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Thread: Iran switches reserves to gold

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    Default Iran switches reserves to gold

    http://www.guardian.co.uk/business/feedarticle/8025778

    Iran has converted financial reserves into gold to avoid future problems, an adviser to President Mahmoud Ahmadinejad said in comments published on Saturday, after the price of oil fell more than 60 percent from a peak in July.
    Iran, the world's fourth-largest oil producer, is under U.N. and U.S. sanctions over its disputed nuclear programme and is now also facing declining revenue from its oil exports after crude prices tumbled.
    "With the plans of the presidency...the country's money reserves were changed into gold so that we wouldn't be faced with many problems in the future," presidential adviser Mojtaba Samareh-Hashemi was quoted as saying by business daily Poul.
    He gave no figures or other details.
    Before oil prices plunged by more than 60 percent from a peak of $147 per barrel in July, Iran made windfall gains from its crude exports and in April estimated its foreign exchange reserves at about $80 billion.
    Iranian officials in July denied reports Iranian banks were moving funds from Europe, with one report suggesting as much as $75 billion had been withdrawn and converted into gold or placed in Asian banks, because of a threat of tightening sanctions.
    The International Monetary Fund said in August that if the price of Iranian crude fell to $75 a barrel, Iran would face a current account deficit in the medium term that would be tough to sustain due to Tehran's financial isolation.
    On Friday, U.S. crude fell $1.20 at $57.04.
    Gold futures ended more than 5 percent higher on Friday and bullion ended the week about $10 higher compared with its last Friday's close of $735.95 as investors covered short positions.

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    Default Re: Iran switches reserves to gold

    well there have certainly been a lot of 'pointed questions' coming out of the 'gold bug' community for the last few months, which centered on three issues ...

    - with the price of gold on the commodity exchanges remaining relatively stable, why weren't the gold refiners able to keep up with deliveries ?

    - with the price of gold on the commodity exchanges remaining relatively stable, why was it extremely difficult for retail precious metals dealers to actually obtain additional supplies of small denomination gold coins and bars ( with what little bit of 'product' that was actually available being sold at a huge cost premium over the official commodity exchange price) ?

    - with the price of gold on the commodity exchanges remaining relatively stable, why were central bank lease rates to 'borrow' gold rising sharply ?

    This led the 'gold conspiracy theorists' to draw the conclusion that a whole lot of physical gold was being taken off the market by some unknown 'player', with the commodity exchange price being kept stable by the sale of 'paper' gold to essentially replace the 'real' gold. Obviously, if this is really the case, then some months down the road the recently sold 'paper' gold, i.e. gold leased from central banks and sold on the commodity exchanges or gold futures contracts backed by absolutely nothing sold on the commodity exchanges, will have to be 'covered' by repurchases / deliveries of 'real' gold.

    Also in the news, the Saudis have in fact managed to purchase 3.5 billion worth of 'real' gold in the past two weeks -->


    Not wanting to rely on 'coincidence', but it would seem more than a mere accident that the Iranian / Saudi announcement exactly coincides with this weekend's G20 meeting - where the financial leaders of the major countries are likely planning the future destiny of their paper currencies.


    One 'gold conspiracy theorist' issued the following prognostication ...

    (snip)"Analysts Predict Hyper-Inflation To Push Gold To $2000, Oil to $300 Within Months
    Investors warn liquidation of assets and deflation is temporary calm before the storm

    Steve Watson
    Infowars.net
    Thursday, Nov 13, 2008

    Economic experts have predicted that rampant inflation caused by government stimulus packages will soon take hold of the economy and force precious commodity prices to all time highs.

    Johann Santer, MD at Superfund Financial Hong Kong told CNBC that he expects to see gold climb from its current position at $710 to a whopping $1500-$2000 an ounce within the next three months.

    "Should money should be going into cash, paper?" asked CNBC anchor Martin Soong, to which Santer replied in the negative:

    "Not necessarily, we see that for the time being this remains the right strategy to be in, of course people are quite nervous, but once we start to understand again that it will not really protect us from inflation, which most likely will come in the long run, because of all the stimulus packages, I would assume that we should also start looking at the gold price at the moment and find opportunities there."

    Santer explained that deflation is not going to protect us from what he sees as inevitable heavy inflation in the long run caused by the huge amounts of money being pumped into the market in the name of saving the economy.

    Santer predicted that we may even see double digit inflation.

    "We better get prepared right away and start to look at real assets, for example gold could be really attractive at the moment, trading at $710." Santer added.

    "At the moment there is a major sell off in everything, people are really looking at cash and treasury bills but in the long run, we will not escape from inflation so we have a medium to long term target of $1500 within the next three months."

    Johann Santer's prediction mirrors that of numerous other fund managers and top investors such as Jim Rogers, Robin Griffiths and Jurg Kiener who are now predicting that global central banks' insistence on printing their way out of economic turmoil is setting the stage for a hyperinflationary holocaust, a knock-on effect of which will be gold's acceleration towards $2,000, as demand for precious metals outstrips supply. "(snip)

    from

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    Default Re: Iran switches reserves to gold

    Just heard on the Russian Business channel (www.rbctv.ru) :

    Russia is moving it's Reserves Fund out of dollars and euros and into rubles. The money will be deposited in Russian banks, and not overseas! And the CIS countries will be paying for Russian oil and gas in rubles!
    Revaluation of the ruble coming?

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    Default Re: Iran switches reserves to gold

    ^^^ it would appear that Russia will attempt to link the ruble exchange rate to the price of oil. This is a dangerous risk though unless the Russians are sure that other major oil producers (like Iran for instance) are willing to side with the Russians in raising or lowering oil production levels

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    Default Re: Iran switches reserves to gold

    it would also appear that the 'mysterious shortage' of gold accessible to small time investors has also hit the mainstream media ...



    (snip)"THERE'S a worldwide run on gold coins.

    Even as the price of the precious metal itself comes under pressure along with commodities like oil and copper, people around the world are demanding so many of the valuable coins that government mints are having difficulty filling orders.

    A spokesperson for the US Mint tells me that gold coins in this country, for the past month, "are being allocated because of an increased demand."

    And the price that the government charges coin dealers has recently been increased by as much as 10 percent for a 10-ounce coin.

    Robert Mish, a coin dealer in Menlo Park, Calif., says customers who want to purchase 200 gold coins often have to wait up to two weeks. Six months ago, he said, a purchase that size could have been filled immediately.

    Someone who recently tried to purchase 100 one-ounce American Eagle gold coins in the New York City-area was turned away, even though he'd uneventfully made purchases before through the same dealer.

    And even when gold coins are available, dealers report that customers are paying a bigger premium than they would have just a few months ago.

    Previously, American Eagle coins were going for 5 percent over the market price of gold on the Commodity Exchange (Comex). Now the premium can be anywhere from 10 percent to 15 percent, even though the US Mint raised its price to dealers by just 3 percent for an ounce coin.

    In one sense, the attraction for gold coins isn't surprising. Since ancient times, gold has been considered the safest investment to hold in times of uncertainty.

    With fears of future inflation rising and concern about the value of paper currency and government-debt increasing with each new recovery plan announced in Washington and in foreign capitals, the desire to hold gold grows.

    That part makes perfect sense. But there's another more puzzling aspect to the recent gold rush.

    Even as the demand for gold coins such as the Canadian Maple Leaf or the Krugerrand of South Africa has grown, the market price of the precious metal itself is off its highs.

    In early October, the price of an ounce of gold on the spot market was about $930 an ounce. With the commodities bubble bursting in recent months, gold declined into the upper $600 range. Spot gold closed yesterday at $739.90, down $2.60.

    Bill Murphy, chairman of the Gold Anti-Trust Action Committee, says the price of spot gold is even more perplexing given the demand for coins and the fact that central banks in Europe have stopped selling gold into the open market.

    "Gold should be moving up," Murphy says. "How could there be such a dichotomy between the historic high premium for coins all over the world and the low Comex price?" (snip)

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    Default Re: Iran switches reserves to gold

    okay... can someone dumb this down for me so I can understand?

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    Default Re: Iran switches reserves to gold

    Quote Originally Posted by Corgan View Post
    okay... can someone dumb this down for me so I can understand?
    BUY gold!


    (Sorry... My boss told me once "Trading's easy, right? It's just BUY or SELL)
    Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
    - Dr John Zoidberg

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    Default Re: Iran switches reserves to gold

    thank you!!!!

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    Default Re: Iran switches reserves to gold

    But seriously:
    (1) People used to keep their money in USD for safe keeping, but traditionally people switch to gold when they want something 'safe" (USD is questionably safe nowadays)
    (2) Wierd things are happening with gold supply, though. Where's it all gone? Are people buying up big? Why's the price not through the roof?

    Both of these make people think "damn, the price of gold is going to go up"
    Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
    - Dr John Zoidberg

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    Default Re: Iran switches reserves to gold

    try pondering this ...

    over the past year, the price of gasoline / food / gold etc. has not changed ... it is the 'purchasing power' of the US dollar that has actually changed.

    ... of course the above statement isn't strictly true for a variety of reasons. But the point remains that Americans are still accustomed to thinking of the US dollar as a fixed measure of value / purchasing power. In point of fact, since 1974 the US dollar has been nothing but green paper. Also in point of fact, since 1974 foreign countries have been exchanging real and valuable goods for ever increasing piles of green paper. However, they are now beginning to seriously worry in regard to what those piles of green paper will ever be able to purchase for them !!!

    Unlike the USA, Weimar Germans, Post-Soviet Russians, Argentinians, and present day Zimbabweans all understand what can happen to the purchasing power of their currency when the rest of the world 'loses faith' in their economies ( and ability to repay foreign debts, or lack thereof).

    Keep in mind also that the US dollars that the gov't is currently spending as part of 'bailout' plans aren't 'real' dollars ... they are actually borrowed dollars (in the form of US gov't bond sales to foreign investors) which our children and grandchildren will be expected to repay with interest.
    Last edited by Melonie; 11-20-2008 at 04:48 AM.

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    Default Re: Iran switches reserves to gold

    Quote Originally Posted by Melonie View Post
    ^^^ it would appear that Russia will attempt to link the ruble exchange rate to the price of oil. This is a dangerous risk though unless the Russians are sure that other major oil producers (like Iran for instance) are willing to side with the Russians in raising or lowering oil production levels
    That is what led to the Warsaw Pact collapse.

    Quote Originally Posted by Melonie View Post
    Unlike the USA, Weimar Germans, Post-Soviet Russians, Argentinians, and present day Zimbabweans all understand what can happen to the purchasing power of their currency when the rest of the world 'loses faith' in their economies ( and ability to repay foreign debts, or lack thereof).
    lol In those countries you've listed, in the latter two, it wasn't so much that the rest of the world lost faith, it's that their economies were run into the ground. The second, the way the central govt managed the economy. The first, well IMO, France got paid back when Germany waltzed through their country. lol Making Germany pay for WW1 was something we should have stopped, as well as putting the blame on them.

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    Default Re: Iran switches reserves to gold

    ^^^ arguably, from the point of view of the foreign lenders, the outcome was the same in all four cases. The foreign lenders were facing a reality that the loans / investments / debts they were owed by these four countries were not ever going to be repaid voluntarily. The foreign lenders responded by A. pulling as much money back out of these four countries as they were able, and B. refusing to lend these four countries any additional money.

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    Default Re: Iran switches reserves to gold

    Quote Originally Posted by Melonie View Post
    ^^^ arguably, from the point of view of the foreign lenders, the outcome was the same in all four cases. The foreign lenders were facing a reality that the loans / investments / debts they were owed by these four countries were not ever going to be repaid voluntarily. The foreign lenders responded by A. pulling as much money back out of these four countries as they were able, and B. refusing to lend these four countries any additional money.

    Except for Russia, yes, you describe the reactionary responses of the lenders, not the root causes. And even though there has been stipulations placed on the money, Russia hasn't had too many problems with loans.

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