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Archive for the ‘Mises’ Category

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 Panda 1 ounce

Wednesday, December 4th, 2013

The Chinese Gold Panda is a popular series of Gold bullion coins issued by the People’s Republic
of China in Proof-like, brilliant uncirculated quality. They are issued in a range of sizes between
1/20 Oz and 1 Oz with larger 2 and 5 Oz coins being additionally issued in some years.

Details
panda 1 onceChina issued its first Gold coins bearing the Panda design in 1982. These were limited
to sizes of 1/10 Troy ounce along with 1/4 Toz, 1/2 Toz and 1 Toz. From 1983, the 1/20 Toz size was added and additionally a 2 Toz and 5 Toz coin is sometimes issued.
These strikingly beautiful coins are always issued in Proof-like brilliant uncirculated quality and prove very popular.
A different design was issued each year until the 2000. When the 2001 edition was announced, so too was a freeze of the design and thus the 2002 Panda is identical to the 2001. Collectors spoke up on behalf of the annual change and China responded by reversing their policy so that from 2003 onwards, the designs again change each year.
However, on the reverse side, it always features the endangered Giant Panda. It also features the size, Gold fi newness and monetary value.
The main design on the obverse of the coin has hardly changed, save for minor detail changes in the image. It features Beijing’s famous Temple of Heaven (Tien Tien) in the centre with Chinese characters on the top saying “Zhonghua Renmin Gongheguo” meaning People’s Republic of China and at

the bottom the year of issue. If it is a commerative issue, the theme will also be marked here.
There was an adjustment of the face values of the coins in 2000/2001 – please see
the table overleaf for details.
The Chinese mints usually do not employ mintmarks. In certain years, there have
been minor variations in items like the size of the date, the style of the temple and
so on. These allow the numismatist to identify the originating mint. In some years,
but not all, other marks and Proof marks (signifi ed by a ‘P’) have been added. The
four mints involved in the production of the Panda are Beijing, Shanghai, Shengyang
and Shenzhen.

Investment Advice

INVESTMENT ADVICE

All Panda coins are issued as pure Gold fineness, 999.9‰ and in theory have a low premium just above the value of the Gold.
However, their intrinsic beauty makes them very collectable and they attract good premiums.
As with any coin, the best quality grades will attract the best premiums. The early years in particular will be those with the highest premium. Although the coins were issued in Proof form, many were unpacked and have thus been damaged and are at lower gradings. The mintage figures should be carefully examined – the number originally minted is quoted but it has been found that production continues for various years, hence the total mintage may be quite a bit higher some years after.

SPECS

SPECS

KEY FACTS

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

THE GOLD SPOT: GOLD THE REFERENCE POINT

Tuesday, May 14th, 2013

The Gold Spot is a regular feature in which Mark Rogers excerpts a passage from his reading as the Text for the Day and then comments on it.

Extract from CURRENCY WARS: THE MAKING OF THE NEXT GLOBAL CRISIS by James Rickards, Portfolio/Penguin, New York, 2011

The continuation of the trend toward a diminished role for the dollar in international trade and the reserve balances begs the question of what happens when the dollar is no longer dominant but is just another reserve currency among several others? What is the tipping point for the dollar? […]

Barry Eichengreen is the preeminent scholar on this topic and a leading proponent of the view that a world of multiple reserve currencies awaits […] the plausible and benign conclusion that a world of multiple reserve currencies with no single dominant currency […] this time with the dollar and the euro sharing the spotlight instead of the dollar and sterling. This view also opens the door to further changes over time, with the Chinese yuan eventually joining the dollar and the euro in a coleading role.

What is missing in Eichengreen’s optimistic interpretation is the role of a systemic anchor, such as the dollar or gold. As the dollar and sterling were trading places in the 1920s and 1930s, there was never a time when at least one was not anchored to gold. In effect, the dollar and sterling were substitutable because of their simultaneous equivalence to gold. Devaluations did occur, but after each devaluation the anchor was reset. After Bretton Woods, the anchor consisted of the dollar and gold, and since 1971 the anchor has consisted of the dollar as the leading reserve currency. Yet in the post-war world there has always been a reference point. Never before have multiple paper reserve currencies been used with no single anchor. Consequently, the world […] is a world of reserve currencies adrift. Instead of a single central bank like the Fed abusing its privileges, it will be open season with several central banks invited to do the same at once. In that scenario, there would be no safe harbour reserve currency and markets would be more volatile and unstable.

Comment: It is hard to fathom such an unrealistic expectation of lead currencies, swilling about supporting each other and every other currency, as being somehow optimistic and benign; Rickards is not saying that he thinks they would be by using these terms, he is pointing up the authors of these expectations as hailing them as benign: what could go wrong, we’re all good chaps…aren’t we?

Rickards’s view is of a piece with Gustav Cassel’s point (quoted in Gold on the Outbreak of the Great War), that “the responsibility for the value of the currency, in cases where the gold standard has been abandoned, must exclusively lie with those in whose hands rests this provision of the means of payment.” The point being that this is an astonishing level of trust to put into the institutions of government, not just moral trust, but a trust that the necessary calculations, observations and measurements can be made consistently and continuously to keep things afloat and stable. The euro is a very good object lesson that both these sorts of trust are misplaced, which is putting it mildly…

From an Austrian School point of view, the goodness of the humans in charge is irrelevant: it is the utterly impossible nature of the task that is the stumbling block. But it is just there, of course, that the immoral temptation to swing things to the state’s advantage comes to the fore – again as shown up by the euro.

Where there is no reference point, no anchor, no solution is feasible… which is why we keep getting  more of the failed nostrums. Which leads on to a very interesting observation: why taxes must go up in an economic world divorced from the gold standard.

Politicians are incapable of managing monetary affairs (see the article linked to below on The Mess We’re In: Why Politicians Can’t Fix Financial Crises). The gold standard prevented them by and large from acting on economic hubris. Unconstrained by gold, bewildered by their failures, corrupted by their power, they turn to the one nostrum that lies unfailingly to their hand: taxation. That is why it is found important at times of high and progressive taxation to denounce “avoiders” as selfish cheats who won’t do their bit for their fellow citizens (see my The Moral Dilemma at the Heart of Taxation). So the gold standard not only prevented printing money, it also held down taxation. Another reason to vote for gold!

For the raison d’être of these articles on goldcoin.org read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS

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

For a series of articles on the pernicious effects of progressive tax regimes: THE MORAL DILEMMA AT THE HEART OF TAXATION

For a review of one of the most important books on the financial crisis published last year: THE MESS WE’RE IN: WHY POLITICIANS CAN’T FIX FINANCIAL CRISES

BANKING FAILURES

Tuesday, January 29th, 2013

By Mark Rogers

 Banks are businesses like any other (in principle) but the regulatory frameworks constructed to “oversee” them in fact legislated banks out the consequences of operating in the private sector. The question inevitably arises therefore: what were the kickbacks?

They were obviously not such as obtained in the media, where for decades newspapers have espoused political causes and backed parties and politicians. Yes there were some ultimately certain relations that proved fairly poisonous for democracy – one thinks of Murdoch and Blair for example. The Browne/Balls-Banker axis was more fundamental, more insidious and more toxic than the media-politician axis, if only because the latter was transparent, in the sense that we could see some at least of what was going on and newspapers made no bones about their political stance.

Banks had traditionally been independent of the state (remember: the Bank of England was only nationalized in the late 1940s). The media-state “interface” had always been the more obvious and troublesome one: censorship versus boosterism – no surprise there. Journalists and politicians after all have a lot in common.

In other words, what the LIBOR arrangements, if guessed correctly by The Spectator, amounted to were not merely a conscription of the banks by the state, but the willingness of the former to be so co-opted. So where does that leave Barclay’s decision not the take the Queen’s shilling? And the subsequent vilification of Bob Diamond?

Are bankers inherently dishonest or do politicians persuade, even force, the at least more craven of the bankers to become so?

After all you don’t have much choice after you’ve been nationalized – and the legislation that exempted bankers from the commercial consequences of failure was effectively a form of nationalization.

Nazi-style socialism

It needs to be strongly emphasised that when Mr Anthony Blair persuaded the Labour Party to abandon Clause Four, the nationalization of the means of production, in favour of “market forces”, he actually was trading in the Communist version of Socialism for the Nazi version of Socialism which was to leave industrial and commercial productive forces in private hands but surround them with state interference and legislation. This is not market forces.

For a brilliant analysis of the banking problem as caused by the regulatory framework – not, it must be insisted upon, bad or lax regulation but the fact of the regulatory regime existing at all – please read the last of the three links below, and then go out and buy the book!

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

And for a review of one of the most important books on the financial crisis published last year: THE MESS WE’RE IN: WHY POLITICIANS CAN’T FIX FINANCIAL CRISES

HUMAN ACTION AND HUMAN EFFORT

Tuesday, January 22nd, 2013

By Mark Rogers

We have seen how the Deutsche Bank analysts who wrote Gold: Adjusting for Zero made a central place in their discussion for the Misean concept of human effort, and how an inflationary, fiat currency economy naturally destroys the value of effort. While at first glance it might seem odd to find such a discussion in an analysis of the feasibility of a return to the gold standard, it is precisely gold’s potential to act as a restraint on, a chastener of political ambitions, that returns the question of human effort to centre stage.

That is, of course, if you have humans in the first place who make that effort. This is so in both an absolute and a relative sense: there must be living humans capable of effort, and those living humans must want to make that effort.

In his important book America Alone, Mark Steyn analyses the western world’s contemporary woes in terms of demographics and makes the sobering observation that only America is breeding at replacement level. Elsewhere, the Spaniards are amongst the lowest in western Europe and the Russians are on an irrecoverable downward trend.

He squarely puts the blame on the welfare state, that “cosseted consumerism”, as the Deutsche Bank report puts it, that has replaced the individualism of free markets. And more to the point he makes clear what the source of this malaise is:

“Unchecked, government social programs are a security threat because they weaken the ultimate line of defence: the free-born citizen whose responsibilities are not subcontracted to the government.”

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

And for a review of one of the most important books on the financial crisis published last year: THE MESS WE’RE IN: WHY POLITICIANS CAN’T FIX FINANCIAL CRISES

Hayek and Mrs Bunch: The Irregularity of Individuals

Thursday, November 29th, 2012

Marshalled by Mark Rogers

It is perhaps not surprising that the English Common Law presages so much of Hayek’s understanding of how law underpins economic life, particularly as it is so heavily concentrated on property. Common Law has another importance, however, in an Austrian, Misean sense in that it is founded in human action, not in abstractions – which tend to the fiat diktat sense of “law” – that is,  in the ordinary practicalities of everyday life. Judges are often to be found revelling in them, as in this glorious example from the late nineteenth century. The judgment is taken from Not In Feather Beds, a collection of essays and speeches by Lord Radcliffe (Hamish Hamilton, London 1968). The essay is entitled “How a Lawyer Thinks”, and Lord Radcliffe has chosen this particular judgment as being an apt specimen of that thinking. The opinion was delivered by Lord Macnaghten, “one of the greatest exponents of the legal art that this country has known,” in an appeal to the House of Lords.

“The period 1888; the setting a late-Victorian, foggy, lamplit Christmas Eve at Paddington; the subject a Gladstone bag lost at the station by a certain Mrs. Bunch. Mrs Bunch is now at grapples with the Great Western Railway as to which of them is to bear the burden of the loss. This is how Lord Macnaghten deals with the problem.” [I should add that it is beautiful specimen of English prose: and, not least, pay attention to the punctuation!]

Your Lordships are familiar with the evidence in this case, and I do not propose to repeat it. It is enough to say that on the 24th of December 1884, at 4.20 p.m. Mrs Bunch came to Paddington with a Gladstone bag and some other luggage, meaning to travel with her husband by the 5 p.m. train to Bath, that on her arrival at the station her luggage was received by a porter in the employment of the company, and taken by him to the platform for the purpose of the journey, and that the Gladstone bag was last seen on the platform with the same porter a few minutes afterwards. From that time all trace of the bag is lost. The porter and the bag both vanish from the scene. It was suggested by the learner counsel for the appellants, by way of explanation, that the porter was possibly one of a number of men picked up by the company for the day to meet the pressure of Christmas traffic. But I may observe, in passing, that so far as the public was concerned, there was apparently nothing to distinguish the casual helper of whom little, if anything, was known, from the regular and trusted servants of the company.

            On these bare facts standing alone it seems to me that there would be evidence upon which the County Court judge might reasonably find for the plaintiff, even if the company were not under the liability of common carriers as regard the lost bag.

            But then it was contended with much earnestness that it ought to have been inferred from the circumstances of the case and from Mrs. Bunch’s conduct that at the time of the loss the bag was not in the custody of the company for the purpose of the journey. It was said that Mrs. Bunch came to the station too soon – that she came before the train was drawn up – that she broke the journey, if the journey is taken as having begun – and left the bag in the charge of a porter who was then not acting as the servant of the company within the scope of his authority as such, but acting as her agent in his individual capacity, and that if this was not what she meant, it was an attempt on her part to saddle the company with a liability which they were not bound to undertake.

            It seems to me that there is no substance in any of these objections. Mrs. Bunch, no doubt, came to the station somewhat early. But the one thing that railway companies try to impress on the public is to come in good time. And considering the crowd likely to be attracted by cheap fares during the Christmas holidays, and the special bustle and throng on Christmas Eve, it does not seem to me that Mrs. Bunch came so unreasonably early as to relieve the company who received the luggage from the ordinary obligations flowing from that receipt. It is impossible to define with the extreme limits on both sides the proper time for arrival. Everything must depend upon the circumstances of the particular case. But, among those circumstances, the least important, as it seems to me, is the time when the train is drawn up at the departure platform. That is, as everybody knows, a very variable time. And it is a matter over which the passenger has no control, and of which he can have no notice before he comes to the station.

            Then I think that there is nothing in the conversation which took place between Mrs. Bunch and the porter. Mrs. Bunch’s question was a very natural one. The answer which she received was just what might have been expected. Nine women out of ten parting with a travelling bag on which they set any store would have asked the same question. In ninety-nine times out of a hundred the same answer would be returned. I do not think that this conversation altered the relation between the parties in the least degree. It seems to me almost absurd to treat it as a solemn negotiation by which the lady abdicated such rights as she possessed against the Great Western Railway Company and constituted this ephemeral and evanescent porter in his individual capacity the sole custodian of her Gladstone bag.

            Nor can it, I think, be said that Mrs. Bunch broke the journey by leaving the platform to meet her husband and get her ticket. To take a ticket is a necessary incident of a railway journey. It is, at least, a very common incident in railway travelling for persons, who intend to travel in company, whether they be members of the same family or not, to meet by appointment in the railway station from which they mean to start, and it is certainly not unusual in such a case for the purchase of tickets to be deferred until the meeting takes place…

            It was said that if everybody acted as Mrs. Bunch acted in this case, railway companies would require an army of porters, and that it would be almost impossible for them to carry on their business. I quite agree, but I am not much impressed by that observation. I apprehend that if all travellers acted precisely alike, if everybody arrived at a station for a particular journey at precisely the same moment, though the time of arrival were the fittest that could be imagined, there would be no little confusion, and perhaps some consternation among the railways officials. Whatever may be the result of your Lordships’ judgment, there is no fear that it will have the effect of making everybody act alike. Things will go on just as usual. The fidgety and nervous will still come too soon; the unready and the unpunctual will still put off their chance of arrival till the last moment, and the prudent may have their calculations upset by the many accidents and hindrances that may be met with on the way to the station. And it is just because of the irregularity of individuals that the stream of traffic is regular and easily managed.

Lord Radcliffe justly comments: “the style is very nicely fitted to the subject. It is grave, without being portentous; it is admirably detailed, without being finicky; and at the same time there is, I think, at the back of it a gleam of decorous amusement that these sober legal propositions have to be marshalled and weighed to solve the problem of Mrs. Bunch and her Gladstone bag. Next, these paragraphs which seem to be no more than a recital of facts, or a rather quizzical glance at certain arguments, do in fact contain an exposition of legal principles – so much so that Mrs. Bunch’s case has become a leading case determining for good the kind of considerations that are to govern the loss of Gladstone and other bags at railway stations and the weight to be given to some of those considerations. But the legal principles are, as it were, built into the factual structure of the story itself, not imposed upon it, so that the story seems to arrange itself naturally around them and to take its form and order from their intrinsic logic… And, lastly, the whole passage, though the careful simplicity of it is to some extent delusive, is irradiated by a vivid common sense.”

It is the last paragraph of Lord Macnaghten’s opinion that sums up the whole problem of economic planning and direction; it is this quality of the Common Law that fits so neatly and substantively with the analysis of human affairs that distinguishes the work of Hayek and Mises.

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

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Thoughts
"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."