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Is Gold A Sleeping Giant? The Basel Accord

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Is Gold A Sleeping Giant? The Basel Accord

In the light of much focus on cryptocurrency this article examines whether gold will make a comeback and establish its true value and status in our economy.

History is Prelude

From time immemorial precious metals have been recognised for their stored value as tangible assets, including silver and gold. A key reason for paper notes becoming used commercially was because it was cumbersome to carry gold and precious metals around in any major quantity for purposes of trade.

Paper notes would be denominated with an inscription pointing to the value of that note in terms of gold and silver. In simple terms they were a bit like coupons. Two particular landmarks in history changed the nature of money. Firstly, things fundamentally changed with the confiscation of gold from the people in the 1930’s by executive order of President Roosevelt.

Then in 1971 gold and silver was removed as backing altogether, courtesy of President Nixon. From that moment the populace had the form of money but not the substance of money, which I referenced in another article. Here in the UK the gold standard was suspended during the Napoleonic War, and brought back for a while from 1821 to 1914.

Image Source: Gold

Inflation

Gold’s restorative impact on the economy and hedge against inflation was well known. In 1914,  £0.95 could buy what £1 pound could buy in 1821, meaning that Britain’s economy strengthened with gold as the key factor. Also Elizabeth I used it to counter inflation during her reign between 1558 and1603.

So, gold has shown itself to be real money and has been the consistent answer to inflation. Based on its track record in history this is one indicator that gold will make a comeback. In the meantime the value of money has been in significant decline for approximately 100 years due to money existing in form alone. Right now as I write this article the UK has now surpassed 10% inflation though I suspect the number is higher. Why?

Mario Innecco is a financial markets and macro economics analyst who recently discovered and reported that the Bank of England had been manipulating data on inflation, to make inflation look better than it really is. The bottom line to curbing inflation is to restore money of substance, in other words to bring back the likes of gold and silver.

The second reason that gold could become resurgent picks up on the theme of manipulation of data. The only reason to manipulate data is when you want it to fit a certain narrative, and to control perception. The conflated numbers cited during the so-called pandemic, show this is a common strategy used by the establishment. If you take a look at the summary gold chart, you will notice that since 2012, when gold was near 1800 per ounce, it declined thereafter to an all time low in 2016.

Image source: Gold Chart

It was not until 2020 during the so-called pandemic that it broke the 2012 record. Again it correlates to rising inflation and yet, the graph resembles a picture of suppression, rather than reflecting its true value according to many commentators. Gold has a history of being stolen, suppressed, and manipulated as far as its data is concerned. This tells its own story of how precious and valuable it is, otherwise you would not see so much energy going into destroying its true worth to the public.

What Happened to All That Gold?

I have always wondered what happened to the abundant supply of gold that used to be? Is it going extinct like the dinosaurs?  Gold has not disappeared but it has transferred from the many to the few through asset stripping and theft.

Recall in history when gold was confiscated with such extreme measures and touted as being in the interests of the economy, only to be sold at a higher price by the American government. It revealed the truth and betrayal of the people by the government. It was a form of asset stripping by theft, designed to enrich the few and enslave the many.

You may also recall Karen Hudes, former World Bank employee who blew the whistle and expanded on the fraud, and the theft of gold which was taking place at the higher echelons of the bank. These thefts mean that gold simply got transferred by force to a few global oligarchs. 

As it stands today, the World Gold Council reports that the Central Banks hold one fifth of all the existing , with the USA leading the way, although China and Russia are the two biggest producers of gold. While you can buy gold today,  the asset stripping strategy is showing up in more subtle forms, as the following case underlines.

Insider Trading

According to the dictionary, insider trading is defined as ‘the illegal practice of trading on the stock exchange to one's own advantage through having access to confidential information’. This has been shown to be going on in the stock market in general, and among those implicated are high ranking officials such as Nancy Pelosi, USA speaker of the house, and Federal Reserve chief Jerome Powell. The following case highlights the connections at the highest level.

The Court Hearing of JP Morgan

Recently In Chicago the trial of certain officials of JP Morgan took place. The court discovery revealed what many suspected – insider trading of gold, which involved spoofing and market manipulation. What’s more the court discovery was able to ascertain that JP Morgan were effectively agents for the BIS, and also the Federal Reserve. At one point the label ‘criminal enterprise’ was used to describe the organized theft.

Certain individuals were charged with fraud. It’s interesting that the trial took place in Chicago. COMEX is a division of the Chicago Mercantile Exchange, and is the primary futures and options market for trading metals such as gold, silver, copper, and aluminum. 

One of the other fraudulent activities that takes place within these exchanges by insiders is fooling people into thinking they own real physical gold [allocated gold] when in fact they only hold the form of it.  ETF stands for exchange traded fund, and is an example of such a paper asset.

The challenge with fraud charges is that so much money is made in fraudulent activities, that many banks think they can simply buy their way out of the consequences. However, that may be stopped in its tracks sooner rather than later.

The Basel Accord 

The Basel Accord, sometimes referred to as Basel IV, comprises Basel III with its three pillars, Basel I, II and III. This is a series of international banking reforms designed to strengthen banking through different economic challenges. It can be summed up in this diagram. 

Image Source: Basel III

This series of regulatory changes are designed to introduce highly disciplined practices to increase safety and to minimize risk in the banking sector. Basel started back in 1974 as a collaborative committee comprising 10 countries including the United Kingdom and USA. Its focus was on quality, safety and efficiency in banking. In 2009 the first version of Basel III came out in response to the financial crisis. Common themes of the accord is the requirement for banks to have greater capital reserves and show liquidity.

Within this comes the monitoring and reporting of key data demonstrating that the bank balance sheets add up. This potentially puts the banks in the headlights where paper versus physical allocated gold is concerned. Now they have to show proper reconciliation. The minimum requirements of Basel III took effect from Jan 2022, and must be fully in play by 2027. The big banks appear to be panicking because they have to report and  submit the relevant documents. It seems that they are using this transition to buy up physical gold in huge quantities in order to plug the gaps they created.  

Alongside this you have Russia who are now charging in gold for its energy, This has resulted in the G7 banning imports of gold from Russia. This has not stopped Russia. Russia is one of the BRIC countries [including Brazil, India and China], and it is being muted that they may come out with their own gold standard, which would threaten the dominance of the USD further.

Elsewhere, Zimbabwe is now offering gold coins as legal tender to curb inflation, and Lithuania is going down a similar path. Many financial commentators such as Robert Kiyosaki and Jim Rickards are predicting a surge in both gold and silver as a result of the pressure of inflation, Basel III, and the activity around the purchase and use of gold.

Gold With Greater Functionality

If you are wondering if gold is still for the long term as simply a store of value, the good news is that its functionality now goes beyond that. You can buy, trade, save and own gold more easily.

For example the Glint App allows you to buy gold through their app using EUR, USD and GBP. The gold you purchase is physical allocated gold, and is stored in a non government brinks vault in Switzerland. You own it. Furthermore you can digitize what you own through their debit mastercard, meaning you can then spend it on everyday things. I have found the purchase of gold through the app to be seamless, and am looking forward to buying something effectively with gold. Check if GLINT is in use in your country.

Another company that has done something similar is Kinesis. The problem they solve is explained in Gresham’s Law, which is where good money is saved and bad money spent historically. They are creating a banking ecosystem around this concept which allows you to buy gold and silver on their exchange, using fiat or select cryptocurrencies, and then you can store it in your own wallet, as well as to be able to send and receive to other participants in the ecosystem.

They are coming out with a VISA debit card too, both virtual and offline. With their own built in exchange, you can trade gold and silver, and you get yields on different activities such as minting, buying, holding and referring. Off course if you are new to this concept, and simply want to buy physical gold you may wish to look up Mike Maloney on YouTube for educational input and recommendation. If gold backed cryptocurrency appeals to you here is a guide as a starting point for exploration.

I have developed a mini ecosystem within my portfolio which allows me to accept payment for my businesses in gold, as well as to save and make purchases. I also have some gold backed cryptocurrency and related company shares based around gold. It certainly feels more empowering to be working with real money, which surpasses what my traditional bank can do.

Much attention has been focussed on cryptocurrencies as the emerging new ‘money’ especially since bitcoin came into being around 2009. In fact many commentaries refer to bitcoin as the new digital gold, since one of the assertions is that it cannot be confiscated. Confiscation is one consideration but anything that deters access to your money is another, as we saw in a previous article which looked at regulation. The volatility of cryptocurrency does not help with the immediate threat of inflation.

With rampant inflation, the intense suppression of gold through market manipulation, and the imminent full implementation of Basel III, these trends suggest that gold will make a comeback and find its true value. Gold may well be the sleeping giant, as it has an inherent and powerful ability to restore an economy that has gone out of control.

Whatever else you do, consider adding this to your resources to stave off the decline in purchasing power of your local currency. Now you know the game that is being played by the establishment, it is up to we the people, the majority, to protect our assets, in order to create and pass on generational wealth to bless ‘we the people’ ad infinitum.

 

 

About: Anita Narayan. (United Kingdom) My life's work is about helping individuals to greater freedom through joy and purpose without self-sabotage, so that inspirational legacy can serve generations to come. Find me at my Markethive Profile Page | My Twitter Account | and my LinkedIn Profile.

 

 

 

 

 

 

Tim Moseley

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Europe Faces Its Worst Food Crisis In Decades

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The Food and Agriculture Organization (FAO) of the United Nations, headquarters located in Rome, was established in October 1945 by the United Nations assembly in the wake of World War 2. Its aim is to improve nutrition and living standards, agricultural productivity, and the conditions of farmers and make the best use of the world's food resources. It provides food and nutrition advice, technical assistance, and other support to people in need in both emergency and non-emergency situations.

During a meeting on 8th June 2022, FAO Director-General, Qu Dongyu, participated with dozens of ministers at the summit in Rome to tackle higher prices for food, fertilizer, and fuel. Acknowledging a “very complicated” global scenario, he urged countries in the Mediterranean to work together to mitigate food security risks that the war in Ukraine has further exacerbated. 

The Mediterranean Sea region includes 22 countries on three continents, each with diverse natural resources, agricultural traditions, and production potential. The Ministerial Mediterranean Dialogue on Food Crisis, an event convened by Italy’s Minister of Foreign Affairs, Luigi Di Maio, drew ministers and government participants from more than 24 countries.

 

Minister Luigi di Maio opened the Dialogue, noting that seldom has hunger had such a high profile on the public agenda and emphasizing the importance of sustainable agrifood systems.

Qu noted that,

“We must keep our global food trade system open and ensure that agrifood exports are not restricted or taxed.” 

Qu Dongyu outlined four major focal points across which cooperative efforts should be made: 

  1. More investment in countries that are severely affected by the current increase in food prices. 
  2. Reduction of food loss and waste. 
  3. Better and more efficient use of natural resources, especially water and fertilizer. 
  4. A focus on technological and social innovations that can significantly reduce market failures in agriculture.

“We are facing the worst food crisis in decades,” said Svenja Schulze, Germany’s Minister for Economic Cooperation and Development, who co-chaired the event.

Participants agreed that high prices for fertilizers and fuels, both critical agricultural inputs, are urgent matters for global food security.

 

European countries are now looking at options for compensation for individual industries, which have enormously high costs due to energy prices.

Before the war in Ukraine began, the European Union was an exporter of grain, like Ukraine and Russia. Export from Ukraine went mainly to the Middle East and North Africa. But that is likely to change now.

The Arab states now have grain stocks purchased, so prices would not have to go up again in the autumn. So far, the harvest looks good in the rest of Europe, but also in countries such as Australia and Canada.

Rising food prices could stabilize after this year's grain harvest, estimates the Food Chamber of the Czech Republic. According to her, current agricultural prices are speculative, with a good harvest, growth could calm down.

Following this, the prices of feed, flour and meat would no longer have to rise – however, food will not return to last year's values. "An absolutely crucial signal will be how this year's harvest ends, because prices now do not fully reflect reality," said Miroslav Koberna, director of the Chamber of Programming and Strategy of Czech Republic.

 

How Do Food Process Compare Across Europe?

Food prices are skyrocketing across Europe. In some countries, however, it does not burden people's wallets as much as in the Czech Republic. Experts say that this is due to higher incomes and different levels of food taxation.

In the Czech Republic, most foodstuffs are subject to 15% VAT. But some states are more lenient. For example, in Poland, several foods are not subject to VAT. They have a similar situation in Hungary.

For example, according to the so-called Big Mac index, the famous hamburger Big Mac earns the fastest in Luxembourg or Switzerland; it takes them about ten minutes. The longest then on one Big Mac they work in Ukraine, almost an hour. It'll take the Czechs about half an hour. 

 

Czech households spend 17.1% of their income on food, which is close to the European average. A quarter of the senior pension falls on basic foodstuffs in the Czech Republic. Comparing Czech food prices – in Italy are 22% more expensive. Lower prices of foods are in Bulgaria and Poland, about 20-25% more than in Czechia are the food prices in Greece, Austria, Italy or France.

In Czechia, the prices of foods in comparison to last year grow extremely. In May 2022  flour prices  accelerated to 64.6% year on year, for butter to about 52 %, for semi-skimmed long-life milk to about 42% and for eggs to about 34%.

 

        “Yellow prices” are reduced – very often quickly sold out

 

People in Ireland or Scandinavia spend the least on food. On the contrary, they pay the most for them in Romania and the Baltic states. In Germany the average income is about three times more than the Czechia, so of course Germans can afford to buy more food, says one Czech economist.

European countries are currently dealing with compensation options for individual sectors, which have enormously high costs due to energy prices.

 

Germany will pay about 32 million euro, Poland 800 000 euro and France will according to experts be the clear winner in the food industry due to its highest investments in rescuing processors. 

Food Inflation In Europe – The Numbers Say it All

This table shows the percentages of inflation in European countries – highest inflation in food prices has Moldova with 30.2%, second place is Lithuania with 24.8% and so on. Absolutely in the best situation is Switzerland with only 1.1% food inflation.

 

 

 

Source:

Ceskenoviny.cz

Idnes.cz

Fao.org

tradingeconomics.com

 

 

 

Tim Moseley

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World Bank outlook for 3 years

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World Bank outlook for 3 years

From Wiki:

The World Bank (WB) is an association of two specialized United Nations (UN) organizations that provide financial and technical assistance to developing countries to reduce poverty and improve living conditions around the world.

Already more than two years ago WB warned that the number of people in poverty could increase by as much as 11 million.
It was supposed the financial shock caused by the pandemic will also have serious effects on poverty, which is defined as an income of less than $ 5.5  per day. The World Bank initially expected the region to lift almost 35 million people out of poverty this year, including more than 25 million in China. 
Five years ago in 2017 there was much more optimism, the overall economical growth was supposed 2,9%. In june 2020 the optimism was away: " World Bank announced: World economy down 5.2% this year due to coronavirus"

In April 2022 the World Bank, based in Washington, has lowered its global growth forecast for 2022 from 4.1% to 3.2%. He points to several problems that have a negative impact on the global economic situation. In addition to the aforementioned inflation and war in Ukraine, the World Bank also sees problems in the progressive isolation of the Chinese market from global trade and the creation of the "Eastern Economic Pact" between China and Russia.

The International Monetary Fund (IMF), part of the World Bank, has cut the UK's economic growth outlook from 4.7% to 3.7%. The global growth forecast was also reduced from 6.1% to 3.6%. The IMF sees the main problem as an inefficient approach to raising interest rates, which on the one hand may slow inflation, but on the other hand will slow down economic growth even more.

NEW WARNINGS
The war in Ukraine will cause high food and energy prices, which will last three years, the World Bank warned on Tuesday last week. Her statement raises fears that the situation will return during the oil crisis in the mid-1970s, when economic growth was weak and inflation was high at the same time.
According to the World Bank's dark outlook, persistently high commodity prices lasting until the end of 2024 could lead to so-called stagflation, a dangerous combination of high inflation coupled with meager economic growth.

This year, the bank expects energy prices to rise by 50 percent, with the price of North Sea Brent crude being around $ 100 a barrel, the highest since 2013. Compared to 2021, it has risen by 40 percent. In 2023, Brent oil prices are expected to fall to $ 92 a barrel, but that is still more than the five-year average of $ 60.

According to the World Bank, the price of gas will double this year compared to 2021, and the price of coal will be 80 percent higher.

The price of wheat will rise by more than 40 percent this year, which will have a severe impact on developing countries that are dependent on grain exports from Ukraine and Russia.
The World Bank's economic outlook for commodities shows that energy prices have risen the most in the last two years since the oil crisis erupted in 1973. Fertilizer prices have risen the most since 2008. Although the bank says energy and other commodity prices will fall from current highs, they are expected to remain above the current average. They will be above average until the end of 2024, including the previous two years, ie a total of five years.

The question remains to what extent these predictions are reliable. Many experts are more pessimistic and the development of some prices in the first months of this year is alarming.

We can only hope that there will be no significant deterioration and that we will recover from this situation strengthened.

                         Thanks for reading

                                                                     Margaret

Tim Moseley

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Inflation in European Union

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Inflation in European Union

The annual inflation rate in the European Union (comparing same month of the year 2021 to this year) rose to a record 7.8 percent in March from 6.2 percent in February. This was announced by the European statistical office Eurostat. The Czech Republic had the third highest inflation in the EU, at 11.9 percent.
Inflation in the euro area is now well above the European Central Bank's 2% target. Upward it is pushed especially by the rising energy. In March, energy prices in the euro area increased by 44.4 percent year-on-year.

The highest inflation in the EU was recorded in Lithuania, where consumer prices increased by 15.6 percent year-on-year. Second place went to Estonia with inflation of 14.8 percent. Czechia takes third place.

In an interview with the BBC,   the president of the World Bank, David Malpass said that war in Ukraine will make food more expensive by up to 37 percent, and the looming food crisis will cause human catastrophe in many poorer countries. Hundreds of millions of people are at risk of poverty and malnutrition if the crisis is not stopped.
The head of the World Bank warned that there is enough food for everyone in the world, and according to comparisons with the situation in the past, there are also high food stocks. But there is a need to change the way food is distributed to get where it is needed.

Here some examples of prices how it is influencing Czech Republic:
prices gasoline and diesel January 2022 were at petrol stations in the Czech Republic for an average of CZK 36.20,(approx 1,68 USD/liter) . But beginning of April gasoline was approx 2,27 USD/liter which means 38 % more  – this influences of course also the prices of public transport and transport of goods  – 22% up.
Foods – flour 63% more expensive than a year ago which has of course big influence on prices of bakery products. Butter and milk very similar. Bread – some economists say that in the second half of this year 1kg of bread can be even 70 CZK/3,10 USD – that might be increse by 40-50% in comparison with the price now.

This price development is supported by the fact that Czech government is inactive and does not want to do anything against this development arguing it is against rules of Europen Union – while for instance Polish government  decreased the VAT on foods.

This graf shows average prices of electricity in capital Praha – New year 2021 compared to New year 2022 = growth 48,49 %

The complicated situation applies also on enterprises
More than half of domestic enterprises expect their energy inputs to become more expensive by 50 percent or more. At the same time, the vast majority of companies will increase the prices of other cost items, such as input materials. This follows from the survey of the Chamber of Commerce. The most acute situation is in the manufacturing industry and construction.
A few days ago was published that inflation in Czech republic now is near to 13% – and if government will not do anything against it will still grow most probably.

But not every state in Europe has the same aproach – for instance Hungary  – The Hungarian government since 1. February  reduced prices for wheat flour, sugar, sunflower oil, milk, pork  and chicken breasts.

Evidently member states of European Union have different approach to the inflation, some politicians have more courage and the development this year might be still quite wild.

                            Thank you for reading

                                                                Margaret

 

Tim Moseley