Tin Foil Hats, Economic Reality and the Total Perspective Vortex

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Conspiracy theories about a so called New World Order (NWO) and a one world currency have been around for a long, long time. So long that most people, who are not disposed to giving conspiracies a moment's thought, and who have been paying attention to the global economic news, have to be a little unnerved by mainstream reports of global banking institutions talking about the potential for the Dollar to lose it's role as the world's reserve currency.

There is a mostly invisible war occurring right now. It's invisible to the unwashed masses who are not paying attention. It behooves every individual to learn about it so that they have the opportunity to make choices and potentially influence the outcome.

Timeline

10/10/08:

Italian Prime Minister Silvio Berlusconi said political leaders are discussing the idea of closing the world's financial markets while they ``rewrite the rules of international finance.''
...
Group of Seven finance ministers and central bankers are meeting in Washington today, and will stay in town for the International Monetary Fund and World Bank meetings this weekend. European Union leaders may gather in Paris on Oct. 12, three days before a scheduled summit in Brussels, Berlusconi said today, while Group of Eight leaders may hold a meeting on the crisis ``in coming days,'' he said.

Berlusconi didn't give any details about what kind of rules leaders were looking to change, except to say that leaders are ``talking about a new Bretton Woods.''

The Bretton Woods Agreements were adopted to rebuild the international economic system after World War II in a hotel in Bretton Woods, New Hampshire. The aim of the agreements was to establish a monetary management system, initially by pegging currencies to gold. The IMF was set up later to help manage the international financial system.

10/15/08:

European Central Bank President Jean- Claude Trichet said officials reshaping the world's financial system should try to return to the ``discipline'' that governed markets in the decades after World War II.

``Perhaps what we need is to go back to the first Bretton Woods, to go back to discipline,'' Trichet said after giving a speech at the Economic Club of New York yesterday. ``It's absolutely clear that financial markets need discipline: macroeconomic discipline, monetary discipline, market discipline.''

Some European policy makers are pushing to tighten oversight of markets after the past year's credit squeeze culminated last week in the biggest stock sell-off since 1933. British Prime Minister Gordon Brown has suggested the most sweeping rethink of global financial architecture since U.S. and European officials met in Bretton Woods, New Hampshire, in 1944. The rules they drew up there governed much of the world economy for the following 30 years.
...
Brown, who has pushed for a decade to strengthen the hand of international authorities overseeing the financial system, said Oct. 13 in London that ``we must devise new rules for a world of global capital flows'' just as the founders of Bretton Woods ``devised rules for a world of limited capital flows.''

``We now have global financial markets but what we do not have is anything other than national and regional regulation and supervision,'' Brown told reporters today before a European Union summit in Brussels.

12/04/08:

...
2. FINANCIAL CRISIS

a. "Be vigilant when considering restoring the gold standard system"

The official Communist Party People's Daily (Renmin Ribao) (12/03): "Recent Western opinion has advocated a new Bretton Woods system with the U.S. dollar as the core and restoration of the 'gold standard' to solve the financial crisis. The appearance of such thought is not accidental. There is a great deal of background. The American financial crisis has caused the loss of the U.S. dollar's credit. Therefore, American financial strategists seek to use the gold standard system to maintain the global financial system led by the U.S. The reason that the U.S. and Europe choose to use gold standard is the fact that the most of gold reservation in the world is in their control. The restored gold standard system will not be the original gold standard system, but instead a 'partial reserve system' partially based on gold. Therefore, rapid economic growth will be relatively limited in the area of currency supply. The possible consequences would be: first, due to the economic growth of the U.S. and Europe is low, the partial reserve system can satisfy their currency supply and will not form serious restriction on their economy, but will greatly restrict China, India and other developing countries. Second, developing countries have to spend lots of foreign reserve to purchase gold. This decision betrays the common wish of the international society to substantially reform the international financial system."
...

03/17/09:

The Kremlin published its priorities Monday for an upcoming meeting of the G20, calling for the creation of a supranational reserve currency to be issued by international institutions as part of a reform of the global financial system.

The International Monetary Fund should investigate the possible creation of a new reserve currency, widening the list of reserve currencies or using its already existing Special Drawing Rights, or SDRs, as a "superreserve currency accepted by the whole of the international community," the Kremlin said in a statement issued on its web site.
...

03/18/09:

A U.N. panel will next week recommend that the world ditch the dollar as its reserve currency in favor of a shared basket of currencies, a member of the panel said on Wednesday, adding to pressure on the dollar.

Currency specialist Avinash Persaud, a member of the panel of experts, told a Reuters Funds Summit in Luxembourg that the proposal was to create something like the old Ecu, or European currency unit, that was a hard-traded, weighted basket.

Persaud, chairman of consultants Intelligence Capital and a former currency chief at JPMorgan, said the recommendation would be one of a number delivered to the United Nations on March 25 by the U.N. Commission of Experts on International Financial Reform.

"It is a good moment to move to a shared reserve currency," he said.

Central banks hold their reserves in a variety of currencies and gold, but the dollar has dominated as the most convincing store of value -- though its rate has wavered in recent years as the United States ran up huge twin budget and external deficits.

Some analysts said news of the U.N. panel's recommendation extended dollar losses because it fed into concerns about the future of the greenback as the main global reserve currency, raising the chances of central bank sales of dollar holdings.

"Speculation that major central banks would begin rebalancing their FX reserves has risen since the intensification of the dollar's slide between 2002 and mid-2008," CMC Markets said in a note.

Russia is also planning to propose the creation of a new reserve currency, to be issued by international financial institutions, at the April G20 meeting, according to the text of its proposals published on Monday.
...

03/24/09:

China's central bank has called for a new global reserve currency run by the International Monetary Fund to replace the US dollar.
...
Mr Zhou said the dollar could eventually be replaced as the world's main reserve currency by the Special Drawing Right (SDR), which was created as a unit of account by the IMF in 1969.

"The role of the SDR has not been put into full play, due to limitations on its allocation and the scope of its uses," he said.

"However, it serves as the light in the tunnel for the reform of the international monetary system."

The essay comes before the G20 summit in London on 2 April, at which reform of the international financial system is top of the agenda.

"This confirms that China intends to play fully its role of global economic and political power at the next G20 summit," said Sebastien Barbe, an analyst at French financial service firm Calyon in Hong Kong.

03/25/09:

...
QUESTIONER: Hi. Good morning. Good morning, Mr. Secretary. Doug Smith, Standard Chartered Bank. Wonder if I could change the subject for a second.

GEITHNER: Former Treasury official. Distinguished Treasury official.

QUESTIONER: Well, thank you. Wonder if you could comment on two related things. One, the Chinese government proposal about a global currency; and about the IMF regulations that were -- the new IMF idea about, you know, very general agreements to borrow and having a faster ability to disburse to the (margin ?) markets.

GEITHNER: On the first question, I haven't read the governor's proposal. He's a remarkably -- a very thoughtful, very careful, distinguished central banker. Generally find him sensible on every issue. But as I understand his proposal, it's a proposal designed to increase the use of the IMF's special drawing rights. And we're actually quite open to that suggestion. But you should think of it as rather evolutionary, building on the current architectures, than -- rather than -- rather than moving us to global monetary union.
...

ALTMAN: Let me just follow that up for one second. A number -- I haven't read the governor's essay, either, but a slew of news reports interpreted his comments to suggest that the world needs a super reserve currency, and that the dollar, on some gradual basis, ought to be replaced in favor of that. And I wasn't entirely clear what your response was.

GEITHNER: Well, as I said, I haven't read his proposal, but I thought the initial reaction was sort of ahead of the details of the proposal I saw. The only thing concrete I saw was a reference to expanding the use of the SDR, but I look forward to reading his figures. As I said, I have tremendous respect for him. He's a really thoughtful, pragmatic guy, and he has a great record of credibility in China as a whole, so anything he's -- he's thinking about deserves some consideration.

It is very important just to underscore that the future evolution of the dollar's role in the system depends really primarily on how effective we are in the United States in getting not just recovery back on track, our financial system repaired, but we get our fiscal position back to the point where people will judge it as sustainable over time. ...

03/25/09:

The head of the European Union slammed President Barack Obama’s plan to spend nearly $2 trillion to push the U.S. economy out of recession as “the road to hell” that EU governments must avoid.
...
“All of these steps, these combinations and permanency is the road to hell,” Topolanek said. “We need to read the history books and the lessons of history and the biggest success of the (EU) is the refusal to go this way.”

“Americans will need liquidity to finance all their measures and they will balance this with the sale of their bonds but this will undermine the liquidity of the global financial market,” Topolanek said.
...

04/24/09:

China has quietly almost doubled its gold reserves to become the world’s fifth-biggest holder of the precious metal, it emerged on Friday, in a move that signals the revival of bullion after years of fading importance.

Gold rose to a three-week high of more than $910 an ounce after Hu Xiaolian, head of the secretive State Administration of Foreign Exchange, which manages the country’s $1,954bn in foreign exchange reserves, revealed China had 1,054 tonnes of gold, up from 600 tonnes in 2003.

The news could spark interest in gold among other central banks. “When the largest holder of foreign exchange reserves discloses an increase in gold holdings, other countries may decide to think more carefully about underweight gold positions,” said John Reade, a precious metals strategist at UBS.

The increase in China’s gold reserves has come primarily from domestic production and refining. However, the news raises questions about the future of Beijing’s foreign reserves policy.

Ahead of the G20 summit in London this month, China suggested global reliance on the US dollar as a reserve currency should be reduced.

China has been diversifying away from the dollar since 2005, when it broke the renminbi’s peg to the US currency and officially marked it to a basket of currencies, but it still holds more than two-thirds in US dollar-denominated assets by most estimates.

As its trade surplus and forex reserves ballooned in recent years, Beijing continued to buy huge amounts of US Treasury bonds while raising the proportion of purchases it allotted to other currencies and to gold.

China’s accumulation of gold has taken place as European central banks have gradually cut back back gold sales following a 1999 agreement to prevent the market from being flooded after prices were dragged sharply lower after the UK decided to sell part of its reserves.

“China’s announcement signals a broader shift in central banks’ attitude towards gold,” said Philip Klapwijk, chairman of GFMS, the precious metal consultancy.

Suki Cooper, a gold analyst at Barclays Capital, said China’s move was “reigniting gold’s relevance as a monetary asset”.

European central banks agreed to limit gold sales to 500 tons a year in 1999, under the Central Bank Gold Agreement after a UK decision to sell part of its gold reserves dragged prices sharply lower.

Since 1999, central banks in Europe have sold large amounts of gold, investing the proceeds into bonds. But in the past two years they have curtailed their sales significantly while central banks outside Europe became net buyers of bullion.
...
Russia has being an active buyer, following Beijing’s similar pattern of purchases from local miners. China became last year the world’s largest producer of gold, outranking South Africa.
...

04/28/09:

...
3. CHINA'S GOLD RESERVES

"China increases its gold reserves in order to kill two birds with one stone"

"The China Radio International sponsored newspaper World News Journal (Shijie Xinwenbao)(04/28): "According to China's National Foreign Exchanges Administration China 's gold reserves have recently increased. Currently, the majority of its gold reserves have been located in the U.S. and European countries. The U.S. and Europe have always suppressed the rising price of gold. They intend to weaken gold's function as an international reserve currency. They don't want to see other countries turning to gold reserves instead of the U.S. dollar or Euro. Therefore, suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar's role as the international reserve currency. China's increased gold reserves will thus act as a model and lead other countries towards reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the RMB."
...

05/14/09:

...
In a column in the New York Times, Prof Roubini warns that with the proposal for a new international reserve currency via the International Monetary Fund, Beijing has already begun to take steps to usurp the greenback.

China will soon want to see the yuan included in the International Monetary Fund's special drawing rights "basket", he warns, as well as seeing it "used as a means of payment in bilateral trade."
...

08/17/09 - Jim Rickards talks about the IMF's QE program with SDRs undermining the dollar:


09/03/09:

Hong Kong is pulling all its physical gold holdings from depositories in London, transferring them to a high-security depository newly built at the city's airport, in a move that won praise from local traders Thursday.
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The Hong Kong Monetary Authority, which functions as the territory's unofficial central bank, will transfer its gold reserves stored in other vaults to the depository later this year, the Hong Kong government said in an earlier statement.

The monetary authority reported $63 million in physical gold reserves as of July 31, according to its International Reserves and Foreign Currency Liquidity statement. The authority wouldn't disclose where the reserves are held, but local media reports cited gold traders as saying that London's the most likely location.
...

09/07/09:

UN wants new global currency to replace dollar

The dollar should be replaced with a global currency, the United Nations has said, proposing the biggest overhaul of the world's monetary system since the Second World War.

In a radical report, the UN Conference on Trade and Development (UNCTAD) has said the system of currencies and capital rules which binds the world economy is not working properly, and was largely responsible for the financial and economic crises.

It added that the present system, under which the dollar acts as the world's reserve currency , should be subject to a wholesale reconsideration.

Although a number of countries, including China and Russia, have suggested replacing the dollar as the world's reserve currency, the UNCTAD report is the first time a major multinational institution has posited such a suggestion.

In essence, the report calls for a new Bretton Woods-style system of managed international exchange rates, meaning central banks would be forced to intervene and either support or push down their currencies depending on how the rest of the world economy is behaving.
...

09/27/09:

World Bank President Robert Zoellick said the United States should not take the dollar's status as the world's key reserve currency for granted because other options are emerging.
...

10/01/09:

... According to Jim Rickards, director of market intelligence for scientific consulting firm Omnis, the unannounced purpose of last week's G20 Summit in Pittsburgh was that "the IMF is being anointed as the global central bank." Rickards said in a CNBC interview on September 25 that the plan is for the IMF to issue a global reserve currency that can replace the dollar.

"They've issued debt for the first time in history," said Rickards. "They're issuing SDRs. The last SDRs came out around 1980 or '81, $30 billion. Now they're issuing $300 billion. When I say issuing, it's printing money; there's nothing behind these SDRs."
...

10/27/09:

...
We must guard ourselves against falling victim to the rumor-mills, while keeping our eyes peeled for the very real possibility that the growing shortage of physical gold can no longer be papered over with paper gold (pun intended). Another story is about GLD, a leading gold ETF, which publishes its bar-list every Friday at the close of business, reporting the serial number of every bar in inventory. The list is customarily well over a thousand pages long. But, lo and behold, on Friday, October 2, and on Friday, October 9, the bar-list shrank to a mere couple hundred pages, with no explanation offered. ...
...
Reports are circulating that similar audits of certain Asian depositories have already produced “good” delivery bars (400 oz or 12.5 kg gold bricks) that have been gutted and stuffed with tungsten ...

02/28/10 - Tungsten filled gold bars exposed:


04/26/10:

...
I think one of the most important features of the present world is that we had an historical change of global governance, an historical change which had been prepared when you were yourself the head of this very important administration in the United States, with the creation, in the occasion of the Asian crisis, of the G-20, which was not the prime grouping for global governance, but was a very important grouping, obviously, particularly for the working out of standards and codes and rules and regulations. But the prime grouping for global governance was, at the time, the G-7.

So the core, if I may, of the industrialized world in terms of dimension was clearly the heart of global governance, at least in its dimension, which is the informal grouping. And I see there France that -- we are the heart of the preparation of this global governance in various G-7 at the level of heads.

All that being said, we have now shifted the battle. The battle is not now in the hands of the industrialized world. The battle is in the hands of a grouping of countries which comprise the industrialized core countries and the emerging economies.

And one of the indivisible events which was in the succession of events in Washington last days was that there was no G-7 communique and there was no G-7 briefing. The communique and the briefings were the G-20.

So again, this is at the level of global governance, something which I trust is of utmost importance. And I would say that we owe this transformation -- which, again, has been prepared; it is something which didn't come as a shock and, I would say, unexpected event, because the G-20 existed already. But this shift from the G-7 to the G-20, we (owe it ?), it seems to me, obviously, because it was overdue that these economies that were obviously systemic at the global level would have a full ownership of this global governance at the level of this informal grouping that I mentioned. And that's of course something which appears absolutely obvious.
...

05/05/10:

... there is a meeting in Zurich on May 11th... I call it the new Bretton Woods.. Basically the IMF is convening a meeting to look at the issuance of SDRs and the alternative is gold. So the G20 and leaders want to go to SDRs to take the dollar off the hook. The market may go to gold on their own, so it's sort of a race between SDRs and gold. The dollar, as you know, is pretty much at the end of the line. ...

06/30/10:

The recently concluded economic summit (June 26-27) of leaders of the G8 and G20 nations in Toronto was, according to most media coverage, an untidy row among those calling for continued government "stimulus" (Team Obama) and the rest of the major economies (led by Germany, the U.K., and China) calling for fiscal restraint and serious cuts in deficit spending. However, the much-ballyhooed disagreements over fiscal policy obscured the much more important result of the Toronto summit: the ongoing G8/G20 push to transform the International Monetary Fund (IMF) into a global Federal Reserve System, with financial regulatory powers to create money "out of thin air," as the Fed does, without having to request replenishments from IMF member nations.
...
As we have been warning in The New American for the past couple of years, the global elites driving the G8/G20 agenda have been aiming at creation of a "new economic order," and transforming the IMF into a global equivalent of the Federal Reserve as a central component of that new order. Supplanting and replacing the dollar with an interim "basket" of currencies and, ultimately, a global currency, is another component. (See Global Fusion: The G20, IMF, and World Government, "Supersizing" the IMF, and G-20 Advances New World Order, Media Admit.)

As we noted here leading up to the April 2009 G20 summit in London, the one-world "global governance" choir members "are all pushing the same ideas, to wit:

1) The IMF should be given huge new infusions of capital through member country "subscriptions."
2) The IMF should be encouraged to issue debt bonds to finance global loans.
3) The IMF should be "legitimized" by giving China and other emerging nations weighted votes in IMF policies.
4) The IMF should be given vast new global financial regulatory powers.

This same agenda continues in the G20's above-mentioned Declaration, notwithstanding its (temporary) curtsey to national interests. The document states that "our reform agenda rests on four pillars." "The first pillar," it notes, "is a strong regulatory framework."

Foremost of the new institutions created to carry out this alleged "reform," the Declaration tells us, is the Financial Stability Board (FSB), an institution probably not even 1 in 10,000 Americans has ever heard of before now. (You might ask your Congressman if he has heard of this new global regulatory body). Only a matter of months ago this facility was known as the Financial Stability Forum (FSF). "Forum," of course, connotes a much less threatening gathering associated with debate and discussion, while "Board" connotes a body empowered to make executive and/or managerial decisions. By what authority was this new institution created and this new global power conferred? Who comprises the membership of this august body, and who regulates these regulators?

The FSB's web site merely informs us: "The FSB is chaired by Mario Draghi, Governor of the Bank of Italy. Its Secretariat is located in Basel, Switzerland, and hosted by the Bank for International Settlements (BIS)." So our assurance of global financial well-being is safely in the hands of Italy's equivalent of Ben Bernanke and a group of secretive banking gnomes in Basel! That should certainly be comforting, especially since the faceless, unaccountable BIS elite, are most likely the original inspiration for the now common term "bankster."

The unelected, untouchable, unaccountable banking oligarchy of the BIS/FSB and the IMF figure large in the "new economic order." The FSB informs us in its "mandate" that it will "collaborate with the IMF" and "implement international financial standards (including the 12 key International Standards and Codes)." The first four of those twelve global "Codes," created by the IMF, are:

• Code of Good Practices on Transparency in Monetary and Financial Policies
• Code of Good Practices on Fiscal Transparency
• Special Data Dissemination Standard
• General Data Dissemination System

Where is Congress in all of this? Where is there any authority in the U.S. Constitution for Congress or the Executive Branch to empower international bodies to usurp our national and state sovereignty in these matters?
...

08/05/10:

...
In 35 pages of extrapolation and footnotes, the IMF's Strategy, Policy and Review Department lays out the how and why of a global currency, which would move from an "inside money" as the SDR to an "outside money" that is traded by governments.
...
The PDF document appeared to have been taken offline at time of this writing, but a cached version was still available. The document is from April, but was only recently noticed by Financial Times.
...

08/26/10:

A number of the world’s biggest banks have launched international roadshows promoting the use of the renminbi to corporate customers instead of the dollar for trade deals with China.

HSBC, which recently moved its chief executive from London to Hong Kong, and Standard Chartered, are offering discounted transaction fees and other financial incentives to companies that choose to settle trade in the Chinese currency.
...

09/07/09:

...
Mr Cheng was until recently Vice-Chairman of the Communist Party’s Standing Committee, and is now a sort of economic ambassador for China around the world — a charming man, by the way, who left Hong Kong for mainland China in 1950 at the age of 16, as young idealist eager to serve the revolution. Sixty years later, he calls himself simply “a survivior”.

What he said about US monetary policy and gold – this bit on the record – would appear to validate the long-held belief of gold bugs that China has fundamentally lost confidence in the US dollar and is going to shift to a partial gold standard through reserve accumulation.

He played down other metals such as copper, saying that they could not double as a proxy currency or store of wealth.

“Gold is definitely an alternative, but when we buy, the price goes up. We have to do it carefully so as not stimulate the market,” he said.

In other words, China is buying the dips, and will continue to do so as a systematic policy. His comment captures exactly what observation of gold price action suggests is happening. Every time it looks as if the bullion market is going to buckle, some big force steps in from the unknown.
...
China’s mercantilist export strategy has led the country into a cul-de-sac. China must continue to run its trade surplus. It must accumulate hundreds of billions more in reserves. Ergo, it must buy a great deal more gold.

Where is the gold going to come from?

09/08/10:

China and Russia plan to start trading in each other’s currencies as the world’s second-biggest energy consumer and the largest energy supplier seek to diminish the dollar’s role in global trade.

China may start trading its currency against the ruble within weeks, three bankers with knowledge of the matter told Bloomberg, and sent out a document last week allowing lenders to apply for ruble trading licenses, one of them said. Russia’s Micex Stock Exchange is making preparations to trade the ruble against the yuan in an initiative that has the backing of the country’s central bank, Ruben Aganbegyan, the head of the bourse, told reporters at a conference in Moscow today.

“Given the risk to the dollar and U.S. assets from their fiscal position they want to reduce their dependence on the dollar as an invoicing currency,” Bhanu Baweja, global head of emerging markets fixed income, currency and credit research at UBS AG, said in a phone interview from London. “It makes sense for two large economies to exclude a third, overly dominant economy from their trading equation.”

In the wake of the global financial crisis, which forced the U.S. economy into recession, both China and Russia have called for the dollar’s role in the financial system to be diluted. Volatility in major currencies is putting the global recovery at risk Zhang Ping, the head of China’s National Development and Reform Commission, said last month. President Dmitry Medvedev last year suggested Russia, holder of the world’s third-largest foreign-currency reserves, reduce its holdings of dollar.
...
The People’s Bank of China started yuan trading against the Malaysian ringgit between banks on Aug. 19. It already allows trading of the renminbi versus the dollar, the Hong Kong dollar, Japanese yen and the euro on its interbank market and China’s Foreign Exchange Trading Center provides daily reference rates for these currencies. The yuan is a non-deliverable currency that is managed by the central bank to prevent volatility.

‘Fully Convertible’

The ruble, which Bank Rossii targets against a dollar-euro basket, is a “fully convertible” currency and some Chinese banks have already been allowed to open ruble trading accounts, Russia’s Deputy Finance Minister Dmitry Pankin told reporters in Moscow today. The opening of cross-currency trade between the yuan and the ruble is more important for China, he said. “They are gradually allowing more currency operations with yuan,” he said.
...
The world’s fastest-growing economy is seeking to eliminate the need to convert yuan holdings in to dollars before converting in to rubles to pay for Russian commodities, Baweja said.

Dollar Elimination

“China wants to reduce the volatility in its access to primary goods,” he said. “They want to reduce their dependence on the dollar in trade transactions.”

HSBC Bank (China) Co. and Bank of Communications Co. completed the first yuan-ringgit transactions, according to the Foreign Exchange Trading Center, which is affiliated with the central bank. The central bank was investigating the possibility of offering new currency pairs on the interbank market, including ruble, won and ringgit, an unnamed official at the center said in April.

“Gradually the dollar is being eliminated from the foreign-trade settlement flows,” said Dariusz Kowalczyk, a Hong-Kong based senior economist at Credit Agricole CIB. “People are beginning to trade Asian currencies without intermediation via the dollar.”

09/14/10:

The US should give up its veto over important decisions in the International Monetary Fund in return for Europe accepting a smaller say, Germany has proposed.

The suggestion, which experts say will be strongly opposed by the US, addresses a politically highly symbolic dispute about voting power and seats on the fund’s executive board. Shifting power towards emerging market countries is one of the central elements in the Group of 20 nations’ drive to make the fund and other international institutions more representative.
...

11/07/10 - Robert Zoellick, the World Bank chief, a former US Treasury official and former managing director of Wall Street bank Goldman Sachs published a statement in the FT calling for a global currency of sorts to be centrally managed using gold as a measuring stick:

...
Fifth, the G20 should complement this growth recovery programme with a plan to build a co-operative monetary system that reflects emerging economic conditions. This new system is likely to need to involve the dollar, the euro, the yen, the pound and a renminbi that moves towards internationalisation and then an open capital account.

The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values. Although textbooks may view gold as the old money, markets are using gold as an alternative monetary asset today.

The development of a monetary system to succeed “Bretton Woods II”, launched in 1971, will take time. But we need to begin. The scope of the changes since 1971 certainly matches those between 1945 and 1971 that prompted the shift from Bretton Woods I to II. Serious work should include possible changes in International Monetary Fund rules to review capital as well as current account policies, and connect IMF monetary assessments with WTO obligations not to use currency policies to remove trade concessions.
...

01/24/11:

The WSJ reports that The Central Bank of Russia, ..., plans to buy 100 metric tons of gold from domestic banks a year in order to replenish the country's gold reserves, Deputy Head of the bank Georgy Luntovsky said Monday, according to the bank's press service. ...

01/30/11:

... Bloomberg has just reported, that "China central bank adviser Xia Bin said the country should increase its gold and silver reserves, the Economic Information Daily reported today, citing an interview with Xia." ...

01/31/11:

With events at Davos taking place, King World News interviewed Jim Rickards of Omnis to get his take on what is happening. When asked about discussions regarding the dollar Rickards remarked, “We’ve talked a lot about a gold standard, we’ve talked about SDR’s. It’s obvious that the international monetary system is breaking down. Nobody’s happy with the dollar, but nobody can quite figure out what the alternative is so they sort of get forced into staying with the dollar...and we keep printing more.”

Rickards continues:

“So there is a search for an alternative and again I’ve identified gold and SDR’s as two alternatives. The third path that I’ve talked about is just chaos...People put off decisions or don’t come up with a good alternative for too long and things just kind of break down.

There is a new entry if you think of this as a horse race. You know I had three horses in the race, gold, SDR’s and chaos. There’s a fourth horse that has entered the race. I think the main advocate for this is Professor Barry Eichengreen of University of California Berkley. He is a leading intellectual student and author on the gold exchange of the 1920’s. So at least in academic circles when you talk about the failure of the gold exchange standard in the ’20’s and 30’s all eyes point to Barry Eichengreen, he’s the leading scholar in that area.

What he is saying and what a lot of people in Davos are talking about is this idea of multiple reserve currencies. Right now the dollar is far and away number one. There are other reserve currencies, stirling, yen, Swiss francs and of course the Euro all play a roll, but the US dollar is between 65% or so, somewhere in that range of all reserves held around the world, not counting gold.

The idea is that it doesn’t have to be a world where the dollar dominates or the dollar goes to zero...But you could have a world where you have maybe four reserve currencies and they all have maybe 25 or 30% of the action, give or take...Something like that did exist in the 1920’s where the dollar and the stirling were side by side, neither one totally dominated...so it’s a plausible hypothesis.

People point to that as a way to say see, the dollar doesn’t have to collapse completely. We don’t have to go back to gold, we just need to make room at the table for these other reserve currencies.

When asked if this was a new end game for the dollar Rickards responded, “It is a new end game and like I say, to me it is a horse race. There were three entries, now there are four and this is what they are talking about. If you think about the other three entries, they are all more or less extreme.

Full Rickards interview: http://www.kingworldnews.com/kingwo...Jim_Rickards_files/Jim Rickards 1:31:2011.mp3

02/07/11:

...
“The Asians, particularly the Chinese, want physical gold and they want it tomorrow. So the Chinese have a new method. They are now planning to buy tremendous amounts of the ETF GLD. They will then tender the GLD shares for immediate delivery of the gold. This bypasses all of the rules of places such as the Comex limiting delivery. There is no limit as to how much you can buy from the ETF GLD.

Mainstream media and some pundits have been pointing to drawdowns in GLD and saying there is liquidation of tonnage and that it is bearish for gold. They are ignorant and don’t understand what is happening is large buyers are tendering shares for delivery, and this is extremely bullish for the gold market.

This gets around the delays, delivery problems and any form of limitation.

The Asian entities are essentially looking for ways to get hold of physical gold because they are having trouble procuring gold in large quantities.
...

More on the GLD redemptions: http://fofoa.blogspot.com/2011/01/who-is-draining-gld.html

02/10/11:

IMF calls for dollar alternative

NEW YORK (CNNMoney) -- The International Monetary Fund issued a report Thursday on a possible replacement for the dollar as the world's reserve currency.

The IMF said Special Drawing Rights, or SDRs, could help stabilize the global financial system.

SDRs represent potential claims on the currencies of IMF members. They were created by the IMF in 1969 and can be converted into whatever currency a borrower requires at exchange rates based on a weighted basket of international currencies. The IMF typically lends countries funds denominated in SDRs

While they are not a tangible currency, some economists argue that SDRs could be used as a less volatile alternative to the U.S. dollar.

Dominique Strauss-Kahn, managing director of the IMF, acknowledged there are some "technical hurdles" involved with SDRs, but he believes they could help correct global imbalances and shore up the global financial system.

"Over time, there may also be a role for the SDR to contribute to a more stable international monetary system," he said.

The goal is to have a reserve asset for central banks that better reflects the global economy since the dollar is vulnerable to swings in the domestic economy and changes in U.S. policy.

In addition to serving as a reserve currency, the IMF also proposed creating SDR-denominated bonds, which could reduce central banks' dependence on U.S. Treasuries. The Fund also suggested that certain assets, such as oil and gold, which are traded in U.S. dollars, could be priced using SDRs.

Oil prices usually go up when the dollar depreciates. Supporters say using SDRs to price oil on the global market could help prevent spikes in energy prices that often occur when the dollar weakens significantly.
...

02/14/11:

France wants new global finance system

France, as current head of the Group of 20 countries, will help the transition to a global financial system based on 'several international currencies', French Economy Minister Christine Lagarde said today.

Lagarde, speaking ahead of a G20 finance ministers meeting in Paris on Friday and Saturday, said the world had to move on from the 'non-monetary system' it now has to one 'based on several international currencies'.

Accordingly, France wants to see less need for countries, especially the emerging economies, to accumulate huge foreign reserves, she said.

At the same time, international capital flows should be better regulated and the role of the Special Drawing Rights issued by the International Monetary Fund should be reinforced by the inclusion of China's yuan in the system.
...
France has previously said it wanted to see the global financial system reduce its reliance on the dollar for a more broad-based arrangement.

02/22/11:

A monetary conference sponsored by the Institute for New Economic Thinking - a nonprofit founded in 2009 with a $50 million pledge from oligarch George Soros - will be held April 8-11 at the Mount Washington Hotel in Bretton Woods.
...
... But it is under the guise of the success of earlier elite global planning that Soros will bring his group of merry global plotters to Bretton Woods. Among those scheduled to be there, in addition to Soros are:

Paul Volcker, Former Chairman, Federal Reserve

Adair Turner, Chairman, Financial Services Authority

Richard Bronk, London School of Economics

Gordon Brown, Former Prime Minister, United Kingdom

Paul Davidson, Co-Founder, Journal of Post Keynesian Economics

Martin Wolf, Chief Economics Commentator, Financial Times

Niall Ferguson, Professor of History, Harvard University

Andy Haldane, Executive Director, Financial Stability, Bank of England

Simon Johnson, Professor of Entrepreneurship, Global Economics and Management, Sloan School of Management, Massachusetts Institute of Technology

Henry Kaufman, President, Henry Kaufman & Co., Inc.

Zhu Min, Special Advisor, International Monetary Fund

Carmen Reinhart, Dennis Weatherstone Senior Fellow, Peterson Institute for International Economics

Kenneth Rogoff, Professor of Economics, Harvard University

Jeff Sachs, Director of the Earth Institute

Joseph Stiglitz, University Professor, Columbia University

03/22/11:

The International Monetary Fund is working on a proposal to become a more significant lender of dollars, euros and other hard currencies during times of crisis, essentially sharing the role of global lender of last resort with the U.S. Federal Reserve.

Under the plan, which has been encouraged by the U.S. and other nations in the Group-of-20 nations, the IMF would provide short-term foreign exchange swaps to central banks in developing nations as a way to handle financial shocks that leave those nations short of hard currencies. That would reduce political pressure on central banks to provide swap lines to countries that could be controversial domestically, and could also help convince borrowers that they don't need to accumulate huge reserves of foreign currencies to protect themselves during times of trouble.

France, which chairs the Group of 20 nations this years, has made the IMF plan a priority. The U.S. Federal Reserve also backs the idea, but wants to make sure the IMF sets tough standards for the swap lines and provides them for emerging nations, not advanced economies, concerned about the amount of new resources the IMF would need to backstop rich nations.
...

04/14/11:

The BRICS group of emerging-market powers kept up the pressure on Thursday for a revamped global monetary system that relies less on the dollar and for a louder voice in international financial institutions.

The leaders of Brazil, Russia, India, China and South Africa also called for stronger regulation of commodity derivatives to dampen excessive volatility in food and energy prices, which they said posed new risks for the recovery of the world economy.

Meeting on the southern Chinese island of Hainan, they said the recent financial crisis had exposed the inadequacies of the current monetary order, which has the dollar as its linchpin.

What was needed, they said in a statement, was "a broad-based international reserve currency system providing stability and certainty" -- thinly veiled criticism of what the BRICS see as Washington's neglect of its global monetary responsibilities.

The BRICS are worried that America's large trade and budget deficits will eventually debase the dollar. They also begrudge the financial and political privileges that come with being the leading reserve currency.

"The world economy is undergoing profound and complex changes," Chinese President Hu Jintao said. "The era demands that the BRICS countries strengthen dialogue and cooperation."

In another dig at the dollar, the development banks of the five BRICS nations agreed to establish mutual credit lines denominated in their local currencies, not the U.S. currency.
...

05/02/11:

...
The emergence of the G-20 as a leading forum for dialogue on financial and economic policy is an important expression of the perceived need for a shift in global governance. During the crisis, the G-20 provided a valuable and effective forum for policy cooperation among the world’s largest economies, supplanting in many ways the G7 and G8. The unprecedented anti-crisis effort organized through the G-20 in early 2009 demonstrated graphically the concrete benefits of global policy cooperation—without it, the crisis almost certainly would have been far deeper.

As the global economy recovers from the crisis, the G-20 is implementing its Framework for Strong, Sustainable and Balanced Growth through a Mutual Assessment Process—or MAP. The MAP represents an ongoing process of policy cooperation based on a serious analytical foundation. In essence, the MAP reflects a concrete recognition that policies developed and implemented in a coherent process can produce a superior outcome for all participants relative to a situation in which policies set independently.

And while the MAP was greeted initially by a considerable degree of skepticism, the progress to date appears to have exceeded consensus expectations by some degree. For example, G-20 Finance Ministers at their April meeting agreed to a detailed assessment of seven major economies whose imbalances—in areas such as private and public saving, and international trade — could represent a potential systemic risk to the global economy. An Action Plan will be prepared for the Leader’s examination and approval at the Cannes Leader’s Summit in November.

The MAP therefore represents the third turning point I will address. If the MAP is viewed as a success -- not only because it will have been taken seriously by the key participants, but also because the process will have produced a positive outcome -- then it likely will have a lasting influence on global relations, as well as on transatlantic relations. First of all, since the MAP is the only item on the G-20 Leaders’ Agenda that is “of the G-20, by the G-20 and for the G-20”, -- and because it deals with the economic and financial sector issues that lie at the heart of the G-20’s proclaimed competence -- the G-20’s relevance and importance will depend notably upon the MAP’s perceived success.
...

05/17/11:

The World Bank expects the US dollar to lose its solitary dominance in the global economy by 2025, as the euro and the renminbi establish themselves on an equal footing in a new “multi-currency” monetary system.

The shift will be driven by the increasing power and strength of emerging market economies, with six countries – Brazil, China, India, Indonesia, Russia and South Korea – accounting for more than half of global growth in 14 years.
...

06/13/11:

Professor Robert Mundell urges gold convertibility for the euro, the currency which he fathered, as well as for the dollar. This is a major step forward. Thought leaders are abandoning “old monetarism,” which was vainly fixated on quantity. Even its chief proponent, Milton Friedman, acknowledged old monetarism as unsuccessful in a 2003 interview with the Financial Times. An emerging “new monetarism” is quickly taking its place — one that focuses on the quality, not quantity, of money.
...

07/14/11:

Return of the Gold Standard as world order unravels

As the twin pillars of international monetary system threaten to come tumbling down in unison, gold has reclaimed its ancient status as the anchor of stability. ...

...

The bar to QE3 - yet more bond purchases - is even lower than markets had thought. The new intake of hard-money men on the voting committee has not shifted Fed thinking, despite global anger at dollar debasement under QE2.

Fuelling the blaze, the emerging powers of Asia are almost all running uber-loose monetary policies. Most have negative real interest rates that push citizens out of bank accounts and into gold, or property. China is an arch-inflater. Prices are rising at 6.4pc, yet the one-year deposit rate is just 3.5pc. India's central bank is far behind the curve.

"It is very scary: the flight to gold is accelerating at a faster and faster speed," said Peter Hambro, chairman of Britain's biggest pure gold listing Petropavlovsk.

"One of the big US banks texted me today to say that if QE3 actually happens, we could see gold at $5,000 and silver at $1,000. I feel terribly sorry for anybody on fixed incomes tied to a fiat currency because they are not going to be able to buy things with that paper money."
...
Step by step, the world is edging towards a revived Gold Standard as it becomes clearer that Japan and the West have reached debt saturation. World Bank chief Robert Zoellick said it was time to "consider employing gold as an international reference point." The Swiss parliament is to hold hearings on a parallel "Gold Franc". Utah has recognised gold as legal tender for tax payments.

A new Gold Standard would probably be based on a variant of the 'Bancor' proposed by Keynes in the late 1940s. This was a basket of 30 commodities intended to be less deflationary than pure gold, which had compounded in the Great Depression. The idea was revived by China's central bank chief Zhou Xiaochuan two years ago as a way of curbing the "credit-based" excess.

Mr Bernanke himself was grilled by Congress this week on the role of gold. Why do people by gold? "As protection against of what we call tail risks: really, really bad outcomes," he replied.

Indeed.

08/01/11:

... China has recently launched a new Precious Metals exchange in Kunming City, Yunnan province, called the Pan Asia Gold Exchange (PAGE). ...
...
This exchange is offering a new international-facing allocated ‘Spot’ Gold and Silver contract, with an 8am Beijing-time ‘fix’. The fix will only involve Chinese Banks; indeed the owners and members of the exchange are in no way related to the western banks that dominate the existing Spot and Futures Precious Metals markets. PAGE is launching in Q4 2011 a new Spot Precious Metals contract to challenge the emaciated LBMA ‘loco London’ system. International investors will now be able to buy allocated and, crucially, Rmb-denominated ‘Spot’ Gold and Silver contracts. The importance of this cannot be overstated. The Renminbi will be accessible to international investors through this exchange, but in a controlled fashion - using Gold as a synthetic choke on demand for the currency. By buying an Rmb Gold contract on PAGE and selling the equivalent $ denominated contract elsewhere, investors will be left with Rmb exposure. ...

08/03/11:

The committee of bond dealers and investors that advises the U.S. Treasury said the dollar’s status as the world’s reserve currency “appears to be slipping” in quarterly feedback presented to the government.

The Treasury Borrowing Advisory Committee, which includes representatives from firms ranging from Goldman Sachs Group Inc. to Pacific Investment Management Co., said the outperformance of haven currencies and those from emerging nations has aided in the debasement of the dollar’s reserve status, according to comments included in discussion charts presented ahead of the quarterly refunding. The Treasury published the documents today.

“The idea of a reserve currency is that it is built on strength, not typically that it is ‘best among poor choices’,” page 35 of the presentation made by one committee member said. “The fact that there are not currently viable alternatives to the U.S. dollar is a hollow victory and perhaps portends a deteriorating fate.”
...
The U.S. currency’s portion of global currency reserves dropped to 60.7 percent in the period ended March 31, the least since March 1999, International Monetary Fund data showed. It was 61.5 percent in the fourth quarter of 2010. The euro’s share rose to 26.6 percent, from 26.2 percent, while the yen was unchanged at 3.8 percent of the total. A category the IMF calls “other currencies” rose to 4.7 percent from 4.4 percent and is up from 3.6 percent in the first quarter of 2010.
...

08/04/11:

Gyrations in world markets are fueling speculation among policy makers and investors that it will take bigger and possibly coordinated moves by governments to douse Europe's sovereign-debt fires and calm tensions between countries trying to keep their currencies weak and exports competitive.

Senior officials from the Group of Seven leading nations have been in communication about Europe's debt crisis, according to a senior G-7 official with first-hand knowledge of the situation, with U.S. officials pushing European leaders to expand the size of their rescue fund for cash-strapped countries.

Their fear is that the crisis of confidence roiling Europe's weaker economies could spin out of control, engulfing Italy and Spain -- the euro-zone's third- and fourth-biggest economies -- rattling financial markets, and pushing the global economy into a recession.
...

08/17/11:

Just days after returning home from another round of chemotherapy in Cuba, Hugo Chavez has ordered billions of dollars in cash and hundreds of tons of gold to be relocated.

According to The Wall Street Journal, Venezuela will move the cash from Swiss and English banks to Russia, China, and Brazil while moving hundred of tons of bullion from abroad into its own central bank vaults.

No official statement has been released, but following the U.S. debt ceiling crisis senior Venezuelan officials have been vocal about "a crisis of uncertainty" with their dollar based monetary system.

Banking officials call the move a big risk that could be prompted, in part, by litigation to recover damages from the nationalization of Venezuela's oil fields -- a bill that could range from $10 to $40 billion.

Documents released by Venezuala's foreign minister also mention "the powers of the North" have "pillaged" Libya's European held reserves and notes a plan should be made to avoid a similar fate.
...

08/17/11:

Venezuelan President Hugo Chavez said on Wednesday he will nationalize the gold industry, including extraction and processing, and use its output to boost the country's international reserves.

The move follows a dispute between his government and foreign miners who say the rules limiting the amount of gold that can be exported from the South American nation hurt their efforts to secure financing and create jobs.

Toronto-listed Rusoro, owned by Russia's Agapov family, is the only large gold miner operating in Venezuela. It produced 100,000 ounces last year.

The gold industry will be just the latest part of the economy to be put under state control by the socialist leader, who said he would issue the necessary decree in the coming days and called on the military to help control the sector.

"I have here the laws allowing the state to exploit gold and all related activities ... we are going to nationalize the gold and we are going to convert it, among other things, into international reserves because gold continues to increase in value," Chavez said in a phone call to state television.
...

08/17/11:

...
No doubt about it today. Venezuela has formally asked the Bank of England for its gold that is stored there to be returned to Caracas. They are also asking the other foreign depositories for the rest of its gold.

Venezuela has 99 tonnes of gold stored at the Bank of England. It has a total of 212 tonnes so 113 tonnes of gold will come from the BIS and the Federal Reserve Bank of NY.

I would like to point out to you that the gold held at the Bank of England is not earmarked gold. It is on deposit there and the Bank can do whatever it likes with the gold. However it is a liability to them and the bank will fail if they cannot return the gold to Venezuela. The gold at the Federal Bank of NY is earmarked gold and the bank receives fees for its safekeeping. The gold held at the BIS is a site deposit and generally the BIS takes ownership of gold in a foreign jurisdiction in return for needed cash to a nation.

It looks like the BIS has site deposits of gold for Venezuela with the Federal Bank of NY.
...
You can now imagine what is going on behind the scenes. The Bank of England will recall its gold from the GLD. If that gold from GLD is now gone to sovereign China, India, Russia, South Korea, Mexico, and to wealthy Europeans fleeing the Euro, then the Bank cannot retrieve its swapped gold to repay Chavez. Not only that but the Bank of England is not the ultimate owner of the gold..it is probably wealthy Arabs or oil barons like Chavez. You can now imagine the wild scenarios possible. Gold was at its nadir of the day and shot up big time on the news of the repatriation of gold. Many understand the significance of today's announcement.
...

08/19/11:

In many ways, recent macro events and risks—the U.S. downgrade, the debt-ceiling resolution and Europe’s fiscal challenges—are marking a turning point for the global economy and markets and, in our view, a new fiscal world order.
...

08/23/11:

German Labour Minister Ursula von der Leyen -- who is also a deputy president of Chancellor Angela Merkel's Christian Democrats (CDU) -- said on Tuesday that future euro zone bailout payments should be covered by collateral such as gold reserves or stakes in state industry.
...

08/29/11:

... India and Sri Lanka are also associated with the Shanghai Cooperation Organization, which was set up by China and Russia with the eventual goal of establishing an Asian supranational state.

This little-known connection is extremely important. The SCO even has a website. The central banks of its member states, observer states and dialogue partners are nearly all buying gold, overtly or covertly. This is more likely to be a co-ordinated economic attack on the West than just a purely random event.

Until Chavez’s intervention, China and Russia – who run the SCO – were gently turning the screws on the gold market: Russia by announcing regular purchases and China by encouraging its citizens to buy. They appear to have put the word about through the SCO that gold will have an important role in the SCO’s future, and those involved should have some. ...

08/30/11 Ned Naylor-Leyland discusses PAGE and the Renminbi:


09/05/11:

Romania’s central bank will analyze the future structure of the country’s international reserves and a possible increase of the gold reserve, Mediafax reported, citing Governor Mugur Isarescu.
...

09/08/11:

Chinese officials told European Union business executives that the yuan will achieve “full convertibility” by 2015, EU Chamber of Commerce in China President Davide Cucino said.

“We were told by those officials by 2015,” Cucino told reporters in Beijing yesterday, declining to identify the government departments involved. People’s Bank of China Governor Zhou Xiaochuan said that while there is no timetable for convertibility, the offshore yuan market is “developing faster than what we had imagined.”

China has accelerated the use of the yuan in international trade and investment to curb its reliance on the dollar. A fully convertible currency is one of the criteria the U.S. and Europe are demanding from china as a condition for allowing it to be part of the International Monetary Fund’s currency basket. A 2015 target would be a year faster than the schedule expected by 57 percent of 1,263 global investors in a Bloomberg survey published in May.
...

09/14/11:

Geopolitical analyst James G. Rickards, who spoke at GATA's Gold Rush 2011 conference in London last month, tonight tells King World News that the major Western industrial powers are likely to start resorting to the "Special Drawing Rights" of the International Monetary Fund for the cash needed for the next round of bailouts. And when that happens, Rickards says, "the game really is over. It will be very transparent that we're just replacing one kind of paper money with another kind of paper money and that is going to accelerate the rush to gold."

If Rickards says it, ordinarily it's a lock, but let's add one contigency. As long as prospective purchasers of gold are content to leave their metal in the custody of bullion banks like HSBC and J.P. MorganChase, forfeiting their metal to the Western central bank fractional-reserve gold banking system, where their metal is turned against them, then infinite amounts of imaginary gold, paper gold and gold derivatives, will be able to keep suppressing the gold price indefinitely.
...
If the Western central banking system and its agents can keep creating paper gold as easily as they can create SDRs, Western financial journalism may have many more years of noting smugly, without expressing the slightest curiosity, that gold isn't keeping up with inflation. The conclusion will be a matter of the readiness of any of the Eastern powers to pull the plug on the scheme when they decide that they have adequately hedged their exposure to the currencies of the gold price-suppressing Western powers.
...

09/18/11:

... the Dutch the Dutch Socialists Party (SP)’s spokesman for financial affairs, Mr. Ewout Irrgang, asked the Dutch Secretary of the Treasury 10 detailed questions about the gold supposedly held by the Dutch Central Bank. Questions vary from: where is the gold? why are gold and gold receivables one line item? how much gold is loaned out? As Dutch website Vrijspreker.nl points out, "This is potentially a big breakthrough for global awareness on how central banks hide crucial info from the public and the disastrous effects central banks have on society." ...

09/19/11:

European central banks have become net buyers of gold for the first time in more than two decades, the latest sign of how the turbulence in the currency and debt markets has revolutionised the bullion market.

The purchases are minuscule compared with the size of the global gold market but highlight a remarkable turnaround from a wave of heavy selling by European central banks.

The role of central banks in the gold market will be a central topic of debate at the annual London Bullion Market Association conference, the largest gathering of the gold industry, in Montreal this week. The switch from large selling to buying has helped propel the gold price more than 25 per cent higher so far this year, hitting a nominal record of $1,920 a troy ounce this month. The shift in Europe comes as central banks in emerging markets are also loading up on gold.

Mexico, Russia, South Korea, and Thailand have all made large purchases this year, in a move to reduce their exposure to the dollar. Globally, central banks are set to buy more gold this year than at any time since the collapse of the Bretton Woods system 40 years ago -- the last time the value of the dollar was linked to gold.

"We're going back to a time when gold is seen very much as money," Jonathan Spall, director of precious metals sales at Barclays Capital, told FT.com in a video interview. "It has been a complete reversal of the attitudes we saw during the 1990s."
...

10/24/11:

The Vatican called on Monday for the establishment of a "global public authority" and a "central world bank" to rule over financial institutions that have become outdated and often ineffective in dealing fairly with crises.
...
It called for the establishment of "a supranational authority" with worldwide scope and "universal jurisdiction" to guide economic policies and decisions.

Such an authority should start with the United Nations as its reference point but later become independent and be endowed with the power to see to it that developed countries were not allowed to wield "excessive power over the weaker countries."
...
It said the International Monetary Fund (IMF) no longer had the power or ability to stabilize world finance by regulating overall money supply and it was no longer able to watch "over the amount of credit risk taken on by the system."

The world needed a "minimum shared body of rules to manage the global financial market" and "some form of global monetary management."

"In fact, one can see an emerging requirement for a body that will carry out the functions of a kind of 'central world bank' that regulates the flow and system of monetary exchanges similar to the national central banks," it said.
...

Commentary

There is a lot missing from that timeline, but I hope I included enough to show that gold is center stage in this currency war among nations and central banks.

I have a hard time imagining that there is sufficient political support for establishing a global central bank or global currency given the vivid pain the Euro is experiencing right now. The warts of central banking with fiat currencies are being exposed and I believe that people are waking up to the reality of the problem.

As things play out, I can see a move to restoring some form of precious metals backed currencies world-wide. It appears that most of the world's central banks are already desperately trying to shore up their gold reserves.

 

[KMS]

Nice work putting this together.

Buy physical and hide it, imho.

 

[DoChenRollingBearing]

Agreed, nice post

:agree:

Tinfoil Hat Brigade member DCRB (in the Lunatic Fringe Battalion, as voted by my blog's readers) also thinks you wrote a nice piece.

There is very little that is safe anymore. Gold is (as long as you don't buy fake...). I saw that video from Heraeus a few months ago re the fake 500 gm bar. I would be interested to know:

1) if the "Fysch" balances are accurate enough to pick out the less than 1% difference in the density of W vs. Au.

2) if there are any other simple ways of checking a gold coin (1 oz) to see if it is gold (22 kt in the case of Eagles), for example would a tungsten salted coin "ring" differently if dropped an inch onto marble or granite?

As time goes by PMBug (and repliers), I would like to know if there are Material Science people present who can answer question like the above.

I also would REALLY like to hear from people who are GOOD at Statistics.

 

[pmbug]

I should have also added this nugget from 10/20/11:

http://www.pmbug.com/forum/f2/russias-central-bank-continue-buying-gold-52/

 

[pmbug]

Should have also included the efforts to re-monetize silver in Mexico:

http://www.pmbug.com/forum/f3/hugo-salinas-price-pushing-mexico-monetize-silver-85/

 

[pmbug]

Latest update on Venezuela's gold:

...
A senior government source involved in transporting the ingots, which amount to 90 percent of Venezuela's gold held abroad, told Reuters they will be shipped in several cargo flights beginning next month and ending before the New Year.
...

http://af.reuters.com/article/metalsNews/idAFN1E79P1B120111026

 

[KMS]

nations calling their gold home. Wonder if the Dutch ever found theirs.

 

[DoChenRollingBearing]

I see a little meme opening up here...

People and nations wanting their gold back. Or to see it. Or to have it closer.

Possession... Paper, no thanks.

I for one would like you, PMBug, to keep feeding us news re Venezuela's gold (if possible). That's around 100 tonnes they are bringing home. I read (here?) that they are going to fly it back on various flights.

 

[pmbug]

Yes, I think we are getting closer to the day when physical possession is going to be the bottom line.

 

[pmbug]

European countries are fighting over "tradition" as the sovereign debt crisis develops:

...
Germany has rejected proposals by France, Britain and the US to have
German gold reserves used as collateral for the Eurozone bailout fund.

Germany Economy Minister Philipp Roesler said on Monday that the
German people's gold reserves cannot be touched and “must remain off
limits."
...
Senior German politician, Gunther Krichbaum, a lawmaker in
German Chancellor Angela Merkel’s governing coalition and Chairman of
the Committee on the Affairs of the European Union of the German
Bundestag has proposed that Italy sell its sizeable gold reserves in
order to lower its debt.

Krichbaum, who chairs the German parliament’s European Affairs
Committee, was quoted as saying in the Rheinische Post that Italy’s gold
reserves are relatively high and could be used to pay off their
sizeable debt.

Using periphery nations’ gold reserves as collateral has been on the
agenda in Germany for some months with many influential German
politicians calling for debtor Eurozone nations to sell their gold
reserves.

Angela Merkel’s budget speaker and his opposition counterpart urged
Portugal to consider selling their gold in May of this year.

Senior Minister and rival to Merkel, Ursula von der Leyen, demanded
that the debtor ‘PIIGS’ countries offer Germany more reliable guarantees
and allow it access to their gold reserves and industrial facilities as
payment for loans.

Gold’s value as money and as a strategically important monetary asset is being slowly realized again.
...

http://www.zerohedge.com/news/germa...its”-italian-gold-sale-again-proposed-germany

 

[oppie2005]

I for one would like you, PMBug, to keep feeding us news re Venezuela's gold (if possible). That's around 100 tonnes they are bringing home. I read (here?) that they are going to fly it back on various flights.

if those flights crash into the ocean......anyone down for renting a charter and going scuba diving?

 

[DSAbug]

if those flights crash into the ocean......anyone down for renting a charter and going scuba diving?

If they "crash" they will have never left the airport with all that gold.

 

[oppie2005]

If they "crash" they will have never left the airport with all that gold.

im not quite following....

 

[KMS]

im not quite following....

The crash would be done on purpose to hide the fact that the gold was never in the air/on the plane. Conspiracy etc.

 

[oppie2005]

The crash would be done on purpose to hide the fact that the gold was never in the air/on the plane. Conspiracy etc.

oh, haha, got it. I was originally referring to a real crash where the gold was really on the plane. but i get what you are saying. thanks for clearing that up for me though, KMS.

 

[pmbug]

The communist government of Vietnam has announced further moves aimed at controlling the nation’s gold market. The state bank of Vietnam has announced that it will cut down the number of gold bar producers that are allowed to legally operate in the country. All companies with less than 500 billion dong in funds will not be allowed to continue their activities. Furthermore, those companies that wish to continue operating will have to prove that they have at least a 25% market share.

After this decree by the country's central bank, Vietnamese experts are warning that there will be a surge in the production of counterfeit gold bars. Since spring of this year rumors have been circulating that the Vietnamese government will eventually ban all gold production in the country. The state bank of Vietnam has repeatedly devalued the dong in relation to the US dollar and other major currencies.

Vietnamese citizens as well as local investors have been using gold as a safe haven to hedge against rising prices, caused by over-issuance of the dong. The flight from the national currency is piling more pressure on the Vietnamese government, which doesn't seem to be capable of solving the economic crisis affecting the whole country. Those funds invested in gold are withdrawn from the Vietnamese financial system. Thus politicians have been looking at ways of discouraging gold ownership.
...

More: http://www.goldmoney.com/gold-research/roman-baudzus/vietnams-new-move-towards-gold-prohibition.html

 

[KMS]

caused by over-issuance of the dong

I'm sorry I couldn't help myself. Yes, I am immature.

 

[pmbug]

^ lol

I suspect that Rickards' new book is going to be an excellent read on this subject:

 

[pmbug]

We’re in the throes of Currency War III, and Ben Bernanke has won the first offensive by flooding China with inflation.

If this sounds like a geeky online game, recall how Chinese prices surged after the Federal Reserve unleashed its quantitative easing in 2009 and 2010, one of many moves James Rickards parses in his somber book, “Currency Wars.”

“It was the perfect currency-war weapon and the Fed knew it,” he says, describing how the Fed’s expanding money supply forced China to print more yuan to maintain its peg to the dollar. “China was now importing inflation from the United States through the exchange-rate peg after previously having exported its deflation to the United States.”
...

More: http://www.bloomberg.com/news/2011-...lation-as-currency-war-intensifies-books.html

 

[pmbug]

President Hugo Chavez’s government began repatriating Venezuela’s gold reserves from European banks Friday as the first shipment arrived on a flight from Paris.

Troops guarded the shipment in a caravan of at least five armored trucks that carried the gold to the Central Bank in Caracas.

A group of government supporters cheered and waved flags as the caravan passed, with soldiers holding their rifles at the ready. Two light tanks escorted the shipment.
...

http://www.washingtonpost.com/busin...rom-overseas/2011/11/25/gIQAwVV8vN_story.html

...
Merentes said the government plans to eventually bring home 160 tons of gold over time. Before Friday, the country held 211 tons -- nearly $11 billion worth -- out of its 365 tons of gold reserves stored in U.S., Canadian, and European banks. The country has the largest holdings in Latin America with nearly two-thirds of its $27.8 billion in international reserves held in the precious metal.

Merentes didn't specify the quantity of gold shipped on Friday but told a rally of supporters outside the central bank headquarters that it was valued at around $300 million. ...

http://gata.org/node/10706

 

[pmbug]

...
Might Russia and China use gold in order to undermine U.S. political and economic dominance?

There is certainly the possibility that they may use gold as a geopolitical weapon against the U.S. and as a way of furthering their growing global political and economic aspirations.

Putin's endorsement in 2005 of the Russian Central Bank's plans to diversify the Russian reserves out of fiat currencies and debt instruments and into gold bullion was seen by some as as much a political act as an economic one.

Putin's overt and PR like choreographed endorsement of gold was replete with many interesting and highly unusual photos.

It was the first time in recent years that a head of state of one of the larger and more powerful G8 global players has expressly endorsed its central bank buying gold and probably the first time that a head of state has been photographed many times holding and admiring gold bullion bars.

Importantly, it was central bank buying that broke the back of the anti-gold cartel or the London Gold Pool in the late 1960s early 1970s. This paved the way for the massive bull market of the 1970s.

Putin's calculated gesture may have been the most important statement on gold by a head of state since French President de Gaulle praised gold as the ultimate from of money and wealth: "There can be no other criterion, no other standard than gold. Yes, gold which never changes, which can be shaped into ingots, bars, coins, which has no nationality and which is eternally and universally accepted as the unalterable fiduciary value par excellence."

Some have posited that Putin may have been sending a "shot across the bows" of the U.S. government as De Gaulle was doing some 35 years ago. Putin and many in Russia are increasingly nervous and wary of Washington's increasing military and economic presence in what they have always considered their backyard - Eastern Europe, Eurasia and the Caspian.

Russia, like China and other 'strategic competitors' to the U.S. are aware of the predicament which the U.S. finds itself in. While it is the world's remaining superpower and overwhelmingly superior to all its rivals in military terms, it has a dangerously exposed Achilles' heel in the form of its fiat paper reserve currency, over dependence on Middle Eastern oil, its massive indebtedness and balance of payments issues.

Russia, like China, is now one of the U.S.' creditors and thus has considerable leverage which it has so far chosen not to exercise. Should it do so there would obviously be a marked increase in geopolitical tension and the potential to create real instability in capital markets and even an international monetary crisis.

Given continuing currency debasement by the US and other debtor nations, the simmering currency wars of recent months may soon heat up.

http://www.goldcore.com/goldcore_bl...y-adds-195-tonnes-gold-reserves-october-alone

 

[KMS]

The U.S. has so much more gold than everyone already, the Russians and Chinese would have to buy like this every month for 300 months without us buying any to pass us up. We reportedly have 8,133.5 tonnes as of August 2011. Therefore, the U.S. has the most gold to back it's currency, even though it currently does not fulfill that role.

American people also make a decent wage when compared to other countries. If the gubbermint decided to play the same game as Russia, China, et al, and start recommending to its people to buy gold, how do you think gold prices would do then?

 

[pmbug]

China’s domestic foreign exchange market announced on Thursday that it would launch trading of the yuan against the Australian dollar and Canadian dollar next Monday, the latest currency pairs to be introduced as part of Beijing’s efforts to promote the use of its currency.

The announcement by the China Foreign Exchange Trade System (CFETS) confirmed a Reuters’ report earlier this week based on foreign bank trading sources.

The move is part of Beijing’s efforts to expand the use of the Chinese currency for trade and investment, as a way of reducing reliance on the dollar and thereby simplifying the settlement of trade in everything from energy to manufactured goods.

Traders said China needed to add direct yuan trading against the Aussie because of increasing deals between China and Australia, in particular, in the mining sector.
...

More: http://business.financialpost.com/2011/11/24/china-allows-yuan-trading-with-loonie/

~~~

KMS - There is a lot of speculation that the US' gold holdings are encumbered (in spite of what officials say publicly and to Congressional hearings). I suspect most soveriegn metal holdings are encumbered. No one (ie. no governments/central banks) wants a great unraveling. My suspicion is - this is precisely the concern that prompted Chavez to repatriate Venezuela's gold from London (before the physical gold "bank run" in paper gold claim game).

 

[pmbug]

Euro-area finance ministers said they would seek a greater role for the International Monetary Fund and the European Central Bank in fighting the sovereign debt crisis after conceding the effort to expand their bailout fund missed its target.
...

http://www.bloomberg.com/news/2011-...le-as-bailout-fund-expansion-falls-short.html

As the Eurozone continues closer to the edge, the calls for a global bailout saviour will increase.

 

[DoChenRollingBearing]

Zero Hedger ¨Smiddywesson¨ today had some interesting comments about gold (in the Korean Central Bank buying gold thread).

He says that perhaps the reason they have not done an audit of Ft. Knox and/or the Fed is that maybe we have MORE gold than claimed!

I have found Smiddywesson to be a very knowledgeable commentator there at ZH, take a look at that thread:

http://www.zerohedge.com/news/bank-...-billion-or-39-november-alone#comment-1938154

 

[pmbug]

Iran and Russia replaced the U.S. dollar with their national currencies in bilateral trade, Iran’s state-run Fars news agency reported, citing Seyed Reza Sajjadi, the Iranian ambassador in Moscow.

The proposal to switch to the ruble and the rial was raised by Russian President Dmitry Medvedev at a meeting with his Iranian counterpart, Mahmoud Ahmadinejad, in Astana, Kazakhstan, of the Shanghai Cooperation Organization, the ambassador said.

Iran has replaced the dollar in its oil trade with India, China and Japan, Fars reported.
...

More: http://www.bloomberg.com/news/2012-...ollar-with-rial-ruble-in-trade-fars-says.html

Iran is a flash point in the war against the US dollar's world reserve currency status. It's no wonder that the globalists at the Council on Foreign Relations are pushing so hard to start world war three at their doorstep.

 

[pmbug]

From 12/28:

The cutting out of the dollar in Japan / China trade may be a small start of only $345 billion in global trade, but it is a sea change decision in the global monetary system that markes the beginning of the end of the dollar's role as the sole global reserve currency. This move is irreversible and will lead to more and more currency exchange rate uncertainties. Gold will benefit!

Japan and China will promote direct trading of yen and yuan without using dollars and will encourage the development of a market for companies involved in the exchanges, the Japanese government said over the holiday weekend.

Japan will also apply to buy Chinese bonds next year, allowing the investment of Yuan that leaves China to Japan to remain in China, the Japanese government said. Encouraging direct yen- yuan settlement should reduce currency risks and trading costs.
...

More: http://www.financialsense.com/node/7223

 

[bushi]

Hi,

I've heard a rumor once, that "Mr non-existent WMDs" Saddam Husein and his little country Iraq was attacked & "liberated", because he was close to get out of US $$$ in his oil trades (according to that same person, Euro was on the cards back then).

We have a saying: "When nobody knows what something is all about - it means it is about money"

regards!

 

[pmbug]

October 30, 2000

A U.N. panel on Monday approved Iraq's plan to receive oil-export payments in Europe's single currency after Baghdad decided to move the start date back a week.

Members of the Security Council's Iraqi sanctions committee said the panel's chairman, Dutch Ambassador Peter van Walsum, would inform U.N. officials on Tuesday of the decision to allow Iraq to receive payments in euros, rather than dollars.
...

http://archives.cnn.com/2000/WORLD/meast/10/30/iraq.un.euro.reut/

 

[bushi]

Ah, yeah, thanks PMBug! All clear now, and the old saying held true.

 

[Silver_Bug]

Zero Hedger ¨Smiddywesson¨ today had some interesting comments about gold (in the Korean Central Bank buying gold thread).

He says that perhaps the reason they have not done an audit of Ft. Knox and/or the Fed is that maybe we have MORE gold than claimed!

I have found Smiddywesson to be a very knowledgeable commentator there at ZH, take a look at that thread:

http://www.zerohedge.com/news/bank-...-billion-or-39-november-alone#comment-1938154

The idea that they have MORE gold than they say and HIDING it, is ludicrous. This is a pipe dream.
In reality only a fraction of the 8133 tons of gold are still in their possesion.

 

[DoChenRollingBearing]

I would mostly agree with you. But with these SOBs, anything is possible. If you are a zerohedge.com aficionado, "smiddywesson" IS a knowledgeable guy. He comments on gold threads frequently.

FOFOA, FWIW does not share the conspiracy talk (no gold) nor is he a cheerleader ("End the Fed", "Crash JMP, buy silver"). He does NOT come out and specifically say that the 8000 (and change) tons ARE there at Ft. Knox, he accepts the word of the authorities that the gold is there. FOFOA is a very logical guy, and is a firm believer in Occam's Razor (usually the simplest explanation is the right one).

 

[Silver_Bug]

I also do not buy the conspiracy theory that they hold no physical gold. i just dont buy the conspiracy theory that they hold MORE gold then they claim they do hold. I would also take their word that they do hold the 261 million ounces they claim. I just think that most of it is encumbered and not theirs anymore.

If they had more gold they would boast about it, not hide it. They would shout from the roof tops if they had more. Gold is a confidence bulding tool for their crap paper (fed notes) so they would never hide it if they had more of it.

 

[pmbug]

Jan 20 (Reuters) - India and Iran have agreed to settle some of their $12 billion annual oil trade in rupees, a government source said on Friday, resorting to the restricted currency after more than a year of payment problems in the face of fresh, tougher U.S. sanctions.

India, the world's fourth-largest oil consumer, relies on Iran for about 12 percent of its imports or 350,000-400,000 barrels per day (bpd) and is Tehran's second-biggest oil client after China.
...

http://www.reuters.com/article/2012/01/20/india-iran-idUSL3E8CK3C120120120

More: http://www.zerohedge.com/news/india-joins-asian-dollar-exclusion-zone-will-transact-iran-rupees

 

[DSAbug]

Boy.. the US dollar just keeps becoming less relevant in the oil biz

 

[pmbug]

With respect to Iran, the US is forcing the issue via the sanctions. It's the same dynamic that played out with Iraq.

 

[pmbug]

Iran has asked India to pay for oil partly in yen as the two nations seek an agreement on how to maintain trade amid tightening global sanctions, according to three people with knowledge of the matter.

At talks in Tehran last week, India proposed to pay its second-biggest oil supplier in rupees through a bank account in the South Asian nation, said the people, declining to be identified because the information is confidential. Iranian officials sought partial payment in yen because they’re concerned that they may not get sufficient value from the rupee, which isn’t fully convertible, according to the people.
...

More: http://www.bloomberg.com/news/2012-...from-india-amid-tighter-global-sanctions.html

 

[pmbug]

...
Meeting in Brussels, foreign ministers from the 27-state EU, which as a bloc is Iran's second-biggest customer for crude after China, agreed to an immediate ban on all new contracts to import, purchase or transport Iranian crude oil and petroleum products. However, EU countries with existing contracts to buy oil and petroleum products can honour them up to July 1.

EU officials said they also agreed to freeze the assets of Iran's central bank and ban trade in gold and other precious metals with the bank and state bodies.
...

http://uk.reuters.com/article/2012/01/23/uk-iran-eu-deal-idUKTRE80M0IK20120123

Tradition!

 

[bushi]

...classy... Thou who do not play by IMFs rules, shall perish.

I don't know if you know, but when Iceland (already recovering from 2007, despite being utterly wiped out by their banks recklessness - they do have good growth and everything - and most of all, they are not paying the debts of PRIVATE banks) had their referendum on the topic "shall we or shall we not guarantee the investments/bank bondholders", of course lost by a landslide by banking system cheerleaders/puppet politicians - despite being oh so important for the economy & the recovery, and oh so too big to fail, and because it would sink Iceland to the bottom of the Atlantic the next morning, if Icelanders would not agree to socialize their banks' debt), decided to show two fingers to broken banks' bondholders, UK also have had frozen all their assets, that they could lay their hands on, using the laws that had been put in place to prevent TERRORISM! And reportedly threatened them with the sea blockade (at that time, Iceland had only two weeks worth of food supply).

That is, of course, because Iceland is a known international terrorism center! They always have been, and always will.

...I wonder, if I will ever see a piece about Iceland's current situation, in the mainstream media?

...Tradition!

 

[pmbug]

...
I don't know if you know, but when Iceland ...

http://www.pmbug.com/forum/f4/iceland-took-road-less-traveled-467/