I had the pleasure of listening to a talk given in the main speaker hall by Professor Antal E. Feteke on Saturday, February 19, 2011 at the Cambridge House Silver Summit. Professor Antal E. Fekete is a mathematician and monetary scientist who spends his time lecturing and writing about fiscal and monetary reform, especially in the role of gold and silver in the monetary system.
Professor Fekete gave a brief background about silver as money in America. In 1873, the government committed a very unconstitutional act by dropping the silver dollar. The lowest silver price was in 1933 and it was .25 spot. By 1963, it slowly rose to 1.29. This is an important landmark because the spot price of an OZ was higher than the monetary value on the standard silver dollar
He believes the silver price change is not cyclical. If it is not cyclical, then what is it? In 1985, Professor Fekete met and spoke with the head of the Comex in New York. And what he discovered was this man had no idea about what made the silver basis tick. What drove the price
If you take a look at the basis chart for silver (or gold, for that matter), then you will see a clear downtrend from top contango (a.k.a. full carrying charge) starting in the 1960′s to the present, when it threatens to dip below zero (a.k.a. backwardation). The big question is this: will it be PERMANENT backwardation? If the answer is “yes”, then the outlook for the present international monetary system is very bleak indeed. It will collapse as the monetary metals silver and gold will elbow out the usurper: fiat paper money. As fiat paper fights back, this will be a very messy process, and a lot of people will lose their wealth, some their shirts as well. Policymakers at the Treasury and the Fed are doctrinaires who put their Keynesian dogmas ahead of the interest of the people. This is a heavy indicator of silver shortages. Antal does not believe that there is a price suppression scheme driving this. He attributes this trend to many wealthy people in the world buying a lot of silver and not sharing the knowledge with the public as to what is happening.
He thinks that it is foolish to talk about $200 silver, because before that happens, there will be permanent backwardation of silver, meaning that silver is no longer for sale at any price quoted in paper money. You will have to cough up gold or some other “hard” asset if you want to have silver. That will be the end of paper money as we know it. SILVER IS SILVER, AND PAPER IS PAPER. (At this point, the audience broke out in spontaneous applause). He went on to state that silver will just be money and you will put it down maybe for gold but not fiat. That is how high silver will go in a real backwardation situation. (Again, the audience broke out in applause).
In Professor Fekete’s 2008 article “Forward Thinking on Backwardation”, he states it’s dangerous to deny or belittle gold backwardation. We should not equate gold and silver backwardation with the backwardation of commodities. Commodity backwardation can be rectified if the fiat currency is still accepted, whereas with gold and silver backwardation, it is completely to do with the failure of the monetary system. In the article, Antal points out how similar the life cycle of the monetary system of the Roman Empire is to that of the United States.
Antal E. Fekete runs a research team based in London that is headed up by his former student Sandeep Jaitley “The Gold Basis Service London”. Antal also runs the “New Austrian School of Economics” in the Hungarian town of Szombathely, right on the Austrian border. Besides offering undergraduate courses, he also has students working for a Master’s degree and some for a Ph.D. degree. He takes pride in that his school lacks accreditation, because there is not one accreditation board in the whole wide world competent to review his curriculum: they are infested with Keynesian and Friedmanite ideology to the core, and have an irrational, not to say insane, bias against the monetary metals gold and silver. When a student completes and defends his or her thesis, Antal gives them a Frank Lloyd Wright-style diploma: just a letter attesting that they have met the requirements for the appropriate degree. The number of his postgraduate students presently is six, from four countries in three continents.
Antal is a supporter of the Gold Standard Institute that is trying to dispel misinformation about metallic monetary standards spread by academia in the world for the past forty years, after president Nixon defaulted on the international gold obligations of the U.S. in 1971. Ever since, a lot of money has been spent by the grant departments of the Federal Reserve banks to support so-called research in the economics departments of the universities around the world singing the praise of fiat paper money. This is very natural: the defaulting banker is trying to promote his dishonored paper by hook of crook. The shame is on academia for accepting bribe money. When the dust settles, the past 40 years will appear as a reactionary period in human history when they tried to eliminate gold an silver, the only ultimate extinguishers of debt, from human affairs in the name of progress, but all they accomplished was the construction of the Debt Tower of Babel, destined to collapse and bury civilization under the debris.
Please note that Antal was asked by Ferdinand Lips to write the forward for his book, “Gold Wars”. I will publish it now on my blog.