The eurogulf and FreeGold

1.
Crunch talks on single currency
Nadim Kawach Saturday, September 06, 2008

http://www.business24-7.ae/Articles/2008/9/Pages/09062008_39117d6293e04d45aad342ac967bc636.aspx

SNIP
Gulf oil producers could end a long-standing rift on terms for a single currency next year and it could be ready by the end of 2009, according to reports.
Monetary officials from the six Gulf Co-operation Council (GCC) countries will meet in Doha tomorrow.
There they will discuss the remaining issues needed to reach agreement on the type of currency, its name, peg and date of issue.

2.
This section 2 summarises my previous post on this blog
Duisenberg, Thomas More and … Erasmus
September 3rd, 2008 by Ivo Cerckel http://bphouse.com/honest_money/2008/09/03/duisenberg-thomas-more-and-erasmus/

The eurogulf, said Wim Duisenberg, former president of the European Central Bank (ECB), has severed its link to gold.

Erasmus says that one should leave that gold in a safe.

Thomas More says that that gold has value by man.

Wim Duisenberg says that the eurogulf has value by man.

The unpegged eurogulf has value vis-a-vis other currencies through MTM (marking to market).

Currencies are floating.

The eurogulf has value through MTM.

Thomas More says that gold has value by man.

Duisenberg has replaced “gold” in Thomas More’s dictum by “the eurogulf”.

Euro-gulf-gold (the gold reserves of the Eurogulf System of Central Banks) has therefore also value through MTM.

3.
Enter, Jean-Claude Trichet, the present president of the ECB.

Yesterday, Friday 5 September 2008, Mr Trichet said that the oil price shock that has hit global growth could have been exaggerated by financial speculation. (1)

Yes, nation states are manipulating the oil market up and the gold market down. (2)

That’s why the euro has severed its link to the nation-state, as said Mr Trichet’s predecessor, Wim Duisenberg, in his 9 May 2002 acceptance speech of the International Charlemagne Prize of Aachen for 2002. (3)

4.
On Thursday 4 September 2008, the Governing Council of the ECB assembled for its monthly interest rate decision.

It pleased the Governing Council to leave interest rates unchanged.

At the press conference following the decision, Jean-Claude Trichet, president of the ECB, spoke at length about the way in which the eurogulf currency will achieve FreeGold. (Trichet speaks only of, for and in name of the euro, of course)

FreeGold means the marking of the gold reserves to market like the ECB, not to model like the US Treasury, The euro has a gold component and a paper component, but puts a “firewall” between the two such that gold’s valuation as a wealth-preserving asset cannot be pulled lower by the inevitable inflation of the paper component of circulating currencies. It is the marking to market (MTM) of gold reserves which provides that wall.

But the independent press attending the “press” conference is only reporting on what Trichet had to say concerning the use by banks of the emergency ECB funds which are guaranteed, collateralised, with ABS (asset backed securities).

The ECB is refining its collateral framework, said Trichet.

From The Times
September 5, 2008
European Central Bank orders bigger ‘haircuts’ for banks to prevent misuse of emergency funds

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4678084.ece

Yours truly is more interested in FreeGold.

Ralph Atkins does not dare to mention in the Financial Times anything which Trichet said about that.

Inflation fear forces ECB to hold rate
By Ralph Atkins in Frankfurt
Published: September 4 2008 18:05 | Last updated: September 4 2008 18:05

http://www.ft.com/cms/s/0/e5b1435c-7aa1-11dd-adbe-000077b07658.html

5.
Here’s a summary (the edited full text is available here (4)) of what Trichet had to say about how the eurogulf-currency will achieve FreeGold during the course of 2010. (Trichet speaks only of, for, and in name of the euro, of course.)

The ECB’s primary goal is delivering [and then maintaining] price stability over the medium term (the necessity to avoid broad-based second-round effects stemming from the impact of higher energy and food prices on price and wage setting behaviour should however not be overlooked.)

Price stability will be delivered in the course of 2010.

Ivo repeats:
Price stability will be delivered in the course of 2010.

Trichet again:
This means that during the course of 2010, the ECB will be back to its definition of price stability and the ECB is credible when it is says that.

I, Trichet, have noted with extreme attention that the USA authorities have said that a strong dollar is in the interests of the United States of America.
Trichet: what the USA authorities say is important, I was therefore attentive, even though market participants were less attentive.

In the recent past / very recently,
(and taking the risks to price stability  and the necessity to take broad-based second-round effects
stemming from the impact of higher energy and food prices on price and wage setting behaviour  into account) we [the Governing Council of the ECB] increased rates in order to reach the goal of achieving price-stability over the medium term, that is, in the course of 2010.

This means that during the course of 2010, inflation will be in line with price stability.

Ivo: this means that FreeGold will be achieved in the course of 2010.

I do not want to be more precise, but this is the moment, said Trichet.

Ivo:
Trichet did not want to elaborate on how this would be achieved.

And nobody from the independent press was allowed to ask the FreeGold-question.

FreeGold will be achieved in the course of 2010,

Ivo Cerckel
ivocerckel AT siquijor DOT ws

NOTES

(1)
Trichet sees investor role in oil shock
By Ralph Atkins in Frankfurt
Published: September 5 2008 18:06 | Last updated: September 5 2008 23:44

http://www.ft.com/cms/s/0/4e69e81c-7b6b-11dd-b839-000077b07658.html

SNIP
The oil price shock that has hit global growth could have been exaggerated by financial speculation, Jean-Claude Trichet, European Central Bank president, suggested for the first time on Friday.

(2)
Big jump in gold sale spurs manipulation talk
Some analysts say only manipulation is government’s attempt to take down oil
By Moming Zhou, MarketWatch
Last update: 7:55 p.m. EDT Aug. 29, 2008

http://www.marketwatch.com/news/story/big-jump-gold-sale-spurs/story.aspx?guid={25D66623-29F3-434B-9B7A-5CE76D3C38F9}

If the link does not work, try newsgoogling for the title of the article.

http://news.google.com/

SNIP
NEW YORK (MarketWatch) — Recent heat from Congress and regulators, along with public speculation, over whether commodity prices are being manipulated has also reached gold pits, where the debate was stirred by a surge in bets in August that gold prices would fall.

(3)
International Charlemagne Prize of Aachen for 2002
Acceptance speech by Dr. Willem F. Duisenberg, President of the European Central Bank, Aachen, 9 May 2002

http://www.ecb.eu/press/key/date/2002/html/sp020509.en.html

(4)
Introductory statement with Q&A
Jean-Claude Trichet, President of the ECB,
Lucas Papademos, Vice President of the ECB
Frankfurt am Main, 4 September 2008

http://www.ecb.int/press/pressconf/2008/html/is080904.en.html#qa

Transcript of the questions asked and the answers given by Jean-Claude Trichet, President of the ECB, and Lucas Papademos, Vice-President of the ECB

http://www.ecb.int/press/pressconf/2008/html/is080904.en.html#qa

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