The Treasury says it won’t tap its gold stockpile, even to avoid a default
By Brett Arends
Grab any Wall Street trader in a bar, or any portfolio manager in his office, and he’s likely to tell you gold is finished.
It’s silly, nothing more than a shiny metal, a substance with little use and little real value, a “barbarous relic,” and the stuff of nothing more than superstition. Only a fool would own any gold in his portfolio.
Right?
After all, its value has plunged by $500 an ounce in the past year, and $100 just in the past month. Gold hasn’t even rallied during the budget crisis: So much for its “safe haven” status.
There is just one nagging problem with this story line. One group of people disagrees. And I am not talking about wacko gold bugs in Arizona (“the ex-husband state”) with tinfoil on their heads.
I am talking about the people running the United States Treasury.
They remain firm believers in gold. Big-time.
This week I asked them if they would consider selling some of the country’s gold reserves to pay the bills if the budget crisis escalates later this month.
Their response? Not a chance.
The Treasury has considered that option, among the many others, and rejected it. “Selling gold would undercut confidence in the U.S. both here and abroad,” a spokeswoman said, “and would be destabilizing to the world financial system.” She was quoting an official position laid out last year in a letter to Senator Orrin Hatch, but so far apparently little noticed on Wall Street.
The Treasury’s position is, in a word, extraordinary. We hear all this skepticism these days about gold. Yet the Treasury itself considers U.S. gold holdings to be a key element in maintaining confidence in the country’s soundness—and the stability of the international financial system.
I thought gold was a joke. Totally over. I thought no one cared about gold. But if that were really the case, why wouldn’t the government just dump the holdings for whatever it could get?
Read the full article at Market Watch
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