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Economist, euro 'inventor' Mundell advised China to buy gold

Dear Friend of GATA and Gold:

Thirteen years ago your secretary/treasurer unexpectedly shared the dias with the Nobel Prize-winning economist and euro "inventor" Robert Mundell, whose death was announced today --

-- and while it may be hard to admire anyone who facilitated something as undemocratic as the European Union, Mundell made some surprisingly pro-gold remarks at the time.

The forum was the October 16, 2008, dinner meeting of the Committee for Monetary Research and Education, held at the lovely Union League Club in New York, where your secretary/treasurer had been invited to detail the longstanding gold price suppression policy of Western central banks. Mundell, a professor at Columbia University, happened to attend and was quickly invited to join the speaking program, though he had no prepared remarks.

Since CMRE always has had high consciousness about gold, Mundell turned to that topic, and your secretary/treasurer recorded something of his observations and dispatched them to the GATA list two days later:

"Mundell had a couple of notable things to say about gold. 

"First, that China, with its huge dollar surplus, has a great interest in buying gold to hedge its dollar exposure but is unlikely to do anything disruptive to the world economic order. 

"Second, that if the International Monetary Fund really does sell its gold, as is occasionally proposed (and you may recall that I doubt that the IMF has any gold at all, just a tenuous claim on the gold reserves of the United States (see, China should purchase all of it. 

"Since Mundell is officially an adviser to the Chinese government, presumably it already has heard this suggestion from him. 

"If the IMF really does have any gold and China is prepared to buy it all, of course this would prevent that gold from depressing what passes for the gold 'market.'"

Mundell's prediction about China's declining to disrupt the world economic order held true for many years but preparations for a change in policy seem to be under way.

The New York Sun tonight publishes a fascinating eulogy for Mundell:

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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