Posted on 01/19/2013 12:39:31 AM PST by bruinbirdman
The world is moving step by step towards a de facto Gold Standard, without any meetings of G20 leaders to announce the idea or bless the project.
Some readers will already have seen the GFMS Gold Survey for 2012 which reported that central banks around the world bought more bullion last year in terms of tonnage than at any time in almost half a century.
They added a net 536 tonnes in 2012 as they diversified fresh reserves away from the four fiat suspects: dollar, euro, sterling, and yen.
The Washington Accord, where Britain, Spain, Holland, Switzerland, and others sold a chunk of their gold each year, already seems another era – the Gordon Brown era, you might call it.
That was the illusionary period when investors thought the euro would take its place as the twin pillar of a new G2 condominium alongside the dollar. That hope has faded. Central bank holdings of euro bonds have fallen back to 26pc, where they were almost a decade ago.
Neither the euro nor the dollar can inspire full confidence, although for different reasons. EMU is a dysfunctional construct, covering two incompatible economies, prone to lurching from crisis to crisis, without a unified treasury to back it up. The dollar stands on a pyramid of debt. We all know that this debt will be inflated away over time – for better or worse. The only real disagreement is over the speed.
The central bank buyers are of course the rising powers of Asia and the commodity bloc, now holders of two thirds of the world’s $11 trillion foreign reserves, and all its incremental reserves.
It is no secret that China is buying the dips, seeking to raise the gold share of its reserves well above 2pc. Russia has openly
(Excerpt) Read more at blogs.telegraph.co.uk ...
There already is a de facto gold standard, so long as people can escape into it, though most don’t. Or possibly better put there oz a de factor anything but cash standard. It was illegal to own gold in the US from FDR to Nixon, and for good reason. So the real standard couldn’t sit alongside the mock standard and embarrass it.
The Dutch Ask Their Central Bank: "Where Is Our Gold?"
Germany to Move 674 Tons of Gold
http://www.nytimes.com/2013/01/17/business/global/german-central-bank-to-repatriate-gold-reserves.html?_r=0
I read that piece here yesterday. Germany is grabbing all its gold back from France before the communists “nationalize” it (ie., steal it) and using a smaller gold grab from New York as cover.
As an 18 y.o. in 1977 I worked at Fort Knox moving gold for the audits that were being done back then.
I can say there was a pile of gold there at that time.
Why repatriating gold is preparing for that only makes sense if as you say you don’t trust the French and to a lesser extent the US.
Now why would anyone distrust the French?
/S
Now I can understand not trusting Obama.
You have to look at who has the power. Over in France the government controls most everything with a nominal private sector. Over here the big banks run everything. Therefore when Germany wants its gold, the French government may eventually have a veto. Over here, some big bank might have a veto in theory, but the German government still has a lot more power than any one bank.
The major currencies of the world, the dollar, euro, yen and yuan are all tools of the governments that issue them in that private wealth is embezzled when more currency is printed. In fact, the fiat money scheme, when coupled with a tax on incomes that includes taxing the nominal increase in the price of assets is the greatest scheme of theft in all of human history.
If any major government would issue a credible currency tied to gold that had a sufficient monetary base, it would very quickly trigger a massive example of Gresham’s Law in that where people had a choice they would prefer to hold gold than fiat. This would bid up the value of the gold-backed currency and bid down the value of the fiat currencies.
It would drastically reduce the ability of governments to finance deficits by issuing more fiat money or debt. Since the US government borrows about half of the money its spends, the level of spending would have to be drastically reduced. I think the biggest area of concern is the effect on military spending. Our ability to afford to be the world’s policeman was always an economic mirage and that mirage is now fading into economic reality.
Since the Chinese invented paper currency in the 7th century, every paper currency has failed. The temptation to print money has proven to be to great to resist. The death of the dollar was started when FDR confiscated privately-owned gold and Nixon (a liberal) severed the last linkage between gold and the dollar in 1971. Since then, it is only a question of time before the dollar goes tits up.
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