Prime Minister Dr Mahathir Mohamad speaks at the 25th International Conference on The Future of Asia in Tokyo today.
TOKYO: Prime Minister Dr Mahathir Mohamad says Malaysia is proposing a new currency based on gold, as this would be more stable than the current currency trading which is manipulative.
He said the precious metal could be used to evaluate import and export activities among the East Asian countries.
“We can make settlements using that (new) currency (using gold). That currency must relate to the local currency as to the exchange rate, and that is something that can be related to the performance of that country.
“That way we know how much we owe and how much we have to pay in the special currency of East Asia,” he said during a dialogue session at the 25th International Conference on The Future of Asia (Nikkei Conference) here today.
Mahathir arrived in Tokyo last night for a three-day working visit.
He said the new currency could also be extended to countries outside the East Asian region.
Currently, he said, the global market is tied to the US dollar, which gives room for the currency to be manipulated.
“Just because that one country is affected, there is infection to the other countries. Malaysia was very stable way back in 1997… but because of the problems that occurred in Thailand (during the Asian financial crisis), they said we must peg the Malaysian currency also.
“What happened? The currency traders sold the Malaysian currency down and the value of Malaysian currency depreciated.
“It is not even the money that they have. They never had any Malaysian currency but nevertheless they were able to sell huge quantities of Malaysian currency and when it is depressed, of course they can buy and sell it at a higher price when it comes up,” he added.
“Currency trading is not something that is healthy because it is not about the (economic) performance of countries but about manipulation.
“Anything that you have in oversupply, we will lose value. Anything that is short of supply will increase in value so they sell huge quantities of money they don’t have, and because the amount is so big, there is depression of the value.”
Mahathir said if countries are downgraded or upgraded, it should be by an uncommitted international forum, not a country.
Here, he hit out at the US for “labelling” other countries.
“The US is fond of labelling that country as no good, this country as no good, and telling countries about ways to conduct their businesses.
For almost a decade, global central banks have been avid gold buyers. Gold purchases by central banks in 2018 rose 36 percent over the previous year. Central banks are now holding 366 tons of the yellow metal. These gold purchases are the largest since 1971 when President Nixon ceased the gold standard and the tie between the U.S. dollar and gold, which rapidly led to the devaluation of the U.S. dollar.
Not every central bank has followed this trend. Venezuela, which is in the midst of an economic collapse, sold 25 tons of gold in 2018 in an attempt to repay its debts. But Venezuela is an exception. Other central banks are eager to increase their gold reserves as a hedge against economic uncertainty. Gold ownership by central banks is at a 50-year high as global purchases have increased 75 percent over the past year.
1. United States
The Federal Reserve holds the largest amount of gold of any other central bank, 8,133.5 tons. This is 75.2 percent of its foreign reserves. The Federal Reserve has not been as active in the gold-buying spree as other countries in an effort to keep the dollar from devaluing.
2. Germany
Germany’s central bank has been busy repatriating 674 tons of gold from the Banque de France and the Federal Reserve Bank. During the Cold War, the country’s closeness to what was then Russia-controlled East Germany drove Germany to store its gold with other countries. Now, the Deutsche Bundesbank is calling its gold back home. This move is expected to be completed by 2020. Germany currently holds 3,370.0 tons of gold, which account of over 70 percent of its foreign reserves. Germany, which experienced hyperinflation in the 1930s which saw the Deutschmark become valueless, has learned its history lesson.
3. Italy
Italy plans on holding on to its 2,451.8 tons of gold. The Bank of Italy has stated that it considers gold a safe investment in times of economic turmoil and a safeguard against the volatility of the U.S. dollar. Gold represents 67.9 percent of Italy’s foreign reserves.
4. France
France has gradually ceased selling its gold reserves in an effort to hold on to the 2,436.0 tons of gold it currently has. This amounts to over 60 percent of the country’s foreign reserves. Marine Le Pen, leader of the National Front Party, has advocated for a freeze on the sale of gold, as well as repatriation of all of France’s gold currently being held by foreign countries.
5. Russia
The Russian Central Bank has been bullish on gold for six years. In 2017, it overtook China to become the fifth largest holder of gold reserves. Much of this is due to trade tensions between the U.S. and Russia. Two years ago, Russia purchased 224 tons of gold and sold off much of its U.S. Treasury debts. This move is seen as a defensive effort to weaken the U.S. dollar as the top global reserve currency. Currently, Russia holds 2,119.2 tons of gold in reserves. The Russian Central Bank is leading the way in gold purchases in its efforts to devalue the dollar.
Since the U.S. placed economic sanctions against Russian, its central bank has been accumulating gold as a safety net against having its assets frozen. In 2018, it purchased 8.8 million ounces of gold.
6. China
China, which currently holds 1,864.3 tons of gold in reserve, a low amount among the leading gold-holding countries, but there have been many reports that the country has left some of the gold purchases off its books. However. China is expanding its reserves slowly. It is also the leading producer of gold in the world.
Global central banks now hold the greatest share of the world’s gold, approximately 33,800 tons. Gold has been a critical diversification tool, a safety hedge against inflation, or as collateral for loans.
Central banks in Austria and Switzerland have also indicated that they consider gold an essential reserve against future emergencies. The Polish central bank expressed the fact that their gold reserves allow diversification and greater independence and less reliance on the financial stability of other countries.
Sweden, Greece, and Portugal have expressed the same sentiments. Gold is a haven of safety during economic turndowns.
Goldmoney Research@GMoneyResearch
Countries have held #gold as a reserve asset throughout history…
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The world’s central banks are counting on the power of gold to help them through bad economic times. Is this something investors should be thinking about, as well? The current economic growth experienced around the globe is expected to come to an end, as all economic upswings do. Some economists are predicting a recession by 2020. In the event of such an occurrence, investors should be position by having a proven hedge during bearing times.
The following chart includes the year to date totals for 2019 Gold and Silver American Eagle Sales from the U.S. Mint as of 5pm on March 28th. The chart also shows the difference in sales from our last report on March 22nd.
POSTED BY SRSROCCO IN MINING, NEWS, PRECIOUS METALS ON MARCH 20, 2019 — 11 COMMENTS
With the latest release by the USGS, silver production in the U.S. is now the lowest in more than 70 years. We have to go all the way back until the year after World War II ended to see U.S. silver production less than it was in 2018. While many reasons can be attributed to the decline, the main factors are falling ore grades and mine economics.
Unfortunately, there just aren’t too many economic silver deposits in the United States, especially with the high level of environmental and governmental regulations. Instead of dealing with all the bureaucracy, companies are looking to Mexico and South America to open new silver projects.
Regardless, U.S. silver production declined by more than 100 metric tons last year, or 10% in 2018, mainly due to the ongoing closure of the Lucky Friday Mine in Idaho. The Lucky Friday Mine has been shut down ever since the United Steelworkers went on strike on March 13, 2017. However, the dropoff in silver mine supply can’t all be blamed on the Lucky Friday Mine. Domestic silver production has been trending lower for the past two decades:
In 2000, the U.S. produced 63.7 million oz (1,980 metric tons) of silver compared to just 29.7 million oz (923 metric tons) last year. Thus, U.S. silver production has fallen by more than 50% in less than two decades. Silver production in the U.S. ramped up significantly during the 1990s due to the McCoy-Cove Silver Mine in Nevada. At its peak, the McCoy-Cove Mine supplied 20% of the total U.S. silver production:
I don’t have a chart of U.S. silver mine supply over the past 100 years, but I checked the USGS data, and in 1946, the country produced only 713 metric tons (mt) of silver. Interestingly, while silver production had declined due to the war focusing its efforts on other strategic metal mining (2,090 mt in 1941 to 903 mt by 1945), the significant drop off in 1946 was also due to mine strikes at base metal mines and smelters. Because most of the silver is a by-product of base metal mining, the strikes had a profound impact on overall production.
So, even though the shut-down of the Lucky Friday Mine reduced U.S. silver production by 3-4 million oz, it doesn’t account for the additional 30 million oz lost since 2000.
At some point, Americans will become aware of the monetary properties of gold and silver. However, when they finally do, domestic silver mine supply will likely not be enough to satisfy the demand.
According to current U.S. government projections, it will need to increase outstanding debt by $12 trillion over the next decade. That is going to be a huge problem.
Such a massive increase in debt, by itself, is an indicator that the value of the U.S. dollar is destined to fall. If investors are looking for a place to allocate part of their portfolio, they would tend to shy away from assets that have the prospect of going down in value.
Already, China and Japan, the largest holders of U.S. Treasury debt, are scaling back on their holdings. Who will replace them, not only in continuing to purchase Treasury debt issued to offset existing obligations as they mature, but also in the huge increase in debt over the next decade?
There really is no outside party that will do so. Consequently, the Federal Reserve is almost certain to again engage in quantitative easing (meaning inflation of the money supply) to absorb the new Treasury debt issues. On Feb. 8, Federal Reserve Bank of San Francisco President Mary Daly told reporters that the Fed was likely to resume quantitative easing as a routine action rather than its current policy that it should only be considered in an emergency.
I have stated all along that the U.S. government would accelerate the depreciation of the U.S. dollar. In recent years, the Federal Open Market Committee had repeatedly stated that it sought to knock down the value at least 2% annually, though not worded so explicitly. How much faster the U.S. dollar will sink over the next several years is now the important question.
This development just adds to the reasons why I consider it prudent to allocate a part of one’s net worth or investment portfolio to ownership of physical bullion-priced gold and silver coins and ingots as “wealth insurance.” In years past, I suggested that the allocation be 5-10% of the total. With this latest development, I am upping the recommended allocation to at least 15%.
Patrick A. Heller was the American Numismatic Association 2018 Glenn Smedley Memorial Service Award, 2017 Exemplary Service Award, 2012 Harry Forman Dealer of the Year Award, and 2008 Presidential Award winner. He was also honored by the Numismatic Literary Guild in 2017 and 2016 for the Best Dealer-Published Magazine/Newspaper and for Best Radio Report. He is the communications officer of Liberty Coin Service in Lansing, Mich., and writes Liberty’s Outlook, a monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at http:// www.libertycoinservice.com. Some of his radio commentaries titled “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 a.m. Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio and text archives posted at http:// www.1320wils.com).
