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Markus Angelicus
November 21, 1997
"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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