Gulf dinar to be backed by gold hiding in oil – Why use dollar for int’l trade? (former Malaysian PM & Surah An Nisaa’) – The Gulf Dinar is The New Oil-Standard
Gulf dinar to be backed by gold hiding in oil
Posted by Ivo Cerckel on September 9th, 2009
http://bphouse.com/honest_money/2009/09/09/gulf-dinar-to-be-backed-by-gold-hiding-in-oil/
The Gulf Co-operation Council (GCC) single currency, the Gulf dinar, will be issued by the GCC Central Bank.
A single central bank for the Gulf could make the region a formidable international force. With the Gulf’s immense OIL WEALTH backing up the bank, the region could be home to one of the world’s largest central banks in terms of assets, analysts said. [capitalisation mine] (1)
As oil is the only commodity in the world that is large enough for gold to hide in,
gold is hiding in there.
Oil producers do indeed exchange their petro-dollars, which like the dollar itself have no value, for gold.
Oil backing thus means gold backing.
Ivo Cerckel
honestmoney@maktoob.com
http://twitter.com/ivocerckel/
NOTE
(1)
Gulf ministers talk regional customs union
Sep 08, 2009 at 20:13
GCC currency to be backed by oil http://business.maktoob.com/20090000372142/Gulf_ministers_talk_regional_customs_union/Article.htm
SNIP
A single central bank for the Gulf could make the region a formidable international force. With the Gulf’s immense oil wealth backing up the bank, the region could be home to one of the world’s largest central banks in terms of assets, analysts said.
Why use dollar for int’l trade? – former Malaysian PM
Posted by Ivo Cerckel on September 16th, 2009
Tun Dr. Mahathir Mohamad, former Malaysian prime minister, reiterates that:
(a) as the whole world knows, the United States is existing on unlimited loans by the rest of the world
(b) if the US Dollar were not used for trade payments and loans, then there would be no demand for it.
Dr Mohamad asks:
Why must we use the US Dollar for international trade?
Why can we not use the dinar or any other currency?
Dr Mohamad concludes that;
the actual name of the new reserve currency is not important but backing by gold is important.
Wednesday, September 16, 2009
NEW CURRENCY NEEDED, SAYS UN – BLOOMBERG
As posted by Dr. Mahathir Mohamad at Che Det on September 9, 2009 8:19 AM
http://mahathir-mohamad.blogspot.com/2009/09/new-currency-needed-says-un-bloomberg.html
Ivo Cerckel
honestmoney@maktoob.com
http://twitter.com/ivocerckel/
1. Ivo Cerckel says: The Holy Koran says in Verse 161 of Surah An Nisaa’:
“That they took usury, though they were forbidden; and that they devoured men’s substance wrongfully;-we have prepared for those among them who reject faith a grievous punishment.”
When one party gives something of value
and the other party pays him with something,
in this case paper, of no value,
and when one party’s wealth is created out of thin air,
while the other party has to slave and earn to pay off the ill-gotten credit or loan,
is this not devouring of other people’s wealth?
There is moreover a Hadith of Prophet Muhammed in the Sahih Muslim which teaches:
“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 the giver being equally guilty.”
This Hadith of Prophet Muhammed establishes two things:
ONE ‘money’ in Islam is either precious metals such as gold and silver, or commodities such as wheat, barley, dates and salt.
TWO when gold, silver, wheat, barley, dates and salt were used as money, their value was ‘inside’ and not ‘outside’ the money. Hence, it is established that ‘money’ in Islam must possess intrinsic value.
(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 on 24 and 25 July 2007, p. 1)
2 Ivo Cerckel Says:
http://www.quranexplorer.com/Hadith/English/Hadith/bukhari/003.034.344.html
Sahih Al-Bukhari :: Book 3 :: Volume 34 :: Hadith 344
Narrated Az-Zuhri from Malik bin Aus:
that the latter said, “Who has change?” Talha said, “I (will have change) when our store-keeper comes from the forest.”
Narrated ‘Umar bin Al-Khattab: Allah’s Apostle said, “The bartering of gold for silver is Riba, (usury), except if it is from hand to hand and equal in amount, and wheat grain for wheat grain is usury except if it is form hand to hand and equal in amount, and dates for dates is usury except if it is from hand to hand and equal in amount, and barley for barley is usury except if it is from hand to hand and equal in amount.” (See Riba-Fadl in the glossary).
The Gulf Dinar – The New Oil-Standard
Posted by Ivo Cerckel on September 21st, 2009
http://bphouse.com/honest_money/2009/09/21/the-gulf-dinar-%e2%80%93-the-new-oil-standard/
In the real world, some people know that gold and oil are real wealth no matter what currency price is put on it.
It is the movement of gold in the hidden background that has kept oil at these low prices.
Oil must be billed at its correct “value” which must be reflected in FreeGold.
I said in my 09 September 2009 “Gulf dinar to be backed by gold hiding in oil”-post that the Gulf oil-wealth will back up the Gulf dinar, the Gulf Co-operation Council (GCC)’s single currency (1)
In my “Why use dollar for int’l trade? – former Malaysian PM”-post of 16 September 2009, I quoted former Malaysian prime minister Tun Dr Mahathir Mohamad as asking last week why the planet should continue to use the dollar in international trade and as saying that the new reserve currency, the new currency settling international trade, will have to be gold backed. (2)
Dr Mahathir is thereby departing from his earlier proposal to use the Islamic gold dinar in trade between countries.
Now I want to examine how the GCC’s gold and oil reserves backing the Gulf dinar will determine the dinar’s value.
People erroneously believe that the dollar has the power to buy oil, just like US president Barack Obama thinks that at this week’s G20 summit in Pittsburgh, he can safeguard “our” global financial system by enacting another batch of regulations.
THE ARCHITECTS
The architects of the New Oil-Standard know that it is the movement of gold in the hidden background that has kept oil at these low prices. Not military might, not a strong dollar, not political pressure, no it was real physical gold. In very large amounts. Oil is the only commodity in the world that was large enough for gold to hide in. (3)
The architects of the New Oil-Standard know that the fact that the dollar is still being used as the intermediary numéraire for oil-trade settlement, as the intermediary basic “standard” by which values are measured for oil-trade settlement, gives this dollar-paper the backing of oil becomes an indispensable valuable.
The architects of the New Oil-Standard know that once oil will see no more reason to support/back the dollar, oil will “openly” shift towards gold and back it (through demand for gold) so as to create the new market for physical gold in association with the gold-friendly numéraire which the Chinese yuan or renminbi is.
The architects of the New Oil-Standard long-suspected that China is increasing its gold reserves in order to achieve FreeGold, a free-floating price of Gold as an alternative to the dollar regime. FreeGold makes gold the natural vehicle to temporarily or eternally store one’s wealth in, in order to be able to later convert it into tangible wealth.
More recently, China became alarmed by the money printing by the Federal Reserve, the US central bank, (4) and said it will continue to buy gold on the dips as a systematic policy. (5)
The Chinese want the world to know that they are increasing their gold, not euro (6), reserves so that the product (the “fruit”) of their wealth be consolidated with a view to further fructifying.
In the real world, some people know that gold and oil are real wealth no matter what currency price is put on it.
THE OLD GOLD-STANDARD
The old gold-standard could not change human nature which dictates that no ruler can withstand the pressure to print more receipts than he has gold in reserve. (7) The old gold-standard did moreover not provide for the possibility that an increase of the ounces, kilograms, or tonnes of gold held in reserve would lead to an increase in the currency’s value. Its chief weakness was however that it could be repealed by the politicians. (8)
Before 15 August 1971, when US president Richard Nixon broke the 1944 Bretton Woods agreements which linked the US dollar at fixed parity to gold and all other currencies to the said dollar, oil producers accepted the ease of trading oil for dollars because these “casino chips” could be exchanged at the cashier window (the gold window). Then, in 1971 the “cashier” was closed for good. Hence, the 1973 (first) oil crisis. (9)
Before 15 August 1971 the dollar was backed by gold. Since then, the dollar is backed by demand for the “subjective use-value” of the dollar for oil (the Gulf dinar), oil (the Gulf dinar) still being priced in dollar. People need to use the dollar to buy oil (the Gulf dinar). The dollar is thus being backed by this need, the buyers of the dollar demanding dollars in order to be able to buy oil (the Gulf dinar).
As Ludwig von Mises points outs:
Use value in the “objective” sense is the relation between a thing and the effect it has the capacity to bring about. It is to objective use-value that people refer in employing such terms as the “heating value” or “heating power” of coal.
“Subjective” use-value is not always based on true objective use-value.
There are things to which subjective use-value is attached because people erroneously believe that they have the power to bring about a desired effect. On the other hand, there are things able to produce a desired effect to which no use-value is attached because people are ignorant of this fact. (10)
THE NEW OIL-STANDARD
The old gold-standard was not perfect, but at least it disciplined the monetary authorities in some way.
In order to return to some discipline, the Gulf dinar should have a gold component and a paper component, but put a “firewall” between the two so 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 the gold reserves of the GCC Central Bank (GCB) which should provide that wall.
Nothing prevents the GCC Monetary Union (GCC MU, GMU in short) 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 he owner of the Mona Lisa daily to organise a “test-action” 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.
MTM of oil means that the objective use-value of oil in FreeGold must correctly reflect the wealth which oil produces for the planet.
Oil must be billed at its correct “value” which must be reflected in FreeGold whereby the exchange rate between the objective use-value of oil and the objective use-value of FreeGold remains constant or stable whatever the currency, that is, whereby the objective use-value of oil is “pegged” to the objective use-value of FreeGold.
That’s how the GCC oil-wealth will back up the Gulf dinar.
In the real world, some people know that gold and oil are real wealth no matter what currency price is put on it.
For the moment, the movement of gold keeping oil at these low prices is occurring in the hidden background. There is however no more reason for oil to back the dollar. The time has come for oil to “openly” shift towards the Gulf dinar and back it.
Ivo Cerckel
honestmoney@maktoob.com
http://twitter.com/ivocerckel/
NOTES
(1)
Gulf dinar to be backed by gold hiding in oil
Posted by Ivo Cerckel on September 9th, 2009
http://bphouse.com/honest_money/2009/09/09/gulf-dinar-to-be-backed-by-gold-hiding-in-oil/
[If the link does not work, try to copy it and to paste it in your browser.}
(2)
Why use dollar for int’l trade? - former Malaysian PM
Posted by Ivo Cerckel on September 16th, 2009
http://bphouse.com/honest_money/2009/09/16/why-use-dollar-for-int%e2%80%99l-trade-former-malaysian-pm/
[If the link does not work, try to copy it and to paste it in your browser.}
(3)
ANOTHER (THOUGHTS!)
Foundational Gold Trail Commentary
The Inside Story on the Gold-for-Oil Deal that could Rock the World's Financial Centers
"Think now, if you are a person of "great worth" is it not better to acquire gold over years, at better prices? If you are one of "small worth", can you not follow in the footsteps of giants? I tell you, it is an easy path to follow!" --ANOTHER (THOUGHTS!) 1/10/98
http://www.usagold.com/goldtrail/archives/another1.html
Date: Sun Oct 05 1997 21:29
ANOTHER ( THOUGHTS! ) ID#60253:
SNIP
oil is being partially used to pay for gold! We are going to find out that the price of gold, in terms of real money ( oil ) has gone thru the roof over these last few years.
(4)
China alarmed by US money printing
The US Federal Reserve's policy of printing money to buy Treasury debt threatens to set off a serious decline of the dollar and compel China to redesign its foreign reserve policy, according to a top member of the Communist hierarchy.
By Ambrose Evans-Pritchard, in Cernobbio, Italy
Published: 9:06PM BST 06 Sep 2009
http://www.telegraph.co.uk/finance/economics/6146957/China-alarmed-by-US-money-printing.html
(5)
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.
(6)
contrast this to
European-Union Economic and Monetary Affairs Commissioner Joaquin Almunia who said on Friday
that China would rush into euros
and that this would have negative consequences for Europe by pushing up the value of its single currency,
adding that he thought a Chinese proposal to base a new global currency on the International Monetary Fund's Special Drawing Rights was inevitable.
(UPDATE 1-EU's Almunia hopes China won't rush into euros
09.18.09, 08:22 AM EDT
By Jason Webb
MADRID, Sept 18 (Reuters) –
http://www.forbes.com/feeds/afx/2009/09/18/afx6903084.html
No, Mr Almunia, China doesn’t want SDRs. China wants the yuan to be gold backed.
With Chinese Freegold from a reserve currency to a world standard
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"]
Only Iran shifts its reserves towards and sells oil in euros.
Iran shifts currency reserves to euros
Sep 20, 2009 at 21:20
http://business.maktoob.com/20090000375246/Iran_shifts_currency_reserves_to_euros/Article.htm
SNIPS
Iranian President Mahmoud Ahmadinejad has issued an order to shift the oil-rich Persian Gulf nation’s foreign currency reserves from dollars to euro, the semiofficial Mehr news agency reported Sunday.
+
The Persian Gulf country has said it had stopped conducting crude trading in dollars and started using euro instead, Mehr said.
(7)
Roland Leuschel and Claus Vogt, “Das Greenspan Dossier, Wie die US-Notenbank das Weltwährungssystem gefährdet. Oder: Inflation um jeden Preis”, www.finanzbuchverlag.de, 2006, 3rd ed., p. 300
(8)
Leuschel and Vogt, op. cit., p. 304
(9)
DEAD END
WEDNESDAY, JUNE 17, 2009
Posted by FOFOA at 3:11 PM
http://fofoa.blogspot.com/2009_06_01_archive.html
(10)
Ludwig von Mises, “Human Action – A Treatise on Economics”, Chicago, Contemporary Books, 1966, (originally published 1949), 3rd. rev. ed., p. 120
April 19th, 2009 at 11:06
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