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Well, well...The vultures really are circling this carcass

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  • Well, well...The vultures really are circling this carcass

    So there no longer is any pretense about what these bailouts are about. Germany will plunder the Portuguese coffers without even having mobilise the light infantry:

    Portuguese Gold Sale Urged by Senior German Lawmakers as Mexican Central Bank Buys 100 Tonnes

    Those calling gold a bubble know little or nothing about economic and monetary history and monetary economics today. Gold is increasingly being seen as a monetary asset and as an important reserve currency by central banks internationally.

    The drumbeat of a return to some form of gold standard is increasing and President of the World Bank Robert Zoellick’s comments to the Financial Times regarding returning to some form of gold standard suggest that monetary authorities internationally may be planning a return to a quasi-gold standard in order to restore stability to currency markets and recreate trust in fiat currencies.

    Senior German Lawmakers Urge Portuguese Gold Sale

    Another sign of the increased appreciation of gold as an important asset came from Germany today where Angela Merkel’s budget speaker and his opposition counterpart have urged Portugal to consider selling their gold.

    Norbert Barthle, Germany’s governing coalition budget speaker and his counterpart Carsten Schneider from the Social Democrats, the biggest opposition party, urged Portugal to consider selling some of its gold reserves to ease its debt problems. They called for a review of Portugal’s request for financial aid to include gold and other potential asset sales.

    The German lawmakers did not specify who should buy the gold from the Portuguese central bank but given the challenges facing Germany and the Eurozone, it is likely that the Bundesbank and the ECB would be willing buyers – if the gold is not already encumbered due to Portugal’s membership of the Eurozone.

    Interestingly, there was an article in the Times of London on Monday suggesting that the Portuguese gold reserves (worth some $20.7 billion at today’s prices) be used to fund their bailout (see news).

    Meanwhile creditor nations’ central banks continue to accumulate gold reserves as seen with the breaking news from the Financial Times that the central bank of Mexico has been diversifying their currency reserves (largely in dollars) into gold with the purchase of 100 tonnes of gold bullion in February and March.
    Debtor nations with large gold reserves may be forced to sell gold reserves to creditor nations in the coming years as has been the pattern throughout history.