Material World 'Standards' In Peril
Source: Stockhouse, Thom Calandra (4/1/09)
"Bold new evidence of metals that matter."
In ThomWatch, I recently referenced a UBS Q-Series Report on Gold. The Swiss bank's report poses the question: What if a gold standard for currencies were put in place in the USA, China, Japan?
If there was a new gold standard? In the USA, for example, the government appears to hold 8,134 tonnes of gold. Thus, gold might have to rise to U.S. $6,498 per ounce to "support the value of the dollar, given the supply of dollars in circulation." If China and Japan adopt a gold support mechanism for their currencies, the UBS report estimates a value of U.S. $9,562 per ounce.
At the Bahamas Investment Conference I attended in March 2009, I explained the case one can make for a silver price that exceeds the gold price. Yes, exceeds. In essence, a great portion of all the silver ever recovered from our planet is used and expended in scores of ways: mirrors, electrical conductors, chemicals and so on. What is more, as Theodore Butler describes in a series of booklets and articles, the world's largest commercial banks might no longer be leasing gold as widely as they once did, given their fiscal and legal and moral woes.
I look at gold and silver forward-swap rates as one way of seeing how easy it is to lend gold and silver. The group in London that compiles the swap stats call it a GOFO, Gold Forward Offered Rate. "These are rates at which contributors are prepared to lend gold on a swap against U.S. dollars," the LBMA in London says. All bullion all the time. The lower the one-month rate, for instance the GOFO rates for silver - the more likely it is that silver for immediate or near-immediate delivery is difficult to come by. Sometimes, the rates go negative, which might be an early warning signal that investors are hoarding precious metals.
GATA.ORG. I always learn something new about gold, silver and markets from Bill Murphy and Chris Powell's GATA.Org. The Gold Anti Trust Action Committee about a year ago took out a full-page ad in The Wall Street Journal - describing documents and letters that trace the ways in which governments, banks and think tanks work together to suppress the price of gold. No one in mainstream media has tracked the GATA story since 2003. . .and back then, it was more or less just me at CBS MarketWatch, a company I started with several others. Chris Powell and Bill Murphy are filing information requests for USA and Germany government data on gold inventories.