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Posts Tagged ‘Gold reserves’

European gold: Sold? Pledged! Safe.

December 25, 2011 Leave a comment

A socialist Europe is deep in debt – but still has substantial gold reserves with various central banks. At least as per official records.

24 types of Statism. Currency mismanagement is part of Statist systems |  Popular cartoon based on original by Barry Deutsch; modification source and author not known  |  Click for original Barry Deutsch cartoon.

24 types of Statism. Currency mismanagement is part of Statist systems | Popular cartoon based on original by Barry Deutsch; modification source and author not known | Click for original Barry Deutsch cartoon.

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.Currency mismanagement is dead. Long live currency manipulation. |  Cartoonist - Michael Ramirez in April 16th 2009; source & courtesy - townhall.com  |  Click for larger source image.

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).


L’Americain in Washington: Sarkozy Searches for an Elusive Friendship with Obama

April 26, 2010 1 comment
Will Sarkozy reverse 75 years of irritants!

Will Sarkozy reverse 75 years of irritants!

There are two types of European state visitors in the United States capital. One seeks to underscore his or her closeness to Washington. The other likes to emphasize how independent Europe really is. But French President Nicolas Sarkozy, who is visiting American Senators and US President Barack Obama, would like to be both at the same time.

Sarkozy also wants to remind the Americans that, as a European, he can defy them. In a speech given in New York on Monday, the Frenchman repeated his demand for better regulation of the global economy. “We can no longer accept a capitalist system without rules or order,” Sarkozy said. “The world economic regulations cannot go on as they are,” Sarkozy said. “A system in which the most money is earned through speculating instead of producing, I don’t want to live in such a system.”

Of course, Sarkozy needs to score points back at home, too. Only last weekend, he was punished in regional elections in France. In an interview, Sarkozy’s own father advised his son not to run for re-election. Given his electoral setback, it makes sense for Sarkozy to bang the drum for French and European interests in Washington. Obama, on the other hand, is feeling reinvigorated following the passage of his healthcare reform through Congress and the new arms treaty with Moscow.

When the US president traveled to Paris last year, he preferred to dine with his wife Michelle rather than Sarkozy. “The hoped-for partnership never materialized,” the French daily Le Figaro wrote. Sarkozy hasn’t forgiven his American colleague for it, either. He has complained to those close to him that Obama is ill-prepared to govern, noting that he didn’t even hold a cabinet-level position before taking office.

The Americans are disappointed that, even after the ratification of the Lisbon Treaty — which was meant to give the European Union’s common foreign policy more clout — the individual European countries are continuing to pursue their own interests abroad. The question, former senior US diplomat and current Harvard professor Nicholas Burns argued in an interview with the New York Times, is whether Europe can “develop a collective European idea of global power? They talk about it a lot, but they don’t do it.” The Washington Post has even criticized Obama for this, noting that in contrast to his predecessors, he hasn’t established close ties to a single European leader.

John Podesta, the leader of Obama’s transition team that helped prepare the newly elected president for the White House in 2009, told SPIEGEL: “His style is certainly different from George W. Bush who wanted to be liked and really developed deep personal relationships.””But if you have the wrong foreign policy and good personal relations, you end up with bad results,” he added. “And if you have the right foreign policy, a strong team to implement it, and thinner personal relations, you’re more likely to have very good results.”(via L’Americain in Washington: Sarkozy Searches for Friendship with Obama that Has Eluded Him – SPIEGEL ONLINE – News – International).

Between Europe and racism

Even US media cannot ignore Obama's race! (NYPOST cartoon).

Even US media cannot ignore Obama's race! (NYPOST cartoon).

While 2ndlook was analyzing the new calculus between USA and Europe, a worried European press (for instance, Der Spiegel) was looking at Franco-American relations through a German prism.

For Europe, the experience of dealing with Obama has been different – and difficult. Europeans would   like to pretend that Obama’s race does not make a difference – but it took Berlusconi to spell out the European ‘superiority’! That probably rankles with Obama.

Behind prickly Franco-American relations is history – and gold!

Franco-American relations – a perspective

In the 1960s, the USA was bleeding gold. Most of the world was buying gold at an artificially low price US$35 – under the Bretton Woods Agreement. USA was printing dollars and dumping it in world markets. Calls for devaluation of the dollar price was resisted by the US, as that “would reward the speculators and be a special windfall for two gold producing countries that have few friends in the Congress, namely Russia (which usually sells at least $400 of gold a year) and South Africa (which sells about $1 billion).”

The French team of Charles de Gaulle and his economic advisor, Jacques Rueff did some quick maths. It was clear this मेला mela (a ‘fun-fair’) would not last long. Based on huge dollar outflows from the US, the French decided to call the bluff. The French started redeeming gold for their dollar earnings – and for this ‘perfidy’ the US had not forgiven France.

The French, unhappy with a “monetary system of gold, dollars and pounds” redeemed their dollar holdings (1958 onwards), sent the French navy (in 1965) to take delivery of gold from USA and bring it to Banque de France. The French raised gold reserves and dumped dollars.  Time magazine called this “an open assault on the monetary power of a friendly nation” – dutifully, echoing American Government’s feeling. Banque De France finally, by 1968, increased its gold reserve to 92% (as a percentage of total foreign currency /monetary reserves). This was much like the pre-WW2 French methodology devaluation, new peg, of old debt for new gold routine got the US hackles up.

Many decades have passed since these redemptions by France.  The new French President, Sarkozy believes it is now possible to renew US-French relations.

If wishes were horses!

USA-Europe-Asia

It was at Copenhagen, that for the first time, Europe realized that they no longer have the inside track with the USA. At least, in Obama’s administration. The ‘special relationship’ that swells the British chest, has been under some strain. For some time now. The US engagement with Asia makes some sense – as it is Asia, which has extended some US$3-4 trillion in credit, growth opportunities to the US. Europe increasingly seems more like a liability – and a truculent competitor.

The US presumably knows which side of their bread is buttered.

G8 is dead, long live G14 – Europe – World – NEWS – The Times of India

July 12, 2009 1 comment

The intimation of G8’s impending demise came from the host of the summit, Italian President Silvio Berlusconi. “We saw that G8 is no longer a suitable format to show a global economic way of doing. Instead, a consolidated G14 representing 80% of the world economy could help create a real dialogue. We want to see if the G14 is the best solution for debates which will bring to us unique results.”

Berlusconi was merely echoing the creeping realisation among the G8 countries that the steady decline of the developed nations, coupled with the rapid rise of developing countries like India and China, had rendered the rich club irrelevant. (via G8 is dead, long live G14 – Europe – World – NEWS – The Times of India).

Western Clubs

On 5th November 2008, Raghuram Raman was appointed as by the GOI as advisor to the Indian PM – to advise the Indian PM about the forth coming G-20 meetings. As ex-IMF man, if he is the ‘expert’ that he is touted as, by this time Raghuram Rajan should know that the IMF and World Bank are international only in name. They are Western Clubs – meant for the benefit of the West.

Sinking .. or saving ...

Sinking .. or saving ...

All G20 members were ‘invited’ to join another Western Club – the FSF. The Financial Stability Forum, another club, with the same G7 members. Just why does India join these rubber stamp bodies – and lend sanctity to the exploitative agenda of the sponsors. Does the world need another body, with the same Central Bank members, addressing the same monetary issues problems, with the same agenda?

G7 and OECD countries have created a club for themselves, by giving each other unlimited line of credit – while the developing world gets credit based on fast-depreciating dollar/euro foreign exchange reserves. Maybe this needs an inversion. The OECD and G7 should be asked to pay their purchases. In a new global reserve currency. And the BRICS need to start working on that.

Many of the regulatory bodies are actually a US-Euro Clubs – to fool the world, with token actions and steps to demonstrate inclusion and fairness of the developing world.

My feeling …

The BRIC leaders know well enough that the West will not let go of the IMF and the UN. The charade of UN /IMF /World Bank Reform is possibly required – and they are going through it.

Could you be loved ...?

Could you be loved ...?

Between ASEAN and IBSA, India needs to take Third World groupings from talk-fests to action-teams. Western clubs like UN, IMF, World Bank, G-7, P-5, etc are all heavily weighted against ‘outsiders’ like developing nations.

Join the gang

Thanks for the offer, but no thanks. And I will tell you why!

Trying to clean these Augean sales is a waste. India should engage with the BRICS countries – and focus on creating another institution without the West to start with.

Safe, Steady and Sure

We can keep banging our head against these Western altars, for another 60 years. It won’t work. We need to move – not necessarily fast, but surely and steadily. The Developing World (and India) can continue to knock at the doors of these Western clubs – and yet why would the West dilute their power and influence? And allow the Rest to take advantage of structures that the West has created for its own benefit?

Just why?

What is on the table

Bankrupt welfare state

Bankrupt welfare state

2 out of the G-7 countries are bankrupt – US and Britain. Their industrial base was supported by raw materials and captive markets – acquired by genocide, and the loot of centuries.

France, Germany Canada and Australia (not in G7) and Italy are tethering on the brink – under the weight of their social security system, and most of their business in the public sector. A geriatric Japan is dependent almost entirely on these declining seven. Japan’s investment in India and China has been negligible.

What Do We Bring To The Table

India, China and South Africa on the other hand, bring growing economies, young populations, lower welfare state burdens, expanding industrial base – and above all, a record of non-aggressive history.

These dubious clubs depend on victims to approve and finance their own slaughter – and these memberships don’t appeal to India.

G7, you are welcome to join us at our terms. We dont want to be a part of your ‘blood soaked history.’

The Real Price of Gold — National Geographic Magazine

December 22, 2008 4 comments

The Real Price of Gold — National Geographic Magazine; Photograph by Randy Olson

The Real Price of Gold — National Geographic Magazine; Photograph by Randy Olson

In all of history, only 161,000 tons of gold have been mined, barely enough to fill two Olympic-size swimming pools. More than half of that has been extracted in the past 50 years. Now the world’s richest deposits are fast being depleted, and new discoveries are rare. Gone are the hundred-mile-long gold reefs in South Africa or cherry-size nuggets in California. Most of the gold left to mine exists as traces buried in remote and fragile corners of the globe.

According to the United Nations Industrial Development Organization (UNIDO), there are between 10 million and 15 million so-called artisanal miners around the world, from Mongolia to Brazil. Employing crude methods that have hardly changed in centuries, they produce about 25 percent of the world’s gold and support a total of 100 million people. It’s a vital activity for these people—and deadly too.

At the other end of the spectrum are vast, open-pit mines run by the world’s largest mining companies. Using armadas of supersize machines, these big-footprint mines produce three-quarters of the world’s gold. They can also bring jobs, technologies, and development to forgotten frontiers.

Gold mining, however, generates more waste per ounce than any other metal, and the mines’ mind-bending disparities of scale show why: These gashes in the Earth are so massive they can be seen from space, yet the particles being mined in them are so microscopic that, in many cases, more than 200 could fit on the head of a pin.

Even at showcase mines, such as Newmont Mining Corporation’s Batu Hijau operation in eastern Indonesia, where $600 million has been spent to mitigate the environmental impact, there is no avoiding the brutal calculus of gold mining. Extracting a single ounce of gold there—the amount in a typical wedding ring—requires the removal of more than 250 tons of rock and ore. Lured by the benefits of operating in the developing world—lower costs, higher yields, fewer regulations—Newmont has generated tens of thousands of jobs in poor regions. But it has also come under attack for everything from ecological destruction to the forced relocation of villagers.

India produces very little gold of its own, but its citizens have hoarded up to 18,000 tons of the yellow metal—more than 40 times the amount held in the country’s central bank. (via The Real Price of Gold — National Geographic Magazine).

The important points …

The poor condition of the workers who produce the ore from which gold is extracted.

The production of gold in the last 50 years is equal to half of total production in mankind’s entire history.

Blaming India for high gold consumption.

The missing points …

India has the largest reserves of gold in the world – but has never been a significant producer except when British colonialists used ‘captive’ Indian labour to extract gold from the Champion Reef in Kolar Gold Fields during the 1875-1925 period, when a few tons hundred tons were extracted.

But India has the largest reserves of gold. How were these reserves acquired? Trade, labour, output, products.That is how.

Not loot – like the Anglo Saxon reserves. Not genocide – like in the cases of Canada, Australia or USA. Not slavery like in South African Apartheid regime, or in Ghana, Peru.

It is this lack of slavery in India, which stopped India from becoming a gold producer – ever, in history.

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