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GATA - Gold Anti-Trust Action Committee
Manchester, Conn.
givvers: jason

The Gold Anti-Trust Action Committee was organized in January 1999 to advocate and undertake litigation against illegal collusion to control the price and supply of gold and related financial securities. The committee arose from essays by Bill Murphy, a financial commentator, and by Chris Powell, a newspaper editor in Connecticut, published at Murphy’s Internet site, www.lemetropolecafe.com.

GATA - Gold Anti-Trust Action Committee is not verified as a 501(c)3 organization.

Latest News

Jul 23, 2014

By Lindsay Fortado, Suzi Ring, and Gavin Finch
Bloomberg News
Wednesday, July 23, 2014

http://www.bloomberg.com/news/2014-07-23/u-k-fca-said-to-near-fx-rigging...

LONDON -- Talks to reach the first settlement in the currency-rigging probe are accelerating, with Britain's markets regulator preparing to reach a deal with a group of banks this year, people with knowledge of the talks said.

The Financial Conduct Authority is in talks with banks including Barclays Plc, Citigroup Inc., JPMorgan Chase & Co., and UBS AG, said the people, who asked not to be identified because the discussions are private. Royal Bank of Scotland Group Plc and HSBC Holdings Plc may also be part of the group settlement, one of the people said.

... Dispatch continues below ...



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The FCA is trying to fast-track the process and may levy any fines in the coming months, three of the people said. The watchdog is seeking to keep the scope of the deal narrow to speed up the settlement, two of the people said.

The talks are still continuing and an agreement may stretch into next year, the people added.

Representatives of the banks and FCA in London declined to comment on the talks.

Regulators and prosecutors are scrutinizing allegations that dealers at the world’s biggest banks traded ahead of their clients and colluded to rig the WM/Reuters rate, a benchmark that pension funds and money managers use to determine what they pay for foreign currencies.

More than 25 traders have been fired, suspended, or put on leave after the allegations emerged last year.

U.K. prosecutors at the Serious Fraud Office opened a criminal investigation into alleged fraudulent conduct in currency markets this week.

* * *

Join GATA here:

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Friday-Sunday, September 19-21, 2014

http://www.caseyresearch.com/summit/2014-fall

New Orleans Investment Conference
Hilton New Orleans Riverside Hotel
New Orleans, Louisiana
Wednesday-Saturday, October 22-25, 2014

https://jeffersoncompanies.com/landing/noic2014?IDPromotion=614011014520...

* * *

Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006:

http://www.goldrush21.com/order.html

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16

Jul 23, 2014

2:15p ET Wednesday, July 23, 2014

Dear Friend of GATA and Gold:

Fund manager Michael Pento predicts to King World News that when the Federal Reserve stops "quantitative easing," there will be a crash in asset prices and then the Fed will start up QE all over again:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/7/23_Th...

And Sprott Asset Management's Rick Rule tells KWN that resource prices are surprisingly strong even though there is no economic recovery:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/7/23_A_...

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.



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Join GATA here:

Casey Research 2014 Summit
Hill Country Resort and Spa
San Antonio, Texas
Friday-Sunday, September 19-21, 2014

http://www.caseyresearch.com/summit/2014-fall

New Orleans Investment Conference
Hilton New Orleans Riverside Hotel
New Orleans, Louisiana
Wednesday-Saturday, October 22-25, 2014

https://jeffersoncompanies.com/landing/noic2014?IDPromotion=614011014520...

* * *

Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006:

http://www.goldrush21.com/order.html

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16

Jul 23, 2014

U.S. Swaps Regulator O'Malia to Head Bank Lobby Group

By Douwe Miedema and Michelle Price
Reuters
Wednesday, July 23, 2014

A member of the U.S. Commodity Futures Trading Commission will become the new head of a bank lobby group that is fighting the derivatives regulator in court over a crucial new rule curtailing Wall Street.

The International Swaps and Derivatives Association said on Wednesday that Scott O'Malia, a Republican who often voted against new CFTC policy in the wake of the financial crisis, will become the trade group's next chief executive.

O'Malia will start his new job as of Aug. 18, ISDA said. The news came only days after O'Malia said he planned to leave the CFTC as of Aug. 8. ...

... For the rest of the story:

http://www.reuters.com/article/2014/07/23/us-regulator-derivatives-swaps...



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Join GATA here:

Casey Research 2014 Summit
Hill Country Resort and Spa
San Antonio, Texas
Friday-Sunday, September 19-21, 2014

http://www.caseyresearch.com/summit/2014-fall

New Orleans Investment Conference
Hilton New Orleans Riverside Hotel
New Orleans, Louisiana
Wednesday-Saturday, October 22-25, 2014

https://jeffersoncompanies.com/landing/noic2014?IDPromotion=614011014520...

* * *

Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006:

http://www.goldrush21.com/order.html

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16

Jul 23, 2014

10:40p ET Tuesday, July 22, 2014

Dear Friend of GATA and Gold:

The Got Gold Report's Gene Arensberg tonight looks again at trader positions in gold futures and concludes that "the gold trade," the people who do the biggest business in gold, "are currently positioned as though they do not believe that gold has any significant downside."

Arensberg's commentary is headlined "Comex Producer/Merchants in Gold, View from 30,000 Feet an Eye-Opener" and it's posted at the GGR here:

http://www.gotgoldreport.com/2014/07/comex-producermerchants-in-gold-vie...

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.



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Join GATA here:

Casey Research 2014 Summit
Hill Country Resort and Spa
San Antonio, Texas
Friday-Sunday, September 19-21, 2014

http://www.caseyresearch.com/summit/2014-fall

New Orleans Investment Conference
Hilton New Orleans Riverside Hotel
New Orleans, Louisiana
Wednesday-Saturday, October 22-25, 2014

https://jeffersoncompanies.com/landing/noic2014?IDPromotion=614011014520...

* * *

Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006:

http://www.goldrush21.com/order.html

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16

Jul 22, 2014

By Jeremy Warner
The Telegraph, London
Monday, July 21, 2014

http://www.telegraph.co.uk/finance/comment/jeremy-warner/10981011/Have-c...

The best way to destroy the capitalist system, the Russian revolutionary leader Vladimir Lenin is reputed to have said, is to debauch the currency.

The world's major central banks have certainly been having a fair old go at it. In the six years since the financial crisis first broke, they've been printing money like there is no tomorrow.

Fortunately, they have not yet managed to bring down the free-market system. On the other hand, they have succeeded in putting a rocket under asset prices and, in so doing, they have greatly exaggerated the wealth divide.

... Dispatch continues below ...



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In a number of cases, including the US and the UK, they have also significantly assisted governments in financing burgeoning fiscal deficits. To the extent that quantitative easing (QE) has had any effect at all, it is asset prices and governments that have been the prime beneficiaries.

This might seem something of an old issue now; the Bank of England stopped buying assets more than two years ago, while the US Federal Reserve is "tapering" fast. For the US and Britain, the age of "unconventional monetary policy" seems to be largely over.

Elsewhere, however, QE remains very much a work in progress. In Japan it's continuing at heroic pace, while on the Continent the European Central Bank is being urged by the International Monetary Fund to stop dilly-dallying in the face of deflationary pressures and get on with it.

Full marks, then, to Prof Andrew Johnstone and Trevor Pugh, of Sheffield Institute of Corporate and Commercial Law, for a new analysis, The Law and Economics of QE, which concludes that not only has QE been largely ineffectual but that it was also illegal.

Like common brigands, central banks have been acting outside the law -- their only real excuse being the supposedly higher purpose of economic necessity, a sort of Robin Hood-type operation where the ends justify the means, only with a slight flaw; by driving up the value of financial assets and real estate, QE further skews the distribution of wealth towards those with already large holdings of it. It robs from the poor and gives to the rich. Not that there is any possibility of the courts judging QE in all its various forms to be against the law, the writers concede. In Europe, the European Court of Justice has admittedly been asked to rule on ECB bond buying, but will almost certainly deem it to be a necessary price for holding the eurozone together. Never mind the law, the single currency comes first.

The director and deputy director of the IMF's Europe division said in a recent blog: "So long as the ECB buys sovereign bonds in pursuit of its mandate and in a way that has nothing to do with fiscal outcomes it can rebut the oft-heard charge that QE violates the prohibition against 'monetary financing of fiscal deficits.'" Thus does looking for ways around the law take precedence over its observation.

Lots of claims have been made for QE but no central bank has yet been able convincingly to demonstrate that it helps stimulate economic recovery. About the best that might be said for it is that it raised confidence at a critical moment in the crisis when financial and economic armageddon were threatened. But the persistence of asset purchases thereafter is much more questionable. There is not a whole lot of evidence to suggest it has played much of a role in restoring growth.

QE is supposed to work in a number of ways; it is, for instance, hard to argue that it hasn't depressed long-term interest rates. Some have benefited from this phenomenon undoubtedly, in particular mortgage holders and large companies, but it doesn't seem significantly to have reduced the cost or availability of finance to the real economy, which for many smaller companies remains high and scarce.

It was also meant to have led to "portfolio rebalancing", with investors replacing the bonds bought by the central bank with other assets such as equities. This in turn might have marginally reduced the cost of capital but, again, for the vast majority of privately-owned businesses it has made no difference at all.

Another declared purpose was to raise inflationary expectations, which in turn was meant to boost spending and wages. Again, nil effect, unless you count the scare stories in the early stages of QE of Weimar-style hyperinflation. In any case, real wages, the chief driver of domestically-generated inflation, have gone nowhere for nearly a decade now.

Expanding the money supply via increased central bank reserves was also supposed to have boosted bankers' willingness to lend, artificially generating the same "money multiplier" effect that rules in more normal times, when commercial bank lending and money creation is buoyant. Again, there is very little evidence that this occurred.

What very definitely did occur is that small cash savers got squeezed and debtors got bailed out.
The biggest of these debtors were governments, particularly the British, US and Japanese governments. All of them were able to borrow more cheaply than otherwise and, with the central bank mopping up supply, were able to raise a great deal more money. Central banks became enablers of continued deficit spending.

Remove the disciplines of the market, which is in effect what QE does, and governments will spend, if not with outright abandon, certainly with less concern than they would otherwise. Both in Britain and the US, much of the urgency of deficit reduction has been removed by QE.

Governments can proceed at a leisurely pace. Heck, why not make deficit spending a permanent feature of the economic landscape?

An invidious sophistry surrounds official explanations of QE, as well as a blanket denial of what it really is. No central bank will admit the unpalatable truth -- that it is backdoor monetisation of government debt -- certainly illegal under European law and possibly English law, too. As the Sheffield Institute authors argue, if you are going to use monetary means to finance government spending, you should at least be open and honest about it, as well as have a proper debate about whether QE is really the appropriate way of going about it.

In any case, underlying all this monetary manipulation is a deeply depressing set of contemporary assumptions and received wisdoms -- that government spending can somehow magic up economic growth; that politicians and regulators know better than markets how productively to allocate investment; that social equality should be the ultimate aim of all government activity. How ironic that QE has succeeded only in making this latter goal even more distant.

* * *

Join GATA here:

Casey Research 2014 Summit
Hill Country Resort and Spa
San Antonio, Texas
Friday-Sunday, September 19-21, 2014

http://www.caseyresearch.com/summit/2014-fall

New Orleans Investment Conference
Hilton New Orleans Riverside Hotel
New Orleans, Louisiana
Wednesday-Saturday, October 22-25, 2014

https://jeffersoncompanies.com/landing/noic2014?IDPromotion=614011014520...

* * *

Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006:

http://www.goldrush21.com/order.html

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16

Jul 22, 2014

Hambro 'Horrified' by Tampering of London Gold Fix

By Thomas Biesheuvel
Bloomberg News
Tuesday, July 22, 2014

http://www.bloomberg.com/news/2014-07-22/hambro-horrified-by-tampering-o...

LONDON -- Peter Hambro, chairman of gold producer Petropavlovsk Plc, said he was "horrified" by the manipulation of the London fix given its importance to the industry.

"When I read the reports on what people had been doing to it, I was horrified," Hambro said in an interview today. "It is something that is really important to people in the industry. It's something that we use in a big way as we deliver our gold. That's how we price."

... Dispatch continues below ...



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Barclays Plc was fined $44 million earlier this year after a trader sought to influence the gold fix in 2012. The gold fixing takes place twice a day by phone and is used by mining companies to central banks to trade or value the metal.

The banks conducting the century-old London gold fixing and the London Gold Market Fixing Ltd., which runs the procedure, are seeking to revamp the process. Deutsche Bank's exit from the process this year as it scales back its commodities business left Societe Generale, Bank of Nova Scotia, HSBC Holdings, and Barclays to conduct fixings.

"To have something that we can rely on is vitally important," said Hambro, who previously traded bullion at Marc Rich Group and Mocatta & Goldsmid Ltd. "I look forward to its continuing existence."

* * *

Join GATA here:

Casey Research 2014 Summit
Hill Country Resort and Spa
San Antonio, Texas
Friday-Sunday, September 19-21, 2014

http://www.caseyresearch.com/summit/2014-fall

New Orleans Investment Conference
Hilton New Orleans Riverside Hotel
New Orleans, Louisiana
Wednesday-Saturday, October 22-25, 2014

https://jeffersoncompanies.com/landing/noic2014?IDPromotion=614011014520...

* * *

Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006:

http://www.goldrush21.com/order.html

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16

Jul 22, 2014

11:24p Monday, July 21, 2014

Dear Friend of GATA and Gold:

Looks like you can now buy a gold-mining stock exchange-traded fund without putting the biggest part of your money in Barrick Gold, the biggest gold hedger and enabler of gold price suppression, the company that 11 years ago, by virtue of its enormous hedging, claimed to be the agent of central banks in the gold market:

http://www.gata.org/node/1858

The new ETF is the Sprott Gold Miners ETF, which began trading last week. According to its announcement, the ETF is based on the Sprott Zacks Gold Miners Index and "uses a transparent, rules-based methodology designed to identify 25 gold stocks that historically have the highest beta to the spot price of gold, with each stock's weighting in the index adjusted based on its quarterly revenue growth and long-term debt to equity":

http://www.sprottetfs.com/documents/pdfs/sgdm-pr-20140715.pdf

The ETF received favorable notice from the Wall Street Cheat Sheet, which noted that "each quarter the fund is re-weighted. This means that the fund is going to take profits on its outperformers and reallocate this capital to the underperformers. The Market Vectors Gold Miner ETF does no such thing. In fact, when the fund sees capital inflows, it pumps more money into the top performers because these are the companies that become the highest-weighted stocks in the fund."

The Wall Street Cheat Sheet commentary is here:

http://wallstcheatsheet.com/business/2-reasons-to-check-out-sprotts-new-...

Of course GATA is no investment adviser, but nobody who wants a free and transparent market in the monetary metals can be enthusiastic about any investment that abets gold price suppression.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.



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Join GATA here:

Casey Research 2014 Summit
Hill Country Resort and Spa
San Antonio, Texas
Friday-Sunday, September 19-21, 2014

http://www.caseyresearch.com/summit/2014-fall

New Orleans Investment Conference
Hilton New Orleans Riverside Hotel
New Orleans, Louisiana
Wednesday-Saturday, October 22-25, 2014

https://jeffersoncompanies.com/landing/noic2014?IDPromotion=614011014520...

* * *

Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006:

http://www.goldrush21.com/order.html

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16

Jul 21, 2014

By Liam Halligan
The Telegraph, London
Friday, July 19, 2014

http://www.telegraph.co.uk/finance/comment/liamhalligan/10978178/The-dol...

In early July 1944, delegates from 44 countries gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire. A three-week summit took place, at which a new system was agreed to regulate the international monetary and financial order after the Second World War.

The US was already the world's commercial powerhouse, having eclipsed the British Empire several decades earlier. America was also on course to be among the victors of "Europe's conflict", even though its economy was largely unscathed by war. As such, Bretton Woods was US-dominated and produced a settlement largely on US terms.

Seventy years ago this week, that fateful summit ended. Its close marked the moment the dollar's unquestionable supremacy was secured. Since then, global commerce has been conducted largely in dollars and leading economies have held the greenback as their primary reserve currency.

... Dispatch continues below ...



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http://fmturl.com/gata/



The same system remains intact today, with the lion's share of commercial settlements worldwide still clearing the US banking system -- even if the parties involved have nothing to do with the States.

The dollar's hegemony continues to be cemented, meanwhile, by the operations of the International Monetary Fund and World Bank. Founded at Bretton Woods, they're both Washington based, of course, and controlled by America, despite some Francophone window-dressing.

The advantages this system bestows on the US are enormous. "Reserve currency status" generates huge demand for dollars from governments and companies around the world, as they're needed for reserves and trade. This has allowed successive American administrations to spend far more, year-in year-out, than is raised in tax and export revenue.

By the early Seventies, US economic dominance was so assured that even after President Nixon reneged on the dollar's previously unshakeable convertibility into gold, amounting to a massive default, dollar demand kept growing.

So America doesn't worry about balance of payments crises, as it can pay for imports in dollars the Federal Reserve can just print. And Washington keeps spending willy-nilly, as the world buys ever more Treasuries on the strength of regulatory imperative and the vast liquidity and size of the market for US sovereign debt.

It is this "exorbitant privilege" – as French statesman Valéry Giscard d'Estaing once sourly observed – that has been the bedrock of America's post-war hegemony. It is the status of the dollar, above all, that's allowed Washington to get its way, putting the financial squeeze on recalcitrant countries via the IMF while funding foreign wars. To understand politics and power it pays to follow the money. And for the past 70 years, the dollar has ruled the roost.

This won't change any time soon. Something just took place, though, which illustrates that dollar reserve currency status won't last forever and could be seriously diluted. Last week, seven decades on from Bretton Woods, the governments of Brazil, Russia, India and China led a conference in the Brazilian city of Fortaleza to mark the establishment of a new development bank that, whatever diplomatic niceties are put on it, is intent on competing with the IMF and World Bank.

It's long been obvious the BRICs are coming. The total annual output of these four economies has spiralled in recent years, to an astonishing $29.6  trillion (£17.3 trillion) last year on a PPP-basis adjusted for living costs. That's within spitting distance of the $34.2 trillion generated by the US and European Union combined.

America's GDP, incidentally, was $16.8 trillion on World Bank numbers, and China's was $16.2 trillion -- within a whisker of knocking the US off its perch. The balance of global economic power is on a knife-edge. Tomorrow is almost today.

Consider also that the BRICs collectively hold sway over 50 percent of global currency reserves, rising to almost three-quarters if you take the emerging markets as a whole. The G7 nations between them control only 20 percent -- and less than 8 percent if you exclude Japan.

Based on such balance sheets, we're now seeing institutional change. The new BRICs Development Bank, modelled on the IMF, will have a $100bn currency reserve available to lend around the world, giving distressed debtor nations an alternative to the "Washington consensus."

For a long time, the BRICs have been paying in to the IMF, yet been denied additional influence over what happens to the money. Belgium has more votes than Brazil, Canada more than China.

The institutions governing the global economy have failed to keep pace with reality. Modest reforms giving the large emerging markets more power, agreed with much fanfare in 2007 and again in 2010, have been stalled by Washington lawmakers. The BRICs have now called time, setting up their own, rival institution based in Shanghai.

The key to the dollar's future is petrocurrency status -- whether it's used for trading oil and other leading commodities. Here, too, change is afoot. China's voracious energy appetite and America's increased focus on domestic production mean the days of dollar-priced energy look numbered.

Beijing has struck numerous agreements with Brazil and India that bypass the dollar. China and Russia have also set up rouble-yuan swaps pushing America's currency out of the picture. But if Beijing and Moscow – the word's largest energy importer and producer respectively -- drop dollar energy pricing, America's reserve currency status could unravel.

That would undermine the US Treasury market and seriously complicate Washington's ability to finance its vast and still fast-growing $17.5  trillion of dollar-denominated debt.

In May, Beijing and Moscow signed a huge multi-decade gas supply contract, to sit alongside a similar oil deal agreed in 2009. No one knows what share of this energy trade will be on a yuan-rouble basis -- and the two governments aren't saying. This question, seemingly inane, is among the most important diplomatic issues of our time.

At the moment, although Russia's export partners do sometimes settle in roubles, most Sino-Russian trade is still in dollars. But the combination of this new gas deal, and western sanctions on Russia -- has seen Moscow and Beijing step up bilateral efforts to facilitate large-scale non-dollar settlement.

With western anti-Russia sanctions likely to be tightened again after the tragic shooting of a Malaysian passenger plane over Ukrainian airspace, Beijing's response will be closely scrutinised. I, for one, expect the Chinese to say little until it's clearly established who grounded the plane and why.

Although the dollar's reserve status won't end overnight, the global payments system is now moving inexorably towards that outcome. The US currency accounted for just 33 percent of all foreign exchange holdings in 2013, on IMF numbers, down from 55 percent in 2001.

Within a decade or so, a "reserve currency basket" may emerge, with central banks storing wealth in a mix of dollars, yuan, rupee, reals and roubles, as well as precious metals. Perhaps some kind of synthetic bundle of the world's leading currencies will be developed, with emphasis placed, after years of Western money-printing, on assets backed by commodities and other tangibles.

I also believe central banks may include cyber-currencies (such as bitcoin) in their reserves. If you think that's mad, consider that mankind has long sought scarcity -- be it with shells, stones or metallic elements -- to store wealth. Now the money-printing taboo has been broken by yet another generation, it makes sense to use complex computer algorithms to ensure that only a certain amount of a particular currency unit can ever exist.

The dollar's status is a big question. Judging the outcome is more akin to star-gazing than scientific economics. But the establishment of this BRIC Development bank, timed to coincide with the anniversary of Bretton Woods, is an audacious and significant move. The world's emerging giants now have thumbscrews on the West.

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