{"id":851,"date":"2014-07-31T18:24:12","date_gmt":"2014-07-31T18:24:12","guid":{"rendered":"http:\/\/www.thebizsense.com\/views\/?p=851"},"modified":"2014-07-31T18:25:03","modified_gmt":"2014-07-31T18:25:03","slug":"gold-starts-recover-traditional-role","status":"publish","type":"post","link":"https:\/\/www.thebizsense.com\/views\/investments\/gold-starts-recover-traditional-role","title":{"rendered":"Gold Starts to Recover Its Traditional Role"},"content":{"rendered":"

\"gold<\/a><\/p>\n

Gold is making a comeback as money, despite a century of near-universal negativism about its future as a key element in global finance.<\/p>\n

Recently \u201cits popularity as a medium of exchange for international transactions has been soaring,\u201d reports the FT\u2019s John Dizard, with large volumes of both \u201creported and unreported\u201d trading in the physical metal.<\/p>\n

This has been particularly noticeable in recent months as the impact of US government sanctions on international banks for failing to comply in full with the dictates of its foreign policies \u201chas become severe.\u201d<\/p>\n

Since May the American authorities have extracted almost $12 billion in fines in settlements with France\u2019s BNP Paribas and Zurich-based Credit Suisse. As a result, Dizard says, \u201cthe world is finding ways to get along without the dollar.\u201d<\/p>\n

Gold is one of several alternatives.<\/p>\n

\u201cNot many transactions are actually invoiced in gold as such; instead, gold is used as the settlement medium rather than for the price quotation,\u201d he says.<\/p>\n

The increase in such transactions has generated demand for \u201cphysical metal held in reliable counterparties in secure vaults in locales considered safe from confiscation by a vengeful [US] Justice Department.\u201d<\/p>\n

Traditional 400 ounce bars are being flown from London to Switzerland, where they are melted into smaller bars of one kilo or less. Those are then flown to places such as Istanbul, Dubai, Shanghai or Singapore, where they go into \u201ca secure vault owned and operated by some family who have been in the business for a few hundred years.\u201d<\/p>\n

Businessmen concluding deals in trade attacked by the American authorities, or potentially at risk, execute them through instructions to such specialist gold bankers, who transfer ownership of physical metal in their vaults from one party to another.<\/p>\n

This is costlier and more troublesome than using the international dollar clearing system \u2013 \u201cbut it is less expensive than having dollar cash balances frozen indefinitely; or having one\u2019s dollar clearing bank covering fines through interest rate margins or service fees.\u201d<\/p>\n

Governments hate gold because of the freedom it offers its owners to conduct their own affairs in ways like this, often beyond the reach of their policies and confiscatory practices. That\u2019s why, despite the volume of anti-gold propaganda, so many governments themselves continue to favour gold as a store of value — beyond the potential hostile actions of other governments.<\/p>\n

copyright: Martin Spring of OnTarget<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Gold is making a comeback as money, despite a century of near-universal negativism about its future as a key element in global 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