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Thread: Interpretation needed

  1. #1
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    Default Interpretation needed

    here is a very interesting article describing the potential for Yuan to become the new reserve currency:

    http://www.financialsense.com/editor...2009/0424.html

    It states: "We believe that the recent moves to introduce the Yuan across the globe will shrink the use of the $ in global trade. With the U.S. in decline, will come a fragmentation of world monetary power. In such a climate, gold will be attractive again, as a long-term investment, as a protection against the uncertainties and strains this will cause. It will also become a more vital hedge against local currency volatility."

    However, the meaning of this is not quite clear, at least to me:
    "When governments contemplate gold’s use in money again, you can be sure they will want the metal to themselves and exclude Joe public!"

    Can anyone explain what the governments can do to exlude the public from profiting from the appreciating price of gold? Are they talking about gold confiscation here?

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    Default Re: Interpretation needed

    ^^^ that was obviously the successful technique used by FDR during the depression. He simply declared private ownership of gold to be illegal, forced individual owners of gold to sell it to the gov't at an 'official' price of something like $20 / oz, and as soon as the gov't was the new owner of the gold the price jumped to $35 / oz !

    Arguably an alternate method of limiting individual ownership of gold is for the US mint to create a shortage of small denomination coins. There aren't too many individuals who can afford to buy gold if the minimum buy-in is a 100 oz COMEX bar (current market value over $90,000). Coincidentally, the US mint has 'run out of' 1 oz coins on more than one occasion this year !!! Obviously to make this scheme work, other countries' mints as well as bank refiners have to 'co-operate' in maintaining a shortage. Doubly coincidentally, both foreign 1 oz gold coins and bank refiner 1 oz gold bars are also very hard to obtain these days.

    On the subject of China posturing to make the yuan a serious rival as the world's reserve currency, the Chinese gov't has just completed the creation of Yuan based currency swap agreements with several Asian and south American countries. These basically amount to a Chinese gov't backed loan to these countries, but a loan that can only be spent on items priced in Yuan (i.e. products made in China or other countries with similar swap agreements in place).

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    God/dess Deogol's Avatar
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    Default Re: Interpretation needed

    Since they make everything anyhow, it will be the default currency no matter what they try to do not to make it so. Especially if they are lending out money that needs to be paid back as their currency instead of the dollar.

    The rest of it is "gold bug" chatter.

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