Is the Europen Union real?

The crisis of the Euro is demonstrating a fundamental lack of credibility in the institutions of the European Union. Throughout, the European Commission has consistently taken a back seat, as if it really had no idea what was going on, let alone what to do about it.

All parties to the state of the single currency share this lack of credibility and not least because the euro was never credible anyway. Its launch was deferred for a year because the poorer member nations were nowhere near the narrow margin either side of parity with the Deutsche Mark which was the fundamental condition for entry into the new currency.

That fact alone shows what a queer creature the Euro is. The Maastricht Treaty created the European Union to give Europe a single market, a single currency – to become a single State. That there are rules as to who was in the single currency already beggars the question as to what forms a cohesive state.

The rules were for a time adhered to; a year on from the original date of the launch, though nothing had changed, political ambition got the upper hand and the Euro was born: the claim was made that delaying any longer would only call the project’s credibility into doubt.

What was done, however, was incredible: this attempt to unite anyway widely disparate economies by breaking the first rule of admission generated an educated scepticism on the part of several British economists, who outlined the demise of the Euro, down to the detail that Greece would collapse first.

A week after the summit which agreed new fiscal rules (the problem with the old ones, apart from the whole air of unreality investing the project, was that they were never adhered to, a fault it is hard to see the new ones mending), a leader in The Times of London (16 December 2011) pointed out that “Mr Sarkozy secured his goal of framing the new fiscal rules as an inter-governmental agreement rather than a treaty backed by the European Union’s institutions.”

Eurozone Union?

This is even more incredible: in order to commit to more binding state-like ties, in order to chase that ever-elusive credibility, the Euro currency nations are going their own way outside the boundaries of the European Union’s institutions – yet still blithely calling it “The European Union”. What, in this light, is one to make of the European Central Bank’s position? What is the status of the Commission? What does the old cry “further and deeper union” mean now?

The other side of this coin is that there can now be no question that what is driving all this is the national interests of the two most powerful states, which are determined to pull the poorer nations, whether or not it is in their interests, after them, and in doing so divide the Union.

As with all advanced democracies, and this is something the euro crisis has exposed mercilessly, there is a further division within the nations between the political class and the ordinary public: the politicians persist in their unreal aspirations, risking jobs and investments.

The People decide while Politics prevaricates?

A little item of Christmas realism? Vendors at a Christmas market in at least one German town are advertising their willingness to accept – Deutsche Marks! (Exchange rate €1 = 2 DM)

by Mark Rogers

The worsening crisis in Greece has prompted savers to empty their bank accounts to exchange their Euros for Gold coins.
Concern is growing over the stability of the Greek banking system and of course the astronomic sovereign debt which is crushing Greece.
The Prime Minister George Papandreou may well have persuaded the parliamentarians to back further austerity measures and have won the vote from them but that will not change the resolve of the Greek people.
Greece would need 12% growth annually for at least 30 years to come anywhere near having the means to repay its debts.
How likely is that?
The Greek economy does not have the means to recover and the fact that they have secured the next gigantic loan from the EU and IMF changes little in real terms. This money will only payback the Banks’ debts and therefore not stay in Greece. Surely the only way to help the Greek economy is to inject some funding into it. The only winner in this situation is the Banks who’ll feed their greed for profits and the loan sharks of the IMF and EU who obviously take their cut of interest.
The losers are the Greek people who will still have an impossible sovereign debt blighting their future whilst falling below the poverty line from increased austerity.
On top of this the Government has agreed to prostitute the future of Greece to the lowest bidders who have the cash to buy whatever “good” state assets they have.

A decision that Greece will regret

Without a doubt this line of action will never save the Greek economy or start to rebuild some confidence for a decent future. Greece will stay in Debt for generations. The Greek people will never accept this and their strong protests are understandable. Headlines talk of a possible Greek default – Why? Greece has been bankrupt for over a year, since it first asked for a “bailout”.

The only route to recovery is to restructure the debts or simply declare the country bankrupt. This would be the best solution for the Greeks but of course they’re in a weak position and all recent decisions, including the political waffle and rhetoric, have been taken to secure the European banks that are hugely exposed to the Greek debt. Be under no illusion that the only reason for this action is to appease the power brokers that support the European Governments. The politicians including the Greek government don’t care one iota for the regular people of Greece and why would they because they are all sufficiently immune to the deepening crisis because their deep pockets are lined with personal wealth that removes them from harm’s way and any sense of reality or empathy with those suffering the effects.

The people’s retribution

The one way Greek people have of preserving and protecting their personal wealth is to opt out of the normal system and there is evidence that they have started to empty their bank accounts (maybe à la Cantona – see Eric Cantona’s French Revolution).
Firstly they are taking retribution on the Banks by weakening them and also showing their distrust for reckless, uncaring institutions.
Secondly they are storing their wealth in something tangible and much more reliable than invented currency which could devalue or collapse anytime – they are buying gold coins as they did during the Second World War because they know that this will maintain real value and purchasing power through the difficulties ahead.
Here is some evidence provided recently in the Financial Times by Kerin Hope

ATHENS — Greek citizens are emptying savings accounts and buying gold as they brace themselves for the possibility of a sovereign default and a run on the banks.

Pledges by socialist Prime Minister George Papandreou that his government would “save the country” have been widely discounted by the public. However, parliament gave him a vote of confidence late on Tuesday night. The socialists have a six-seat majority in the 300-member house.

Sales of gold coins have soared as savers seek a safer and fungible source of value.

“When the global financial crisis started, our sales of coins to investors overtook bullion for the first time,” said Harry Krinakis, at Sepheriades, a Greek precious metals trader. “Now the sales ratio has reached five to one.”

Tomas, a computer technician, has exchanged his euro savings for gold coins: “I keep them at home just like my grandmother did in the Second World War.”
Monthly bank withdrawals were running at E1.5 billion-E2 billion in the first quarter. Last year, depositors withdrew E30 billion, equivalent to 12.3 per cent of total savings, according to the central bank. Greek deposits worth an estimated E8 billion were transferred to banks in Cyprus in 2010. But the flow has dried up this year amid fears that Cypriot banks could suffer contagion.

Andreas, a supermarket manager, transferred the family savings to Munich earlier this year. “The Swiss banks aren’t interested unless you’ve got several hundred thousand euros,” he said.

“We can’t trust the politicians to get us out of this mess [and] have to protect our families,” said Sakis, a garage owner, at an anti-austerity protest in Athens’ Syntagma Square. “A bank collapse has got to be in the cards.” He added he had withdrawn his savings and placed them in a bank safe deposit box “for security. Who cares about interest right now?”

Others put their savings into land when prices fell after Greece’s first European Union-led rescue last year. Angelos, a software specialist, bought a neighbour’s olive grove. “I grabbed the opportunity,” he said.
“A year ago I wouldn’t have considered making such an old-fashioned investment.”

It is no accident that other European countries, particularly Germany and France, have experienced dramatically increased investment in gold coins during the last three months. In France investors own more gold than the Bank of France and transactions in coins have increased by 35% (source AuCoffre.com) since January. These countries have aan historical reference to gold coin investments and their benefits so it is no surprise to witness such an increase during periods of crisis. In fact one can determine the “temperature” of concern from this rising activity and people are seriously concerned about an impending crash on the horizon that will have global significance.

Countries like the UK are rather slow on the uptake and the gold investment market tends to be reserved for the extremely well-off and well-connected. What a shame so many people are misled by false information to detract them from participating or they are just ignorant of the facts.

Anyway their loss is someone else’s gain and come the day they will be left holding bits of paper good for burning while their European neighbours use their gold coins to pay for provisions and ultimately survival!

Remember that the signs of crisis were ignored by myopian political rhetoric pre-2008 leaving millions of ordinary folk open to its consequences. The signs of crisis have been with us ever since and still they pretend all will be well and their policies are “working”.

2008 was just the prelude and the worst is yet to arrive.
Be warned and be prepared or once again you will be hung out to dry!

An investment in gold is a survival kit for your future.

Last month Belarus witnessed the effects of a collapsed currency when the Government cut the rouble’s value against the US dollar by almost half. Previously 3155 roubles would buy a dollar but in the blink of an eye they decided 4930 would be needed. This was not even the reality because perception of the collapsing currency meant the situation was even worse as people scrambled for foreign exchange on the black market where you needed at least 6000 roubles to buy a dollar.

So what sparked this crisis?

President Lukashenko had promised to raise public sector wages by a third during his election campaign, which he duly carried out. This was sustainable only because of the support Belarus received from Moscow in terms of loans. However, as fears grew about the country’s finances, support from Russia waned and even near neighbours from the EU didn’t fancy the risk thus sparking a sharp drop in confidence in the currency.
To exacerbate the problem there was a shortage of foreign exchange currencies, dollars or euros, in the country.

The consequences of a collapse

Shelves quickly emptied of food and any "tangible asset" that would hold value better than their currency

Wide spread panic broke out as the economy effectively became paralyzed and people suddenly realised their currency was of diminishing worth. Shops were quickly emptied of everything that could be bought. Everyday food was snapped up at “luxury” style prices as people thought of survival but also they also bought electric goods like toasters, microwaves, canned goods and virtually anything that was for sale as they rushed to convert their currency into “any tangible assets” that were not losing value as quickly as their roubles.
The empty shelves throughout the towns seemed eerily reminiscent of the Soviet controlled days.
Shoppers knew that anything they could purchase could be more useful as a form of barter than the diminishing currency in their purses and wallets.

The human cost was quickly evident from the stories of employees sent on unpaid leave as companies also struggled to cope and comprehend the impact. Andrei, a computer company employee explained how he queued for a week in Minsk trying to buy dollars but didn’t even get one. “In just one month, I have been made bankrupt, the entire country is bankrupt” he said, adding that “even during the Soviet collapse we never suffered such a nightmare”.

There are many more stories of hardship, families without food or the means to buy any, shops without stock for them to buy even if they had the means.

Dmitry who is a 48 year old factory worker explained how he closed his bank account to get out 5 Million roubles in cash so he “could buy something before my money turns to dust”.

Tensions are growing as many people blame the President for mismanaging the economy.
Staple food supplies are now hoarded but people feel anxious that unrest is starting that could spill over into conflict at any time.
Revolution is always more likely when the population are starving.

Which country is next?

This may all seem so far away from wherever you are reading this but the causes of currency collapse may be closer to your doorstep than you think.

How many countries are in deep debt and reliant on support loans and bailouts right now?
Greece, Ireland, Portugal, Spain, Italy, Japan, USA, Belarus and virtually all of Eastern Europe and the Euro zone (only they never put it in the headlines!)

What happens when the support cannot be maintained?
Currency Collapse.

It could be the US Dollar, the Euro, the Yen who knows?
But even if it isn’t your currency that collapses what will be the knock on effects in every developed country if one of these currencies collapses?
The same as in Belarus.

Globalisation has been the buzz word for expanding Capitalism but it also means that economies are now inextricably linked and inter-twined to such an extent that when one sneezes they all catch a cold!

Remember the level of Sovereign Debt is spiralling out of control in the US, Greece, Ireland, Portugal and others are close behind such as Spain and the UK. Austerity measures in all countries are hurting normal folk badly – they are losing their jobs, suffering pay freezes, inflation and pension erosion. Social unrest and industrial action looms large across Europe and this will itself impact the recovery and debt repayment. This has already started in Greece, Portugal, Ireland and large scale protests in the UK are gathering momentum with the Autumn likely to be the boiling point of anger.

The discontent and despair of regular folk is understandable as they are bearing the brunt of all the hardship and it just isn’t fair.
Politicians spout their practiced rhetoric about how to fix things but the reality is they just don’t care that much as they are not the ones affected. They have means to isolate them from the hardships and many of them are actually responsible for producing the mess. How can they care about regular people or preach what we need to give up when they don’t – ever met a poor politician? Enough said!

There is now even talk of a “sub-prime” type problem in China because of over-indulgence in property speculation, leaving huge swathes of developments empty or under-occupied and therefore leaking money and ready to default.

We need more than lip service!

Mainstream news outlets are all controlled by self-interest groups (private and Governments) and they never provide the whole story about global economic frailty as there would be worldwide panic if they told the truth. The situation right now is on a knife edge and the next Belarus is not far away. Politicians won’t admit it but then again they won’t suffer like the rest of us as they’re all rich enough and well connected to see out any storm. They care too much for their own popularity to be honest.
Posh boys and rich kids rule the world and their assets are well protected in advance.

Remember what happened when panic struck in Belarus, people bought any tangible asset they could because it would maintain value better than their currency.
This phenomenon is happening daily – your bank account is the best place to keep currency if you want it to devalue!

Currency is not a means of preserving wealth because it has no inherent value especially when confidence is lost – then it is just a piece of paper.

The only real money available is a tangible asset that maintains its value whatever happens to printed bits of paper currency – and that is gold!

A lesson on Money and currency

We need to understand the difference between money and currency as one is real and the other a promise. Money can be defined as a medium of exchange and a store of value and until fairly recent times was in fact coins made out of precious metal with an intrinsic value or for ease of use, notes backed by precious metal.
Money, when considered as the fruit of many years’ industry, as the reward of labor, sweat and toil, as the widow’s dowry and children’s portion, and as the means of procuring the necessaries and alleviating the afflictions of life, and making old age a scene of rest, has something in it sacred that is not to be sported with, or trusted to the airy bubble of paper currency. Thomas Paine (1737 – 1809)
Currency is still a medium of exchange but is not a store of value as it only derives its value by government degree or “fiat”. It’s value is based on the issuing the authority’s guarantee to pay the stated (face) amount on demand, and not on any intrinsic worth or extrinsic backing. All national currencies in circulation, issued and managed by the respective central banks, are fiat currencies.

A days wages in Germany 1923

The problem is that fiat currency runs the risk of central bankers printing too much and causing large inflation or worse. The more that is printed the more the currency is debased just as the Fed is doing now with the dollar. This has been going on for decades with central banks indiscriminately creating money to cover expenditure and ever increasing debt. There are examples throughout history and in the 20th Century most of us are aware that in Germany in 1923 it would take a barrow load of Deutschmarks to buy a loaf of bread but an ounce of gold could buy a reasonable house and one dollar was worth 4 trillion marks.

This irresponsible printing of money has eaten away at the value of the world’s reserve currency the USD dollar and dollar based assets, to such an extent that they have lost 82% of value since 1971, the year the US cut links with the gold standard. The GBP has fared even worse that the USD losing around 85% of value since 1971. There are many illustrations of then and now and how owning gold with intrinsic value would have more purchasing pro rata than currency. E.g the latest model Cadillac Eldorado would have taken 180 ounces of gold at $42.02 to pay the showroom price of $7,546. This same 180 ounces is now worth over $200k and would buy two Cadillac convertibles with enough left over to fuel to first service. In the UK an average family car cost £1000 around 60 oz of gold and now the same would cost £17000 around 23 oz of gold. The 60 ounces would have bought the same family car for you a sports car for your wife and a hatchback for your son or daughter. Gold retains its purchasing power year after year.

Not long ago the gold standard imposed monetary discipline on countries as they had to hold enough gold to cover the money in circulation but this all changed with the Jamaica agreement in 1971 when the decision was taken by President Nixon on the 15th August 1971 to suspend the direct convertibility of dollars into gold, the keystone of the financial system created in July 1944 (the Bretton Woods Agreement). On the 1st October 1971 the general assembly of the IMF asked the board of trustees to study and propose a comprehensive reform. This would be adopted by member States during a meeting held in Kingston (Jamaica) on the 7th and 8th January 1976, and included a set of provisions which put an end to the reign of gold. The US money supply in 1971 was $776 billion and quickly became an upward curve which rose dramatically over the last decade where the US money supply doubled from below $7 trillion to $14.3 trillion indicating that spending is out of control.

The US National debt is now greater than this!

The US though still likes to play the rich kid on the block and bizarrely gives aid to those supporting its debt as a report in the Daily Mail of London illustrates:
The U.S. is providing hundreds of millions of dollars of foreign aid to some of the world’s richest countries – while at the same time borrowing billions back, according to report seen by Congress.

The Congressional Research Service released the report last month which shows that in 2010 the U.S. handed out a total of $1.4bn to 16 foreign countries that held at least $10bn in Treasury securities.

Four countries in the world’s top 10 richest received foreign aid last year with China receiving $27.2m, India $126.6m, Brazil $25m, and Russia $71.5m. Mexico also received $316.7m and Egypt $255.7m.

And yet despite the massive outgoings in foreign aid, the receiving countries hold trillions of dollars in U.S. Treasury bonds.

China is the largest holder with $1.1trillion as of March, according to the Treasury Department.

Brazil held $193.5bn, Russia $127.8bn, India $39.8bn, Mexico $28.1bn and Egypt had $15.3bn.
Maybe it’s just additional interest on the debt to keep them sweet!

Greece figures predominantly in the spotlight and unrest is growing – will the Government have to mortgage the Acropolis and Parthenon or even sell them off to pay their debts?
Clearly they can never work their way out of this debt because they would have to increase GDP by 12% a year for 30 years in order to grow their way out of debt.
The Sovereign Debt crisis is well and truly out of control and the only solution will be to default on the debts and devalue currencies.

As discussed in the example of Belarus, chaos ensues when currencies collapse and regular folk suffer badly as they don’t see it coming or refuse to believe it could happen to them.

Be warned: A currency collapse is coming near you.
Be prepared: don’t put faith in bits of paper which have no inherent value.
Protect yourself: Invest in tangible assets that hold real value at all times, especially during a crisis.
Remember: Real money has inherent value, it is worth something because of what it is not because of what is written on it.
Now you know why people buy gold to protect themselves from crisis – it always holds value and is the only real money.

In summary:
• Currency is not money and its value can be changed by monetary policy makers
• Currency can be created and printed at will with no substance to support it
• Currency depreciation in value is accelerating with subsequent loss of purchasing power
• National debt is increasing to disastrous levels with threat of sovereign debt default
• Confidence in the USD is waning and its use as a reserve currency is under threat
• Countries and investors are shedding their dollar assets
• Central Banks are diversifying into gold and out of dollar assets
• Smart investors are diversifying their portfolios with a proportion of gold
• The value of gold has been consistent in retaining its purchasing power
• Gold is insurance for your wealth
• Gold is the only real money

I rest my case!

Here’s a Goldcoin.org look at some beautiful Spanish Gold coins with terrific potential for investment.

Alfonso XII 25 pesetas coins

Without doubt the Alfonso XII 25 pesetas coins are on the list of the most important coins in the history of Spain.
His life started with the coup d’etat on 3 December 1874 by General Pavía which brought about the end of the Republic and the establishment of the “Regency Ministry” by Antonio Cánovas, whose commitment was to re-establish the Bourbon monarchy.
All this effort culminated in the arrival in Spain of the son of Isabel II, who had ascended to the throne three years earlier while in exile.

25 Pesata coins

With the Bourbons again at the helm, a new period started to strengthen the pesetas after 10 years of being minted only in copper and silver. This in turn saw the rebirth of the process of manufacturing in gold thereby demonstrating the maturity and growth of the new monetary system which over this period exceeded some 30 million coins.
Design of the new gold coins to be put into circulation occurred three months after the arrival of Alfonso XII by means of a Royal Decree.

Seal of Guarantee for this Currency

There were very few people involved in the design of this coin which propelled the kingdom’s economy for more than a decade. In concrete terms, there were seven experts over this period who were tasked with guaranteeing the quality of the product. Their duties required the printing of their initials on each coin, thereby certifying the process, the exact weight and its authenticity.
The nominated engraver was Gregoria Sellán Gonzalez who saw his work live on in the design of the coins of Alfonso XII and in the first two struck by his son Alfonso XIII.

The seals on these coins are the following:
Engraver: G.S. Gregoria Sellán Gonzalez

Assayers and Weigh Masters:
DE M: Eduardo Diaz Pimienta, Julio Escosura Tablares and Ángel Mendoza Ordoñez
EM M: Julio Escosura Tablares, Mauricio Morejón Bueno and Ángel Mendoza Ordoñez
MS M: Mauricio Morejón Bueno, Pablo Salas Gabarrell and Ángel Mendoza Ordoñez
MP M: Mauricio Morejón Bueno, Félix Miguel Peiró Rodgrigo and Ángel Mendoza Ordoñez

Description and wording on the Alfonso XII 25 pesetas coins

Coins from 1876

ALFONSO XII (1874-1885)
Year: 1876
Gold: Ley 900 milesimas
Diameter: 24,09 mm
Weight: 8.08 gr.
Striated edge
Description
Obverse: ALFONSO XII – POR LA G. DE DIOS 1876/76 (between stars with six points). Head facing right. G.S. (Gregoria Sellán) shown at the bottom of the neck. Pointed fringe.
Reverse: REY CONSTL-DE ESPAÑA D.E. 25 PESETAS. Crowned, draped arms in the collar of the golden fleece and covered under the Royal cloak with the arms of Castilla, León, Aragón, Navarra and Granada; in the centre the Bourbon coat of arms. Pointed fringe. (Information extracted from Book: Gold Coins from the Collection of the Bank of Spain).

Coins from 1881

ALFONSO XII (1874-1885)
Year: 1881
Gold: Ley 900 milesimas
Diameter: 24.11 mm
Weight: 8.07 gr
Striated edge
Description
Obverse: ALFONSO XII – POR LA G. DE DIOS 1881/81 (between stars with six points. Head facing right. G.S. (Gregoria Sellán) shown at the bottom of the neck. Pointed fringe.
Reverse: REY CONSTL-DE ESPAÑA D.E. 25 PESETAS. Crowned, drapped arms in the collar of the golden fleece and covered under the Royal cloak with the arms of Castilla, León, Aragón, Navarra and Granada; in the centre the Bourbon coat of arms. Pointed fringe. (Information extracted from Book: Gold Coins from the Collection of the Bank of Spain).

The manufacturing of these coins started in 1876, with the King’s image being reversed in order to distinguish them from the copper and silver coins. In 1962 a special commission was made by an American company based in Switzerland who made a prepayment both for the stipulated costs and the profits. Original stamps were used with the print date of 1961 and 1962 appearing between the stars.
On the edge of the coins there is an engraving of 27 lily flowers comprised of three groups of nine each.
For the manufacturing proofs and quality check on the engravings, copper coins were used which were subsequently destroyed to avoid them being put into circulation after being gold plated.

In 1881, it was decreed that the king’s image be updated and the result of this shows a great difference compared to the initial one from 1876. Such differences were not so noticeable in the mints from 1876, 1877, 1878, 1879 and 1880 where only slight changes can be seen to the head and features of Alfonso XII.

After his death, all the coins (with the exception of the 2 pesetas) continued to be minted upon the order of his wife, Maria Cristina of Habsburg, until 1886 when his son Alfonse XIII was born and a year later Sellán made the first design with the image of the successor and thereby resumed the task of manufacturing the coins, a period which saw the issuing of the 20 and 100 pesetas coins.

Why do we consider that this is a good coin to buy?

The 25 pesetas coin is one of the most popular in the catalogue of gold coins which are currently in circulation in Spain, and which are also in demand from individuals from other countries who are interested in its historical and financial value. Given that it is one of the most known, its premium can increase considerably in times of crisis, thus acquiring values which are attractive and well-positioned in the world of offer and supply, which happened with the Napoleon in France, for example, and which can reach a premium of 100% during times of crisis.

We should recall that the premium is the difference between the price of the precious metal from which the coin is made and its market price, and that its value depends on many factors which we have explained in our article: “The Premium on Gold Coins”.
It is a type of coin destined to be saved in the future given its good condition and quality.

Translated from an original article by Lizette Paternina

Here at Goldcoin.org we have previously discussed the moves in Utah to introduce its own gold currency, Gold currency is making a comeback! In Utah, they could soon be buying a hamburger with gold! and noted that progress was made by the passing of a bill in Utah Gold Currency a step closer.
However, Utah is not alone.

There are no fewer than 12 other States which are pushing for a return to gold currency by introducing bills before the Legislature in the form of the ”Constitutional Tender Act”.
The 12 States are:
Colorado
Idaho
Indiana
Montana
Missouri
New Hampshire
North Carolina
South Carolina
Tennessee
Vermont
Virginia
Washington

The “Constitutional Tender Act”

The United States Constitution declares, in Article I, Section 10,
“No State shall… make any thing but gold and silver coin a Tender in Payment of Debts”. This means that no State can make something a “tender in payment” (which means they cannot “make something an offer as payment”) for any debts, which would include debts owed by and to the State.
However, EVERY State in the United States of America HAS made some other “Thing” an offer as payment – they have by law declared that they will accept, and pay out, Federal Reserve Notes for any debts owed by or to them.
Therefore, every State is in violation of Article I, Section 10 of the U.S. Constitution.
Thus the need for the “Constitutional Tender Act” — a bill template that can be introduced in every State legislature in the nation, returning each of them to adherence to the United States Constitution’s actual legal tender provisions.

Most importantly the bills are aimed at protecting the people from the continued devaluation of the dollar and almost certain hyperinflation which is due in the future.
It is also seen as a way for States to insulate themselves from the policies and practices of the Federal Reserve which seems to be pursuing the inflationary practice of monetizing the national debt to address the consequences of runaway federal spending.

The Privately Owned Central Bank

Did you know that the Federal Reserve is a private institution with link shareholders? Most folk believe it is a federal agency.

Fed shareholders earn 6% interest “by law” and as for reserves, well they have none. The only thing the Fed does is create paper and charge the government interest for doing so. It also has licence to print “paper money” that is not backed by assets. The more it produces the more the value of the dollar is diluted. The $800 Billion it has printed for QE2 are merely bits of paper with ink on them that eventually some average Joe will be charged interest for using or borrowing. In reality the money doesn’t exist just the debt it creates.

Individual states have not issued legal tender for over a hundred years so why now?

Because the weakening of the dollar by the Fed to essentially reduce the size of the national debt has also eroded the savings of citizens, the price of their houses, the worth of their pay cheques and eroded their purchasing power at a time when inflation is rising but wages are stagnant. Enough is enough.
History is on the side of the people here. In the original drafting of the Constitution the Founders disliked “paper” money so much they provided specific wording against it.
The transcript of the debates in the original Constitutional Convention shows the attitude of the Founders toward paper money was one of disgust. In debate one delegate, Roger Sherman, called for the insertion of an absolute prohibition against states issuing their own paper money.

Mr. Wilson and Mr. Sherman moved to insert after the words ‘coin money’ the words ‘nor emit bills of credit, nor make any thing but gold and silver coin a tender in payment of debts’ making these prohibitions absolute…

Mr. Sherman thought this a “favourable” crisis for crushing paper money.

The Founders voted to adopt Sherman’s “crushing” of state-based paper money.

As for the federal government, the original draft of the Constitution included language permitting the federal government to issue unbacked paper money. The Founders objected strongly to this power. The objections were summed up by delegate Oliver Ellsworth:

Mr. Elsesworth thought this a favourable moment to shut and bar the door against paper money. The mischiefs of the various experiments which had been made, were now fresh in the public mind and had excited the disgust of all the respectable part of America. By witholding the power from the new Governt. more friends of influence would be gained to it than by almost any thing else. Paper money can in no case be necessary. Give the Government credit, and other resources will offer. The power may do harm, never good.

Those who wrote the Constitution decisively stripped the federal government of the power to issue inconvertible paper money. And stripped it stayed… until, temporarily, during the Civil War. Saving the Union was of transcendent importance.
For most of American history dollars were convertible into gold or sometimes silver.
It is a 20th century innovation to have unconvertible money

On April 19 1933 Franklin D Roosevelt took the US off the Gold Standard and Americans had to exchange their gold for paper dollars at $20.67 an ounce (so a dollar was approximately equal to 1/20th of an ounce of gold). This was the start of the Great Confiscation which lasted until 1975.
In 1945 The Bretton Woods Agreement created a “Gold exchange standard” whereby the US promised to fix the price of gold to $35 an ounce (the dollar therefore was worth 1/35th of an ounce). The dollar therefore became the world’s reserve currency and was used for international trading and commerce, notably for the quotations of oil. Therefore all other currencies were effectively pegged to the dollar and therefore gold. At this point “paper” money had a reference value and theoretically could be exchanged as originally intended for a specific weight in gold.

However, in 1971 Richard Nixon suspended the convertibility of the dollar into gold because of the huge US debts following the Vietnam War. This was another nail in the dollars coffin. The gold price was approximately $41 an ounce ( so a dollar was worth 1/41th of an ounce). This also effectively unhinged all the other currencies from a gold standard as they had all been pegged to the dollar. The Demonetization of gold was completed by the Jamaica Agreement. This meant currencies could freely float in value up and down which they did. It marked the first time in history that only Fiat currencies existed (i.e. unbacked currency).
President Nixon announced this as a temporary suspension.

Nixon Lies again and again

President Nixon made certain promises to America when he suspended convertibility of the dollar. August 15, 1971:

“I have directed Secretary Connally to suspend temporarily the convertibility of the dollar into gold ….

Now, what is this action–which is very technical–what does it mean for you?

Let me lay to rest the bugaboo of what is called devaluation.

If you want to buy a foreign car or take a trip abroad, market conditions may cause your dollar to buy slightly less. But if you are among the overwhelming majority of Americans who buy American-made products in America, your dollar will be worth just as much tomorrow as it is today.”
The dollar has actually lost 3848% of its value when measured against Gold since Nixon declared this.
An ounce of gold is today quoted at $1420 (rounded up) which means that a dollar is technically only worth 1/1420th of an ounce compared to 1/41th of an ounce when Nixon made his declaration.
This steady erosion of the worth of a Dollar is exactly why there are calls for a return to gold currency or gold-backed currency in 13 States with others already contemplating the same.
One can understand the concerns and the choice between paper dollars or a piece of gold to preserve your wealth seems self-evident.
Just in case let’s check the value of the Dollar expressed in Gold.

From Confiscation until Bretton Woods 12 years later the Dollar lost 175% of its value against gold (an average of 14.58% per annum).
From Bretton Woods created the standard until Nixon removed it 26 years later the Dollar lost 117% of its value against gold (an average of 4.5% per annum).
In the last 40 years since Nixon unhinged the Gold Standard, the US Dollar has lost 3484% of its value against gold (an average of 87.1% per annum).
In a total of 78 years since confiscation in 1933 the US Dollar has lost over 7142% of its value against Gold (an average of 91.56% per annum).

So the period of greatest stability for the Dollar was with a Gold Standard and Confiscation still in place.
The most unstable period for the Dollar was when neither of these was in place as is the case today.

If the Dollar continues to falls by at least the average for the last forty years, bearing in mind that current world events could add to its woes, then it would be worth 0.00009 ounces of gold or 1/11111th of an ounce within a year – that gives a gold price of $11,111 an ounce.

It is especially pertinent when one considers the strength of an investment over time – Gold is anti-inflation and anti-crisis. It will always maintain real value, worth and purchasing power which can be traded and wilfully accepted in exchange for the necessities of life. This cannot be said for paper money which as history has proved time and again eventually becomes a worthless piece of paper whose only real value is its calorific heat value for burning!
This illustrates exactly why the peoples of Thirteen States are leading the charge to convert to a gold currency that maintains real value rather than be chained to the US Dollar which will only be of value for fire-lighting very soon.
It is inevitable that currency must be established against a fixed reference for it to have any real value and this road will always lead back to Gold as history has proved.
If you’ve never bought Gold before then maybe now is a good time before your savings literally go up in flames.

We have already spoken about the 50 pesos coin on Goldcoin.org. This coin remains a very good choice for buyers looking to invest over the long term. But the 50 pesos coin is not the only Mexican gold coin to have in your money bag! In the following article you will discover the smaller family members of the 50 pesos coin and their characteristics.

20 PESOS OBVERSE

Description of the gold pesos coins.

The 2, 2.5, 5 and 10 pesos coins all bear the same inscriptions and engravings:
-  The obverse of the coin has the inscription “ESTADOS UNIDOS MEXICANOS” (United States of Mexico) which straddles an eagle that is standing and grasping a serpent in its mouth. The eagle is standing on a crown made from an oak branch and an olive branch. The eagle is the National symbol of Mexico: for Mexicans it is the representation of the duality between the earth and the sky. It also symbolises the conflict that delivers Good over Evil. There is a legend which surrounds this eagle: the old city of Tenochtitlan, today Mexico City, was built in the place where the Aztecs once saw an eagle flying off carrying a serpent in its beak.

20 PESOS REVERSE

- the reverse of the coin shows the value of the coin and the year in which it was minted. The coin is the effigy of Michel Hidalgo, a revolutionary and abolitionist. Michel Hidalgo is an emblematic figure of Mexico: a priest, a rebel and a revolutionary whose insurrection triggered the country’s process of independence. He first proclaimed independence on 16 September 1810 and then abolished slavery on 6 December. On 30 July 1811 the Inquisition had him shot for his crimes.

The 20 pesos coin

The obverse of the coin has a motif which represents the eagle striking down the serpent. The reverse of the coin shows a representation of the Aztec calendar from the Tiahuanaco Sun Gate. The Sun Gate is one of the vestiges of the Aztec civilization and is considered by several researchers as a astronomic sign.

Date on the gold pesos coins

• Note on the 10 pesos coin: From 1961 to 1972, 954,983 coins were re-minted with essentially the year 1959. In 1996 , matt remints were created.

What is the interest in Mexican gold pesos coins?

Above all the interest in these coins is numismatic. But there is only a small step from numismatic to profitable investment! Why? Because these coins are ever more rare and their value can never fall below that of gold itself under any circumstances. To be clear: buying Mexican pesos in an opportunity to combine asset protection with pleasure.

As previously reported on Goldcoin, Gold currency is making a comeback! In Utah, they could soon be buying a hamburger with gold!, the state of Utah has been considering a bill that would allow gold coins to become a new inflation-proof currency that would also be exempt from state capital gains tax.
The bill, HB317, was introduced by Republican Brad Galvez and it passed by 7 to 1 in the Utah House Government Operations Committee on Wednesday.

The bill sets out a framework for the Legislature to explore the possibility of an alternative legal tender system being created but the use of a gold currency would remain voluntary. The timing stipulated is for conclusions to be submitted for the 2012 session.
The “Utah Sound Money Act” was drafted by local attorney Larry Hilton who said that “un-backed money created by the Federal Reserve to stimulate the economy, is hanging over us like the sword of Damocles waiting to just come down in an avalanche and destroy the value of our currency.”

In short it represents the frustration of ordinary people who feel that the “paper dollar” no longer serves their needs. They have simply lost faith in a devalued currency which has eroded their wealth, their incomes and their purchasing power.

A Symbolic Act that brings back the Gold Standard?

Further comments came from Jeffrey Bell who is Policy Director for the American Principles Project based in Washington D.C. He explained that this bill would be viewed as a “symbolic act”. He added “But it sends a signal to Washington that political elites who want to leave the value and staying power of our currency uncertain, indefinite, so that they can at will intervene to do what they think would ameliorate the situation facing the U.S. economy.
The last time we had the system that we are recommending — the  International Gold Standard — it set a record for least inflation”.

It is interesting to note that the US Dollar is under pressure from all sides and its role as a “Global positioning Currency” is severely under threat as is its very existence.
We have previously discussed the possible role of Gold as a future money in Gold Money, a currency of the past…. and the future? And the demise of the Dollar in Financial Armageddon from worthless Paper Money.

Word is not only spreading but people are taking action against worthless fiat currencies and you too can do something now by taking out insurance against a fiat currency collapse – buy gold and gold coins. Remember it is always prudent and advisable to have insurance before the event – in this case an Economic crisis that could happen any time soon.

German philosopher Arthur Schopenhauer once said that “all truth goes through three stages. First it is ridiculed. It then it encounters strong opposition and finally it is considered to have always been obvious”.

Think back to January 2007. All the elements of the crisis were already in place but the prophets were rapidly called “doom-mongerers”, stupid pessimists who were incapable of imagining the power of interventions made by the monetary authorities and the central banks. Countries had relatively little debt. Sovereign debts were therefore on assets held as a priority.

Certainty is illustrated by the expression “Fly to quality”. Each stock market shock leads to massive arbitrage away from equity markets to bonds which are considered to be “invulnerable”.

We were in the first stage which was described by Schopenhauer. The one during which we ridicule those casting doubt on the soundness and financial sustainability of large states.

Then came the great crisis of 2008. The one needing billions of Euros and Dollars of stimulus, monetary creation and social expenditure.

Deficits were dug out quickly and in a way never imagined by all the economic commentators. Caught in the cross fire of sagging tax revenue and massive spending support, the hole could only become quite cavernous. By the end of 2010, the idea of the widespread failure of Western States is now only encountering soft opposition. “No, come off it, a Country does not really go bankrupt; anyway, growth is starting in the United States which is, after all, the World’s largest economy”.

Exactly. Remember the figure of 2.9% which was the growth rate for the U.S. economy in 2010. Remember it well, we’ll come back to it.

Growth does not cure the crisis

Despite this 2.9% (which needs to be borne in mind), unemployment did not fall at all. Some kill-joys who were looking at the real unemployment rate in the United States (the one published by the FED and which also records those looking for work but receiving no benefits) even dared to say that this figure had reached more than 17.4%.

Despite this 2.9% (growth), approximately 43 Americans eat every day thanks to “Food Stamps” which are handed out to the poorest of society to enable them to go stores and buy basic items of food. It is a modern version of the soup kitchen that avoids shocking images of queues of the miserable and hungry unemployed. In short “food stamps” are a cross between ration books and restaurant vouchers.

Let’s turn now to the kingdom of perfidious Albion. Our English friends had the brilliant idea of electing a new “Conservative” Prime Minister, Mr Cameron. He argued that “If you do not deal with the the debt, you will never grow”. His main opponent the “Labour” Ed Miliband replied: “If you do not grow, you will never get out of the debt.”

That’s a neat debate. How can we get out of this crisis? How do we get back to growth? By spending more in stimulus measures to stimulate the economy as argued by our Labour friend? Why not…but with 11% deficit it is difficult to spend more without going immediately bankrupt.

So, the Conservative Prime Minister is exploring the only path which theoretically still holds out some hope…..the one of austerity. We cut all spending. Not a little but very much. Civil Servants are laid off (490 000 less up to 2015). Tuition fees? Tripled, quadrupled or quintupled. Teachers? Laid off. Parents will have to organise themselves to provide teaching for their children. Judging by how things are going over there, there will be no shortage of available parents in the coming months.

Heavy debt + recession = insolvency

Is this good or bad? This is not important in terms of ethics (although the debate is fascinating). But will this work in economic terms? Will the treatment of austerity lead to “healthy” growth?

The answer at this time is clear and unequivocal. No. The United Kingdom has double-dipped back into recession. Not officially, because there needs to be three months of negative growth, as Mrs. Largarde calls it, for an economy to be officially considered to be in recession. We are only talking about one quarter at the moment. The first one. However, a recession also means a fall in tax revenue which, given that this revenue is to be used to pay the debts which have already reached monstrous levels, is not the best of news. In summary therefore heavy debts + recession = insolvency.

Yes, but look! Going back to the United States of America. Remember our figure of 2.9% growth (the one that you must not forget!)? This is indeed a reason for hope. The Americans have decided, unlike the British, to let deficits “spin” in order to stimulate growth. And it works, 2.9% growth! Well, at the risk of shattering a few wonderful hopes, it does not work. Why?

Three figures:
The 2.9% growth represents a total increase in GDP of 541 billion U.S. dollars.
To create these 541 billion dollars of new wealth, the political and monetary authorities have created … 1,700 billion in new debt. To be clear, for every dollar of growth, you need 3.14 dollars of new debt.

Therefore, we can make two observations:
- The debt is growing faster than the wealth created with these new debts.
- The global economy is no longer able to create growth without debt.

Is the “stimulus” the last hope of humanity?

In 2011-2012, we return to the last stage of the truth according to Arthur Schopenhauer. The bankruptcy of countries will be “deemed to have been obvious.” The world will acknowledge the widespread insolvency of the Western nations. This will occur either because the stimulus will have created a debt which is too large … or because austerity measures will have created excessive debt; the end result caused by the austerity plans is essentially the same when adjusted for social and human damage.

Both routes lead us straight into insolvency. The only advantage of austerity measures is that they enable you to save time.

Everyone could see that the stimulus led to disaster. The austerity measures still have another 12 to 24 months to go before they either convince or else show that they will not work any better ….
There is always the French way of course; the one espoused by Mrs. Lagarde.
The path of the “Stimulus”.
Half austerity – half stimulus; half angel, half demon.
The stimulus is the last hope of humanity. A bit thin isn’t it?

Translation of an article by
Charles SANNAT
Chargé d’affaires BNP Paribas

The remarks did not reflect the opinion of BNP Paribas and in no case constitute an incitement to invest.

I’m sure that we all believe that governments control the money supply especially in their own country and their own currency.

I’m sure that when we place our blind faith in the banks for loans, mortgages and everyday banking we trust that they will do their best for us and operate with upstanding principles to protect our assets.

I’m sure that those of us living in a free democracy believe our liberty and rights are being controlled by fairly elected governments representative of the people.

I’m sure that as you watch the daily news about unrest around the world you begin to sympathise with the poor oppressed peoples and hoping that soon they can have the same safe system bestowed upon them that we all apparently enjoy.

I’m sure that you would be horrified to learn that the controlling influence on the largest economy in the world and therefore an influence that stretches right around the world does not actually belong to the US government at all.

Despite its self-appointed name, the US Federal Reserve which controls Quantitative Easing, the printing of the US Dollar and US Economic Policy is actually a private company steeped in mystery with a special status completely outside the control of law.

You don’t believe it? Well just take a few minutes and watch the video for a quick insight into the real world of money laundering and absolute control.

Remaining ignorant could be bliss but then again if your livelihood and survival depends on it sometimes it’s better to be informed.

Disclose.tv – “the american dream” Video

You may now understand why your continued use and enslavement in paper assets is important to those who would seek to control.

When a crisis hits or the bubble bursts you will be left with nothing and no way of reclaiming a cent or a penny of your hard earned cash.

Do you think the politicians, bankers and enormous fortunes of the world will really care?

After all when was the last time you saw a poor politician or a poor banker?

When crisis strikes they remain the great untouched because they have the personal means and wealth to survive wars or economic disaster. They won’t feel hardship or hunger but you will.

During World War II many ordinary French families managed to survive the occupation because they had stashed a few gold Napoleon coins away which they could use to buy food. This is fact and is borne out by many a testimony from the time.

If the monetary system imploded or crashed and your Dollars, Euros, pounds or whatever became worthless, how would you survive?

Gold ownership is like a fire insurance for your personal wealth and is an investment in a physical entity that you own. When a crisis hits it has always proved to be vessel of value irrespective of the currency or era.

The logic for fire insurance is quite simple – should you buy it before or after the event?

Gold investment for the masses has never been encouraged because the Banks prefer you to believe in paper money which they can print, lend to you and make huge profits for themselves in the process.

It has never been in their interest to tempt you or advertise its qualities because they have been “stealing your gold” since money was invented.

In the Age of Austerity we find ourselves, not knowing whether currencies or countries may collapse at any time, what have you done to protect yourself from destitution and desolation?

Maybe you like taking chances and are hoping for the best but that may not be enough to survive and feed yourself.

Maybe you could plan ahead and maybe you should start now?

Remember, after the fire it is too late to buy insurance!

There are many potential investors wondering what all the fuss is about concerning Gold because for the longest time it has been viewed as a past time for millionaires and Countries. The Gold we refer to here is “allocated” gold i.e. a specific, referenced, visible piece of gold bullion or a gold coin that is allocated to and owned by one person. It does not necessarily include quantities of gold held as anonymous parts of anonymous bars in anonymous vaults (“unallocated”) because this type of gold cannot be repatriated to the owners if the need arose as no-one knows which bits of which bar belong to each investor.

1. It is an investment that you own, it is your property and it cannot be lent out to a third party or used to form credit.
2. It has increased in value over 600% in the last 10 years and has shown a healthy return on investment year on year.
3. It is not a paper asset vulnerable to to the performance, viability, stability or existence of an intermediary.
4. It is not an investment in a Bank which cares little about paying you interest and a return on investment because it is preoccupied making money for itself.
5. Historically it is the only “currency” to maintain a real value in purchasing power throughout centuries.
6. It is a debt free investment, not linked to the worldwide black hole of sovereign debt and spiralling deficits.
7. It is THE safe haven for wealth and used by Countries and the largest Private fortunes on the planet as a protection against inflation, currency devaluation, economic instability and ultimately pending crisis.
8. Economic and financial experts the world over recognise and advise that Gold should form part of every investment portfolio.
9. The price of gold has been suppressed and controlled for decades by those who seek to control global finance. Since 2008 the rules have changed and control has been lost. If the gold price was corrected by the same factors as fuel, food and currency it would be worth at least $2100 an ounce today.
10. It is a precious metal available in a finite quantity that is constantly in demand the world over.It is always a good time to invest in gold because demand is extremely high and supply is dwindling. Prices will fluctuate but in the end Gold will continue to rise because it is irreplaceable, a precious metal with unique properties and it cannot be manufactured or printed.

There may well be more good reasons to invest in gold so feel free to leave a comment and add yours because there can never be too many.

The financial elite have guarded the control of Gold for far too long and would prefer that it remained their sole property.

However, in a current day climate of democratic rebellion by the masses against authoritarian elitist control of wealth it is time for everybody to share in the prosperity of gold investment.

After all, your wealth in gold is a lot safer than your wealth in the Banks!

Gold has always fascinated with its attractive, brilliant and glistening appearance but also because of the intrinsic properties of this precious metal. No wonder that it has played an important role in history since its discovery. Thus, for many people, gold has been at the heart of their culture, such as the Inca civilization which referred to gold as the “perspiration of the Sun”. They bestowed gifts in gold, made statues of gold, wore gold and in fact gold was everywhere around them. But in addition to this cultural role, gold very quickly acquired another role: that of Money.
While currency wars and devaluations are very much a thing of today, we have taken a trip back into the past to look at the origins of one of the first real currencies… and who knows, one that may again take its place again in the near future as a trusted, true exchange of value.

Money, a concept born of necessity

Before money existed, goods were traded in a form of exchanges and bartering. Livestock such as oxen, horses and sheep, commodities like wheat, fruit & vegetables, wood, silver and of course gold were all traded against each other depending on needs (demand) and availability (supply). However, there was an obvious difficulty that would arise which was how to equate the value of items to each other. There needed to be a reference value so that prices could be agreed upon and defined as quantities of this “stable” known value. There was also the problem of giving change or what to do if you only had enough to buy half a sheep and we’re hungry!

A popular and plausible hypothesis by Hauser* was that as gold was also being traded against various goods, its weight was used to agree an exchange. Soon people realised that gold could easily be divided into different weights which equated to multiples of its value and therefore the value of other commodities. This led to the concept that of weights of gold were indeed useful “units of value” and quickly prices for oxen, sacks of wheat etc became equivalent to a certain weight of Gold.
Naturally gold started to become a reference point for the exchange of all goods particularly because it was easily divisible and impossible to fake.

The birth of gold coins

In Egypt, gold was exchanged against goods in the form of rings which had fixed weights and therefore different multiples of value could be used for pricing goods. Elsewhere however, gold stayed in the form of ingots for a long time but their weights were often variable and trading was tedious because of these discrepancies. Weight variations meant that trades were seldom a direct equivalent to the goods being traded and so much haggling ensued.
In search of something more convenient, reliable and safe, small gold discs of a fixed weight were made and each one had a value struck on it. They were easier to carry around and allowed trade to be more flexible, retail as well as wholesale.
Thus the first gold coins were born and indeed the first recognisable currency. This took place around 700 BC according to Erik Chanel.

Whilst gold was not the only metal used for coins – silver has been widely used as well- gold, however, was the ideal metal because of its unique combination of properties such as: it is stainless, rustproof, divisible, malleable, ductile and of course rare, which made it from the outset a symbol of riches.

Is Money as good as Gold

We have previously mentioned the Gold Standard on Goldcoin.org which has several meanings depending on the era.
The Gold Specie Standard was a system that associated units of money to gold coins in circulation or when lesser metal coins drew their reference of monetary value from a circulating gold coin.

The Gold Exchange Standard was when circulating coins made of various metals such as silver and copper drew their reference monetary value from a fixed value of gold independent of their own metal value.
Finally, there was the Gold Bullion Standard which did not involve circulating coins. This was when governments had agreed to sell gold bullion at a fixed price in exchange for a quantity of circulating currency. In other words, each unit of currency effectively had a value related to gold. This allowed the mass introduction of paper currency, which was easily transportable and practical for payments.
It was also the mechanism which allowed banks to not only look after your gold deposits as they had previously but led to the credit creation system, fractional reserve banking, loans and mortgages. The problem here was that greed got the better of bankers who realised they could lend more than they had in Gold reserves and print paper money whenever they wanted as long as nobody caught them out. Sound familiar.
If you are interested in the story of money, banking and the credit crisis have a look at this video when you have a chance. It’s very relevant to our current problems.

Without Gold, Money as Debt

Anyway, the Gold Bullion Standard ended in 1971 when Nixon felt the strain of expenditures from the Vietnam War and he effectively untied the value of the dollar to gold. This also effectively untied all the other currencies which had been part of the Bretton Woods Agreement to form the IMF (International Monetary Fund) in 1944.

Paper is worth as much as Paper!

So nowadays currencies are not “covered” by a relationship to gold or a fixed unit of reference so they can be extremely volatile, easily devalued and printed at infinitum. The problem is that today’s money is based on pieces of paper that are printed with a value but there only real value is the piece of paper they are printed on. Currency value comes from economic confidence. When there is none the currency becomes worthless and it is not because the central bank has printed a number on a piece of paper that it becomes meaningful.
What actually counts is whether anybody will accept the paper in return for goods or services or dare I say it an oxen or two. We’re back where we started. The value of currency has to be real and cannot be created otherwise it will not be accepted.
Much of the problems we face today are because an excess of credit has led to an excess of debt. Pressure on currencies causes devaluation which in turn decreases the value of assets, investments and therefore wealth.
This is causing people to look for ways of protecting their wealth outside of paper money. This brings us full circle to gold which has proved through the ages to be the best safe haven for value.
The choices today are to own a physical asset that will always maintain its value i.e. Gold or to invest in the labyrinth of debt ridden, financial institutions whose products are heavily advertised but rarely realised for the poor customer. They spend more on marketing their wares than they do in paying out customers at term. Remember HSBC charging 80% over the 32 year term of a pension fund leaving some poor old retired guy broke. He’s in no position to fight back especially with the expensive legal eagles they can afford with his hard earned money!

Should we return to a Gold Standard?

Unfortunately, that is virtually impossible because there isn’t enough gold to go around. There are only 20m3 in the world and about another 100,000 tonnes in the ground. There would have to be a huge devaluation of currencies to restart the Gold Standard and of course it’s unpopular with Central banks as they would have to behave properly.
We referred recently to the state of Utah and how people are taking the matter into their own hands because they require more certainty about the money they earn and spend. The dollar has failed them and so they are now looking at creating their own Gold currency which will maintain value better than the greenback.
It would seem we have turned full circle and more and more people are turning to Gold because it offers a safe haven for their savings and is an insurance against instability.
Gold coins are an excellent investment vehicle and more and more people are turning to the value of gold. Gold coins are actually worth more than their weight in gold because they have a dual leverage. The gold content of the coin increases in value with the spot price and the premium (added value) of a coin increases with demand. During a crisis or unstable economic conditions the premium of certain coins can rise more than 40% irrespective of the spot price.

Gold as a future currency?

Gold as a currency of the future may seem far-fetched but given the state of paper money and the interest in Gold who knows, it is already being planned as an alternative stable money in certain places. Even if gold coins do not re-enter circulation they are being used as a more certain tangible investment.
Some of the most popular coins for investment are those commonly sought the world over such as the Krugerrand, The British Sovereign, The American Eagle and the French Napoleon.
These are a way of preserving your wealth and savings in something of real, timeless value.

* H. Hauser, Gold, Vuibert & Nony publishers, Paris, p.307.

During World War II the British sovereign was the only tangible and reliable currency in Greece and they were hoarded and hidden in every conceivable place. A girls dowry would often include a cache of sovereigns.  They were parachuted in to fund the Greek resistance to the German occupation. War is a crisis but now the Greek population face the crisis of being unable to repay its debts and once again they turn to the sovereign as the currency of choice.

It is remarkable and a tribute to the sovereign that it remained legal currency long after the war due to the unstable drachma until eventually in 1965  the Greek government placed restrictions on trading resulting in many hoarders cashing in their stocks. Even so at the slightest hint of uncertainty, and there have been many, the Greeks turned to their favourite foreign gold coin.

Greece has not really had a true period of financial stability for decades and markets are wondering whether they will default on repaying their debt given past behaviour  so the uncertainties  are understandable. The population is in panic resorting to strikes and riots and fear that Greece may leave the eurozone.

Once again  have returned to their known safe haven, the sovereign, as a hedge against financial collapse causing the the demand to increase year on year and the price to rise dramatically. For weeks citizens have been queueing at Athens central bank to buy sovereigns and have been prepared to pay the highest prices. It is estimated that in the first 4 months of the year 50,000 sovereigns were sold legally and as the demand increased so did the black market  and at least 100,000 were sold illegally with price up to €300 (£252).  The uncertainty and fear has driven people to pay a huge premium of almost 40% over the current value of the gold content to protect their wealth.

Without doubt the British sovereign has been the gold coin that has world wide recognition as mechanism for survival  whether it be a financial or physical crisis – see our article “Gold sovereigns open doors”

Maurice Hall

The Gold Train is a mystery emanating from WWII but the almost mythical  status developed because of the secrecy particularly in the USA. In reality it is story of horror, mass murder, theft and greed not revealed until Bill Clinton created the Presidential Advisory Commission on Holocaust Assets in the United States and had become a symbol of all that was lost by Holocaust victims

We begin in Hungary where prior to the war almost one fifth of the population was Jewish and had been integrated into the countries fabric. The government was increasingly sympathetic to fascism and gradually tightened laws against the Jews eventually the Arrow Cross party became the fascist government of Hungary. As the war went badly for Germany things got worse and with the Soviet Army only 100 miles from the border Hitler launched an invasion of Hungary in March 1944.

Until 1944 the Hungarian government had not cooperated with the Nazi but this all changed as the facist dominated government were eager and willing to collaborate and the SS saw the opportunity to continue their work of mass murder to solve the Jewish problem. Consequently the estimated population of 800,000 Jews were forced to hand overall of their valuables to government official including gems, gold, jewelry, gold coins, silver, wedding rings in fact anything of value. With typical efficiency everything was bagged, boxed and identified with receipt given to the owners.

After handing over their valuables the majority of Jews at a rate reaching 12,000 per day were shipped off to the concentration camps of Auschwitz-Birkenau where most never survived.  Meanwhile the Hungarian authorities resorted all the confiscated valuables into categories destroying the identification of the original owners but the inventory was fairly exact.

Car from the Gold Train

By December 1944 the Red Army were on the outskirts of Budapest and a decision was made to evacuate the Jewish booty and this was supervised by a Hungarian Árpád Toldi, the commissioner of Jewish affairs appointed by the SS. The valuables, estimated at around $5 billion in today’s terms, were packed into  a 42 car freight train that was designated for Germany. As the train moved slowly westwards through Hungary and Austria. Toldi bought off bands of marauding troops with small batches of loot but large amounts of gold and precious stones were off loaded into  trucks along the route and stories of Nazi gold  springing up all along the route ensured the  “Gold Train”  became one of the many myths of Nazi treasure.

However, the majority of the loot ended up in allied hands. Toldi  had two trucks loaded with valuables and they headed towards the French zone where they were seized by French troops at St. Anton. According to a report written by the Central Board of Jews in Hungary and referring to available reports at the time the trucks seized by French troops contained:

31    cases of gold

2        case of gold coins

3        cases of gold watches

8        cases of brilliants

2        cases of selected brilliants and Pearls

The French returned these valuable to Hungary but they did not reach the hands of any remaining owners or relations, but were mostly were stolen by the communists.

The Gold Train eventually fell into the hands of the United States Army nesr the town of Werfen in Austria in May 1945 and according to the Central board contained the following:

10              45kg cases of gold

1                100kg cases of gold coins

18              35kg case of gold jewels

32              30-60kg cases of gold watches

1560          cases of silver of different weights

1                case of silver bricks

1                trunk of currencies and brilliants

100            artistic picture

3000          Persian carpets

2                wagons of mixed valuable

American soldiers guarding the gold train

The Central Board of Jews and the Hungarian government were aware that the majority of the contents were in American custody and passionate pleas for them to return the valuables to Hungary, where they could be returned to their rightful owners or surviving family members, were continually ignored. Despite the clear country of origin ownership,  Americans decide that the contents were  ownerless property and that it should be sold for the benefit of non-repatriable  refugees who could be accessed through the International Refugee Organization (IRO). It is a matter of fact that some of the property from the train ended in the possession of high ranking US Army officers but the majority was sold off through US Army exchange stores in Europe and the remainder auctioned off in New York in 1948  with proceeds going to the IRO.  Approximately 200 paintings seized from the train should have been returned to Hungary but they came into possession of the Austrian government and disappeared to this day they have not surfaced.

As a result of Bill Clinton’s creation and subsequent freedom of information in 2001, there was a lawsuit against the United States government. This was filed by Hungarian Holocaust survivors in a Florida district Federal Court for the government’s mishandling of the assets on the Hungarian Gold Train. In 2005, the government reached a settlement worth $25.5 million. The money was allocated for distribution to various Jewish social service agencies for the benefit of Holocaust survivors. Hungarian Jewish survivors did not receive any money directly so justice was not seen to be done.

Árpád Toldi

There was gold, gold coin, jewelry and precious stone that did not end up in allied hands, spirited away by Toldi during the long  journey and the amount returned to Hungary, from the French. that was stolen by the communists and ended up in Russian hands.  The trail has disappeared  leaving many unanswered questions, the most important of which where is the gold now ?.

Toldi himself tried to enter Switzerland with a convoy of trucks but was turned away at the border. After hiding for some time in the French zone he gave himself up to the French authorities and led them to some bags of precious stones.  After a few months detention he was released and then disappeared. It is rumored that he lived under the protection of high ranking French officials but not substantiated.

This is a terrible story where thousands of people lost their lives and their wealth. Could it happen today, unlikely, but less unlikely is a family losing its wealth through crisis.   If a family were to put aside some of its wealth in the form of tangible assets in a safe haven, such as well documented vault in a stable country such as Switzerland, then there is a strong chance of surviving that crisis

Maurice Hall

I was listening to a programme on BBC Radio which is always an informative station and my ears pricked up on a discussion on the 2009 Bordeaux vintage which is reputed to be the best in 60 years.  I like wine very much but the grand Grands Crus of Bordeaux which have long catered for the discerning tastes of the elite in the western world are beyond my means. However, I thought it would be an interesting to understand why the wines are so great and if I had a rush of blood to the head and splashed out, what would be the best value for money. To my surprise there was little in the way of comparison of the various producers but a great deal on the destination of the very best of French wine

From the baroque tasting room of Chateau Mouton Rothschild, to the grand hall of the Union des Grands Crus, Chinese delegations declared their intent to siphon off huge quantities of first growths, the very best wines.  The price of the first growths are likely to cost £4000 per 12 bottle case and even as high as £1000 per bottle.  According to the Chinese importers money does not seem to be a problem and Lafite-Rothschild is said to be the tipple of choice for the Chinese industrialist.  Private companies are soaring and property values are rising fast so people have a lot of money.

You may wonder why I am writing about wine on a blog whose main interest is gold. Whilst critics were in raptures with the top wines from Haut-Brion, Margaux and Latour it seems to matter little to the Chinese consumer who are reported to glug their wine or dilute even the most expensive bottles with lemonade. The reason is one of economics, no longer do these famous vintages end up in the cellars of the rich in the western world and particularly recession hit America; but they have become prestigious gifts amongst Chinese business people.

Throughout history, all great powers have their day Egyptian, Greek, Roman. More recently countries such as Spain, France, and Great Britain all had periods of unrivalled power. Today, the United States still reigns as the world’s sole superpower but it is on the brink and is being credibly challenged by rising powers in Asia, India and more importantly China who have designs on world financial dominance. It is a process that will have huge implications for investors over the coming years. It is no surprise India is the greatest consumer of gold and China the largest producer.

The balance of power is swinging eastwards. First the West exported industrial plant to Asia leading to investment in technology in the East which coupled with a cheap workforce produced a number of startups. Their cost effectiveness captured markets normally supplied from the West and eventually western domestic markets were flooded by cheaper imports leading to a decline in the manufacturing base and vast trade deficits. Now we find our selves in a situation where we are even being financed by the East. Iconic UK brands MG and Jaguar are Chinese owned and the new Californian bullet train was not only funded by money borrowed from China but built by a Chinese company.

Sovereign debt is threatening the fabric of western society and dragging down our currencies. It reminiscent of the 1930s as austerity measures have been running in Ireland fore some time, problems in Greece and Spain have lead to strikes and a general strike is threatened in Italy. Portugal is in the same mould as Spain and Italy, later additions to the EU from former Eastern Europe are in great difficulty particularly Hungary, France has to tighten its belt and Germany is in a domestic struggle over the Euro. Outside the Euro zone, the UK debt is of a greater GDP of all but Spain and its only because our repayment has a longer time span that we are not in quite the same mess as Greece. If the June budget does not show sufficient promise to bring down our deficit our triple –A rating maybe under threat.

So how does the American superpower stand?. The economy is the country’s top concern, with persistently high unemployment the greatest threat the public sees. Eight of 10 Americans rate joblessness a high risk to the economy in the next two years, outranking the federal budget deficit, which is cited by 7 of 10. An increase in taxes is named as a high risk by almost 6 of 10. Fewer than 1 in 3 Americans think the economy will improve in the next six months….Only 32 percent of poll respondents believe the country is headed in the right direction, down from 40 percent who said so in September.” (Bloomberg).

The U.S. debt will top $13.6 trillion this year and climb to an estimated $19.6 trillion by 2015, according to a Treasury Department report to Congress. ( Reuter 8^th June). Economic contraction will continue with record numbers of foreclosures, personal bankruptcies, the highest rate of unemployment with millions more jobs to be lost as purse strings tighten.

Going back to the origination of this theme if Chinese businessmen can afford to mix lemonade with £1000 bottles of Bordeaux to impress friends and associates then there truly has been a swing to the East and that is where the demand for Gold will be driven. Currently the USD is the reserve currency but as power is being challenged so is the dollar as  both Russia and China are pushing for alternatives where gold may play a part.

Read the china Gold Report on this blog

Maurice Hall

Every culture or civilisation has a period termed its “golden age” and for India that was between the fourth and sixth century, the Gupta dynasty which covered most of modern India. The Guptas were prolific minters of gold coins and some of great beauty. The coins were named the dinara after the Roman denarius aureus- a reflection of Indian trading contacts with the West and the export of Roman coinage as bullion to India. However they were not a copy of Roman coins but completely Idianised and closely followed the concept of a universal monarch or ideal ruler. The original coins adopted the standard Roman weight of 8 grams but this was not very acceptable so the Guptas minted coins in a standard Indian weight called Suvarna around 9.2 grams. It must me remembered at this time the three world powers were the Roman Empire , the Byzantine Empire from  modern day Iran and the third the Indian Empire under the Guptas

We are at a period of time where religion in India was at a crossroads and the Guptas  were said to be responsible for patronizing a new temple based religion recognized as Hinduism. However, Kamuragupta  ( AD415-455) still practiced ancient Vedic rituals

Commemorating King Kumaragupta's horse sacrifice

Normally gold coins would feature the king or ruler on the obverse of the coin but this coin of King Kumaragupta I features a magnificent tethered stallion ordained with banners and ribbons. It symbolises the ashvamedha ( horse sacrifice) the Vedic ritual of legitimizing the conquests of a honourable and pious king. The reverse features the queen with ritual instruments for the ceremony. The Sanskrit around the rim says “King Kamuragupta the supreme lord who has conquered his enemies”

The Ashvamedha could only be conducted by a king. Its object was the acquisition of power and glory, the sovereignty over neighbouring provinces, and general prosperity of the kingdom. This was immensely expensive and is usually only performed once in  a Kings life time.

The horse to be sacrificed must be a stallion, and it is ritually purified and the sacrificer whisper mantras into its ear. The horse is then set loose towards the North-East, to roam around wherever it chooses, for the period of one year. Anyone who should stop the horse is ritually cursed, and a dog is killed symbolic of the punishment for the sinners. If the horse wanders into neighbouring provinces hostile to the sacrificer, they must be subjugated. The wandering horse is attended by a hundred young men, sons of princes or high court officials, charged with guarding the horse from all dangers and inconvenience but manly to stop it mating thus keeping it pure.

Reverse with the queen and ceremonial instruments

After the return of the horse, more ceremonies are performed. It is and bathed and anointed with ghee by the chief queen and two other royal consorts. The chief queen anoints the fore-quarters, and the others the barrel and the hind-quarters. They also embellish the horse’s head, neck, and tail with golden ornaments.  The king performs the sacrifice with a golden Knife. It concludes with the eulogy “May this Steed bring us all-sustaining riches, wealth in good kine, good horses, manly offspring”

First Indian Coins

Based on the available evidence today, it appears that the concept coins as means of trading (money), was developed by three different civilizations independently and almost simultaneously. Coins were seen in Asia minor, India and China in 6th century BC. Most historians agree that the first coins of world were issued by Greeks living in Lydia and Ionia around 650 BC using Electrum a natural alloy of gold and silver . However some historians have suggested that coins were minted in India as long ago as the 8^th Century BC.

What is beyond doubt that the first coins of India were minted just before 5th century BC in central India. Archaeological evidence confirms that the Indians were minting coins between 5th to 6th century BC. Coins are also mentioned  in ancient literature from 500 BC.

The Indians love of gold continues to this day as the world number one consumer of the precious metal.

Maurice Hall