Swiss gold vote threatens foundations of global currency system

[mania]

You are linking to Gold Eagles which are actual US currency in gold coins. They have numismatic value above the value of the gold.

You need to be looking at simple bullion, even 1 oz rounds. I can buy that all day long for 1.5% over world spot in person, for cash, at a gold shop.

Well yes I did link an Eagle as an example & yes it can be "considered" a currency in the US & even held as a IRA

Since it once was a currency of the US

Yes you can even pay your taxes with eagles if you want but they will be accepted as the value stamped on them long ago not today's price.

So if you want to use a $1200 dollar spot value coin & get $50 credit against it go for it

Also when you say numismatic values you are referring to coins collectors buy....Or what is called NGC certified or a sort of flawless coin etc.

They will cost you closer to $200 above spot

They have no meaning to folks who buy to hold or as insurance/investment & It is not what I used as an example

I was referring to straight eagles etc. Random years etc. But what I said is also true

of generic rounds bullion etc...In the US

Generic bars or rounds are also a bit more than 1.5% above spot...from a trusted seller ( again in the US as here we have no premium in Thailand )

Cheapest secondary market bar is even now with gold at $1175spot selling for $1207-$1249

at same example of a big trader I linked before http://www.apmex.com/category/19420/1-oz-gold-bars-rounds

Many stick to various known coins as they are easily sold anywhere in the world & the coin with the cheapest premium has always been the South African Krugerrand

If buying a bar they use something like a Credit Suisse

Although you can save a bit by buying even this dealers own 1oz bar

Edited November 2, 2014 by mania

[mania]

So, if I understand what you wrote, it means that whereas the dollar used to be backed up with gold (the gold standard), now gold is backed up by the dollar?

Who on earth, if that is right, would buy paper gold?

"s the COMDEX's right to pay in USD if they so choose."

Comex (Commodity Exchange, Inc.) a division of the New York Mercantile Exchange (NYMEX)

They sell futures, options etc & like many trading markets it is just another form of gambling

You buy gold futures betting today's price is lower than at contract expiration etc.or buy options.

But it has long been questioned that this whole game they play is what gives false prices

or the ability to move the price for example by selling more than what physically exists knowing the majority

of traders will never come for it but just trade paper. Or maybe they claim overlaps

If ever the traders all said ok we want our metal they... comex... reserve the right to give you the fiat equivalent

Which is why when it comes to metals there is the old saying “if you don't hold it, you don't own it”.

Edited November 2, 2014 by mania

[thailiketoo]

Off to the gold shop this morning. Won't hurt to have a few baht sitting under the mattress.

We were in Chinatown Bangkok yesterday. I have not seen so many customers in the 2 shops I observed. They must have read your post

Do you mean the shops were busy and the price of gold was going up?

[Robert24]

@mania: just wanted to add some detail about the Gold futurea on CME. As you know NYMEX is now part of CME. The Gold futures contracts are physically deliverable on expiry, no issues with that. 1 contract is 100 oz of Gold. So if you are long 1 contract on expiry you will get 100 oz, if short you have an obligation to deliver 100 oz. No issues with that. Standard procedure as with all othe commodities be it Oil, Coal, Metals, Ags etc. And by the way they are not allowed to cash settle the contract ad you indicate. If you are short and fail to deliver, again there is a standard as to how the CME will proceed, ie ultimately buying the phyisical themselves and deliver to the party that is long.

[mania]

@mania: just wanted to add some detail about the Gold futurea on CME. As you know NYMEX is now part of CME. The Gold futures contracts are physically deliverable on expiry, no issues with that. 1 contract is 100 oz of Gold. So if you are long 1 contract on expiry you will get 100 oz, if short you have an obligation to deliver 100 oz. No issues with that. Standard procedure as with all othe commodities be it Oil, Coal, Metals, Ags etc. And by the way they are not allowed to cash settle the contract ad you indicate. If you are short and fail to deliver, again there is a standard as to how the CME will proceed, ie ultimately buying the phyisical themselves and deliver to the party that is long.

Hi

Yes I know about CME but on the settlement I am 99% sure I read in their site somewhere that if physical is not available a cash option existed.

(on longs...I do not know about shorts)

Also back in 2008 many could not collect for months due to shortages.

I will see if I have a link handy or can find that part I read on CME's site

Edit: I do not have any links handy as I have been out of it for a few years

but this is pretty much the gist of it

http://www.rapidtrends.com/understanding-paper-versus-physical-gold/

Also interesting is that a site/blog I use to watch by Harvey Organ which tracked the daily coming & goings of

CME Comex has just recently been deleted by court order? Odd? As it was deleted this month & I watched it for years back in 2008-2012

http://jessescrossroadscafe.blogspot.com/2014/10/harvey-organs-gold-and-silver-blog-have.html

Although a internet archive still exists

https://web.archive.org/web/20140701000000*/http://harveyorgan.blogspot.com/

Edited November 2, 2014 by mania

[cloudhopper]

Take a look at history.. 99% of the worlds fiat currency's have collapsed bringing hardship to most of the people.Gold and silver have been used as real

money for nearly 5000 years and has never been worthless.The debt in the world today is so big it can never be repaid..

My choice...gold and silver in my hands and not in banks or bullion dealers..

There are almost 200 currencies in circulation, and all of them are "fiat currencies" or tied to another currency. (Even sizable gold reserves make no difference if the currency cannot be redeemed in gold at any time. It is still a fiat currency)

So [logically] all (not 99%) commodity based currencies (clams, gold, etc.) have failed. Surely eventually all fiat currencies will fail and all the species will become extinct. Eventually.

And please provide a link to a list of those [approximately] 19800 failed currencies. I can only find about 600 and most of those failed due to political turmoil of one sort or another, not simply due to some inherent failure of the fiat currency concept.

Well said MrY and it is the corrupt political class that is currently whipping the world's central banks to create exponentially increasing money debt to fund their bread and circus programs. And that is why they cannot tolerate any constraints to their money creation deficit spending. Those pointing to GDP fail to understand that the state can devalue the currency deficit spend to any level of GDP it wishes, but that is hardly a valid indicator of prosperity. A fiat currency does not need to be based on a gold standard to function properly, but is doomed to failure once the political class begins to exponentially devalue it, as is happening. The Swiss voters are being offered the opportunity to opt out of the current global currency devaluation.

[maidee]

why keep gold, when you can print valueless money and only hold 10% of the real value in the vaults ...

banksters ideas that corrupted the world & the economy, over & over again

and it is the people that have to save them, when they gambled away the money on useless assets, none of the experts every seen to have been capable of value at its true worth

[Publicus]

Take a look at history.. 99% of the worlds fiat currency's have collapsed bringing hardship to most of the people.Gold and silver have been used as real

money for nearly 5000 years and has never been worthless.The debt in the world today is so big it can never be repaid..

My choice...gold and silver in my hands and not in banks or bullion dealers..

There are almost 200 currencies in circulation, and all of them are "fiat currencies" or tied to another currency. (Even sizable gold reserves make no difference if the currency cannot be redeemed in gold at any time. It is still a fiat currency)

So [logically] all (not 99%) commodity based currencies (clams, gold, etc.) have failed. Surely eventually all fiat currencies will fail and all the species will become extinct. Eventually.

And please provide a link to a list of those [approximately] 19800 failed currencies. I can only find about 600 and most of those failed due to political turmoil of one sort or another, not simply due to some inherent failure of the fiat currency concept.

Well said MrY and it is the corrupt political class that is currently whipping the world's central banks to create exponentially increasing money debt to fund their bread and circus programs. And that is why they cannot tolerate any constraints to their money creation deficit spending. Those pointing to GDP fail to understand that the state can devalue the currency deficit spend to any level of GDP it wishes, but that is hardly a valid indicator of prosperity. A fiat currency does not need to be based on a gold standard to function properly, but is doomed to failure once the political class begins to exponentially devalue it, as is happening. The Swiss voters are being offered the opportunity to opt out of the current global currency devaluation.

The current currency devaluations such as in Russia are temporary, limited, reversible....the sanctions come, the sanctions go.

Currency devaluations are incidental rather than structural or being commanded to occur by the market. Devaluation is implemented by policy makers to correct a correctable problem over the short term.

The CCP Boyz in Beijing are notorious currency devaluators due to their strict mercantilist policies. The CCP Boyz under U.S. pressure have altered their devaluation policies but only somewhat and never by much, which is a policy decision rather than the result of market forces.

The Swiss gold initiative comes from a right wing extremist political party which gathered the requisite 100,000 referendum signatures. The consequence is that the Swiss Franc will be tested by market forces before the referendum occurs. Being shredded is quite different from being devalued, as I'd be sure others can appreciate.

Edited November 2, 2014 by Publicus

[thailiketoo]

If the Swiss back up their currency with gold then the Bank of Switzerland will not be able to keep the Swiss Franc low and Swiss imports will go to heck and the country will go into a depression.

[recycler]

If the Swiss back up their currency with gold then the Bank of Switzerland will not be able to keep the Swiss Franc low and Swiss imports will go to heck and the country will go into a depression.

The main exports and imports of Switzerland are gold and medicine than watches are only export.

So no matter what the value of the Swiss Franc is, this won't be affected a lot.

They currently have a problem to produce enough "mid range" watches, that is between 20K and 100K US$ the vast majority of those is sold to Chinese and other Asians. There is so much margin in this that a few percent more or less on the Franc won't do anything.

[thailiketoo]

If the Swiss back up their currency with gold then the Bank of Switzerland will not be able to keep the Swiss Franc low and Swiss imports will go to heck and the country will go into a depression.

The main exports and imports of Switzerland are gold and medicine than watches are only export.

So no matter what the value of the Swiss Franc is, this won't be affected a lot.

They currently have a problem to produce enough "mid range" watches, that is between 20K and 100K US$ the vast majority of those is sold to Chinese and other Asians. There is so much margin in this that a few percent more or less on the Franc won't do anything.

Exports of goods and services (% of GDP) in Switzerland was last measured at 53.55% in 2010, according to the World Bank.

1863.70 CHF Million Exports of Watches & Clocks

5535.93 CHF Million Exports of Pharmaceuticals, Vitamin, Diagnostic P

7145.24 CHF Million Exports of Chemical Products (total 1)

3813.67 CHF Million Exports of Mechanical Engineering (total 1, Wda)

http://www.tradingeconomics.com/switzerland/exports

Press release from Swiss National Bank

The current massive overvaluation of the Swiss franc poses an acute threat to the Swiss economy and carries the risk of a deflationary development.

The Swiss National Bank (SNB) is therefore aiming for a substantial and sustained weakening of the Swiss franc. With immediate effect, it will no longer tolerate a EUR/CHF exchange rate below the minimum rate of CHF 1.20. The SNB will enforce this minimum rate with the utmost determination and is prepared to buy foreign currency in unlimited quantities.

Read more: http://www.businessinsider.com/wow-swiss-national-bank-takes-intervention-to-a-new-level-franc-plunges-2011-9#ixzz3HyK6xf7v