European gold: Sold? Pledged! Safe.
Currency mismanagement is part of Statist systems | Cartoonist Barry Deutsch; source & courtesy - http://laughingatpolitics.com | Click for larger source image.
Printing presses – all systems go
As Governments across the world, print more and more money, the 20th century idea of Trustworthy State is on its last legs. Increasingly, the (undeserved) trust that the State enjoyed with the masses in the 20th century, is now close to breaking point.
We may very soon see a situation, where people will accept only gold – and no paper currency. The entire structure of 20th century monetary system after WWII, was built on paper. In the last 60 years, people (except a few) have gradually forgotten the link between gold as a store of value.
A memory lapse of a link that is too important to forget.
Currency mismanagement is dead. Long live currency manipulation. | Cartoonist - Michael Ramirez in April 16th 2009; source & courtesy - townhall.com | Click for larger source image.
Few people realize it, but Italy holds the world’s fourth biggest stockpile of gold, at 2,452 tonnes. That’s even more than France, and more than twice as much as China.
Only the U.S., Germany and the International Monetary Fund hold more.
The question here is whether some of the troubled European countries — such as Italy and France — are going to have to start selling off the national gold pile to meet their bills.
Some wonder if they already have.
Italy’s gold has a street value of about $123 billion — easily enough to cover this year’s $80 billion budget shortfall. Portugal’s $19 billion in bullion more than covers its $13 billion deficit. France has $122 billion worth of bullion, enough to make a massive dent in its $150 billion deficit.
Meanwhile, look at the people who actually have a lot of money — namely, the Chinese. I continue to suspect that, sooner or later, China is going to move some of its massive $3 trillion-plus reserves into gold, the only currency that no other country controls. At the moment, the richest Western countries, including the United States, Germany, Italy, and the Netherlands, hold between 60% and 80% of their entire reserves in gold.
The figure for China: Less than 2%. No, that isn’t a misprint.
When that bullion changes hands, it may be the moment when power shifts from the rulers of yesterday to the rulers of tomorrow. This is what happened a century ago, when plenty of that French, German and British gold ended up in the hands of the United States.
In the very short term, this may keep downward pressure on gold. The people who hold the world’s gold at the moment need cash, and may have to sell.
In the medium to longer term, it ought to be bullish. (via Will the Europeans have to sell their gold? – Portfolio Insights by Brett Arends – MarketWatch).
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Exciting new series. From 1 Mar, 2010.
