Perspectives on the global economic changes

[panduranghari]

Can you give more details
This is good.

In 1995 they took some decision which created the rivalry between Eu and US

It's a long reply but do read it to the end. Hopefully it will clarify the idea.

There were 2 monetary conferences held in Genoa. One in 1445 and second in 1922. Why are they important? It will explain many things wrong with the world today.

And why these 2 European conferences? The first one made colonialism the cornerstone for the financial expansion of Europe. The second one ensured when the overt colonialism was disappearing, the covert colonialism was sustained through economic warfare.

Were they successful. Yes. Up to an extent.

Aurobindo said don't expect the 1940-1945 war between England and Germany is being fought for freedom of India. The freedom of India is a coincidental outcome of the war. It makes neither country our friend.

Let's talk about the 1922 conference first.

Let me use an example first.

Assume for a minute the world has no currency. All finances are devised either as goods/services and gold. Let's use example of India and Pakistan. India produces many goods/services that pak wants. Pak does not produce anything except terrorism. In the absence of any goods/services provided by Pakistan, they have to pay India in gold. The gold keeps flowing out of Pak into India until they have no more left or they start providing goods/services India wants.

There is a mathematical limit where this equation becomes unbalanced as GOLD is given an arbitrary value. At a high enough price, the balance of payments owed to India by Pak can be neutralised and reversed too. But the gold has been ascribed a price and the constraint on price has made the natural ability of gold to act like a spur and brake vestigial.

After 1914-1918 war in Europe, European economy was decimated. American economy being big and rich produced goods for Europe and the European gold flowed enmasse to the US. The US instead of allowing the gold to act like a spur and brake, sterilised the gold flow. That means, they took the gold out of the equation by providing more currency.

Federal Reserve Sterilization of Gold Flows

When a country imported gold, its central bank could sterilize the effect of the gold inflow on the monetary base by selling securities on the open market…

Sterilization of gold flows shifted the burden of the adjustment of international prices to other gold standard countries. When a country sterilized gold imports, it precluded the gold flow from increasing the domestic price level and from mitigating the deflationary tendency in the rest of the world. Under the international gold standard, no country had absolute control over its domestic price level in the long run; but a large country could influence whether its price level converged toward the world price level or world prices converged toward the domestic price level…

Traditionally, economists and politicians have criticized the Federal Reserve for not playing by the strict rules of the gold standard during the 1920s.

…Federal Reserve sterilization in the early 1920s probably served the best interests of the United States.

-Leland Crabbe, Washington, D.C., 1988
Board of Governors of the Federal Reserve System

The price mechanism is the governor in the delicate balance between production and consumption. It is what keeps the economy in a sustainable balance somewhere between starving shortages and ruinous waste. Case to the point being janitors in Europe can afford to travel in the palace of wheels train in Rajasthan but you have to be relatively affluent to be able to do that if you live in India. And the flow of unambiguous real gold has always been a key international transmitter of the price mechanism because gold is the physical-monetary proxy for economic goods and services, subject to the same physical limitations as goods and services. Modern currency, on the other hand, even though it flows and trades like a commodity, is subject only to political limitations, not physical ones, and is therefore qualitatively different (an inferior, infertile transmission medium) from the perspective of the global economy.

The flow of gold is the flow of real capital, even if today it is obscured by an electronic matrix of imaginary capital (currency). Today's debt (the bond market) is imaginary capital in that it cannot perform in real terms; with "real terms" defined as economic goods and services (under current economic conditions) plus gold—and this part is important—at today's prices. It is all nominal debt, but the price of goods and services—as well as the price of gold—is what connects it to reality. And at today's prices of each, bonds are imaginary capital. It is our obsessive compulsion to centrally control the price mechanism that sterilizes the vital signals that would otherwise be transmitted to billions of individual market participants keeping the monetary and physical planes connected.

The outflow of real capital from any zone signals the need to produce more and consume less. The inflow of real capital signals the need to consume more and produce less. The price mechanism transmits this signal to individual actors in the economy. The inflow of real capital will raise prices vis-à-vis real capital, which makes exports more expensive abroad, lowering exports and raising imports. The country with an inflow of real capital will have to start consuming more of its own production or else it will just pile up and rot. Case to the point- More people in Greece bought German marquee cars in the boom years than Germans did in Germany.

Likewise, the country with an outflow of real capital will have to start producing more than it consumes. Again, this signal is transmitted to individual actors via the price mechanism. With less real capital upon which credit flourishes, credit will contract, general price levels vis-à-vis real capital will drop, the purchasing power of real capital will rise, and real capital will become more expensive in terms of goods and services. Exports will rise because exportable goods will fetch a higher price abroad, imports will slow because local prices have fallen versus the vanishing real capital, and people will have to begin producing more than they consume in order to survive.

The monetary plane, that electronic matrix of imaginary capital, obscures the simplicity of what is actually happening today, and it does so by design. But it's really simple, and hopefully I can help you see through all the noise. Everyone knows that the sovereign debt in Europe is a problem today. But all we hear are complex solutions proposed within the monetary realm. Consolidate this paper, roll over that paper, haircuts, pay cuts, job cuts, interest rate cuts, print, sell, buy, repo, reverse repo, reverse-reverse repo, rescue funds, POMO, SOMA, EFSF, SMP, EMP, ETA, ESPN; it can make your head spin after a while.

The lesson from the monetary changes made in the post-war 20s is that if you want the debtors to ever be able to repay their debts in real terms, you do not sterilize the vital spur and brake function of gold by locking its purchasing power. It is the price mechanism—price changes in goods and services—that transmits the arbitrage signal that causes gold to physically flow to where it has the greatest purchasing power. For a struggling economy to grow and expand to a point at which it can repay its debts, the gold not only needs to flow, but it must be a fertile member of the economic ecosystem so that it can perform its vital function.

Once sterilized, gold flowed uncontrolled into the US right up until the whole system collapsed and beyond. This would be similar to Pak selling gold at today’s prices to pay off its debt. The gold would quickly be gone and then the economy would collapse. The sterilization of gold may be at least partly responsible for the roaring 20s, the Great Depression, the rise of Hitler and the Second World War.

You cannot get something from someone that they don't have. In order to pay its debt in real terms, Pak needs to ultimately get back to producing more than it consumes. And as counterintuitive as this may sound, they will first need to run a BOP surplus in order to get there. You do that by exporting more value than you import.

I realize how backward this sounds, but that’s only because we haven’t seen gold function properly in more than 90 years—beyond living memory. And this is why the limited stock of physical gold is far more valuable than the paper gold promises of New York and London would have you believe. This is why Countries called the PIIGS will never part with its gold at today's prices. It is far more valuable. PIIGS ultimately needs to get back to importing gold which is what happens when you produce more than you consume. But you can't get back to that place by spewing your real capital at imaginary capital prices.

The 1922 conference they decided its cumbersome to move gold from Europe to US, so they made paper promissory notes to be used in lieu of real gold. The paper promissory notes were approved by US federal reserve and Bank of England.

What the 1922 Genoa Conference did was to institutionalize the "sterilization" of gold for the rest of the world through the reserve structure of the international banking system. And this bit of genius was decided by a "committee of experts" from 34 different countries. India was represented too by the Raj. Here we can find more information about the money still owed to India by Britain. They did this by introducing paper gold—or paper promises of gold—into the international banking system as reserves equal to the gold itself. This wasn't the first paper gold, but it was the first time that specific paper gold (that from New York and London) was used as an equal reserve upon which credit can be expanded. What is acceptable as international reserves is critical because trade settlement is a function of the reserves. This conference was the birth of the IMF and it's financial system.

In 1922, they officially changed the old gold standard into the new "gold exchange standard". The stated purpose was "the stabilization of the general price level" which you can feel free to read as code for sterilizing the price mechanism and its elegant governance of an extremely delicate and complex balance. This, of course, gave birth to the arrogance of the managed economy and its attendant science, Keynesian Economics (est. 1936) and Monetarism (est.1956).

With the gold mostly staying put in London and New York, and paper promises of gold flowing as equal base money elsewhere, the monetary base was effectively duplicated. Credit could now expand without ever having to contract, at least not because of the unwanted flow of gold. But of course that's not how it actually works in practice. What Raghuram Rajan, Chidambaram or Montek Ahluwalia do not get is that The "unwanted" flow of gold is not the cause, but the effect of real imbalances (physical, not monetary ones) between international production and consumption. So, obstructing the adjustment mechanism of real gold settlement set the world up for periodic busts, economically destructive punctuations and regular currency devaluations.

To use a modern buzz word, they expanded the 500 year-old international monetary base into a more flexible "basket" that included US dollars, British pound sterling, and gold. They needed Britain as USA did not have the big colonies. As dollars began to accumulate abroad, they would be deposited back in the New York banks in exchange for a book entry reserve on the foreign country's balance sheet. In this way, the unbalanced flow of trade acted only as an occasional spur, and never as a brake. The only brake would now come in the form of destructive crises and abrupt monetary resets.

Now let's look to 1445.

The Hundred Years' War was already more than a hundred years old at that time, as was the economic and monetary havoc that protracted war brings. By 1420, the French currency, the livre, was under severe market pressure to devalue. The King valued his livres at .78 grams of gold each, relative to the gold mark, the contemporary unit of weight for gold. But the marketplace was trading livres at only about 11% of that official value, or .09 grams of gold. The market had already devalued the livre by 90%.

Nicolo Machiavelli set up the bank of genoa who managed the French economy very much like the central bank today. They decided, in 1445, after deliberation to use the gold standard pure and simple.

Soon the banks were required to settle credit imbalances in gold, the new banking system reserve, and to deposit one hundred gold pieces as security for fines in case they broke the rules. And all bank drafts drawn on Genoa abroad had to also be denominated in gold, thus making it the new international bank reserve, in the modern sense of the term.

Christopher Columbus who was directly related to the Genoese banker was in effect their travelling salesman. He like the other blood thirsty colonials went in search of Indies with an aim to get more gold for the Genoese bank. This culminated in colonialism like never before and extermination of cultures like never before. Of course the ideals were based on Christian church as the Genoese bank was called the bank of st. George. Right from that era until today they are wrecking havoc in the world. Still the original intent was to stabilise Europe. Which they did by destabilising the whole world.

Now let's jump 5 centuries into the future in 1965 era.

The London Gold Pool was a covert consortium of Western central banks, a 'gentleman's club' of sorts, that agreed to pool its physical gold resources at predetermined ratios in order to manipulate the London gold market. Their goal was to keep the London price of gold in a tight range between $35.00 and $35.20US.

London had become the world's marketplace for gold. For more than a half century nearly 80% of the world's gold production flowed through London. The "London Gold Fix" daily price fixing began in 1919 and only happened once a day until the London Gold Pool collapsed in 1968 and an "afternoon fix" was added to coincide with opening of the New York markets.

In 1944 the Bretton Woods accord pegged foreign currencies to the US dollar and the dollar to gold at the exchange rate of $35.20 per ounce. At that time gold was not traded inside the US, but in London it continued to trade between $35 and $35.20, rarely moving more than a penny or two in a day.

Through the first decade of the Bretton Woods system there was generally a shortage of US dollars overseas which lent automatic support to the fixed gold peg. But the US was running a large trade deficit with the rest of the world and by the late 1950's there was a glut of dollars on the international market which began draining the US Treasury of its gold.

Then, in one day in October 1960, the London gold price, which would normally have made headlines with only a 2 cent rise, rose from $35 to over $40 per ounce! The Kennedy election was just around the corner and in Europe it was believed that Kennedy would likely increase the US trade deficit and dollar printing.

That October night, in an emergency phone call between the Fed and the Bank of England, it was agreed that England would use its official gold to satiate the markets and bring the price back under control. Then, during Kennedy's first year in office the US Treasury Secretary, the Fed and the BOE organized the London Gold Pool consisting of the above plus Germany, France, Switzerland, Italy, Belgium, the Netherlands, and Luxembourg.

The goal of the pool was to hold the price of gold in the range of $35 - $35.20 per ounce so that it would be cheaper for the world to purchase gold through London from non-official sources than to take it out of the US Treasury. At an exchange rate of $35.20, it would cost around $35.40 per ounce to ship it from the US to Europe. So the target range on the London markets acted as a shield against the US official gold which had dwindled substantially over several years.

The way the pool was to work was that the Bank of England would supply physical gold as needed into the public marketplace whenever the price started to rise. The BOE would then be reimbursed its gold from the pool according to each countries agreed percentage. If the price of gold fell below $35 an ounce, the pool would buy gold, increasing the size of the pool and each member's stake accordingly. The stakes and contributions were:

50% - United States of America with $135 million, or 120 metric tons
11% - Germany with $30 million, or 27 metric tons
9% - England with $25 million, or 22 metric tons
9% - Italy with $25 million, or 22 metric tons
9% - France with $25 million, or 22 metric tons
4% - Switzerland with $10 million, or 9 metric tons
4% - Netherlands with $10 million, or 9 metric tons
4% - Belgium with $10 million, or 9 metric tons

Remember this- the gold that these countries owned came from 3 centuries of raping/pillaging the rest if the world.

And since they, as a group, were doing this in secret, it turned out that they were able to make a substantial profit in the first few years of the pool. Since they were buying low and selling high within a fixed trading range that only they knew was fixed, they reaped substantial profits and even increased their reserves as much as FIVE-FOLD by 1965!

But with the cost of US involvement in Vietnam rising substantially from 1965 through 1968, this trend reversed and the dollar came under extreme pressure. From 1965 through late 1967 the gold pool was expending more and more of its own gold just to keep the price in its range. Seeing this, France (who was one of the insiders and knew of the price fixing operation) began demanding more and more gold from the US Treasury for its dollars.

And as this trend progressed, the world was flooded with more and more dollars that were backed by less and less gold, creating an extremely volatile situation. Public demand for gold was rising, the war was escalating, the pound was devalued, France backed out of the gold pool, and in one day, Friday March 8, 1968, 100 tonnes of gold were sold in London, twenty times the normal 5 tonne day.

The following Sunday the US Fed chairman announced that the US would defend the $35 per ounce gold price "down to the last ingot"! Immediately, the US airlifted several planeloads of its gold to London to meet demand. On Wednesday of that week London sold 175 tonnes of gold. Then on Thursday, public demand reached 225 tonnes! That night they declared Friday a "bank holiday" and closed the gold market for two weeks, "upon the request of the United States".

That was the end of the London Gold Pool. The public price of gold quickly rose to $44 an ounce and a new "two tiered" gold price was unveiled; one price for central banks, and a different price for the rest of us. Even today official US gold is still marked to only $42.22 per ounce, $2 LESS than the market price in 1968!

Let's see how this is related to Euro

The Marjolin-Memorandum was the European Commission's first proposal for an economic and monetary union. Robert Marjolin was a French economist and politician involved in the formation of the European Economic Community (EEC). he was an economic advisor to Charles de Gaulle. Charles de Gaulle complained publicly about the exorbitant privilege afforded the US by the use of dollars as international CB reserves, demanded physical gold from the US Treasury, and pulled out of the London Gold Pool which led to the end of Bretton Woods three years later.

2 effects of Rome Accord of 1957, the Marjolin memorandum of 1962 and the signing of Mastricht treaty of 1992 were

1. The purpose of the euro was to provide an international transactional alternative to the dollar.
2. The consequence of the launch of the euro would be that gold would undergo "the most visible transformation since it was first used as money.

And effect we are seeing visibly-

Tuesday, January 1, 2002 - Launch of euro notes and coins
Friday, February 8, 2002 - GOLD ABOVE $300
Monday, December 1, 2003 - GOLD ABOVE $400
Thursday December 1, 2005 - GOLD ABOVE $500
Monday, April 17, 2006 - GOLD ABOVE $600
Tuesday, May 9, 2006 - GOLD ABOVE $700
Friday, November 2, 2007 - GOLD ABOVE $800
Monday, January 14, 2008 - GOLD ABOVE $900
Monday, March 17, 2008 - GOLD ABOVE $1000
Monday, November 9, 2009 - GOLD ABOVE $1100
Tuesday, December 1, 2009 - GOLD ABOVE $1200
Tuesday, September 28, 2010 - GOLD ABOVE $1300
Wednesday, November 9, 2010 - GOLD ABOVE $1400
Wednesday, April 20, 2011 - GOLD ABOVE $1500
Monday, July 18, 2011 - GOLD ABOVE $1600
Monday, August 8, 2011 - GOLD ABOVE $1700
Thursday, August 18, 2011 - GOLD ABOVE $1800

Of course it has fallen down since, but heck let the noise not distract you from the big picture developing right in front of your eyes.

And that's because the price of gold today still does not reflect the physical flow of gold that would normally be a function of arbitrage, with speculators transporting gold to where its purchasing power is highest. The flow of gold today is still sterilized by the paper gold trade within the LBMA bullion banking system that, by a recent LBMA survey, was around 250 times larger than the flow of new gold from the mines. That's a total turnover in the LBMA (sales plus purchases) of 5,400 tonnes every single day. That's the equivalent of every ounce of gold that has ever been mined in all of history changing hands in just the first three months of 2014. That's what the LBMA members, themselves, voluntarily reported. And that's a lot of paper gold that is still sterilizing the economically beneficial price mechanism that physical gold would otherwise be transmitting.

Yet things are changing, even today. That's what the rising price of gold since 2002 tells us. This is about much more than just a rising price. It's not just about a gold or even a commodity bull market. It has everything to do with a changing world financial architecture. Gold's function in the monetary system is changing. And None of the other metals will play a part in this. Take that Max Keiser who promotes the poor mans gold aka silver.

Gold will return to its pre-1922 function, but that does not mean we will return to a pre-1922 gold standard. This post is not about the merits of the gold standard. It is not about praising the hard money camp’s decision in 1445 over the easy money camp’s decision in 1922. It is about the choice of the collective consciousness over the management of men. The pre-22 gold standard, although it allowed gold to function, still carried the same flaw I point to so often; that using the same medium for exchange and savings leads to regular recurring conflicts between the two camps.

This is an important distinction to understand. Gold's true function is relative to the real, physical balance of trade, not man's flawed, political-overvaluation of debt and other monetary schemes. In 1971, the entire planet switched to using a pure token money as its medium of exchange. These symbolic tokens do fail miserably and regularly as a store of value, but they work remarkably well as a medium of exchange. They are not going away.

The whole ECB/Euro architecture was built to turn Genoa 1922 on its head, to reverse the damage done and to restore the function of gold which Jacques Rueff knew all too well. The ECB has one plain and simple mandate, to act with regard to a target CPI that is statistically harmonized across different economies dealing with different economic factors. In other words, the job of the ECB is to maintain stability in the purchasing power of a common currency against the general price level in many different countries.

This simple architecture is designed to work best in the new economic paradigm, where the price and flow of physical gold will automatically regulate and relieve the pressure of economic differences between member states. That's what I said in the earlier posts- no more balance of payments.

http://forums.bharat-rakshak.com/viewto ... 1#p1600001

The new paradigm is settlement.If the ECB had been designed to assist the European economies, it would likely have been given the second mandate, same as the US Fed. The Fed has two mandated targets: CPI and full employment. These dual mandates are like fair weather friends, because when the heat is on—like it is today—they actually become dueling mandates. The ECB, on the other hand, is not mandated to assist the economy like the Fed is.

FOFOA- the blogger states - Basically, this is the direction the Euro group is taking us. This concept was born with little regard for the economic health of Europe. In the future, any countries money or economy can totally fail and the world currency operation will continue. What is being built is a new currency system, built on a world market price for gold.

Too long winded reply, but it took me best part of 2 hours to compose this. I received a lot of help from FOFOA the blogger of great repute.

[panduranghari]

panduranghari , had a question ....lets say of Russia decides to Dump $100 billion of Fed Bond ....can they just buy $100 Billion worth of Gold for that money say in an instant ......is there Gold available in open market for any country to buy ?

What do you think, Saar?

Also I posted this a while back, it was my first post on BRF.

"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

[Follow contemporary writings of "ANOTHER" and "Friend of ANOTHER" at the Gold Trail]

"If ANOTHER's claims are true -- that a consortium of oil states has cornered the gold market (and given the impressive circumstantial evidence, this could very well be the case) -- these "footsteps of giants" become the most salient and persuasive case for gold ownership I have seen in the past decade, if not the full twenty-eight years I have been in the gold business." -- Michael J. Kosares, president of Centennial Precious Metals, Inc.; author of The ABCs of Gold Investing


Foreword
When the once highly secretive London Bullion Market Association (LBMA) -- its venerable membership comprising the world's largest gold dealers -- published its daily clearing volume for the first time in January 1997, it rocked the tight-knit world of international gold traders and analysts.

According to this first of many subsequent LBMA press releases, thirteen hundred tonnes of gold (representing more than 50% of the world's annual mine production) changed hands daily in this fog-shrouded center of the global gold market. This figure represented over $10 billion per day and $4 trillion per year in bullion banking activity!

The gold market had always stood in austere, quiet contrast to the highly charged, mega-volume world of stocks and bonds. Now this first LBMA report forced analysts, investors, and brokers to reassess their understandings of the gold market. While some revelled in the glow of the large LBMA numbers, others began to raise some very important and rather unsettling questions. First, Why was this much gold on the move? Second, Where was all this gold going? And third, Where was all this gold coming from?

Then, in October of 1997 at the internet's only gold discussion forum of the day (hosted by Kitco), a series of remarkable postings began appearing under the pseudonym "ANOTHER", offering plausible answers to those questions. What followed in a seemingly incongruous stream of thought over many months was, in the fullness of time, seen to blend into a logical whole by many astute readers following the complete text. If you are not similarly moved to at least reassess your own view of the international financial scene after reading what's revealed below, then you are either firmly entrenched in your world view, or you've been numbed by too many hours of Wall Street's cheerleader (CNBC) and too many Friday nights with Louis Ruykeyser.

What matters most to us here at USAGOLD is ANOTHER's educational value to all who would take the time to read and think through his (at times) arcane and cryptic commentary of international economic dealings behind-the-scenes. ANOTHER demonstrates a feel for and understanding of the gold and oil markets that indicates connections at the highest echelons of international finance, yet for reasons having to do with his "position," as he has indicated, he wishes to remain anonymous. If his "THOUGHTS!" are theory; they are good theory. If they are speculation; they are reasonable speculation. If they are supposition; they are well-grounded supposition.

In the final analysis, ANOTHER offers one of the more plausible hypotheses for why the financial markets have acted as they have in the past few years, and therein lies his immense value to the reader, no matter who he is. Again, knowledge as is conveyed in his series of "THOUGHTS!" is rarely to be found outside the highest levels of international finance, and is seldom to be seen bandied about on the front pages of The Wall Street Journal or your favorite financial newsletter.

As explained by ANOTHER, an opportunistic arrangement for massive physical gold acquisition among important petroleum producing and exporting nations could be comfortably facilitated within these astronomical trading volumes now being publicly revealed via the LBMA. For the oil states this meant receiving real money (as opposed to government-sponsored paper) in payment for their depleting oil reserves. For the industrialized countries, this meant a continuing supply of cheap oil to fuel the economic boom already in progress. These transactions were to be cleared through the bustling London gold market. Up until late 1996, the volumes were a tightly kept secret so "the deal" proceeded without the knowledge of the general public.

When the LBMA went public with its figures, it raised the shroud off "the deal." But by then, according to ANOTHER, it no longer mattered. The oil states had already (almost inadvertently) cornered the gold market. As implied by ANOTHER's own words, his motivation for these postings was the discovery by "big traders" in the Far East of this opportune facility to buy gold at ever lower prices. Their subsequent heavy purchases of physical gold upset the delicate balance. Now there was no longer a reason to keep it secret, and hence, the revelation of this extraordinary tale.

His choice to use an Internet forum to tell his story is surely a "story" in itself. Many who have read ANOTHER's "THOUGHTS!" speculate why he would choose this particular venue for his revelations. Why not a magazine article? Or a book? Rather than turning this Foreword into a treatise on the merits of the Internet, let it suffice to say that if ANOTHER and his motives are as implied, then there is probably no better venue than the Internet; allowing his "THOUGHTS!" to be disseminated rapidly, anonymously, and without editing by intermediaries. In addition, they could be efficiently targeted to go directly to the core market audience -- the gold analysts, brokers and investors who frequent such Internet sites as this, devoted strictly to the yellow metal. And after all, as a utility, isn't this capacity for specialization and instant communication what the Internet is all about?

We encourage you to find time to read and consider these remarkable postings of ANOTHER with an open mind. In the field of gold and international economics, these posts are sure to remain as fascinating and worthy of careful study as anything you will find on the web today.

A note on the text: No attempt has been made to correct typographical errors, misspellings, punctuation, grammatical and/or textual errors as originally submitted. This archive of ANOTHER's online commentary is presented here in its unedited entirety in the order his "THOUGHTS!" were posted via the Internet -- beginning at the Kitco website (from October 1997 to April 1998) then proudly hosted here at our expanded USAGOLD website (from May 1998 onward) through mutual agreement and cooperation with ANOTHER.

gold trail archives

[Austin]

panduranghari , Check the 2nd half Max interviews Egon von Greyerz of Matterhorn Asset Management in Switzerland about wealth preservation and gold. ( starts at 15:19 )

http://rt.com/shows/keiser-report/episo ... eiser-425/


Mentions paper Gold market is 100X of Physical Gold

[Neshant]

They are in the business of selling gold thus their opinions will reflect just that.

Most commodities are traded in paper at many times their actual availability.

The difference is that most traders don't collect tankers full of coffee or a yard full of timber. Its all settled in cash for obvious reasons - its not portable or easily exchangeable.

With gold however, it is certainly possible to collect a suitcase full of it and move it around.

[panduranghari]

http://forums.bharat-rakshak.com/viewto ... 5#p1470885

I already hold gold with MAM in Zurich. They are as safe as they come. My SHQ holds it with www.goldmoney.com

As I mentioned elsewhere on this thread- I hold 95% assets in physical gold. I have talked the talked and walked the walk.

[Austin]

They are in the business of selling gold thus their opinions will reflect just that.

I think Max clarified that his organisation provides Storage Service for Gold .... they are not into actual business of selling Gold

[Austin]

As I mentioned elsewhere on this thread- I hold 95% assets in physical gold. I have talked the talked and walked the walk.

Yes you did but its bit risky too , I wish things turn out well for you.

Generally its better to spread risk .... I would prefer 50 % Physical Gold , 40 % Govt Bond and rest in Stocks.

BTW does any one know if keeping Gold in State Bank Vault is a safe bet in India ?

[Austin]

makes informative read with stastics

Fisher Outs Bubbles Ben: QE Was A Massive Intended Gift To The 1%

[Austin]

How China Imported A Record $70 Billion In Physical Gold Without Sending The Price Of Gold Soaring

[Austin]

Jim Sinclair: Russia Can Collapse US Economy, Gold Update, Silver is Gold on Steroids & More

[Christopher Sidor]

Too much money chasing few goods and services leads to inflation. Classic case the current ruling dispensation's policies. The reverse is equally bad, Too little money chasing many goods and services leads to deflation. Classic case the Great Depression of 1930s or a very slow variant of the same, Japan in 1990's and first half of 2000's.

In case of Gold standard, the amount of money in circulation is fixed, based on the amount of gold that can be found and dug up from the ground. So any increase in goods and services is automatically restricted not by efficiency of production or by demand but by the amount of gold ore that can be found. If increase in goods and services still happen then they have a tendency to lead to panics and depressions.

Let us take an example, a bloke maufactured something for say 10 units, i.e. His cost price is 10 units in 1928. Let us assume that his selling price is 12 units. His input costs as in raw material is 4 units. His input costs as in manpower is 4 units. 2 units is what he owes as taxes. In case of Gold Standard since the money supply cannot keep up with the rising production, deflation results, and in 1929 the price of his finished good falls to 8 units. This bloke is wiped out. His input costs will not depreciate they still have to be paid. He will lay off people, i.e. His workers, default payment for his raw materials, impacting the raw mterials supply corp, thus forcing layoffs on the raw materials supply corp. He will default on payment on taxes, thus impacting government services and budgets.

Gold as a mechanism especially in currency or payment is horrendeous one.

[Austin]

In case of Gold standard, the amount of money in circulation is fixed, based on the amount of gold that can be found and dug up from the ground. So any increase in goods and services is automatically restricted not by efficiency of production or by demand but by the amount of gold ore that can be found. If increase in goods and services still happen then they have a tendency to lead to panics and depressions.

Well in that case let the free market forces determine the true value of fiat currency rather than CB manipulating it.

If you want fiat currency then as Stockman says
link

Once upon a time we had a far better decision mechanism called the free market and a wonderful financial market governor called the price of money and debt, aka market-based interest rates. Under that regime, savers got an honest reward for deferring current consumption and spending; borrowers faced the true economic cost of debt to finance their projects; speculators faced the risk of sudden, sharp changes in the cost of carry when markets got frothy; and investors discovered in the market a valid “cap rate” against which to figure the return on their investments.

At the end of the day, markets cleared. When society’s pool of economic savings out of current income, as opposed to fiat credit created by the central bank, was insufficient to meet demand for borrowed funds, interest rates rose to induce more savings. At the same time, when investment booms and demand for borrowed funds by speculators got too frisky, interest rates peaked—and even soared into high double digits in the Wall Street call money market, which was the epicenter of capitalist speculation—and thereby rationed available savings and rolled back excess demands for borrowed funds.

Stated differently, the free market of millions of savers, borrowers, investors, intermediaries and speculators was balanced out and stabilized by the mechanism of prices. It thereby had a built-in correction against booms and bubbles—and one that showed no mercy to those who got in over their ski’s when periodic liquidations of financial excesses were rung out of the markets.

The essence of honest free markets for debt, money, equity and everything else that is traded is that there are no bailouts, no moral hazards, no central bank “puts” and safety nets under the stock market, and therefore no unearned windfalls to gamblers and speculators. By contrast, the Greenspan-Bernanke-Yellen style of Keynesian central banking is all about dishonest markets where all prices in the money, debt and related securities markets are rigged, pegged, manipulated and medicated by 12 fallible people—nowadays mostly academic PhDs— who rotate thru the FOMC.

[Austin]

Expert: China’s yuan may become 3rd world reserve currency along with US dollar and euro

BEIJING, March 23. /ITAR-TASS/. China’s yuan (renminbi) may become a third reserve currency in the world in the future, Managing Director and Chief Economist of investment company Sberbank CIB Yevgeny Gavrilenkov said at the 15th governmental Chinese economic development forum in the Chinese capital on Sunday.

“This forecast can be made on figures of domestic economic growth. Probably the country will keep high GDP growth rate and the GDP volume will increase to around 14-16 trillion U.S. dollars for a brief period of time, the indicators comparable to the European Union and the United States. Meanwhile, Chinese securities are more attractable for the countries that have a surplus in economy, particularly the Middle East states, and China will obviously follow the path of securing the country’s assets,” the expert noted.

[chola]

What the US and China have done is acquire the ability to print money without inflation. .

Saar please do point out how that is realistic? I would prefer some proof of that statement. Without having anything tangible to compare the currency to, the idea that there is no inflation with continuous printing for 5 years, is a logical fallacy.

This is the most obvious truth in the face of global economics since the QEs began.

Inflation in the US is at a historic low (so low that the cost of living increase for the Social Security checks could not even kick in.) All this while the Treasury prints US dollars hand over fist for the QEs. When the US Treasury quadrupled its dollar holdings over 6 years and the banks are giving out interest at 0.4% to savers then there is effectively no inflation for creating wealth out of nowhere.

The same goes for the chinis expanding their money supply by 15T (2 X their GDP) and STILL have their currency gaining a third against the US dollar and all the other major currencies since 2007. When a currency gains, it is not inflating.

So tell me how this is not "realistic" when it is staring you in the face?

Creating wealth with paper is not easy but obviously there are nations doing it. In fact, they are kicking us in the face with this fact. They can buy oil and other resource with this minted wealth and it directly screws India over when even Iran won't take rupees.

I want India to be able buy resources with the money we print. If we deem it "unrealistic" then we will forever let the US and PRC corner the world's resources with their "unrealistic" assets.

[chola]

Again, what's with the gold standard fetish?

It cannot operate in a modern economy. If you want to live in a barter economy trading goats and bags of rice for pieces of metal then perhaps it will work for you. But for modern economies, a standard based on one ultimately meaningless commodity is nothing short of stupidity.

Gold is no different from coils of copper, barrels of oil or silos of corn -- all of which are held as backing of currency.

Think about it. If you are a modern economy and you need to inject any sort of stimulus to avoid a recession what do you have to do before you print money? If you're on a gold standard, then you need an appropriate ratio of new gold to be literally dug out of the ground before you can print more money.

Nope, modern economies depend on their national product. It could be gold but it could be anything else that nation produces, including investor confidence.

The US didn't have to wait for the rest of the world to dig up new sources of gold before it printed US dollars to head off a Depression in 2007. It printed money based on what the US produced and that was confidence from the rest of the world. The QEs, for all intents and purposes, ended up as wealth created from the paper.

[Austin]

^^ Yes it did created wealth but for the top 1 % at the cost of others

"QE Was A Massive Gift Intended To Boost Wealth", Fed President Admits

[chola]

^^ Yes it did created wealth but for the top 1 % at the cost of others

"QE Was A Massive Gift Intended To Boost Wealth", Fed President Admits

Sorry but, for the lack of a better term, that is leftist commie bull manure.

One, it created wealth for a vast portion of the middle and working class whose pension funds hold the bonds that the QE bought.

Two, even if only the wealthy were helped, the whole pie had expanded. No existing wealth was transferred from the poor to the rich. The rich would have gotten wealth that was previously not there (but that is already false as stated above)

Three, how did it cost the 99% when there was no inflation and no new taxes were leveled?

[Austin]

Well Leftist or Rightist it quote Bernanke

"The result was there are still many people after the crisis who still feel that it was unfair that some companies got helped and small banks and small business and average families didn’t get direct help,” Bernanke said. “It’s a hard perception to break." The truth, as again revealed by Fisher, will not help with breaking that perception.


What QE did was bailed out the bankers , enriched the speculators and the rich and created many bubble whose fate we know not yet coz we are in uncharted territories .....not to mention it sky rocketed US Debt that are to be borne by average American.

Like the interest rates the inflation figures are manipulated How the US Government Manipulates Inflation Data

[TSJones]

Well Leftist or Rightist it quote Bernanke

"The result was there are still many people after the crisis who still feel that it was unfair that some companies got helped and small banks and small business and average families didn’t get direct help,” Bernanke said. “It’s a hard perception to break." The truth, as again revealed by Fisher, will not help with breaking that perception.


What QE did was bailed out the bankers , enriched the speculators and the rich and created many bubble whose fate we know not yet coz we are in uncharted territories .....not to mention it sky rocketed US Debt that are to be borne by average American.

Like the interest rates the inflation figures are manipulated How the US Government Manipulates Inflation Data

OK, let's review AGAIN what is happening here with QE3.

The Federal Reserve(Fed) is NOT the US Treasury. The Fed buys US Treasury bonds, notes, etc., Freddie and Fanny mortgage backed securities, on the OPEN market. That can be at a US Treasury auction or from global dealers in the Treasuries and mortgage backed securities.

The Fed can create money by *FIAT* in order to buy the Treasuries and other securities. There is no debt created on the part of the Fed. Got it? Does everybody understand this? Must I repeat it again?

In this process, the only time US taxpayer debt is created is by the US Treasury as authorized by the US Congress when it sells the Treasuries at auction. Does everybody understand this??? Must I repeat it again?

The danger of QE3 is not debt. It is inflation of the dollar from too much currency issued by the Fed or if not done right or improperly when stopping QE3, is deflation. Does every body understand this?

I keep reading all these misleading statements posted on this thread and I've not posted because it is hopeless. People believe what they wish for. I'm gonna take a break from this thread. Again.

[Austin]

^^ If the Fed wouldnt be printing money out of thin air who else would be buying US Treasuries ? Isnt the case that Fed Balance sheet rose from 900 billion to ~ 5 trillion through QE is short period of time

I mean isnt Fed indirectly responsible for the rise of Debt because in the end it is the Fed that buys those Treasury out of money printed it created in first place ?

Inflation/Deflation are direct consequences of printing unlimited money .....and so those bubbles that are direct consequences of Fed artificially creating almost zero interest rates.

Technically you are right that Fed is not creating debt but that is just part of the story.

[member_28502]

The inflation figures of USG (and independent agencies so called) are bogus the real rate of inflation is easily around 4 to 5 % not including gas price aka energy costs (in the Basket)

The figures doled out about US inflation are as reliable as PRC govt agencies statistics..

[Austin]

Central Bank intervention keeps ruble afloat

[Austin]

Steve Keen: "Loans create deposits!" aka No One Understands Banking

http://rt.com/shows/boom-bust/loans-dep ... ng-us-537/

[Austin]

After Russia its Brazils turn .....S&P Downgrade......Looks like US Rating agency are targeting BRICS

S&P cuts Brazil credit rating in blow to Rousseff

Standard & Poor's cut Brazil's sovereign debt rating closer to speculative territory on Monday in a blow to President Dilma Rousseff, whose efforts to stir the economy from a years-long slump have eroded the country's finances.

Brazil had its long-term debt rating downgraded to BBB minus, the agency's lowest investment-grade rating. S&P changed its outlook to stable from negative, meaning further downgrades are unlikely for now, which will come as a relief for both politicians in Brasilia and financial markets.

The move was widely expected but the timing surprised some investors.

As it came ahead of an October election in which Rousseff will seek a second term, the downgrade will expose her left-leaning government to further accusations that it has squandered the goodwill built during a long economic boom last decade.

Brazil has suffered from slow growth that averaged about 2 per cent in recent years. Rousseff has tried to revive the economy with tax cuts and social spending but has been widely criticized for intervening too much and resorting to sometimes opaque accounting moves to meet budget targets.

"The downgrade reflects the combination of fiscal slippage, the prospect that fiscal execution will remain weak amid subdued growth in the coming years, a constrained ability to adjust policy ahead of the October presidential elections, and some weakening in Brazil's external accounts," S&P said.

The agency said that fiscal credibility had been "systematically weakened" following cuts in the government's main budget target, and that loans by state-run banks had "undermined policy credibility and transparency."

The Brazilian finance ministry rejected S&P's arguments and said the downgrade contradicted Brazil's solid economic fundamentals and healthy standing compared with other major economies.

"The Brazilian economy has low external vulnerability because it holds the fifth largest volume of international reserves among G20 nations," it said in a statement.

The short-term effect of the move on financial markets was unclear, analysts said. Some investors could sell Brazilian assets because of policies forcing them to hold higher-quality stocks and bonds, while others may focus on the fact that S&P is unlikely to downgrade Brazil any further.

S&P's move could prompt peers Moody's Investors Service and Fitch Ratings to signal they may follow with a downgrade of their own.

"The natural tendency for markets tomorrow is the fear that there could be a chain reaction and other agencies may do the same," said Ariovaldo Santos, manager of floating-rate assets at H.Commcor in Sao Paulo.

Moody's and Fitch, which still rate Brazil two notches into investment-grade territory, have indicated, however, that they do not intend to downgrade Brazil before the elections.

Rousseff's government has worked to restore its credibility on budget targets in recent months, but investors are worried that she will resort to more unorthodox accounting moves and raise spending as she seeks re-election.

The downgrade is unlikely to undermine Rousseff's popularity among voters, but potential rivals blamed her management of the economy for Brazil's fall from grace on financial markets.

Opposition leader Aecio Neves said the downgrade was due to the "manipulation" of fiscal accounts by her government, "exorbitant" public spending and "leniency" with inflation.

"Brazil is going through a sad moment of loss of confidence and ruined credibility," he said in a statement.

[panduranghari]

If we deem it "unrealistic" then we will forever let the US and PRC corner the world's resources with their "unrealistic" assets.

I request you to furnish proof that inflation is not biting US and China. Thats all I am asking.

[TKiran]

If we deem it "unrealistic" then we will forever let the US and PRC corner the world's resources with their "unrealistic" assets.

I request you to furnish proof that inflation is not biting US and China. Thats all I am asking.

I think Chola has already given answer to your question. The inflation has been effectively exported out of US, Social Security pay checks did not correct for cost of living.
Just accept the reality that US $ is the world's reserve currency, so that they can create wealth from paper. China is also competing for such a status and their efforts are bearing fruits, even though we despise them. So US is declaining economic super power and Cjina is the upcoming super power economically. US would not have allowed such a situation, but Karma is a biatch.

US allowed their Gamblers to survive even after heavy losses. Thats the bad Karma.

Even highly educated folks dont understand the 2008 crash. They came out of that successfully. Lots of youngsters in our Apartment complex doing engg. Know exactly what happened in 2008, and their views has baffled me. There could be any number of economic slowdowns in US, but youngsters like us need not worry. We will go there, for education and earn for 10 years, and in our ripe old age of 35, we will get married and retire in India.

They still have American Dreams, they say, only 10 crises of the magnitude of 2008 could destroy US economy, who else can evolve such a system of Economy? OK baby boomers had it for longer, but we may still have it for atleast 10 10 years,

Such

[Austin]

An informative Interview

Stockman Joins Dr. J. and The Chief on Stocks and Jocks – Listen!

[Neshant]

One, it created wealth for a vast portion of the middle and working class whose pension funds hold the bonds that the QE bought.

Capital does not come out of a printing press, that's for sure.

The only thing money printing has done is rip off savers, wage earners (both present & future) and pensioners. In addition to that, there has been as ass load of debt that has been run up with nobody is sure how to repay - other than to water down the value of the currency.

All in all, the amount of money spent on "stimulus" has produced far less (and increasingly diminishing) returns. Evidence of this is that despite spending trillions, they keep talking about the need to spend more to "stimulate" the economy.

Worst of all, since everything these days is leveraged up the wazoo, there is a ton of misallocated capital waiting to implode at the sight of the next pin.

Three, how did it cost the 99% when there was no inflation and no new taxes were leveled?

The cost is merely deferred to the future much like running up a credit card. It means a whole lot of people are going to have to be cheated in the future as the debts incurred get defaulted on and/or not repaid. A whole lot of bogus "wealth" being created out of a printing press will then evaporate just as fast as it appears.

[Austin]

Talk about Inflation

Let Them Eat iPads: 14-Years Of Data Debunk Fed’s Inflation Shortfall Canard

[panduranghari]

I think Chola has already given answer to your question. The inflation has been effectively exported out of US, Social Security pay checks did not correct for cost of living.
Just accept the reality that US $ is the world's reserve currency, so that they can create wealth from paper. China is also competing for such a status and their efforts are bearing fruits, even though we despise them. So US is declaining economic super power and Cjina is the upcoming super power economically. US would not have allowed such a situation, but Karma is a biatch.

US allowed their Gamblers to survive even after heavy losses. Thats the bad Karma.

Even highly educated folks dont understand the 2008 crash. They came out of that successfully. Lots of youngsters in our Apartment complex doing engg. Know exactly what happened in 2008, and their views has baffled me. There could be any number of economic slowdowns in US, but youngsters like us need not worry. We will go there, for education and earn for 10 years, and in our ripe old age of 35, we will get married and retire in India.

They still have American Dreams, they say, only 10 crises of the magnitude of 2008 could destroy US economy, who else can evolve such a system of Economy? OK baby boomers had it for longer, but we may still have it for atleast 10 10 years,

Such

No he has not. Where is the data? Or you think anything pulled out of musharraf is considered as data, then I can write mahabharat for you.

[johneeG]

Pandurangahari saar,
great post. I'll read it and reread it several times before I understand it properly. Thanks for that.

BTW does any one know if keeping Gold in State Bank Vault is a safe bet in India ?

Any answers to this question?

[TSJones]

Capital does not come out of a printing press, that's for sure.

It certainly does if everybody in a nation's productive economy honors it. (they will return goods and services in exchange for it)

That's like saying a bank's letter of credit (a type of document historically used for centuries) doesn't represent an asset to a company. It most certainly does. Its a legal contract representing a medium of exchange available to a company.

In essence you are postulating that such things as business contracts are worthless in a productive capitalist economy with a proactive legal system. You are implying there is nothing of value in that.

If a government mandates its currency upon the pain of law in an economy, it's capital.

You as an individual don't have to accept payment in currency but the banks must accept it for payment of debt.

[Austin]

Money Flowing out of Russia

Russia’s Central Bank Has No Plans to Introduce Capital Controls

MOSCOW, March 26 (RIA Novosti) - Russia has no plans to impose capital controls to regulate the flow of money into and out of the country, a top official at the Russian central bank said Wednesday, describing such measures as ineffective.

Easing concerns that Russia could introduce restrictions to stop capital outflow, Ksenia Yudaeva, a member of the bank's board of directors, told parliament the country's currency remains secure.

"We have found the ruble is a highly insulated currency in terms of protection from sanctions," Yudaeva said.

Russian Deputy Economy Minister Andrei Klepach said Tuesday that capital outflows from Russia are forecast to reach $70 billion in the first three months of 2014.

Russia's finance ministry and economic development ministry previously confirmed measures to restrict free capital movement were not under consideration.

Prime Minister Dmitry Medvedev said Tuesday the country welcomes all business partners and has no plans to restrict commercial activity in the country.

[Austin]

Russia's Capital Outflow Could Reach $100Bln in 2014 - Putin's aide

NOVO-OGARYOVO, March 26 (RIA Novosti) - Capital flight from Russia may reach some $100 billion in 2014, a presidential aide said Wednesday.

“I believe that the figure would be around $60-80 billion, but counting interventions [by Central Bank to reduce volatility], it could be some $100 billion,” Andrey Belousov said.

According to Central Bank data, net capital outflow from Russia increased from $54.6 bln in 2012 to 62.7 bln last year.

The World Bank warned earlier on Wednesday that Russia may see capital outflow at $150 bln this year due to the current standoff with the West over the Crimean crisis.

[TKiran]

Pandurangahari ji, we are not disputing your claim that you foresaw Gold as Lakshmi Devi, and emassed huge physical Gold when it was cheap and converted your paper currency into asset which has appreciated many folds during the last decade. In fact, many investors become super rich by taking huge risk with their own conviction and not play safe by diversification. In fact I also benifitted a lot by buying stocks when BSE was 4000, and my inveatment became 10 folds and the dividends i get now itself is sufficient for me to live happily even without a job. But after seeing my success a lot of my friends burnt their hands buying stocks. I havent seen any of my driwnda made any money out of their stocks. There were other folks in early 2000s who also saw paper currency as dangerous asset and puchased many good land properties and now they are getting Rents itself as much as their investments every month. To manage their properties, they gave up their jobs, and now they are kinda retired in early 40's.

The point is that, a very strong conviction that paper currency couldbecome useless was sub-consciously felt by many many a speculators, u invested in physical Gold, I invested in stocks, somebo,dy invested in real estate., and a lot of my friends in US purchased houses, which have been fully paid off now.

But insisting that, Gold is going to once again appreciate 10 folds in near future is just speculation, your reasonings not withstanding.

In fact, this situation now what we are witnessing wasactually predicted by GM in early late 90's and in early '00s by other auto OEM's as I am a witness to that. Well their premise was Demographics and nos of retirees and working population. Their strategy was to target new immigrants who could become the most dominant consumers by 2020

[TKiran]

The new immigrants would be the only hope for them. In fact they predicted that whites would become minority by 2020. That prediction used to baffle the group listening to their strategic meeting, there used to be gloom in the face of Whites in the room.

But their predictoons more or less played out very accurately so far. And when see the most young energetic, smart and well informed, and highly educated (in IIT's and NIT's) lining up to emigrate to US and give their most productive years to US economy, I am convinced nothing will happen of the Gloom and Doom types to US economy. In fact those youngsters are not deraci.ated useless fellows. Theu are very religious doing pooja everyday, yoga etc, ayleast 50 of them I know from my own aprtmnt complex. When I try to reason with them, they say that their support syatem is there in US as their brothers sisters, uncles, aunts and all the close relatives are based in US.

[panduranghari]

Tkiran ji

None of my posts are recommending anything. I am just saying that the world has changed. You may have felt it in the water, you may smell it in the air, you may have felt it in the earth. Much that once was is lost, none now live to remember it.

Neither will I be affected if you do good or bad, neither will you be affected if I do good or bad.

We are here to exchange points of view. I was once a guy investing heavily in stocks and shares. I was not good any way. But if we are unable to reassess our own positions in light of more information, then how can we claim to be thinking men?

I am willing to review my position if more coherent information comes to light. But if the Chinese and Russians are seeing a trend, I would happily piggyback them. They are the giants. I am a mere shrimp.

As written earlier on this thread- "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!"

[anmol]

Joyce Chang and Nouriel Roubini discuss global financial risk.

This session was part of a CFR symposium, Risk and Strategy for the Changing World, which was made possible by the generous support of Rita E. Hauser, and organized in cooperation with King's College London.

Speakers: Joyce Chang, Managing Director, Global Head of Fixed Income Research, JPMorgan
Nouriel Roubini, Chairman and Founder, Roubini Global Economics

[Austin]

Peter Schiff: It's not the weather, the economy is headed towards recession!

http://rt.com/shows/boom-bust/facebook- ... coins-521/

[TKiran]

Eventhough you r not recommending anything, (I also agree that buying Gold when cheap makes perfect sense), your view points tend to give an impression that Physical Gold is the only option to safe guard wealth. I am sorry to aay this but many members get this impression with your posts.

By now every body who has some spare cash want to convert it into something physical and controllable, and if possible some invest to get some returns also.

Nobody is disputing physical Gold is a very good investment. In fact millions of Indians have been investing in Gold since ages.

Post facto analysis of how your investment has performed is always misleading, as the same investment strategy may still give good results but not outstanding results. You might have observed in the last 1 year, Gold investment has not yielded much returns. As far as my view point is concerned, if you have excess cash, choose only one option and do not diversify and do not worry about ups and downs, do not over analyze and keep on investing in the same investment instrument again and again for 10 years, whenever you have spare cash. The investment inatruments are also limited, 1. Gold, 2. Stocks, 3. Real estate, your conction alone can give great returns, diversification is forr 'bujhdils' . Wait for 10 years and you can be very secure and confident about your financial health for the rest of your life.

Now would you still say Gold could be the only investment instrument which is the most prudent one? If your answer is yes, then you will be the most happiest person for the rest of your life. If the answer is anything else, you may loose all your wealth in a flash.