Deutsche Bank opts for gold

Yikes! Deutsche Bank recommends gold -- even a gold standard

GATA,

22 September, 2012

In its editorial today the New York Sun expresses amazement at the gold-friendly report published this week by Deutsche Bank, one of the world's major banks. As the Sun notes, that report, written by Deustche Bank analysts Daniel Brebner and Xiao Fu, doesn't just recommend gold as a currency and investment, a form of "good money" far superior to the "bad money" issued by governments -- it also muses sympathetically about restoration of a gold standard for money.

The Sun's editorial, "Germany Eyes Gold Standard," is posted at the newspaper's Internet site here:

http://www.nysun.com/editorials/germany-eyes-gold-standard/87997/

The Deutsche Bank report itself quickly dismisses with contempt the "spurious" objection that "there isn't enough gold" to back currencies with. "The volume of gold is not important," the report says. "Instead it is the value that is ascribed to this gold that is important. A zero can easily be added to a paper bill to change its value; similarly it can be added to the value of an ounce of gold. Absolute values are in fact unimportant. ... Gold is infinitely divisible. Does it matter that a paper bill is backed by a gram or a kilogram of gold? Theoretically it shouldn't matter, in our view."

As do so many of gold's friends, Brebner and Fu expect Western debt repudiation through inflation. "When one has accumulated too much debt," they write, "while the right thing to do is pay it back, the easiest thing to do is default and hope your creditor has a short memory. We believe the Western economies in general are biased toward the latter, whether they will admit it or not. We expect a soft default will likely be the preferable course of action -- a managed form of currency depreciation through various stages of 'quantitative easing' or successive bailouts by central banks of the banking system."

While it doesn't mention the logical consequence of a surreptitious devaluation policy -- manipulation of the gold market to help disguise the policy -- the Deutsche Bank report on gold may be more intelligent and candid than anything yet produced about gold by any major bank. So you might want to read it before Brebner and Fu are fired or demoted to the bank's mail room and the bank demands return of all copies or, signifying the prescience of the authors, Deutsche Bank itself crumbles under bad debts repaid in bad money and is acquired by the Musical Heritage Surplus Club of Hong Kong, a subsidiary of the People's Bank of China. For the time being the report is posted at GATA's Internet site here:

http://www.gata.org/files/DeutscheBankReport-09-18-2012.pdf

CHRIS POWELL, Secretary/Treasurer

Gold Anti-Trust Action Committee Inc.