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Alternative Market Briefing

Other Voices: Bullion - barbarous relic, bubble or boom

Tuesday, June 01, 2010

Article authored by Toby Birch, of Guernsey Gold Limited. Toby Birch is an international fund manager dealing in precious metals, mining stocks and natural resources, and the author of The Final Crash: Addictive Debt and the Deformation of the World Economy, published in April 2007, just months before global stocks plummeted. He is a Fellow of the Chartered Institute for Securities and Investment.

The topic of precious metals is a contentious one; provoking extreme and often entrenched reactions. The Depression-era economist John Maynard Keynes once described gold as a Ďbarbarous relicí. This was in part due to its ancient role as a currency but also because its restraining effect on money supply when the economy was on its knees. With good stewardship there should be no place for using metals as money but the human desire to live beyond our means has been our undoing. Paper money has been the passport to profligacy and we are just beginning to pay the price for trusting in promissory notes with no foundation.

Financial folly and war have made easy bedfellows down the ages. By regarding the recent actions of gold in an historical context one realises how little has changed. The rise and fall of the Roman Empire acts as a worked example given its many parallels with the modern world.

Vested interests and lobby groups influence modern Senators as much, if not more, than their Roman counterparts. In the First Century AD, the coins of the realm......................

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