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Brief Introduction
"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,
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 honor 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 meager. It is
important to note that this rare exposure of the family business coincides
with the recent rare exposé 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 philanthropist 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,
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mining companies ( De Beers and gold mines in South Africa )
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metal
plants ( Rio Tinto )
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oil
interests ( Royal Dutch Shell )
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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 noiseless 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:
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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).
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U.S. M3
money supply August 1997 was $5.2 trillion
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U.S.
debt is currently $5.4 trillion.
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U.S.
GDP (1997; 2nd Q.) is $8.03 trillion.
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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 amassing
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 "altruistic"
organizations. 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
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The
Globe and Mail (various issues)
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The
Wall Street Journal
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Morton, Frederic (1962). The Rothschilds
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Corti, Baron Egon Caesar (1928). The Rise of the House of Rothschild
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Soros, George (1994). The Alchemy of Finance
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