Gold Trade Usage And Price Effect

January 19, 2020

Some basic logic must come to the table in the Gold pricing mechanism. The easiest way to keep the gold price down is NOT TO USE IT IN TRADE, NOR IN BANKING RESERVES, and to relegate it to the sidelines as the barbaric metal. Some deep amusement comes always in hearing that gold does not have value, does not earn a yield, and has no uses. Watching the destruction in bond principal value leads the observer to note how gold holds its value in times of crisis, and even rises against the general paper tide. The bond market crisis is global this time, unlike in 2008. Each debt downgrade to BBB, within the context of fallen angels, brings a realized loss in bond value. All this occurs with a rising gold price, even with pauses for consolidation. The best way to lift the gold price is TO USE IT IN TRADE AND IN RESERVES MANAGEMENT. The actual usage further motivates the proper value to be instilled, regardless of type of usage.

BELT AND ROAD IN NON-USDOLLAR

Bear in mind that the Belt & Road projects, led by China and with participation across the entire Eastern Hemisphere, can qualify as a Global Economic RESET basis. The BRI full 2019 year trade payments hit an impressive $1.34 trillion, after reaching the $600 billion level for the first six months. It is all all ALL non-USDollar in trade payments. Thus witness the acceleration. It should reach $3 trillion in the next few years, with the inclusion of the European Union, either in large sections or in its totality. These nations observe the nasty USGovt sanctions, the vicious SWIFT exclusion, pressured political tactics, in addition to hot wars across the globe in defense of the decaying corrupted USDollar. Not even US allies are spared, all targeted like Germany and Saudi Arabia.

SELF-INTEREST MOTIVE

Think in simple self-interested terms for the two parties. If China sets up broadbased systems for trade payments in Gold, then the Beijing crew will surely gather tremendous bounty in gold bullion. Nation after nation has a trade deficit with China. The accumulation will be great and in impressive volume, which the Chinese will want to be priced properly. They will wish to establish a new banking system with a prudently monetized system based upon gold. The transactions on the street and shops will not be in gold coins or bars, but the monetary basis will be gold. The point is that the Chinese Govt will want gold properly priced, since they will hold large vaults of gold. They will want their gold reserves valued as high as possible, but in realistic terms. Simple point, indisputable point, inevitable outcome!

If Italy sets up its bilateral trade with China, then Italy stands at risk of shedding (forfeiting) large volumes of its gold reserves. The two nations early last year arranged a Gold Trade Note to serve as their bilateral trade foundation in contract form. This vital European cog will be typical in such trade deals with China, a global model of sorts. A guarantor device is required in the new system to come, called the Global Financial RESET. Recall that the dominant theme will be Current Account Deficit (CAD), not just trade deficit within this context. Factor in investments. The Chinese already have signed preliminary deals with Italy to acquire port facilities such as Trieste and Palermo, with four ports targeted. CAD equals trade deficit plus investment deficit. Here the Italians will be selling ports with value in the multiple EUR billions. In the first year, the overall deficit might be very small, and thus small gold deliveries to settle. The point is that the Italian Govt will want the gold properly priced, since they will run the risk of forfeiting gold in balancing the accounts. They will want their gold reserves valued as high as possible, but in realistic terms. Simple point, indisputable point, inevitable outcome!

It is inconceivable how the Gold Trade Note or trade differences settled in gold would work based on the current Gold spot price. It is far too low to properly function. Its ongoing consistent penetrating corruption has endured for a few decades. Its time is up. Proper Gold pricing is overdue, and it is coming soon. The same principle will work on a full global basis. Expect for those countries settling their trade difference with gold on a quarterly basis to pursue the pricing of gold much higher, within their own self-interests and national motivations. Then also, the Oil & Gas industries will eventually demand gold payment for their shrinking energy deposits and stores. The entire crude oil market has made very large strides in moving away from the USDollar. The effect has been to weaken the global power of the King Dollar, opening the door to gold to become the global financial foundation. The Petro-Dollar is somewhere between dead in the morgue, and comatose on the gurney greased by war and blood.

HIGHER GOLD PRICE FROM USAGE

Actual usage of Gold in trade and in bank reserves management should push it to a price near $2500 in USD quickly. Any gold-backed digital currency sponsored by China will also propel the Gold price much higher. The entire gold market mechanisms are due for changes upon its formal usage:

  • trade payment on individual transactions (like oil & commodities)
  • backing of bilateral trade (e.g. China & Italy)
  • central bank reserves management (shift from USTBond to Gold)
  • industrial deals to attract foreign direct investment

GOLD AND SILVER DUE TO RISE

The true save haven is precious metals. Their price could rise double or triple quickly. The Basel End Game Plan calls for the major central banks to accumulate gold, to convert impaired sovereign bonds to gold reserves, and then finally to push the gold price up 10-fold, like over $10,000 per oz. The Basel hive is executing this plan right here right now, in the Jackass opinion. They are using closely aligned financial firms to do the gold purchases, and using false accounting with double books to conceal their activity. The personal Jackass desired outlook is to see a universal acceptance of Gold Trade Note for trade payment, and a $2500 gold price aside a $50 silver price later this current year. As for a forecast, hard to say since so many corrupt factors are at work, like political obstacles, trade sanctions, regional wars, and basic murders.

The gold price is poised to move upward in an aggressive manner. Rising moving averages lead the way. The consolidation endured over September, October, and November has finished. The annual Christmas run-up was impressive from 1480 toward 1600, which also has endured its own consolidation. Fading REPO attention span, along with fading Iran War expectations can be attributed. The trendlines are upward. The cyclicals are positive. One must remember that with proper inflation adjustment, the $1300 price from year 2013 would be over $1900 today. Therefore, the current gold price is absurdly under-valued. The next price target is 1750, on the march to reach the hallowed $2000 level.

The fundamentals have never been stronger in modern history. The hyper monetary inflation by the USFed and their denied QE is historic. The Infinite QE gradually encompassed numerous channels, from overnight REPO to Term REPO to Permanent Operations (onto Fed balance sheet), and recently the newly announced liquidity measures to feed the insanely aggressive hedge funds that operate under the Wall Street aegis. The big ugly chaos story on Wall Street is that the hedge funds blew up in late October, resulting in the USFed buying all assets in sight, regardless of impaired quality, regardless of unknown ownership. The big ugly joke on Wall Street is that the hedge funds run dangerous illicit games loaded with arbitrage, all of which are denied by their assigned VP overseers. The vice presidents are in charge of credit provision, algorithm supervision, and bust denial.

The silver price is also poised to move upward in an aggressive manner. Rising moving averages lead the way. The consolidation endured over September, October, and November has finished, having gone down a parallel path to gold. The annual Christmas run-up was impressive from 16.60 toward 18.50, which also has endured its own consolidation. The trendlines are upward. The cyclicals are positive. The fundamentals have never been stronger in modern history. The Global Financial RESET calls for silver to become the new technology standard, with core applications in the energy field. The USMilitary has blessed the waves of disclosure, a process already having begun. The current Silver price is absurdly under-valued. The next price target is 20.5, on the march to reach the hallowed $50 level, in a wonderful grand Fibonacci display, which could see the $90 level in the next couple years.

Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a PhD in Statistics. His career has stretched over 25 years. He aspires to thrive in the financial editor world, unencumbered by the limitations of economic credentials. Visit his free newly revamped website to find articles from topflight authors at  www.Golden-Jackass.com. It now has a hyphen in the URL address. For personal questions about subscriptions, contact him at  JimWillieCB@gmail.com.

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Jim Willie

Jim Willie

Jim Willie CB, also known as the “Golden Jackass”, is an insightful and forward-thinking writer and analyst of today's events, the economy and markets. In 2004 he launched the popular website http://www.goldenjackass.com that offers his articles of original “out of the box” thinking as well as content from top analysts and authors. He also has a popular and affordable subscription-based newsletter service, The Hat Trick Letter, which you can learn more about here.  

Jim Willie Background

Jim Willie has experience in three fields of statistical practice during 23 industry years after earning a Statistics PhD at Carnegie Mellon University. The career began at Digital Equipment Corp in Metro Boston, where two positions involved quality control procedures used worldwide and marketing research for the computer industry. An engineering spec was authored, and my group worked through a transition with UNIX. The next post was at Staples HQ in Metro Boston, where work focused on forecasting and sales analysis for their retail business amidst tremendous growth.

Jim's career continues to make waves in the financial editorial world, free from the limitations of economic credentials.

Jim is gifted with an extremely oversized brain as is evidenced by his bio picture. The output of that brain can be found in his articles below, and on the Silver-Phoenix500 website, on his own website, and other well-known financial websites worldwide.

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