First, we had (and still have) paper gold,
Tomorrow, Tuesday 27 May, we will have paper oil on the Dubai Gold and Commodities Exchange (DGCX).

The oil contracts will be settled in cash, and will not be backed by physical deliveries. (1)

German leaders are now to propose a worldwide ban on oil trading by speculators, blaming the latest spike in crude prices on manipulation by hedge funds. (2)

The oil crisis is due to the fact that oil is being traded for a worthless piece of green paper.

But of course, Germany’s president, Horst Koehler, is a former International Monetary Fund (IMF)-bureaucrat
and since 15 August 1971,
when US president Richard Nixon broke the Bretton Woods agreement,
which at least linked that piece of paper to gold,
the IMF has no more reason to existence
and
that piece of paper, aka the US dollar, no more … value.

Still, the IMF maintains that that piece of paper should be maintained as the anchor of the world monetary system.

First, we had (and still have) paper gold,
Tomorrow, Tuesday, we will have paper oil on the DGCX.

Germany does now want to prohibit speculation in paper oil.

“All paper will burn!”, said Another. (3)

Germany is now adding oil to the fire, WAOAAAAAW …

ivocerckel AT siquijor DOT Ws

NOTES

(1)
DGCX to launch WTI and Brent crude futures next week
By Shakir Husain, Staff Reporter
Published: May 20, 2008, 15:03

http://archive.gulfnews.com/articles/08/05/20/10214708.html

The Dubai Gold and Commodities Exchange (DGCX) will launch West Texas Intermediate (WTI) and Brent crude oil contracts next week to offer trading and clearing in these two global oil price benchmarks under the UAE regulatory and taxation regimes.
Their listing on May 27 will allow companies and investors to trade in oil futures without moving their money outside the region, chief executive officer Malcolm Wall Morris said.
Both contracts will be settled in cash, and will not be backed by physical deliveries.

(2)
Germany in call for ban on oil speculation
By Ambrose Evans-Pritchard
Last Updated: 1:40am BST 26/05/2008

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/26/cnoil126.xml]

SNIP
German leaders are to propose a worldwide ban on oil trading by speculators, blaming the latest spike in crude prices on manipulation by hedge funds.

(3)

http://www.usagold.com/goldtrail/archives/another1.html

FREEGOLD IN ACTION

Starting with the question “What is the rationale for the proposed unified currency within the Gulf Cooperation Council(GCC)?”,
the Dubai, June 15, GCC Currency Forum 2008 (1) will discuss what lessons from the European Union’s currency union can be applied in the move towards a single currency for the GCC, hereafter the GCC-Single-Currency.

The Brussels Economics Forum 2008 “Economic and Monetary Union in Europe – 10 years on” aims at gaining insight into the euro-area’s first decade of development and the single currency’s ongoing and future roles in the evolution of an integrated market.
That Forum is being held this year on May 15 and 16.
On the agenda of that Forum are the need for global policy coordination, the way the euro area is coping with financial market distress, and the question whether the European Monetary Union has lived up to expectations. (2) (3)

The Brussels Economics Forum 2008 will not deal with the question how the euro is evolving to the GOLD EURO.

It is therefore up to the GCC Currency Forum 2008 to explain it.

This goes to the heart of the question “Will the banks buy or sell Gold in an unstable market?” which the GCC Currency Forum 2008 is going to discuss. (4)

The explanation goes something like this:

As a consequence of the currency crisis in Asia, in the first part of 1997, then Prime Minister of Malaysia Mahathir bin Mohamad proposed introduction of Islamic gold dinar as currency for international trade in the Muslim world. It was intended to replace the American dollar and, as a gold-based currency, provide a medium of exchange more stable than the dollar. Mahathir announced that Malaysia was to start using the dinar in mid-2003, but when in 2003 Abdullah Ahmad Badawi replaced him as Prime Minister of Malaysia, this idea was halted. (5)

By introducing the Islamic Gold Dinar in 2003, Malaysia has shown the world what is the natural vehicle to temporarily or eternally store one’s wealth in, in order to be able to later convert it into tangible wealth. This is the first function of gold.

Freegold, a freely floating price of gold, as an alternative to the dollar regime, has however a second function also. In the central banks’ strong-rooms, it has the same role to fulfill as the Mona Lisa in the Louvre-museum in Paris. A wealth reserve which would now be in the strong room (the Louvre) of a monetary union.

By not defining the GCC-Single-Currency, like the old gold standard, as a certain quantity of gold, but by using gold in reserve as a freely-trading financial reserve, the GCC Central Banks will achieve for the GCC-Single-Currency what the European Central has achieved for the euro, that is, that each increase in the price of gold will bring about an increase in the value of the reserves of the GCC-Single-Currency and thus an increase in the value of the GCC-Single-Currency itself.

SAMA

The past three and a half decades of cheap Arabian oil have been made possible by the flow of cheap gold to the Saudi Arabian Central Bank, the Saudi Arabian Monetary Agency, SAMA.

Still, at a certain moment, some people will be exasperated by the currently rising price of oil.

At that or another moment, others will be exasperated by the falling price of the dollar because it imports inflation.

At that latter moment, it will be the Middle Eastern countries which peg their currencies to the dollar which will call the shots on the ailing dollar’s future, said Liam Halligan in the 11 May 2008 Sunday Telegraph under the title “Beijing and Riyadh will call the shots on ailing dollar’s future”. (6)

The lesson from the European Union’s currency union which can be applied in the move towards a GCC-Single-Currency is that
oil is being traded on this planet for gold,
that the sellers of oil have only the real value of gold in mind, not the present US dollar-denominated value of gold,
and that the euro is evolving to the GOLD EURO,
which euro has already established itself as a pegging currency,
wrote Wolfgang Münchau in the May 12, 2008, Financial Times. (7)

SAMA has now had enough time to cheaply accumulate gold.

Now, Saudi Arabia can let gold and oil rise in tandem and price oil in GOLD EURO.

As the GCC Central Bankers argue, there are no technical hurdles which cannot be overcome by 2010. (8)

Time is up for those interventionists who think that by calling for intervention in the currency markets, if the dollar continues to drop, it, the dollar, could recover.

The May 02, 2008 joint intervention by the US Federal Reserve and the European Central Bank to pump an extra $82bn into the banking system (9) shows that some Europeans don’t understand that oil is being traded for gold and that they are still prepared to support the dollar-regime.

Even Mr Euro, Jean-Claude Juncker, (10) and the Financial Times (11), belong to this camp.

It is therefore up to the GCC, and thus its Currency Forum 2008, and more particularly to Erwin Nierop, Senior Official at the European Central Bank, who will be speaking in Dubai, to explain that the euro is evolving to the GOLD EURO. Jean-Claude Trichet, President of the European Central Bank, cannot be expected to raise that issue before his European audience at the Brussels Economics Forum 2008.

Or will King Abdullah bin Abdul Aziz Al Saud of Saudi Arabia, Custodian of the Two Holy Mosques and Prime Minister, raise this issue later this week when His Majesty meets US President Bush? (12)

Ivo Cerckel
ivocerckel AT siquijor DOT ws

NOTES

(1)
http://www.itp.net/events/gcccurrency08/

(2)
The Brussels Economic Forum
http://cordis.europa.eu/fetch?CALLER=EN_NEWS&ACTION=D&SESSION=&RCN=29374

(3)
Brussels Economics Forum 2008 – 15 and 16 May – Economic and Monetary Union in Europe – 10 years on
http://ec.europa.eu/economy_finance/bef2008/eteaser_c.html

(4)
Reason to Attend
http://www.itp.net/events/gcccurrency08/reasonsattend.php
SNIP
GCC Currency Forum 2008 is going to discuss:
SNIP
Will the banks buy or sell Gold in an unstable market?

(5)
http://en.wikipedia.org/wiki/Islamic_gold_dinar

(6)
Beijing and Riyadh will call the shots on ailing dollar’s future”
Liam Halligan
The Sunday Telegraph 11 May 2008
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/11/ccecon111.xml
SNIPS
It’s instructive that the main reason for the dollar’s “recovery” has little to do with the US economy. The greenback’s relative strength is less about the robustness of America, than the weakness of the eurozone.
+
And, anyway, the biggest problem for the US isn’t the eurozone: it’s the rest of the world – in particular China, the other emerging giants and the Middle Eastern countries which peg their currencies to the dollar.

(7)
The global euro needs a stronger apparatus
By Wolfgang Münchau
Published: May 11 2008 18:44 | Last updated: May 11 2008 18:44
http://www.ft.com/cms/s/0/cf6b6448-1f56-11dd-9216-000077b07658.html
SNIP
The euro has already established itself as the world’s second most important currency – in terms of foreign exchange reserves, as a pegging currency, as a global invoicing currency and as a currency of denomination for financial instruments. There is a chance that the euro’s global role will increase significantly in the years to come.

(8)
GCC defends dollar peg, single currency deadline
by Mohammed Abbas on Sunday, 11 May 2008
http://www.arabianbusiness.com/518871-gulf-to-keep-dollar-pegs-2010-single-currency-plan?ln=en
SNIPS
Gulf states plan to stick with their dollar pegs and the 2010 deadline for establishing a currency union, Kamal said. (Getty Images)
Gulf Arab states will not revalue their currency pegs to the weak dollar despite soaring inflation, and plan to stick to a deadline for currency union by 2010, the chairman of a meeting of finance ministers said.
+
Gulf policymakers said last year the 2010 deadline would be hard to meet as consensus crumbled on how to deal with spiralling inflation and the weak dollar.

(9)
From The Times
May 3, 2008
US Federal Reserve and European Central Bank pump an extra $82bn into banking system
Gary Duncan, Economics Editor
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3864287.ece?Submitted=true
SNIP
The US Federal Reserve and the European Central Bank united yesterday to open a new front in their battle to quell the persistent money market strains that are fuelling the global credit crunch.

(10)
Authorities lose patience with collapsing dollar
By Ambrose Evans-Pritchard
The Daily Telegraph, 1:44am BST 19/04/2008
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/04/18/cneuro118.xml
SNIP
Jean-Claude Juncker, the EU’s ‘Mr Euro’, has given the clearest warning to date that the world authorities may take action to halt the collapse of the dollar and undercut commodity speculation by hedge funds.

(11)
The dollar danger is not over yet, Financial Times, May 9, 2008
http://www.ft.com/cms/s/0/41afd266-1d2a-11dd-82ae-000077b07658.html
SNIPS
When a currency rises after government officials say that it should, you learn one thing: that the fundamentals were pushing it up anyway. It makes sense for senior US and European officials to talk up the dollar against the euro – as they did this week in the Financial Times – especially now that optimism about the US economy makes their arguments plausible. In the long run, however, the real risk of a dollar crisis is against the managed currencies of Asia and the Middle East.
+
Through good judgment, as well as a little good luck, policymakers have so far avoided turning a credit crisis into a currency crisis. Without a run of fresh bad news on the US economy there is little reason for the dollar to fall further.

(12)
Bush to discuss oil prices with Saudi king
Monday, May 12, 2008
(05-12) 14:48 PDT WASHINGTON, (AP)
http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/05/12/national/w134301D68.DTL
SNIP
White House spokeswoman Dana Perino also said Bush would raise the topic.
“Will he ask the Saudis to consider the drain on the world economy because of high gas prices? Yes, of course. He raises it every time that he can,” Perino said.—

World moving away from falling dollar, but slowly
May 12 2008

http://www.khaleejtimes.com/ColumnistHomeNew.asp?xfile=data/virendraparekh/2008/May/columnistvirendraparekh_May1.xml&section=virendraparekh&col=yes

SNIPS

THE steep fall in the value of the US dollar vis-a-vis most of the major currencies in recent months has reignited the debate on its future as the currency of international trade and global foreign exchange reserves.
+
The dollar now has a strong rival as a reserve currency: euro.
+
The upshot is that countries of the world are moving away from the dollar both as a medium of exchange in international trade and a reserve currency. The movement has been gradual so far and may remain so because a sudden collapse of dollar is in nobody’s interest. But the shift looks irreversible because the US is losing influence both economically — as China and India move up the scale of global growth, as euro area emerges as a powerful economic bloc and as sovereign wealth funds, notably from the Gulf, begin to impact the world of global investment — and politically.

US Fed Chairman Ben S. Bernanke is a lunatic
who wants his Fed to pay interest on bank reserves.

The essence of the conventional commercial banking model is not riba, […]. It is riba plus gharar. (1)

Riba means usury and is forbidden in Islamic economic jurisprudence. According to some, this refers to excessive or exploitative charging of interest, though according to others, it refers to the concept of interest itself. (2)

Gharar is the sale of probable items whose existence or characteristics are not certain, due to the risky nature that makes the trade similar to gambling. (3)

Bernanke wants riba, plus gharar, PLUS LUNACY.

Indeed,
Bernanke wants his Fed to pay interest on bank reserves. (4)

[The] link between oil and the euro may weaken, it is not about to disappear, says the Financial Times today. (5)

As I said earlier this week on these pages, the euro is indeed evolving to the gold-euro. (6)

Others are still in denial:
Top officials also want to avoid dollar weakness reinforcing the rise in oil prices. They do not think the dollar is the main cause of the rise – oil has gained on days when the dollar has strengthened. But they agree that dollar weakness has at times contributed to oil’s strength. (7)

The question is not whether or not one is opposed to the dollar unit.

The question concerns the maladministration of the dollar unit by the colonial dollar-regime.

At the end of the day, this is no longer working in a globalising world.

Such a world requires “equilibrium” in order to continue functioning.

Hence,
the USA must continuously wage war in order to prevent the dollar-regime from being submitted to a closer examination
because
such an examination would result in its adaptation to reality.

Indeed,
the examination would reveal that the dollar-regime is based on electronic digits, not on real wealth.

Money in Islam must possess intrinsic value, says the Qur’an. (8)
“Abu Said al-Khudri reported Allah’s Messenger as saying: “Gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates and salt for salt. (When a transaction is) like for like, payment being made on the spot, then if anyone gives more or asks more he has dealt in Riba, the receiver and giver being equally guilty.” (Sahih Muslim)

Real wealth,
such as gold, silver, wheat, barley, dates and salt,
can be distributed in an equitable way.

The electronic digits of the dollar regime are not real wealth
and are thus arbitrarily being divided.

In order to hide this truth, Bernanke wants his Fed to pay interest on bank reserves.

This is riba, plus gharar, PLUS LUNACY.

Ivo Cerckel

NOTES

(1)
A discussion on current accounts
http://www.islamic-finance.com/item150_f.htm
SNIP
The following is the text of an email exchange that took place during the period September 2007 – March 2008 between an executive officer and Shari`ah advisor of an Islamic commercial bank and Tarek El Diwany regarding the fiqh position on bank current accounts, reproduced with the kind permission of those involved. The names of the bank and its employees have been changed to maintain confidentiality.

(2)
http://en.wikipedia.org/wiki/Riba

(3)
http://en.wikipedia.org/wiki/Islamic_banking

(4)
Bernanke Wants Fed to Pay Interest on Bank Reserves
http://www.bloomberg.com/apps/news?pid=20601087&refer=home&sid=aOm_fLe0pDxk
SNIP
May 7 (Bloomberg) — Federal Reserve Chairman Ben S. Bernanke, seeking ways to stabilize money markets, will ask Congress for authority to pay interest on commercial-bank reserves this year, a person familiar with the discussions said.
The central bank isn’t authorized by Congress to begin making such payments until 2011. Allowing interest on bank reserves may allow the Fed to pump more funds into the banking system without pushing its main policy rate lower, in effect separating action to boost liquidity from monetary policy.

(5)
The Short View: Euro and oil
By John Authers, Investment Editor
Published: May 7 2008 21:02 | Last updated: May 7 2008 21:02
http://www.ft.com/cms/s/0/1232f96e-1c5d-11dd-8bfc-000077b07658.html

(6)
GCC Currency Forum 2008
May 4th, 2008 by ivo
http://bphouse.com/honest_money/2008/05/04/gcc-currency-forum-2008/

(7)
Europe and US unite on stronger dollar
By Krishna Guha in Washington and Ralph Atkins in Frankfurt
Published: May 8 2008 02:01 | Last updated: May 8 2008 02:01
http://www.ft.com/cms/s/0/1f5097f2-1c6f-11dd-8bfc-000077b07658.html

(8)
Imran N. Hosein, “Explaining the Disappearance of Money with Intrinsic Value”, paper delivered at the International Conference on the Gold Dinar Economy, held in Kuala Lumpur, July 24-25, 2007

The GCC Currency Forum 2008 will be held on June 15, 2008 in Dubai, United Arab Emirates. (1)

Starting with the question; “What is the rationale for the proposed unified currency with the Gulf Cooperation Council (GCC)?”,
it will discuss what lessons from the European Union’s currency union can be applied in the move towards a single currency for the GCC. (2)

Once
the world will be allowed to know that
the past three decades of cheap Arabian oil
have been made possible by the flow of cheap gold
to the Saudi Arabia oil-central bank
then
most will start to understand what the GOLD EURO really means.

Reuters reported on Wednesday
that
Venezuela will not abandon the US dollar as a currency for oil sales, despite the Opec member’s trend toward asking for payments in euros for certain contracts (3)
and that
whereas in the past Iranian officials have said that oil remained priced in the US dollar but with actual payments carried out in other currencies,
an Iranian official was now quoted as saying that Iran is conducting ALL its crude trading in euro and yen, instead of the US dollar. (4)

Oil and gas for euro
simply because the euro is evolving into a GOLD EURO,
through the European Central Bank marking its gold reserves to market.

Time is up for those interventionists who think that
by calling for intervention in the currency markets,
if the dollar continues to drop,
it, the dollar, could recover.

The problem is that Friday’s joint intervention by the US Federal Reserve and the European Central Bank
to pump an extra $82bn into the banking system (5)
shows that those interventionists also exist within the European Central Bank.

It is to be hoped that the GCC Currency Forum 08 will
argue for an end to this confusion,
by condemning intervention in currency markets,
so that oil can be priced in euro now.

Ivo Cerckel
ivocerckel AT siquijor DOT ws

NOTES

(1)
GCC Currency Forum 2008
http://www.itp.net/events/gcccurrency08/

(2)
04 May, 2008
Experts to bring the Euro perspective to the Gulf
http://www.dubaichronicle.com/2008/05/experts-to-bring-euro-perspective-to.html

(3)
UPDATE 2-Venezuela says will not abandon dlr in oil sales
http://www.reuters.com/article/oilRpt/idUSN3053405620080430
SNIP
CARACAS, April 30 (Reuters) – Venezuela will not abandon the dollar as a currency for oil sales, Energy Minister Rafael Ramirez said on Wednesday, despite the Opec member’s trend toward asking for payments in euros for certain contracts.

(4)
Iran conducts all crude trade in euro, yen -agency
Reuters – USA
http://www.reuters.com/article/oilRpt/idUSBLA02024820080430
SNIPS
TEHRAN, April 30 (Reuters) – Iran, the world’s fourth-largest oil producer, is conducting all its crude trading in euro and yen, instead of the U.S. dollar, an Iranian official was quoted as saying
+
In the past, Iranian officials have said that oil remained priced in the U.S. dollar but with actual payments carried out in other currencies.

(5)
From The Times
May 3, 2008
US Federal Reserve and European Central Bank pump an extra $82bn into banking system
Gary Duncan, Economics Editor
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3864287.ece?Submitted=true
SNIP
The US Federal Reserve and the European Central Bank united yesterday to open a new front in their battle to quell the persistent money market strains that are fuelling the global credit crunch.