Perspectives on the global economic changes

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Austin
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Re: Perspectives on the global economic changes

Postby Austin » 18 Oct 2014 15:06

Russian CBR says they plan to make Rouble Free Floating by Jan 1,2015

Russia on track to let rouble float freely - central bank chief
It has since relaxed its intervention rules to widen the rouble's trading "corridor" of rates against a basket of currencies and reduce the amount it spends before shifting the boundaries of the corridor.

Nabiullina reiterated that the central bank will let the rouble float freely from Jan. 1, scrapping the trading corridor as part of a long-term policy shift, although it will still intervene if risks to financial stability emerge.

"A floating exchange rate allows (the economy) to bear external shocks, to restrain fluctuations in interest rates," Nabiullina said.


"We will constantly monitor the situation - which now is under control - and if necessary, will intervene. But to spend the gold and foreign currency reserves over a short period of time, that will not be constructive."

Nabiullina said that even when the rouble starts floating next year the central bank will keep intervening in the currency market if risks to financial stability emerge.

"For now (the rouble) is not freely floating, but it is influenced by market factors, including oil prices," Nabiullina said. "Having said that, in our opinion fixing the exchange rate is a counterproductive decision, since this will contradict market factors which we can't control."

The central bank's stated goal is to shift away from a policy of supporting the rouble to place greater emphasis on bringing down stubbornly high inflation.

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Re: Perspectives on the global economic changes

Postby Liu » 18 Oct 2014 16:02

Austin wrote:I wonder what good is the low Debt and high reserves for Russia if it does not help credit rating ? Or Credit Rating has just become a political tool for geo-strategic objectives
Economic Development Minister Alexei Ulyukayev . "Now, really, there are expectations, there is talk, there are rumors that the possible actions of the international rating agencies to reduce the sovereign rating of the Russian Federation", - said Uljukaev reporters Tuesday.

According to him, if such a decision is taken, it will be strange and economically unjustified decision. "What is the rating of the rating agencies? Rating long-term solvency, solvency. This is, simply put, is the belief that we are able to pay off our foreign debt , "- said Uljukaev.

He added that today the country's external debt - less than 3% of GDP and public debt all - 11% of GDP, one of the lowest in the world. "That is, if desired, the debt can be repaid in one year", - said
Uljukaev, adding that Russia's Reserve Fund and National Welfare Fund significantly exceed this value. In 2014, the budget was in surplus, the draft budget for 2015-2017. a miserable deficit, besides the country has a fiscal rule and a policy of floating exchange rate, which is "Powerful damper" against the decline in oil prices.

"Therefore, from whatever side you look, macroeconomic and financial structures are very stable, and the risk that this meager foreign debt somehow miraculously not be extinguished, no," - said Uljukaev.

"Actions for the revision of the sovereign rating of Russia downwards in this situation would have meant either a strange incompetence, or, perhaps, political partisanship that it would probably be closer to reality," - said the Minister.

Читайте далее: http://www.vedomosti.ru/politics/news/3 ... z3GTio4k8L


Why do European countries like Germany and Italy which has low growth and high Debt to GDP Ratio end up paying 2-4 % of their Bonds , while countries like India and Russia and BRICS which has high growth and low Debt end up paying 8-9 % for their bonds ?

Image

Image


because the balance of fund supply VS fund demand favours Germany more than India.

Among BRIC, CHina is the only fund exportor . India ,as well as Russia,Brazil and South Africa are all short of fund.

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Re: Perspectives on the global economic changes

Postby Austin » 18 Oct 2014 17:25

Fund exporter , I mean what does EU and US does to export fund other than print USD and Euro from their unlimited printing press ?

There is hardly any kind of economic discipline in these two big economies these days all they need to to start their printing press and increase debt and say its all well.

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Re: Perspectives on the global economic changes

Postby Liu » 18 Oct 2014 18:36

Austin wrote:Fund exporter , I mean what does EU and US does to export fund other than print USD and Euro from their unlimited printing press ?
There is hardly any kind of economic discipline in these two big economies these days all they need to to start their printing press and increase debt and say its all well.

well, industry might is the preconditon of economy domonance , financial dominance ,culture dominance and language dominance. europe and USA have global largest industry might,so they dominate the world militarily,economically,culturally,financially and languagelly..... but Chinese industry might is surpassing USA and challenging the economical,militay,cultural,and language dominance of west countries,so China can export fund and industry products like europe and USA. however,india industry might is still quite weak,so india and other developing countries are still importing industry products and fund,thus have to accept high cost fund.

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Re: Perspectives on the global economic changes

Postby Austin » 18 Oct 2014 19:53

In the second half, Max continues with his interview of Professor Antal Fekete of FeketeResearch.com about how the 1921 bond market collapse led the US Federal Reserve & Treasury conspiring to illegally introduce open market operation, leading to a situation in which profits in the bond market are risk free while profits in the commodity market are NOT risk free.

http://rt.com/shows/keiser-report/19694 ... ax-keiser/

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Re: Perspectives on the global economic changes

Postby Neshant » 19 Oct 2014 19:35

The banker "bail-in" aka theft of depositor's money to bailout private bankers which will soon be the norm throughout the western world.



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Re: Perspectives on the global economic changes

Postby Neshant » 22 Oct 2014 18:05

An interesting piece. Will savers be subject to the ultimate theft via e-dollars.

First, since eventually the old paper dollar would go extinct and all commerce would be electronic, it would be easy for the government to track money thus easier to tax. This would certainly please tax and spend liberals who try and vilify anyone who attempts to avoid taxes, even though that is what this nation was founded on.

Another benefit of being able to track the new e-dollars is black market transactions in dollars would disappear. This would delight right of center. Without cash, illegal drug trade would have a major barrier. An even a bigger feather to the right is that it would be more difficult for people to hide secondary income thus take advantage of entitlements while working “under the table”. Illegal immigrates would also have a much more difficult time living in the US, talk about a plus for the conservatives. The government also wouldn’t need to spend money to create new bills and coinage. Finally the biggest pro is the governmental debt will be priced in the “old” dollars, meaning the burden of the national debt would decrease by as much as the Fed decides to set the negative interest rate at annually. So we’ve pleased both sides of the isle, now on to the banks.

Well the benefit to the banks is quite clear, not only are you forced to keep your savings with them to speculate with and collect their standard fees on, but they also will be able to charge you interest for the privilege. Some of the concerns that run a distant third, those of the people of the United States COULD also be addressed. I emphasize COULD because they will only help a certain portion of the population and only if the powers in the government and banks feel as if they need more popular support for the E dollar.

As with the government debt, the new system COULD allow ALL old debt to be priced in the old dollars thus lessening the burden on anyone holding previous debts, and with a large portion of the population with underwater home mortgages and huge student loans I’m sure the relief would be welcome. The losers in this would be those who were prudent and didn’t take on large debts but since there are far more debtors then savers, politically the plan would still be a winner.

I have to admit before learning the truth about our system I racked up my fair share of debt and a little piece of me would be relieved. Though I think the Government would allow all debt to be priced in the old dollars the only debt that must be would be the government debt. It would certainly be fairer to price all old debt in the old dollars, but I would not be surprised if the banks were able to use their substantial influence to swap old debts into the gradually more valuable E Dollar.

This is historically what has taken place when there have been failed currencies, and even though the debt agreements may have been made in those currencies the banks attempted, and were often successful in demanding payment in gold. Even the most powerful such as President Thomas Jefferson was subject to such a debt payment. Let me know your thoughts.

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Re: Perspectives on the global economic changes

Postby Neshant » 23 Oct 2014 17:40

the immoral theft of peoples' savings through financial repression

______

Is There A “Back Door” Method For The Government To Pay Down The Federal Debt Using Private Savings?

http://danielamerman.com/va/Repression.html

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Re: Perspectives on the global economic changes

Postby Neshant » 23 Oct 2014 18:53

I'm in a rush and can't listen to it right now but I'm posting it anyway.

Swiss citizens voting on having their currency or reserved backed by 20% gold ... or something to that effect.

Here's what's being proposed :

[youtube]zuYTgSI3f8k#t=274[/youtube]

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Re: Perspectives on the global economic changes

Postby Austin » 24 Oct 2014 13:43


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Re: Perspectives on the global economic changes

Postby chanakyaa » 25 Oct 2014 04:49

I posted the following in the WU dhaga but it is also very relevant here...
>>>>>>>>>

Do not mean to change the subject, but I'm posting about one interesting area that is somewhat related to WU, I mean WU rubbish. I also intend to put in econ forum, but if you feel it is inappropriate here, okay to remove. It was briefly mentioned in Libya dhaga. It is about French Colonialism in 21st century in Africa. Yes, looting in Africa by France never stopped!! I'm putting snippets of an article below, but read the whole thing to get the context, if interested. Material is slightly date, but relevant..

French Africa Policy Damages African and European Economies
..
By Christof Lehmann – Since the independence of the former French colonies in western Africa they are in spite of the richness of their natural resources and the productivity of their populations still catastrophically under-developed.
In 2007 the French and European economies began deteriorating into a devastating recession. France seems to be like a man who is standing at the edge of a cliff, transfixed by the thought of falling into the abyss. In fear of losing the lucrative racket of controlling the western African economies he forgets that there is Terra firma and a possibility for both French, European and African prosperity behind him. Africans and leading European politicians expected that the administration of President Hollande would bring much-needed change with respect to French control over the economies of Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Equatorial Guinea, Ivory Coast, Gabon, Guinea-Bissau, Mali, Niger, the Republic of Congo, Senegal and Togo. However, also Hollande´s administration seems to be so transfixed by the prospect of falling into the abyss that it does not fathom the possibility of taking one step back.


The root causes for the lacking development of the western African economies are closely related to the fact that France, contrary to other former colonial powers, managed to install its commissars at the heart of its former colonies economic and monetary system and that it still maintains almost unchallenged control over them. The system was created by German National Socialists during the 1930s and 40s. It was used to usurp France and other German occupied nations.


In other words sixty-five per cent of all foreign currency reserves of the fifteen nations and all revenue generated outside of the unions territory is kept at the French National Bank. On 3 Mai 2010 the website of Jeune Afrique quotes the former French Minister of Finance and Commerce, Christine Lagarde: “The Bank of the States of Central Africa, for instance, places an almost 90 per cent of their reserves in the French National Bank”.


The words of the late Etienne Gnassingbé indicate that the Bleeding of Africa can be taken literally. According to the statutes of the monetary and economic union every member state is free to leave it. So much to theory. In practice, France has left a trail of post-modern coup d´etats, violence, and murder in those nations who tried to get out from under what many West-Africans perceive as French Finance-Nazism in Africa.


The question for this and the coming year is whether France will continue standing at the edge of the cliff and fall while dragging both western Africa and Europe into the abyss together with it, or if it dares to listen to the voices of reason from Africa and its European partners, turn its gaze away from the abyss and see that there is fertile land, right behind it.


Same subject is covered in a bit sensational way in following post.

http://www.siliconafrica.com/france-colonial-tax/

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Re: Perspectives on the global economic changes

Postby Neshant » 30 Oct 2014 11:29

Image

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Re: Perspectives on the global economic changes

Postby kmkraoind » 31 Oct 2014 09:01

Shadow Banking Grows to $75 Trillion Industry, FSB Says - Bloomberg

The shadow banking industry grew by $5 trillion to about $75 trillion worldwide last year, driven by lenders seeking to skirt regulations and investors searching for yield amid record low interest rates.

The size of the shadow banking system, which includes hedge funds, real estate investment trusts and off-balance sheet investment vehicles, is about 120 percent of global gross domestic product, or a quarter of total financial assets, according to a report published by the Financial Stability Board today.

Shadow banking “tends to take off when strict banking regulations are in place, when real interest rates and yield spreads are low and investors search for higher returns, and when there is a large institutional demand for assets,” according to the report. “The current environment in advanced economies seems conducive to further growth of shadow banking.”

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Re: Perspectives on the global economic changes

Postby Austin » 01 Nov 2014 21:09

Looks like BOJ gone crazy on QE and introduced more stimulus but the Stock Markets are happy :)

On Friday, the Japanese regulator decided on additional measures for easing monetary policy, the bank will increase the monetary base by 80 trillion yen annually (about 730 billion dollars), compared to 60-70 trillion yen earlier. Bank of Japan intends to continue soft monetary policy aimed at achieving the inflation target of 2% for the required period.

http://ria.ru/economy/20141031/1031237011.html

I wonder how an economy with Public debt of 230 % of GDP afford such stimulus , So they happily print money till Eternity ?

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Re: Perspectives on the global economic changes

Postby hanumadu » 01 Nov 2014 23:11

After Japan, will it be Europe's turn next?


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Re: Perspectives on the global economic changes

Postby UlanBatori » 04 Nov 2014 00:54

With all this gloom-n-doom here, I am unable to understand why gold gold mining stock is down like 70+ percent from 2 saal pehle, and the ishtock market is up accordingly, AND oil is down. OK, some of this is midterm-election-eve manipulation, but by whom? Who manipulated world oil prices by so much? And why aren't ppl buying gold like crazy, given all these "Quantitative Easings"?

Pls explain as 2 a 4-yr-old. Then I can get someone to explain it to me.

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Re: Perspectives on the global economic changes

Postby panduranghari » 04 Nov 2014 19:46

re - OIL.

viewtopic.php?p=1524624#p1524624

Oil has been the key to the fantastic success of the West over this period of time. Therefore it follows that the true VALUE of oil is immeasurable! We complain when the cost of a gallon of gas rises to nearly $5, but can we possibly know the true VALUE until we have to do without?

The COST of living without oil is perhaps the greatest burden [PUNISHMENT] that can be placed on a modern nation. For this reason, oil is the MOST POLITICAL TANGIBLE.

In the past, nations have paid a VERY HIGH PRICE for oil when man made conditions prohibited (rather than ENABLED) the "CHEAP flow" of oil. South Africa under sanctions (1985-1991) is one example.

So what is the TRUE PRICE of oil? What is the TRUE VALUE of oil? Is it $3 per gallon of gasoline? Or is it the VERY DEAR PRICE we would pay if it wasn't flowing our way?

What is a responsible government to do? It must look to the future and SECURE the inflow of oil. Why has the US stopped looking for new oil in the ground? Because long ago it SECURED the "CHEAP flow" of oil! A man made phenomenon! The future "CHEAP flow" of oil can only be secured three ways. 1.) Own the oil in the ground,
2.) amass wealth reserves desired by those who own the oil in the ground, or
3.) fool (trick) OTHERS into paying the VERY HIGH PRICE (in gold) for the "CHEAP flow" of oil to your shores.

Arabia has oil in the ground. It does not have gold in the ground. But it does VALUE the precious metal very highly. It always has. Even BEFORE oil became WEALTH.

The exploding world dependence on the "CHEAP flow" of oil has brought GREAT WEALTH to Arabia. Up until 1971 the ease of trading oil for dollars was accepted because these "casino chips" could be exchanged at the CASHIER WINDOW (the gold window). Then, in 1971 the "CASHIER" was closed for good.

What followed was "the oil crisis of 1973".
From Wikipedia:
End of Bretton Woods

On August 15, 1971, the United States pulled out of the Bretton Woods Accord taking the US off the Gold Exchange Standard (whereby only the value of the US dollar had been pegged to the price of gold and all other currencies were pegged to the US dollar), allowing the dollar to "float". Shortly thereafter, Britain followed, floating the pound sterling. The industrialized nations followed suit with their respective currencies. In anticipation of the fluctuation of currencies as they stabilized against each other, the industrialized nations also increased their reserves (printing money) in amounts far greater than ever before. The result was a depreciation of the value of the US dollar, as well as the other currencies of the world. Because oil was priced in dollars, this meant that oil producers were receiving less real income for the same price. The OPEC cartel issued a joint communique stating that forthwith they would price a barrel of oil against gold. This led to the "Oil Shock" of the mid-seventies... Until the Oil Shock, the price remained fairly stable versus other currencies and commodities, but suddenly became extremely volatile thereafter... The substantial price increases of 1973-74 largely caught up their incomes to Bretton Woods levels in terms of other commodities such as gold.

Then, in the early 1980's, the situation was brought back under control. A leveraged system of paper gold forward sales was set up to keep the price of gold (DOWN) under control, so that OTHER people's PHYSICAL gold could be shipped to Arabia at a low DOLLAR price. This would satisfy "the owners of the oil in the ground" and SECURE the "CHEAP flow" of oil to the US who had the SOLE privilege of creating those dollars out of thin air.

From Another:USA GOLD
It's more complicated than this but here is a close explanation. In the beginning the CBs didn't sell their own gold. They ( thru third party ) found someone else who had bullion. That "party" sold to a broker who sold forward for a mine or speculator or government ) . In the end the 3rd party had the backing from the broker that he had backing from the CB to supply physical if needed to put out a fire. The CB held a very private note from the broker as insurance and was paid a small fee. This process mobilized free standing bullion outside the government stockpiles. The world currency gold price was kept down as large existing physical stockpiles were replaced by notes of future delivery from the merchant banks ( and anyone else who wanted to play ) .

This whole game was not lost on some very large buyers WHO WANTED GOLD BUT DIDN'T WANT IT'S MOVEMENT TO BE SEEN! Why not move a little closer to the action by offering cash directly to the broker/bank ( to be lent out ) in return for a future gold note that was indirectly backed by the CBs. That "paper gold" was just like gold in the bank. The CBs liked it because no one had to move gold and it took BIG buying power off the market that would have gunned the price! It also worked well as a vehicle to cycle oil wealth for gold as a complete paper deal.

So, in 1983 Barrick Gold was formed...

And once again physical gold was flowing INTO Arabia and "CHEAP" oil was flowing OUT. But SOMEONE was paying the TRUE PRICE for this oil.

Then, probably sometime in the early 1990's, a group of Europeans that had been planning for a single currency in the "Eurozone" with the ECU that began in 1979 (at the height of the dollar crisis) and later became the EMU and the Euro, came to the realization that the path the dollar (and the entire international monetary and financial system) was on was essentially a DEAD END. It was not sustainable! At some point in the future this system, and its MONETARY FOUNDATION, would (MUST) collapse. This was not a plot to collapse the dollar. It was, instead, a RECOGNITION of the inevitable!


So what is a responsible government to do?
"It must look to the future and SECURE the inflow of oil." And given the three choices listed above, ONLY ONE COULD WORK! [2.) amass wealth reserves desired by those who own the oil in the ground.]

So the Euro was founded with the requirement that gold reserves MUST be (PHYSICALLY) held and MUST be marked to the (RISING) market price of gold. What the Euro architects recognized was that this new dollar PAPER gold market would (MUST) at some point transition into a purely PHYSICAL gold market. This was a MATHEMATICAL CERTAINTY.

link

Everyone knows where we have been. Let's see where we are going!

It was once said that "gold and oil can never flow in the same direction". If the current price of oil doesn't change soon we will no doubt run out of gold.

This line of thinking is very real in the world today but it is never discussed openly. You see oil flow is the key to gold flow. It is the movement of gold in the hidden background that has kept oil at these low prices. Not military might, not a strong US 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. No one could make the South African / Asian connection when the question was asked, "how could LBMA do so many gold deals and not impact the price". That's because oil is being partially used to pay for gold! ["CHEAP oil to the West" was the HIDDEN part of the price Arabia was paying for large quantities of PHYSICAL gold. HIDDEN --"gold hiding in oil"-- and did not affect the VISIBLE $demand fundamentals because most Westerners were perfectly happy with PAPER 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.

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Re: Perspectives on the global economic changes

Postby panduranghari » 04 Nov 2014 23:10


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Re: Perspectives on the global economic changes

Postby panduranghari » 04 Nov 2014 23:16

re- Gold and the apparent rise or no rise

viewtopic.php?p=1480886#p1480886

Theo_Fidel

Re: Perspectives on the global economic changes

Postby Theo_Fidel » 05 Nov 2014 03:56

don't hold your breath saar. We would not want to lose you prematurely.... :)

UlanBatori wrote:With all this gloom-n-doom here, I am unable to understand why gold gold mining stock is down like 70+ percent from 2 saal pehle, and the ishtock market is up accordingly, AND oil is down. OK, some of this is midterm-election-eve manipulation, but by whom? Who manipulated world oil prices by so much? And why aren't ppl buying gold like crazy, given all these "Quantitative Easings"?

Pls explain as 2 a 4-yr-old. Then I can get someone to explain it to me.

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Re: Perspectives on the global economic changes

Postby panduranghari » 06 Nov 2014 14:08

Austin wrote:Looks like BOJ gone crazy on QE and introduced more stimulus but the Stock Markets are happy :)

On Friday, the Japanese regulator decided on additional measures for easing monetary policy, the bank will increase the monetary base by 80 trillion yen annually (about 730 billion dollars), compared to 60-70 trillion yen earlier. Bank of Japan intends to continue soft monetary policy aimed at achieving the inflation target of 2% for the required period.

http://ria.ru/economy/20141031/1031237011.html

I wonder how an economy with Public debt of 230 % of GDP afford such stimulus , So they happily print money till Eternity ?



Either they will or won't taper either in the next month or any month thereafter and if they do taper whenever they taper they'll untaper shortly thereafter as the taper will have a deleterious effect on the economy unlike the untapered effect which will happen shortly thereafter, anyhow when they revers whatever taper with an untpaer which they'll call something other than something with or without the word, taper.

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Re: Perspectives on the global economic changes

Postby Austin » 06 Nov 2014 20:14

^^^ :D

This article reflect the state Japan is in

Anatomy Of A Failing State: Japan's Budgetary Nightmare

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Re: Perspectives on the global economic changes

Postby panduranghari » 07 Nov 2014 15:14

Japan is irreversibly kaput.

This is a very useful chart. most negative GOFO rates since 2001. :eek:

Image
From Zero Hedge
Before we get into the implications of this rather historic inversion, let's review the basics:

What is GOFO (Gold Forward Offered Rates)?

GOFO stands for Gold Forward Offered Rate. These are rates at which contributors are prepared to lend gold on a swap against US dollars. Quotes are made for 1-, 2-, 3-, 6- and 12-month periods.

Who provides the rates?

The contributors are the Market Making Members of the LBMA: The Bank of Nova Scotia–ScotiaMocatta, Barclays Bank Plc, Deutsche Bank AG, HSBC Bank USA London Branch, Goldman Sachs, JP Morgan Chase Bank, Société Générale and UBS AG.

When are the rates quoted?

The means are set at 11 am London time. These are the rates shown on the LBMA website. To show derived gold lease rates, the GOFO means are subtracted from the corresponding values of the LIBOR (London Interbank Offered Rates) US dollar means. These rates are also available on the LBMA website.

How are the GOFO means established?

At 10.30 am London time, the Reuters page is cleared of all rates. Contributors then enter their rates for all time periods. A minimum of six contributors must enter rates in order for the means to be calculated. At 11.00 am, the mean is established for each maturity by discarding the highest and lowest quotations in each period and averaging the remaining rates.

What are some uses for GOFO means in the market?

They provide a basis for some finance and loan agreements as well as for the settlement of gold Interest Rate Swaps.

* * *

Unpleasant similarities with Libor and most other fixed (literally and metaphorically) rates aside, what is known is that under normal market conditions, GOFO is always positive, or in other words gold serves as a money-equivalent collateral for a pseudo-secured loan against paper fiat (USD in this case) hence the low interest rate.

Sometimes, however, normality inverts and the rate goes negative and as such serves as a useful indicator of gold market dislocations. Thus, while disagreements exists, one can safely say that what GOFO is, is simply a blended indicator of liquidity, counterparty or collateral (physical availability) stress in the gold market. Since it is next to impossible to isolate just which component is causing the indicated disturbance, it is prudent to be on watch for all three.

The best known example of a complete collapse in the GOFO rate, is the September 1999 Washington Agreement on Gold, which in brief, was an imposed "cap" on gold sales (mostly European in the afteramth of Gordon Brown's idiotic sale of UK's gold) to the tune of 400 tons per year. The tangent of the Washington Agreement is quite interesting in its own right. Recall the words of Milling-Stanley from the 12th Nikkei Gold Conference:

"Central bank independence is enshrined in law in many countries, and central bankers tend to be independent thinkers. It is worth asking why such a large group of them decided to associate themselves with this highly unusual agreement...At the same time, through our close contacts with central banks, the Council has been aware that some of the biggest holders have for some time been concerned about the impact on the gold price—and thus on the value of their gold reserves—of unfounded rumours, and about the use of official gold for speculative purposes.

"Several of the central bankers involved had said repeatedly they had no intention of selling any of their gold, but they had been saying that as individuals—and no-one had taken any notice. I think that is what Mr. Duisenberg meant when he said they were making this statement to clarify their intentions."

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Re: Perspectives on the global economic changes

Postby kmkraoind » 07 Nov 2014 17:47

panduranghari wrote:Japan is irreversibly kaput.

This is a very useful chart. most negative GOFO rates since 2001. :eek:


Can you please explain what is the relation between Japan and GOFO. TIA.

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Re: Perspectives on the global economic changes

Postby Austin » 08 Nov 2014 09:09

Greenspan's Stunning Admission: "Gold Is Currency; No Fiat Currency, Including the Dollar, Can Match It"

In that link check Ben being questioned by Ron Paul on Gold , Look at his reaction :lol:

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Re: Perspectives on the global economic changes

Postby chola » 08 Nov 2014 20:13

We desis love gold which is why we want to believe that gold is the only real currency.

The truth is if the world were on a pure gold standard, the world would never have a middle class or a modern economy for that matter.

As an Indian, we should pray that gold does not become a standard or else India stays poor for eternity.

A modern economy creates wealth by the goods and wealth it can produce not by the amount of gold it can dig out of the ground.

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Re: Perspectives on the global economic changes

Postby vishvak » 09 Nov 2014 00:23

Chola ji, there is a lot of discussion about Gold in this very thread. Not that I disagree, many different uses of Gold that I can recollect:
(*) Traditional reserve. Even the poor who can't participate in various economic activity can save Gold and sell it when needed.
(*) Used as part payment to buy oil (for real) - keeps real price of oil below certain value globally.
(*) Used as leverage in gold exchanges across the world, most notable London gold bullion.
(*) Jewelry, gold ornaments industry in India.
(*) National reserve. Few countries still have gold as part of overall reserve to back currency. India doesn't.
(*) Can't ignore history - so can't avoid mentioning here. When nations were getting industrialized, the gold was the international currency during international industrialization. The British were ruling India then, and refused to hand over Indian gold to Indians against demands of Indian industries. (Gave silver instead, thereby cutting Indian industry off industrialization on one hand and flooding Indian markets with silver which is not as worthwhile a currency as gold was then.)
(*) Some people predict that actual value of gold, in future, will be a lot higher than face value but not much gold will be available in market.

Then there is also paper gold schemes, that work more like any hedge fund schemes - making money out of available gold reserves. But can't return gold in case there is no more gold available in pool and therefore will pay cash in such a case.

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Re: Perspectives on the global economic changes

Postby member_28797 » 09 Nov 2014 07:44

chola wrote:We desis love gold which is why we want to believe that gold is the only real currency.

The truth is if the world were on a pure gold standard, the world would never have a middle class or a modern economy for that matter.

As an Indian, we should pray that gold does not become a standard or else India stays poor for eternity.

A modern economy creates wealth by the goods and wealth it can produce not by the amount of gold it can dig out of the ground.


1. But gold is the real currency, paper is just paper.
2. If it wasn't for colonialism and mass slavery amreeka and britain would never be a superpower :P . Not long ago, paper money was backed by gold and the middle class was still thriving in certain countries. The real problem lies with mindless printing of paper money (specifically US dollars) that screws up the economic system. You can't blame gold for that.
3. I bet the socialist marxist schemes don't have anything to do with India staying poor. It's all gold wonlee. By the way, why is your near and dear china that you love and defend so much buying so much gold and silver in secret? Or is it that chinese buying gold is some super duper chanakyaan strat-e-gee but Indians buying gold are just a bunch of dumbos that need a strict lesson on what to buy and what not to.
4. Most of the gold is imported in India, if India dug gold from the ground it won't have an inflated imported bill. Besides, India already creates goods and services. Although admittedly it's lagging in the amount of goods (read finished goods) it produces as compared to the soopal doopal cheen.

And please stop writing "WE" as if we are some little tribal robots belonging to a tiny village. There are 1.23 billions of Indians and they definitely don't think the same thing. Besides I hope you do realize that a very very small number of Indians actually come to this forum and even a smaller number would have the fortune to read your comment, so your attempts to curb gold imports by making such statements won't really dent the gold imports in India.
Gold imports are just an excuse used by the previous incompetent govt. to hide failure to generate wealth in any other sector. And how would it? with corruption and third rate NGO-giri being it's goals instead of planning and executions.

More than 100 crucial infrastructural projects were hanging since the last 10 years under the glorious secular regime. Bet that didn't had anything to do with growing CAD.

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Re: Perspectives on the global economic changes

Postby Neshant » 09 Nov 2014 08:19

Once a select group of individuals sitting up in ivory towers get control of the monetary system, they tend to delude themselves into believing they are helping what ails the economy by fiddling around with interest rates (aka price fixing) and money printing (aka counterfeiting).

At a deeper level, this control over the monetary system has been used (more like abused) to the benefit of those politically connected with the money printers - getting backdoor deals, bailouts, rent seeking behavior and what President Andrew Jackson of the US called "a withdrawl from the honest pursuit of industry". Basically the banking industry has morphed into a useless middleman scheme which produces nothing of value but subsists parasitically on productive society.

In even more recent times, its been used to promote immunity against prosecution of crimes committed by the said private bankers who use the power over the issuance of money to corrupt legislators and politicians and pack their ranks with their ex-employees.

Gold is fortunately the only accountant out there which every now and then steps in to threaten the end of the whole corrupt scheme.

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Re: Perspectives on the global economic changes

Postby shyam » 09 Nov 2014 12:23

People who believe gold is useless should explain why GOTUS did not formally sell off their gold reserves in Fort Knox to raise capital during financial crisis instead of raising public debt?

Or why Bank of England had to publish the a photo of Queen inspecting the gold in their vault, and a video report to convince the public that they have gold in their vaults. As the father of modern economy, they must have just said "what gold?, we don't care".

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Re: Perspectives on the global economic changes

Postby shyam » 09 Nov 2014 12:25

There is a very high chance that a big chunk of the QE money printed by Japan will end up in India as their investment.

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Re: Perspectives on the global economic changes

Postby Vriksh » 09 Nov 2014 14:35

Actually the only real currency is human effort. Everything else is measuring this even Gold. Question is how can we objectively measure and allocate value or human/other effort which can then be traded across borders and time. For eg An Einstein/Ramanujam's human effort for discovering relativity/number theory would be very very large.

Essentially any human (or for that matter the ecosystem as a whole plants and animals by the very act of living are creating order). We need a method to objectively quantify this effort in helping organize information and create order from disorder by using Energy from the sun and use it as currency.

For example Oil is a form of organization harvested by the earth's ecosystem millions of years ago which is being traded/utilized today. Any nation that creates these reserves of organization (essentially a form of anti-chaos/energy storage) is automatically rich. Anything that increases the throughput of energy in the system is creating wealth.

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Re: Perspectives on the global economic changes

Postby member_28797 » 09 Nov 2014 23:35

Vriksh wrote:Actually the only real currency is human effort. Everything else is measuring this even Gold. Question is how can we objectively measure and allocate value or human/other effort which can then be traded across borders and time. For eg An Einstein/Ramanujam's human effort for discovering relativity/number theory would be very very large.

Essentially any human (or for that matter the ecosystem as a whole plants and animals by the very act of living are creating order). We need a method to objectively quantify this effort in helping organize information and create order from disorder by using Energy from the sun and use it as currency.

For example Oil is a form of organization harvested by the earth's ecosystem millions of years ago which is being traded/utilized today. Any nation that creates these reserves of organization (essentially a form of anti-chaos/energy storage) is automatically rich. Anything that increases the throughput of energy in the system is creating wealth.


That's a nice ideological speech but doesn't aid the current debate being flaunted by some here. Gold (and silver and other precious metals)
are the real currency and are definitely more credible than paper. Paper doesn't has any value when it is not backed by anything. It's like saying a house contract is "real" but the house with which it is backed is not.

When in reality the contract is merely a representation that the house actually belongs to it's owners. Without the house, the contract is as good as a toilet paper. You can print/xerox countless contracts, but without the house, they are meaningless. Paper currency is similar to the contract.

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Re: Perspectives on the global economic changes

Postby panduranghari » 09 Nov 2014 23:39

kmkraoind wrote:
panduranghari wrote:Japan is irreversibly kaput.

This is a very useful chart. most negative GOFO rates since 2001. :eek:


Can you please explain what is the relation between Japan and GOFO. TIA.


Some people claim Kuroda - governor at BOJ is working with Yellen at UsFR. That's CT.
(Sidebar - http://www.zerohedge.com/news/2014-11-0 ... re-banks-f Every Abdul, hussain and gafoor has claimed gold market can never be manipulated just like LIBOR market can never be manipulated. But even UBS has to finally acknowledge this and pay the fine)

When US gives up or claims about giving up QE, Japan takes up the slack. Though not directly connected, yen has been historically used for carry trade.
Here is some information about carry trade -

What is the carry trade? It’s the borrowing of a currency in a low interest rate country, converting it to a currency in a higher interest rate country and investing it in the highest rated bonds of that country. The big trading outfits do this with leverage of 100 or 300 to one. This causes important moves in the financial markets, made possible by the trillions of dollars of central bank money creation.

The monetary stimulus in Japan is aimed to produce a cheaper yen, and thus a stronger dollar. That causes the U.S. bond market to rise, bond yields to decline, commodity prices to plunge, and precious metals prices to decline. If you are in any of these investments, you must know what drives their prices.

Here is how the “yen carry trade,” a favorite currency for the trade, basically works now:

Hedge funds and other very big traders borrow the yen at very, very low interest rates now approaching zero.
The yen are converted to dollars, which are invested in U.S. Treasuries at a much higher yield than the interest cost for the borrowed yen. That creates a “positive carry” because of the differential in interest rates.
The buying drives up U.S. bond prices. The traders accrue big profits, when done with high leverage, assuming the yen value doesn’t rise.
Additional profits are made when a) The dollar rises vs. the yen as the BOJ intends, b) U.S. Treasuries rise in price (as is happening)
Triple Profits: A leverage 100:1 means that a 1% rise in the value of the dollar vs. yen doubles the value of the equity investment. An additional profit is made if the U.S. T-bonds rise in price as they have done. Further profits are made from the positive carry, i.e. when the yield on the T-bonds is greater than the interest cost on the yen. That’s a “triple profit.”
So far, so good. And that’s what is happening now. Some of the profits are probably reinvested in the stock market for diversification.


Now the non CT. Someone once said - If everyone is thinking alike, then no one is thinking.

Gold is close to money substitute. (I can hear heckling) when gold goes into backwardation - I.e. spot price is higher than the price of the futures contract determined price. It means people are not willing to accept the futures price as a realistic price of gold. They are more inclined to believe todays price. Unfortunately for the gold bug crowd, price discovery for gold happens in the paper market which includes a lot of futures contract. So even if there is a disconnect, as long as people trade futures contract, the price discovery is not happening in the physical gold market. Most miners are finding mining gold at $1200 hard. At 1000$ it will lead to shut downs. At the end of the day the futures contract is settled in paper, however big ETF's like GLD have to offer physical if the demand is made. The minimum investment to be eligible for getting physical from ETF's like GLD is 100,000 shares which in current market value comes to about $11,200,000. So there is some physical gold they need to hold.

Coming back to Japan

Image

Image

Gold price in USD falling while gold price in JPY not. Japan is doing the same like US. now its called credit easing. In the past it was called QE. For the size of Japanese economy, QE of the level they are doing now is madness. And the local market within Japan has seen through it. No wonder the Japanese are buying gold. Unlike Americans who still believe in paper or they just do not have the money.

I am expecting Japan like scenario everywhere in the not to distant future. It will happen in India too. Watch for the government of India recapitalising the nationalised banks next year. They will also call it by some fancy name.

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Re: Perspectives on the global economic changes

Postby panduranghari » 09 Nov 2014 23:48

Vriksh wrote:Actually the only real currency is human effort. .


Very well said. And hence Indian population is our real wealth. Unlike what the west preaches as population is the cause of poverty in India.

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Re: Perspectives on the global economic changes

Postby vishvak » 10 Nov 2014 00:07

All countries From Japan to Gulf are buying gold including China - except Indian where gold import is taxed. Russia is buying gold too.

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Re: Perspectives on the global economic changes

Postby Liu » 10 Nov 2014 06:46

panduranghari wrote:
Vriksh wrote:Actually the only real currency is human effort. .

Very well said. And hence Indian population is our real wealth. Unlike what the west preaches as population is the cause of poverty in India.

all currency is human efficint effort.....indian "human effort" is by far more inefficient than advanced societies. 50+ of indian labour work in traditonal agri 。even those labor in india industry sector have much less than efficiency than advanced economies,due to the backward infrastructure and facilities in india. before india modernizes its infrastructure and industry facilities, indian "human effort" will keep much less efficient than advanced economy and indian will keep poorer..
Last edited by Liu on 10 Nov 2014 07:28, edited 2 times in total.

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Re: Perspectives on the global economic changes

Postby Vriksh » 10 Nov 2014 06:55

narendranaik wrote:
Vriksh wrote:Actually the only real currency is human effort. Everything else is measuring this even Gold. Question is how can we objectively measure and allocate value or human/other effort which can then be traded across borders and time. For eg An Einstein/Ramanujam's human effort for discovering relativity/number theory would be very very large.....


That's a nice ideological speech but doesn't aid the current debate being flaunted by some here. Gold (and silver and other precious metals)
are the real currency and are definitely more credible than paper. Paper doesn't has any value when it is not backed by anything. It's like saying a house contract is "real" but the house with which it is backed is not.

When in reality the contract is merely a representation that the house actually belongs to it's owners. Without the house, the contract is as good as a toilet paper. You can print/xerox countless contracts, but without the house, they are meaningless. Paper currency is similar to the contract.


Why is gold so valuable... is it because it is shiny or because we use it to measure human effort. The answer is the latter 1) Back in the day it used to take 100 mandays to extract and deploy 1g of gold and therefore if someone owned 1 g of gold he/she could trade it for 100 mandays of work say like building a house.

So really speaking we are now simply using various currencies/gold to measure and trade human effort. USA has created tremendous value over the last 200 years it is visible in the freeways, the cities and the universities that exist out there, so has China and many other nations. Indian human effort measured as gold was shipped out the country for nearly free during British times and we are poor today since the reserves of human effort we had built up was destroyed.

The day we find a way to manufacture gold (looks extremely difficult) then its value will automatically drop in terms of mandays required. This was essentially what Adam Smith propounds. The legitimate question is what happens when we have excess amount of human effort available. At that time we will not be able to deploy the human labor to create value and very likely the excess labor will consume what has already been builtup.

Liu is not wrong... 800 years of Islamic invasions + 200 years of Colonial rule + last 60 years of congressi rule have been a disaster as far as creating/supporting systems that improves Indian people's efficiency. Our population is essentially existing without doing the kind of useful work it has been capable of doing in the past. Though it is not too late even now. India was one the most advanced civilizations before and will soon get there again.


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