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The Rothschilds, LBMA, and Gold

"It would be insufficient to sum up the (Rothschild) family as still very wealthy. ..(their fortunes are as) ineffable as always....today the family grooms the inaudibility and invisibility of its presence as a result, some believe that little is left apart from a great legend -- and the Rothschilds are quite content to let legend be their public relations." (The Rothschilds, Frederick Morton, 1962)

Gold-Eagle analysts, including the Red Baron's The Grand LBMA ExposÚs (http://www.gold-eagle.com/gold_digest/baron1110.html) and the Oracle of Alberta's Novus Ordo Seclorum and China (http://www.gold-eagle.com/gold_digest/alberta1030.html), have drawn attention to the role of the London Bullion Marketing Association (LBMA) and to the House of Rothschild, as a key player at the LBMA and global gold markets. The intention of this essay is to provide an in-depth forensic historical and geopolitical assessment of key issues and players in today's markets. For this purpose, an historical analysis is a good teacher. To understand today's currency and gold markets requires a study of the House of Rothschild; undoubtedly the world's most influential merchant banking power for over 200 years.

When a Rothschild Falls in the Forest, Does Anyone Hear It?

Most people would have overlooked the Globe and Mail's (Canada's national newspaper) news clip announcing the very recent death of Baron Edmond de Rothschild in the newspaper's International Business section. The Baron's death is no small event when considering the importance of the Rothschild's in European and global financial history. When a Rothschild dies, does anybody hear it or understand the significance? It is ironic that while days of attention were devoted to the deaths of Princess Diana and Mother Theresa, virtually no attention is given to the death of a member of one of the wealthiest families in the world.

The following description of the Baron's demise appeared in the Globe and Mail under his picture:

"Baron Edmond de Rothschild, philanthropist, international financier and member of the banking dynasty, died Monday in Geneva, of a respiratory illness at age 71, a spokesman said. Mr. Rothschild was president of his Geneva-based bank and financial companies as well as the Luxembourg-based Leicom Fund. He was believed to be the richest family member (of the House of Rothschild) that has played a major role in French business and culture for nearly two centuries. The Rothschilds are widely known for their wineries in the Bourdeaux region of France, including the Baron's Chateau Clarke, where he is to be buried this week in a private ceremony. Mr. Rothschild was named an officer of France's legion of honour in 1994, and its order of arts and letters in 1990. Throughout his life, he donated the equivalent of tens of millions of dollars to hospitals, museums, and the State of Israel. An avid art collector, he gave works to the Louvre museum in Paris. Mr. Rothschild's son Benjamin, 34, will succeed him as president of Paris-based Cie Financiere Holding Benjamin et Edmond de Rothschild."

In a July 1997 edition of the Globe and Mail another rare report of another important Rothschild enterprise was made (see Rothschilds holding company fiscal year profit up 66%): The article referred to the Rothschilds Continuation Holdings AG, parent of N.M. Rothschild & Sons Ltd, "a Swiss holding company for the Rothschild merchant banking business worldwide ...(with) operating profits rising to 179 million Swiss francs ($122.4 million U.S.) in the year ended March 31 from 108 million francs the previous years." A 66% profit increase is no small feat especially when you consider their line of business. In the article, Sir Evelyn de Rothschild, chairman of Rothschild's Continuation, noted "We've got a good balance of businesses and on the whole we've had a pretty good run." Sir Evelyn also noted that the company has three global business lines "treasury and bullion trading; resource banking, or banking for the mining industry; and investment banking." Such stupendous returns on a supposedly barbarous relic, gold, make even George Soros's Quantum Fund returns seem meagre. It is important to note that this rare exposure of the family business coincides with the recent rare exposÚ by the LBMA that the equivalent of between 30-42 million ounces of gold per day are traded in London.

The more significant cousin of RCH AG is in fact N.M. Rothschild and Sons Ltd, named after Nathan Mayer Rothschild, one of the five sons of Mayer Amschel Rothschild, who operated the London-based house of the family merchant banking enterprise in the latter part of the 18th and early 19th century. The Rothschild business enterprise has changed little in over 200 years. But why change a good thing when such large and sustained profits can be made by trading currency, treasuries, and gold plus gold leasing, financing of gold mining operations, and investment banking?

So what is the significance of the death of one of the richest and greatest philanthropers in the world, and the connection to the London Bullion Marketing Association?

The House of Rothschild: Roots in Germany

To understand the importance of the Rothschild's in world financial markets, one must study the history of the House of Rothschild. Ironically, despite their enormous influence on European finance and banking for over 200 years, there are few references to the House of Rothschild in history books. There are a few exceptions including the exhaustive financial historical account of the House of Rothschild between 1770-1830 entitled the "The Rise of the House of Rothschild" by Count Egon Caesar Corti (1928) and "The Rothschilds" by Frederic Morton (1962 ), undoubtedly a family-commissioned auto-biographical account of two hundred years of the House.

The House of Rothschild was founded in 1776 in Frankfurt, Germany by Mayer Amschel Rothschild - (born 1743 in Frankfurt, Germany). Mayer fathered five boys who would establish the most successful merchant banking network in England (Nathan), France (James), Austria (Salomon), Prussia (Amschel) and Italy (Carl).

From humble beginnings as a rare coin trader, Mayer quickly built a private merchant banking empire which was the choice of not only the German Prince William, but also the financier of choice of the major powers of Europe. The Rothschild name became synonymous with merchant banking quality and safety. The financial acumen of Mayer and his five sons became legendary. The acumen and the accumulated wealth of Mayer has been continually passed down to the next male generation of Rothschilds, without dilution. Their market worth has never been audited or accounted for, following from Mayer's clever accounting practices and the keeping secret books and subterranean vaults which were never the privy of auditor, legal counsel or state taxmen. Their mastery in financing both economic growth and war in Europe with both gold and fiat currencies undoubtedly continues unabated into the 20th century, though romantic auto-biographical accounts might lead you to believe that "that was history."

Their financial hand has been in virtually every major European event, including financing the Duke of Wellington defeat of Napoleon at Waterloo, to financial aid to Prince Metternich of Prussia. The Rothschilds were the first to build the railways of Europe. Studying the Rothschild family acumen for stock markets, gold trade, and financing of nations provides an insight into how 'Smart Money' survives. The Rothschild name is also associated with philanthropy, horticulture, and fine wines (the French house). While romantic autobiographical accounts of the family suggest that their empire has dwindled since World War II, all this may be a clever illusion to avoid publicity and attention. In the words of the autobiographer Frederic Morton "the family grooms the inaudibility and invisibility of its presence as a result, some believe that little is left apart from a great legend - and the Rothschilds are quite content to let legend be their public relation"

Today, their historical ingenuity and financial acumen is undoubtedly at work building new wealth regardless of a bear or bull stock, bond, or gold market. They undoubtedly revolve in circles that include the LBMA, and possibly every important central bank board of directors, including the IMF. While even by conservative accounting, they are undoubtedly the wealthiest family in the world, though you will never see them listed in Fortune magazine.

Through the involvement of N.M. Rothschild and Sons Ltd. in the LBMA in London, I believe they benefit from virtually every transaction in financial trading, whether treasuries or gold bullion, negotiating gold lease terms for central banks and mining companies, or simply purchasing their own share of gold and gold real estate. One could even imagine that they are involved in the trading of oil for gold and dollars (as per ANOTHER's hypothesis), given their family's interests in Royal Dutch Shell, the world's largest oil company. As Count Corti in 1926, we shall examine the "reported" evidence of their past and current influence in world financial events.

The English House of Rothschild (N.M. Rothschild & Sons)

Of the two major Rothschild Houses (French and English), the London House (New Court ), founded by Nathan Mayer Rothschild and operating today as N.M. Rothschild and Sons, is undoubtedly the most influential, especially as it pertains to gold and currency trading. Twice daily a Rothschild agent sits in a cloistered room "fixing" the price of gold in the world's largest bullion trading market: the London Bullion Market Association ( LBMA ). Historically, N.M. Rothschild was owner and operator of England's Royal Mint Refinery and was the primary gold agent to the Bank of England.

Nathan helped finance Britain's conquest of Napoleon at Waterloo, and benefited in London's stock market from advanced knowledge (from his superb courier service using pigeons) of Napoleons defeat at Waterloo. Nathan helped finance the Duke of Wellington's army having bought 800,000 pounds of gold from the East Indian Company for $8 million then selling the gold to the Duke to help defeat Napoleon. Hence, Nathan became chief broker and pay master general to England's most important army; the Rothschilds were England's lifeline for getting paycheques to the English army. Nathan could single handily wipe out savings of many a competitor by dumping "consols" in London driving down their share prices, as he did with the advance news of Napoleon's defeat. Nathan eventually switched businesses to "buying and selling money only."

On a daily basis, Nathan was legendary in London's markets for jumping in and out of the market with tens of thousands of princely rounds, never too early and never too late. Eventually Nathan would become richer than Prince William, his father Mayer's German client. It is said that the Rothschilds were the inventors of the courier service using passenger pigeons to relay news amongst the family and to their client beneficiaries. Nathan's ability to depress stock prices, then buy them up after people panicked was legendary.. He would use Rothschild agents to send false news which would be used by observers falsely leading the crowd astray, then he would buy up the same stock at ridiculous low prices. One of the Rothschild's first victims was the legendary Barings and Ouvard Bank which Nathan almost destroyed after their competitor attempted to wrestle merchant banking business from the House. Ironically, Barings Bank recently suffered an untimely death at the hands of a rouge derivatives trader in Singapore!

More than any other family, the Rothschilds have built and maintained an empire unparalleled by any monarchy in history. Their acumen as money changers and financier to the leaders of Europe over the past 200 years is unparalleled. No single corporation or business entity has survived with so much accumulated wealth intact.

To this day, N.M. Rothschild & Sons of London still lists as its primary business the selling and buying of treasuries and gold bullion. N.M. Rothschild helps fix the price of gold in London each day through the LBMA. A recent London Times articles explained that the gold price fix ceremony where five men (including a Rothschild) talk on their phones for 10 minutes, then lower tiny Union Jacks sitting on their desks, thereby fixing London's gold price each day. This ceremony takes place at 10:30 a.m. and 3 p.m., like clockwork, the same way, in the same place, and with mostly the same firms participating since the first gold fixing was enacted at Rothschild in St. Swithin's Lane on Friday Sept. 12, 1919. The company's name is also associated with many gold mining companies (e.g. Trillion Resources Ltd. and other Canadian mining companies).

The French House (Baron Edmond de Rothschild et.al.)

The French House, which was most recently headed by the Baron Edmond de Rothschild, was the most powerful private merchanting banking arm and the richest of all the Rothschilds and ran the Compaigne Fincanciere, a world wide organization which builds villas, hotels, pipelines, and finances other banks. Rothschild Freres, run by cousing Baron Guy Eduoard, was the largest private bank in France. The French House also controlled mining companies ( De Beers and gold mines in South Africa ) , metal plants ( Rio Tinto ), oil interests ( Royal Dutch Shell ) , and chemical industries (Morton, 1962). The Baron was estimated to be the richest Rothschild and probably the most multiple millionaire/billionaire in Europe. That wealth is now passed on to his son, in Rothschild tradition always to the males, Benjamin ( 34 years of age ) . Edmonds cousin Baron Guy Eduoard was director of the Bank of France. Baron Guy, who owned the Compagnie du Nord railway network in France, was known to use participants to join in ventures serving as initiator and packager as well as guarantor with very deep pockets of cash.

As Morton (1962) notes, the two banks in London and Paris are still probably the largest private institutions in the world. "Although the French house controls scores of industrial, commercial, mining, and tourist corporations, NOT ONE bears the family name." In the 1920s the banks of England and France were organized under the French House into a noisless international syndicate that reached from J.P. Morgan in New York to their cousin Baron Louis' Creditanstallt in Vienna, Austria.

To appreciate the Rothschild's ability to sustain and increase their wealth and avoid the scrutiny of both the public, the markets, and the state taxation system, consider the story of the death of Edouard Rothschild, of the French House. Anticipating the death of Eduoard in 1949, Rothschild agents began to sell their majority stock holdings of Royal Dutch Shell, Rio Tinto and Le Nickel ( giant mining corporation ) to drive down the price of shares just prior to his death to reduce the value of the estate that was subject to taxation by the French Government. This selling created a panic in the world markets depressing stock prices further. A few days following the death of Eduoard, Rothschild agents bought the volume of stock back at depressed prices, and his reported estate wealth was taxed at the depressed price on the day of his death. One should never underestimate the capacity of a Rothschild to influence markets, even today.

Rothschild interests touch virtually every aspect of our lives. They helped found and finance Royal Dutch Shell and De Beers. Following World War II they invested in vast areas of resource rich properties in Canada, possibly gold rich deposits. Joey Smallwood, premier of Newfoundland, Canada, described the 50,000 square mile land purchase by Rothschild as the biggest land deal in Canadian history. Their influence extends to the Bank of England, Bank of France and most likely the U.S. Federal Reserve, and possibly the IMF. They thus have enormous influence on the world's monetary policy.

Accounting for the Rothschild Wealth and Influence

Morton (1962) noted that the Rothschild wealth was estimated at over $6 billion US in 1850. Not a significant amount in today's dollars; however, consider the potential future value compounded over 147 years!

Taking $6 billion (and assuming no erosion of the wealth base) and compounding that figure at various returns on investment (a conservative range of 4% to 8%) would suggest the following net worth of the Rothschild family enterprise:

$1.9 trillion US (@ 4%)
$7.8 trillion US (@ 5%)
$31.5 trillion US (@ 6%)
$125,189.1 trillion US (@ 7%)
$491,409.0 trillion US (@ 8%)

To give these figures some perspective consider these benchmarks:

  • A little of $300 billion US buys every ounce of gold in every central bank in the world (see John Kutyn's estimate (http://www.gold-eagle.com/gold_digest/kutyn111597.html).
  • U.S. M3 money supply August 1997 was $5.2 trillion
  • U.S. debt is currently $5.4 trillion.
  • U.S. GDP (1997; 2nd Q.) is $8.03 trillion.
  • George Soros' empire is worth an estimated $20 billion.

We shall never have a full accounting of their wealth. All we can go on is Morton's (1962) comment that their wealth is "ineffable as always." Even our conservative estimates suggest a family with staggering wealth and thus influence. In a world awash in debt and unsustainable fiat currencies subject to implosion, the power of gold and the preference of the Rothschilds to gold cannot be easily ignored.

The Rothschilds and the LBMA: The World's Central Bank?

Consider the Rothschild's profound position of influence in the LBMA and the transaction fees they are earning on each and every transaction of treasuries and 42 million ounces of gold transactions DAILY (recently reported volumes of physical, leased, forward sales). . The Rothschild business earns income from "transactions" (including transfers, calls, puts, trades, leases) and one can only begin to imagine the transaction costs associated with last reported trading of over 42 million ounces of gold per day through the LBMA (more than twice South Africa's annual gold production).

Also consider their involvement and influence over monetary policies exercised by the Bank of England and the Bank of France (and possibly the US Federal Reserve System) and in Geneva. Consider the world's above ground gold reserves is roughly 120,000 tons -- with roughly 40,000 tons or 33% held by central banks. How is the remaining "private" gold holdings distributed? Does anyone have such an account? Certainly not the World Gold Council and their statistics. If a single private owner held 5% of world's remaining gold, would that not constitute majority share holdings? If any player could have accumulated, and could afford a 5% holding of the world's gold supply over the last 200 years, it would be the Rothschilds. Could it be that the Rothschilds through their involvement in daily London gold trades are quietly amasing more of the precious metals in their private vaults, while the confidence game of the Central Banks tries desperately to avoid what Soros calls "unsustainable" fiat currency built on unsustainable debt? It was Mayer Amschel Rothschild who kept a secret subterranean vault full of gold beneath the House of Rothschild in Frankfurt in the 1770s (Morton, 1962) .

While the world is led to believe that gold is a barbaric relic of the past, a huge confidence game is being played out in fiat currency markets, illustrated by the events in Asia. In order to maintain confidence in inherently unsustainable fiat currencies and unsustainable debt, confidence in gold must be depressed, given that it is the only alternative store of value. The increasing volume of gold transacted through LBMA reflects the crescendo this confidence game has reached. These large volumes also suggest that gold is trading as currency and not as a barbaric commodity, as the press is apt to suggest. Could it be that the LBMA is being used as a testing ground for the establishment of a new gold-backed world currency system? If so, the Rothschilds are in a position of enormous influence over such a genesis process.

Consider these words of Stanley Fisher (WSJ, Nov. 12, 1997), IMF's Deputy Managing Director: "What is needed at this point in the world's economic affairs is leadership in setting up a SYSTEM more dependable than using IMF bailouts as a guide to the future value of money. Where that leadership comes from is a tough question."

Indeed, will the leadership and system Fisher is speaking come from the House of Rothschild through the central institution of the LBMA? Only time will tell.

If the Rothschilds, through the LBMA operations, are effectively cornering the world's gold supply they would undoubtedly be in a prime position to benefit from a currency crisis - which they and Soros undoubtedly expect, given Soro's claims that the Asian, and thus by implication all fiat currencies, are inherently unsustainable. This crisis of sustainability is already engaged in Asia and will undoubtedly wash over Europe, England and the U.S. And who recently announced another bailout package? The IMF, of course.

The Houses of Rothschild, more than any other players, knows the historical power of gold and importance of a gold-backed currency system. The English system they helped engineer remained resilient and sustainable for over 200 years until the early 1900s. The Rothschilds believe in gold as the ultimate store of value; always have and always will Undoubtedly they do not consider the metal a barbarous relic of the past.

Epilogue

We are reminded of Morton's words, "today the family grooms the inaudibility and invisibility of its presence as a result, some believe that little is left apart from a great legend - and the Rothschilds are quite content to let legend be their public relations."

What is unique about old power and money of the Rothschilds is their uncanny ability to sustain their power and wealth, and keep it within the family. While it is a tribute to the power of family, the danger is their ability to control and influence the daily lives of average human beings, with fewer resources and less power. Such power can lead to the temptation of becoming as powerful as the gods. Control over such important forms of value such as gold, as an instrument of liberty, may lead to the temptation of exercising dominion over such liberty. The maintenance of power and wealth is ultimately motivated by an anxiety of losing the security that such power has provided. The power and wealth of the Rothschilds carries with it enormous privileges and hopefully a sense of responsibility for the welfare of others. While the Rothschilds and Rockefellers have exercised philanthropy to the benefit of many, even this exercise has benefited their corporations through a tax system which rewards such "charitable" and "atruistic" organisations. What distinguishes the Rothschilds from other world power brokers, like Soros, is their diminutive "presence" in the world, in spite of their untold influence on almost every aspect of our economic existence. Their continued bullishness on gold exhibited through their activities in the LBMA and gold trading suggests that we maintain our confidence in the this barbaric relic. Ultimately, however, one must be keenly aware of the potential controlling influence over gold which the Rothschilds and their merchant banking brethren can exercise, and thus placing our liberty in their hands.

It has been said that "the wealth of Rothschild consists of the bankruptcy of nations"


References:

The Globe and Mail (various issues)

The Wall Street Journal

Morton, Frederic (1962). The Rothschilds.

Corti, Baron Egon Caesar (1928). The Rise of the House of Rothschild.

Soros, George (1994). The Alchemy of Finance


Markus Angelicus

November 21, 1997



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