The gold standard bandwagon is rolling - Thailand must climb aboard

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OVERDRIVE
The gold standard bandwagon is rolling - Thailand must climb aboard
Thanong Khanthong

BANGKOK: -- The world is slowly, if almost unnoticeably, moving back to embrace the gold standard. Russia, China and India are leading the drive by accumulating gold reserves.

Although these three countries will not spell out clearly that they are reverting to a future under the gold standard, by stockpiling the precious metal, their actions speak loud and clear. In the event of another fiat currency crisis, they will use the gold reserves to back the value of their currencies.

At present, countries issue paper money without the backing of hard assets because the US dollar, printed out of thin air, acts as the world's reserve currency. But central banks' unending money printing, via quantitative easing (QE), to prop up the financial markets has raised concern of currency destruction and hyperinflation.

The gold price has rebounded to around $1,200 per ounce after the central bank of Russia announced that it had bought 150 tonnes this year.

The Russians are moving fast to dump the dollar in favour of gold. With reserves of 1,150 tonnes, the central bank of Russia is now ranked the world's sixth-largest gold hoarder. The yellow metal currently comprises 10 per cent of the central bank's total assets. Russia is now locking horns with the US and President Vladimir Putin has announced that he will end the "dollar dictatorship" in the oil market. This means that Russia is trying to dethrone the petrodollar. The gigantic gas deals between Russia and China will be sealed in either yuan or rubles. Trade between the two countries will no longer be conducted in dollars.

China has declared it has gold reserves of slightly over 1,000 tonnes. But it is widely believed that Beijing has a far greater hoard after gradually selling off its US dollars for gold. Like Russia, China foresees the imminent collapse of the fiat money system brought about by QE and the huge debts of Western central banks that will never be repaid. This month, Song Xin, president of the China Gold Association, said China should amass 8,500 tonnes in gold reserves to surpass those of the United States. The US declares a total of more than 8,100 tonnes, though this figure has not been independently audited in recent memory. There is in fact growing doubt that the US has anywhere near that amount, with many suspecting that its gold stocks have been depleted by sell-offs and loans over the years to protect the dollar.

Xin wrote in Sina Finance in July this year: "Gold is money par excellence in all circumstances and will help support the renminbi [yuan] to become an international currency, as gold forms the very material basis for modern fiat currencies."

If China were to use gold to back the yuan, the Chinese currency would strengthen and gain stability amid the wild fluctuations of fiat currencies triggered by the avalanche of money printing. Moreover, China has entered into yuan-swap agreements with 24 countries, the latest being Australia and Singapore. This will further enhance the use of yuan in international trade and financial transactions. Both the move toward the gold standard and the yuan-swap agreements will erode the role of the US dollar as the reserve currency.

India has declared it has 557 tonnes of gold reserves, more than 7 per cent of the total assets of the Reserve Bank of India. However, India's demand or appetite for gold has been increasing at break-neck pace. The Reserve Bank of India will soon emerge as one of the largest hoarders, rivalling the central bank of China.

So far the move towards the gold standard is sluggish. Gold prices have been hammered down by market manipulation to protect the fiat currencies. But the national referendum on gold in Switzerland on November 30 will be a turning point. The Swiss vote will chart the future of gold. A "yes" vote would mean that the Swiss National Bank must purchase about 1,500 tonnes of gold over the next five years in order to build reserves of at least 20 per cent of its total assets.

Thai gold reserves remain relatively low at 152 tonnes, or 4 per cent of the Bank of Thailand's assets. In preparation for the next financial crisis, it should sharply increase its gold holdings so as to back the baht and ensure currency stability and confidence. In addition, the Thai central bank should increase the size of its currency swap agreement with China to ensure that it will also have enough liquidity available to cope with the next round of global financial crisis.

Source: http://www.nationmultimedia.com/opinion/The-gold-standard-bandwagon-is-rolling--Thailand-m-30248255.html


-- The Nation 2014-11-21

[Thai at Heart 17,300]

So, right, um, the current Thai junta intends to buy gold to back its borrowings to fund the fiscal deficit?

Uuuuuuuuuuuhhhhhhh?

[SheungWan 5,354]

Thanon Khanthong is the managing editor of The Nation and as such gets to vent away on his gold bug fantasies every so often. The hilarious bit is where he gets to say that gold has 'rebounded' to 1200 baht. On this subject at least, not of this world.

Edited November 20, 2014 by SheungWan

[RustBucket 1,614]

The USD is in its death throws regarding its place as the global reserve currency.

Returning to the gold standard will be the last stand for the Dollar.

Once significant amounts of USD have been offloaded for gold it will start a domino topple as other countries scramble to swap USD for gold before it becomes almost valueless.

Then the whole US economy will collapse.

Many already know the Federal Reserve is lying about what gold they have left. It is a lot less then they say and China has up to 5 times the amount they say.

[shirtless 7,308]

America should not dominate world financial markets as wall st is not honest Sub prime is only one example,

[ezzra 27,064]

Blah, blah, blah, blah... Russia say like that China will do like that, the dollar will rise, fall,

go sideways, lots of heads talking but in reality no one knows what will happened in the

next five minutes, let alone what Russia China or the US will do in days or weeks...

[PoorSucker 6,116]

Keep an eye on Switzerland end of this month.

http://dailyreckoning.com/will-the-swiss-vote-to-get-their-gold-back/

[Traveler19491 1,141]

The problem with going back on the gold standard is many fold. If Switzerland votes to go back on gold, the price of gold will skyrocket in anticipation of global demand from central banks escalating, which could easily have the effect of devaluing currencies around the world, as people will believe that the primary international currencies will become less valuable and will be seeking to exchange their currency for gold (self fulfilling prophecy on their part). However, the biggest problem will be the tightening of credit, as banks will not be able to create money the way they have in the past. Ergo, they will only be able to lend what is currently in circulation, as central banks will not be able to create more currency than the gold they have on hand will support. Therefore, you have a fixed supply of cash being chased by borrowers. The laws of supply and demand will drive interest rates up dramatically. The effect of this will be to constrict new business. The combination of high interest rates and constricting business will put tremendous downward pressure on the world's economies. Stock markets will plummet. Oil prices will shoot sky high. If you think the collapse of 2008 was bad, you ain't seen nothin' yet.

[TG911 18]

Thanon Khanthong is the managing editor of The Nation and as such gets to vent away on his gold bug fantasies every so often. The hilarious bit is where he gets to say that gold has 'rebounded' to 1200 baht. On this subject at least, not of this world.

The article states 1200USD, which is about right for the current price per ounce

[SinCityGr8One 305]

America should not dominate world financial markets as wall st is not honest Sub prime is only one example

You are absolutely clueless making that statement regarding Sub Prime mortgages. Sub Prime was available to those consumers that had less than good credit. Anyone having less than a FICO score of 620 was NOT eligible for a traditional mortgage. However, due to them being a risk because of THEIR credit history, Sub Prime was available for them to purchase or refinance their home. Higher risk has a Higher ROI or yield. Or, do you believe everyone with a heart beat should get a low interest mortgage. Do you think a credit score of 500 is on parity with a credit score of 800? I was a residential mortgage Agent years ago in the USA and I seen many atrocious credit reports with collections, past dues, chargeoff's, etc. The only ones I could not help were people that had Tax Liens on their property. I did not put a gun to a clients head to sign the documents for their Sub Prime mortgage. They were practically begging me for a Sub Prime mortgage, because they knew their past credit history sucked and were all too happy to get anything they qualified for. Wall Street bundled up these Sub Prime Mortgages and sold them through the Global Financial Market to Corporations, Sovereign Funds, Insurance Companies, etc. that were lining up to buy them because of a Higher Yield. No body seen the Global Recession coming, when people lost their jobs, couldn't or did not want to pay their Sub Prime mortgages. In the end, it was a snowball effect that threw the Global Financial Market in a tailspin. If it wasn't for Sub Prime mortgages, a lot of people would not have been homeowners in the USA.

[midas 1,783]

Thanon Khanthong is the managing editor of The Nation and as such gets to vent away on his gold bug fantasies every so often. The hilarious bit is where he gets to say that gold has 'rebounded' to 1200 baht. On this subject at least, not of this world.

What on earth are you blabbering on about ?The article says nothing about “1200 baht “? It talks about $1,200 per ounce. Kitco currently shows $1193 ( And the Thai gold traders Association shows 18,550 baht.) ?

so if you want to be pedantic about the difference of $ 7 go ahead if it makes you feel better.

Edited November 21, 2014 by midas

[maidee 865]

the junta can do like USA during WW2, make it illegal for private citizens to own gold, they will buy it back at a STEAL

all for the good of the country off course

[midas 1,783]

The problem with going back on the gold standard is many fold. If Switzerland votes to go back on gold, the price of gold will skyrocket in anticipation of global demand from central banks escalating, which could easily have the effect of devaluing currencies around the world, as people will believe that the primary international currencies will become less valuable and will be seeking to exchange their currency for gold (self fulfilling prophecy on their part). However, the biggest problem will be the tightening of credit, as banks will not be able to create money the way they have in the past. Ergo, they will only be able to lend what is currently in circulation, as central banks will not be able to create more currency than the gold they have on hand will support. Therefore, you have a fixed supply of cash being chased by borrowers. The laws of supply and demand will drive interest rates up dramatically. The effect of this will be to constrict new business. The combination of high interest rates and constricting business will put tremendous downward pressure on the world's economies. Stock markets will plummet. Oil prices will shoot sky high. If you think the collapse of 2008 was bad, you ain't seen nothin' yet.

Coincidentally……………………………. from a former US Congressman

As The “Sanctions War” Heats Up, Will Putin Play His ‘Gold Card’?

http://davidstockmanscontracorner.com/as-the-sanctions-war-heats-up-will-putin-play-his-gold-card/

Edited November 21, 2014 by midas

[khwaibah 6,149]

Every Thai women I know already has. The rest of you are late.

[Pib 10,782]

Sure looks like gold is continuing to trend downward from its approx $1,890 USD/ounce on 22 Aug 11.....now it's around $1,200. Goldbug accumulators have basically been losing money since Aug 11. But hey, accumulate all you want...someday it will start a long term trend back up again for a while....but when that "someday" will come and how long the trend will last is anyone's guess...maybe next week....maybe 10 years from now.