In a recent interview the Dutch central bank (DNB) shares it has equalized its gold reserves, relative to GDP, to other countries in the eurozone and outside of Europe. This has been a political decision. If there is a financial crisis the
Jan, just read your Part 2 (including the summary of Part 1). Taken together with this latest piece, it seems to me a remarkable exercise in research and analysis.
While in a sense it's still an hypothesis, the evidence you pull together of progressive harmonisation of various ratios does seem too consistent to be coincidental.
I confess it runs counter to my long-held perceptions (biases?🤔) of widespread fecklessness amongst western central banks, but you've persuaded me to be a bit more open-minded about where things might be headed.
If anything, even more fascinating than Part 2. Loved the transcripts of various meetings and memos.
At one level, considering the often chaotic state of international financial affairs, it's hard to believe this sort of quiet, widespread, professional work has been taking place in the background over such a long period. And yet, your statistical work and much of the more anecdotal evidence suggests you may well be on the right track.
The fiat system (surprise, surprise) has brought us international imbalances, inequality, misallocation of capital and growing systemic fragility. Still, even though I thought a return to some sort of gold standard would be a very good thing, I didn't much like the odds. Barbarous relic and so on.
If you're right, I've been distracted by all the sound and fury and entirely missed the serious stuff going on under the surface. If you have any reading or listening recommendations that further flesh out your fascinating hypothesis, please do let me know.
True, but it seems to me that's only at a pretty superficial level.
My general impression is physical gold has been moving steadily from west to east, in size, for a long time. I've figured at some point Russia, China et al would introduce a gold-based means of settling international balances. Perhaps in time that cornerstone might spread out into more general usage, perhaps not. Meanwhile, I've assumed fiat currencies would suffer increasingly volatile cycles on the way to completing their downward spiral. Only then might something more constructive emerge. Might . . .
All merely guesses of course.
What you're suggesting, if I've understood you correctly, is something radically different. The implication, I think, is that China and Russia are also involved in this long-term rebalancing and careful planning. That is, as of course you know, a big call.
Do correct me if you think I've got anything wrong.
Correct. I think China and Russia have this balancing of gold reserve also in the back of their heads. The reason is that "Plan B" (gold) only works if the metal is evenly distributed. If it's not, there is no point to Plan B.
I was more wondering about how and when the different "sides" might begin to more formally cooperate. At the moment, the gulf between the west and the rest is widening.
Well, despite pervasive views to the contrary in the west, I think Russia and China would prefer a benign, cooperative international environment so what you're suggesting doesn't seem out of the question.
If I've understood you correctly, any eventual implementation of Plan B would require across-the-board coordination including Russia, China and, for that matter, the US. Do you have any thoughts on how this might play out? Or a timeline?
We see it playin out live. Have a look at China buying aggressively, or Poland. These countries have (had) too little gold. But most central banks want to keep plan A. Until the SHTF
If the DNB and other Euro countries believe 4% of GDP is a prudent amount to hold, I wonder what the percentage of an individual's net worth should be in physical gold?
Depends entirely upon one’s personal definition of prudence. In my opinion it would be wise to let neither anxieties nor greed influence this. No physical gold in personal possession is not enough, 100% is way too much. IMHO.
Good article. Just out of curiosity, what do you know / think about Kinesis and their blockchain / physical gold based system? I know this isn't the topic of the article, but you're someone I've followed for many years and respect your opinions. Thanks. And BTW, do you get a feel from all your study of and insights into these people, ie, DNB and the other banksters, how close they feel we are to that crisis moment? 2024?
Congrats! I have been following your substack for a couple of years and saw that Zerohedge picked up this post!!! Thanks for all you do!
Jan, just read your Part 2 (including the summary of Part 1). Taken together with this latest piece, it seems to me a remarkable exercise in research and analysis.
While in a sense it's still an hypothesis, the evidence you pull together of progressive harmonisation of various ratios does seem too consistent to be coincidental.
I confess it runs counter to my long-held perceptions (biases?🤔) of widespread fecklessness amongst western central banks, but you've persuaded me to be a bit more open-minded about where things might be headed.
Thanks, and congratulations on some fine work.
Thanks for your comment. You could also read Part 1 in which I show more in depth (with evidence) that European central banks wanted to go back to a gold standard in the 1970s but simply couldn't at the time. https://thegoldobserver.substack.com/p/europe-has-been-preparing-a-global-gold-standard-since-the-1970s
If anything, even more fascinating than Part 2. Loved the transcripts of various meetings and memos.
At one level, considering the often chaotic state of international financial affairs, it's hard to believe this sort of quiet, widespread, professional work has been taking place in the background over such a long period. And yet, your statistical work and much of the more anecdotal evidence suggests you may well be on the right track.
The fiat system (surprise, surprise) has brought us international imbalances, inequality, misallocation of capital and growing systemic fragility. Still, even though I thought a return to some sort of gold standard would be a very good thing, I didn't much like the odds. Barbarous relic and so on.
If you're right, I've been distracted by all the sound and fury and entirely missed the serious stuff going on under the surface. If you have any reading or listening recommendations that further flesh out your fascinating hypothesis, please do let me know.
And, again, many thanks.
It is sad that most of the gold community is stuck to writing about the COMEX. They completely miss the plot, and many readers with them
True, but it seems to me that's only at a pretty superficial level.
My general impression is physical gold has been moving steadily from west to east, in size, for a long time. I've figured at some point Russia, China et al would introduce a gold-based means of settling international balances. Perhaps in time that cornerstone might spread out into more general usage, perhaps not. Meanwhile, I've assumed fiat currencies would suffer increasingly volatile cycles on the way to completing their downward spiral. Only then might something more constructive emerge. Might . . .
All merely guesses of course.
What you're suggesting, if I've understood you correctly, is something radically different. The implication, I think, is that China and Russia are also involved in this long-term rebalancing and careful planning. That is, as of course you know, a big call.
Do correct me if you think I've got anything wrong.
Correct. I think China and Russia have this balancing of gold reserve also in the back of their heads. The reason is that "Plan B" (gold) only works if the metal is evenly distributed. If it's not, there is no point to Plan B.
Yes, understood.
I was more wondering about how and when the different "sides" might begin to more formally cooperate. At the moment, the gulf between the west and the rest is widening.
Well, despite pervasive views to the contrary in the west, I think Russia and China would prefer a benign, cooperative international environment so what you're suggesting doesn't seem out of the question.
If I've understood you correctly, any eventual implementation of Plan B would require across-the-board coordination including Russia, China and, for that matter, the US. Do you have any thoughts on how this might play out? Or a timeline?
We see it playin out live. Have a look at China buying aggressively, or Poland. These countries have (had) too little gold. But most central banks want to keep plan A. Until the SHTF
If the DNB and other Euro countries believe 4% of GDP is a prudent amount to hold, I wonder what the percentage of an individual's net worth should be in physical gold?
Depends entirely upon one’s personal definition of prudence. In my opinion it would be wise to let neither anxieties nor greed influence this. No physical gold in personal possession is not enough, 100% is way too much. IMHO.
Well, that's mighty specific! Don't go TOO far out a limb, now! '-)
100%
Good article. Just out of curiosity, what do you know / think about Kinesis and their blockchain / physical gold based system? I know this isn't the topic of the article, but you're someone I've followed for many years and respect your opinions. Thanks. And BTW, do you get a feel from all your study of and insights into these people, ie, DNB and the other banksters, how close they feel we are to that crisis moment? 2024?
Thanks. I'm not a Kinesis fan because. No I don't.
Very enlightening! Thanks.