Gold World News Flash |
- Quality assessment of fine gold (part 2 of 2)
- Quality assessment of fine gold (part 1 of 2)
- GoldMoney further expands educational activities with launch of the GoldMoney Laboratory
- Dr. Nu Yu?s Market Trends Update on Gold, Silver, Crude Oil, Stock Market & Bonds
- The 15 Trillion Dollar Party
- Asian gold near 2-week high on dollar, US GDP data
- European Reality Check
- Will Gold Buy a Case of Beer? (or Lunch?)
- Gold caught in range as Europe heads to a ‘suicide'
- Gallup: America's Favorite Long-Term Investment Is Gold
- Peter Schiff : The Next Big Move In Gold Will Be Up
- China's Zhongjin Gold to issue 600 million yuan in bills
- Current Gold Demand Completely Unsustainable Without Sharply Higher Prices: Eric Sprott and David Franklin
- Market Forces
- Got Gold Report for April 29, 2012
- Why the U.S. Dollar is Critical for the SP 500 Index this Week
- Alf Fields Update On Gold -April 4th Was The Low
- Hugh Hendry Is Back - Full Eclectica Letter
- Dutch central banker's memoirs confirm gold price suppression
- Dutch central banker's memoirs confirm gold price suppression
- The Moneychanger interviews GATA secretary about gold and silver suppression
- Join GATA at the Vancouver conference in June
- NanoGold
- Deflecting Attention From The Real Question
- Return to the Gold Standard?
- Gold COT Report, Speculators Can Win Against Producers By...
- Silver COT Report, Only Way to Beat Commercials is to Go Long and Stay Long
| Quality assessment of fine gold (part 2 of 2) Posted: 29 Apr 2012 07:15 PM PDT Quality assessment of fine gold (part 2 of 2) Modern methods of chemical analysis One should keep in mind that the required sampling for chemical analysis will always damage the inspected item. ...
| ||||||||||||||||||||
| Quality assessment of fine gold (part 1 of 2) Posted: 29 Apr 2012 07:00 PM PDT Quality assessment of fine gold (part 1 of 2) Introduction Gold quality designation Many countries have enacted consumer protection targeted regulations on quality and marking of precious metal ...
| ||||||||||||||||||||
| GoldMoney further expands educational activities with launch of the GoldMoney Laboratory Posted: 29 Apr 2012 07:00 PM PDT GoldMoney further expands educational activities with launch of the GoldMoney Laboratory London, 30 April 2012 - GoldMoney, one of the world's largest providers of physical bullion for ...
| ||||||||||||||||||||
| Dr. Nu Yu?s Market Trends Update on Gold, Silver, Crude Oil, Stock Market & Bonds Posted: 29 Apr 2012 05:43 PM PDT [B][B][/B][/B][B][B]This update analyzes the developing trends in gold, silver, crude oil, the [/B]stock market, the US Dollar Index and 30-year U.S. Treasury bonds. Take a look.[/B] Words: 883 So says Dr. Nu Yu ([url]http://fx5186.wordpress.com[/url]) in edited excerpts from his original article*. [INDENT]Lorimer Wilson, editor of [B][COLOR=#000000]www.munKNEE.com (Your Key to Making Money!), has further edited the analysis below for length and clarity – see Editor's Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.[/COLOR][/B] [/INDENT]Yu goes on to say, in part: The Broad Stock Market (Wilshire 5000 Index)* The Dow Jones Wilshire 5000 index is a benchmark of the total equity market. It closed in neutral last Friday and*is now in a bullish time window as*forecast by*the Long Wave Index (LWX) below: The daily chart of the Wilshire 5000 index below has the price bars color coded with the LWX indicator and ...
| ||||||||||||||||||||
| Posted: 29 Apr 2012 05:12 PM PDT  If you knew that you could live in luxury for the rest of your life but that by doing so it would absolutely destroy the future for your children, your grandchildren and your great-grandchildren would you do it? Well, that is exactly what we are doing as a nation. Over the past several decades, we have stolen 15 trillion dollars from future generations so that we could enjoy a dramatically inflated level of prosperity. Our 15 trillion dollar party has been a lot of fun, but what we have done to our children and our grandchildren has been beyond criminal.We ran up the greatest mountain of debt in the history of the planet and we are sticking them with the bill. Sadly, both political parties have been responsible for the big spending that has been going on. Both Democrats and Republicans have run up huge budget deficits when in power. But instead of learning the hard lessons of the past, both political parties continue to vote for even more debt. They would rather continue to steal trillions of dollars from future generations than have the party end and have to face the consequences. And the consequences will be dramatic when the party ends. During fiscal year 2011, the U.S. government spent 3.7 trillion dollars but it only brought in 2.4 trillion dollars. That means that the U.S. government spent about 1.3 trillion dollars that it did not have. It is important to understand that even if the U.S. government spent that 1.3 trillion dollars on really stupid things, that money still got into the pockets of ordinary Americans who then spent it on things like food, gas, housing, etc. In turn, most of those that received money from providing those goods and services would spend it on other things. Read more..... 
This posting includes an audio/video/photo media file: Download Now | ||||||||||||||||||||
| Asian gold near 2-week high on dollar, US GDP data Posted: 29 Apr 2012 05:11 PM PDT
Gold added $1.12 to $1,663.44 an ounce by 0301 GMT, but the metal was heading for its third monthly decline. Bullion had risen to $1,667.11 on Friday, its strongest since April 13, on disappointing US growth and European debt jitters. Read More @ Reuters Business Standard
| ||||||||||||||||||||
| Posted: 29 Apr 2012 03:48 PM PDT from Gold Seek:
"The pain in Spain falls mainly on the sane". (With apologies to "My Fair Lady") There has been a lot of pain in Spain recently with probably more to come. Unemployment is at 24% while youth unemployment (under age 24) is about 53% and rising. The economy is in recession. Debt, both government and private, is excessive and there is pressure for greater austerity measures. Much has been written about Spain's problems. An article this week in "Der Spiegel", covers the more important aspects of the Spanish problem. Spain (and Portugal) are currently in the spotlight, but it is the European Union (EU) and the Euro itself that are in need of some serious discussion and a few reality checks. The first reality check is to recognize that the EU is a failed experiment.
| ||||||||||||||||||||
| Will Gold Buy a Case of Beer? (or Lunch?) Posted: 29 Apr 2012 03:41 PM PDT from ReutersTV:
But… surprise, before long an informed restaurateur gladly accepts his gram of gold in exchange for lunch. And as the top comment on You Tube notes: "What the moron here doesn't get is, 10 years from now, he'll still get 3 lobster rolls for 1 gram of gold, but not for $52. "
| ||||||||||||||||||||
| Gold caught in range as Europe heads to a ‘suicide' Posted: 29 Apr 2012 03:37 PM PDT by Ben Traynor, MineWeb.com
SPOT MARKET prices to buy gold remained steady around $1650 an ounce during Friday morning's London trading – well within their range from mid-March – as stock markets and commodity prices were also flat and US Treasury bonds gained following a credit ratings downgrade for Spain. Heading into the weekend, gold looked set to record its seventh successive Friday PM gold fix between $1600 and $1700 an ounce.
| ||||||||||||||||||||
| Gallup: America's Favorite Long-Term Investment Is Gold Posted: 29 Apr 2012 03:04 PM PDT by Forrest Jones from MoneyNews:
Americans feel gold is the safest long-term investment out there, a Gallup survey finds. Gold beat out four other types of investments perceived as the best long-term choice out there, with 28 percent choosing it today. Real estate followed in second place, with 20 percent seeing it as the best long-term investment.
| ||||||||||||||||||||
| Peter Schiff : The Next Big Move In Gold Will Be Up Posted: 29 Apr 2012 02:47 PM PDT Peter Schiff : " The bottom line here is gold is... [[ This is a content summary only. Visit my website http://goldbasics.blogspot.com for full Content ]] 
| ||||||||||||||||||||
| China's Zhongjin Gold to issue 600 million yuan in bills Posted: 29 Apr 2012 02:18 PM PDT from Bullion Street:
Coupon rate will be determined in the process of book-building and the bills be issued at face value. Both value date and payment due date is May 4 and the to-be-issued bills tradable on May 7. BEIJING(BullionStreet): China's largest publicly-traded gold miner by market share, Zhongjin Gold announced plans to issue 600 million yaun worth of 365-day unsecured bills on the interbank market on May 3, sources reported.
| ||||||||||||||||||||
| Posted: 29 Apr 2012 02:10 PM PDT by Ed Steer, CaseyResearch.com:
The '1-4′ largest traders in the Comex silver market are short 163.3 million ounces of the stuff…33.8% of the entire Comex futures market in silver on a net basis. The '5-8′ big short holders are short an additional 40.4 million ounces of silver, which represents 8.4% of the net short position. So, the '1 through 8′ largest traders on the short side, are short 42.2% of the entire Comex futures market in silver, once the market-neutral spread trades are removed from the Non-Commercial category. This is called a short-side corner on the silver market.
| ||||||||||||||||||||
| Posted: 29 Apr 2012 01:29 PM PDT Here's the latest Stock World Weekly: Market Forces. Features this week include:
Excerpts: TECHNICALS with Mark Hanna:
HFT TRADING with Washington's Blog Addressing the proportion of silicon to carbon-based traders, Washington's Blog reported, "As of 2010, 50-70% of all stock trades were done by high frequency trading computer algorithms. And many other asset classes are dominated by high frequency trading as well. "High-frequency trading distorts the markets. See this and this. It lets the big banks peak at what the real traders are buying and selling, and then trade on the insider information. See this, this, this, and this. "Morgan Stanley has just shown (via the Financial Times) that the percentage of high frequency trading in the stock market has skyrocketed to 84%:
(Full article 84% of All Stock Trades Are By High-Frequency Computers… Only 16% Are Done By Human Traders)
TRENDS - Allan Trends Once again the VXX Long signals were quickly reversed as the market climbed higher last week. The patterns playing out with the stock market indexes are not as unanimous, and considering the "big picture," equal weight needs to be given to all the indices. The principle of trend following is to be on the right side of the dominant trend of the market. What we see above is a clear downtrend in volatility, VXX, while a mixed bag of signals in the equity indices. I would be more comfortable going Long the market here if all-of-the-above were in alignment. Although this weekend, it looks as though that is where we are headed, we are not there yet. Gold and Silver rose into the end of last week, but both remain in dominant downtrends. These two can offer tremendous gains as they trend extremely well and there is a host of leveraged instruments to play the trends. Three day of rally was not enough to turn these trends Long, but they are setting up a trading opportunity by either triggering fresh Long trends, or hitting the trend lines and resuming their downtrends with a vengeance. . For a risk-free trial, click here for Allan's standard service; or here for his premium service. The premium trading service is for active/day traders. SEA OF CASH by Lee Adler Looking ahead, will the latest index break outs from Mark Hanna's boxes endure? Will Allan's signals turn uniformly to LONGs? Lee Adler of the Wall Street Examiner discusses this question in "Tide About to go Out On the Sea of Cash." His analysis casts doubt on the idea that the stock market will soar to new highs. Courtesy of Lee Adler. The massive $50 billion Treasury bill paydown that the dealers and other holders received on April 16, augmented by a much more modest $3 billion paydown last week was enough to keep the markets floating upward on a sea of cash. But the tide is about to go out. Monday, the players must settle $54 billion in new notes and TIPS auctioned last week. From now until mid June, when estimated quarterly income taxes will be collected, there will be no more paydowns. Every other week, another wave of longer term paper will buffet the market. This is a normal feature of the calendar every year, which is one of the reasons why "sell in May and go away" works so well year in and year out. Last year the Fed exacerbated the problem by taking a wait and see attitude after QE2 wound up. Ben will not make the same mistake this year. The public, as indicated by bond mutual fund flows, is still buying bonds like mad. By holding short term rates at zero, Bernanke is forcing old people to take ever increasing duration and credit risk. The first wave of Bernankecide through the forced drawdown of savings accounts and money market funds will be followed by a second wave when the elderly face massive capital losses in their bond mutual funds. This massive ongoing loss of purchasing power is a drag on the economy. Bernanke has never addressed the issue because the question hasn't been asked exactly in those terms. Tax receipts through mid April were much stronger than last year, but that party appears to be over. Tax receipts have fallen rapidly over the past 10 days, so that they are now barely above last year's pace in real terms. I may be jumping the gun, but if this continues it will indicate that the economy has stalled again. That will spell bigger than expected Treasury supply. (Tide About to go Out On the Sea of Cash) Note: This section is part of the Wall Street Examiner Professional Edition Treasury Market Update, available to WSE subscribers and being made available to us this week. .
PHARMBOY'S BIOTECH/PHARMA CORNER This weekend, Pharmboy wrote a follow up article regarding the patent cliff in the pharmaceutical industry. The follow-up article is "Big Pharma – Where Are We Now?" (His original article was "The Calm Before the Storm - Big Pharma Is Gonna Have Big Problems and Pfizer's Is the BIGGEST.") In conjunction with his analysis of big pharma companies, Pharmboy likes three option strategies for three well-known pharma stocks... For example, Pharmboy wrote: "BMY - I like buying the stock ($33.31) and going way out in time on the options by selling a January 2014 $32 call and put for $7.10 or better. Alternatively, one could do a synthetic buy/write by buying a January 2014 $25/30 bull call spread for $2.50, and selling a January 2014 $30 put for $2.85 (net credit of 35 cents for a $5 spread)."
To read all of Stock World Weekly, click here for a free trial.
Disclaimer Trading involves risk, including possible loss of principal and other losses, and past performance is no indication of future results. We make no representations that the techniques used in our rankings or selections will result in or guarantee profits in trading. Further, our analyses are based on third-party data, which we cannot guarantee as to adequacy, accuracy, completeness or timeliness. We accept no responsibility for any loss arising for use of these materials. Hypothetical or simulated performance results have certain limitations unlike an actual performance report. Simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under or over compensated for the impact, if any, of certain market factors such as lack of liquidity. Simulated trading programs in general are also subject to the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.
| ||||||||||||||||||||
| Got Gold Report for April 29, 2012 Posted: 29 Apr 2012 01:19 PM PDT
| ||||||||||||||||||||
| Why the U.S. Dollar is Critical for the SP 500 Index this Week Posted: 29 Apr 2012 01:15 PM PDT Recently I have been advising members of my service to be cautious as the market appears to be at a major crossroads. The U.S. Dollar Index is on the verge of a major breakdown. If a breakdown occurs it will be clear that the Federal Reserve ... Read More...
| ||||||||||||||||||||
| Alf Fields Update On Gold -April 4th Was The Low Posted: 29 Apr 2012 12:21 PM PDT According to Alf Fields Apr 4th was likely the low for gold at 1612, here is what he says… "Elliott Wave Gold Update: In the article "What Happened to Gold" dated 1 march 2012, the "other possibilities" mentioned in the event of gold dropping below $1650 related firstly to the 61.8% retracement of the prior rise. The prior rise was from $1523 to $1792, so the 61.8% retracement was $1626. There was a further possibility of the retracement being 2/3 of the prior rise, also a Fibonacci relationship. That produced a figure of $1612. The first number $1626 did provide some support to the market but the absolute low was $1612.8 on 4 April 2012. This low came at the culmination of a double zig-zag correction, which adds to the validity of that low. The odds now suggest that the gold correction bottomed at $1612.8 on 4 April 2012 and that the gold market is in the early stages of a sharp upward move."
| ||||||||||||||||||||
| Hugh Hendry Is Back - Full Eclectica Letter Posted: 29 Apr 2012 11:25 AM PDT Hugh Hendry is back with a bang after a two year hiatus with what so many have been clamoring for, for so long - another must read letter from one of the true (if completely unsung) visionary investors of our time: "I have not written to you at any great length since the winter of 2010. This is largely because not much has happened to change our views. We still see the global economy as grotesquely distorted by the presence of fixed exchange rates, the unraveling of which is creating financial anarchy, just as it did in the 1920s and 1930s. Back then the relevant fixes were around the gold standard. Today it is the dual fixed pricing regimes of the euro countries and of the dollar/renminbi peg." In the letter the most surprising insight from the perpetual contrarian is his almost predictable contrary view of the dominant investing meme at the moment. To wit: "We are, as a result, long the debt saddled west and short the vastly over vaunted and over owned BRICs." More on this: "There is a near consensus that China will supplant America this decade. We do not believe this. We are more bullish on US growth than most. The momentous nature of recent advances in shale oil and gas extraction and America's acceptance of the unpleasantness of debt and labour price restructuring looks to us as if it is creating yet another historic turning point. By embracing his inadequacies and leaping on his luck, the strong man may have finally broken the binds that had previously held him back. We are also more pessimistic on Chinese growth than ever. This makes us bearish on most Asian stocks, bearish on industrial commodity prices, interested in some US stocks, a seller of high variance equities and deeply concerned that Japan could become the focal point of the next global leg down. On the plus side we also believe that we are much closer than before to the beginning of a bull market of perhaps 1982, if not 1932, proportions. We just need the last shoe to drop." We will let readers combs through the narrative that shapes Hendry's most recent outlook, although one chart worth pointing out is The Eclectica boss' visual summary of the "New Economic Order" which presents precisely the tenuous relationship between the Fed and the PBOC we have been decrying for so long, and which so many commentators (ooh, ooh, the PBOC is easing any minute now... oh wait, it isn't) fail to grasp:
Yet one thing we do want to point out is how different compared to your run off the mill 2 and 20 rent collector is the Eclectica M.O. when it comes to generating Alpha (as opposed to everyone else's levered beta):
Who would'a thunk it: one just needs some imagination and creativity, the ability to visualize that which most of the other ones cant or are too lazy to do it, and just wait as the bizarro market takes over and makes the impossible not only probable, but conventionally accepted by the herd. ... And a segment that all the Whitney Tilsons of the world should read:
Read the full letter below:
| ||||||||||||||||||||
| Dutch central banker's memoirs confirm gold price suppression Posted: 29 Apr 2012 11:06 AM PDT by Chris Powell, GATA.org:
Dear Friend of GATA and Gold: With his new study, "Dr. Zijlstra's Final Settlement: Gold as the Monetary Cosmos' Sun," appended here, our good friend the Netherlands economist Jaco Schipper of MarketUpdate.nl today adds substantially to the growing documentation of the Western central bank gold price suppression scheme. Zijlstra is the late Dutch treasurer, prime minister, and central banker Jelle Zijlstra, in whose memoirs Schipper has found confirmations of that scheme, including a confirmation involving former Federal Reserve Chairman Paul Volcker, whose involvement in gold price suppression often has been noted by GATA:
| ||||||||||||||||||||
| Dutch central banker's memoirs confirm gold price suppression Posted: 29 Apr 2012 10:07 AM PDT 6:13p ET Sunday, April 29, 2012 Dear Friend of GATA and Gold: With his new study, "Dr. Zijlstra's Final Settlement: Gold as the Monetary Cosmos' Sun," appended here, our good friend the Netherlands economist Jaco Schipper of MarketUpdate.nl today adds substantially to the growing documentation of the Western central bank gold price suppression scheme. Zijlstra is the late Dutch treasurer, prime minister, and central banker Jelle Zijlstra, in whose memoirs Schipper has found confirmations of that scheme, including a confirmation involving former Federal Reserve Chairman Paul Volcker, whose involvement in gold price suppression often has been noted by GATA: http://www.gata.org/node/10923 Zijlstra knew what he was writing about, as he served not only as president of its central bank but also, simultaneously until his retirement in 1981, as president of the Bank for International Settlements, where gold price suppression long has been a primary function: http://www.gata.org/node/11012 http://www.gata.org/node/11257 As noted by Schipper, in his memoirs Zijlstra recounts repeated efforts by the U.S. government to discourage the use of gold as a measure of currency values and writes, "Gold is artificially kept at a far too low price." Schipper also calls attention to Zijlstra's notation that central banks had begun to count as an asset not only gold but "an asset on an equal footing," apparently some claim to gold not quite in a central bank's own possession, perhaps the original form of the somewhat mysterious "gold receivables" that now reside on the books of many central banks, mechanisms of imaginary inflation of official gold reserves. We welcome Zijlstra, if only posthumously, to the ranks of gold "conspiracy theorists," and will have a tin-foil hat engraved in his honor. CHRIS POWELL, Secretary/Treasurer * * * Dr. Zijlstra's Final Settlement: Gold as the Monetary Cosmos' Sun By Jaco Schipper http://www.marketupdate.nl/nieuws/valutacrisis/dr-zijlstras-final-settle... Whenever I am in Amsterdam, I go to a bookstore and browse the second-hand shelves in the economics section. Recently I found two books by Dr. Jelle Zijlstra: "Dr. Jelle Zijlstra, Conversations and Writings" (1979, second edition) and "Per Slot Van Rekening" (1992, fifth edition). The latter title is a Dutch figure of speech that may be translated as "The Final Settlement." The covers of the books are shown here: http://www.gata.org/files/Jelle_Zijlstra_book_covers.jpg Jelle Zijlstra was a renowned Dutch economist and one of Holland's finer statesmen. Early in his career in 1948, shortly after World War II, he became a professor, specializing in the velocity of money. By 1952 he was appointed minister of economic affairs, then Dutch treasurer from 1958 to 1963 and again from 1966 to 1967. During his last term as treasurer he led the Dutch Cabinet as prime minister as well until 1967, after which he became president of De Nederlandsche Bank (DNB). While president of the Dutch central bank he was appointed as the president of the Bank for International Settlements (BIS) as well, positions he held until his resignation in 1981. You can read a little about this extraordinary man at Wikipedia here: http://en.wikipedia.org/wiki/Jelle_Zijlstra In Zijlstra's first book, "Dr. Zijlstra," he writes about his career and his time as president of De Nederlandsche Bank and the BIS. While he was DNB president the international Bretton Woods agreement collapsed, and he goes into great detail about what happened. He writes about the "European" group's interests, about the cultural and financial ties between Germany and the Netherlands, the relationships with France and Great Britain, and, of course, about the position of the United States. ... Dispatch continues below ... ADVERTISEMENT Golden Phoenix Discusses Royalty Mining Growth Strategy Golden Phoenix Minerals Inc. has discussed its royalty mining growth strategy on the Fox Business Network program "21st Century Business" with host Jackie Bales. Golden Phoenix's director of corporate communications, Robert Ian, told how the company narrows its focus to project generation and future royalty streams. He explained why Golden Phoenix believes it's better to own joint-venture interests in several producing mines instead of full exposure to just one project. "21st Century Business" has been airing for 15 years. Previous hosts have included Gen. Alexander Haig, Gen.l Norman Schwarzkopf, and Secretary of Defense Caspar Weinberger. Golden Phoenix appeared as paid programming on this broadcast. To view the program with Golden Phoenix, please visit Golden Phoenix's Internet site here: http://www.goldenphoenix.us/company-videos.html It gets especially interesting when Zijlstra writes about then-U.S. Treasury Undersecretary Paul Volcker and Federal Reserve Board member Dewey Daane of the Richmond Federal Reserve Bank. On the July 7, 1971, Volcker and Daane arrived in Amsterdam to urge the Dutch government not to convert any more of its dollar reserves into gold. Zijlstra writes (p. 191): "From the beginning of 1971 we had already converted almost $600 million in return for gold or an asset on an equal footing." This phrase -- "an asset on an equal footing" -- is peculiar, since from an investor's or central banker's perspective there is no equivalent to physical gold. Let this be very clear: There is no asset that stands on equal footing with gold. You either own it or you do not. But central bank balance sheets account for official gold reserves under the description "gold and gold receivables" and apparently have done so back to times before Zijlstra became a central banker, before Bretton Woods collapsed. This is quite revealing. In the eyes of gold bugs, "gold receivables" is a bit of a contradiction in terms and has been the cause for much suspicion. Can we really trust the numbers on central bank balance sheets? The essence of this question is one of accounting, because gold reserves are either "allocated" or "unallocated." The big difference is that when gold is "allocated" one has legal title to specific metal vaulted by someone else. But when gold is "unallocated" one has merely a fiduciary claim on a future delivery of gold. This implies counterparty risk. Zijlstra and Volcker: 'Monetary Adversaries' As an economist, I knew of the visit by the U.S. officials in 1971. It is remembered by many Dutch economists because of Zijlstra's famous anecdote about a conversation he had with Volcker, who went on to become Fed chairman. When Volcker visited Zijlstra as Treasury undersecretary, Volcker said, "You are rocking the boat." Zijlstra replied: "If the boat is rocking because we present $250 million for conversion into gold or something that can be considered an equal asset, then the boat has already perished." (p. 191.) Zijlstra refused to heed the U.S. request and converted DNB's dollar holdings for gold. And since the reasons behind this "heavy American delegation" -- as he described it -- were quite obvious, he suspected that the gathering storm he had foreseen for some years was about to break loose. Or, as we say these days, he knew that "the fiat was about to hit the fan." A Man of Precision and Conviction Also interesting about Zijlstra's first book is that he is very detailed and precise in explaining his views. For example, he describes inflation as "the most gross social injustice" which "hits the less fortunate the most," and he practiced what he preached. He explains how, as Dutch treasurer (1958-63 and 1966-67) he managed his Cabinet to be fiscally prudent, which he connects to his opposition to inflationary policies. To illustrate his objections, in his second book he writes: "Despite an additional flow of funds due to increasing returns on Dutch natural gas reserves and the second oil crisis, this Cabinet also proved it could grow hungrier while eating." Also, and in this respect very typically, he defines the Dutch guilder in terms of gold: "F. 1 = 0.334987 grams of fine gold" (p. 181), and in a footnote on this page he included the numbers needed to calculate the value of the guilder after the 1978 devaluation: 0.13333 grams of fine gold. This points out something really important. Why does a central banker, a former BIS president, calculate the value of his currency in terms of gold when gold backing had been officially removed? 'The Final Settlement' In Zijlstra's second book, "Per Slot Van Rekening," we find a very candid man, even contrarian. He gives a very precise description of how central bankers conduct their business and maintain their independence from government interference. This makes this particular book so refreshing. For example, whereas conventionally monetary debasement is described euphemistically, Zijlstra explains what central bankers actually do, and more importantly, acknowledges that the price of gold is kept far too low. Central bankers have thus known what gold bugs long have been saying. Let me take this one step at the time. Dr. Zijlstra writes that revaluing is "'putting a bit more gold in your currency' so it becomes more valuable than other currencies. Summarizing: it is about the choice between 'adjustment' inflation or revaluation. Germany decided to revalue the German deutschemark on March 3, 1961, with 5 percent; we decided ... to follow. To my regret, then and still, Germany did not revalue more; I would have defended a revaluation of 10 percent zealously if Germany would have done so. ... A devaluation was more or less seen as a defeat, a testimonium paupertatis for a country." (p. 220.) Now that's a really honest way of explaining currency devaluation. But it gets far more interesting. Zijlstra explains his understanding of the role of gold in what he eloquently calls the international "monetary cosmos": Gold functions like the sun, with all currencies as planets orbiting around it, with only the sun in fixed position: "... It is perhaps nice to get into the role of gold and its meaning in the time before the monetary cosmos collapsed into more chaotic conditions. Throughout centuries gold was a protection against [natural] disasters, arbitrariness, and persecution. ... Because natural production levels hardly allow overproduction with substantial depreciating values as result; because it does not rust and, once produced, never perishes, excessive scarcity can never occur. That's why gold developed its image of solidity, stability, and reliability. ... Gold coins then have been used over the centuries as means of exchange in primitive currency frameworks and were later, with the development of paper money, seen as a reliable basis. In the heydey of the gold standard one could take a banknote to the central bank and -- if you would like that -- get gold in return. The famous Englishman Bernard Shaw once said one has the choice between the natural stability of gold and the natural stability of honesty and intelligence of government. And he was of the opinion this choice was not hard." (p. 221.) Zijlstra explains how all this was relevant during his time as president of the DNB and during his presidency of the BIS. He explains that the United States was debasing the dollar. Most interestingly, Zijlstra writes about his idea of a solution for the "international chaotic non-arrangements": "A good solution would have been to drastically raise the price of gold, since it was extraordinarily peculiar that in the post-World War II world, in which everything became more than three to four times more expensive than in the 1930s, the price of gold remained the same. Actually, two things had to be done. The official gold price in all currencies had to be raised ('their gold content had to be reduced') and, beside this, the official dollar price of gold had to be raised extra, to allow the dollar to devalue against all other currencies". (p. 222.) Zijlstra writes about the American reaction to his proposals: "However, the Americans found this idea like swearing in a cathedral. Because, by that, the dollar would in regard to gold become second, and the American ideal was and is to have the dollar central in its role on the economic stage. As a consequence, there was only one exit and that was cutting the tie between the dollar and gold. That would eventually happen in August 1971 when President Nixon announced that the dollar was no longer convertible into gold. After increasing American pressure, step by step, the actual convertibility of dollars in gold was curtailed until it was formally ended." (p. 222.) But it gets even more interesting. Zijlstra wittingly or unwittingly confesses what most gold bugs assert. He writes: "An important step on this road was the creation of a whole new international monetary instrument, the SDR (Special Drawing Rights). This is about an inventive construction whereby 'something' is created out of 'nothing.' The International Monetary Fund would -- through precise administrative procedures -- create rights on the fund, with which central banks can settle their payments among each other. Those rights would -- according to certain measurements -- be credited to the members of the fund. The idea behind this was that it was expected that in due time there would be too little gold (I am inclined to say: what do you expect with such an artificially maintained, much too low gold price) to serve as 'international means of settlement.'" (p. 222.) This speaks for itself, but just in case you missed the elephant in the room of international finance, Zijlstra writes, even if it is in a mere aside, "Gold is artificially kept at a far too low price." He continues that the introduction of SDRs in 1967 was warmly welcomed, becoming soon "a fantasy for intellectuals" to have the SDR perform the function of the sun in the "monetary cosmos." But despite this warm welcome, the SDR went the way of the dodo bird. Zijlstra elaborates about the SDR that in the late 1980s and early 1990s, "we do not hear much of it. At first, it appeared as if the foremost Americans were enthusiastic proponents of this new international monetary instrument, but this proved to be pretence. They welcomed the SDR to move gold even further away. As soon as gold was removed as a central point in the international monetary framework, their love for the SDR disappeared. The SDR has become a piece for a museum." (p. 223.) And: "But in case there is no complete international means of settlement, no gold, no SDR, wherein should central banks settle? The logical end-piece of this development was giving up on fixed parities" to gold. "The currencies are currently exchanged on international markets. The resulting prices bring supply and demand in balance and there is no way of settling. No more cosmos, no sun with planets: All currencies are formally equal. One can buy and sell them on international currency markets." (p. 223.) "It may be so that in the formal sense of currencies one can say that all are equal, but that in reality it proves that some are more equal than others. The dollar is back as the material core of the international financial and monetary arrangements. That the countries of the EEG [currently the EU] have begun constructing their own monetary cosmos, I have mentioned already." (p. 223.) What most pundits are missing about Europe and the euro is what Zijlstra refers to: The euro has been established as a solution and is orbiting gold. Now if you took notice of the consolidated European Central Bank's system-wide balance sheet -- http://www.ecb.int/press/pr/wfs/2012/html/fs120424.en.html -- you can figure the shadow value of one euro in terms of grams of fine gold much as Zijlstra explains in his books. According to my calculation, with the ECB's gold holdings at 502.5 tons of gold, divided by the number of euros in circulation (note how all other balance sheet items are "denominated"), one will find that 1 troy ounce is worth the equivalent of around E55,000. And that's what you really want to make use of -- that is, after everything else has failed. If there emerges an absolute need to fix the financial crisis, you can be sure of one thing: We'll have a pricing mechanism for physical gold at least. In tragedy lies humor Even humor finds its way into Zijlstra's second book, and something that is quite revealing as well. It also illustrates his adversarial relationship with Volcker, if one of a professional nature. When Zijlstra stepped down from the BIS presidency in 1981, Volcker, then chairman of the Fed, gave Zijlstra an "$DR Note of 10 billion" depicted here: http://www.gata.org/files/Jelle_Zijlstra_SDR_note.jpg The note is dated December 1981, carries a photo of Zijlstra's face, is signed by Volcker, and bears the legend: "The Fund May Prescribe ... As Holders ... Institutions [and Persons] that ... Perform Functions of a Central Bank for More than One Member." Zijlstra writes: "This gift has become a lasting memory of the feelings on both sides: It will never be something, respectively, it may never be something with the SDR."(p. 234.) Knowing his religious and, more generally, his Dutch background, I think this was Zijlstra's way of saying he appreciated Volcker's reflection and irony. The other side of the mock SDR note says: "To Meet the Need, As and When It Arises, for a Supplement to Existing Reserve Assets." In between it says: "1 SDR = 0.8886671 gram of fine gold(?)": http://www.gata.org/files/Jelle_Zijlstra_SDR_note2.jpg We'll have to check some numbers, but perhaps we should make a contest for gold bugs to determine what's behind this calculation. For the question mark says a lot: Behind the scenes, central bankers were still discussing their currency values in terms of gold, at least into 1981 when Zijlstra stepped down as president of the BIS. By the way, on the left side of the mock SDR note, it says in small print: "This note is freely convertible into useable currencies at widely fluctuating rates." Zijlstra must have thought: "Funny money indeed!" Conclusion All this information Zijlstra shared in his books is quite something. During his terms in office central banks were converting their dollars into something other than real gold in possession and probably did so all along from the start of the Bretton Woods agreement in 1944. An asset "on an equal footing of gold" makes you think: You either have possession or not. Apparently central banks converted their dollars into something "funny." A real giveaway is that Zijlstra wrote this in the 1990s: "The gold price is artificially kept far too low." And most important, he has provided all the necessary information to reach the conclusion that central bankers are always evaluating their currency in terms of gold. Why? Because, before and after all has failed, gold is the sun in our "monetary cosmos." As a central banker Zijlstra was a statesman in heart and mind. His legacy and his insights are a tribute to honesty. He explained that we must not think of the dollar or any other currency as the sun of the "monetary cosmos" -- not anything but gold. Not the SDR either, just gold. This, in my opinion, is the essential point Zijlstra is conveying. He will not speak further. He died in 2001. May he rest in peace. He provided us with an enduring lesson. Two things were needed back then but are ever more desperately needed now. The official gold price in all currencies had to be raised ("their gold content had to be reduced") and the official dollar price of gold had to be raised extra, "to allow the dollar to devalue against all other currencies," to quote Dr. Zijlstra a final time. Now you know why you should own some physical gold. It is like the sun, which, in the end, we are all circling, whether we do so consciously, with acknowledgment, or in denial. ---- Jaco Schipper is a Dutch economist who wrote this study for MarketUpdat.nl and GATA. His sources included: Jelle Zijlstra (1979), "Dr. Jelle Zijlstra -- Gesprekken en Geschriften samengesteld door Dr. G. Puchinger met bijdragen van Dr. W. Drees Sr.," Strengholt's Boeken (Naarden), second edition; ISBN: 90-6010-430-7, and Jelle Zijlstra (1982), "Per slot van rekening," Uitgeverij Contact (Amsterdam), fifth Edition; ISBN: 90-254-0181-3. Join GATA here: Las Vegas Money Show Committee for Monetary Research and Education Vancouver World Resource Investment Conference Standard Chartered's Earth Resources Conference Hong Kong Gold Investment Forum New Orleans Investment Conference * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Be Part of a Chance to Discover Northaven Resources Corp. (TSX-V:NTV) is advancing five gold and silver projects in highly prospective and politically stable British Columbia, Canada. Check out the exploration program on our Allco gold/silver project : -- A large (13,000 hectare) property, covering more than 15 square kilometers of a regional mineralized trend just 3km from a recently announced 1.2-million-ounce gold and 15-million-ounce silver deposit. -- The property hosts historic high-grade silver workings and many mineral showings as well as former mines at the property's northern and southern boundaries. -- A deep-penetrating airborne geophysics survey has just been completed on the entire property and neighboring deposits and its results are eagerly awaited. To learn more about the Allco property or Northaven's other gold and silver projects, please visit: http://www.northavenresources.com Or call Northaven CEO Allen Leschert at 604-696-3600.
Subscribe to:
Post Comments (Atom)
| ||||||||||||||||||||
.jpg)
No comments:
Post a Comment