Karl Heinrich Marx

For the Soviet system, inspired by Marx, currency was the manifestation of social evil, the relationship with commodity production.  There were certainly some countries where this practice was even more radical than the Soviet system.  This was particularly true of Cambodia and the Khmer Rouge, where trade itself, including bartering, was the objectification of evil itself.  To some degree, it surpassed even Marx’s theories.  In his book the “Critique of Political Economy,” Marx spoke about exchange values and not exchange itself.  It is for this reason that André Malraux called “PolPotism” the Marxism of imbeciles.

That said, the conclusion that Pol Pot and his friends and family made from Marx’s theories, is not that far away from Marx’s ideas, because for Marx the historical process itself results in the production of useful values.  For this reason, Pol Pot’s followers condemned the production of exchange values; therefore exchange itself.  This explains the terrible reality of the demographic collapse in Cambodia during the implementation of what some have called a “murderous utopia.”  The dismissal of exchange can only lead to the disappearance of all systems for satisfying needs; therefore an empire of death, collective suicide.  Of course, in this system characterised by the dismissal of production for trade, access to goods and services has always been conditioned by a hierarchical order of socialist societies, the needs of leaders, including their ostentatious needs, were covered by society.

Boris Yeltsin, who was the first president of Russia after the fall of communism in the 1990’s, declared in October 1987, in a speech to the Central Committee of the Communist Party of the Soviet Union: “Yes comrades, it is not easy to explain to a factory worker why in the seventieth year of political power, he is forced to queue to buy sausages in which there is more starch than meat whilst on our tables there is sturgeon and caviar and all sorts of fine meats obtained without any problems from a place which he is not even allowed near.  In these special shops reserved for the nomenklatura (the ruling bureaucratic elite of the former Soviet Union), “the prices of goods were inversely proportional to the position the “customer” had in the nomenklatura.  The higher your position in the hierarchy, the lower the price was.”.  More precisely, this means that for members of the nomenklatura money was certified, that is to say that the higher up a person was in the nomenklatura the higher the value of their money.
EXTRACT FROM THE BOOK by Norman Palma and Edouard Husson –  Capitalism is sick of its currency

According to this book – It has often been said that it was not possible to predict the economic and financial crisis that is currently sweeping across the world.  Nothing could be further from the truth.  At the root of the crisis is an International Monetary System that has been seriously affected by the dollar standard system.  For several decades, informed minds had warned of the possible devastating effects on the world economy as a result of the American Federal Reserve’s issuing policy.  As Maurice Allais, the French Nobel Prize Winner for Economics, emphatically said with general indifference “what will happen will happen” What has happened today always happens with paper money systems: after the euphoria of increasing credit without any restrictions the crash arrives.  This is why the dollar is heading towards total depreciation.”

Although every effort is being made to postpone it, we cannot avoid the collapse of the dollar and currencies which unwisely held it up.  To limit the effects of this unavoidable catastrophe, if it is at all possible, we must urgently create an International Account Unit which is a basket of major paper currencies to which we must add gold in order to restore vital credibility to paper money.  Then, we should not be content with returning to a gold reference system, which will in any case impose itself on the market, no matter what top political and economic leaders think.  Due to limits on the quantity of gold, it will be necessary to return to its vital circulating complement: silver, which ruled alongside gold, during the historical rise of the wealth of nations.  With this diagnostic put forward, and with the only possible remedy analysed, all that remains is for an immense reform to be implemented by a politician largely responsible for the situation, who has nothing planned and whose actions will in all respects be judged by this present tragedy.

The role of the Dollar in the Bretton Woods Agreement

Behind the changes that led to the Jamaica agreement can be found the decision taken by President Nixon on the 15th August 1971 to suspend the direct convertibility of dollars into gold, the keystone of the financial system created in July 1944 (the Bretton Woods Agreement).  On the 1st October 1971 the general assembly of the IMF asked the board of trustees to study and propose a comprehensive reform.  This would be adopted by member States during a meeting held in Kingston (Jamaica) on the 7th and 8th January 1976, and included a set of provisions which put an end to the reign of gold.  The decisions taken focussed on two main points:

1. The new exchange rate system

Member countries had to refrain from manipulating their exchange rate for competitive reasons and had to choose between three possibilities:
- not assigning a parity to their currency which floats freely on foreign exchange markets ;
- fixing the value of their currency by pegging it to another currency or Special Drawing Rights ( SDR )*– not to gold;
- linking the value of their currency to one or various other currencies as part of cooperation mechanisms

2. The role of gold

The solution presented was a compromise between the French argument that pushed for gold to remain part of the organization and running of the international monetary system and the American policy that had for a long time wanted gold to be withdrawn from its supreme position.  The agreement withdrew the status of the IMF and all references to gold and replaced it and its core functions with SDR whose dollar value is posted daily on the IMF website.  The consolation for gold was that central banks were given back the freedom to carry out transactions with metal without restrictions on them or the market.

This desire to remove gold as the standard parity system and to abolish the official price of the metal was completed by:

- abolishing obligatory payments in gold for operations between the IMF and member countries;

- obliging the IMF to get rid of a third of its gold holdings (50 million ounces) by returning half to Member states at the old price ($ 35 an ounce) and by selling the other half through public auctions.

Again we must add that the abolition of the official price of gold resulted in central banks being able to carry out transactions at a price derived from the market and to reassess metal stocks in their possession (as was very quickly the case of France and Italy).

Even if the United States made it known that they would continue to assess their reserve at the old official price of $ 42.22 an ounce and even if the first auction by the IMF lowered the price of gold on the world markets, at least for short periods, we can say that in the fact the results expected by the American policy and the IMF were a long way from being achieved.  The price of gold and gold itself still remain important elements of a vast political game: all things considered, if gold has survived, it’s because it has not stopped being the official metal that governments didn’t want it to be and wanted to forget.

Today - As the dollar struggles and the new gold giants Russia, China and India are all looking in different ways towards gold as the international medium to back commitments or in the long term to oust the dollar as the international reserve currency. Closer to home the crisis that rose to the surface in 2008 has caused us to once again look at the stabilisation that resulted in the Bretton Woods agreement, which collapsed, partially due to economic expansion in excess of the gold standard’s funding abilities on the part of the United States and other member nations. However, the problems of currency systems not pegged to gold lead to economic problems far worse.

Both France and Britain have envisage such a stabilization. French President Nicolas Sarkozy and British Prime Minister Gordon Brown were recalling the previous success and called for a “new Bretton Woods” agreement in October 2008. What Sarkozy and Brown envisaged was a new multilateral agreement to stabilize international finance in the 21st century, the way the 1944 conference, which established the International Monetary Fund and the World Bank, stabilized financial relations among countries in the second half of the 20th century. The summit meeting of world leaders held in Washington, D.C., in November 2008 started a process that could lead to such an agreement. What would that take to succeed? What kind of leadership, and what kind of commitment, would be needed? History offers some useful lessons.

On several occasions throughout the 20th century, political leaders in major countries sought international agreements on the global economic or financial architecture. Many of those efforts failed, Bretton Woods being the major exception. The central lesson that emerges from these efforts is that successful reform in response to a crisis requires three ingredients:

1. effective and legitimate leadership combined with inclusive participation;
2. clearly stated and broadly shared goals
3. a realistic road map for reaching those goals.

The goals, achievements also that which is deferred is dependant on the participant countries. New rules in finance can only be devised by the those who are the major players in the financial markets, industrial and emerging markets. The more inclusive the participants in the next Bretton Woods the more likely to conclude with  long lasting benefits

* The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries’ official reserves. Its value is based on a basket of four key international currencies, and SDRs can be exchanged for freely usable currencies. With a general SDR allocation that took effect on August 28 and a special allocation on September 9, 2009, the amount of SDRs increased from SDR 21.4 billion to SDR 204.1 billion (equivalent to about $ 321 billion).

Maurice Hall –  based on extracts from Jules Lepidi’s book gold and article by JM Boughton IMF Historian

The discovery of gold in Australia in the mid 19^th Century had more of an affect on the nation than its discovery in any other country, transforming Australia from a British penal colony to a nation that integrated many nationalities. To this day a term of endearment for Australians is “Digger”.   It was not an easy passage and on the way there was greed, dispute, revolution, racism and a new type of outlaw “the bushranger; but gold was responsible for the building of infrastructure, the end of transportation and financial viability. Britain no longer had any excuse for withholding self-government from its Australian colonies eventually leading to the formation of the Federation of the Commonwealth of Australia after the referendum of 1900. As for gold itself some of the biggest nuggets ever formed came out of Australia which gave the name to famous “nugget” gold bullion coin of today.

It all began when Edward Hargraves returned from the Californian goldfields and was convinced that there was  similarity in geological features between Australia and the California. In February 1851, Hargraves took his pan and rocking-cradle and with his guide, John Lister, set out on horseback to Lewes Pond Creek, a tributary of the Macquarie River close to Bathurst where he filled and washed several pans, some of which did indeed produce gold. He named the place ‘Ophir’ after the biblical golden city, reported his discovery to the authorities, and was appointed a ‘Commissioner of Land’. He received a reward of £10,000, plus a life pension

Australian gold fields

Word spread quickly and within a few days 100 diggers were frantically tunneling for instant wealth. The road over the Blue Mountains from Sydney became choked with men from all walks of life, carrying tents, blankets, and rudimentary mining equipment hastily bought at inflated prices. By June there were over 2000 people digging at Bathurst, and thousands more were on their way. Gold fever gripped the nation and the colonial authorities responded by appointing ‘Commissioners of Land’ to regulate the diggings and collect licence fees for each ‘claim’.

Hargraves could never have dreamt how significant his discovery would be. New South Wales yielded 26.4 tonnes (850,000 ounces) of gold in 1852. This was a mere drop in the ocean compared to the yield from neighbouring Victoria when they joined the rush for gold.

The Victorian authorities, eager to prevent its population from joining the gold frenzy in NSW, offered a reward of £200 for any gold found within 200 miles of Melbourne. In 1851, six months after the New South Wales find, gold was discovered at Ballarat, and a short time later at Bendigo Creek.

Very soon the fabulously wealthy alluvial goldfields at Ballarat and Bendigo turned Victoria into a magnet for immigrant adventurers, who came in their hundreds of thousands – literally. The Australian gold rush would transform the British colonies, eventually into a nation. In 1851 the population of Victoria stood at around 80,000, and a decade later it had risen to over 500,000. In 1852 alone, 370,000 immigrants arrived in Australia and the economy of the nation boomed. The total population of Australia increased threefold from 430,000 in 1851 to 1.7 million in 1871.

Deposits were also uncovered in other states: Western Australia and Queensland in the early 1850s, the Northern Territory in 1865, and Tasmania in 1877, though the rich Kalgoorlie and Coolgardie fields in the west were not uncovered until the 1890s. But Victoria was the epicentre of the Australian gold rush.

Holtermann's Nugget

In October 1872 Holtermann’s Nugget was found. At that time it was the world’s largest specimen of reef gold. It weighed 286 kg and measured 150cm by 66cm. The Hand of Faith (27.2 kg), the Welcome Stranger (73.4 kg) and the Welcome (69.9 kg) are other famous Australian nuggets. Between 1851 and 1861 Australia produced one third of the world’s gold

Despite the romantic attraction the reality was a harsh life with filthy and dangerous conditions made all the worse by the administration.  The system of licences caused great trouble at all the goldfields. Miners had to pay the fee of 30 shillings each month, which was exorbitant, whether or not they had found gold. They had to renew the licence each month. They had to carry their licence at all times to avoid prosecution. The frequent licence hunts caused great resentment within the mining communities, especially as the police employed to enforce the licencing system were notoriously corrupt and behaved with excessive brutality. As resentment and tension grew, under the leadership of Peter Lalor, an Irish immigrant, a group of several hundred miners erected a stockade of logs at Eureka near Ballarat. They withdrew into the stockade and unfurled the Southern Cross flag to proclaim an oath to fight to defend their rights and liberties. This was meant to be symbolic rather than revolutionary and most miners left after a day but some 400 troops stormed those that remained and 22 miners were killed and the leaders arrested and taken for trail. However, the courts refused to convict them and a following Royal Commission remedied the miner’s grievances and allowed them political representation  and Peter Lalor was elected to the Victoria parliament.

With Police concentrating on licence hunts they had little time to fight other crime and  travelers,  particularly those heading towards Melbourne from the gold fields were liable to be ambushed by groups of outlaws called bushrangers.

The diggers had come from many nations but by far the largest national contingent other than British and Irish were the 40,000 Chinese who had made their way to the Australian goldfields. They were mostly under contract to businessmen and worked the goldfield until the debt for their passage was paid off. As the deposits dwindled there were moves to restrict the Chinese diggers as they worked untiringly and were able to sustain the viability of their claims longer than their Western counterparts. They would rework ground abandoned by Europeans, and continue to work a claim until the whole of the gold bearing earth had been cleaned. There were campaigns to oust the Chinese from the goldfields and the motivation was based on racism and fear of competition for the  dwindling amounts. Victorian Parliament imposed a tax of £10 a head on all Chinese entering the colony and a poll tax of £1 per annum levied on every Chinese person on the goldfields. Restrictions were eventually placed on Asians in general, to prevent an influx from other nearby nations: Indonesia, Malaysia, and the Philippines. And of course the native Aborigine was rarely permitted to own gold.

At the turn of the century the Australian gold fields were the most productive in the world and today the hold second place ironically to China who have raced to the head of the gold producers in the last decade. The richness of the gold fields brought large numbers genuine traders who supplied the tools, timber and transportation plus the usual hotchpotch of drinking dens, hotels and prostitutes.  New towns and cities sprung up and merchants of all types flourished and hundreds of companies were floated and a new wealthy bourgeoisie was created. They eventually wanted to distance themselves from the riffraff so more respectable areas were built, trams were required for transport in the towns and railway networks were needed to join them. By 1853 under pressure from the new wealthy inhabitants the British ceased the process of transporting convicts to Australia. Many large public works programmes were undertaken as prosperity increased. This dramatic improvement in wealth and facilities led to the formation Federation of the Commonwealth of Australia after the referendum of 1900.  A new Nation was born

Maurice Hall

At the age of 40, Abe Lee didn’t need to be told twice.  In 1859, he left his farm in Arkansas after hearing a rumour from miners working along the river and according to whom there was gold in Colorado.  In spring 1860, Lee finally found what he was looking for in the ravine of a mountain “It was full of gold and there were loads of different colours rolling in his pan. It was at that precise moment that he made the connection: I have all of California in this pan.  This was the name that was eventually given to the gulch, the Californian gulch.”

It took off like in 49′.  In the first year, the Californian ravine produced more than 2 million dollars worth of gold.  “This first rush was purely a rush towards gold sands.  A method which would today be known as a geochemical method was suitable enough to find gold.  It consisted of finding small quantities of gold using gravity by gently swirling the pan.”

The discovery at Leadville rounded up gold hunters from all over the world.  “Lots of people came from Eastern countries.  In spring 1860, 10000 people arrived trying to set themselves up directly in the Californian ravine.  The 8km ravine was rapidly split up into little individual concessions, most of which were no longer than 30m.”“Slovenians occupied the west of town, Hispanics were at Stringtown, the Swedes were on Chicken Hill and the Irish were on Sixth Street.”

Leadville 1860

Leadville is a small community of just over a square mile, perched some 3300m up in the Rocky Mountains of Colorado.  Following Abe Lee’s discovery, the thousands of miners that flocked to this remote camp soon realized that the area was also rich in other types of deposits.  Over the next thirty years, more than a million mine pits were dug from which gold, silver, zinc and the metal which gave the town its name in 1878, lead, were extracted. “It was a primitive and disorganised community.  I remember reading an article published in 1893 which said that Leadville was the most famous mining community the world has ever known. ““Leadville was famous for its games rooms and brothels and for every church or school there were 10 to 20 bars and brothels.”

One of the miners that set out to pursue his dreams in Leadville was none other than Thomas Walsh, an Irish immigrant who arrived in 1879 to look for gold.  For fifteen years, Walsh dug and when he wasn’t digging he took care of a bar in Leadville.  Before that he worked in one of the many metal refineries that breathed life into the region’s mining industry. In 1895 Thomas Walsh literally fell upon a gold mine.  “It was quite an extraordinary bit of luck that only happens once in your life because the place just above where this rich mass of gold deposits was located had previously been excavated fifteen times by miners who were convinced that they were going to find silver.  They committed the error of not sampling the minerals that were in range of their picks.  When he himself took samples and tried them he found that the ore had a very high concentration of gold”.

In 1879, silver was discovered in Leadville.  Hundreds of mines literally sprang up overnight.  However, during the 1880’s, silver progressively dropped in value as countries around the world moved on to a new standard, the gold standard.  The death of this once precious metal ended in total failure.  Lots of silver concessions were automatically abandoned.  In the months that followed, Walsh discretely purchased 50 deserted concessions scattered amongst the hills surrounding Leadville.  He carried out consolidation work and inspired by a small rocky mountain known as Raven, he decided to call his minefield Camp Bird Mine. He was however one of the exceptions.  If some found fortune in Leadville, most didn’t find anything or very little gold.  “Life in these mining communities was very, very difficult.  Everyone thought that with the next shovel full they would hit the jackpot, but sadly it happened very rarely.”

Contestoga wagon

“Most of them returned home on board Conestoga wagons which were typical of the time.  More often than not they painted little mottos by way of a coat of arms on the wagon’s canvas: “money or nothing”.  And when they returned home to the east they often said that they had been plucked by God”.

As the nineteenth century drew to a close, the chances of making a fortune through gold were dwindling.  The last opportunity for prospectors was in Alaska.  When gold was discovered in Klondike River in 1896, thousands of miners sailed there.  The ticket to travel there on a steamer, which had previously cost 50 dollars, rose to 1000 dollars.  But the boat was only part of the journey.  Prospectors  then had to follow a long route strewn with obstacles across one of the most hostile terrains in the world.

Canadian Mounties also worked to prevent people embarking on the adventure without at least a years worth of food.  A Major of the Mounties wrote at the time: “It’s hard to imagine such a scene of ruin and desolation, thousands of horses lay dead littered across the road, sometimes whole groups.  They were lying  their harnesses, their saddles, their loads which had fallen with them from the top of the rocks.”

But prospectors continued on their way unabated.  Because so much gold had been found in so many different areas they remained convinced that it was only a matter of time before the next big discovery.

“People used to wonder where the next rush would be.  California quickly reached saturation point but there were many other stories in the 1850’s and 60’s.  It was suddenly announced that there was gold in Seattle or elsewhere, absolutely everyone would rush  to these places and more often than not there was nothing to be found.”

The men who made the great gold rushes of the nineteenth century were strong, strapping solitary individuals with huge dreams.  They panned for gold that changed history in  flakes, grains and sometimes whole nuggets.  Every time an announcement was made that gold had been discovered from California to Australia via Alaska, the world rushed to filter rivers, but rivers are not the only hiding place for gold.  People soon realised that gold was also hiden in the surrounding hills.  Unfortunately, it takes more than just a shovel and pan to get to it.

Maurice hall

An ingot of goldis part of a collection of gold stolen by the nazis

At their peak in 1949, the United States held half of all gold ever mined in history, almost 22000 tons.  Almost two decades earlier, as the world was struggling to drag itself out of the great depression, a new crisis was looming, a crisis that threatened the whole of civilisation.  Adolf Hitler came into power in a Germany that was still reeling from defeat in the First World War with its gold reserves empty and its currency valueless.  Having promised to return his country to glory, Hitler began to rebuild the Germanic Empire and for this he needed gold.  It is important to understand that in 1939 Germany’s gold reserves were not very large, worth around 200 million dollars and already allocated, mainly for constructing German war machines.  Furthermore, the country could no longer buy products manufactured abroad nor basic raw materials because of the low value of the Reichsmark.  The only remaining alternative was gold.

And so, little by little whilst moving through Europe, the German Army plundered the gold reserves of the nations they invaded.  In 1938 they took 30 million dollars worth of gold from Czechoslovakia and a further 85 million dollars from Poland.  In reality it all started with the Anschluss ( union of Austria and Germany  forced by Hitler in 1938) where the Austrians’ gold was taken then in 1939 they stole the Czech reserves before occupying Czechoslovakia.  At the beginning of the war, each time they took control of a country they plundered the gold.

Most of Hitler’s spoils were stored in the Reichsbank’s vaults in Berlin.  But the tide began to turn for this Reich which should have lasted a thousand years.  The intensive bombing carried out day and night by allied forces systematically destroyed Hitler’s war machine by hitting it right at its heart, that is to say by destroying industrial infrastructures themselves built from stolen gold.

On the 3rd of February 1945 more than 900 allied bombers unleashed nearly 23000 tons of explosives on Berlin.  The city was reduced to ashes and ruins and the Reichsbank was practically destroyed.  In February 1945, what was left of the Reichsbank’s gold reserves was probably loaded onto trucks by prisoners, probably French, and taken to Merkers in Southern Germany.

In the Spring of 1945, General Patton’s third army advanced on Germany like a juggernaut.  On the 4th of April it entered the town of Merkers.  Rumours were circulating about a secret shipment that had recently arrived from Berlin that had been concealed in a nearby potassium mine.  Out of sheer curiosity, several GI’s decided to go and investigate.  On leaving the elevator, eight hundred metres below, they came face to face with a huge steel door.  They sent a message to Patton, what should we do? Patton’s response: “Break down the door.”  As someone was just about ready to blow open the door, some genius realised that half a stick of dynamite would be enough to blow up the wall just next to it without having to worry about the vault.

In the room lay more than 7000 neatly stacked bags.  What the Americans found inside was so incredible that three of the most powerful men in the world had to see it with their own eyes.  George Patton, his superior Bradley as well as Eisenhower, Supreme Commander of the allied forces in Europe.  It was an extraordinary sight.  More than 8000 gold bars in the form of ingots, 2000 bags of gold coins: Reichsmarks, English sovereigns, Napoleons, American 20 dollar gold coins and hundreds of bags of gold from other countries.  Heading towards the back of the mine, Patton discovered a more sinister haul.

Eisenhower and Bradley examine suitcases of silverware, gold rings and teeth

The back of the room was full of goods stolen from victims of the concentration camps.  There was a pile of suitcases full of silverware, gold wedding rings and gold teeth.  Each bag, box or trunk had been carefully inventoried and stamped with a label marked Melmer.  Melmer was the German SS officer who went back and forth from the concentration camps to collect all he could such as gold teeth and gold wedding rings in order to take them to Berlin.  During the war he carried out 77 deliveries containing the fruits of his plunder.

Assets taken by Melmer amounted to more than one million US dollars.  Today this sum would exceed one billion, but this discovery was only the tip of the iceberg.  At the end of the war, the Germans had plundered around 580 million dollars worth of gold from the occupied countries.  Out of that, we estimate that 450 million dollars worth of gold was sent to Switzerland and other countries during the war.

In 1946, this gold was entrusted to an international commission in charge of calculating damages for the victims of the Holocaust.  The surplus was returned to an allied commission and redistributed to the nations from which it was stolen.  Europe was devastated and recovered painfully from the Second World War.  The United States became the richest country in history.  To reconstruct their economies, nations torn apart by war were forced to buy dollars.  Their method of payment remained gold.  As a result the United States gold reserves soared.

The largest quantity of this gold reserve is stored five levels below Manhattan in the Federal Reserve’s vaults.  At the time,  probably one quarter or one third of all gold extracted from mines could be found underneath the basements of Manhattan.  (read our article : the Federal Gold Reserve in New York)

With such a large quantity of gold, the dollar became the strongest currency in the world.  Countries settled their debts in dollars and governments could exchange their dollars for gold.  Following the example of the Besant and the Ducat, the dollar is the coldest hardest form of cash.

Maurice Hall

There are two different types of Swiss 20 franc coins. The first type with a laureate head of Liberty, wearing a coronet bearing the word “LIBERTAS”, with the inscription “CONFEDERATIO HELVETICA”. The reverse shows a 5 pointed star above the red cross of Switzerland on a simple shield within a wreath. The inscription at either side of the shield 20 FR, with the date below. The letter B, the mintmark for Bern, appears below the wreath. This type was issued form 1886 to 1896 inclusive.
The second type known as Vreneli or sometimes Helvetia and commonly known as Swiss 20 Francs is undoubtedly one of the world’s most dignified and classically designed Swiss gold coins. The obverse of the Swiss Helvetia depicts “Vreneli,” the charming “Swiss Miss” of folk lore, wearing flowers and facing left, framed against the majestic Alps. The reverse has an image of the traditional Swiss arms, featuring the famous Swiss cross over oak leaves tied with ribbons and shows the face value of 20 FR and the date

The name “Helvetia” dates back to Roman times when it was the term for the original inhabitants of what is now Switzerland. In fact, the country for a time was named the Helvetian Republic during Napoleon’s rule over the region. Switzerland’s central location, privacy laws, and political stability have helped make it one of the world’s most important financial centers. Swiss currency has never been devalued. Swiss gold coins, like these Helvetias, are cherished worldwide for their fine gold content and excellent minting.

Because of their wide and constant availability, Helvetias trade remarkably close to their intrinsic gold value. You should never pay a high premium (price over gold value) for Helvetias in today’s market.

Maurice Hall

Reverse of the Mexican 50 Pesos featuring winged victory

The Mexican 50 Pesos gold coin is not very well known in the UK, but its many qualities are more than enough reasons to make it an excellent investment if you are looking to invest in gold coins for the long term. This coin has great aesthetic value, large mintage (now ended), strong historical value and a very low or non existent premium.

Let’s begin with its characteristics.  The beauty of the coin is initially striking.  It is 20% bigger than a one ounce Eagle, its American sister making it a large “bullion” coin.  It is 22 carat  with 10% copper to ensure that the coin is hard wearing and has an attractive colour.

The image of Winged Victory makes the 50 Pesos Centenario one of the most beautiful coins in the world

A small history lesson is required to explain the image – in 1910, Mexico celebrated the 100^th anniversary of the beginning of the war of independence with Spain. To commemorate the centennial, a huge victory column was erected in the centre of Mexico city, crowning the column is a 6.7 metre sculpture in bronze covered in 24 carat gold  and representing winged victory is   “ El Angel de la Independancia”, the Angel of Independence.  The angel represents Athéna Niké (Athéna brings victory), the famous Greek winged Goddess.

Located on the reverse of the coin, she holds a laurel crown in her right hand to symbolise victory and holds a broken chain in her left hand, to symbolise  liberty.  Two famous Mexican Volcanoes, Popocatépetl and Ixtaccihuatl, are situated in the background.  The date located in the bottom right is the year the coin was struck whilst 1821 is the year of independence.

Mexican 50 Pesos obverse with the national emblem

The obverse features an image of the national emblem – an eagle perched on a cactus eating a snake.

The edge of the coin reads « INDEPENDENCIA Y LIBERTAD »

Engraved by the artist Emilio del Moral, it was first minted in 1921 by la Casa de Moneda de Mexico to mark the 100th anniversary of independence (hence the name “Centenario” for the 50 Pesos coin).  The 50 Pesos coin therefore pays homage to the independence of Mexico.

More than 12 million coins were minted between 1921 and 1972.  The majority are dated 1947, but this is mainly due to 3 975 654 coins being re-struck between 1949 and 1972.  Only 309 000 coins were actually minted in 1947.  Re-struck  coins and coins dated 1947 are always of a very high quality however coins from earlier years are often rarer and therefore more expensive.

The 1943 dated coin of which 89 000 examples were  minted has a bigger diameter of 39mm but the same weight.  Very rare!

Today, the coin is a great success in the Hispanic world, mainly in Spain and Latin America.  The increase in popularity of the Kruggerand in recent years has however somewhat overshadowed the attractiveness of the 50 pesos coin for other investors.

A long term investment choice

Even if the differential premium for this coin is very low, it is a wise choice for investors looking to invest in gold coins for the long term.  It is in fact one of the lowest premium coins and as such can be purchased for practically the same price as gold.  It is obvious that in the case of a crisis, even the premium of this coin will rise, in particular in Hispanic countries.  In contrast to the Krugerrand, production of the 50 Pesos has finished and therefore the coin will one day become rare.  Avoid buying this coin directly from individuals as it has been widely copied and there are a large number of often crude fakes in circulation.

Buying 50 Pesos today to resell them when the premium has risen could prove to be a very wise choice.  You just need to be very patient and must not buy from just anyone.

Diversify when buying gold coins and consider  the 50 Pesos Centenario as  it has everything you need.

Did you know?

When Americans regained the right to own gold on the 31st December 1974, the Mexican 50 Pesos coin rapidly became one of the flag bearers for the physical gold industry.  The Krugerrand was not well known enough at the time.

Many transactions between Mexico and the USA were carried out using gold coins.  These gold transactions no longer occur today, but who knows, perhaps bank notes will become unfashionable some day and then…

British gold is rare indeed. Unlike the vast mining industries in Nevada, China and South Africa, gold reserves in the UK are modest. Most mines have been alluvial where the precious metal has been sifted from rivers and silt rather than dug from rock. Gold has been mined in the UK since around 600 BC when the first mine was opened in Wales. One of the reasons the Romans invaded Britain was that they believed it to be rich in precious metals. More Roman gold artefacts have been found in Britain than anywhere else in Europe.

Wales

Gold has been mined in Dolaucothi Wales since prehistoric times. The pre-Christian Celtic chiefs wore fine gold torcs and armbands and became wealthy as a result of metal trading. The Romans later controlled some of the mines, developing large-scale mining operations. During the Roman occupation, British metalwork was widely circulated. Reaching their peak during the great expansion of the Celtic Church in the 8th century AD, Celtic goldsmiths produced work of unrivalled craftsmanship. Later, the Welsh princes became wealthy and powerful rulers due to rich supplies of metal ores.

The Acts of Union passed in 1536 and 1542 made mining rights the property of the English Crown and royalties of 4% are still payable to the Crown on any gold mined in Wales. Welsh gold, which is mined by hand, is found in an area stretching from Barmouth, past Dolgellau and up towards Snowdonia. Welsh gold-bearing rock lies in seams, like coal, and has been known to yield up to thirty ounces per tonne.  Gwynfynydd Gold Mine in Dolgellau opened in the 1860s and was one of the richest gold mines in Britain with a recorded output since 1884 of more than 2,000 ounces of fine gold. Gold was first worked on a serious scale at. In 1862 a small scale British gold rush was triggered by the Clogau mine, which excavated more than 165,031 tons of ore and was a key producer of gold on a serious scale

Welsh gold due to its rarity is very expensive and has a distinctive rose colour.  The Clogau and Gwynfynydd mines are the only mines to have recently produced significant quantities of gold, and it is from these two mines that gold for the Royal wedding rings, traditionally made of Welsh gold, has been obtained. In is rumoured that the queen obtain a kilogram of welsh gold many years ago to ensure sufficient remained for more royal rings

Scotland

Scottish Highlands are famous for many things: ancient mountains, sparkling lochs, whisky and wildlife. But now a new and highly lucrative attraction has been found in the Highlands - gold.

An Australian-funded mining company has made several large finds of gold, potentially worth hundreds of millions of pounds, around the small village of Tyndrum.

The company, Scotgold, already owns a small mine near Tyndrum known as Cononish. First drilled 20 years ago, Cononish has never been commercially worked, until now where it is estimated that 4.5 tonnes of gold lie buried worth £100m..

The local community trust and tourism officials are discussing plans for a gold mine visitors centre in the village, gold panning “experiences” and jewellery boutiques selling rings, brooches and necklaces of “Tyndrum gold” to passing tourists at premium prices.

Chris Sangster, the director and CEO of Scotgold, said Cononish is expected to start producing 200kg of gold a year at the mine site when full-scale mining begins in 2011 – enough to produce 30,000 wedding rings a year – and another 500kg each year by sending rocks for processing elsewhere. Cononish will also produce roughly 17 tonnes of silver.

But Sangster said Cononish may only be the start of a major gold mining operation in the area. The company has a licence to explore a 2,200 sq km area of the southern Highlands for gold and it now believes there could be up to five times as much gold in the Tyndrum area.

The one-kilometre long shaft at Cononish has remained dormant until now because of the technical difficulty and cost of extracting the particles of gold from the quartz rock, which traps it. For every 10g of gold – roughly the weight of one wedding ring – about a tonne of rock will need to be crushed.

Most Tyndrum gold will be sold on the open market. The mine’s commercial value has been transformed by the sharp surge in its price during the recession.

Northern Ireland

The UK’s largest gold mine is in County Tyrone Northern Ireland, where 14 tonnes have been discovered in shallow deposits beneath a peat bog at Cavanacaw, in the same Dalradian rock strata that runs across the northern UK to the mine at Cononish in the Scottish Highlands.

In January 2007, after modern prospecting techniques discovered recoverable gold at Cavanacaw near Omagh in Co Tyrone, the first modern gold mine came into production. “This is Ireland’s first for two millennia”, announced Galantas, the Canadian company who owns and operates it.

It announced that Galantas expected to produce 30,000 ounces of gold a year – which alone would net close to 15 million pounds. Deposits were claimed to hold 14 tonnes of Irish gold. While most was to be sold as gold concentrate, a small part of what the company billed as “rare Irish gold” was to be used to make a range of branded 18-carat jewellery – Galantas Irish gold jewellery.

In addition to the Omagh gold mine, there are at least three other projects that are being explored.

Maurice Hall

Why do we hoard gold? In defiance of the world of fiduciary payments. Because of fears about war, revolution, devaluation, taxation. To avoid paying inheritance taxes. To remain true to ancestral reflexes that ensure that gold as a refuge and gold as a reserve prolong the gold fetish.

Hoarding gold has both advantages and disadvantages. On the side of the advantages, one has to include its discretion, gold can not be identified. Unlike notes and cheques, which are numbered, coins have no serial numbers and whilst ingots are numbered, it is easy to remove the mark or simply melt the metal. Gold’s longevity must also be added to the positive side of the scales: neither the air, nor the earth damage it; as the Indians say: ants don’t eat it. It does not change over the centuries. Gold is a durable security.

In terms of disadvantages, the metal’s sterility must be considered. It has no yield, unlike a security, goodwill, an industrial company, a bit of land or rental property, it provides no revenues just like a diamond, a precious stone; a painting, a carpet or a collector’s piece. The capital that it represents can even decline if it has been bought at a high price. But gold hoarders usually consider gold to be an insurance policy and the insured does not complain until he/she wants to make a claim. Like insurance, gold only pays when a misfortune occurs.

However, investors often hoard gold more by instinct than for good reasons and, to them, gold’s virtues are primarily sentimental. Even when you demonstrate that they are wrong, they continue.

Their attitude is different depending on their geographical location, their social status, their profession and their age.  Whether it is more or less logic to conserve gold depends on the country where you live, your wealth, the profession you practice, your life expectancy. A amateur philosopher would say “the reasons for hoarding gold are subjective”.

Alongside these simple instinctive gold hoarders, there are others, fewer in number, who see gold as an investment and the opportunity to make a capital gain. These people are looking for a revaluation of the official price. They speculate on a decision that will make them richer.

It goes without saying the gold hoarder, of either type, only acts based on what he or she considers to be in their own best interest without worrying about the general good. From the State’s point of view, they are subject to taxation. From the nation’s point of view, its ties up investment funds which, if used differently, could be productive. From a higher economic and ethical view point, their behaviour is useless and egoist. However, the severity of these negative criticisms does not worry owners of gold. They believe that they are defending themselves against a State that robs them and a society that threatens them. They add that we will be only too happy to have them and their gold when they decide to put it back into circulation.

René Sédillot – “Histoire de l’or” – Publisher Fayard