The declining power of the `ol American greenback...should we start panicking?

12 Reasons Why Gold Should Bounce Sharply Higher in 2014 
(Lorimer Wilson)
Munknee.com

edited excerpts by Jason Hamlin (goldstockbull.com) from his original article entitled: 12 Reasons Why Gold Will Rebound and Make New Highs in 2014.

[...]

#4 – Dollar Losing Status as World Reserve Currency

   The exorbitant privilege of being able to print the world reserve currency is coming 
   to end.

   --“It is perhaps a good time for the befuddled world to start considering building a de-   
   Americanized world,” said a statement by Xinhua, the state news agency of China — which 
   holds some $1.3 trillion in Treasury bonds.

   --“The United States will inevitably lose its reserve currency monopoly,” wrote economists 
   Hélène Rey of the London Business School.

   --Pierre-Olivier Gourinchas of the University of California, Berkeley, and Emmanuel Farhi of 
   Harvard University said. “It can only be a matter of time before the world becomes multipolar.”

   --The IMF echoed this sentiment, stating how “reserves concentration in the government debt 
   of one country introduces idiosyncratic risks to the international monetary system.

   Several nations now have bi-lateral trade agreements that bypass the dollar.

   --China has made arrangements to swap Yuan’s for for local currencies with Japan, Russia, 
   Australia, Iceland, South Korea, Malaysia, Brazil, India and South Africa. The BRICS nations 
   are emerging as a powerful economic force and they are intent on conducting affairs without 
   use of the U.S. dollar.

   --The growing rift with Saudi Arabia threatens the petrodollar.

   --Oil-rich countries that have attempted to sell their oil in currencies other than dollars include 
   Iraq and Libya, both bombed into submission.

   --Iran is now trading oil for gold, bypassing the U.S. petrodollar. This is likely the real reason 
   they are now in the crosshairs of the U.S. military.

   --Syria is seen as a stepping stone to attacking Iran, but widespread opposition from ally 
   countries and citizens alike stopped the recent war momentum.

   --As the influence of the petrol-dollar continue to wane, so too will the power of the U.S. dollar 
   as the world reserve currency. Without the ability to deficit spend and export our inflation, it   
   will come home to roost and the dollar will suffer or even collapse as have other debt-ridden 
   fiat currencies throughout history....

[Click here to read the full article]

Related articles:
--Learn how the 'petro-dollar' got started

Welcome to the money of the future: GOLD

Fancy a chunk? No, it's not chocolate... It's a solid gold bar you can break up (and could be the future of money if there's economic meltdown)

• Swiss refinery marketing gold bar that can be easily broken into 1g chunks to be used as payment in a crisis
• Wealthy individuals in Switzerland, Austria and Germany said to be lining up to buy the gold 'CombiBars'
• Value of gold has gone up more than 500 per cent since 2001

By DAMIEN GAYLE
DAILYMAIL
December 21, 2012

With Christmas coming, sales of chocolate gold coins have no doubt soared as parents get ready to fill their little ones' stockings with edible treasure. But wealthy individuals worried about what the New Year could bring are instead stocking up on gold chocolate bars.

Swiss refinery Valcambi has been selling its CombiBar to private investors in Switzerland, Austria and Germany who are worried about a return of Weimar Republic-style hyperinflation.

 
Gold chocolate bar: An employee divides a gold Combibar at a plant of gold refiner and bar manufacturer Valcambi in the southern Swiss town of Balern. Sales have soared amid economic uncertainty in Europe


Crisis currency: Swiss refinery Valcambi has been selling its CombiBar to private investors in Switzerland, Austria and Germany who are worried about a return of Weimar Republic-style hyperinflation

The size of a credit card, the 50g gold CombiBars are easily be broken into one gram pieces to be used as money in times of crisis. Now the company wants to bring them to market in the U.S. and build up sales in India - the world's largest consumer of gold, where it has long served as a parallel currency.

Investors worried that inflation and financial market turmoil will wipe out the value of their cash have poured money into gold over the past decade. Prices have gained almost 500 per cent since 2001 - compared to a 12 per cent increase in MSCI's world equity index, a benchmark for the value of the world's business investments.

Sales of gold bars and coins were worth almost $77billion in 2011, up from just $3.5billion in 2002, according to data from the World Gold Council.


Stocking filler for the wealthy: The divisible gold bar has a purity of 99.9 percent, weighs 50 grams and also has predetermined breaking points which allow it to be easily separated into 1g pieces without any loss of material

'The rich are buying standard bars or have deposits of physical gold. People that have less money are buying up to 100 grams,' said Michael Mesaric, CEO of Valcambi. 'But for many people a pure investment product is no longer enough. They want to be able to do something with the precious metal.'

Mr Mesaric said the advantage of the CombiBar - dubbed a 'chocolate bar' because pieces can be easily broken off by hand - is that it is easily carried and is cheaper than buying 50 one gram bars. 'The produce can also be used as an alternative method of payment,' he said.

Valcambi, a unit of U.S. mining giant Newmont, is building a sales network in India and plans to launch the CombiBar on the U.S. market next year. In Japan, it wants to focus on CombiBars made of platinum and palladium. In Europe, demand is particularly strong among the Germans, still scarred by post-World War One hyperinflation, when money became all but worthless and it took a wheelbarrow full of notes to buy a loaf of bread.

'Above all, it's people aged between 40 and 70 that are investing in gold bars and coins,' said Mr Mesaric. 'They've heard tales from their parents about wars and crises devaluing money.'
The CombiBar is particularly popular among grandparents who want to give their grandchildren a strip of gold rather than a coin, said Andreas Habluetzel, head of the Swiss business of Degussa, a gold trading company.

'Demand is rising every week,' Mr Habluetzel said. 'Particularly in Germany, people buying gold fear that the euro will break apart or that banks will run into problems.' Stephan Mueller, who manages bank Julius Baer's $6billion gold fund, said one problem with using gold as a method of payment is that people have to take its value on blind trust.

'Gold is a useful store of value,' Mr Mueller said. 'However I doubt whether it will succeed as a method of payment.' Nonetheless, as developments in the euro zone lurch from one crisis to another, demand for gold that can be sold in vending machines is also growing.

'Sales rise according to the temperature of the crisis,' said Thomas Geissler, whose firm Ex Oriente Lux operates 17 gold vending machines in Europe, the U.S. and the United Arab Emirates. The machines saw record sales in 2010, one day after the then Deutsche Bank CEO Josef Ackermann raised doubts over whether Greece would be able to pay its debts. Since the launch of the machines, which operate under the name 'GOLD to go', 50,000 customers have withdrawn more than 21million euros in gold. The average buyer is male, over 50 years old and well off.
'
Customers are hoarding gold mostly at home as a precaution against a crisis, just as their fathers and grandfathers did before them,' Mr Geissler said.

BEWARE OF FRAUD: As surge into precious metals forge ahead, people are bound to be taken advantage of...

Tungsten-Filled 1 Kilo Gold Bar Found In The UK
Zero Hedge
by Tyler Durden
03/24/2012 16:50 -0400

The last time a story of Tungsten-filled gold appeared on the scene was just two years ago, and involved a 500 gram bar of gold full of tungsten, at the W.C. Heraeus foundry, the world's largest metal refiner and fabricator. It also became known that said "gold" bar originated from an unnamed bank. It is now time to rekindle the Tungsten Spirits with a report from ABC Bullion of Australia, which provides photographic evidence of a new gold bar that has been drilled out and filled with tungsten rods, this time not in Germany but in an unnamed city in the UK, where it was intercepted by a scrap metals dealer, and was supplied with its original certificate. The reason the bar attracted attention is that it was 2 grams underweight. Upon cropping it was uncovered that about 30-40% of the bar weight was tungsten. So two documented incidents in two years: isolated? Or indication of the same phenomonenon of precious metal debasement that marked the declining phase of the Roman empire. Only then it was relatively public for anyone who cared to find out on their own. Now, with the bulk of popular physical gold held in top secret, private warehouses around the world, where it allegedly backs the balance sheets of the world's central banks, yet nobody can confirm its existence, nor audit the actual gold content, it is understandable why increasingly more are wondering: just how much gold is there? And alongside that - while gold, (or is it GLD?), can be rehypothecated, can one do the same with tungsten?

From ABC Bullion:

     ABC Bullion received the following email from one of our trusted suppliers this week.

     Note:

• It was not ABC Bullion that purchased this bar, the email and photos were sent to us        as a general warning

• I xxxx'ed out the city's name to avoid any second guessing as to the name of the   dealer.

     19/03/2012:

     Attached are photographs of a legitimate Metalor 1000gm Au bar that has been drilled 
     out and filled with Tungsten (W).

     This bar was purchased by staff of a scrap dealer in xxxxx, UK yesterday. The bar  
     appeared to be perfect other than the fact that it was 2gms underweight. It was checked by 
     hand-held xrf and showed 99.98% Au. Being Tungsten, it would not be ferro-magnetic. 
     The bar was supplied with the original certificate.

     The owner of the business that purchased the bar only became suspicious when he   
     realized the weight discrepancy and had the bar cropped. He estimates between 30-40% 
     of the weight of the bar to be Tungsten.

     This is very worrying and reinforces the lengths that people are willing to go to profit from 
     the current high metal prices. Please be careful.

Photos of the cropped bars: 1000g Gold bar cut showing inserted tungsten rods

Two halves of the cropped bar:

  

Finally, some observations from Paul Mylchreest on debasement:

     Let’s consider the run-up to Rome’s hyperinflation. I think this comment from 
     jaysromanhistory.com “Good Money, Bad Money, and Runaway Inflation” resonates with 
     what’s happening in the US today:

     “Severus Alexander (AD 222-235) tried to reform by going back to the denarius but, once 
     started, this path of runaway inflation and financial irresponsibility on the part of the 
     imperial government proved impossible to control.”

     It also seems that the hyperinflation was preceded by some kind of banking crisis, which 
     is an interesting parallel. From “Demise and Fall of the Augustan Monetary System” by 
     Koenraad Verboven:

     “Papyri show it was common for private individuals to deposit money at a bank and to 
     make and accept payments through bankers.Bankers in the west disappear from view 
     around the middle of the 3rd c… A famous papyrus from Oxyrhynchus from 260 CE 
     shows exchange bankers closing in order to avoid having to change the ‘imperial money’.  
     The strategos ordered the exchange bankers to reopen and accept all genuine coins and 
     warned businessmen to do the same. In 266 CE we find for the first time transactions  
     being expressed in ‘ptolemaeic’ or ‘old silver’ as opposed to ‘new silver’.”

     The chart shows how inflation remained relatively subdued until a tipping point was   
     reached in the late- 260s A.D Monetary systems can absorb substantial abuse before 
     there is a dramatic impact on the price level. For example, the debasement of the 
     coinage was already accelerating in the early part of the third century A.D., before 
     plunging in the latter part. Indeed, the chart below (apologies for the quality) only shows 
     the trend up to 253 AD. By around 290 AD, the coins were only dipped in silver to give 
     them a coating (<0.5%):
     

Additional Info:
Gold Counterfeiting: German TV discovers 500g Tungsten bar from bank - Zero Hedge MArch 2, 2010

Current U.S.-Iran Tensions: Is there more than meets the eye...again? Reminiscent of Iraq and Libya...

Here we go again, are we that naive to think that yet again the current tensions with Iran is really about 'nukes'? Come on, it all about the precious black gold we call OIL, its always about oil. In 2000, Saddam Hussein of Iraq wanted to turn away from trading oil in U.S. dollars to euros instead. Of course that wouldn`t be allowed to befall the powerful dollar and he was subsequently attacked and removed in 2003. In 2011, Col Muammar Ghadafi of Libya envisioned to create a new Gold dinar currency, a currency that would be backed by gold, inevitably rivaling the dollar and euro and allow Ghadafi to re-price oil. It would have had serious consequences for the world financial system - i.e. the world elite, even though it would have empowered the people of Africa for once in their lives and not be dictated by the global powers into debt slaves and destitute. 

An oil field near Pol-e-Dokhtar, Iran; credit: RT News

Petrodollar pumping US policy on Iran, backfire looms
by: Michael T. Winter
RT News
published: 01 February, 2012, 20:18

As tensions between the US and Iran heat up, author Michael T. Winter believes the main reason behind America’s harsh stance is Tehran’s move to seek an alternative to the dollar as an oil currency.

Economic sanctions, spearheaded by the US and, less willingly, the EU could have a disastrous effect on both of their respective economies. If Iran cannot sell their oil to Europe, there are plenty of customers waiting in the wings, and if they come bearing not petrodollars, but gold and sovereign currencies, then all the better for Iran. These sanctions, if enforced, will in effect place a serious dent in the power of the petrodollar.

...At the heart of the issue is not Iran’s dubious attempt to build nuclear weapons, or even oil, but how that oil is paid for. In 1973, Richard Nixon promised King Faisal of Saudi Arabia that the US would protect Saudi Arabian oilfields from any and all interested parties seeking to forcefully wrest them from the House of Saud. It’s important to remember that in 1973, Saudi Arabia didn’t have a fraction of the military and ground forces it possesses today (almost exclusively US manufactured weapons) and the USSR was very much a threat.

In return Saudi Arabia, and by extension OPEC, agreed to sell their oil in US dollars only. As if that weren’t sweet enough, as part of the deal, they were required to invest their profits in US treasuries, bonds and bills. The real zinger is that all countries purchasing oil from OPEC had to do so in US dollars, or ‘petrodollars’.

...2001, enter Saddam Hussein. He floated a plan to sell oil for European currencies in lieu of petrodollars. Shortly after Iraq was ‘suddenly’ found to be seeking and stockpiling weapons of mass destruction – allegations spearheaded by the US. The world knows what happened, suffice it to say that Saddam is dead and Iraq is ‘back on track’, selling its oil for petrodollars once again.

...Gaddafi made a fatal error when he decided to move away from the petrodollar in favor of other currencies. This simply was not tolerated by the US. Having already played the WMD card in Iraq, something new was pulled from the US ‘regime change’ grab bag. Within a year, ‘internal’ elements rose up in rebellion against Gaddafi and now he is dead. Long live the petrodollar.

Dominique Strauss-Kahn, former head of the International Monetary Fund (IMF), suggested last year that the Euro would be a more suitable oil reserve currency than the US Dollar. Within three months of that statement, allegations of rape ruined his career, derailing his bid for the French Presidency in the process. Soon thereafter, all charges were dropped, but of course, le dommage était fait – the damage was done. Christine Lagarde, DSK’s replacement as head of the IMF sees no reason to change the current arrangement, naturellement.

The Iran situation is a little trickier. The US has sought to dismantle Iran’s regime ever since the 1979 Iranian Revolution, so this round of hostilities, while not new, reflects a new level of intensity. Why, after thirty years of hostility, has the US ratcheted up its rhetoric? As Obama stated in his recent State of the Union address, when it comes to Iran and the insistence they dismantle their nuclear program, “no options are off the table”. By stating ‘no options’ this would include nuclear deployment as a deterrent.

The answer of course is that Iran is now seeking to disengage itself from the petrodollar dynamic. In 2005, Iran sought to create an Iranian Oil Exchange, thus bypassing the US controlled petrodollar. Fear that western powers would freeze accounts in European and London banks put an end to that plan.

...Iran is breaking the back of the petrodollar. Others have tried, but Iran is succeeding. To understand how disastrous this is for the US, one must have a basic understanding of how critical a role the petrodollar plays in the economic health of the US.

...By creating the petrodollar paradigm, the US economy soared, as all countries of the world were required to amass US currency to purchase oil from OPEC nations. Sales of T-bills, securities and US bonds soared. US coffers fattened. With the US dollar as the world’s oil currency reserve, economic fortune favored the US. But with great reward comes great risk. While other countries exchanged their currency for the dollar, (forfeiting value in the process) the US simply printed more money to match their needs and purchase their oil – essentially for free. The best example is that while gasoline in the US cost $3.00 per gallon, in Europe that same gallon costs $6.00 or more.

Herein lies the danger. If Iran is successful in its bid to set up their own bourse, or oil exchange, then what need does the world have for all those US dollars? The answer is none at all. As Iran creating gold and sovereign currency partnerships with India, China, South Korea and Russia, the hegemony of the petrodollar will be destroyed.

The resulting sell-off of US dollars, T-bills, securities, bonds and assets will flood the already swollen world economy with even more useless dollars, ultimately devaluing it into a position where hyper-inflation becomes a risk.

So, while the US government sabre-rattles and prattles on and on about nuclear weapons and the threat Iran poses to the Middle East, the thin veneer of lies spouted by the elite controlled media is being stripped away, revealing the truth of their warmongering rhetoric.

...The US, by their foolish insistence on enforcing embargoes and sanctions against Iran, is hastening the end of the petrodollar and ushering in the age of US dollar hyper-inflation. A practical example: One loaf of bread in a healthy economy is $1.00. In an inflationary economy it’s $1.75. In a hyper-inflationary economy, $500.00.

Bullies may be large and dangerous, but rarely are they intelligent.

Damocles wisely vacated the throne of Dionysius before the sword fell upon his head, but the US is foolishly refusing to step down from their economic dais in spite of the catastrophic effect current policy direction will mean for US citizens and the world economy.

Michael T. Winter

The statements, views and opinions expressed in this article are solely those of the author and do not necessarily represent those of RT.

(click here to read the full article by Michael Winter)

Additional info:The Real Reasons Why Iran is the Next Target: The Emerging Euro-denominated International Oil Marker
by William Clark
www.globalresearch.ca

Using gold to buy crude oil?...you betcha

Numismaticassets

It seems India has purchased Iranian oil from Iran using gold, circumventing unilateral U.S. and EU sanctions placed on the Iranian oil industry and financial institutions. (The sanctions placed on Iran ban any bank involved in oil trade with Iran from dealing with American and European financial institutions.) And now, China, another top purchaser of Iranian oil may follow suit in future oil transactions. India and China, the two major buyers of Iranian oil together account for 40% of all exports of oil from Iran while the EU accounts for 20% of Iranian oil.

India and China do not support and refuse to join the sanctions. Russia, already announced in a bilateral meeting they would implement bilateral trade using their domestic national  currencies instead of the dollar. Russia already uses their rouble for trade with China

Now this would severely hurt what the U.S. and EU sanctions and oil embargo are trying to do. Just this past Monday, the EU announced an oil embargo against Iran. Oil is priced in US dollars, and bypassing the greenback will pose challenges for both parties. This will certainly push the price of gold high, especially as large sums of gold are involved in such oil transactions, and that would hurt the value of the dollar especially at a time like this.

RT News (24 Jan 2012): India pays gold for Iranian Oil:

RT News: Priya Sridhar (24 Jan 2012)

Source: Sanctions dodge: India to pay gold for Iran oil, China may follow (RT News), 24 Jan 2012

Did Earth’s Gold Come From Outer Space?

Did Earth’s Gold Come From Outer Space?
 (Top 100 Stories of 2011 #53 -DISCOVER)
Money never grows on trees, but precious metals do sometimes fall from the sky.
by Elizabeth Svoboda
DISCOVER Magazine
From the January-February special issue; published online December 27, 2011
(Image left: iStockphoto)


The platinum in your wedding 
ring and the gold in your dental fillings most likely arrived on Earth in a furious meteoric bombardment 200 million years after the planet’s formation, University of Bristol geologist Matthias Willbold reports. According to standard planetary formation models, the gold, platinum, and 
tungsten that were present when Earth was born should have quickly bonded to iron and sunk into the planet’s core. Those precious metals are thousands of times more prevalent on the surface of Earth and in its mantle than the models predict.


Willbold proposes that a colossal meteor shower about 4 billion years ago deposited the additional bling. To test his theory, he measured the isotopic mix of tungsten in rocks from an ancient formation that predates the proposed meteor shower. He then compared the readings with isotopes found in more recent rocks. “If you look at really ancient rocks in Greenland, the tungsten composition is different,” he says.


[Related Fact]
The largest gold deposit ever, may not even be on this planet. Eros, one of the closest asteroids to Earth, is thought to have gold valued in excess of a thousand billion dollars. That`s 200,000 times the amount of gold that has ever been mines on Earth.
Source: Gold Rush Alaska (Aired: 02/13/12)