Is Gold Money Again?


The gold standard has one tremendous virtue: the quantity of the

money supply, under the gold standard, is independent of the policies

of governments and political parties. This is its advantage. It is a form

of protection against spendthrift governments.”

— Ludwig von Mises, from Economic Policy


  gold buffalo coin



On June 18, the Federal Reserve and FDIC circulated a letter to banks that proposes to harmonize US regulatory

capital rules with Basel III. BASEL III is an accord that tells a bank how much capital it must hold to safeguard its

solvency and overall economic stability.

It’s a global standard on bank capital adequacy, stress testing, and market liquidity risk.Here’s the important bit:At

the top of the proposed changes is the new list of “zero-percent risk weighted items,” which now includes “gold

bullion,” right after “cash.


That’s the part to take notice of.If the proposals are approved by regulators — and that

seems likely since adoption of Basel III will be — then this is a momentous change for the gold market.

Now banks will be allowed to hold bullion in their vaults and count it among their Tier 1 assets — in other words, the

least risky assets.That by itself would be bullish for the gold price, as banks that recognize gold’s unique

characteristics seek to stockpile more of it.


But that’s not the whole story…Gold Regains Money Status

For one thing, Basel III also stipulates that a bank’s Tier 1 holdings must rise from 4% of assets to 6%.That means

that banks may not only replace a portion of their existing paper with bullion, but may use it to meet some of the

extra 2% as well.In addition, this vote of confidence from the highest monetary authorities gives further impetus to

the remonetization of gold.


In essence, what’s happening is that from now on gold will be considered “money” in

virtually the same way as cash or bonds.And banks will be given the choice between holding more of their core

assets in history’s most reliable store of value vs. paper backed by nothing more than the promises of increasingly

wasteful governments. Finally, there is the impact on individual and institutional investors.

Jeff Clark, in Casey Research’s BIG GOLD newsletter, has been guiding gold investors for years. In his view, this

news looks set to really shake up the gold market, because as regulators and banks increasingly view gold as having

safety on a par with the various paper alternatives, it is logical that they will also see the need to beef up their own

holdings.There are a number of positives for gold going forward.

Though it remains speculation on our part, we believe that the net result of Basel III and associated adjustments to

US regulations will be an increased recognition of gold’s safe-haven status across all markets.

And that translates into higher global demand for the metal next year, and a concomitant increase in its price.If you

haven’t done so already, it’s time to get informed on gold and begin adding it to your portfolio.

Regards,Doug Hornig

for The Daily Reckoning



Gory and the Glory – Fascinating Facts About Gold


Despite its unrivaled properties, gold is an inert material. It does nothing until man discovers it, mines and refines it and bends it to his will. So the history of gold is very much the history of civilization. Here are some points in time where that history was made.

  • A smelting furnace

    c. 3600 BC  First smelting of gold

    Egyptian goldsmiths carry out the first melting or fusing of ores in order to separate the metals inside. They use blowpipes made from fire-resistant clay to heat the smelting furnace.


  • Mesopotamian Headdress

    2600 BC  Early gold jewellery

    Goldsmiths of ancient Mesopotamia (modern-day Iraq) craft one of the earliest pieces of a burial headdress of lapis and carnelian beads with willow leaf-shaped gold pendants.


  • Wax models are mounted on a trunk of wax to form a 'wax tree'. The wax is later melted out and molten gold is cast in the cavity.

    1200-1500 BC  Advances in jewellery making

    Artisans develop the lost-wax jewellery casting technique. The process allows for improved hardness and color variation which in turn broadens the market for gold products.


  • Tutankhamun's funeral mask

    1223 BC   Creation of Tutankhamun’s funeral mask

    Instantly recognized the world over, the funeral mask of Tutankhamen is a triumph of gold craftsmanship from the ancient world.


  • A reconstruction of Solomon’s temple

950 BC Solomon builds gold temple

The Queen of Sheba from Yemen presents King Solomon of Israel with 2,500 kilos of gold, bringing the contents of his treasury to 5,700 kilos. Solomon uses part of his holdings to construct his famed temple, allegedly overlaid with gold.


  • First gold dentistry practiced

    600 BC   First gold dentistry practiced

    The first use of gold began as the Etruscans begin securing substitute teeth with gold wire. Bio-compatibility, malleability and corrosion resistance still make gold valuable in dental applications.




  • The Lycurgus Cup

    300  First gold nanoparticles

    The Romans use gold to colour the Lycurgus Cup. Melting gold powder into glass diffuses gold nanoparticles throughout which then refract light, giving the glass a luminous red glow.


  • Hallmark in a gold ring

    1300  Hallmarking practice established

    The world’s first hallmarking system, scrutinizing and guaranteeing the quality of precious metal, is established at Goldsmith’s Hall in London – where London’s Assay Office is still located today.


  • The Great Bullion Famine begins

    1370 The Great Bullion Famine begins

    During the years 1370-1420, various major mines around Europe become completely exhausted. Mining and production of gold declines sharply throughout the region in a period known as ‘The Great Bullion Famine’.



  • This gold funeral mask dates from pre-Columbian times. Persons of high rank were literally covered in gold after their death.

    1511  Ferdinand unleashes invasion force

    King Ferdinand of Spain proclaims “Get gold, humanely if you can, but at all hazards, get gold!”, launching unprecedented expeditions to the Americas. Within years, the Inca and Aztec civilizations would be virtually destroyed by Spanish conquerors.


  • 1717  UK gold standard commences

    Britain moves onto a de facto pure gold standard, as the government links the currency to gold at a fixed rate (establishing a mint price of 77 shillings, ten and a half pennies per ounce of gold.

  • 1803 First gold electroplating practiced

    The first recorded experiment in electroplating is carried out by Professor Luigi Brugnatelli at the University of Pavia. Gold electroplating ensures improved conductivity, now essential to many 21st century technologies.



  • Californian gold rush begins

    1848 California Gold Rush begins

    John Marshall discovers gold flakes while building a sawmill near Sacramento, California. The greatest gold rush of all time follows as 40,000 diggers flock to California from around the World.


  • Gold ore - Image © Terry Davis

    1885 South African Gold Rush begins

    While digging up stones to build a house, Australian miner George Harrison finds gold ore on Langlaagte farm near Johannesburg. Miners flock to the region. South Africa will go on to become the source of 40% of the world’s gold.


  • Replica of a Faberge egg

    1885 First Faberge Easter egg crafted

    Carl Faberge makes his first gold Imperial Easter Egg for Tsar Alexander III. Named The Hen Egg, it was commissioned as a gift from the Tsar to his wife, the Empress Maria Fedorovna, beginning a tradition that lasts until 1917.

  • Adoption of gold standard

    1870-1900  Adoption of gold standard

    All major countries other than China switch to the gold standard, linking their currencies to gold. The practice of bimetallism is abandoned.


  • Gold Britannia coins

    1925 Gold standard returns

    The UK returns to the gold standard at pre-war parity of $4.86=£1 with sterling convertible to gold at 77sh 10.5d per standard ounce. This follows the country’s departure from the gold standard six years previously at the outbreak of World War I.


  • Roosevelt suspends gold

    1933 Roosevelt suspends gold

    President Roosevelt suspends US dollar convertibility to gold (gold at US$20.67/oz). The export of all transactions in, and the holding of gold by private individuals, is forbidden. Presidential proclamation makes the dollar convertible again in January 1934 at a new price of $35 per troy ounce.


  • Supermarine Spitfire Mk 21

    1939 World War II closes gold market

    The London gold market is closed on the outbreak of war, as at the beginning of World War II. The world will later return to a fixed system of exchange rates, this time with currencies fixed to the dollar and the dollar convertible into gold.


  • John Maynard Keynes (right) represented the UK and Harry Dexter White represented the US at the conference.

    1944 Bretton Woods conference

    The Bretton Woods conference sets the basis of the post-war monetary system. The US dollar is set to maintain a $35=1 oz gold conversion rate. Other currencies are fixed in terms of US dollar, thus forming a Gold Exchange Standard.


  • Dummy

    1961 First gold bonded microchips

    Gold bonding wire is used in microchips engineered at Bell Labs in the USA. Nowadays literally billions of chips are bonded this way every year, controlling all manner of indispensible electrical devices.


  • An astronaut on a space walk

    1961 First gold in space

    The first manned space flight uses gold to protect sensitive instruments from radiation. In 1980, 41kgs of gold is included in space shuttle construction through brazing alloys, fuel cell fabrication and electrical contacts.


  • First South African Krugerrand

    1967 First South African Krugerrand

    The Krugerrand is introduced in 1967, as a vehicle for private ownership of gold. This iconic coin is actually intended for circulation as currency.


  • Gold window closed

    1971 Gold window closed

    The Bretton Woods system of fixed exchange rates comes to an end as President Nixon “closes the gold window”, suspending US dollar convertibility to gold. The world enters its present day system of floating exchange rates.


  • First gold-based arthritis treatment

    1985 First gold-based arthritis treatment

    Pharmaceutical giant, SmithKline & French, develops Auranofin, a gold-based drug for the treatment of rheumatoid arthritis. The drug receives regulatory approval and goes on sale for the first time.


  • First Central Bank Gold Agreement

    1999 First Central Bank Gold Agreement

    The First Central Bank Gold Agreement (CBGA) is agreed. 15 European central banks declare that gold will remain an important element of their reserves and collectively cap gold sales at 400 tonnes per year over next five years.


  • Cardiac stents

    2001First gold used in heart surgery

    Boston Scientific markets the first gold-plated stent (Niroyal) used in heart surgery. Inserted inside large arteries and veins, such stents act like scaffolding, propping open the blood vessels to allow adequate flow.


  • K-gold jewellery

    2003 K-gold launched in China

    The World Gold Council creates an entirely new market segment with the launch of K-gold, the first 18k jewellery in China. The jewellery, in predominantly white and yellow gold, takes its inspiration from Italian design.


  • Launch of SPDR<sup/>® Gold Shares” /></a></div>
<h3>2004 Launch of SPDR<sup>®</sup> Gold Shares</h3>
<p>The market is transformed by an innovative, secure and easy way to access the gold market. Six years later SPDR® exceeds $55bn in assets under management.</p>
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<div><a title=Central banks return to buying

    2009 Central banks return to buying

    In the second quarter of the year, central banks collectively become net purchasers of gold for the first time in two decades. This reflects a combination of slowing sales from European banks and growing purchases by emerging market countries.


  • Price Chart

    2010 – 2011  Gold price sustains record highs

    Fiat currencies are undermined by inflation fears and successive financial crises. The London pm fix achieves 35 separate successive highs in the year to date.


  • Gold in catalytic converters

    2011    Gold in catalytic converters

    Gold used in catalytic convertors by a leading European diesel car manufacturer. The first use of gold in automotive emissions control.


To get your hands on the real thing at the right price go here now

To Your Success,

                                                                                                                                                                                                                                                                    Catherine Allen

Net Working Marketer


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