Perspectives on the global economic changes

[TSJones]

If the Federal Reserve of New York is holding gold for India, it is there for a reason: to facilitate and assist India's banking needs in the US and elsewhere. Probably for currency swapping with the lender of last resort, the US Federal Reserve. India just recently sent a big shipment to London for the very same reason. Don't want to hold an account with the US? Please take your gold and go elsewhere. I'm betting that's not gonna happen though. Not completely. Hey maybe you should send it to China. Get a better deal.

[panduranghari]

100% of Indian gold is held in India. In 2012, they tried sneaking gold to vaults in London, which was legally challenged and the gold did not move. No one holds account with US federal reserve except USG.

[TSJones]

100% of Indian gold is held in India. In 2012, they tried sneaking gold to vaults in London, which was legally challenged and the gold did not move. No one holds account with US federal reserve except USG.

Why don't you try googling things before you make absolute statements?

http://articles.economictimes.indiatime ... lion-banks

http://libertyblitzkrieg.com/2014/07/02 ... f-england/

The NY federal reserve is custodian of gold for many countries. I don't know if it holds gold for India. That's the reason why I said "If" in my previous message.

[panduranghari]

I am stating with a certainty that India does not store gold on overseas territories with custodians other than GOI vaults.

The wish to swap impure (or non LBMA bars) for pure bars is the make accounting simple. Buying London gold is a misnomer.

London good delivery bar is 400oz bar which has been tested for purity. It is not a legal requirement about having a good delivery bar. But it helps.

The Good Delivery specification is a set of rules issued by the London Bullion Market Association (LBMA) describing the physical characteristics of gold and silver bars used in settlement in the wholesale London bullion market. It also puts forth requirements for listing on the LBMA Good Delivery List of approved refineries.

Good Delivery bars are notable for their large size and high purity. They are the type normally used in the major international markets (Hong Kong, London, New York, Sydney, Tokyo, and Zürich) and in the gold reserves of governments, central banks, and the IMF.
.....

The LBMA maintains two Good Delivery Lists of approved refineries (one for gold and one for silver) that meet certain minimum criteria (age, net worth, and production volume) and have demonstrated their ability to produce Good Delivery bars. Listed companies agree to submit to monitoring by the LBMA. Those listed companies that refuse to participate in regular monitoring are removed from the Good Delivery List and added to the Former List.

I think RBI is thinking out of the box to satiate good requirement in India. They import good delivery bars to make up for the non good delivery bars. They use the impure gold to sell to common Indian man which reduces CAD. The refiners who are running at break even costs would be delighted to get a big offer to buy gold bars from them.

No gold from India will ever reach London or New York. Fortunately.

[TSJones]

I feel like Gallileo did at the Vatican inquisition. Simply incredible.

http://articles.economictimes.indiatime ... lion-banks

But the gold that RBI would give to banks in India could be of a slightly inferior quality compared with the 'London deliverable' purer gold that it would receive from banks in London. The banks will deposit the gold in London in RBI's account with Bank of England.

[panduranghari]

Look mate, if you need you should take education about gold from your son who you claim is a gold dealer. He would know.

Anyhoo....

Better known as loco swaps in the global bullion market, it's a mechanism whereby gold in one location is 'swapped', or exchanged, for gold in another location without physically shipping the yellow metal.

[Neshant]

I've never heard of the Federal Reserve holding India's gold.

In any case, its not the govt of India that has the vast hoard of gold, its the people - as should be the case.

It makes it harder for any shyster to milk the nation out of its gold when the gold is dispersed among the vast population.

If it were all concentrated in the hands of the govt, it would only be a matter of time before an Iraq or Libya style invasion & gold grab would take place courtesy of foreign powers.

Gold should always be in the hands of the people, not bankers, the govt, market slick talkers, "secure storage facilities" located overseas, gold ETFs ..etc. Invariably, those turn out to be good old fashioned scams where the gold is never to be found and the paper representations of gold, promises and slick talking bankers are aplenty.

[panduranghari]

THE MATTERHORN INTERVIEW:
Marc Friedrich / Matthias Weik – 31 July 2014

In view of the public debate they have raised in Germany, Matterhorn Asset Management is extremely pleased to feature the below written interview Lars Schall did, on our behalf, with Marc Friedrich and Matthias Weik this past week. German economists Friedrich and Weik co-authored two books which unfortunately are still only available in German. In their latest publication, “Der Crash ist die Lösung”, the economists explain from a German and International perspective, in easy to understand language, why “The Crash is the solution” and why this crash will be more catastrophic than the previous one. They describe based on solid economic fundamentals why a ‘final financial collapse’ is on our doorstep.

“The people causing the crisis are the ones who stand to gain the most from it”
By Lars Schall

Lars Schall: What are the most crucial weak spots in our financial system? And why is it that the financial sector is so powerful vis-à-vis politics?

Marc Friedrich: The most crucial weak spots in our financial system are:

Japan’s gigantic debt;
China’s shadow banking system;
The completely opaque derivatives market;
The immense and rapidly growing global debt;
The global banking sector as a whole.
The financial sector is so powerful vis-à-vis politics because a very unhealthy one-sided relationship exists between the political system and the financial industry. Let’s take a closer look: How does a government fund itself? It collects taxes, and it sells government bonds. Who buys these government bonds for the most part? Banks and insurance companies! So who holds the reins here? It’s the creditor, of course, who gives the commands and who says which laws can and cannot be passed against him. This is also the reason why nothing has changed since the crisis in 2008. The hand that gives is always above the hand that takes. Moreover, the financial industry has succeeded in establishing structures outside of the law and saturating itself with cheap money from the central banks. This has made them even bigger, more powerful and, most importantly, more systemically important, which has only increased their ability to coerce governments and citizens when the next crisis comes.

LS: Why do you think the financial system won’t survive?

M&M: The financial system won’t survive for several reasons: We’ve had a fiat money system in place since 1971 based on interest and compound interest. In other words, it grows exponentially. But exponential growth is mathematically impossible on our planet with limited resources and thus destined to fail. We have a monetary system based on debt, so our system constantly needs new debt in order to grow, i.e. new money is generated only through the issuance of credit. This means our financial system has a mathematically finite lifespan–and it expired in 2008. Added to this is bank money created from nothing. This enables all banks to create money out of nothing by lending money.

Let me explain this madness: Central banks and commercial banks can create nearly unlimited amounts of bank money from “nothing”. This completely perverse system works this way every time a loan is granted by a bank. By creating money out of nothing, banks do something that is not only incredible but also makes every banker’s heart beat faster with delight–it’s what we call the 8th wonder of the world, in addition to the effect of compounding: Banks lend money that they themselves can create from “nothing”. Since January 18, 2012, banks in Europe are only required to deposit a one percent minimum reserve of central bank money at the ECB as collateral. This means that for every euro deposited at the ECB, the bank can create 100 euros and lend this with interest and compound interest. The banks lend money created from “nothing” and charge interest for something that actually does not exist. It’s brilliant! Banks make money without directly having to do anything for it. The interest that the customer has to pay ultimately means that more money is paid back than previously existed and was lent. In turn, the banks take this additional money and grant new loans. This automatically leads to more and more debt, which the banks must create out of nothing again, ad infinitum. This creates an unending circle, which, mathematically speaking, must eventually collapse.

The only way to keep the present financial system alive is to ban math and thus overturn the laws of nature.

LS: In order to understand your thesis that the crash will be the solution, one needs to understand the following, namely that the same people who caused the ongoing financial crisis are the real winners of it. Please elaborate on this, and please explain why you consider a crash as a chance?

M&M: As perverse as it may sound, the people causing the crisis are the ones who stand to gain the most from it. We explain this in our book “The Crash Is the Solution” based on an overwhelming number of facts and sources.

Financial sector profits are back at record levels, stock markets are hitting all-time highs thanks to the flood of cheap money and huge bonuses are being paid out again. Yet, ever since the onset of the crisis, the political establishment, central banks and financial industry have only bought time at a very high price and, in doing so, more than anything else, have accelerated the process of maximizing economic damage at the expense of us citizens. No lessons were learned from the crisis and nothing has changed. What happened to all the big promises that were announced? What about Basel III, the financial transaction tax, reining in the banks, etc.? The financial lobby succeeded in axing, massively watering down or pushing all this off into the far-distant future.

Banks have swelled up again with cheap money from central banks so that they are now even bigger, more powerful and therefore more “systemically important” than before. But that’s not all. They’ve also achieved something truly incredible: It is the only industry that is above the law and seems to always land softly despite constant systematic fraud, lies and manipulation.

Furthermore, there is no åsolution within the existing system. If there was one, the protagonists would have proudly announced it long ago. The profiteers of the system from the political and economic elite will do anything to preserve the status quo and let the masses pay for it. Aside from 90 percent of the population, the biggest loser is democracy.

LS: Is the crisis we’re seeing really a crisis of capitalism?

M&M: What is capitalism? In capitalism, you would have let the forces do their work and the market would have taken care of itself. But this was not permitted. We no longer live in the age of capitalism: Banks are bailed out with taxpayers’ money or even nationalized; central banks intervene in the markets and shareholders are expropriated. The real “capitalism” in place now uses means of communism to save itself. Just like in communism, only a small elite group benefits from this system. No crisis has been solved to date by printing money. What we are witnessing in Europe right now is neither in Europe’s interest nor does it correspond to our understanding of democracy. Laws and treaties are broken at the highest level, and an already failed currency is desperately being clung to–at the expense of the people, and especially at the expense of Europe’s youth. Money that needs to be rescued like the euro is not money at all. In our book we point out that the FED had intervened in the markets on 85 percent of all trading days since 2008. This is sick and often leads to the formation of bubbles, and ultimately to crises. With their disastrous policies, central banks create one bubble after another that often have to be absorbed by new, even larger bubbles. That’s why the solution will be the final collapse.

What we currently have is a mixture of planned economy, statism, socialism and other nonsense. Everything but capitalism.

LS: Is the crisis caused partially because of the way money gets created?

M&M: Yes, absolutely! This is the underlying problem together with the unhealthy relationship between our elites in politics and the financial industry.

LS: Do you think in the future the process of how money gets created needs to be taught in schools and universities?

M&M: Yes definitely, we also call for this in our latest book “The Crash Is the Solution– Why the Final Collapse Will Come and How to Save Your Assets.

” If people understood how our monetary and financial system works, then many people would likely not be so easily robbed of their savings by the financial industry. We all deal with money on a daily basis, but hardly anyone knows how our monetary system works. This needs to change. We need empowered citizens and responsible investors. Money, saving for retirement, and investments–these are all topics that must be taught as a subject in schools. This is also essential to break up the financial industry’s current monopoly and to ensure more democracy and justice.

LS: What do you see as possible triggers for a crash?

M&M: There are any number of variables in the system that could cause it to collapse. Start with Japan’s disastrous kamikaze policy and its horrendous debt, the extremely bloated shadow banking system in China or the credit bubble there; drastic political turmoil in the Middle East; the Ukraine conflict; a flash crash on the stock exchanges; a major bank that fails; the crash of the dollar or euro; the sovereign default of Greece, Italy or Spain; a bursting government bond bubble, or the real estate bubble popping in the UK. We are all so interconnected through globalization that if a bank, a country or a currency collapses it could create a disastrous domino effect that no one can escape. The fact is: It isn’t a question of whether the crash will come, but when.

LS: Is your advice to get out of paper securities and go into tangible assets?

M&M: We have been experiencing epochal change since 2008, and we are very clear in our advice: Get out of paper assets and into tangible assets! These have always done better in the past than paper assets, and they have the unbeatable advantage that they can never become completely worthless. Paper assets have the disadvantage that they are more or less transparent, are only on paper and can only serve you indirectly. In addition, many different parties (banks, brokers, insurance companies, the government, etc.) take their own share. Tangible assets on the other hand prevent this in part, and serve you directly and immediately.

Broad diversification of investments is essential. No more than a third of total assets should be invested in an asset class. For example, a third in real estate, a third in gold and a third in (cash) money. We recommend much broader diversification however, spread over ten or more different investments. This makes your asset situation much more stable, even if one of your main assets should fail. And they will fall, be taxed or at worst even be expropriated.

LS: What do you think about gold and silver in that regard?

M&M: In uncertain times like these, physically possessing the two classic “money metals” gold and silver is essential as “life insurance” to protect your assets against crises, economic and social turmoil, and inflation. This gives you two time-tested and globally accepted tangible assets to protect your wealth. With silver you can also protect yourself against a possible prohibition on gold, which, for instance, has been practiced in the past in the United States, Russia and China. And due to the lower purchase price of silver coins, silver is more suitable than gold in an emergency to meet daily needs such as purchasing food and household items.

As a general rule: Always rely on the “old” precious metals–gold and silver. In physical form, that is. But it’s important here to buy in several installments! You can still take your wealth out of the system completely legally and anonymously with gold and silver. This is something that should be done and taken advantage of.

Gold and silver have survived all crises and have never become worthless for thousands of years. What did Jesus get as a gift from the three kings to honor his birth? Myrrh, frankincense, and… U.S. government bonds! No, of course not. It was gold.

We do not recommend other precious metals such as palladium, etc. The risks and uncertainties are much greater here. It remains to be seen how the price of gold and silver will continue to develop. We currently are not seeing real prices, especially in the case of gold where the political establishment has deliberately manipulated and depressed prices in the past. Gold of all things was not allowed to be too expensive!
Avoid debt, and definitely do not buy what is often totally overpriced real estate with borrowed money.

In view of the current situation, having a certain amount of cash on hand is not a bad idea. Whether you hide it under the mattress or keep it in a safe deposit box is your decision.

Ever since the bank accounts of depositors in Cyprus got a major shave to bail out the banks there, we know: Money belongs everywhere, just not in an account. Something essential that everyone should know: The money in your bank account doesn’t belong to you, but the bank! It’s not yours until you physically withdraw it. By depositing money at the bank, which is up to the roof in debt, you are providing a loan at extremely favorable conditions to the bank with no real underlying security. On the other hand, when the bank gives you a loan to purchase a home for example, it puts a lien on the property to secure the loan.

LS: You perceive a crash as an opportunity. Why so?

M&M: There is an opportunity in every crisis. We currently have the biggest economic crisis in modern times, so we also have the biggest opportunity. If we succeed in seizing this opportunity, we can enter into a golden age of humanity. However, in order to do this we must solve the problem of “elite” and fundamentally change many things–both socially and economically, the human factor being the more important one. We deal with this in our book, which is extremely unusual for nonfiction. We talk about humility, respect, love, trust and other catchwords.

It is said that people learn from failure. Apparently the crash of 2008, whose aftershocks we are still feeling today, was not big enough. The facts, unfortunately, tell us that nothing has changed. The past, unfortunately, also shows us that the protagonists won’t be forced to make the necessary changes until after a catastrophic event. It’s always been like this, and so it will probably be the same this time, too. But the collateral damage will be enormous. One dramatic example of this is the “energy transition” in Germany–whether it is good or bad is beside the point. Nevertheless, it took a catastrophe in Japan to happen before the energy transition was possible in Germany. Apparently, our financial system will need to collapse first before people realize that we must implement a new financial system that serves all people and not just a small percentage of the population.

LS: Would you agree that we would need a competition of different forms of money in order to overcome the monoculture that we are witnessing in the monetary sphere?

M&M: This could be a sensible approach, but the currencies should be secured and not unsecured like our current money. Only time will tell whether different forms of money in order to overcome the monoculture is on the right path. The fact is: We definitely need a different and new monetary system!

LS: Who will be the winners and the losers of a crash?

M&M: There will only be losers, because we will all lose something. However, those who hold paper assets will lose substantially more than those who own property. Owners of government bonds, annuities, life insurance policies and accounts will be the big losers in the event of a crash–this was always the case in the past, and will also be so in the future. It’s only a matter of time until the mother of all bubbles–the government bond bubble–bursts, because we cannot pay off debt with debt forever. This is why we are very clear in our advice: Get out of paper and into tangible assets.

LS: Marc and Matthias. Much appreciate your time for this interview.

Marc Friedrich studied international business administration and has focused intensely on the economy and financial markets. During a job assignment in Argentina, he witnessed a sovereign default first hand in 2001 and its devastating consequences. Marc Friedrich gained valuable work experience in the UK, Switzerland and the US.
Matthias Weik studied international business in Australia where he completed his degree. He has dealt with the global economy and its financial markets for over a decade. Matthias Weik earned his MBA as part of a work-study program while working for a German corporation. On professional and academic stays in South America, Asia and Australia, Matthias Weik gained deep insight into the world of international finance and economics.
Together with Matthias Weik, Marc Friedrich holds seminars and lectures for companies, associations, foundations, at conferences, trade shows and at universities and colleges. Together with the economist Matthias Weik he co-authored two bestselling books “Der grösste Raubzug der Geschichte” (“The Greatest Heist of All Time”) and “Der Crash ist die Lösung” (“The Crash Is the Solution”). Their first book was also translated into Chinese Taiwan. Translations into Chinese mandarin and Korean are in preparation.

[ldev]

To the best of my knowledge, of the 557 tons of gold that India has, more than 200 tons is held by the Bank of England, the overseas custodian of the Reserve Bank of India. The 200 tons of gold India bought in 2009 from the IMF was delivered to the Bank of England, in addition, the Bank of England previously held an unspecified amount of RBI gold, the total in any event held by the Bank of England does not exceed about 270-280 tons. The reason for this fog is that the RBI has never explicitly stated how much of its gold is held by its overseas custodian.

The recently announced gold swap will result in old gold held by the RBI at it's Nagpur vault being sold to commercial banks including the State Bank of India and these banks in turn buying gold overseas and delivering that gold to the Bank of England. I do not know what quantity of gold is involved in this swap.

According to the RBI act, 85% India's gold reserves have to be held within the country and that does not appear to be the case today.

[Austin]

If BOE is holding those 200 tons of Gold then we should get it back ASAP. See no reason why we should be keeping our gold in BOE when the coming crises would make Gold a significant player and there is little chance we would get our gold back if they refuse to give.

[Austin]

Watch it if you can



Max Keiser and Stacy Herbert ask “is the Fed fueling bubbles?” An opinion piece in USA Today says: “No, this time it’s different (due to zero percent interest rates).” Another opinion piece from former academic-turned-fund manager John Hussman says there is a bubble and it’s matched only in size by the bubble leading to the 1929 Wall Street crash. In the second half, Max interviews Mitch Feierstein of PlanetPonzi.com about George Osborne’s ponzinomics and Janet Yellen’s bubbles.

[Austin]

Europe's Russian Connections

[Austin]

Japan on brink of recession ?

Goldman Warns Of 6.5% Japanese GDP Collapse, Worst Since Lehman

[Austin]

Boom Bust: Axel Merk and Peter Schiff talk GDP numbers and US growth

[Suraj]

The WTO 'deal' failure brouhaha is an instructive example of how the current western driven system works. A description:

Both the west and India have substantial subsidization of the agricultural sector. The US subsidizes production factors including crop insurance subsidies of $12 billion, general govt support averaging $96 billion/year while simultaneously slashing food stamp budget, and more. The US is showing a pronounced trend towards subsidization of production, rather than distribution. India is doing the latter. It retains right to stockpile, and to subsidize distribution and sale.

The WTO draft focuses on reducing the latter, and ignores the former. Further, as a negotiating tactic, it combined multiple different drafts - agriculture, customs clearance and trade faciliation, into one agreement. The intent of this is to force countries to sign. By stalling, they get to be painted as the spoilsport who 'ruined everything', even if their concerns are very particular and related to one particular draft. The west knows that if they debated the agricultural draft independently, they cannot push through the poison pill clauses within. Therefore, the goal is to push everything together, and use propaganda to threaten the other side with being the spoilsport if they block it. It's a good bet on their part - they control the message, they wrote the draft, the bundled everything together and said 'here, sign'.

India called their bluff, and refused. The response has been predictable. "India blocking trade deal and economic development! Obstructionist turd world country! Doubts about Modi!" Thankfully we have a strong leader who is not swayed by such garbage press. The west also knows that now that India called their bluff, they don't quite have a plan B. India provided one - a modified draft that addresses the original shortcomings. Hopefully, this will be agreed upon, to terms India finds acceptable.

[panduranghari]

Suraj saar,

WTO is actually on its last legs. It was dying when they finally allowed China to join in 2001. This gave them respite. However, they never imagined the conversion of a potential market into a super-producer. Now China has the west by its balls, they are trying to push through this agriculture nonsense. China wont object to it, because its agriculture is taking a beating as majority of farmers are working in factories.

In Britain, most of my clientele is farming community. They cannot make ends meet without subsidies which the government is finding unaffordable. Even with subsidies, the regulatory framework prevents them from increasing profitability. Besides the productivity is seriously hampered by the supermarkets who drive the price wars. For eg. its cheaper to pour milk down the drain than sell it in cartons direct to public, as supermarket milk is way cheaper due to bulk purchasing. But I digress. The issue here is the west wants to create market for its farmers in the 'turd world' so that the government can stop subsidies and give these farmers hope of making a better living.

Manufacturing in the west is dead, agriculture (at current prices) is almost dead.

Thank god for Modi Sarkar.

WTO is dead. Just watch it happen right in front of our eyes.

[Suraj]

Now China has the west by its balls, they are trying to push through this agriculture nonsense. China wont object to it, because its agriculture is taking a beating as majority of farmers are working in factories.

I'm curious. Why would China not object to the agri nonsense ? They stand to lose much if they depend on western grain sourcing. They already, as you mentioned, lost a lot of farmers to the factories. They're also facing repeated droughts, as well as desertification, threatening their food security. They've every reason to do the same thing as us - stockpile and control supplies effectively when hit by environmental factors, manpower loss or other issues, because they too don't have much of a safety margin when it comes to food supplies. Maybe they're just letting us take the lead in the opposition, but considering their circumstances they're probably more likely to agree than disagree with us.

[TSJones]

The WTO 'deal' failure brouhaha is an instructive example of how the current western driven system works. A description:

Both the west and India have substantial subsidization of the agricultural sector. The US subsidizes production factors including crop insurance subsidies of $12 billion, general govt support averaging $96 billion/year while simultaneously slashing food stamp budget, and more. The US is showing a pronounced trend towards subsidization of production, rather than distribution. India is doing the latter. It retains right to stockpile, and to subsidize distribution and sale.

The WTO draft focuses on reducing the latter, and ignores the former. Further, as a negotiating tactic, it combined multiple different drafts - agriculture, customs clearance and trade faciliation, into one agreement. The intent of this is to force countries to sign. By stalling, they get to be painted as the spoilsport who 'ruined everything', even if their concerns are very particular and related to one particular draft. The west knows that if they debated the agricultural draft independently, they cannot push through the poison pill clauses within. Therefore, the goal is to push everything together, and use propaganda to threaten the other side with being the spoilsport if they block it. It's a good bet on their part - they control the message, they wrote the draft, the bundled everything together and said 'here, sign'.

India called their bluff, and refused. The response has been predictable. "India blocking trade deal and economic development! Obstructionist turd world country! Doubts about Modi!" Thankfully we have a strong leader who is not swayed by such garbage press. The west also knows that now that India called their bluff, they don't quite have a plan B. India provided one - a modified draft that addresses the original shortcomings. Hopefully, this will be agreed upon, to terms India finds acceptable.

utter nonsense. the US dramatically increased food stamp levels in 2009 due to the recession. the increase was based on a four year basis scheduled to cease on November 2013. Your premise is that because the US has ag subsidies it cannot object to what ever level India wants to take it for WTO purposes. Which is quite frankly BS and it is a back track from India's previous position last year.

[TSJones]

Now China has the west by its balls, they are trying to push through this agriculture nonsense. China wont object to it, because its agriculture is taking a beating as majority of farmers are working in factories.

I'm curious. Why would China not object to the agri nonsense ? They stand to lose much if they depend on western grain sourcing. They already, as you mentioned, lost a lot of farmers to the factories. They're also facing repeated droughts, as well as desertification, threatening their food security. They've every reason to do the same thing as us - stockpile and control supplies effectively when hit by environmental factors, manpower loss or other issues, because they too don't have much of a safety margin when it comes to food supplies. Maybe they're just letting us take the lead in the opposition, but considering their circumstances they're probably more likely to agree than disagree with us.

Because it's marginal agricultural production. The ROI sucks. "Food Security" is an ideological hype. This is an Indian scheme to increase ag subsidy and encourage marginal ag productivity as payment to rural areas. As has already been explained to me there is no infrastructure to properly store it in order to keep it fit for human consumption. India human food production is largely from field to daily hand to mouth. Now if India was to say, start a national infrastructure scheme with 24x7 temp, moisture and rodent control then I would believe in India's sincere efforts, otherwise it's just a hype and a another payment transfer scheme.

[Suraj]

Your premise is that because the US has ag subsidies it cannot object to what ever level India wants to take it for WTO purposes. Which is quite frankly BS and it is a back track from India's previous position last year.

Oh, why is that ? Because you want to assert "do as I say, not as I do" ? We didn't agree to anything last year. That's just US propaganda on the same lines as "bad bad India against world trade!" You got a paper with our signature on it ? No ? That means we didn't agree to anything.

The government deferred an agreement pending the General Elections in India, with a decision due by July 31 2014. The deal was not signed then. We refused to sign it now. July 31st has come and gone, and the WTO deal is standing there naked with the tide gone.

[TSJones]

^^^^India created the position last year that it now refuses to sign. Disavow it all you want and I know you will. This issue is dead. You ain't signing. Why continue to harp about it? Enjoy your ag subsidies.

[Suraj]

Actually India did nothing of the sort at all. Like I challenged, do you have a signed agreement ? No. That means we agreed to nothing. You can pretend all you want about 'refused to sign'.

The most basic tenet of contract law is you get the signature. No signature means you have nothing. You ever buy a house using a document where you claim the seller promised to sign in 8 months ? You can make up anything from "I thought he'd sign" to "He PROMISED he'd sign", but they're all equally useless.

We refused to agree in Nov 2013 and we refused to agree in July 2014. The west thought it could push through an omnibus high stakes deal by threatening anyone with a media offensive about them spoiling the whole deal. The omnibus approach was your own poker move, and you lost.

[panduranghari]

I'm curious. Why would China not object to the agri nonsense ? They stand to lose much if they depend on western grain sourcing. ........ Maybe they're just letting us take the lead in the opposition, but considering their circumstances they're probably more likely to agree than disagree with us.

Perhaps they are used to eating everything that moves. This is not really an option for India at least at this stage.

Also China due to its super industrialisation and buying up of foreign industries, stands to loose more by opposing WTO agenda. Short termism perhaps.

Or as Ramana says - its all the part of The Great Game. The game to gain the control of India.

2 VIDEOS recommended for watching

http://on.aol.com/video/the-free-trade- ... -517395814

http://www.bigpicture.tv/videos/watch/1d7f7abc1

WTO is very pro huge corporations. Chinese ambitions are fulfilled by the presence of WTO. China when it was re-admitted to WTO agreed to about many terms which -though have made them dollar rich - has really screwed them royally. Even if China wanted they cannot increase tariffs on imports. Now think, if the patents or IP gives opportunities to improve productivity, the newer way of doing things could seriously upset the Chinese apple cart of super industrialisation.




We hear about how China has been increasing patents but many have been proven to be really hogwash. China prefers the status quo. Chomsky said about WTO - The World Trade Organization regime insists instead on product patents, so you can’t figure out a smarter process. Notice that impedes growth, and development and is intended to. It’s intended to cut back innovation, growth, and development and to maintain extremely high profits. The organisations invested in China are the same US corps.

China wont for a minute worry about if India gets screwed. The CCP need to keep their power.

[Suraj]

Tariff barriers don't provide a full picture. The Chinese, as well as us and anyone else with any sense, use non-tariff barriers to augment their permissible limits.

As for product vs process patients, India changed its own system to instead crack down on both pay-to-delay and evergreening (tweaking the formula a little to extend original exclusivity), as the Novartis Glivec case showed. The Chinese are even bolder, using market access to protect themselves from the consequences of outright IP theft, something we should increasingly resort to as the ability to do so permits.

[panduranghari]

With Modi Sarkar at the helm, we can hope for everything. Who knows he will even deliver of this soon.

[Austin]

We should do what is in our national interest and glad we did that. There would be the usual cry in Western MSM about India Sabotaging $1 trillion WTO deal but our answer should be Learn to Deal with it.

Modi government has Clarity of thoughts and Indias National Interest in Mind.

[Austin]

US is Bankrupt: $89.5 Trillion in US Liabilities vs. $82 Trillion in Household Net Worth & The Gap is Growing. We Now Await the Nature of the Cramdown By Chris Hamilton

[panduranghari]

[panduranghari]

Posting it in full, as if taken down it will be one fine essay which many would never get to read.

Mauldin Economics

The moment I landed in Charleston, South Carolina, on my way to a small barrier island 35 minutes away for a family vacation, I got that feeling in my stomach that this was a special place.

Eighteen years on, and my love affair with the Carolina Low Country has only deepened.
Now that I live in Singapore, my visits are far more infrequent than I would like, but whenever I get the chance to spend time amongst the marshes or at the beach, I fall in love all over again.
The city of Charleston is beautiful. Small enough to walk around, but filled with wonderful restaurants, gorgeous architecture, quaint shops, and the vibrancy of youth that comes with being home to several colleges (Go Cougars!).
It has twice been voted "America's friendliest city" by Condé Nast Traveler (a judgment I can second, having done my fair share of traveling around the United States over the years) and also "the most polite and hospitable city in America" — though in fairness, that particular award was bestowed upon the fair city of Charleston by Southern Living magazine, which may well have a dog in that particular hunt. No matter.
Above all, however, the city is filled with history; and this week I am going to share with you a story which illustrates beautifully why understanding history is perhaps more important today than ever before — certainly when you are considering what to do with your savings.
Charleston is the oldest city in the State of South Carolina, founded in 1670 as Charles Towne — a tribute to King Charles II of England. Seven short years after the War of Independence ended, that name, funnily enough, was changed to its present form.
But Charleston's greatest claim to historical fame is two events that occurred 83 days apart in early 1861.

On January 9, a group of cadets from The Citadel, a military college (Go Bulldogs!) that still sits just north of downtown Charleston, opened fire on the Union ship Star of the West as it entered Charleston Harbor on its way to resupply the troops stationed at Fort Sumter.
South Carolina had seceded from the Union in December 1860 after the election of Abraham Lincoln; and the Union commander, Major Robert Anderson, had subsequently moved his command post from Fort Moultrie on nearby Sullivan's Island to Fort Sumter, a far more substantial fortress that guarded the entrance to Charleston Harbor. But, as Anderson would discover, it was also something of a sitting duck (see map below).
Slowly but surely, Confederate troops began to lay siege to Fort Sumter, surrounding it with battery after battery — though no shots were fired.
At least, not until April 12, 1861.



As one look at this map makes clear, it was only a matter of time until the fort fell; and that time turned out to be just 34 hours, during which a savage bombardment rained down upon the beleaguered Union troops.

Anderson evacuated Fort Sumter (he didn't surrender) on April 14th with, remarkably, no loss of life on either side. Bizarrely, but perhaps unremarkably, the only casualty of the engagement occurred when a gun exploded during the surrender ceremonies (yeah, "ceremonies," apparently), killing one poor Union soldier who had made it safely through the barrage.
This engagement began the US Civil War, a conflict that would take the lives of almost 700,000 Americans and wound nearly half a million more.
It was during the siege of Fort Sumter that the story I want to share with you takes place. (Yes, I am afraid that everything so far is just background).
This story came to me from the pen of Jared Dillian, the very talented writer of an excellent publication called The Daily Dirtnap; and the moment I read it I knew I had to share it with my readers, because it illustrates perfectly something I have been talking to people about for years.
Readers can, and definitely should check out Jared's fantastic work HERE; and to give you a taste of Jared's enviable narrative prowess, I am going to let him tell you the story as he told it to me:


Let me tell you again why I like gold and silver.

I was in Charleston two weekends ago for my mom's birthday. We did a horse and carriage ride, a historical tour, around the city. I always thought those things were cheesy, but as it turns out, the horse and carriage tours are very highly regulated, the tour guides have to pass a series of knowledge exams and then take continuing education. I kid you not! Ours had been doing it for six years, and was good.



So as we went by the Calhoun Mansion on Meeting Street, the tour guide fella starts telling us about the house. It was built by a guy named George Walton Williams, who was the richest guy in town. This was back during the Civil War. It's a 24,000 square foot mansion with 14 foot ceilings. It's just monstrous. It cost $200,000 to build — back in the 1860s! So how did Mr. George Walton Williams make his money?
Well, as you probably know, Charleston is a port city, and during the War, the Union Navy blockaded the port and then bombarded the city for weeks and months, but during this time, there were these guys who were "blockade runners" who would sneak by the navy ships, bringing necessary supplies to the city, which was under siege. Blockade runners made a lot of money — five grand a trip sometimes — but you know who made even more money? George Walton Williams did.

He financed the blockade runners.

Williams was not the only one doing this, but he was the most successful, why? Because he insisted on being paid only in gold and silver. If you know your Civil War history you also know that there was a Confederate currency, and I don't know if Mr. Williams had a particular view on the Confederate dollar, but at the conclusion of the war, the Confederate dollar collapsed, and everyone was left holding the bag — except for George Walton Williams.

Williams became like a J.P. Morgan character in the city — Charleston was the center of Southern finance, and Williams singlehandedly bailed out the Broad Street banks. He also built a pretty cool house.
Sorry to interrupt; I know you were enjoying Jared's prose, but we're just about to get to the point of this story, so I want to make sure everybody is paying close attention.
This next paragraph contains the fundamental principle of investing in gold and silver, which so few people genuinely understand — despite the multitudes of commentators expending countless thousands of words.
Hit 'em between the eyes, Jared:

So these anti-gold idiots are just that, idiots, or else they have the memory of a goldfish, because currencies come and currencies go, as sure as night follows day. It is the natural order of things. And as you can see, it's not about trading gold to get rich or getting long gold or buying one by two call spreads or getting fancy, it literally is about protecting yourself in the end. It's not like Williams got rich. He just stayed rich. Everyone else got poor.
It's not like Williams got rich. He just stayed rich. Everyone else got poor.
That's it. Right there.
Thanks, Jared, I'll take it from here.
So ... five pages in and we've yet to see our first chart — that's another first, but at least it's a familiar chart:

chart1

Source: Bloomberg

That is a chart of the gold price from the beginning of the secular bull market in 2000 to today, and it lies at the root of the fundamental misunderstanding about gold that I want to address today, with the help of Jared's wonderful story.
The bull market in gold started for two very distinct reasons and amongst two very diverse groups of people.
The first group were those who saw a commodity of intrinsic value that had fallen so completely out of favour that it was trading at or below the cost of production, along with a group of companies producing that commodity whose stocks were so out of favour that they simply had to go higher over time.
This is what the chart of the gold price looked like heading into 2000:

chart2

Source: Bloomberg
As you can see, gold was beaten down — hard.
Between 1980 and 1999, gold fell from $850 to $250, and had there been an ETF for gold mining stocks as there is today, it's safe to assume that it too would have been battered almost beyond resuscitation. What we DID have was the Philadelphia Gold and Silver Index (XAU), a capitalization-weighted benchmark that includes the leading gold and silver mining stocks.
The index was formulated with a base value of 100 as of January 1979 — we'll get back to why THAT'S important shortly — and as you can see here, by 2000 it had taken what is known in the industry as "a pasting":

chart3

Source: Bloomberg
Shares in gold and silver mining stocks halved between 1979 and 2000 and fell fully 70% from their interim high of 1987, so it's safe to say they were as beaten down as the metal itself, if not more so. Once the market changed its opinion of the mining stocks, however, they took off, soaring almost 400% between 2001 and 2011. The reason for this massive rally? Why, the change in the metal's fortunes, of course; and that's what attracted this first group of people who contributed to the gold bull in the early 2000s — the traders.

These people saw an opportunity to make money by buying something low and selling it high — as they would a stock or a bond or a piece of real estate.
But gold is different, and to illustrate why that is, let's turn our attention to the second group of people attracted by gold around the turn of the century (sheesh — that makes it sound so long ago).
The second group of people were those who looked at the landscape around them, saw the massive amount of debt that had been created over the previous four decades, and began to fear for the future of fiat currencies in general and the US dollar in particular.

These people didn't so much care about the price performance of gold (though most realized that the balance of probability suggested the path of least resistance was higher), as they cared about protecting a portion of their wealth from confiscation, which might come either through the inflation that was clearly going to be required to dissolve the debts, or through a dramatic loss of confidence in the mighty US dollar.

The price of gold wasn't their chief concern. Not even remotely. In fact, for the second group of people a falling gold price was a good thing because it enabled them to swap more of their dollars for the precious metal.
When you acquire gold, if your concern is the price you pay for it, then you belong in the first group — the traders — and should calibrate your expectations accordingly. If the gold price jumps from $1,000 to $1,500 and you sell your gold, locking in a nice profit, then you are happy and can either move on to your next investment or wait for a pullback in the price to be able to reload and try to repeat your success.

The danger with this approach is that it's also really rather easy to buy gold at $1,900 and find it languishing some $600 dollars lower a couple of years later. Ask "that guy." You know "that guy," right? We all do. He's the one who, when gold hit $1,900 in August 2011, told you it was definitely going to $2,500 and bought a bunch of it — through the ETF, of course. No point going to all the trouble of buying the metal itself.
Ask him. He'll tell you how much gold SUCKS.
"That guy" has been the one selling to crystallize his loss — or perhaps doubling up and going short to try to recoup his loss because the one-way guaranteed trade is back on, he claims — only this time it's headed in a more southerly direction. He's been the guy calling for gold to go to $1,000 or maybe even back to $600.
He often works in the research department of an investment bank.
Want to know what the second group of people have been doing as gold has fallen from its 2011 highs?
Accumulating more. Exchanging more of their fiat currency for physical metal.
Not futures contracts. No. Physical metal.
And no, not "buying more." Accumulating more.
I choose my words very carefully.
This group of people are the investors.
It has never ceased to amaze me that, whenever and wherever I discuss gold with folks, the first question

I am asked is invariably this one:
"Where does the gold price go this year? $2,500? $3,000? Higher? What's your 'number'?"
My answer is always the same:
"It doesn't matter."
At least, it doesn't if you are in the second group of people.
The story of George Walton Williams demonstrates this perfectly.

Williams wasn't refusing to accept anything but gold and silver as payment because he thought the price of gold was going to rise and he'd make a profit. There were no futures contracts, ETFs, or options on gold trading back then. No. Williams wanted gold and silver because they were money and would remain money no matter what happened after the Civil War had run its course.

Williams' alternative was to accept Confederate dollars in payment for his services to society:
(Wikipedia): The Confederate States of America dollar was first issued just before the outbreak of the American Civil War by the newly formed Confederacy. It was not backed by hard assets but simply by a promise to pay the bearer after the war, on the prospect of Southern victory and independence.

What would YOU rather have been handed as payment? A piece of paper that represented the promise of a group of individuals to pay you back — based, no doubt, upon their ability to tax those who had just won their "independence" from the Union after their inevitable victory — or a lump of metal that history had proven would be accepted by either side, no matter the victor in this little fraternal scrap?
Yeah, you're right; when I put it THAT way, it's hard to make a case for one of those alternatives.



What happened? Well:

(Wikipedia): As the war began to tilt against the Confederates, confidence in the currency diminished, and inflation followed. By the end of 1864, the currency was practically worthless.
Want to venture into the weeds a bit further to see how the mechanics of the devaluation played out? OK:
At first, Confederate currency was accepted throughout the South as a medium of exchange with high purchasing power. As the war progressed, however, confidence in the ultimate success waned, the amount of paper money increased, and their dates of redemption were extended further into the future. Most Confederate currency carried the phrase across the top of the bill: "SIX MONTHS AFTER THE RATIFICATION OF A TREATY OF PEACE BETWEEN THE CONFEDERATE STATES AND THE UNITED STATES" then across the middle, the "CONFEDERATE STATES OF AMERICA WILL PAY [amount of bill] TO BEARER" (or "...WILL PAY TO BEARER [amount of bill]" or "...WILL PAY TO BEARER ON DEMAND [amount of bill]").

As the war progressed, the currency underwent the depreciation and soaring prices characteristic of inflation.

Near the end of the war, the currency became practically worthless as a medium of exchange. This was because Confederate currency were bills of credit, as in the Revolutionary War, not secured or backed by any assets. Just as the currency issued by the Continental Congress was deemed worthless because they were not backed by any hard assets, so, too, this became the case with Confederate currency.

Even though both gold and silver may have been scarce, some economic historians have suggested that the currency would have retained a relatively material degree of value, and for a longer period of time, had it been backed by hard goods the Confederacy did have, perhaps such as cotton, or tobacco. When the Confederacy ceased to exist as a political entity at the end of the war, the money lost all value as fiat currency.

"Poof! It's gone." That's how these things happen. Always.
Of course, the ultimate irony is that today a crisp, uncirculated Confederate $100 bill will auction for upwards of $5,000...
But I digress.

The point of owning gold is NOT to get rich but to stay rich, and sometimes, simply by staying rich, you can become very wealthy indeed — just as Williams did.
Owning gold isn't about the price. Trading it is. Owning gold is all about possession.

For the last couple of years, the traders have been in control of the price and have driven it down because it stopped going up. That sounds simplistic, but it's true. During that time, however, the investors have taken advantage of the leverage applied on top of the physical gold market to acquire more.

A lot more.

One of the big reasons this isn't readily apparent to Western investors is the fixation in that part of the world with trading gold. Here in the East, it's all about ownership.
If you talk to most people in the West about gold, they have no idea about the price or its recent direction. Narrow your sample audience down to those with a passing interest in finance, and they will likely know that gold is an awful investment whose price only goes down. (Had we conducted this little survey in 2011, the results would have been different, but that only illustrates the point.)

Ask a random group of people in the East about gold, however, and the conversation is completely different.
In this part of the world, people talk about how much gold they (or their parents or their grandparents) own. They will tell you stories of the first time they handled a gold coin (usually as a child), and they will know the price but not have much of an opinion on how good or bad gold's performance has been — it will be far less relevant to them. They just know that you don't trade gold; you own it.
To further illustrate this point, let's talk about our old friends the world's central banks.
The chart showing the 25 largest central bank holders of the world's gold looks like this


Source: WGC

If we take a look at the changes in those holdings between 2008 and 2013, an interesting phenomenon emerges: central banks in the East, as their reserves have grown, have been accumulating gold:

chart4

Source: WGC


Since 2008, the central banks of China, Russia, India, Turkey, Saudi Arabia, Thailand, and the Philippines have increased their gold holdings on average by 119.67%. This number is derived from the available data published by central banks, which, let's face it, can be a little sketchy in some jurisdictions.
Like the data disseminated by China, for example.
In 2009, the PBoC announced that its gold reserves had leapt from 600 tonnes to 1,054 tonnes — an increase of 75% — and there those reserves have stayed. Officially.
That's the Party line. However, there is overwhelming evidence that suggests China's gold reserves have increased by significantly more than 75% since March of 2008:

(Shanghai Daily): China's gold consumption and production both notched new records last year as bullion prices plummeted, spurring feverish sales of jewelry and bars in the world's biggest gold market.

China's gold demand jumped 41.4 percent annually to 1,176 tons in 2013, led by strong growth in jewelry and bars, the China Gold Association said in a statement on its website today. The national industry association is comprised of exploration, mining, processing, manufacturing and other gold-related industries.

China's yearly consumption has topped India's 1,000 tons, making it the world's biggest gold market in 2013, according to data from the domestic association and the World Gold Council.

The World Gold Council said in November that India's combined demand for bullion in the first three quarters was 715 tons, while China's was 821 tons.

So I think it's safe to describe the demand for gold in China as "pretty healthy," don't you? No surprise to the investors in the physical metal, sure, but perhaps news to the traders of paper?
In addition to experiencing a huge surge in demand for gold, China has managed to keep a streak going on the other side of the supply/demand dynamic:
(Shanghai Mouthpiece Daily): On the supply side, China has been the top bullion producer for seven straight years. Gold production increased 6.2 percent from a year earlier to 428 tons in 2013, the China Gold Association said.

Koos Jansen did a little digging of his own:
(Koos Jansen): Friday the numbers were released on total Chinese gold demand for 2013. Total demand can be measured by the amount of physical gold that is withdrawn from the vaults of the Shanghai Gold Exchange. In the last full trading week (#52, December 23 – 27) of 2013 there were 53 tons of physical gold withdrawn, which brings the yearly total to 2181 tons.

Yes, total Chinese demand for 2013 was 2181 tons, excluding PBOC purchases....

So, for China, being the largest producer of gold in the world — again — was not enough. They needed more, for some reason. (Nota bene, Koos's numbers for mine supply in the chart below include all the gold produced by both China and Russia. Why do I mention that? Read on).





Total Chinese demand for gold was 2,181 tons, EXCLUDING PBoC purchases (the PBoC apparently do not buy any gold through the Shanghai exchange), which is a pretty staggering number for a country whose official reserves total less than half that sum ... but it gets better.

In an open letter to the World Gold Council in late 2013, Eric Sprott (a man who embodies the essence of a gold investor as opposed to a trader) broke down global supply and demand (insofar as the data opacity allows). His results are presented here:



See that number there? The one in red? Well, the amount of gold physically delivered through the Shanghai exchange in 2013 was 38 tons MORE than the year's entire available global mine production. (I say "available" because neither China nor Russia allows the export or sale of a single ounce of gold mined within their borders.)

Think that doesn't matter?

China has stayed silent on the levels of its gold reserves since 1999; but rather curiously, there recently began a wave of speculation that the Chinese were about to clue us in with a more current number. It started with a story in the Shanghai
Mouthpiece Daily:
(Shanghai Mouthpiece Daily): China may soon announce an increase in its official gold reserve from 1,054 tons to 2,710 tons, Jeffrey Nichols, managing director of American Precious Metals Advisors, said.

The People's Bank of China has not reported any increase in official gold holdings since 2009, when the central bank said the official reserve was at 1,054 tons, which accounted for only about 1 percent of its multi-trillion foreign exchange reserves.

The PBOC has been "surreptitiously" adding to its official gold reserves. It has bought a total of 654 tons in 2009 through 2011, another 388 tons in 2012, and more than 622 tons last year, mostly from domestic mine production and secondary supplies, Nichols said in a commentary posted on NicholsOnGold.com yesterday.

Suddenly, the math was being done in even the most unlikely of places:
(FT): A 500-tonne gap in China's gold consumption data is fueling talk that the central bank took advantage of weak prices last year to bulk up its holdings of the precious metal.

The last time the Chinese central bank said it increased its gold holdings was nearly five years ago, in early 2009. Officials have since then repeatedly insisted that they do not view gold as a useful asset for diversifying the country's $3.8tn mountain of foreign currency reserves.

But the latest official figures show that China imported and produced far more gold in 2013 than its citizens bought. This chasm suggests that the central bank was a buyer in the gold market last year in spite of its protestations to the contrary, say analysts....

Adding up the reported and estimated figures, Na Liu, of CNC Asset Management, calculated that China's "apparent gold consumption" exceeded 1,700 tonnes in 2013, more than 500 tonnes higher than reported.

"We would not be surprised to hear the People's Bank of China announce a new, significantly higher figure, if it chooses to do so," Mr Na said. The PBOC has said that its gold reserves have been steady at 1,054 tonnes since April 2009.
Right in the middle of that article lies the key point:
Officials have since then repeatedly insisted that they do not view gold as a useful asset for diversifying the country's $3.8tn mountain of foreign currency reserves.
Gold is NOT a useful asset for diversifi.... look!! Over there!!! A squirrel wearing a raincoat!
DISTRACTION!!!!
Central banks continually rubbish gold as a worthless asset class because it constricts their ability to produce money at the push of a button. Not only that, but it offers their citizens the means to reduce their reliance upon a nation's fiat currency — one has only to look at the goings-on in India last year to see what THAT looks like.

Deep down, though, central bankers know what gold is for and why you hold it. They know.

In 1999, a group of central banks came together through the Washington Agreement on Gold to jointly manage sales of the precious metal. That agreement worked fairly well for a period of time (it was renewed twice, in 2004 and 2009, and will be up for renewal again this year), BUT there are a couple of things worth pointing out about that little agreement.

Firstly, take a look at the central bank signatories:
Österreichische Nationalbank — Austria
Banque Nationale de Belgique — Belgium
Suomen Pankki — Finland
Banca d'Italia — Italy
Banque de France — France
Banco de Portugal — Portugal
Schweizerische Nationalbank — Switzerland
Banque Centrale du Luxembourg — Luxembourg
Banco de España — Spain
Bank of England — United Kingdom
Deutsche Bundesbank — Germany
De Nederlandsche Bank — The Netherlands
Central Bank of Ireland — Ireland
Sveriges Riksbank — Sweden
ECB

See any Eastern central banks in that list? No.
Why? Well, for two reasons: one, they didn't have any "surplus" gold, and two, THEY'RE NOT SELLERS.
Secondly, take a look at the text of the Washington Agreement:
In the interest of clarifying their intentions with respect to their gold holdings, the above institutions make the following statement:
Gold will remain an important element of global monetary reserves.

The above institutions will not enter the market as sellers, with the exception of already decided sales.

The gold sales already decided will be achieved through a concerted programme of sales over the next five years. Annual sales will not exceed approximately 400 tonnes and total sales over this period will not exceed 2,000 tonnes.

The signatories to this agreement have agreed not to expand their gold leasings and their use of gold futures and options over this period.

This agreement will be reviewed after five years.
The first statement in that agreement? "Gold will remain an important element of global monetary reserves."
DISTRACTION!!!
Penultimate statement of the agreement? "The signatories to this agreement have agreed not to expand their gold leasings and their use of gold futures and options over this period."
But, wait? You mean they lease their gold out? But I thought ... oh, never mind.
Interestingly, when the agreement was resigned in 2004, that text had changed:
"... the signatories to this agreement have agreed that the total amount of their gold leasings and the total amount of their use of gold futures and options will not exceed the amounts prevailing at the date of the signature of the previous agreement."
And ... by the time the third Washington Agreement was signed in 2009 (during which time the price had risen three-fold) that section of text had disappeared altogether.
Hmmm...

The Washington Agreement worked when central banks were selling their gold because there were always buyers, at lower and lower prices — those were the investors soaking up the bullion.
NOW we have a bunch of central banks aggressively trying to BUY gold; and what they're finding (unsurprisingly) is that the investors aren't sellers, so the only people left from whom to acquire gold are the traders — and they have a very limited supply of actual metal:


Source: Bloomberg

That's a chart I've used before, and I use this previous version again here rather than redraw it, because the two vertical dotted lines are important.

Venezuela broke ranks first, demanding repatriation of its gold in early 2011 — a move which, counterintuitively, stopped the rising gold price in its tracks. A similar request from the Bundesbank in January of 2012 for a far larger amount saw the beginning of a strange but massive outpouring of physical gold from the major trading repositories — the COMEX warehouses and the ETF vaults.
Meanwhile, as the earlier charts and the recent data out of China show, Eastern central banks are buying — AND TAKING PHYSICAL POSSESSION OF — as much gold as they can, as fast as they can, because they KNOW what it represents.
Now let me ask you this:

If the very people who have the ability to basically create all the paper money they want out of thin air, whenever they need it, are exchanging that paper for gold at a record pace, what conclusions could you draw?
Would you think for a second that they are accumulating gold because they think the price is going to go up and they can make a quick profit?
Of course they're not.

Do you think they'll sell all their gold when the price reaches $2,000? How about $2,500?
When Western central bankers rubbish gold as a "barbarous relic" or, as in the case of Ben Bernanke shortly before he started his job at The Brookings Institution left office in January, admit to a complete lack of understanding of it, does it not strike you as strange that, having accumulated significant stockpiles of gold over the years, they aren't in a hurry to swap any of it for paper money (well, with the notable exception perhaps of the United Kingdom, thanks to the antics of Gordon Brown, King of the Idiot Chancellors)?
It shouldn't.

Gold is held by Western central banks for exactly the same reason individuals ought to hold it: protection.

Central banks are accumulating gold because it cannot go BANG! like fiat currencies do.
Individuals should be doing the same — not being sidetracked by the distractions.
It's not about price. The story Jared shared with us demonstrates that beyond any doubt.
If you own gold, it will do all the heavy lifting for you when the time comes, just as it did for George Walton Williams.
It seems only fair to leave the final word this week to Jared, who, in a postscript to the story of the Calhoun Mansion added this:
If Calhoun had been paid in quarters, he would be just as rich today. But not because 800,000 quarters as CURRENCY held their value. It is because the silver content in those 800,000 quarters is worth about $4,000,000 today.
Bingo!
Hopefully that clears a few things up.

_____________

[symontk]

If BOE is holding those 200 tons of Gold then we should get it back ASAP. See no reason why we should be keeping our gold in BOE when the coming crises would make Gold a significant player and there is little chance we would get our gold back if they refuse to give.

Actually huge amount of gold is held there. whenever in the past there was a discussion to bring the same, it all ended up without a decision due to the security required for the physical move

May be this new idea will work out

[Austin]

Fly in an IAF plane and get it back what security one needs ? After all US flew gold out of Iraq and Ukraine the same way.

[Austin]

Three Chart Alarm: The Fed Has Set-Up The Corporate Bond Market For A Big Fall

[Austin]

Informative Episode on Fracking by Max Kaiser seems Fracking Industry is in perpetual Red

http://rt.com/shows/keiser-report/17797 ... ax-keiser/

Max Keiser and Stacy Herbert discuss how the UK stopped worrying and learned to love the FRACK! For there can be no mine-shaft gap, nor fracking well gap. In the second half, Max interviews precious metals expert, Alasdair Macleod, about the Argentine default, China’s gold and London’s gold fix.

[svinayak]

http://en.wikipedia.org/wiki/Louis_Thomas_McFadden

"It was a carefully contrived occurrence. International bankers sought to bring about a condition of despair, so that they might emerge the rulers of us all."

Louis McFadden on 1929 Stock Market Crash. Louis McFadden died of poisoning shortly thereafter.



"For a long time I felt that FDR had developed many thoughts and ideas that were his own to benefit this country, the United States. But, he didn't. Most of his thoughts, his political ammunition, as it were, were carefully manufactured for him in advanced by the Council on Foreign Relations - One World Money group. Brilliantly, with great gusto, like a fine piece of artillery, he exploded that prepared "ammunition" in the middle of an unsuspecting target, the American people, and thus paid off and returned his internationalist political support.
"The UN is but a long-range, international banking apparatus clearly set up for financial and economic profit by a small group of powerful One-World revolutionaries, hungry for profit and power.

"The depression was the calculated 'shearing' of the public by the World Money powers, triggered by the planned sudden shortage of supply of call money in the New York money market....The One World Government leaders and their ever close bankers have now acquired full control of the money and credit machinery of the U.S. via the creation of the privately owned Federal Reserve Bank."

Curtis Dall, FDR's son-in-law as quoted in his book, My Exploited Father-in-Law
http://www.gnosticliberationfront.com/dall.pdf

[Austin]

Russian companies opt for Hong Kong dollar as new reserve currency

MOSCOW, August 4. /ITAR-TASS/. As the U.S. and EU introduce new sanctions, Russian companies are shifting cash to Hong Kong dollars and depositing them with Chinese banks.

Potential risks linked to Western sanctions prompted Russian mobile operator MegaFon, controlled by business tycoon Alisher Usmanov, to convert some of its cash into Hong Kong dollars, said the company’s Chief Financial Officer Gevork Vermishyan. According to Bloomberg financial news agency, mining and metallurgical company Norilsk Nickel has taken the same step. Chinese media report Hong Kong dollars are deposited on accounts with Chinese banks.

This trend takes place at the same time as Russia and China switch to payments in rubles and yuans. During Vladimir Putin’s visit to China in May, Russian VTB and the Bank of China agreed not to use dollars in transactions between the two countries.

Reorientation towards an Asian financial system is not without risks, vice-president of the Association of Regional Banks Oleg Ivanov told Rossiyskaya Gazeta daily. But Russia has already started working to reduce them to a minimum.

Exchange rates and currency stability is the chief stumbling block. There is no guarantee that the value of any of the two national currencies will not change dramatically in a year or several years. The dollar and euro are steadier in this respect but even this problem can be resolved, said Ivanov.

“Some international mechanisms can help maintain stability,” the expert said. The Central Bank of Russia and its Chinese counterpart were now considering a foreign exchange swap agreement, he added. This means the banks will be able to make transactions in national currencies and then swap yuans accumulated in the CBR for rubles in the Chinese central bank on mutually beneficial conditions.

The preference for the Hong Kong dollar as a new reserve currency caused no raised eyebrows among analysts. On the one hand, it is strictly pegged to the U.S. dollar. Besides, it is the currency of China’s special administrative region, albeit under a “one country - two systems” formula, and is therefore much less prone to risks connected to Western sanctions. In April 2013, the Hong Kong dollar ranked among 15 most-traded currencies with a $77 billion average daily turnover, according to the Bank for International Settlements.

“There are many restrictions for the Chinese yuan; it is not a freely convertible currency, while the Japanese yen causes certain concerns now,” Alfa-Bank analyst Natalya Orlova is quoted by Vedomosti daily as saying. “Russian companies’ willingness to shift to the Hong Kong dollar might be due to their attempts to make international payments through Hong Kong.”

Singapore's dollar was another option but would not imply such a strong link to China, she added.

On the first wave of sanctions that affected the Russian bank Rossiya and SMP Bank, many banks hastened to open accounts on Hong Kong, said former director of research at Otkritie bank Kirill Tremasov.

The choice is logical, said lecturer at the business and management strategy department of the Russian Presidential Academy of National Economy and Public Administration Teymuraz Vashakmadze. “The Hong Kong dollar is more liquid than yuan, and there are only a few liquid currencies in the world,” he told Itar-Tass.

Major Russian companies with production assets in the U.S. might follow the example, he added.

This decision was in line with the government’s general course to avoid the dollar where possible, lecturer at RANEPA Institute of Natural Monopolies Research Vladislav Ginko told Itar-Tass. “Hong Kong is an international financial centre, and the Hong Kong dollar is a highly predictable currency,” the expert added.

“Russian companies' wish to diversify is understandable as the situation is uncertain and risks are high,” lecturer at Higher School of Economics world economy department Pyotr Mozias told Itar-Tass. “The more so since talks have intensified recently about Russia’s reorientation towards Asian financial markets.”

Even so, he added, the Hong Kong dollar cannot become a viable alternative to the U.S. dollar in Russia. “This is a temporary trend, and even East Asia rather considers the yuan its regional currency,” Mozias said.

Russians will hardly buy Hong Kong dollars instead of U.S. dollars and euros to secure their savings, experts say.

“We should not forget that Russians are conservative; quite a few have never even heard of the Hong Kong dollar,” said Ginko. “Besides, it is rarely accepted even in Moscow.” “Banking infrastructure is not yet ready for that, and the difference between buying and selling rates will be large,” said Vashakmadze, adding that if Russians are to choose any currency, this would more likely be the Swiss franc.

[chetak]

If BOE is holding those 200 tons of Gold then we should get it back ASAP. See no reason why we should be keeping our gold in BOE when the coming crises would make Gold a significant player and there is little chance we would get our gold back if they refuse to give.

Actually huge amount of gold is held there. whenever in the past there was a discussion to bring the same, it all ended up without a decision due to the security required for the physical move

May be this new idea will work out

Move it by Naval Warship(s) with required security and oversight by any acceptable authority

[vic]

Fly one ton of Gold per flight. Use American airlines. How do you think USD 60 Billion dollar of Gold and diamonds are imported into India each year?

[TSJones]

that gold is being used as a reserve or as collateral for India's leveraged positions on currency swaps and loans. In other words it's being used for India's benefit. go ahead take the gold back, it will be fun to see what happens.

[vic]

We don't need to use GOLD we have USD

[vishvak]

On a sidenote, the Indian govt. should consider taking a part of own gold reserves. Push all members of New Development Bank deposit n thousand tons of gold (equal amount of gold for each members) under no-movement guarantee. This gold should be used only for currency swaps and not as reserve against collateral even - thereby making such huge wealth available by each member for trade without any risk over time - very much similar to currency swaps in London/NY. On the other hand, London and NY are ongoing center of financial trade and no amount of gold movement is going to change it anyway.