This is right up there with the strange goings on in Sweden.
The single most popular internet search that leads to my blog is “most civilized country in the world”. This is due to a post I put online some two years ago chiding Sweden for betraying its status as most civilized country in the world when it decided to offer negative interest rates on saving accounts.
For a country of till then high moral standing, that was a decision I found to be out of character. Sweden eventually went on to do other peculiar things as, indeed, did Denmark when it was implicated in a carbon trading credit scandal of rather large proportions and whose instigator eventually went on to become EU Climate Commissioner. Nice work if you can get it.
One wonders what is happening with those beacons of morality and fairness that northern countries are usually known for.
And so it is that today it is Holland’s turn to act out of character. To be sure, Holland has already been acting strange in the recent past as attested by the attempt by two politicians to pass legislation that would criminalize the expression of comments that are deemed to lead to withdrawal of funds from a bank (which is exactly what I am suggesting in order to get out of this crisis and bring about a modicum of democracy again).
So now, for the most recent WTF moment, Holland is at it again as the Dutch central bank orders a tiny pension fund to sell its gold holdings.
NB: On May 10th, 2011 I have updated the link to the press article. The original link I provided is no longer active. This is the new link: http://www.bloomberg.com/news/2011-02-10/dutch-central-bank-pension-fund-must-sell-gold.html
Excerpt emphasis added:
“The Vereenigde Glasfabrieken pension fund said Thursday it wants to keep the gold but a Rotterdam court sided with the bank in a ruling Tuesday.”
If you understand the implications of any of the above, you have to wonder what is going on with these countries that till recently were unmatched examples of tolerance, social justice, personal freedom and morality.
More specifically, in a presumed open and capitalist economy, economic actors are ostensibly free to operate as they see fit provided they operate within the bounds of the law. Moreover, in a debt based fiat monetary system where the authorities are hell bent on conveying the idea that gold is a barbarous relic, buying, holding or selling gold is not an activity that should be subject to state approval and, certainly, is not an activity that represents a particular threat to anyone thus should not be subjected to legislation.
If the central bank or the Rotterdam court feel that gold represents a particular investment risk I can only conclude that the head of the central bank and the judge of the court have taken a look at the performance of their own pension funds over the past ten years and threw an issy fit when they realized that this little pension fund did rather well for itself as compared to the average pension fund that has shunned gold.
But, seriously, at a time when the performance of traditional investment vehicles that are stocks or bonds has been disastrous for the past ten years, why condemn a little fund that has done well by blazing a trail in alternative investments? Indeed, innovation is the essence of capitalism. So, what’s going on? Why beat-up a small pension fund? And why is all this happening in these economically marginal countries? And why now? And, anyway; this pension fund’s investment in the precious metal is equivalent to only 10% of total money under management so that even if the price of gold went to zero, the fund would still survive and eventual losses do not even approximate what the fund has lost in bonds and stocks since the year 2000.
Here are some charts that tell the real story of what has happened to various investments during the past ten years.
The only thing I can think of is that small economies are being used as test ground by the monetary authorities like the ECB and the Fed to see what would happen if they were to push such aberrant legislation on larger countries.
These are likely tests for last ditch attempts to keep the current monetary system alive short of opting for the nuclear option of converting to a global currency.
In line with the spirit of this blog and as I have done so far, I am inclined to act in a manner that is contrary to what the authorities suggest and dictate.
A bon entendeur…