The Gulf Co-operation Council Monetary Union should link its currencIES to its gold reserves hiding in oil

Gulf union advised to de-peg
Travis Pantin
The National, 11 June 2009
http://www.thenational.ae/article/20090610/BUSINESS/706109912/-1/NEWS
SNIP
Gulf states should use the planned GCC monetary union as an opportunity to de-peg their currencies from the dollar, two international banks said yesterday. UNSNIP

De-peg from the dollar and re-peg to a basket?

What’s the use?

The issuer of a currency needs reserves in order to determine the value of that currency.

Without reserves to that effect, the currency administered by the issuer has no value whatsoever.

Does Latvia have such reserves?

No apparently. Latvia has no gold reserves.

The issuer of the lat, the currency in Latvia
which is (still – for how long I don’t know) PEGGED to the euro,
has only foreign exchange, forex, reserves.

Forex reserves consisting of worthless paper money can only possibly be used for intervention on forex markets.

Such reserves are worthless, no, useless, to determine the value of the lat.

Only gold reserves can determine the value of a currency.

Latvia has no gold reserves.

The (intrinsic) value of the lat is ZERO.

Sweden is close to Latvia and Swedish banks have apparently extended loans to Latvians,

The European Central Bank is now supplying €3bn ($4.2bn) to the Swedish Riksbank to boost its FOREIGN RESERVES – increasing its firepower to help Swedish private sector banks if necessary, says the Financial Times. (1)  Reuters says it’s to safeguard financial stability. (2)

The contraction of Latvia’s economy led to speculation that it would be forced to SEVER THE LINK between the lat and the euro. (3)

The euro is the first currency that has not only SEVERED ITS LINK TO GOLD, but also its link to the nation-state, said the late ECB-president Wim Duisenberg on 9 May 2002. (4)

Latvia must sever the link to the euro which has severed the link to gold.

Latvia must re-link to gold?

For the ECB, its gold reserves are freely floating
and marked to market (-price),
not marked to model of 40-something dollar an ounce like in the US of A,
on a regular basis.

Oil is the only commodity in the world that is large enough for gold to hide in. Gold reserves are therefore hiding in oil reserves.

The GCC Central Bank should therefore link its currencIES to its gold reserves hiding in oil.

But the architects of GMU want to link the currencIES to a basket of forex reserves.

Ivo Cerckel
honestmoney@maktoob.com

NOTES

(1)
ECB lends €3bn to Swedish bank
By Ralph Atkins in Frankfurt, Joshua Chaffin in Brussels and Robert Anderson in Stockholm
Published: June 10 2009 11:55 | Last updated: June 10 2009 23:59
http://www.ft.com/cms/s/0/ad578092-55a8-11de-ab7e-00144feabdc0.html
The €3bn ($4.2bn. £2.6bn) the ECB is supplying to the Riksbank will be used to boost the Swedish central bank’s FOREIGN RESERVES – increasing its firepower to help Swedish private sector banks if necessary.

(2)
Sweden cbank takes ECB loan; banks pass stress test
Reuters, Wednesday June 10 2009

Swedish cbank to take 3 bln euro loan from ECB
Swedish watchdog: banks can handle worst-case scenario
Says banks can absorb 150 bln SEK of losses in Baltics
Sees no need for capital strengthening by top banks
(Adds analyst comment, updates crown, shares)
By Niklas Pollard and Eva Odefalk
http://www.guardian.co.uk/business/feedarticle/8551024
SNIP
STOCKHOLM, June 10 (Reuters) – Sweden’s central bank said on Wednesday it would take out a hefty loan from the European Central Bank to safeguard financial stability, although a watchdog said local banks could cope with “extreme” pressures.

(3)
From The Times
June 9, 2009
Latvia budget cuts ease fears of Sweden’s nervous banks
Carl Mortished
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article6458670.ece

(4)
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