GOLD AND THE FUTURE OF THE DOLLARJanuary 21, 2013
This is a very interesting paper from the "Official Monetary and Financial Institutions forum", if you have the time to read it, because it provides a very different perspective on what may be going on:
I want to direct your attention, however, to some of the conclusions it reaches on page 32, which may be summarized as follows:
- "Gold will play a greater role in the future than today – but not a dominant one." With this, I tend to agree, but for very different reasons than given in the report, namely, that as the readers of this website know, I believe that there are enough indicators out there to suggest two salient impediments to a gold standard: (a) the amount of gold in existence - depending on the sources used, seems to vary significantly and occasionally over an order of magnitude. Even if this is not the case, the amounts cited vary significantly; (b) this gold - whatever the amount - has been massively re-hypothecated. What this might mean is that for any return to a gold standard or modified gold standard to occur, some "re-set" of the system might have to occur, which it is unlikely will be allowed.
- "Central banks will trade gold more actively." Well, if calls for repatriation and audits are "more active trading", then yea, one would have to agree. But this does not portend the nice world seemingly protrayed in the document.
- "Gold will not replace fiat currencies; the Gold Standard will not return." With this I have to agree, but again, not for the usual cited reasons but for the reasons cited in point one above. The report states that "Nostalgia for a supposed golden age of the Gold Standard, coupled with concerns about governments' ability to manipulate fiat currencies, occasionally gives rise to calls for, or predictions of, a return to gold as the underlying basis for the international monetary system. This is not possible. Gold’s relative scarcity means that it could only ever replace a fiat currency on a fractional basis. Even that is unlikely, as a legacy of history." In other words, "there ain't enough gold to do it folks." Well, true enough, but that's not the only reason. As indicated in one above, the amount of gold is not really known, though the indicators are there is more in existence than the bankers are letting on, and this has been used, as I have argued, to establish a huge system of fraudulent financing for all sorts of mayhem. All who profit from this system, and I have no doubts the threads run even to the most unlikely places, will not soon abandon it. Additionally, it is too finely woven into the structure of Western power to be abandoned, which a return to a gold standard would do.
- "Gold will increasingly become a currency hedge, not just a dollar hedge." Agreed, for the moment, we are seeing the emergence of a two-tiered public system...As I have argued here before, what will really occur is that competition to "the system" will increasingly emerge... gold will constitute some but not all of that competition.
- "Rebalancing of gold in central bank reserves is likely." This provocative observation is really another way of saying that a geopolitical realignment will take place, and that will be accompanied by a restructuring of the global financial system, signaled in part by various central banks' holdings of gold. This we have already seen occurring with Germany's Bundesbank.
- "Greater attention will be paid to geographical location of central bank gold storage." Note what the paper says here: "Large Chinese banks, which are actively building vault space as a means of underpinning the country’s private sector gold activities, will increasingly offer storage facilities to central banks from developed and emerging market economies to offset the west’s traditional dominance in this field.... Issues of convenience, reliability and cost will generate greater interest in central banks holding gold away from the traditional centres, mainly at the Federal Reserve Bank of New York and the Bank of England." (p. 32, emphasis added).
That says it all folks: behind the polite language of "academese" and "committee-speak," what is really going on is that the Bank of England and the Federal Reserve are simply no longer trusted... gee, I wonder if all those counterfeit Federal Reserve gold-backed bearer bonds have anything to do with it...?
See you on the flip side...