s actions on the gold market, recently slamming Gordon Brown for his infamous gold sale of 400 tonnes of gold between 1999 and 2002 at reserve prices of between $256 and $296 an ounce.”
Ned Naylor-Leyland, investment director at UK investment firm Cheviot, lent succour Pascoe’s controversial remarks on CNBC the other day, by calling for an investigation into price fixing on the gold market.
