Ronald-Peter Stöferle, Analyst at Erste Bank, and James Turk, Director of the GoldMoney Foundation, talk about his "In Gold we trust" report.
They explain why gold's high stock-to-flow ratio makes it very different to commodities. Gold is not consumed, it is accumulated, which is why it is great for monetary purposes. Mine production and supply of gold in general is not very important in setting the gold price, whereas demand for gold is.
All economic goods are subject to supply and demand, including money, something that many economists overlook.
The decreasing trust in fiat currencies, which are gold's real competitors, is what really drives bullion prices. It is Gresham's law that we should use to model gold's demand.
James Turk and Alasdair Macleod discuss the pros and cons of the gold standard, the benefits of competition between different currencies and the historical role of gold in international monetary systems.
James Turk points out that he is actually not in favour of a classical gold standard as it grants excessive monetary authority to governments and central banks.
He prefers free competition between currencies, and thinks that gold has proven itself as the best form of money over thousands of years. He says that gold will always be the ultimate standard for economic calculation. Both men agree that money should not be a product of governments, as most modern monetary theories advocate, as well as influential people such as Warren Buffett.
As a result of on-going debt monetisation and expansion of the money supply, James Turk ultimately expects an Argentinian style hyperinflation. Macleod argues that it will be almost impossible to raise interest rates to re-establish faith in the bond markets because the current debt levels are way too high already.
While James Turk is optimistic that a solution will eventually be found to our financial problems, he expects a serious crisis before gold is reintroduced in one form or another back into the monetary system. Therefore he advises that you should become your own central bank by buying gold and silver as a means of protecting your purchasing power.
When buying precious metals one should make sure not to have counterparty risk which is why Turk and Macleod advise buying physical metal only. In conclusion, James Turk points out the difference between price and value and argues that gold is still undervalued even though the price has risen for 11 years in a row.
Talk of a gold bubble is therefore misguided. James is still expecting much higher prices in the future due to on-going money printing. Alasdair also talks about how little investor participation there is in the gold market in comparison with other assets, and points out the lack of speculative buying.
Edwin Vieira talks to James Turk about his book "Pieces of Eight: The Monetary Powers and Disabilities of the United States Constitution", how it came to be and the new editions and upcoming translations (see James Turk's review of this book). Edwin explains the role that the gold commission hearings and Ron Paul played in inspiring the book. He also says how important and urgent monetary reform is for the United States and how the best chance of reform comes at the state level, given gridlock in Washington.
Gold Bullion is the world's oldest asset class and the century's best performing currency. In this brand new GoldMoney Inc roundtable recorded in Toronto, top executives from the company explore the history of gold as currency and how the banking system evolved over time.
Chris Powell, Secretary/Treasurer of http://gata.org, and James Turk, Director of The GoldMoney Foundation and Founder of GoldMoney discuss the Exchange Stabilization Fund in this video. This fund was established in 1934 as a provision in the Gold Reserve Act. It only answers to the Treasury Secretary and the President.
James Turk, globally recognized expert on precious metals, joins Kuzman Iliev and Vladimir Sirkarov in the Boom and Bust show on Bloomberg TV Bulgaria to discuss a wide range of investment topics - monetary policy, the new reality of negative nominal yields, investment strategies for wealth preservation, what to consider when investing in gold and how to prepare for turbulent times.
Humans have been using metals as money for almost three thousand years. Until fairly recently, historically speaking, gold, silver and other metals were the basis for money all over the world.
Over the last couple of centuries, money lost its exclusive form of gold and silver coinage. Base metal coins and paper money, whose values were linked to gold at a fixed rate, gradually took over.
Linking printed paper notes and base metal coins to gold satisfied the requirement of money supply stability, given that the stock of gold is relatively constant, and only rises depending on how much new gold is mined from the earth.
Historically, the above-ground global gold stock has generally risen at the same rate as world population growth and global GDP (gross domestic product) expansion.
“The above-ground stock [of gold] grows about one and three quarters per cent per annum, which is approximately equal to world population growth and new wealth creation. Money supply stability is thus guaranteed, in theory at least.”
There’s a new business model among the ranks of the fully authorised peer-to-peer lenders. Lend & Borrow Trust Company (LBT) is a platform which allows users to borrow against their precious metals.
Lenders earn interest by investing in loans that are secured against “investment grade” gold and silver bars. LBT takes effective control of the pledged gold and silver on behalf of lenders, and will sell it off if a borrower defaults on a repayment.
The pledged precious metals are stored in specialised bullion vaults in England and Hong Kong, operated by cash-handling company Loomis. Pledged bars must meet the standards of the London Bullion Marketing Association.
The maximum loan-to-value ratio on the platform is 65 per cent. LBT continuously monitors the LTV and will make a margin call if it rises to 75 per cent, meaning than the borrower will be required to pledge more collateral and/or partially repay the loan to bring the LTV back into line.
LBT’s founder, James Turk, previously founded and floated an online gold trading platform called Goldmoney. Now listed on the Toronto Stock Exchange, Goldmoney has a market cap of CAD$225m. Goldmoney is a shareholder in LBT, and Turk tells us that the platform will complement the services that Goldmoney already offers to its c. 1.5 million customers.
LBT has been operating as a business-to-business lending platform since December 2016, when it completed its first loan.
Turk, who is chairman of LBT, said that the authorisation process has taken 21 months.
“Lenders benefit, but so do borrowers because they can monetise their precious metals,” he said. “With LBT, borrowers and lenders interact without disclosing their names through online auctions that enable both parties to ‘lend & borrow’ at a mutually agreeable interest rate.”
These auctions may be initiated by both borrowers and lenders. Either borrowers list borrowing proposals, or lenders enter the conditions under which they would be willing to lend, with borrowers then bidding for the money.
The platform supports lending in five different currencies: GBP, EUR, USD, CAD and CHF. Its first loan was a £2m loan in GBP. Its second was a $5.25m deal in CAD.
Investors must invest a minimum of £5k to use the platform. The minimum loan size for business borrowers is £25,001, and £60,261 for individuals.
Peer-to-peer lending platforms in the UK must be fully authorised in order to offer an Innovative Finance ISA product to investors. There are now a decent number of fully authorised firms in the market, including (as of last week) the world’s original peer-to-peer lending platform Zopa.
LBT has said that the launch of its own IFISA is in the pipeline.
James Turk is widely respected as one of the true legends of the gold market, with over 40 years in the business. In conversation with Grant Williams, James looks back on his career, which is entwined with the modern history of gold, examining the potential for the next break to the upside and what comes next when empires of money end.
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