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Monopoly money is no game nor investment

Friday, April 25th, 2014

The US would have exported a total of 215 metric tons of gold bullion to Hong Kong as well as other small quantities of Dore’ not yet specified.

Hong Kong is the only country to have received so much gold. If you have a close look at the table below, Switzerland comes in second at 150 metric tons.

TOTAL US GOLD EXPORT 2013

TOTAL US GOLD EXPORT 2013

August is the highest month at 30.7 metric tons.

According to the information released by the USGS, the US exported 57 metric tons of gold bullion to Hong Kong last January.

US total gold bullion export to Hong Kong

US total gold bullion export to Hong Kong

This new record is three times more than the amount of gold exported in January 2013 (17 tons) and 84% more gold than the record set in August 2013 (31 tons). Gold bullion goes from the US to the East;

Total gold exports in January 2014 (80.7 tons) nearly surpassed the total hit in March 2013 (80.8 tons).

Where was the majority of the remaining gold exported in January 2014?

Gold Bullion:

Australia 3.1 tons, Thailand 2 tons, Switzerland 1.5 tons and Singapore 1.0 ton.

Dore’:

Switzerland 10.6 tons, India 2.7 tons and United Arab Emirates 1.4 tons.

The Western countries carry on playing with Monopoly money whereas the Eastern countries accumulate as much gold as they can.

Fiat money or Monopoly money is no good. So much of if has been and still is printed out but is not backed by gold. It’s worth nothing. The Eastern countries have understood the importance of having gold. One should invest while prices are low.

India’s silver imports dropped by 40%

Friday, April 11th, 2014

This is what has been announced by the Indian Government.


India is the second largest buyer of silver and Indian trade ministry confirmed the information that silver imports  dropped to $33.46 billion in 2013/14. This could be due to a series of restrictions rules that the government imposed in order to decrease the current account deficit.

Last March, gold and silver imports dropped by more than 15%.

The Reserve bank of India (RBI) finally allowed five private banks to import gold. Will that mean that the tough rules on imports will be eased ?  We do not think so since Indian authorities made physical checks of gold stocks held by wholesalers in order to ensure that inventories tally with the amount imported through legal channels. The checks were part of efforts aimed at curbing gold smuggling.

Pakistan even temporarily prohibited gold imports so to check smuggling to neighbouring India.

One has to expect that next Indian elections could change somehow the present situation.


Confidence in physical gold

Tuesday, December 10th, 2013

According to kingworldnews.com and also confirmed on jsmineset.com, the Shanghai Stock Exchange would have delivered more gold than Fort Knox in the States. Needless to say the strong impact that would have on the gold price in the forthcoming future.
Some people even expect tapering to happen again or at least at some point.

Shanghai stock exchange
Shanghai Stock Exchange

The dollar is being printed on such a large scale that it leads to a complete devaluation of the US currency. That may be a satisfaction to the American to have more bank notes printed out but on the other side this does not help other countries like China who is presently sitting with some $3.7 trillion of foreign exchange reserves – other countries are actually in a pretty similar case with lesser quantities but still the concern remains …

Kingworldnews visited the Shanghai Stock Exchange in 2009 and said that they had delivered some 8655 tons of gold since 2009. The Chinese bought something like 1.700 tons of gold in the first eight months of this year. It means that gold is actually feeding the Chinese’ foreign exchange reserves. We know that the renminbi is already the second largest currency used in global trade … How long before the dollar becomes fully obsolete ?

Let’s have a closer look at the dollar :

Well, one should be scared when looking at that 14 year perspective published on jsmineset.com

a 14 year perspective for the de-dollarization

a 14 year perspective for the de-dollarization

In our article published on Nov 19th 2013 – China remains the world’s largest gold consumer in Q3’13 – we were actually talking about the lack of confidence in the global financial market and systems altogether. As Jim Sinclair was saying ‘Credibility speaks to Confidence and Confidence speaks to Gold’.

Soon we may have part of our savings confiscated. How trustworthy are the banks? 

Investing in physical gold has never been so important. Making it affordable to everybody is our main concern and feasible thanks to our LSP.

For further information with regards to the confiscation in the USA, please read our article The Great Confiscation : Gold ownership was illegal in the USA from 1933 to 1975.

The Krugerrand 1 once

Monday, December 9th, 2013

The Krugerrand is probably the original Gold bullion coin. It was introduced in 1967 as a vehicle for private ownership of Gold whilst also being circulated as currency, hence being minted in a durable alloy. From 1980, further sizes were introduced. See specification table overleaf.

Details

pict krugerrand 1 ONCE The history of the Krugerrand begins with the South African Chamber of Mines which had the inspired idea to market South African Gold by producing a one Troy ounce bullion coin to be sold at a very low premium over the intrinsic Gold value. It was intended to be circulated as currency, hence it was minted in a more durable alloy and contained 2.826g copper to resist scratching and thus giving the coin its golden hue. At the time of launch, the Krugerrand was the only accessible Gold investment opportunity for the everyday buyer and this thought came through from the inception. It was the fi rst coin to contain exactly 1 Troy ounce of Gold.
Despite the coin’s legal tender status, economic sanctions against South Africa made the
Krugerrand an illegal import in many Western countries during the 1970s and 1980s. These sanctions ended when South Africa abandoned apartheid in 1994 and the Krugerrand once again regained its status as one of the worlds’ leading bullion coins.
In 1967, only the one ounce coin was available. From 1980, the fractions were available, namely, one half ounce, one quarter ounce and one tenth ounce. The name is derived from a combination of Paul Kruger, a well-known Boer leader and later President of the Republic and the Rand, the monetary unit of South Africa. The obverse side features the Otto Schultz image of Kruger along with the name of the country “South Africa” in the two languages, English and Afrikaans. The reverse side, designed by Coert Steynberg features the image of a Springbok Antelope, one of the national symbols of South Africa.
By 1980, the
Krugerrand accounted for 90% of the Gold investment coin market. For example, it is estimated that between 1974 and 1985, some 22 million coins were imported into the United States alone. Although it is not a beautiful coin, many millions have been sold since its introduction due to the policy of selling with a very low premium. The success of the Krugerrand led to many other Gold-producing nations minting their own bullion coins, such as the Canadian Maple Leaf in 1979, the Australian Nugget in 1981, the Chinese Panda in 1982, the US Eagle in 1987 and the British Britannia in 1987.
The
Krugerrand is interesting in that the government of South Africa has classed the coin as legal tender although it has no face value. It therefore fulfills VAT-free criteria for investment coins.

Investment Advice

There are various grading systems in use around the world. However, the British system is as follows:

investment advice krug
Essentially, the bulk of
Krugerrands are produced in a non-proof form although the South African Mint produces limited edition Proof quality Krugerrands as collector’s items. These coins in particular attract a healthy premium and are priced well above the value of the bullion alone. However, non-Proof coins also have a premium above the value of the bullion.
The Proof and non-Proof coins can be distinguished by the reeding, that is, the number of serration on the edge of the coin. Proof coins have 220, non-Proof have 180.

key facts krugerrand

Krugerrands are made of an alloy of Gold and Copper – this effect also being known as Crown Gold as it has long been used for the British Sovereign coins. Due to the popularity of the Krugerrand, there are also many fakes in existence and the investor should be wary. Copper alloy gives a much more orange appearance than silver alloy. Likewise copper is very durable and coins should be in good condition always.
The best marker of authenticity is the weight and this should be checked carefully using the table below since the Gold weight and total weight are known. Check also the reeding.

Specs

specs krugerrand
All investment coins sold by LinGOLD.com are EF quality or above.

For further information: +44 (0)203 318 5612
info@lingold.com


The Maple Leaf 1 once

Sunday, December 1st, 2013

The Canadian Gold Maple Leaf is one of the oldest bullion coins alongside the Krugerrand. It is a classically beautiful coin, internationally recognised and provides investors with a secure, quality addition to a portfolio.

Details

The Royal Canadian Mint introduced the Maple Leaf in 1979. Along with the Krugerrand, it has been in continuous production ever since. It came about because of the Krugerrand – at the time, there was an economic boycott of South Africa so Krugerrands were not widely available – and thus the Maple Leaf fi lled a gap in the market. It contains virtually no base metals at all and uses Gold exclusively mined in Canada.

MAPLE LEAF 1 ONCE GOLD COIN

The earliest years between 1979 and 1981 had a Gold fineness of 999.0‰ but 1982 onwards is 999.9‰. For those same fi rst years, only a 1 Toz coin was produced. Between 1982 and 1985, the 1/4 Toz and 1/10 Toz sizes were added. Then in 1986 the 1/2 Toz was added and in 1993 a 1/20 Toz coin joined the group. It has remained thus to date except 1994 when a 1/15 Toz coin was produced for that year only. That year, a Platinum 1/15 Toz coin was also produced, possibly for jewellery, but both the Gold and Platinum 1/15 Toz coins were not a success and were dropped. The Maple Leaf is also available in Silver and Palladium.

Each coin features the image of Queen Elizabeth II by Ian Rank-Broadley on the obverse side. It also has the denomination and year of issue. On the reverse is an image of Canada’s national symbol, the maple leaf along with the word CANADA and the Gold fi neness in both English and French. Every coin is guaranteed to contain the stated amount in Troy ounces of fi ne Gold. The coins are identical in design except for the obvious items such as weight.

All Maple Leaf coins are legal tender in Canada although are categorised as “non-circulating bullion coins”. Their Gold fi neness easily puts them into the general category of being VAT-exempt.

On 3rd May 2007, the Royal Canadian Mint unveiled a 100 Kg Gold Maple Leaf with a face value of C$ 1 million although the Gold content makes it worth much more. The coin was produced as a promotional product to give the mint a higher international profi le. However, several interested buyers came forward so the mint announced it would manufacture to order. There are believed to be five confirmed orders and/or deliveries. It held the record for the largest coin until 2011 when an Australian coin superseded it.

Investment Advice

There are various grading systems in use around the world. However, the British system is as follows:

INVEST ADVICE

All Maple Leaf coins are issued as pure Gold finewness, 999.9‰ and in theory have a low premium just above the value of the Gold.

KEY FACTS 1

However, the reality is that a 5% premium should be achieved for a quantity of coins

with higher values for individual coins. As always, the smaller value coins will have higher premiums.
The coins were never really designed to be handled due to the softness of 24 carat Gold, the milled edge and clear fi eld around the image of the Queen. With some coins supplied in tubes, this makes them susceptible to handling marks and other damage. So careful examination of coins is highly recommended.

Specs

SPECS 2

GOLD: THE BOOK OF THE MOMENT

Monday, April 29th, 2013

livre3DReview by Mark Rogers

Gold, A Different Point of View by Paul McGowan

With a Preface by Bill Bonner

Published by Ferrington in association with LinGold.com

Following the drop in the price of gold a few weeks ago, record sales of gold coins were reported (see here, and here for a rise in its price). The publication of this little book is therefore timely and pertinent.

There may be many people who would like to hold some gold but are dissuaded by the thought of large and expensive ingots. But bullion is not the only way in which to invest in or purchase gold. Yet as the author states: “Gold is not just ingots. The common response to gold is that it is only for the wealthy: those heavy bars, alluring though they may be, are simply unaffordable.”

This book argues that this view of gold is misguided and misinformed: there are affordable routes to investment in gold.

Although short the book contains a wealth of information. There is an introductory chapter giving a brief history of gold’s 6,000 history, which includes its denigration by politicians and academics in the twentieth century; Keynes for example thought it a “barbarian relic”. Proudhon, Marx, Lenin, Hitler all denigrated it, and to this day it troubles the likes of Ben Bernanke and George Soros.

Gold’s function as a stabiliser of value and its use over time as actual currency coin in circulation suggest that gold is today an alternative currency, and this first chapter ends with a comparison of gold with modern economies, noting that the latter are not working, while attempts to remonetize gold are afoot in, for example, Utah.

There is also discussion of the vexed problem of clean extraction with some useful information about the certificating process that reassures investors that their gold has been mined under the highest standards.

Chapter Two, “Gold, the last bastion of individual freedom”, examines the role that gold may play in hedging one’s investment portfolio, as well as its potential as a regulating device, controlling the whims of politicians and central bankers. This chapter contains a concise guide to the problems of paper currency unsecured against tangible value, with the inevitable consequence that savings are eroded and destroyed and more and more paper is required to purchase fewer and fewer goods. In other words, paper currencies are a direct attack on people’s individual control of their lives, rendering it harder and harder for them to provide for themselves, their families and their futures. We have been here so many times in history, with the latest example being the eurocrisis, that it is nothing short of scandalous that the political and academic classes cannot see the lessons to be so plainly learned.

Gold on the other hand “observes a constancy. With one ounce of gold you can almost buy today the same quantity of basic goods as at the time of the Roman Empire or Egyptian civilization. Inder the Pharaoh Tutmosis III, one needed the equivalent of 2 ounces of gold to buy an ox. Today, 2.5 ounces would be needed. Inflation has been rather weak in 4,000 years!”

This is a salutary reminder of gold’s stabilising power, which is just the very thing that the modern politician resents about it.

A strong bullish potential

The importance of gold in the contemporary world is underlined by an examination of those countries which invest heavily in it, both at the national as well as the individual level. Russia, China and India are at the forefront of this investment, with others, such as Vietnam, making significant moves in this direction. There is a useful digest of information about these countries, the role gold has traditionally played in them and how they are managing their portfolios at present. This analysis clearly establishes trends which are not going to vanish: China indeed buys enormous quantities of it, even though she also produces it.

These markets ought to assure the potential gold investor that while prices do indeed fluctuate, bullish potential is always there in gold, and has been for most of human history. Any falls in the market have identifiable causes – for example, the wedding season in India sees a rise in prices. Indeed, this analysis is testimony to the fact that we have had 6,000 years to observe people’s behaviour with gold and make it one of the easiest assets to manage.

An Investment Portfolio

Nevertheless, the author does not argue that gold should be the sole asset in one’s portfolio, far from it. Instead it should be looked on as the preserver of a portfolio’s value, that depending on the scale of one’s other investments a relevant proportion should always be kept in gold to support the rest of the portfolio.

There is a very useful chapter on investments other than gold, such as arable land and forestry, fine art and fine wines. These all have valuable potential (after all, we all need to eat), but each has significant drawbacks which are clearly and carefully spelled out. Gold’s position as being free of such drawbacks means that it is essential to invest in it, as a hedge against the dormant disasters in the rest of one’s investments.

And gold enjoys an enormous potential over any other investment, including in things such as diamonds that might seem to share some of gold’s economic potential. Gold is superbly versatile. Cut a diamond, and much of it is waste; melt an ingot of gold, and you still have the same amount of gold.

Gold Coins

The heart of the book is in its last chapter which really gets down to brass tacks – or gold coins! Coins represent gold at its most versatile, allowing even those who do not have huge fortunes to start saving in gold. While one ingot is beyond the reach of most, a single coin, perhaps purchased at the rate of no more than one a year, is a realistic and feasible option.

The book contains a wealth of information on tax regimes; storage; what to do and what not to do in actually physically handling coins and how to transport them; what to look out for as enhancing a rare numismatic coin’s value and what depletes it – all fascinating information in itself, and eminently practical.

“If we had to state only three reasons to buy: gold is a recognized and accepted safe haven throughout the world, demand from the emerging countries is strong and the total demand over the mid to long term is reliably forecast as being higher than the supply.”

The book is available on Amazon in a Kindle version (price: £5.14). Those readers who would like the printed version, should send a cheque for £12.50 (includes p+p) made out to: Ferrington, and send it to: Ferrington, Bookseller & Publisher, 24 Shipton Street, London E2 7RU. The book is also available as Buy It Now on eBay.

GLOBALIZATION: A VIEW FROM THE EIGHTEENTH CENTURY

Wednesday, December 26th, 2012

THE ROYAL EXCHANGE by Joseph Addison (1672-1719)

There is no place in the town which I so much love to frequent as the Royal Exchange. It gives me a secret satisfaction, and, in some measure, gratifies my vanity, as I am an Englishman, to see so rich an assembly of countrymen and foreigners consulting together upon the private business of mankind, and making this metropolis a kind of emporium for the whole earth.

I must confess I look upon high-change to be a great council, in which all considerable nations have their representatives. Factors in the trading world are what ambassadors are in the politic world; they negotiate affairs, conclude treaties, and maintain a good correspondence between those wealthy societies of men that are divided from one another by seas and oceans, or live on the different extremities of a continent.

I have often been pleased to hear disputes adjusted between an inhabitant of Japan and an alderman of London, or to see a subject of the Great Mogul entering into a league with one of the Czar of Muscovy. I am infinitely delighted in mixing with these several ministers of commerce, as they are distinguished by their different walks and different languages: sometimes I am jostled among a body of Armenians, sometimes I am lost in a crowd of Jews, and sometimes make one in a group of Dutchmen. I am a Dane, Swede, or Frenchman at different times, or rather fancy myself like the old philosopher, who upon being asked what countryman he was, replied that he was a citizen of the world.

Though I very frequently visit this busy multitude of people, I am known to nobody there but my friend Sir Andrew, who often smiles upon me as he sees me bustling in the crowd, but at the same time connives at my presence without taking any further notice of me. There is indeed a merchant of Egypt who just knows me by sight, having formerly remitted me some money to Grand Cairo; but as I am not versed in the modern Coptic, our conferences go no further than a bow and a grimace.

This grand scene of business gives me an infinite variety of solid and substantial entertainment. As I am a great lover of mankind, my heart naturally overflows at the sight of a prosperous and happy multitude, insomuch that at many public solemnities I cannot forbear expressing my joy with tears that have stolen down my cheeks. For this reason I am wonderfully delighted to see such a body of men thriving in their own private fortunes, and at the same time promoting the public stock; or, in other words, raising estates for their own families, by bringing into their country whatever is wanting, and carrying out of it whatever is superfluous.

Nature seems to have taken a peculiar care to disseminate the blessings among the different regions of the world, with an eye to this mutual intercourse and traffic among mankind, that the natives of the several parts of the globe might have a kind of dependence upon one another, and be united together by this common interest.

Almost every degree produces something peculiar to it. The food often grows in one country, and the sauce in another. The fruits of Portugal are corrected by the products of Barbados; the infusion of a China plant sweetened with the pith of an Indian cane. The Philippine Islands give a flavour to our European bowls. The single dress of a woman of quality is often the product of a hundred climates. The muff and the fan come together from the different ends of the earth. The scarf is sent from the torrid zone, and the tippet from beneath the Pole. The brocade skirt rises out of the mines of Peru, and the diamond necklace out of the bowels of Hindostan.

If we consider our own country in its natural prospect, without any of the benefits and advantages of commerce, what a barren, uncomfortable spot of earth falls to our share!

Natural historians tell us that no fruit grows originally among us besides hips and haws, acorns and pig-nuts, with other delicacies of the like nature; that our climate of itself, and without the assistance of art, can make no further advances towards a plum than to a sloe, and carries an apple to no greater perfection than a crab; that our melons, our peaches, our figs, our apricots and cherries, are strangers among us, imported in different ages, and naturalized in our English gardens; and that they would all degenerate and fall away into the trash of our own country if they were wholly neglected by the planter, and left to the mercy of our sun and soil.

Nor has traffic more enriched our vegetable world than it has improved the whole face of nature among us. Our ships are laden with the harvest of every climate: our tables are stored with spices and oils and wines; our rooms are filled with pyramids of China, and adorned with the workmanship of Japan; our morning’s draught comes to us from the remotest corners of the earth; we repair our bodies by the drugs of America, and repose ourselves under Indian canopies.

My friend Sir Andrew calls the vineyards of France our gardens, the spice-islands our hot-beds, the Persians our silk weavers, and the Chinese our potters. Nature indeed furnishes us with the bare necessaries of life, but traffic gives us a great variety of what is useful, and at the same time supplies us with everything that is convenient and ornamental. Nor is it the least part of this our happiness that while we enjoy the remotest products of the north and south, we are free from those extremities of weather which gave them birth; that our eyes are refreshed with the green fields of Britain at the same time that our palates are feasted with the fruits that rise between the tropics.

For these reasons there are not more useful members in a commonwealth than merchants. They knit mankind together in a mutual intercourse of good offices, distribute the gifts of Nature, find work for the poor, and bring wealth to the rich and magnificence to the great. Our English merchant converts the tin of his own country into gold, and exchanges his wool for rubies. The Mohammedans are clothed in our British manufacture, and the inhabitants of the frozen zone warmed with the fleeces of our sheep.

When I have been upon the change, I have often fancied one of our old kings standing in person, where he is represented in effigy, and looking down upon the wealthy concourse of people with which that place is every day filled. In this case, how would he be surprised to hear all the languages of Europe spoken in this little spot of his former dominions, and to see so many private men, who in his time would have been the vassals of some powerful baron, negotiating like princes for greater sums of money than were formerly to be met with in the royal treasury!

Trade, without enlarging the British territories, has given us a kind of additional empire: it has multiplied the number of the rich, made our landed estates infinitely more valuable than they were formerly, and added to them an accession of other estates as valuable as the lands themselves.

AID TO INDIA THE LAND OF GOLD

Thursday, August 30th, 2012

By Mark Rogers

On February 10, 2012, I posted a prediction that the Barmiest Political Story of the Year would be the refusal by the British government to accept India’s rejection of the Department for International Development’s hand-out of £280 million a year: this aid programme is set to end after 2015.

Nothing barmier has emerged – only the original story getting even barmier. My original concern was simply that the Indian government had categorically stated that it didn’t want it, although of course at the back of my mind was the thought that India is a nuclear power – why was it deemed to need a hand-out?

India Orbiting Mars

It was reported just over two weeks ago that India is to launch a satellite which will orbit Mars. The cost of this project is just under one fifth of the amount of money that the Department for International Distribution of Other People’s Money sends to India each year. India has been conducting a space programme since the 1960s and has launched many satellites.

India is also a large regional military power – with a navy.

The Indian Military

Whether or not India intends to emerge as the region’s dominant military power is not at issue; what is at issue is that it is surrounded by hostile or potentially hostile powers, the obvious one being the ongoing conflict with Pakistan not only over Kashmir but also about Pakistani-backed terrorists operating in India in pursuit of goals other than just the Kashmiri issue. But India fought a war with China in 1962 – and China’s ambitions cannot be ignored (especially if its economy goes into a widely predicted decline). India has both the manpower resources as well as the economic wherewithal to provide for its own security. It has proud fighting traditions and its long association with the British Army laid solid foundations for its modern prowess.

Today it was reported that the Indian Navy is spending £1 billion on three warships – and buying them from Russia. This has caused a predictable uproar in the U.K., chiefly because the British Navy, along with the rest of the British armed forces, is being emasculated.

Yet here is the public purse being used to send “aid” to India, in pursuit of the Coalition government’s promise to raise the total spending on international aid to 0.7% of national income. Promise to whom, one has to wonder? There are serious problems with the Ministry of Defence – not just the usual overspending on projects that are then abandoned; not just that, unlike the Indian Navy, we no longer have any aircraft carriers (the Indian Navy has aircraft carriers and warplanes to put on them); but, most importantly, the large number of redundancies being inflicted on the services and a very serious crisis of military pensions.

No wonder the self-deluded International Development Secretary, Andrew Mitchell has been quoted as saying: “I completely understand why people question the aid programme to India and we questioned it ourselves.” Obviously he didn’t completely understand the answer.

Just to drive the point home, two things should be noted about the U.K.’s aid to India: first of all, India has become over the last two-three decades so much of a developed nation that it even has its own international aid programme; and second, that the money that the U.K. sends to India is borrowed – that’s right, we don’t even have the money that we dispense with such largesse!

Aid Targets

The Department for International Decrepitude justifies this largesse on the grounds that the money goes to targeted projects and is not just a general hand-out to the Indian government which then gets spent on Russian battleships. That misses the point entirely. Besides there are development projects run by Indian charities that are compromised by the aid money – it is not just the Indian government that has denied that it needs aid, autonomous organisations within India, working in the very poorest regions, have rejected the need for it.

Those who defend the aid to a country like India accept that India is now a major economic power, but point out that the country, with a population of 1.21 billion, is still riddled with poverty. This is saying nothing – it is like pointing out that Britain at the height of its imperial power still had pockets of dire poverty. The Empire didn’t go round asking for hand outs for the East End; the amelioration of poverty was the result of people’s own indefatigable efforts in a low tax environment, aided where needed by voluntary organisations and self-help societies.

None of this shakes the self-belief of those would dip their fingers into others’ pockets to bolster their sense of their own rectitude.

“Lord Ashdown emphasised the immense influence and respect that meeting our aid commitments and being a leader in international development gives us in international affairs. He then made the moral case for giving aid, arguing that the UK is a great country ‘and one of the reasons we’re a great country is because of our humanity.’ ” Thus the self-important Lord Ashdown at a debate organised by Save the Children and UNICEF, held in London in May.

Thus, the Indian government says it does not want or need Britain’s aid: such is the power of the “moral” case that the British government can “afford” to ignore the Indian’s in a fit of smugness that we – the colonial masters still, perhaps in imagination, eh, Lord Ashdown? – know best what’s good for Johnny Foreigner.

Readers curious as to why articles of this nature should be appearing on a gold investment website should read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS 

And for background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST

THE FEDERAL RESERVE AND THE CAMPAIGN FOR SOUND MONEY

Wednesday, August 22nd, 2012

By Mark Rogers

We noted here that the Federal Reserve of the United States has always conducted its own audit.

This could be set to change. Mitt Romney has recently on the campaign trail demanded independent auditing of the Fed. And in July 2012, the House of Representatives voted for “A Bill To require a full audit of the Board of Governors of the Federal Reserve System and the Federal reserve banks by the Comptroller General of the United States before the end of 2012.” (H.R. 459)

The support for the bill was decisive, the vote being 327 in favour to 98 against. It is interesting to note how close was the Democrat vote: 89 in favour to 97 against. The extra one making up the 98 against overall was a lone Republican, the Republicans otherwise voting 238 in favour.

The Democrat vote in favour was something of an achievement given that the Democratic leadership in the House tried to whip all members to vote against. Senate majority leader, Democrat Harry Reid has asserted that he will not permit a vote in the Senate, even though he thought it a good idea in 1995. However, he could be out-manoeuvred: Senator Rand Paul (the son of Representative Ron Paul who has been championing this cause since 1983) has sponsored a companion bill in the Senate which has twenty-two cosponsors. The Presidential elections later this year may well provide a momentum that outwits Sen. Reid and forces a Senate vote.

However, there is reason for caution: Constitutional Tender, for one, thinks that there is little likelihood of this getting past the Senate anytime soon.

But all is not lost. The Constitution of the United States of America states, Article I, Section 10: “No State shall… make any Thing but gold and silver Coin a Tender in Payment of Debts.” Which means that Federal Reserve notes are unconstitutional, and States’ laws that have been passed to make them legal tender were passed in defiance of the above Article. This also means that the lifeblood of the Fed’s notes, quantitative easing, is also unconstitutional and therefore illegal. And the individual States have the power to act as Utah has and start remonetizing gold and silver through similar schemes.

This may well be the most revolutionary movement since the separation of the American people from the British Crown. The tendencies towards big government for so long unchecked – and striking at the heart of the Constitution – may at last be confronting a resistance that modern politicians do not expect to happen to them: the end of rule by political elites despising traditional methods of financial sobriety, in favour of ordinary people armed with gold!

We will be keeping a close watch on developments: while gold purchases are down in both India and China, while speculation as to China’s intentions about backing the renminbi with gold in order to become a rival to the dollar are still speculations shrouded in uncertainty, ordinary Americans are returning to the gold standard in a movement that is likely to prove unstoppable.

For a very thorough account of Utah’s sound money policy please go here.

Gold: The Terminator amongst currencies: “I’ll be back”

Tuesday, May 15th, 2012

Some thoughts on the return of gold as a means of exchange from L’Or et L’Argent (the original article may be read here).

Payment for Iranian oil in gold

More than a trend, there is a strong signal being sent: gold is returning to the markets as a currency of exchange. Thus, China, the largest importer of Iranian oil, follows in the footsteps of India and avoids the embargo imposed on Iran by choosing to pay for crude oil in gold. Because it decided to continue with its nuclear program, Iran saw sanctions imposed by the United States in late 2011. The oil embargo, which will take effect in June, prohibits payment for Iranian crude oil in international exchange currencies (Dollars, Yen, Euros…). Soon after, the European Union announced that it was also going to apply the embargo which will take effect in July.

Gold returns in trading

Although Iran does not represent a large percentage of oil imports to the US and to the EU, the same cannot be said for India and China which between them account for 40% of imports. India, which has a large demand for oil, has chosen to maintain its commercial trade with Iran by paying its bills in gold.

Recently, Forbes magazine reported that China was also intending to avoid the financial sanctions imposed on Iran by buying its oil with gold. China, the largest producer but also the largest consumer of gold, already imports huge amounts of the yellow metal (its imports tripled in 2011, to 428 tons). Such a decision will only amplify the economic effects on the price of gold.

Gold: exchange currency and political weapon

Gold, which is increasingly returning to the mechanisms of means of payment will also take a more political dimension and become a real weapon of war. These events confirm the most bullish gold market for years. In the same way that investors made wise choices by betting on gold since 2007, this also goes for today’s investors, when they will see the ounce crossing the $2,000 mark in the next few months.

 Gold has recently been undergoing a consolidation period – its price is below the value that in reality it should have. It is therefore the right time to strengthen one’s positions on gold, before the summer. Moreover, because of the presidential elections in the US next November, uncertainty over the economic future of the country will undoubtedly cause a new rush on gold… which will not stay at the current level of $1,640.

The BRIC attack: A major political event

Friday, April 27th, 2012

Translated from an original article by Charles Sannat, Director of Economic Studies, AuCOFFRE.com, Paris

The Fourth Summit of the BRIC nations, a major political event.

This is a huge story and yet has gone largely unreported by the major western media. On the 29th of March in New Delhi, the Fourth Summit of the BRIC nations took place (Brazil, Russia, India, China).

“The BRIC nations (Brazil, Russia, India, China and South Africa) should no longer use the US Dollar in their bilateral exchanges. That is what was decided on Thursday the 29th March, 2012, during the Fourth Summit of leaders of these five nations in the Indian capital”.

Source: algeriedz.info and rian.ru

The following was decided during this meeting: an essential step was taken towards a “multipolar” global monetary system. March 29th 2012 will undoubtedly not be the date remembered in history as marking the end of the era of the Dollar. Nonetheless, the change is major.

Towards an overhaul of the IMS

We are entering a phase of disintegration of the International Monetary System as we know it. Our monetary system dates back to the Bretton Woods agreement of 1944 which was brought to an end by the Jamaican agreement of 1976 (this ended the gold standard).

So what will happen now? Stock markets are starting to fall because the issuing of European bond funds is doing badly or is disappointing (depending on your degree of optimism about the outcome of this policy), which is the case for Spain and now Italy.

What one must understand is that according to the current economic system it is the surpluses of some which finance the deficits of others, thus creating a balance. In other words, western countries are in a chronic deficit which has been, and I stress has been, financed by the major Asian exporting nations on the one hand (China and India) and the oil-producing nations on the other.

For the last few years, nobody was lending to western states (by this we mean the US and Europe) which now find themselves in an irreversibly compromised situation.

It is this lack of external funds which is pushing the central banks, the FED and the ECB to massively intervene in the markets. The only option that remains for us is indeed the use of the printing press and the creation of money with all the negative consequences that follow.

Though this Fourth Summit of the BRIC nations is a founding step towards the overhaul of the IMS this is certainly not the ultimate goal.

Ground-breaking events in international relations

Discussing the topic of the monetary system without mentioning the political dimensions would be a mistake. The future International Monetary System will be shaped by the international balance of power and alliances between the major players in the context of the fight for access to energy and agricultural resources and in the broader sense to raw materials. A strong axis is taking shape amongst the BRIC countries, and Iranian diplomacy is also far from insignificant.

The trans-Atlantic relationship remains strong despite the strains and divergences. Lastly, one should not imagine that the United States of America will let their status as world leaders slip away without a colossal “fight”. American policy has always been based on a simple concept: “America First”.

We are thus entering a new phase in the current crisis:

In 2007, the subprime crisis led to a financial and stock market crisis.

The financial crisis led to an economic recession.

The economic recession lead to massive state intervention in the form of stimulus packages which resulted in massive debts for these states.

The debt crisis can only lead to a major monetary crisis.

The monetary crisis (which is on its way) will lead to the restructuring of the International Monetary System.

And… the manoeuvres have already begun. The global repercussions will be deeply felt, as the International Monetary System is to the global economy what tectonic plates are to geology. We are touching upon the essential part. The tremors will truly be felt.

Will you be ready?

GOLDEN NUGGETS: THE GOLD STANDARD

Monday, April 9th, 2012

An occasional series of curiosities of Gold, its history and ideas about it.

By Mark Rogers

For all practical purposes, it has looked for a very long time as if the gold standard has become a curiosity; reviled by Keynesians, found impractical by politicians (I wonder why?!), alleged to be unworkable as a medium for regulating international trade – these are just some of the reasons that anybody who advocates a possible return to it is regarded as a crank. (This does not stop governments from wanting to get their hands on gold or control it, as witness the buying of gold in China, and the curtailing of paying for gold in cash in Europe.)

That is not the only reason why I am, at least for the purposes of this article, putting the gold standard in the category of a curiosity. Although Britain came off the gold standard in 1931, at least as late as 1934 candidates sitting the Final Examination of the Institute of Chartered Accountants were still being asked questions on the gold standard.

I discovered this in a small crib published in 1934 for such candidates: “109 Examination Questions on General Financial Knowledge together with Answers Thereto” by R. Byrne (A.C.A, A.S.A.A., F.C.I.S), published by The Coaching Association Ltd, London E.C.2.

Here they are, giving as good and succinct a definition as one could wish for, written with essentially practical business in mind:

Q.77 Explain concisely what is meant by the gold standard, and mention the various forms of the gold standard.

By “the gold standard” is meant a system of monetary management whereby the currency of the country has a definite gold value, even though the circulating medium is a paper currency or a metal other than gold.

Any country which is on the gold standard undertakes that its standard coin shall contain a fixed and unalterable amount of pure gold. It also undertakes that such standard gold coins shall be legal tender to an unlimited amount, and that its central agent (the Bank of England in this country) shall buy and sell gold at certain fixed prices.

Under the gold specie or circulation standard – which is the most perfect form of gold standard – gold coins are actually in circulation and the central bank undertakes to redeem any of its bank notes in gold coin. Gold coin, therefore, is readily available for the settlement of debt. This is the system which was in operation in this country prior to 1914. The gold bullion standard, which was in operation in this country from 1925 until 1931, is a more restricted form of gold standard. Under this system the central bank is bound to buy and sell gold bullion at fixed prices. In England, the Bank of England was compelled to buy gold of standard fineness at the rate of £3 17s. 9d. per oz., and to sell it – in bars of not less than 400 ozs. – at £3 17s. 10½d. Consequently, gold was always available for shipment in payment of debts, and the £ always had a value fixed in relation to these prices. The gold exchange standard is that adopted by silver-using countries. Thus, a country such as India would maintain the gold standard by purchasing the exchange or securities of a country which was on the gold standard, e.g. England. These securities could be sold, and with the proceeds gold obtained from the Bank of England. This gold could then be transferred to India’s creditors so that the rupee, although silver, could be definitely linked to gold.

Q.78 Explain how the gold standard operates to adjust the balance of international trade.

The gold standard maintains stability of the exchanges, for when the currency of a gold standard country is convertible into gold at a fixed price, the value of that currency in terms of the currencies of other gold standard countries will only vary within small limits known as specie points. Therefore, international trade may proceed without any fear on the part of the trader of loss owing to exchange fluctuations.

In order that the gold standard shall operate freely, it is necessary that no restrictions shall be placed upon the free movement of gold from centre to centre, and that there should be some relationship between the internal and external purchasing power of a currency.

When a country has an adverse balance, payment will be made in the form of gold. The loss of gold will result in a contraction in the volume of money, and prices will tend to fall. In consequence, the country exporting gold is able to produce more cheaply, and its exports tend to increase. Its imports, however, tend to decrease because of the higher costs of production prevailing abroad. In the countries receiving the gold the opposite results will be noticed, i.e. more imports and fewer exports, so that in due course the country which had the unfavourable balance will tend towards equality with the others, and will ultimately have a favourable balance, resulting in the receipt of gold.

The gold standard therefore operates as a corrective, whereby the course of international trade is facilitated by the transfer of gold.

If the gold standard is not permitted to operate freely, i.e. by an inflationary policy on the part of the gold-losing country, or by excessive tariffs on the part of others, gold will tend to move one way only, resulting in the exhaustion of gold supplies of at least one country, and the eventual abandonment of the gold standard by that country.

For good measure, Q.79 is What are the disadvantages of a paper standard of currency? the last sentence of the answer reading emphatically: It may be remarked that inflation has always occurred in cases where a paper standard has been adopted.

[The author is, amongst other things, a dealer in secondhand books and is always picking up little gems such as this crib on his rambles!]

AN ECONOMIC PEANUT IN THE LAND OF GOLD

Friday, February 10th, 2012

You know how it is: it’s January and already the film critics are exhorting one and all to see “this year’s best movie”. With another 11 months to go, how do they know?

Nothwithstanding such follies of prediction, I am going to announce the Barmiest Political Story of the Year. And no, it is not the euro-shenanigans…

It was reported in The Sunday Telegraph, 5 January 2012, that last year the Indian Government tried to reject Great Britain’s development aid largesse. The U.K. Department for International Development has spent in excess of £1 billion over the last five years in “aid” to India, with a further £600 million earmarked up to 2015, corresponding to about £280 million per year.

This in spite of the fact that “the then Foreign Minister, Nirupama Rao, proposed ‘not to avail [of] any further DFID assistance with effect from April 1, 2011’.” In tune with the April folly, the British government declined the saving offered by India, officially now ranked as a middle-income country.

And what was the reason?

To save politicians’ faces. “They said”, continues The Sunday Telegraph correspondent Andrew Gilligan, quoting an anonymous source, “British Ministers had spent political capital justifying the aid to their electorate. … They said it would be highly embarrassing if the Government of India then pulled the plug.” Highly embarrassing? Wasting taxpayers’ money, when the recipient has declined it? Which is stupider: looking foolish because the DFID has ignored the tremendous growth in Indian prosperity? (And at an annual growth rate of 10%, that’s growing! Within the decade, the Indian growth rate is projected to be greater than Britain’s.) Or looking foolish because it is determined to persist in an unnecessary and demeaning expenditure, especially in these would-be austere times?

The Indian Government regards the aid as belittling, as if India was still being regarded as an impoverished country. Said the Finance Minister, Pranab Mukherjee: “We do not require the aid. It is a peanut in our total development exercises.”

This is a land where even the peasants invest in gold: “The IMF estimates in fact that Indian homes alone represent 15,000 tons of gold,” notes Jean-François Faure in “Gold: an investment and an insurance that reassures” (transalation). And here at GoldCoin.org we reported on January 14, 2011 that “India is responsible for one quarter of the global imports of gold.”
Gold is immensely important in India, even for the poorest families because it represents some sort of status; this is because gold jewellery plays an essential role in Indian marriage customs and ceremonies. It is a measure of both prudence and munificence. The U.K., the government of which has long since forgotten the first of these, and then makes a pretence of the latter, has no business being spendthrift with money it really hasn’t got.

Savings, anyone?

by Mark Rogers

1 Billion+ Investors to Buy Gold as Chinese Gold Rush Grows

Wednesday, March 30th, 2011

We have previously reported at Goldcoin.org in Chinese queue at malls to beat Bernanke’s inflation with gold that the a Chinese Gold rush is underway from investors who are looking to beat inflation and devaluing currencies by buying and hoarding gold bullion and gold coins.

In January 2010, China recorded an inflation rate of 1.5%. But just 12 months later, the rate of Chinese inflation has climbed to 4.9%.

Rising inflation has sent food and property prices in China skyrocketing.

The price of food in China has increased 10.3% on an annual basis. The price of grain rose 15.1% and fruit prices were up 34.8% since January of last year.

Chinese inflation has been fuelled by an economic stimulus during the financial crisis two years ago of $585 which has resulted in excesses of liquidity in the economy.

The Chinese Government has tried to curb the inflation with measures such as raising interest rates several times and tightening lending requirements but so far this hasn’t worked. Even worse is the fear sweeping through the Chinese economy that inflation could go out of control and even lead to hyperinflation.

This has already prompted Chinese citizens to buy gold and their appetite for the yellow metal is insatiable.

This trend is not only set to increase but possibly explode into action following recent reports that the People’s Bank of China (PBOC) is actively recommending that over 1 Billion Chinese citizens buy gold as a way of preserving and protecting their wealth against inflation, economic crisis and the falling values of major currencies .

This recommendation was given in the Financial Markets Review from the PBOC and its publication coincided with the decline of several major currencies against the value of gold notably, the Swiss Franc fell 2.5%, The Japanese Yen 2%, The Pound Sterling 2% and of course the US Dollar  which fell 1%.

Chinese buy almost half the Gold produced in the world

According to the gold-specialising Swiss Bank UBS the Chinese demand for gold in the first 2 months of 2011 exceeded  7.05 Million ounces.

This unbelievable demand is the equivalent of 47% of all gold produced in the world during the same period. So the Chinese are buying almost half of the world’s gold production.

If this continues then the Chinese are set to buy in excess of 42.3 Million Ounces of Gold this year!

To put this quantity into context it is more gold than China’s Central Bank officially stores in its reserves.

The Financial Times recently quoted a senior executive at the Industrial and Commercial Bank of China ICBC, who spoke of the “voracious” appetite for gold in China…

China’s largest bank started a physically-backed gold savings account in December with the World Gold Council. Account openings have already surpassed 1 million, with more than 12 tonnes of gold already stored on behalf of investors.

Zhou Ming, deputy head of ICBC’s precious metals department, said the nation’s largest bank sold nearly 250,000 ounces of physical gold in January — the equivalent of 50% of all the bullion ICBC sold last year.

Added to this is the continuing diversification out of Forex by the People’s Bank of China into gold and other precious metals. They have around $3 Trillion which they would like to change because the weakening dollar is eroding its real value. How much gold will they need for $3 Trillion?

We know that China has been accumulating gold surreptitiously by buying up its own domestic production.

This suggests that increasing gold production was part of a long-term strategic plan to become a global leader in gold investments among governments.

The World Gold Council even reported:

Some market participants believe that China may also be continuing to buy local mine production, which it has done regularly in the past. There is certainly no shortage of experts, both domestic and from overseas, advising China to do so.

The World Gold Council estimates China’s gold demand could double in 10 years as more investors embrace precious metals.

But even in the short term, the expected demand for gold in China over the coming month will be enough to put significant strain on global supplies.

According to Tom Bulford  “China has spent the last decade buying every ounce of gold it can lay its hands on.

In fact, the Chinese have increased their deposits by 1,054 tonnes since 2001.

That’s 76% more than it was buying just a decade ago!

And it’s not just the Government we’re talking about here.

Ever since private gold ownership was legalised in China…and the Shanghai Gold Exchange opened – regular Chinese citizens have also started buying up gold in a BIG way”.

Quite simply, the Chinese seem to want to buy ANYTHING gold…

…gold coins…gold bullion…even foreign gold miners.

In fact, according to Want China Times…

“Chinese state-owned gold miner China National Gold Group announced… that it will step up overseas mergers and acquisitions in an effort to increase its gold stockpiles by 100 tonnes this year.”

Chinese production figures

China Produced $35 Billion in Gold in 2010

According to China’s Ministry of Industry and Information Technology, gross output from domestic production increased 67% to 230 billion yuan ($35 billion) in 2010.

Of this, China’s gold industry earned 5 billion yuan ($3.8 billion) in profit — 78% more than in the previous year.

China’s gold mines produced 9.9 million ounces of gold in 2010 — an increase of 7% over 2009.

Meanwhile, total domestic gold output grew 9% to 12.0 million ounces. (source WGC)

India is also encouraging Gold acquisition

Traditionally there has always been a strong demand for gold in India  with its specific seasonal demands for weddings and a cultural attachment to jewellery. However, they are also strengthening demand in Asia which is fast becoming the most important Continent for gold investment.  Gold is selling extremely well to the ordinary citizens looking for wealth protection and preservation. There are over 460 Post Offices that sell gold direct to the people. India also has public companies that offer credit to anyone wishing to purchase gold – in other words you can get a loan to buy gold!

This incredible demand throughout Asia is sure to impact the price of gold which may not have been factored in to the so-called expert calculations/ predictions/guesses.

Gold Price set to go skyward with Asian demand and World events

Similarly there are other significant factors that cannot have previously been factored in to annual gold price predictions such as;

  • The continuing European Sovereign debt crisis with Portugal the latest Eurozone country in difficulty,
  • The on-going Japanese catastrophe following the Earthquake, Tsunami and nuclear crisis,
  • The popular uprisings in North Africa and around the Middle East with Syria and Yemen on the brink and the conflict in Libya worsening by the day. This has drawn military (and therefore financial)  resources from France, the UK and the US which have their own deficit problems and now has involved NATO countries.

It is becoming increasingly difficult to see how all of this can be paid for or accommodated in a World Economy already faltering.

It is no wonder that the Chinese are hedging against another crisis and with their ever increasing hoards of gold they are aiming to back the Yuan with gold and ultimately replace the Dollar as the world’s reserve currency.

We are heading for a spot of $1500 within weeks – and then…..$3000+

In view of the colossal demands for gold already discussed, the possible collapse of the dollar and the unknown outcomes of other world events a crisis bigger than 2008 looms large and we cannot predict which event will trigger it but be sure that it will happen. When it does make sure you have copied the Chinese and secured your wealth in the only safe haven for the crisis ahead. Buy Gold and buy now before the price takes off exponentially surpassing $2000 and even £3000 an ounce before the end of the year. The worthless dollar, hyperinflation, extraordinary demand and debt crisis dictate the course of gold to re-establish itself as the only real measure of currency and wealth. When the dust settles and re-evaluations have been made just pray you have gold as it will be worth upwards of $3000 an ounce.

Gold Trends Intra Day Gold Update – Mar 29th

Tuesday, March 29th, 2011

In last nights website update resistance was listed at 1426-1434 and the high so far today is 1422. Support was listed at 1406-1413 and the low is 1410.90

London Gold Fix $1414.00 -$6.00 LME

Gold prices appear to have come in from over seas action on a slightly weaker footing. Apparently prices for gold related items in Japan continued to slide overnight and that could be the uncertainty of the Japan crisis.

Indian gold prices were also softer in the wake of weakness in a host of commodity prices in the US on Monday. Some gold players probably saw the hawkish dialogue from US Fed members speaking in Prague this morning as a negative, while others might have noted some residual concern within the Fed for the “Four” uncertainties facing the market. The Fed’s Bullard suggested that macroeconomic uncertainty was on the rise over the last few weeks because of Japan, the Middle East, the Euro zone debt crisis and also because of the US fiscal situation.

Last week, the gold market seemed to draw support from evidence of weak US economic readings, as that fostered some talk of an extension of easy money policies. While somewhat hawkish dialogue from the Fed over the last 24 hours might temper the impact of weak US data on gold prices, the trade should still take a long look at the reaction in gold prices to the Consumer Confidence report and the Case-Shiller home price survey this morning as both of those reports are expected to be soft.

The Dollar is higher against most of the major currencies during overnight trading. A Regional Fed President said that the US Fed may start to normalize policy before global uncertainties are totally resolved. Western and Middle Eastern nations will meet in London today to plan for a post-Gaddafi Libya. Japanese officials have found traces of plutonium around the damaged Fukushima nuclear power plant.

From a chart perspective — the inability of gold to close above 1444 last week continues to exert pressure on prices again this morning. Last nights high at 1422 kept gold inside the trading range we’ve been in for the past five months. Today’s lows have retraced back down to yesterday’s price range near 1410. This adds additional pressure on yesterday’s reversal back up. Support is the 1405-1410 (purple line) area and 1390-1398 where the dotted trend lines are.

Price needs to close back above the 1425 level as a minium to reverse the pullback that began last Thursday. The 9am to 10:30am EST timeframe needs to be watched carefully today.

by Bill Downey

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"For a mountaineer, the important things are the effort, the posture and the muscles. The rope that holds him serves no purpose when everything works but it gives him a sense of security. In the same way, all gold does is ensure confidence; it's a safe haven."