With Chinese FreeGold from a reserve currency to a world standard
Posted by Ivo Cerckel on September 11th, 2009
by Ivo Cerckel
Tuesday, 2 September 2003
http://www.free-europe.org/english/2003/09/with-chinese-freegold-from-a-reserve-currency-to-a-world-standard/
replace “derivates” in the text with “derivatives”
From The Times September 11, 2009
China’s insatiable appetite for gold underpins market
Carl Mortished, World Business Editor
http://www.timesonline.co.uk/tol/news/world/asia/article6829932.ece
Comment
Ivo Cerckel wrote:
Nothing prevents the rest of the planet from copying what the Chinese are doing and keep gold (the Mona Lisa) in the strong rooms (the Louvres) of its central banks and mark it to market (MTM) price
(not to the model of 44 dollar an ounce or so like the Fed, the US central bank)
on a regular basis.
Every individual of the planet would then be free to copy the concept of FreeGold.
In that case, every increase in the price of gold, would lead to an increase in the value (of the reserves) of the central bank and/or the individual.
Just like it would never enter the mind [of the] owner of the Mona Lisa daily to organise a “test-auction” to establish what today’s value of his wealth is, neither do the Chinese organise test auctions. Once FreeGold will have arisen, gold will continuously be auctioned … freely and on a global basis.
September 11, 2009 5:10 AM BST on UK-TimesOnline
China, Bernanke, and the price of gold
By Ambrose Evans-Pritchard
Last updated: September 7th, 2009
http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100000821/china-bernanke-and-the-price-of-gold/
SNIP
Mr Cheng was until recently vice chairman of the Communist Party’s Standing Committee and is now a sort of economic ambassador for China around the world […}
What he said about US monetary policy and gold — this bit on the record — would appear to validate the long-held belief of gold bugs that China has fundamentally lost confidence in the US dollar and is going to shift to a partial gold standard through reserve accumulation.
He played down other metals such as copper, saying that they could not double as a proxy currency or store of wealth.
“Gold is definitely an alternative, but when we buy, the price goes up. We have to do it carefully so as not stimulate the market,” he said.
In other words, China is buying the dips, and will continue to do so as a systematic policy. His comment captures exactly what observation of gold price action suggests is happening. Every time it looks as if the bullion market is going to buckle, some big force steps in from the unknown.
Investors long-suspected that it was China. We later discovered that Beijing had in fact doubled its gold reserves to 1054 tonnes. Fait accompli first. Announcement long after.
UNSNIP
Ivo Cerckel
honestmoney@maktoob.com
http://twitter.com/ivocerckel/