Monday, November 21, 2011
There is an elephant in the room. Jim Rickards has been making some bold predictions while on his book tour for Currency Wars. He says that in the case of a collapse of confidence in the dollar, the U.S. could confiscate the gold owned by foreign governments, Germany in particular, that is stored in NYC at the Fed. He says the U.S. could then use this gold to dictate a new international monetary system based on U.S. currency, just like last time.
Here are a couple of Jim's tweets on the subject:
@JamesGRickards Got a bid from #Germany for foreign rights to #CurrencyWars. Germans should read it. Ch. 11 tells why they'll never see their gold again
@JamesGRickards @FrankfurtFinanz Yes. This is described in Ch 5 and Ch 11 of #CurrencyWars. #Germany will never see its #gold again
We don't like to ignore elephants at FOFOA, so please discuss. Should those countries with gold stored at the Fed be worried? I just know this makes different people uncomfortable for different reasons. I posted some of my own thoughts here in response to Wandee who wrote, "I’m hoping Rickards is right per Blondie’s post above and the US/West can muster up 20ktons and figure out some kind of new currency alignment."
Also, Jim was interviewed by Eric King at KWN the other day. Here's the link. And here's a partial transcript (h/t Blondie):
“...I can see it happening, and it might even be a good thing in the sense that if we combined the official US gold of 8000 tonnes and I think 6000 tonnes that we could confiscate from the Europeans, Japanese and the IMF, and there’s another several thousand tonnes out at JFK airport in warehouses controlled by ScotiaBank and HSBC, its amazing how concentrated the gold is, its not in that many places, its really ten, you can count ten places that hold really the vast majority of all the official gold in the world, combine all that gold and the US could easily have 17,000 tonnes or upwards of 20,000 tonnes, which is you know 70% of all the official gold in the world. That’s enough to dictate the outcome of the international monetary system. It would be like, it would be a lot like Bretton Woods... [other nations] they might as well have stayed at home because the US dictated the outcome... We could do it again if we had that much gold, we could say hey, here’s the deal, here’s the new currency, its the new American dollar, backed by gold, all you other people have to peg to it and if you want your gold back, get to work, and, and try earning it and you know we’ll give you an IOU or something.
Again, this is an extreme scenario, but I think it is something that would be likely to happen in extreme distress. I mean, governments are not just going to throw up their hands, if we have some kind of collapse of confidence in the dollar the United States government is not going to curl up in a ball and cry, they’re going to use executive orders and executive power to dictate an outcome.
[comparing the US to Rome as the current world superpower]... if we converted the European gold for our own purposes, think of it as a 100% tax”
2000 Flushes: 20,000 tons you say?...
Rickards on the euro! Here's Jim from this morning on CNBC Worldwide Exchange. He's great on the euro and gold, as long as he refrains from predicting a confiscation of custodial gold, a 90% tax on old gold and a new U.S.-led gold price fixing scheme.
FOA on currency war: We will see the beginnings of a currency war like no other in our time...
Several years ago, many gold bugs and gold advocates missed the path as the trail turned. Something I pointed out at the beginning of these "message" talks. As most of you will no doubt agree, almost all gold discussion still centers around "the dollar's war with gold". Truly, the evolution of this story will be how that war ended then and now the dollar's war with the Euro began! A very large part of that war strategy, employed by the ECB/BIS, was to let the dollar / IMF faction hang themselves by expanding and supporting the whole arena of this dollar paper gold market. Inflating the gold market place with so much "paper gold" that we would eventually have to bankrupt ourselves just to keep the dollar in the war game against the Euro.
Yes, the war now is between the Euro and the dollar! The Washington Agreement placed gold "on the road to high prices" as it signaled a phasing out of Euro support for our American gold values. How fast gold can, now, rise will gauge how much staying power the dollar has in all this. If there is any gold war now, it's to be in just how fast the dollar gold market can disintegrate into worthless IOUs! So, don't count on this destruction of our paper gold market to mark the real value and availability of physical gold; that ratio will split somewhere down the goldtrail. This action will scare most harden gold investors to death; especially the ones in leveraged gold stocks and lesser white metals!
The war between gold and the dollar has been over for a while now. The action, today, is between the dollar and the euro arena and this is what will break the price lock on gold. Leaving gold bugs with a lot of questions that ask why this: both systems will strive for a higher currency price for gold; one doing it because they have to; the other doing it because they want to! The casualty on this battlefield will be the world gold market as we know it. A market caught between how Western perception thinks gold's price should be "discovered" and at what price level trading in physical gold craters the entire paper structure. A structure of American based "paper gold".
We have been saying for some time that this will be "the" show to watch unfold; but only if your holdings allow you to stay still in your seat as it happens (smile).
They shifted their war on gold to become a war on the Euro,,,, only too late. Now, knowing that the Euro is a fact, we must have a super gold price if the dollar is to stay in the game! The question becomes one of supporting a cheap paper price for the sole function of keeping the market and all its bullion players alive. With the war on gold over, they need to turn their tanks around to face the real enemy but cannot.
FOA (10/3/01; 10:21:26MT - usagold.com msg#110)
Now that the Euro block is passing a point where the Euro currency is viable; this same past dollar support that built American's illusion wealth will now fall away. In its place we will see the beginnings of a currency war like no other in our time.