• Gold Money
    05/26/2016 - 14:27
    Here’s a question that might have you pondering: Is gold a commodity? More importantly, are we doing a disservice to the gold industry by calling gold a commodity? These may sound like silly...

Turkey Once Again Proves That Gold Is First And Foremost Money

Tyler Durden's picture




 

The Turkish central bank has doubled the amount of gold that lenders can hold in reserves (as opposed to paper money - Lira) as part of their reserve requirement changes. As the WSJ reports, this shift from 10% to 20% means that Turkish banks can use their shiny yellow metal as fungible money reserves against foreign currency deposits. This move follows closely on the heels of our comments on last week's 'gold transfer' efforts in Turkey to unleash some of the country's vast personal holdings of Gold. This effort to draw down on the nation's individual gold reserves - the traditional form of savings in Turkey - is part of Ankara's efforts to reduce a finance gap that is currently around 10% of GDP but more importantly it should serve as a lesson reality-check for Bernanke that gold is money and in the words of a 70-year-old housewife "In an emergency, I can convert [gold] to cash and I don't have to wait for the bank to say the asset has matured." It would seem a better store of value than the Lira over the past decade or two and we suspect incentives will have to rise considerably to 'help' the people part with their savings-gold.

It would seem the rise in the value of Gold (in Turkish Lira) has been a 'good' store of value for the Turkish people over the past two decades...

 

Chart: Bloomberg

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Tue, 03/27/2012 - 09:37 | 2293972 GetZeeGold
GetZeeGold's picture

 

 

Gold is backed by nothing.....but everything else is backed by gold.

 

Tue, 03/27/2012 - 09:39 | 2293997 spiral_eyes
spiral_eyes's picture

Gold is backed by scarcity, history, and the reality that you can't print more of it. 

Paper is backed by petty politics

Tue, 03/27/2012 - 09:40 | 2294006 Zero Govt
Zero Govt's picture

Gold is as asset class, prices go up and down

productivity is the only real (human) asset class, Gold reflects that just like any other commodity

Tue, 03/27/2012 - 09:51 | 2294041 goldfish1
goldfish1's picture

Yet as money, PM's function better than any other asset class.

 

Tue, 03/27/2012 - 10:13 | 2294101 Gully Foyle
Gully Foyle's picture

goldfish1

"Yet as money, PM's function better than any other asset class."

No. Anything that is commonly accepted as a medium of exchange between at least two parties will function with an equal effiency.

There is an old Freak Brothers quote about how weed would do better in times of no money than money would in times of no weed.

Same principle.

The real problem is people confuse mediums of exchange with wealth. Wealth is owning rescources and the land those rescources are on.

Why do you think some states own all the water including rainwater?

The reason PMs seem to be increasing in value is the dollar is decreasing in value. Thus PM's are equivalent to cheese/milk/eggs, but closer to say truffles due to availability.

 

Tue, 03/27/2012 - 10:30 | 2294165 Badabing
Badabing's picture

My physical gold just vaporized!!!!!!

Tue, 03/27/2012 - 10:39 | 2294202 Transformer
Transformer's picture

The quote is, "Weed will get you through times of no money, better than money will get your through times of no weed."

Tue, 03/27/2012 - 10:51 | 2294241 Gully Foyle
Gully Foyle's picture

Transformer

Fuck dude, all the weed I smoked then I'm surprised i recalled the quote or the source in any way.

Thanks for the correction.

Tue, 03/27/2012 - 10:30 | 2294166 GOSPLAN HERO
GOSPLAN HERO's picture

Gold is payment in full.

Tue, 03/27/2012 - 09:53 | 2294047 Quinvarius
Quinvarius's picture

Gold is money.  There are several differences between money and a commodity that people refuse to acknowledge at their own peril.  Anyone can store gold and silver indefinitely in their closet.  They never go bad like corn.  They cost nothing to store.  They take up little space.  Among other reasons, that is why gold is money and corn is not money.

Tue, 03/27/2012 - 10:16 | 2294112 Gully Foyle
Gully Foyle's picture

Quinvarius

How well is "gold as money" working in Utah?

Anyone having their slivers accepted in a Utah 7/11 for Slurpies and a fillup of premium?

Tue, 03/27/2012 - 10:44 | 2294216 ParkAveFlasher
ParkAveFlasher's picture

Thanks for confirming the absence of a bubble.

Tue, 03/27/2012 - 11:35 | 2294398 chipshot
chipshot's picture

this dude just smacks of orwellian govi shill-ness..so thick you can taste it

Tue, 03/27/2012 - 11:36 | 2294399 Yardfarmer
Yardfarmer's picture

some small scale grocery stores in CA have been accepting silver in payment. http://youtu.be/h4_ehBNlCL0

Tue, 03/27/2012 - 12:20 | 2294621 Nage42
Nage42's picture

If the guy at the pump has a brain in his head, he should step in and say: "sure man, our 'official' exchange rate for direct silver to gas is 1 toz to 30$ gas dollars, and pull it out of his own wallet as he walks into the back room...

But then again, how many savy gas jockeys are we expecting to run into nowadays?  <5%  How many get clued 'da fsck in 2 years from now ~20% and 5 years from now? North of 50%?

Just pulling numbers outa my ass (as 'ya do!), but I'm thinking I'll not be far off..

 

Tue, 03/27/2012 - 15:47 | 2295324 LongBalls
LongBalls's picture

Your assuming PM investors are dumb enough to exchange them at the 7/11 when they can use FRN dyed toilet paper. 

Dollars = 2% less value y.o.y. (If you believe the gov's manipulation...it's more like 10%)

Gold = 10% plus in value y.o.y.

You decide.

Even when the proof such as the chart in the article is slapping them in the face some people refuse to SEE TRUTH!

Tue, 03/27/2012 - 16:43 | 2295567 MiddletonRobert3
MiddletonRobert3's picture

my roomate's sister makes $85 hourly on the computer. She has been fired from work for 6 months but last month her paycheck was $16158 just working on the computer for a few hours. Read more here .....  http://lazyCash9.com

Wed, 03/28/2012 - 07:35 | 2296729 prole
prole's picture

Dear SPambot-

A- ZHers aren't retards exept for one Chinese idiot, even he isn't stupid enough to fall for your scam

B- If, on the outside chance of one in ten billion, that you actually know a way to make 16k per month, you would be busy DOING IT, not begging others to come run get the money.

Conclusion- nobody here is stupid enough for your scam. Kill yourself.

Tue, 03/27/2012 - 09:50 | 2294037 Rahm
Rahm's picture

Barbaric relic, bitchez!

Tue, 03/27/2012 - 10:04 | 2294072 Zero Govt
Zero Govt's picture

PM's do not perform better "as money" ...because all money is run by the same systemic vandals, monopolists (bankers and Govt) who have wrecked every monetary system in the world dating back mellenium

Gold and Silver has been wrecked (debased) by the same crew, be it the Roman Empire, Henry VIII or Ben Bernanke... so it matters not what money is, it matters what system you operate

the only money system that'll work is a free market (competition) in money... no rules on money and no monopolies on money ..let the market free (of Govt intervention) and let it compete

Tue, 03/27/2012 - 11:16 | 2294323 Bluntly Put
Bluntly Put's picture

I tend to agree. In that scenario gold rises to the top as the ultimate extinguisher of debt. In all forms gold is the foundation of our "monetary" system, as it represents the standard unit of account, the future value of any bill of credit requires a standard unit who's value must be assumed constant.

Paper currency is the poorest substitute for a standard unit of account as its value is completely inelastic and even in the world of nano second trading, completely unquantifiable. Only gold can hold the place of a standard unit of account, this history has documented beyond debate.

Tue, 03/27/2012 - 14:10 | 2294997 Esso
Esso's picture

Log scale inflation, bitchez!

Tue, 03/27/2012 - 10:18 | 2294119 GOSPLAN HERO
GOSPLAN HERO's picture

From Genesis 2 through Revelation 21 the Bible refers to gold and silver no less than 783 times.

Tue, 03/27/2012 - 10:45 | 2294222 ParkAveFlasher
ParkAveFlasher's picture

RIGHT.  And as far as taxes are concerned, payable in salted metal, "render unto Caesar what is Caesar's".  The wisdom is buried in the ancient texts like, well, like gold.

Tue, 03/27/2012 - 12:24 | 2294639 Peter Pan
Peter Pan's picture

Gold is first and foremost backed by man's stupidity as evidenced by war, deficit spending and out of control bankers. Minus those things and fiat might have had a chance. No chance of those things ever stopping so just hold gold and some silver.

Tue, 03/27/2012 - 10:14 | 2294106 GOSPLAN HERO
GOSPLAN HERO's picture

Gold has been used as money for over 5000 years ... somebody likes gold.

Tue, 03/27/2012 - 09:33 | 2293974 Bazinga
Bazinga's picture

I can see the long arm of Ankara reaching into the pockets of the Turkish citizens...

Tue, 03/27/2012 - 09:43 | 2294013 Zero Govt
Zero Govt's picture

politicos will reach for (rob) anyone and anything when they're in a hole of their own digging

"..the grasping hands, grab all they can.." (Depeche Mode)

Tue, 03/27/2012 - 09:34 | 2293978 Barry Mcokiner
Barry Mcokiner's picture

Tradition bitchez

 

Tue, 03/27/2012 - 09:35 | 2293983 francis_sawyer
francis_sawyer's picture

Why IN HELL would they ever want to enter the Eurozone?

Tue, 03/27/2012 - 09:38 | 2293995 GetZeeGold
GetZeeGold's picture

 

 

Tradition?

 

Tue, 03/27/2012 - 09:45 | 2294019 francis_sawyer
francis_sawyer's picture

'Tradition' in Europe = getting ass-raped by a Rothschild (without a reach around) because the other two hands are busy stealing your gold...

Tue, 03/27/2012 - 13:39 | 2294927 e-recep
e-recep's picture

hahaha, that was good.

Tue, 03/27/2012 - 10:19 | 2294120 Sudden Debt
Sudden Debt's picture

So their unemployed can drive straight into Europe without border control to find work and send the money back home to Turkey. A bit like Poland did.

Tue, 03/27/2012 - 09:37 | 2293994 centerline
centerline's picture

Freegold people are probably peeing all over themselves.

(note: I don't know enough about the mechanics of a freegold system here to really critique it, but I do like the core concepts of the freegold approach - FOFOA is one of the sites I visit from time to time).

Tue, 03/27/2012 - 10:03 | 2294076 goldfish1
goldfish1's picture

Thank you. Never heard that term - freegold. Looks interesting. Will read up.

Tue, 03/27/2012 - 12:15 | 2294595 dark pools of soros
dark pools of soros's picture

to have freegold you need a free market so i don't what FOFOA is smoking but all that stuff works well on the white board

Tue, 03/27/2012 - 09:38 | 2293996 Its_the_economy...
Its_the_economy_stupid's picture

But, but, you can't eat it and it doesn't produce a return/dividend.

Tue, 03/27/2012 - 09:40 | 2294005 GetZeeGold
GetZeeGold's picture

 

 

Yeah.....just rising year over year for 11 years now.....sucks.

 

Tue, 03/27/2012 - 10:11 | 2294095 Terminus C
Terminus C's picture

gold has not risen over the last eleven years...

Tue, 03/27/2012 - 10:45 | 2294219 GetZeeGold
GetZeeGold's picture

 

 

These are not the droids you're looking for.

 

Tue, 03/27/2012 - 10:48 | 2294227 ParkAveFlasher
ParkAveFlasher's picture

TRUE.  It's price denominators have collectively been devalued.  Still worth 15-16 barrels of crude.

Wed, 03/28/2012 - 07:45 | 2296741 prole
prole's picture

gold has not only risen over the last eleven years, gold has risen over the last one hundred and eleven years, and was stable for the last three thousand one hundred and eleven years.

I would say gold has "risen" for the last forever, considering the fact that gold keeps its value, while paper fiat currency schemes crash and burn by the wayside all while gold shines.

Examples- "Continentals, US Dollars, Zimbabwe Dollars"

Tue, 03/27/2012 - 10:38 | 2294197 Badabing
Badabing's picture

Your both right it’s a great floor wax and desert topping!

Tue, 03/27/2012 - 10:41 | 2294209 Badabing
Badabing's picture

The big boyz lease it out for a dividend, what about that grasshopper.

Tue, 03/27/2012 - 09:37 | 2293998 Quinvarius
Quinvarius's picture

This is the kind of stuff that happens when you let a raggy unqualified housewife become Secretary of State and she threatens to kick people out of the SWIFT system.  The dollar has been fatally undermined.

Tue, 03/27/2012 - 10:15 | 2294111 Gully Foyle
Gully Foyle's picture

Quinvarius

http://theeconomiccollapseblog.com/archives/10-reasons-why-the-reign-of-...

10 Reasons Why The Reign Of The Dollar As The World Reserve Currency Is About To Come To An End

The following are 10 reasons why the reign of the dollar as the world reserve currency is about to come to an end....

#1 China And Japan Are Dumping the U.S. Dollar In Bilateral Trade

A few months ago, the second largest economy on earth (China) and the third largest economy on earth (Japan) struck a deal which will promote the use of their own currencies (rather than the U.S. dollar) when trading with each other.  This was an incredibly important agreement that was virtually totally ignored by the U.S. media.  The following is from a BBC report about that agreement....

China and Japan have unveiled plans to promote direct exchange of their currencies in a bid to cut costs for companies and boost bilateral trade.

The deal will allow firms to convert the Chinese and Japanese currencies directly into each other.

Currently businesses in both countries need to buy US dollars before converting them into the desired currency, adding extra costs.

#2 The BRICS (Brazil, Russia, India, China, South Africa) Plan To Start Using Their Own Currencies When Trading With Each Other

The BRICS continue to flex their muscles.  A new agreement will promote the use of their own national currencies when trading with each other rather than the U.S. dollar.  The following is from a news source in India....

The five major emerging economies of BRICS -- Brazil, Russia, India, China and South Africa -- are set to inject greater economic momentum into their grouping by signing two pacts for promoting intra-BRICS trade at the fourth summit of their leaders here Thursday.

The two agreements that will enable credit facility in local currency for businesses of BRICS countries will be signed in the presence of the leaders of the five countries, Sudhir Vyas, secretary (economic relations) in the external affairs ministry, told reporters here.

The pacts are expected to scale up intra-BRICS trade which has been growing at the rate of 28 percent over the last few years, but at $230 billion, remains much below the potential of the five economic powerhouses.

#3 The Russia/China Currency Agreement

Russia and China have been using their own national currencies when trading with each other for more than a year now.  Leaders from both Russia and China have been strongly advocating for a new global reserve currency for several years, and both nations seem determined to break the power that the U.S. dollar has over international trade.

#4 The Growing Use Of Chinese Currency In Africa

Who do you think is Africa's biggest trading partner?

It isn't the United States.

In 2009, China became Africa's biggest trading partner, and China is now aggressively seeking to expand the use of Chinese currency on that continent.

A report from Africa’s largest bank, Standard Bank, recently stated the following....

“We expect at least $100 billion (about R768 billion) in Sino-African trade – more than the total bilateral trade between China and Africa in 2010 – to be settled in the renminbi by 2015.”

China seems absolutely determined to change the way that international trade is done.  At this point, approximately 70,000 Chinese companies are using Chinese currency in cross-border transactions.

#5 The China/United Arab Emirates Deal

China and the United Arab Emirates have agreed to ditch the U.S. dollar and use their own currencies in oil transactions with each other.

The UAE is a fairly small player, but this is definitely a threat to the petrodollar system.  What will happen to the petrodollar if other oil producing countries in the Middle East follow suit?

#6 Iran

Iran has been one of the most aggressive nations when it comes to moving away from the U.S. dollar in international trade.  For example, it has been reported that India will begin to use gold to buy oil from Iran.

Tensions between the U.S. and Iran are not likely to go away any time soon, and Iran is likely to continue to do what it can to inflict pain on the United States in the financial world.

#7 The China/Saudi Arabia Relationship

Who imports the most oil from Saudi Arabia?

It is not the United States.

Rather, it is China.

As I wrote about the other day, China imported 1.39 million barrels of oil per day from Saudi Arabia in February, which was a 39 percent increase from one year earlier.

Saudi Arabia and China have teamed up to construct a massive new oil refinery in Saudi Arabia, and leaders from both nations have been working to aggressively expand trade between the two nations.

So how long is Saudi Arabia going to stick with the petrodollar if China is their most important customer?

That is a very important question.

#8 The United Nations Has Been Pushing For A New World Reserve Currency

The United Nations has been issuing reports that openly call for an alternative to the U.S. dollar as the reserve currency of the world.

In particular, one UN report envisions "a new global reserve system" in which the U.S. no longer has dominance....

"A new global reserve system could be created, one that no longer relies on the United States dollar as the single major reserve currency."

#9 The IMF Has Been Pushing For A New World Reserve Currency

The International Monetary Fund has also published a series of reports calling for the U.S. dollar to be replaced as the reserve currency of the world.

In particular, one IMF paper entitled "Reserve Accumulation and International Monetary Stability" that was published a while back actually proposed that a future global currency be named the "Bancor" and that a future global central bank could be put in charge of issuing it....

"A global currency, bancor, issued by a global central bank (see Supplement 1, section V) would be designed as a stable store of value that is not tied exclusively to the conditions of any particular economy. As trade and finance continue to grow rapidly and global integration increases, the importance of this broader perspective is expected to continue growing."

#10 Most Of The Rest Of The World Hates The United States

Global sentiment toward the United States has dramatically shifted, and this should not be underestimated.

Decades ago, we were one of the most loved nations on earth.

Now we are one of the most hated.

If you doubt this, just do some international traveling.

Even in Europe (where we are supposed to have friends), Americans are treated like dirt.  Many American travelers have resorted to wearing Canadian pins so that they will not be treated like garbage while traveling over there.

If the rest of the world still loved us, they would probably be glad to continue using the U.S. dollar.  But because we are now so unpopular, that gives other nations even more incentive to dump the dollar in international trade.

So what will happen if the reign of the U.S. dollar as the world reserve currency comes to an end?

Well, some of the potential effects were described in a recent article by Michael Payne....

"The demise of the dollar will also bring radical changes to the American lifestyle. When this economic tsunami hits America, it will make the 2008 recession and its aftermath look like no more than a slight bump in the road. It will bring very undesirable changes to the American lifestyle through massive inflation, high interest rates on mortgages and cars, and substantial increases in the cost of food, clothing and gasoline; it will have a detrimental effect on every aspect of our lives."

Most Americans don't realize how low the price of gasoline in the United States is compared to much of the rest of the world.

There are areas in Europe where they pay about twice what we do for gasoline.  Yes, taxes have a lot to do with that, but the fact that the U.S. dollar is used for almost all oil transactions also plays a significant role.

Today, America consumes nearly a quarter of the world's oil.  Our entire economy is based upon our ability to cheaply transport goods and services over vast distances.

So what happens if the price of gasoline doubles or triples from where it is at now?

In addition, if the reign of the U.S. dollar as global reserve currency ends, the U.S. government is going to have a much harder time financing its debt.

Right now, there is a huge demand for U.S. dollars and for U.S. government debt since countries around the world have to keep huge reserves of U.S. currency lying around for the sake of international trade.

But what if that all changed?

What if the appetite for U.S. dollars and U.S. debt dried up dramatically?

That is something to think about.

At the moment, the global financial system is centered on the United States.

But that will not always be the case.

The things talked about in this article will not happen overnight, but it is important to note that these changes are picking up steam.

Under the right conditions, a shift in momentum can become a landslide or an avalanche.

Clearly, the conditions are right for a significant move away from the U.S. dollar in international trade.

So when will this major shift occur?

Only time will tell.

Tue, 03/27/2012 - 10:39 | 2294201 harmonymonkey
harmonymonkey's picture

They all hate us anyhow
So let's drop the big one now
Let's drop the big one now

~ R. Newman

Tue, 03/27/2012 - 13:13 | 2294837 Winston Churchill
Winston Churchill's picture

My wife(who is English) was refused service at two stores in the UK

recently,because she has picked up a slight Southern drawl with the odd American word,

peppering her speech.Had to show her British passport to get served.

That's our best ally.

Tue, 03/27/2012 - 15:50 | 2295347 LongBalls
LongBalls's picture

FATALLY being the key word.

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