Gold Dinar: An Economic and Strategic Response to Chaos
This is from a series of posts on the Yahoo NEM board
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This article appears in the Nov. 15, 2002 issue of Executive Intelligence Review.
Gold Dinar: An Economic and Strategic
Response to Chaos
by Michael O. Billington
Mounting concern around the world that the Bush Administration is
madly threatening to drive the world into perpetual warfare, while doing
nothing to address the global financial-economic collapse, has led to the
introduction of a number of defensive measures by nations and groups
of nations acting in concert. One such measure is the proposal for
creation of a Gold Dinar, intended as a replacement for the dollar as the
currency of trade among nations. With a war against Iraq looming on
the horizon, and U.S. threats against Saudi Arabia escalating in the
establishment's institutions and publications, it is increasingly probable
that the Gold Dinar policy will be implemented in the near term, among
certain Islamic nations at first, and potentially expanding to include
non-Islamic nations.
Malaysian Prime Minister Dr. Mahathir bin Mohamad hosted a two-day
seminar in Kuala Lumpur on Oct. 22-23, called "The Gold Dinar in
Multilateral Trade." This was the second major conference in Malaysia on
this subject involving representatives of members of the Organization of
Islamic Conference (OIC). The first conference, "Stable and Just Global
Monetary Systems," held in August, announced that the Gold Dinar
would be implemented as a bilateral arrangement between Malaysia and
certain unspecified partners by the middle of 2003, and extended to
multilateral agreements over time. At the more recent seminar, Bijan
Latif, the head of Iran's Central Bank, offered to support the
establishment of a secretariat in Malaysia to coordinate the
development of the Gold Dinar policy. Dr. Mahathir supported the idea.
Not a Gold Standard
In his speech to the October seminar, Dr. Mahathir made clear that the
proposal was not intended to establish a gold standard (as put forth by
fixated "gold bugs" around the world), but to return to the Bretton
Woods policy of a gold-reserve system, which was destroyed when
President Richard Nixon removed the dollar from a fixed peg to gold on
Aug. 15, 1971, allowing currencies to float at the whim of speculators.
Dr. Mahathir reminded the participants, that after World War II, "when
the Allied nations met in Bretton Woods to determine the principle for
the rate of exchange of international currencies in order to facilitate
trade, they decided to use gold as a standard." This worked until 1971,
when "the market claimed that it could determine the exchange rate
through the demand and supply of currencies freely traded in the
market. But the profiteers moved in and manipulated the value of the
currencies so that there was chaos in terms of exchange rates of
currencies."
The Gold Dinar policy intends to return to the former, superior policy.
Tan Sri Nor Mohamed Yakcop, an economic adviser to Dr. Mahathir,
explained the system at the August conference as follows, using trade
between Malaysia and Saudi Arabia as an example: "Malaysian
exporters will be paid in ringgit [the Malaysian currency] by Bank Negara
[the Malaysian National Bank] on the due date of exports.... Similarly,
the importers will pay Bank Negara the ringgit equivalent of their
imports. The Saudi Central Bank will do the same for its exports and
imports. Say, at the end of a three-month cycle, the total exports from
Malaysia to Saudi Arabia is 2 million Gold Dinar, and the total exports of
Saudi Arabia to Malaysia is 1.8 million Gold Dinar. Therefore, for that
particular three-month cycle, the Saudi Central Bank will pay Bank
Negara 0.2 million Gold Dinar. The actual payment can be by way of the
Saudis transferring 0.2 million ounces of gold in its custodian's account
in the Bank of England in London, to Bank Negara's account with the
same custodian. The important point to note here, is that the relatively
small amount of 0.2 million Gold Dinar is able to support a total trade
value of 3.8 million Gold Dinar."
The weakness of the system as it is now proposed is that gold, too, is
subject to speculation, especially if it is pegged to a currency such as the
dollar, which is heading for a plunge due to the collapse of the U.S.
banking system. Dr. Mahathir is aware of the problem: "Gold prices can
also be manipulated," he said, "but not as easily as the U.S. dollar or
other currencies.... Speculation and manipulation will not be as easy as
when local currency is valued against the U.S. dollar."
EIR Founding Editor Lyndon LaRouche has proposed that the necessary
return to a Bretton Woods system of fixed exchange rates must also
peg currencies to a "basket of commodities" rather than to gold, as a
means of basing currency valuations to the real economy, rather than
tying the real economy to a speculative entity (see Documentation).
Although the Gold Dinar proposal assigns a value to gold in terms of
dollars, Dr. Mahathir suggested in his speech that he is thinking along the
lines of a "basket of commodities": "The value of one Gold Dinar is one
Gold Dinar, no matter what the exchange rate of a currency is against
the Gold Dinar. If the value of goods and services is expressed in Gold
Dinar, the value remains the same, no matter which country is involved
in the trade."
Whatever the case in this regard, the discussion and implementation of
the bilateral or restricted multilateral Gold Dinar policy can provide a
much-needed defense against the collapse of the dollar-centered
financial system, and could contribute to a more durable global solution
in the near future.
Strategic Necessity
Dr. Mahathir emphasized that the Gold Dinar policy is being driven by the
crushing reality of the economic and strategic crisis. The disastrous
situation in the Holy Land, the terrorist attacks of Sept. 11, 2001, and
the threatened war on Iraq, have resulted in "the whole world's
economy being unable to grow," he said. "The West, and in particular
the Americans, are very angry. So are the Muslims. Angry people cannot
act rationally." He concluded his speech: "Of course, the Gold Dinar can
be a trading currency for all countries, not necessarily Muslim countries.
But Muslim countries are in the best position to demonstrate the viability
of the system, ... and in the process, show the world that they are
capable of growing with stability and peace. And this will do more
towards countering oppressions by their enemies, than the futile violent
retaliations."
Other voices are also warning that the current folly in Washington will
only hasten this break from the bankrupt IMF system. James Sinclair,
the head of the mining company Tan Range Exploration, said in an Oct.
28 editorial in Financial Sense Online: "It is perceived, and correctly so,
that the Islamic world is controlled via the use of the U.S. dollar as the
main settlement currency.... I am told there is a significant possibility
that when the U.S. attacks Iraq, the united Islamic salvo back will be at
the U.S. dollar via the Gold Dinar." The Saudis, he says, "are less likely
than most observers think to rescue the dollar this time."
In fact, the Saudis are already repatriating deposits from the United
States, as reflected in the increase by $30 billion in deposits in Saudi
banks in September.
Sinclair also notes, as did Bijan Latif of the Iranian Central Bank, that
"the establishment of a gold-based currency is rebellion against the IMF,
as it is distinctly forbidden under IMF rules." Sinclair adds: "The advent of
the Gold Dinar would be the 'nadir' of the IMF and World Bank."
Other commentators have noted the concern in Saudi Arabia that the
United States may freeze Saudi assets in U.S. banks, forcing them to
consider the Gold Dinar as a replacement for the dollar, and dumping
dollar holdings altogether if necessary. As amazing as this sounds, given
the long history of U.S.-Saudi friendship, there has been a drumbeat of
anti-Saudi hysteria in the United States recently, escalating since the
infamous presentation before the Defense Department's Defense Policy
Board on July 10 by the RAND corporation's Laurent Murawiec, which
declared Saudi Arabia the mother of all terror, and calling for the
overthrow of that country's government and other Arab "dictatorships"
(see EIR, Aug. 16, 2002). Although Murawiec was fired by RAND for this
mindless diatribe, Richard Perle, who runs the Defense Policy Board, was
never publicly reprimanded, let alone fired, and the Saudis took note.
Even more blatant was the report issued by the leading think-tank of
the American establishment, the Council on Foreign Relations, in
October, "Terrorist Financing." The report is the work of a task force,
headed by Maurice "Hank" Greenberg of the AIG insurance cartel,
himself a notorious money-launderer. The report castigates Islamic
charities in general, but hits Saudi Arabia in particular: "For years,
individuals and charities based in Saudi Arabia have been the most
important source of funds for al-Qaeda; and for years, Saudi officials
have turned a blind eye to this problem," says the report. Making their
intentions clear, the CFR adds: "It may well be the case that if Saudi
Arabia and other nations in the region were to move quickly to share
sensitive financial information with the U.S., regulate or close down
Islamic banks, incarcerate prominent Saudi citizens or render them to
international authorities, audit Islamic charities, and investigate the
hawala system—just a few of the steps that nation would have to
take—it would be putting its current system of governance at significant
political risk." Nonetheless, they argue, the Bush Administration must
proceed, and stop pretending that "Saudi Arabia is being cooperative,
when they know very well all the ways in which it is not."
With this madness as establishment policy, the Saudis, and others, may
well see no choice but to pull out of the dollar-based system. This is one
reason for the great interest in LaRouche and his proposals in the
Mideast today. It may well lead to the timely adoption of the Gold Dinar
policy among Islamic nations, and progress toward a New Bretton
Woods monetary system.
Another piece by the same person who posted the article above:
ARABIA INC GOES FOR GOLD MINES JUST LIKE NORLISK A FRONT FOR THE RUSSIAN GOVERNMENT
Re: Subterranean Gold Grab
Surfaces
by: zeno451 (53/M)
11/10/02 03:13 pm
Msg: 189762 of 190878
Al Ghurair Giga Gold refinery (GGG), the first project to take off at Dubai
Metal and Commodities Centre
(DMCC), is weighing options of buying gold mines in South Africa.
This, according to a top official of Al Ghurair Giga Gold refinery, will help
the project to be more viable as
backward integration will always strengthen the bottomline.
**************
Due to Sept 11 lawsuits(since quashed) and open threats to confiscate the
assets of the House of Saud cashiered in European and American banks the
Arabs are desperate to find safe havens for their capital. Gold sounds good
and the $3.8 billion market cap on Pdg is pocket change to the Arabs. They
are now openly talking about purchasing South African mines. You better
believe the likes of GFI and Anglo Gold will want to get some part of the
massive cash infusion the Arabs are willing to pour into an illiquid gold
market. The Arabs would probably be looking for joint ventures with the
established SA miners. They would prove the ideal front for a GFI and an
Anglo Gold grab for Pdgs non South African assets. i.e. The Arabs buy
Placer and spin off the non SA assets to Anglo and GFI in exchange for SA
joint ventures and refining rights for the gold produced by them. 3 million
ounces are required for refinery #1 and the new refinery construction would
require up to 3 million more ounces of new gold. Hey FIAT PAPER is
wothless to the Arabs and they know it.... |
