-- Posted Tuesday, 7 April 2009 | | Source: GoldSeek.com
By R. D. Bradshaw
In possible response to my articles on China and the SDRs (the Goldsmiths, Parts LV and LVIII), I received the following email from a reader:
“Hi Bradshaw,
“You are right in wrong sense.
“If Gold were priced in other currency then it would have crashed.
“Gold is priced in US dollar and as improtance (sic) of US Dollar vanishes, Gold will skyrocket.
“I never expected such a stupid statement at the end of great article that you wrote.
“Hope you get what I am saying.”
My Response
This excellent email brings some good points to the surface for discussion in the vein of the current Chinese efforts to resurrect the role of the Special Drawing Rights (SDRs) in the global economy and in the settlement of accounts between nations.
As I understand the reader, the point is that gold is now priced (on the international markets) in dollars. In the present environment, these dollars are used as the world’s reserve currency and are valued at high exchange rates vis-à-vis other currencies like the euro, yen, franc, etc. Presumably, if the dollar lost its reserve status and was replaced by a basket of currencies or some other arraignment, then the relative value of the dollar would go down.
Therefore, it is plausible that the value of other currencies that replaced the dollar in international trade would go up. As I understand the reader’s comment, this would price the value of gold by this new basket of currencies instead of just the dollar as is now the case. In the sense that the value of the dollar would go down as the value of the other currencies rise, it would accordingly bring up the value/price of gold which would be priced in accordance with the currencies being used for the reserve function in international trade.
In other words, gold would go up in value in conformity with the rise in the foreign currencies making up the new reserve basket. Actually, I have previously written articles which recognized that gold was indeed much like the euro, oil and other currencies/commodities in that gold usually sinks or swims in the same way that these items sink or swim in opposition to the US dollar. Thus, as the euro goes up or down, gold has often followed pursuit.
Therefore, it is a given that if the relative value of the euro, franc or whatever goes up, it is often true that gold goes up. This means that if the euro, franc, yuan, ruble or whatever goes up, there is a probability that gold will correspondingly go up. In this sense, I can easily see that if these foreign currencies go up in value versus the dollar, there is a likelihood that gold will also go up.
The SDR Backdrop
But the focus on my articles on the Chinese push for a new involvement of the SDRs was made on the basis of another issue which could be catastrophic for gold. As I noted, the backdrop for my concern over the Chinese action was in the direction of the purpose back in 1969 for the SDRs. This purpose was precisely to demonetize gold and silver and turn the world over to paper accounting entries called Special Drawing Rights.
The idea was that the SDRs would replace gold, silver and precious metals. Actually, as it turns out from the G20 meeting in London, this possibility is another step closer. It must not be rejected out of hand.
Instead of holding gold in their national monetary reserves, the hope and plans were to get nations in the world to hold SDRs. As I noted, this 1969 planning never reached fruition; though it is true that the SDRs came into being and are used internationally today to settle many accounts between nations. Certainly, some nations count them as a reserve asset the same as they count gold.
If things would have gone as planned, the plutocratic bankers would have successfully abolished gold in all national and international financial dealings. Gold would have become a metal used in cosmetics/jewelry. Instead of a nation using gold in its reserves, each nation would use SDRs. This would allow gold to be used in making watches and rings and nothing else.
The Bottom Line
Obviously, this scheme would allow the plutocratic bankers a whole new opportunity to do away with gold and replace it with fiat worthless money—whether euros, francs, dollars or SDRs. Gold is the one item that they cannot increase through the printing press. Gold is therefore the one issue in international trade which imposes some discipline in the markets to keep the international bankers from inflating paper money in a mad rush worldwide.
Once this SDR thing becomes reality, there will be gross worldwide inflation. Even the Swiss franc will be in the same boat as all the rest of them. The underlying pin for all of them will be these SDRs which will become the total item of value to settle the accounts of various nations around the world. And, of course, this was the plan from 1969. Well, we haven’t had it so far, but it is ultimately on the way with world government and a one world money system.
My own guess is that this present effort will not make it immediately; although the just ending G20 meeting seems to be moving in that direction (on this, see the Goldsmiths, Part LXII). If the controlled media picks up on it, it could damage the price of gold. Or at least, it could put some fear into the hearts of gold advocates. This will not be good for the price of gold.
My own take is that world government is coming and a new one world money system. I now have reservations about the status of gold and other precious metals in that one world system. In any case, I don’t think world government is on the horizon until after WWIII. I am convinced that the plutocrats are planning WWIII right now. In that eventuality, it is almost a certainty that gold will initially go up, up and away when the war breaks out.
But how long this acceleration will last for gold is a question mark. If the plutocrats bring on their one world state and one world money system, it could offer some major problems for gold—certainly for a while. But I suspect that most of this is future, following WWIII.
The one word which completely governs the future of gold has to be “when.” Or put another way, the crux of the matter is the timing.
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-- Posted Tuesday, 7 April 2009 | Digg This Article
| Source: GoldSeek.com
