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Gold for Grabs

In 2011, while Michelle Obama was encouraging Americans to grow gardens to improve their health and finances, another first lady, Leila Trabelsi of Tunisia, was taking a healthy chunk out of Tunisia’s financial reserves.  When she and hubby President Ben Ali fled the country, the first lady stopped at the Central Bank, where she carted off, with the help of her private militia, gold bars worth $50-$75 million.  The newly appointed bank president denied the incident as he tried to assure the global community that Tunisia remained financially sound.  However, Ben Ali and Trabelsi were subsequently tried—in absentia—and found guilty of that and other crimes.  If Trabelsi did escape with the  gold (and she probably did as she and hubby are living luxurious lives in Saudi Arabia) she joins a long, historical parade of gold grabbers.

Let’s start with the Scythians (8th-1st century BC), skilled nomadic horsemen who repeatedly raided Assyria, eastern Asia, and Greek cities for gold.  Although Herodotus characterized the Scythians as barbarians who drank from skulls and readied females for combat by removing a breast, their gold craftsmanship remains esteemed to this day.  But, as much as the Scythians prized gold, they freely parted with their plunder to honor their dead.  In Siberia, one excavated Scythian gravesite containing a man and a woman yielded no less than 44 pounds of gold ornament.  But the Scythians may have been small-time thieves compared to the Crusaders.

The Byzantine Greek historian Nicetas Chroniates describes the Crusaders’ sack of Constantinople:   ”Nor can the violation of the Great Church {Santa Sophia} be listened to with equanimity.  For the sacred altar, formed of all kinds of precious materials and admired by the whole world, was broken into bits and distributed among the soldiers, as was all the other sacred wealth of so great and infinite splendor.”  Approximately 150 churches in Constantinople met a similar fate.  Looters took gold altars, chalices, and crosiers.  Venice and the Vatican itself received cartloads of gold and silver.  Regrettably, the plundering also included rape, arson, and murder, although the emperor Alexius escaped with his favorite child and 10,000 pieces of gold.

When the Europeans sailed to the new world, they brought their plundering ways with them.  Conquistador Hernando Cortez’s looting of the Aztec empire resulted in three galleons full of gold bars, jewelry, and exotic animals.  This convoy, however, was intercepted off the coast of Portugal by Jean Fleury, a French privateer, who divested two of Cortez’s of their treasure.

Likewise, in Peru, Francisco Pizarro accumulated Incan gold for the Spanish crown.  Pizarro’s tactics included throwing Atahualpa, the Inca emperor, in a prison cell and not releasing him until the cell was full of gold.  Unfortunately, after Atahualpa was released, Pizarro executed him.  (After Atahualpa’s death, the Inca Empire fell into decline.  Was the decline a result of the Inca’s losing their “unique Inca,” or because they lost their gold?)

But Pizarro got his comeuppance when Sir Francis Drake attacked and acquired one of his laden ships.  Thus began the “golden age” of piracy (which presently is enjoying a revival in Somalia.)

During World War II, the Nazis were notorious in their pursuit of gold.  How much gold was taken is still the subject of debate, and Swiss banks as well as the Vatican have been called to task for enabling the Nazis.  During the war, the Bank of International Settlement transferred 20 tons of gold to Lisbon to purchase tungsten for Germany for use in its armaments industry.  The Swiss National Bank held $440 million worth of Nazi gold; of that amount, $316 million was believed to have been looted.  Before the Nazi regime collapsed, $3.36 billion of gold was removed from another Swiss bank account.  Some looted Nazi gold came from the jewelry, coins, and dental work of the victims of the Nazi regime.

Perhaps the most famous gold grab of World War II involved the “Treasure of Priam.”

In 1873, Heinrich Schliemann excavated what he believed to be the site of Troy.  The treasure trove he recovered included gold goblets, a headdress, a necklace, and rings.  Schliemann sent the loot to his native Germany where it was exhibited in Berlin and then stored.  After the Red Army entered Berlin during WWII, the cache disappeared.  In 1993, the Russians confirmed that they had it and intended to keep it as reparation for German pillaging of Russian museums.  Curiously, in Time’s list of the top ten plundered artifacts, only one, the Treasure of Priam, consisted of gold.

Gold grabbing is not limited to wartime or specific cultures.  In Australia in 1935, thirty-four pounds of gold ingots were taken from a train in the Great Ghan Gold Robbery.  No one was ever charged with the crime.  In the same year at Croyden Airport in Britain, thieves made off with $12 million in gold bullion destined for Paris and Brussels on Imperial Airlines.  Then in 1983 at the Brinks Mat Warehouse robbery, six men made off with ten tons of gold.  Only four of the perpetrators were caught, and three tons of gold was never recovered.

In the U.S., Golden Door Creations/Suisse Gold, which shared the same building in North Miami, Florida, claimed to have been robbed of approximately $11 million in gold.  Lloyds of London, the insurer, was not convinced, however.  It claimed the robbery was a sham.  The owner, Sanford Credini, eventually pled guilty to fraud.  He needed the insurance money to cover gambling losses.  Sometimes what happens in Vegas comes home to roost.

Then there are those who believe that the biggest gold heist in history was camouflaged as a terrorist attack—at the World Trade Center.  Prior to 9/11, the WTC was one of the largest gold depositories in the world.  November 1st after the terrorist attack, Mayor Giuliani reported that $230 million worth of gold and silver had been recovered.  This figure caused some consternation because the Bank of Nova Scotia alone claimed $200 million, and the Comex vault held precious metals not only for the Comex exchange but for banks around the world, as well as for Kuwaiti interests.  Was there close to a billion dollar shortfall in the amount of gold recovered?

This question will never be resolved because those who secret away gold expect more than a modicum of discretion in terms of their assets.  They understand the Latin proverb: “Even the just may sin with an open chest of gold before them.”  Historically, if gold is up for grabs, it usually is.

2 Responses to “Gold for Grabs”

  1. Joseph

    Oftentimes I’ve heard claims that gold, and precious metals in general, have no value because you can’t buy anything with them or you can’t eat them. It is never explained though that if the value of something was determined by whether you could eat it or not then a loaf of bread should be worth more that a handful of diamonds. Now don’t get me wrong, if we were to find ourselves stranded on a small island somewhere in the middle of nowhere, then yes a loaf of bread would be worth more than all the diamonds in the world, as there would be a survival issue

    But, since we live in a society where we exchange goods and services on a daily basis, the value of something is not determined only by whether you can eat it but by something else, and that is the labor and time that went into its making. It is a fundamental principle that the more work something needs to be made the higher it value. Gold is rare and therefore takes a lot of Labor and Time to locate, extract and process and all that time consuming, specialized labor is reflected in its value. Gold is not a store of value, as much as it is a store of labor and since it is not affected by time and external conditions, can maintain the value (Labor) stored in it indefinitely, thus allowing receipts (money) that are backed by it to retain their value, because they reflect all the productivity invested in the creation of the underlying asset.

    Theoretically, Money could be backed by anything that takes a lot of Labor to produce but anything else, except precious metals, erodes and in time becomes useless, thus devaluing the currency that it backs. Fiat money has no intrinsic value because all it takes to produce it, is a printing press, cotton and ink, all easily and readily obtainable in huge amounts. Its only value is the convention that Governments accept tax payments in that form which doesn’t sound too reassuring to me. Those who disagree can and should trade their Gold, Diamonds, Jewelry and other valuables for Sacks of Sand.

  2. Gary

    I’m pretty sure that a pile of mud that took 1000 hours to accumulate wouldn’t go for the same price as, say, an intricate model of an old sailing ship despite its durability. I would add “Desirability” and “Scarcity” as central items of your list of what determines market value. For example, air, food, and shiny things are all highly desirable – this list is in order of highest to lowest desirability. The three listed have prices the opposite of their desirability; the levels of scarcity highly affect price such that a fool might seek gold before ensuring their air supply. People die attempting gold theivery.

    This is called supply and demand….

    Social convention is a central tenet of any monetary system. Some who didn’t see gold as useful stuck to the barter system, and thus entire cultures were held in the early iron age or before. “Money” can be anything we agree to exchange, and the value of an economic system is determined by the level of complexity of trades it can perform reliably. When the silver market was nearly cornered in the early 60’s, it showed the reliability of metal-based currency was suspect. Thus, our current system.


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