Friday, September 4, 2009

The Chinese Know The Value of Gold; South Africans Fast Asleep At The Wheel.

I recently read on Mineweb an important story about the Chinese Government now officially encouraging their population to buy gold and silver. Because they know, as fiat-currencies are crumbling, that in the nearby future only gold and silver will have value. Gold and silver cannot be printed and have no risk attached to it. It is what it is.

The article below has more or less the same message: "we want to have our physical gold and silver in our pocket as we do not believe the custodians anymore. Trust is breaking down".

In a couple of years time the Chinese will be applauded for their great insight in the markets and we will know 2 kind of people: the ones with - and without gold and silver.

The South Africans in the meantime, shipped in February of this year, with approval of course of the Reserve bank, Minister of Finance and everybody else high up in the financial food chain, their ETF gold of Absa bank to the UK. Now we are talking only 28 tons, but the mere fact that this happened says something about their insight in financial markets, the lack of confidence on how to be in charge of your own destiny and knowledge of monetary history. Count the latter to be close to zero: everybody is running around in circles and no one has a helicopter view.

Where are the refreshing sounds from the South African Government, Reserve bank or financial media? They are all looking at their fiat-currency navel waiting for the next advertising Ponzi Rand to come in. Oh yeah, the Reserve bank is increasing their gold reserves, but this is for their convenience only, not because they suddenly see gold as a tool to prosperity for the population. South Africa unfortunately licks the boots of the Money Men of the IMF (read: Wall Street Bankers) who denies them to link their currency to gold or silver

Soon the financial world in the US and EU starts to unravel and there is nothing they can do about it. Just read Steve Keen, economics professor in Australia:
"What we are going through is a deleveraging crisis and we haven't experienced one of those since 1930. Last time (1929) it took 10 years and a world war to get rid of it, and this time we are staring up with 1.7 times the level of debt in America, not even mentioning the derivatives catastrophe that is also there."

"And deleveraging which is the attempt by the private sector to reduce its debt level can overwhelm the government's stimulus. The whole problem was caused by irresponsible lending and the only way out of this ultimately is to eliminate that debt. The debt has to be written off"
As the current financial system struggles to survive their follies, gold and silver will shine.

And what is the South African Government trying to do about it? Just about nothing. Reasons: as said before we contribute it to lack of knowledge on the monetary history.

Oh yes,
they talk all day about uplifting the impoverished masses. But if they really want to do something about poverty and enrich South Africa they should encourage the South African population to hoard gold and silver instead of Rands. It is there: in the ground below their feet!!

Gold and Silver have been money for 5000 year. The Chinese know this; they know what is coming and that the game is up.

Hong Kong recalls gold reserves, touts high-security vault
In a challenge to London, Asian states invited to store bullion closer to home

HONG KONG (MarketWatch) -- Hong Kong is pulling all its physical gold holdings from depositories in London, transferring them to a high-security depository newly built at the city's airport, in a move that won praise from local traders Thursday.

The facility, industry professionals said, would support Hong Kong's emergence as a Swiss-style trading hub for bullion and would lessen London's status as a key settlement-and-storage center.

"Having a central government-sponsored vault would create a situation where you could conceivably look at Hong Kong as being a hub, where metal could be traded for the region," said Sunil Kashyap, managing director at Scotia Capital in Hong Kong, adding that the facility was the first with official government backing in the region.

The Hong Kong Monetary Authority, which functions as the territory's unofficial central bank, will transfer its gold reserves stored in other vaults to the depository later this year, the Hong Kong government said in an earlier statement.

The monetary authority reported $63 million in physical gold reserves as of July 31, according to its International Reserves and Foreign Currency Liquidity statement. The authority wouldn't disclose where the reserves are held, but local media reports cited gold traders as saying that London's the most likely location.

Traders said the new depository facility could also foster new financial products, such as exchange-traded funds based on precious metals.

The 3,660-square-foot depository, located at the city's main Chek Lap Kok Airport, will serve as a "storage facility for local and overseas government institutions," according to the government statement.

Martin Hennecke, a financial advisor with the Hong Kong-based Tyche Group Ltd., said that could be appealing to regional central banks unnerved after watching the global financial system teeter on verge of implosion last year.

"Central banks are increasingly aware of the importance of having gold reserves at time of financial crisis and having it easily available at their own disposal," he said.

Meanwhile, local newspaper reports said the Hong Kong Mercantile Exchange had signed an agreement to use the depository for its physical settlement and storage needs.

Marketing efforts will be launched to convince Asian central banks to transfer their gold reserves to the Hong Kong facility, according to reports citing Raymond Lai, finance director with the Hong Kong Airport Authority.

Efforts will also be made to reach out to commodity exchanges, banks, precious-metals refiners and ETF providers, the reports said.

Management firm Value Partners planned to launch an ETF gold fund that will use Hong Kong instead of London as a repository for the gold backing the fund, local reports said Thursday.

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