The Economic Center of Gravity Since 1 AD

A facinating map showing the move of economic power since 1 AD. Aivars Lode

Weather Is Not Climate

The "entire North Polar ice cap will be gone in five years," Gore said in 2007. Woops its still here, what went wrong? Aivars Lode

Antarctic ice doesn’t discredit the warmists, but they should dial down the death-cult drama.

By Charles C. W. Cooke

We are but six days into the new year, and we are already involved in another climate imbroglio — another one of those prickly brawls in which conservatives become overexcited by an anecdote and mock progressives’ most cherished beliefs, and progressives get all huffy in response and start talking about Science and “flat earthers” and “echo chambers” and the like, and shouting, too, that their opponents are mistaking today for tomorrow.

As it happens, on the specifics at least, this time the progressives are right: Clearly, that a few hapless analysts have gotten themselves stuck in the Antarctic ice no more negates the climate-change evidence than the terrible massacres we saw last year reversed the falling crime statistics. As the Guardian put it:

Some commentators have remarked on what they describe as the “irony” of researchers studying the impact of a warming planet themselves being impeded by heavy ice. With some even suggesting that the situation is itself evidence that global warming is exaggerated. In fact, the local weather patterns that brought about the rapid build up of ice that trapped the Academik Shokalskiy tell us very little about global warming. This is weather, not climate.

And yet if Chris Hayes and the Guardian are wondering why, in Hayes’s words, “in 2006, 59% of Republicans believed that there is solid evidence the Earth is warming” but “a decade later, that number has dropped to just 50%,” they might look less to the supposedly sinister influence of an always nameless “industry,” and more to their own side’s habitual embellishment. It turns out that there’s an awful lot of “weather, not climate” these days, and while it is fair to say that it’s silly to see snow out your window and conclude that the world is cooling, there isn’t much of a broader warming trend for alarmists to fall back on either.

This is to say that the green movement’s longtime reliance on hyperbole has deeply weakened its case, and it is about time it recognized that establishing a parade of hostages to fortune has not been tactically profitable. Al Gore, who apparently continues to see himself as a put-upon Cassandra, likes to talk about inconvenient truths. Instead, he might do better to focus on inconvenient predictions — an abundance of which have marked the last 40 years of climate hysteria, and which continue to damage the case in the public’s eye. Gore and his ilk can paint skeptical Americans as rubes if they wish, but pattern recognition is a valuable human trait, and the pattern in Gore’s industry is one of failure and of obfuscation. What, pray, are the leery supposed to think?

No, the crack team on the Akademik Shokalskiy didn’t specifically say that they wouldn’t find any summer ice at the South Pole. Indeed, contrary to popular belief, most of the ship’s passengers are not climate scientists but researchers from other fields. Still, high-profile climate commentators did predict that the ice was going to disappear, and in a media age, that matters an awful lot more. In 2006, Gore himself argued that the breakup of the Antarctic ice shelves was imminent. He was wrong. And spectacularly so. By 2013, sea ice in the region had grown to a record level for the second consecutive year — a development that prompted the Washington Post’s Jason Samenow to observe drily that scientists were “seeking to understand why this ice is expanding rather than shrinking in a warming world.” (Interestingly, grainy film footage of Commonwealth Bay, shot during the Antarctic survey that the Akademik’s team was hoping to update, shows that the area was free of sea ice 100 years ago.)

Being equal-opportunity sort of people, climate scientists forecast the death of the other pole, too: Wieslaw Maslowski anticipated in 2006 that that the Arctic’s summer ice would “completely disappear” by 2013. (The “entire North Polar ice cap will be gone in five years,” Gore said in 2007.) In spite of this warning, Arctic ice cover has expanded 50 percent since last year. It is quite the achievement to be so wrong on two continents, and no great surprise that the cynics looked from the predictions to the boat stuck in the ice, and from the boat stuck in the ice to the predictions, and said, “Huh.”

Indeed, one suspects that honest climate-change activists must roll their eyes in frustration each and every time that the doom-mongers open their mouths, for thus far their augury has been rather embarrassing. Kenneth Watt’s 1970 divination — “if present trends continue, the world will be about four degrees colder for the global mean temperature in 1990, but eleven degrees colder in the year 2000 . . . twice what it would take to put us into an ice age” — has not stood well the test of time. Nor has James Hansen’s 1988 asseveration that New York City’s West Side Highway would be underwater by the year 2000 and that restaurants across America would soon have signs in their window that read “water by request only.”

And it’s not just the crazies. The 1990 IPCC Report promised an increase in sea level of around 120 millimeters by 2014. This was off by a rather remarkable factor of 5. (If the sea is going to rise another 96 millimeters, it had better get on with it.) The IPCC missed the mark in all of its subsequent four reports, too, and in the lattermost of those dispatches, it effectively admitted that the apocalypse was not quite as imminent as had previously been thought.

Bitter a pill as this must be to swallow, the climate-change brigade’s outward-facing image is becoming less Carl Sagan, the much-loved pop-science explainer, and more Harold Camping, the senile religious huckster who perpetually predicted the end of the world. In 2011, after Camping’s prediction of civilization’s end had proven wrong, he effortlessly moved the goalposts, contending cleverly that the world might not have literally ended — as he had claimed it would — but that a never-defined “spiritual” judgment had occurred, and that, having reviewed his data once more, he could now announce that the physical Rapture would come along a few months later than planned.

Clearly, the fundamental theory behind global warming is sound: Basic physical chemistry dictates that if you change the makeup of the atmosphere, other things will change, too. The trouble is that, whatever they say, nobody really knows what or on what scale. And they certainly don’t know enough to warn that the end times are nigh. Nevertheless, that hasn’t stopped a diverse cast of prognosticators from trying — safe in the knowledge that being a climate scientist, to paraphrase a 1970s romantic movie that Al Gore claimed he inspired, means never having to say you’re sorry.

Progressives understandably hate it when they are mocked in simple language for complex predictions. Often they have a point. But the remedy is squarely within their hands. With a bit more “we’re not sure” and a bit less “and when he had opened the second seal,” they might well find that fewer people are looking out of the window and saying, soberly, “Well, this wasn’t supposed to happen today.”

— Charles C. W. Cooke is a staff writer at National Review.

Gold's Decline Eats Into Swiss Reserves

Even the swiss government has made a loss because of it's holding of gold. Aivars Lode

Central Bank to Cancel Dividends for First Time

By John Revill, Laura Clarke and Matt Day

ZURICH—It didn't take a heist for the Swiss National Bank SNBN.EB +0.48% to lose $16.6 billion on bullion.

That is how much the central bank said its gold holdings fell in value last year, as the price of the precious metal skidded 28%, the most since 1981. The loss was only partially offset by the central bank's profit on foreign currencies, saddling it with a $10 billion paper loss for 2013 and forcing the bank to cancel dividends to shareholders for the first time since it was founded 107 years ago.

The central bank also said Monday that it wouldn't be able to make additional payments to Switzerland's 26 cantons, which are similar to U.S. states, and the federal government for the first time since 1991.

Investors ranging from coin collectors to billionaire hedge-fund manager John Paulson have been hammered by gold's decline, which ended a 12-year bull run in 2013. Central banks are among the biggest losers, with $350 billion shaved off the value of their holdings in the year through October, according to Wall Street Journal calculations based on the most recent data from the International Monetary Fund. Unless the banks sell, their losses are unrealized and could reverse if gold rallies.

Most central banks own gold to boost confidence in their paper currency or protect against financial shocks, and are less concerned with the metal's performance.

For many investors, the shrinking role of central banks in the market is another reason to sell. The magnitude of last year's selloff already is making central bankers reluctant to buy more of the metal, weighing on prices and making a rebound less likely in 2014, analysts said.

"It's been a very tough period for [central bank] reserve asset managers," said Tom Kendall, a precious-metals analyst with Credit Suisse Group AG in London, pointing to volatility in currencies and the retreat in gold. "In theory these guys should be managing for the very long term, but the fact that they're recording [paper] losses makes it harder to say you should be adding more."

Gold fell throughout 2013, diving $200 a troy ounce, or 13%, over two days in April amid speculation the U.S. Federal Reserve would scale back its economic-stimulus efforts. The Fed is set to reduce bond purchases this month, marking the beginning of the end for a program that had supported demand for gold among investors worried that it would spark inflation.

Gold prices hit a more-than three-year low of $1,195 an ounce on Dec. 19. On Monday, gold ended down 60 cents, or 0.05%, at $1,237.80 an ounce.

The Fed doesn't own gold. The U.S. gold hoard—8,133.5 metric tons as of November, according to the IMF—is held in vaults by the Fed and U.S. Mint but is owned by the Treasury. The government agency has valued its gold at $42.22 an ounce by law since 1973.

Amid the price volatility last year, two of the most prominent investors in gold, Mr. Paulson and George Soros, cut their holdings in SPDR Gold Trust, GLD +0.18% the world's largest gold exchange-traded fund. Overall, ETFs liquidated 874 metric tons of the metal as investors sold shares, according to Barclays PLC. Many developed economies have gradually reduced their gold holdings for much of the past decade. However, central banks in emerging markets were major buyers over the same period, turning to the metal in an effort to diversify away from the U.S. dollar and other paper currencies. Some, including Russia and Indonesia, increased their gold holdings in 2013, according to the IMF.

Recently, gold's drop has heightened concerns about dwindling foreign-exchange reserves in some of these countries as slowing economic growth causes trade and budget deficits to widen. Investors pay close attention to the size of a country's reserves, including both currencies and gold, as a way to gauge how much firepower it has to pay its debts and to ride out economic shocks.

"With gold prices falling, obviously those countries that have built up gold reserves and have inflated reserve estimates…are the ones that get hurt with gold on the way down," said Robert Abad, an emerging-markets portfolio manager at Western Asset Management Co. in Pasadena, Calif. The decline in gold prices is particularly bad news for Venezuela, which holds about 70% of its foreign-exchange reserves in gold.

The SNB's gold holdings are kept in bars and coins. Bloomberg News

Still, most central banks aren't nearly so reliant on gold to shore up reserves. Even factoring in last year's drop, central banks' gold hoard was valued at $1.35 trillion in October, up 60% since 2008.

"Anyone who bought gold after 2010 is currently in the loss zone," said Andreas Nigg, head of equity and commodity strategy at Bank Vontobel VONN.EB -0.27% in Zurich.

Central banks in the euro zone own about 350 million ounces of gold. Through the first nine months of 2013, the value dropped by about €100 billion ($136 billion). However, euro-zone central banks built up sizable valuation buffers, accounts used to address unrealized gains and losses, when gold prices were rising and can probably absorb these paper losses without affecting their annual profits, which are distributed to national governments.

The Swiss National Bank's loss on its gold holdings, which amounted to 1,040.1 metric tons as of September, according to the IMF, will likely stoke a political controversy in Switzerland. Members of the right-wing Swiss People's Party are pushing for a national vote on requiring the central bank to keep at least 20% of its assets in gold. The central bank has said its flexibility would be limited by such a requirement, which could force it to buy more gold or reduce its holdings of other assets, such as currencies.

—Erin McCarthy contributed to this article.

Gold's Decline Eats Into Swiss Reserves

Even the swiss government has made a loss because of it's holding of gold. Aivars Lode

Central Bank to Cancel Dividends for First Time

By John Revill, Laura Clarke and Matt Day

ZURICH—It didn't take a heist for the Swiss National Bank SNBN.EB +0.48% to lose $16.6 billion on bullion.

That is how much the central bank said its gold holdings fell in value last year, as the price of the precious metal skidded 28%, the most since 1981. The loss was only partially offset by the central bank's profit on foreign currencies, saddling it with a $10 billion paper loss for 2013 and forcing the bank to cancel dividends to shareholders for the first time since it was founded 107 years ago.

The central bank also said Monday that it wouldn't be able to make additional payments to Switzerland's 26 cantons, which are similar to U.S. states, and the federal government for the first time since 1991.

Investors ranging from coin collectors to billionaire hedge-fund manager John Paulson have been hammered by gold's decline, which ended a 12-year bull run in 2013. Central banks are among the biggest losers, with $350 billion shaved off the value of their holdings in the year through October, according to Wall Street Journal calculations based on the most recent data from the International Monetary Fund. Unless the banks sell, their losses are unrealized and could reverse if gold rallies.

Most central banks own gold to boost confidence in their paper currency or protect against financial shocks, and are less concerned with the metal's performance.

For many investors, the shrinking role of central banks in the market is another reason to sell. The magnitude of last year's selloff already is making central bankers reluctant to buy more of the metal, weighing on prices and making a rebound less likely in 2014, analysts said.

"It's been a very tough period for [central bank] reserve asset managers," said Tom Kendall, a precious-metals analyst with Credit Suisse Group AG in London, pointing to volatility in currencies and the retreat in gold. "In theory these guys should be managing for the very long term, but the fact that they're recording [paper] losses makes it harder to say you should be adding more."

Gold fell throughout 2013, diving $200 a troy ounce, or 13%, over two days in April amid speculation the U.S. Federal Reserve would scale back its economic-stimulus efforts. The Fed is set to reduce bond purchases this month, marking the beginning of the end for a program that had supported demand for gold among investors worried that it would spark inflation.

Gold prices hit a more-than three-year low of $1,195 an ounce on Dec. 19. On Monday, gold ended down 60 cents, or 0.05%, at $1,237.80 an ounce.

The Fed doesn't own gold. The U.S. gold hoard—8,133.5 metric tons as of November, according to the IMF—is held in vaults by the Fed and U.S. Mint but is owned by the Treasury. The government agency has valued its gold at $42.22 an ounce by law since 1973.

Amid the price volatility last year, two of the most prominent investors in gold, Mr. Paulson and George Soros, cut their holdings in SPDR Gold Trust, GLD +0.18% the world's largest gold exchange-traded fund. Overall, ETFs liquidated 874 metric tons of the metal as investors sold shares, according to Barclays PLC. Many developed economies have gradually reduced their gold holdings for much of the past decade. However, central banks in emerging markets were major buyers over the same period, turning to the metal in an effort to diversify away from the U.S. dollar and other paper currencies. Some, including Russia and Indonesia, increased their gold holdings in 2013, according to the IMF.

Recently, gold's drop has heightened concerns about dwindling foreign-exchange reserves in some of these countries as slowing economic growth causes trade and budget deficits to widen. Investors pay close attention to the size of a country's reserves, including both currencies and gold, as a way to gauge how much firepower it has to pay its debts and to ride out economic shocks.

"With gold prices falling, obviously those countries that have built up gold reserves and have inflated reserve estimates…are the ones that get hurt with gold on the way down," said Robert Abad, an emerging-markets portfolio manager at Western Asset Management Co. in Pasadena, Calif. The decline in gold prices is particularly bad news for Venezuela, which holds about 70% of its foreign-exchange reserves in gold.

The SNB's gold holdings are kept in bars and coins. Bloomberg News

Still, most central banks aren't nearly so reliant on gold to shore up reserves. Even factoring in last year's drop, central banks' gold hoard was valued at $1.35 trillion in October, up 60% since 2008.

"Anyone who bought gold after 2010 is currently in the loss zone," said Andreas Nigg, head of equity and commodity strategy at Bank Vontobel VONN.EB -0.27% in Zurich.

Central banks in the euro zone own about 350 million ounces of gold. Through the first nine months of 2013, the value dropped by about €100 billion ($136 billion). However, euro-zone central banks built up sizable valuation buffers, accounts used to address unrealized gains and losses, when gold prices were rising and can probably absorb these paper losses without affecting their annual profits, which are distributed to national governments.

The Swiss National Bank's loss on its gold holdings, which amounted to 1,040.1 metric tons as of September, according to the IMF, will likely stoke a political controversy in Switzerland. Members of the right-wing Swiss People's Party are pushing for a national vote on requiring the central bank to keep at least 20% of its assets in gold. The central bank has said its flexibility would be limited by such a requirement, which could force it to buy more gold or reduce its holdings of other assets, such as currencies.

—Erin McCarthy contributed to this article.