Trading with PT style
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EU: Using Gold Reserves As Collateral
Article Yesterday’s big news as far as gold was concerned was a Telegraph report stating that Germany could be about to get into the “cash for gold” business in a big way. Angela Merkel is said to be increasingly favourable to the idea of countries pooling a portion of their sovereign debt into a redemption fund, with the eurozone then taking on a collective obligation to honour this debt. Member states would be obliged to pledge gold and currency reserves as collateral in case they are unable to make good on their obligations.
This so-called “European Redemption Pact” gets around German courts' constitutional objections to “Eurobonds”. It would also allow PIIGS governments to in effect share “Germany’s credit card”, thus lowering borrowing costs in the eurozone periphery and so taking the pressure off of embattled governments in Spain, Greece, Italy and elsewhere. And a big plus point as far as Germany is concerned is that this is no free lunch: if countries cannot honour their commitments, then they will lose their collateral.
But of course, things are never as simple as that. The fly in the ointment here is the always-emotive subject of gold, with many in southern Europe sure to object to the idea of pledging their gold to such a venture. Italy’s sovereign gold reserves stand at 2,451 tonnes – worth €98 billion as of March – while France sits on a hoard of 2,435 tonnes, and Portugal 383 tonnes (Portugal actually owns around 72 tonnes more then the European Union’s second largest economy, the United Kingdom). Having thus far resisted pressure to sell gold in order to shore up state finances, many in these countries will no doubt be wary of this EU take on a “cash for gold” shopping mall kiosk.
This idea bears close attention. If it looks like taking off, it will be yet another indicator that gold is slowly but surely re-entering the financial calculations of governments around the world.
Article Yesterday’s big news as far as gold was concerned was a Telegraph report stating that Germany could be about to get into the “cash for gold” business in a big way. Angela Merkel is said to be increasingly favourable to the idea of countries pooling a portion of their sovereign debt into a redemption fund, with the eurozone then taking on a collective obligation to honour this debt. Member states would be obliged to pledge gold and currency reserves as collateral in case they are unable to make good on their obligations.
This so-called “European Redemption Pact” gets around German courts' constitutional objections to “Eurobonds”. It would also allow PIIGS governments to in effect share “Germany’s credit card”, thus lowering borrowing costs in the eurozone periphery and so taking the pressure off of embattled governments in Spain, Greece, Italy and elsewhere. And a big plus point as far as Germany is concerned is that this is no free lunch: if countries cannot honour their commitments, then they will lose their collateral.
But of course, things are never as simple as that. The fly in the ointment here is the always-emotive subject of gold, with many in southern Europe sure to object to the idea of pledging their gold to such a venture. Italy’s sovereign gold reserves stand at 2,451 tonnes – worth €98 billion as of March – while France sits on a hoard of 2,435 tonnes, and Portugal 383 tonnes (Portugal actually owns around 72 tonnes more then the European Union’s second largest economy, the United Kingdom). Having thus far resisted pressure to sell gold in order to shore up state finances, many in these countries will no doubt be wary of this EU take on a “cash for gold” shopping mall kiosk.
This idea bears close attention. If it looks like taking off, it will be yet another indicator that gold is slowly but surely re-entering the financial calculations of governments around the world.
Gold reserves are going to play an increased role in the new economic order
Gold prices may have fallen out of bed over the past four months. But gold as a currency is gaining ground as gold reserves are increasingly being allocated a more important role in the coming new economic order.
Under a $3.5 billion stabilisation plan being promoted in Germany as the European Redemption Pact the heavily indebted eurozone states would use hard assets such as their gold and currency reserves to back a new type of euro bond.
Gold prices may have fallen out of bed over the past four months. But gold as a currency is gaining ground as gold reserves are increasingly being allocated a more important role in the coming new economic order.
Under a $3.5 billion stabilisation plan being promoted in Germany as the European Redemption Pact the heavily indebted eurozone states would use hard assets such as their gold and currency reserves to back a new type of euro bond.
IMF Buys $2.3 Billion Worth of Gold
After years of selling Gold to help finance developing countries projects, the International Monetary Fund announced in May 2012 that it is now forced to purchase $2.3 billion worth of Gold (1.5 million ounces) on account of rising global risks. The IMF currently holds around 2,800 tonnes of Gold, but facing increasing credit demand and risk from many euro zone countries, it needs to increase the Funds Gold reserves. This announcement comes as no surprise, because many Greek, Spanish and Italian banks are badly in need of Euros and U.S. Dollars and have been selling Gold into the global commodity markets to raise funds.
The Deputy Chairman of Russia's Central Bank, Sergey Shvetsov, said that the Bank of Russia plans to keep buying Gold on the domestic market in order to diversify their foreign exchange reserves.
After years of selling Gold to help finance developing countries projects, the International Monetary Fund announced in May 2012 that it is now forced to purchase $2.3 billion worth of Gold (1.5 million ounces) on account of rising global risks. The IMF currently holds around 2,800 tonnes of Gold, but facing increasing credit demand and risk from many euro zone countries, it needs to increase the Funds Gold reserves. This announcement comes as no surprise, because many Greek, Spanish and Italian banks are badly in need of Euros and U.S. Dollars and have been selling Gold into the global commodity markets to raise funds.
The Deputy Chairman of Russia's Central Bank, Sergey Shvetsov, said that the Bank of Russia plans to keep buying Gold on the domestic market in order to diversify their foreign exchange reserves.
Fall is due to China rejection of stimulus package and worst condition of euro so sell all rallies is mantra till 17th June:thumb::thumb::thumb:
Dont take any position at home in any mkt $ at 56.55 whenever reversal would come can kill ur portfolio and u both so play with small profits:clap::clap: LIKE ME
Dont take any position at home in any mkt $ at 56.55 whenever reversal would come can kill ur portfolio and u both so play with small profits:clap::clap: LIKE ME
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