Fabrice Drouin Ristori:How long can the manipulation of the precious metal markets last ?

Chris Powell: It can last as long as gold investors buy “paper” gold rather than real metal. The primary article of faith about gold is that it can’t be printed, but it CAN, insofar as “paper” gold can be printed to infinity. Gold investors who buy “paper” gold with the hope of price appreciation would do better to flush their money down the toilet. At least that way they’ll avoid commissions.

FDR: What will put an end to it –

CP: Probably only the discrediting of “paper” gold, or a futures market default.

FDR: What will be the signs proving that the manipulation is ending ?

CP: I doubt that we’ll get any signs, though maybe the decline in price of “paper” gold relative to the price of real metal is a sign of trouble for the manipulation. More likely the gold price suddenly will be reset to a much higher level that is more sustainable for manipulation by central banks with less drain on their gold reserves, at which point manipulation will resume at the higher level. I doubt that the manipulation will ever end, since, to preserve their power, governments probably always will try to rig the currency markets, and they’ll probably get away with it until investors around the world are far more informed than they are now.

FDR: Do you anticipate an overnight ending of the manipulation or a progressive process ?

CP: I think an overnight revaluation is more likely now. Of course currency revaluations are always done suddenly, aiming for surprise. No central banks are going to call us a few days in advance so we can arrange our portfolios for the greatest benefit. Only the investment banks that function as agents for central banks will get such calls.

FDR: Is the gold/silver paper spot price still relevant to value physical gold and silver ?

CP: It is if people really can find metal for purchase at the paper spot price. But the paper spot price may be losing some relevance as more shortages have been reported and there is rationing of gold and silver coins from government mints. Shortages and rationing are forms of higher pricing that don’t get included in nominal prices. Nominal prices are little use if the product isn’t available. But indeed, most gold-related assets are still taking their cues from the paper spot price and futures prices.

FDR: What direct consequences would a free gold/silver market have on people worldwide — not investors, people in general ?

CP: Free markets in the monetary metals would liberate markets and peoples generally, and reduce the power of governments and central banks, especially their power to control in secret the prices of all capital, labor, goods, and services in the world. Such liberation is really the objective of those who would expose the Western central bank gold price suppression scheme. We don’t really care what people use as money. We just want them to have options of valuation that are beyond the control of government. Here’s how von Mises put it: “It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically it belongs in the same class with political constitutions and bills of rights.”

]]> http://www.dgcmagazine.com/goldbroker-interviews-gatas-chris-powell/feed/ 0 http://www.dgcmagazine.com/arizona-governor-vetoes-gold-and-silver-legal-tender-bill/ http://www.dgcmagazine.com/arizona-governor-vetoes-gold-and-silver-legal-tender-bill/#comments Sat, 04 May 2013 03:15:52 +0000 Julia Dixon http://www.dgcmagazine.com/?p=1404 Continue reading →]]> Arizona bill SB 1439 passed the state legislature last month and would have allowed Arizona residents to use gold and silver with the same recognition as Federal Reserve notes starting in 2014.

However, Arizona Governor Jan Brewer vetoed the bill on Thursday.

Via Mineweb.com

In a letter to Arizona State Senate President Andy Biggs, Brewer said, “While I believe the concern over a devalued dollar as a result of an unsustainable federal deficit is justified, I am unable to support this legislation.”

“I believe the provisions in this legislation need to be more carefully examined and there should be prior coordination with those government agencies tasked with the oversight of these transactions,” she stressed.

“For example, it is unclear whether this legislation would require Arizona to exempt income tax related to a transaction involving collectable coins or bills that were originally authorized by Congress and may be used as legal tender,” Brewer said. “This would result in lost revenues to the state, while giving businesses that buy and sell collectible coins or currency originally authorized by Congress an unfair tax advantage.”

It is possible for the state legislature to over-ride the veto with a 2/3 vote. However this appears unlikely as the bill was passed with a smaller majority in an 18 to 10 vote.

The legislation was inspired by Utah’s legal tender law passed in 2011. Arizona’s version would allow Arizona residents to use gold and silver with the same recognition as Federal Reserve notes starting in 2014… assuming of course that your local grocery store is willing to accept your silver coins; the bill does not require anyone to accept gold or silver in payment.

Jim sees the BRIIICS (that includes Iran and Indonesia) moving away from the US Dollar, the Yen and the Euro and adopting a USD alternative for trade. He believes the East will sell off its US bonds, continue to purchase gold (driving it up to $7,500) and perhaps adopt “gold trade notes”. As he sees it the consequences of this will not be inflation, but a “large widespread cut-off of supply chains” in the states as foreigners will not be willing to accept US Dollars.

The 28min interview is full of colorful commentary and interesting thoughts including the possibility of “bail-in’s” in the states.

Or watch it here.

Part II  examines the Voucher-Safe economy, trust, security and software.

This final part looks at Voucher-Safe’s interaction with Bitcoin, Issuers and OnionPay.

Bitcoin

The idea behind voucher-safe is that money can be anything that people value and want to exchange.  Money can be national fiat currencies, silver or gold and increasingly, Bitcoin. Bitcoins can be exchanged via the Voucher-Safe system with the creation of Bitcoin backed Vouchers.

One of the benefits that Bitcoin backed Vouchers have is increased anonymity.  Voucher-Safe’s principal developer Kevin doesn’t see Bitcoin as anonymous.  “You actually see people offering to sell bitcoins that are free of taint now. Because taint means there are certain payment hashes that have been used for criminal activity or looted bitcoins … And because everything is recorded on this massive block chain, it’s like a chain of titles… And so if you end up with a house or car that has been owned by a criminal it casts a taint on your property. And that’s a horrible problem for the Bitcoin block chain.”

Kevin sees a solution to the block chains problems in Vouchers. “If you bailed bitcoins into a Voucher-Safe Issuer that issued Vouchers against bitcoins, they could circulate in the wild without having any foot print in the block chain whatsoever, except in what was created when the bitcoins actually moved in or out of the Issuer. I really think that would be a huge improvement and would solve one of Bitcoin’s biggest problems.“

Kevin sees further benefits adding, “Circulating bitcoins in voucher form would also eliminate problems with clearing times and transaction dependencies, which arise from the fact that bitcoins actually exist in blocks of 20 whole coins. This means that when some of the coins in a block are involved in uncleared transactions, it prevents any other coins in the same block from clearing until the earlier transactions are closed. Bitcoins carry the full transaction history of every coin. Vouchers are always destroyed and replaced any time they are used in a transaction, so they can carry no history.”

A Voucher Issuer for Bitcoin is being discussed.

Issuers

At the heart of Voucher-Safe are the Issuers who put the currency into the system.

One of the first Voucher-Safe Issuers will be PXGold. The business is run by the creators of Pecunix and they hope that Pecunix’s good reputation is also applied to the new business. However, PXGold is a separate entity and will have no direct connection to Pecunix.

As an Issuer PXGold will issue gold backed Vouchers and maintain 100% backing for all their Vouchers.  However, they will not make the location of their gold vaults public. The reasons behind this move is explained in part II.

When demand becomes sufficient to justify it, PXGold plans to do a run of PXGold Medallions, which customers will be able to take delivery of in exchange for their PXGold Vouchers. The business will work with Vouchi.com, the current Voucher-Safe publisher.

There is currently one active Voucher-Safe Issuer, voucher-issuer.com. The site issues Vouchers backed by USD and EUD. The decision to have the first Issuer back their Vouchers with national fiat currencies is explained by Sidd. “People need to come to terms with the fact that these Vouchers can be used as a payment system to pay each other and used as real money. Not just as vouchers to claim back whatever is backing that system. “

“When I’ve spoken to people, often the reaction is that we’ve created this voucher system where the vouchers are for gold. And they say ‘that’s great, so if I want to give my aunty some gold I can give her a voucher.’ And I say yes but you can also buy her a pair of shoes with that Voucher by paying for it with a Voucher. And you could be paid in Vouchers. And that seems to be a difficult problem for some people. And that’s why we are considering an issue with USD and Euro’s, so that they can see that well one Voucher is equivalent to one Euro, that makes sense to me. “

Plans are also in the works for two more Issuers, one for silver and another for Bitcoin.

Issuers and KYC

Any Voucher-Safe Issuer who intends to interface with the fiat banking system will need to be KYC compliant and require ID from their customers. Not doing so would be a violation of AML laws and would risk a shutdown of the business.  However, there are options for obtaining Vouchers anonymously. An obvious choice would be to receive one in trade with an existing Voucher Issuer customer. There is also the possibility of an Issuer which does not interface with the banking system and is not subject to KYC rules.

It is possible to have an Issuer which only trades its assets in exchange for other types of Vouchers or anonymous digital cash.  For example, suppose an Issuer existed for a metal-backed Voucher currency which only bought or sold the metal using Bitcoin. That Issuer could likely get away with not requiring ID from its customers.

OnionPay

OnionPay (The name is a “humorous tip of the hat” to Tor) is add on software for the Voucher-Safe system.  It is essentially a Voucher-Safe based PayPal alternative for e-commerce websites. OnionPay is intended to provide a more traditional merchant checkout experience for websites that accept Voucher-Safe.

The Voucher-Safe payment process involves a few steps; the sender has to send and then the receiver has to pick up. “Well how is that going to work if the receiver, the payee, is actually a website?” OnionPay solves this problem.

As Kevin explains, “the way it works is that it borrows a concept from public key cryptography where you have a public key that you give to everybody and you have a private key. Only here you have a public Voucher-Safe and a private Voucher-Safe.”

To use OnionPay, an e-commerce website would set up what amounts to a merchant account with OnionPay. The service creates a public safe to which both OnionPay and the merchant have joint access. This provides the merchant with a payment gateway that allows customers to check out. The customer can make a Voucher payment that goes to the public safe. OnionPay then logs into the public Voucher-Safe, picks up the payment, confirms that it is the correct amount and then takes the customer to the success page back on the merchant’s website.

After sending a message notifying the merchant of the payment, OnionPay sweeps the money from the public safe to the merchant’s private safe. “This keeps the merchant from actually having to trust OnionPay with any of their money unlike PayPal where it sits there in your account until you withdraw to a debit card or take an ACH payment.”

Auto Exchanger

A planned additional feature of the Voucher-Safe system is an auto exchanger or escrow system.  As Kevin explains, “We used to have this kind of functionality with something called Open to Exchange. And this was back in the day when people wanted to exchange between e-gold and Pecunix, etc. It was mostly exchangers who used it when they had too much of one and not enough of another. But in theory, this is something that can be done by anyone. I think there is room for a lot of synergy there in terms of people using different kinds of Vouchers and being able to exchange with each other.”

“So one of the easy things that we would be able to do is to create an auto exchanger that would act as the escrow system, it would probably be an Onion Pay merchant, that would let people exchange all these different things as anonymous digital cash without ever having to go through an exchange. So for example, you have a Bitcoin Voucher and you want a Dollar Voucher, you just post that on this site for someone who wants the reverse of that trade. Then each of them pays their Voucher to the middle man and he reverses it.”

While the Voucher-Safe system is designed to allow anything to be money, the system offers one of the best options for those who want to transact in gold, silver, etc. Voucher-Safe is about as de-centralized as you can get while still being able to transact with real assets. The system is a versatile, more decentralized, Anti-Money Laundering compliant way to anonymously exchange value. It is a smarter, more resilient generation of digital currency.

• The History of Silver
• Silver Supply and Demand
• Silver as an Investment

Check them out here.

Also on the speaker line-up is Keith Neumeyer, President of First Majestic Silver and Jeff Berwick of The Dollar Vigilante.

The Sovereign Exchange is asking for a donation to GATA of two ounces of silver or $100 fiat dollars. Hor d’euvres will be served along with a refreshment. The event will be limited to 75 people, giving everyone a chance to meet and mingle with Bill, Chris, Keith and Jeff. Jay Taylor, Al Korlein and Peter Spina are also scheduled to attend.

If you will be in Vancouver and wish to join in, please email [email protected]

Run to Gold:  Fiat Currencies and Gold Collapse Against Bitcoin

“The currency collapse has continued unabated. Once again all major fiat currencies have fallen relative to gold. And once again Bitcoin’s performance absolutely crushes gold and silver.”

Seeking Alpha: Best Currency In 2012

“About this time last year I wrote an instablog about the best performing currency of the year 2011. There was one currency, which gained 1400% against the USD last year – and this same currency is again – by far – the best performing currency this year gaining another roughly 220% against the FEDs USD . .

That is a two-year yield of 4400% vs. USD (from 0.3 USD/BTC to 13.4 USD/BTC). In gold terms, bitcoin is also doing well.”

Priced in Gold:

GoldSilver.com: Race to Debase – 2012 – Fiat Currencies vs Gold & Silver

“Below you can examine how gold and silver performed against 164 fiat currencies in 2012. In 2012, the median loss of purchasing power to gold was 7.0%. Approximatly 94% of all fiat currencies lost purchasing power to gold in 2012.”

“Imagine a contaminated blood system that infects, corrupts, and destroys all interior organs from the spread of the toxin. Those nations that stick with the crumbling USDollar system stubbornly will find a horrible fate with devastating effects, rampant economic damage, broken financial markets, sputtering credit engines, tremendous loss of wealth, wrecked supply lines, poverty spreading like wildfire, ruined political structures, social disorder, isolation from the rest of the world, and a fast ticket to the Third World. That is EXACTLY what is happening in the last several months. A division has begun, as the East has been busily installing the next generation platforms, as related to trade, banking, and commercial integration.”

“The division between East and West actually accelerated when the extremely ill-advised decision for Iran sanctions was made by an increasingly desperate United States Govt and its handler on the Southern Med. The division continues, matures, and develops with each passing month.”

“The Asians partners and players even rejected the United States from the entire Asian trade zone, but did include Australia and New Zealand. The incredibly stupid naive US-led plan, the Trans-Pacific Partnership, attempted to create a trade zone with Asia which would have blocked China.”

“A Paradigm Shift is taking place, and the ASEAN-China summit gave proof positive in a seminal event of the vast changes in progress.”

“The late November Asian summit meeting held in Phnom Penh included 15 Asian nations, which represent half the world’s population. They decided to form a Regional Comprehensive Economic Partnership that excludes the United States.”

“The US will be isolated, so as to protect the rest of the world from its fascist exhibitions and deep manifestations.”

“In the 1960 and 1970 and even 1980 decades, the favorite currencies off the standardized tables of commerce were the USDollar and DeutscheMark. At one time in the Soviet Union and the Soviet Bloc of Eastern Europe, more USDollars and DMarks were in circulation than official Russian Rubles or Polish Zlotys or Hungarian Forints or whatever. … Under a strange bizarre compromise arranged to assimilate East Germany and to conceal the French sovereign debt, the Euro Monetary Union and the common Euro currency was born. It is now in the process of disintegrating. So the powerfully strong and stable German DMark went away.”

“No exposure to alternative currency held under the table was discovered in beach locations to the south or modest hotels in the green hills to the north. But friends reported stories. My older brother spent two months in Germany and Czechoslavakia, with ample stories of hoarded USDollars and DMarks. Store owners and wise families were eager to obtain USD and DM currency, even young kids. He and some ambitious friends heard stories of vast black market activity in Russia, where the US$100 bill was a favorite. In that era, Gold was not an item of pursuit or stored wealth. Times have changed radically, and Gold is the new store of value.”

“Times have changed with the sunset of the DMark and the toxicity of the USDollar. The people, the shop keepers, the business men, the small financial firms, they all have been turned upside down in recent years as they struggle to find a safe place to store wealth. Money has been corrupted. … As a result, all those people, the shop keepers, the business men, the small financial firms, have been discovering Gold & Silver bars and coins.”

“Their combined actions have resulted in an implicit isolation of the USDollar, even an isolation of the Southern European sovereign debt. Swiss havens have grown, in parallel with Gold havens. The toxic monetary plague has been identified, and its toxic sources too. They are the US Federal Reserve and the Euro Central Bank.”

“My personal background has taught me well that a corrupt system never corrects itself. …The US system will remain broken until it collapses, never to be corrected until after its collapse.”

“Only an external force will result in change. When the USDollar is further isolated, that change will come.”

“The Gold price will not rise from internal forces to push up value, in response to central bank monetary policy or shortage of COMEX inventory. The Gold price will rise from external forces in USDollar isolation, along with isolation of the big banks in the US and London. Their gold inventory will be removed, returned, and drained. In time, the USDollar will widely be rejected in trade.”

“The process of isolation is not just now beginning. It is a process well along.”

“immediately following the Lehman Brothers death … the major foreign players located primarily in the East began to feverishly prepare for new platforms on trade and banking. They sought to develop an alternative. For the last 20 to 25 years, a backwards principal has been at work. It dictated that the USDollar would prevail in reserves management, actually the USTBond as vehicle. The rules for trade surplus recycle were constructed to lean toward usage of the USTBonds. Therefore, the global trade would be dominated by USDollars. In other words, banking would dictate trade settlement. That is backwards, and keenly exhibits the brute force of the USDollar hegemony. Also the crude oil payments have been standardized in USDollars, ever since the Saudis cut a major deal with the USGovt and UKGovt in the mid-1970 decade after the famous embargo. Protection came to the Saudi regime and Persian Gulf emirates, in return for exclusive USDollar payment on trade for oil. The Petro-Dollar defacto standard is the primary plank behind the USDollar global trade patterns shown for over three decades. It is coming to an end, a sunset.”

“The Iranian sanctions put forth by the USGovt and adopted by the EuroZone nations have contributed more to unwinding the USDollar trade system than any event in decades. It sounded the death knell for the USDollar. It hastened numerous nations to seek a US$ alternative. It provided a fertile environment to fashion new trade settlement mechanisms. It pushed Turkey into acting as a gold bullion intermediary role in the provision of gold for usage in trade settlement.”

“When an independent highly reliable gold trader source was asked to confirm the role of Turkey as a test case in developing gold based trade settlement, he gave a tacit confirmation.”

“Turkey will serve in my view as a critical swing nation in the movement to create a non-US$ trade settlement system. The new system will be decentralized, meaning not funneled through the major banks, not passing through the USFed as clearing house. Turkey will be essential in the formation of the Eurasia trade zone.”

“First comes the Asian trade zone (the US excluded), and next comes the hand shake between the Asians and Europeans to create Eurasia.”

“Across the new trade zone and its diverse commerce, the USDollar will not be at the center. It is in fact being isolated, since it is a toxic agent. Everything US$-based is crumbling, from currencies to bonds to banks to credit lines to economies.”

“Only those who adopt a Gold strategy will survive the powerful storm underway, as it intensifies. Great wealth is being destroyed, and only Gold & Silver will enable that survival by the construction of lifeboats. Paper wealth is being blown away, as only hard metal assets will prevail. Add energy and farmlands.”

“China has made numerous bilateral swap accords with other nations. As the label indicates, they are deals cut between China and another nation to freely use Chinese Yuan from a credited account that will retain equilibrium. So far many nations have signed up and even renewed deals. The list of nations includes Brazil, Russia, Japan, and India. One might be correct to include all of Asia on the list, as nations like South Korea and Taiwan and Vietnam freely trade in Yuan transactions. The first major signal that the bilateral swaps have taken hold sufficiently to undermine the USDollar through a new trade foundation will be the complete arena of Asian trade being conducted in Yuan transactions.”

“The latticework of bilateral swaps has created the critical mass of a global blanket with no centralized control room, no choke points with bank transactions, no SWIFT code ticket taker. The bilateral swap accords work to build a critical mass that isolates the USDollar from an entirely new foundation for trade.”

“The COMEX is under constant unrelenting pressure. They must shift around ill-gotten precious metal inventory in order to avoid a default. That would be embarrassing. The main device for maintaining order at the COMEX continues to be naked shorting of futures contracts, a blatantly corrupt practice. The naked short ambushes occur with greater frequency in recent months.”

“The new wrinkle to render damage to the COMEX is the arrival of the Shanghai Gold Exchange.”

“The upcoming Petro-Dollar sunset has very uncertain timing indications. … Back in April 2010, the Saudis and other main Persian Gulf nations struck a deal with Russia and China for protection in the gulf region. … the event signaled the sunset of the Petro-Dollar defacto standard.”

“The day is nigh where the Saudis accept non-US$ payments for crude oil. They might first accept Chinese Yuan, then Japanese Yen, then Korean won, then Gold itself through big Turkish bazaars.”

“with imposed rules on account reporting abroad, with tax information requirements, and with capital controls. It is harder each month to move large amounts of funds. The forms to complete have become onerous and imposing, acting like implicit restrictions. It is harder each month to use simple bank cards at ATM machines. With a simple rule change, the banks cannot complete these transactions. The organized and patterned restrictions work to trap USDollars within the local US borders. Consider it an internal mechanism to assist the global isolation of the USDollar.”

“The world wants a more just, more functional, more efficient, more equitable global trade system. The United States has abused its global reserve custodian position too long. The world is fighting vigorously to remove it.”

“The usage of the USDollar as a credit card to finance its consumption binge without ability to pay will come to an end. The usage of the USDollar as a device to enable powerful aggression in war to advance syndicate interests like vertically integrated narcotics will come to an end. The usage of the USDollar as a banking monopoly device will come to an end. The usage of the USDollar as an instrument for bond fraud will come to an end. The usage of the USDollar as a free lunch device to finance the USGovt deficit will come to an end.”

“When the USDollar is no longer the global reserve currency, the Gold Standard will be right around the corner, if not already in the implementation stage.”

Jim’s very um, …exuberant, piece can be read in its entirety here.