Bretton Woods and potential gold revaluation

pmbug

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Good summary of history and implications for the future (I only quote a snippet at the end):
...
The U.S. gold coverage ratio, which measures the amount of gold on deposit at the Federal Reserve against the total money supply, is currently at an all-time low of 17%. This ratio tends to move dramatically and falls during periods of disinflation or relative price stability. The historical average for the gold coverage ratio is roughly 40%, meaning that the current price of gold would have to more than double to reach the average. The gold coverage ratio has risen above 100% twice during the twentieth century. Were this to happen today, the value of an ounce of gold would exceed $12,000.

The possibility of an upward revaluation of the official price of gold should not be minimized. Although I do not anticipate or advocate a return to the gold standard, an upward revaluation of gold by one of more central banks is possible. If the Federal Reserve, for instance, announced that it stood ready to purchase gold at $10,000 per ounce, the gold-coverage ratio of the dollar would return to 75%, roughly where it stood at the beginning of Bretton Woods. This could restore confidence in the value of the dollar if its ultimate role as a reserve currency were to be challenged.
...
http://www.zerohedge.com/news/2012-10-10/guggenheim-gold-and-unsustainable-return-bretton-woods

It's quite clear that reserve currency status is being challenged by China and other interests.
 

bushi

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very good article, thanks PMBug. Even within the MAtrix of mainstream economics, they see the light now, apparently :)
 

mark.1

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Gold investment worldwide has grown dramatically in the last five years, but compared with the total stock of financial assets, gold bullion investment is still just a tiny proportion. Several factors are now stimulating gold investment by new pension fund money - as well as by private investors. Sales of gold jewelry across Asia are surging as the local economies boom and private investment grows. China's gold investment demand grew by 20% in 2007, while Indian consumers bought a record 900 tonnes – well over one-fifth of the total world market.
 

Unbeatable

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Did China Just Fire The First Salvo Towards A New Gold Standard?

In a somewhat shockingly blunt comment from the mouthpiece of Chinese officialdom, Yao Yudong of the PBoC's monetary policy committee has called for a new Bretton Woods system to strengthen the management of global liquidity.
given China's growing physical gold demand and the fixed-exchange-rate peg that 'Bretton Woods' represents, and contrary to prevailing misconceptions that the SDR may be the currency of the future, China just may opt to have its own hard asset backed optionality for the future; suggesting the new 'bancor' would be the barbarous relic (or perhaps worse for the US, the Renminbi).
http://www.zerohedge.com/news/2013-08-04/did-china-just-fire-first-salvo-towards-new-gold-standard
 

Potemkin

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I think there is no ceiling for gold. It can go to 50,000 $, according to some. It can go to a billion. Think of what happened in Zimbabwe.

It's senseless to predict figures if hyperinflation occurs.

I'm afraid it will eventually occur. Japan-EU-US... they are all pretending, but could all hyperinflate.
 

Jay

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PBOC Official calls for New Bretton Woods Agreement !!!

http://www.thetreeofliberty.com/vb/showthread.php?t=187336

not much info, but this:
snip:
China has been preparing for this, and knows that the West is on the very precipice of destruction.

All one has to do is look at what Jim Willie said a couple weeks ago... Deutsche Bank is on suicide watch. If it goes, the ECB and Eurozone fall like dominos.

And SINCE Sep of last year, China has created new partnerships, with the Brics and Australia, so that as of this moment, 3 billion people (3/7 of the globe), transact in Yuan.

China wants a gold backed currency, with gold backed trade notes (agreements)... they have a stockpile much greater than what has been reported, and access to both oil and minerals.

They could care less about the over 1 trillion they hold in Treasuries... if they get to control a gold backed currency, they not only destroy the West, but will multiply that 10-fold when gold goes to 10-50K per ounce to back the next reserve.
 

pmbug

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Seems like China is starting to bang that drum a little faster now.
 
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