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    The Changing Role of Gold Within the Global Financial Archictecture
    The Changing Role of Gold Within the Global Financial Archictecture
    The Changing Role of Gold Within the Global Financial Archictecture
    Ebook86 pages1 hour

    The Changing Role of Gold Within the Global Financial Archictecture

    By John Bougearel

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    The Changing Role of Gold examines Western economies attempts to dismantle gold's role within the international monetary system. Those attempts have failed. As a result, golds role within the global financial architecture has begun expanding.

    Central banks are now positioning themselves for currency shocks from the Euro and US Dollar by accumulating more gold in 2012 than they have anytime in the past 50 yrs. Central banks are the ultimate long term investors. Discover how gold's traditional role is being restored. Learn how to can safely accumulate and diversify into gold and understand the risks that lie ahead for gold investors.

    LanguageEnglish
    PublisherJohn Bougearel
    Release dateMar 5, 2013
    ISBN9781467564373
    The Changing Role of Gold Within the Global Financial Archictecture
    Author

    John Bougearel

    John Bougearel is a Chartered Market Technician (CMT) and founder of Structural Logic, a registered Commodity Trading Advisor (CTA) offering managed accounts for clients. Structural Logic has been publishing a daily financial newsletter for institutional clients since 2000. As an educator, John does educational webinars on the financial markets for the ICE Exchange, Market Technicians Association, and various FCM's. John has authored two books, The Changing Role of Gold and Riding the Storm Out: What Do Investors Do Now. John is also a featured financial analyst on Bloomberg News. John received his B.A. from St. Olaf College in 1985.

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      Book preview

      The Changing Role of Gold Within the Global Financial Archictecture - John Bougearel

      The Changing Role of Gold

      By John Bougearel

      Published by John Bougearel at Smashwords

      Copyright 2013 John Bougearel

      http://thecommoditytradingadvisor.com/

      Structural Logic Research Working Paper on the Gold Market:

      The Changing Role of Gold Within the Global Financial Architecture, First Edition

      Table of Contents

      1. A Brief History from the 1960s Onward

      2. The Ultimate Long-Term Investor: Central Banks: They're BACK!

      3. The Composition of Foreign Exchange Reserves (COFER): Gold's Role from the 1960-2011

      4. 2010: This is Where it All Begins, With the Return of the Ultimate Long Term Investors

      5. The World Gold Council: Q3 2012 Stats and Gold Demand Trends

      6. Political Headwinds in US - the 2013 Fiscal Cliff

      7. Changes in Commercial Lending, Money Supply, Creation of 'Bad' Money, & the Fight Against Debt Deflation

      8. QE3, Fiscal Cliffs, and the US Money Supply

      9. Gold Demand Growth - A Primary Driver of Gold Prices in a World of Suspect Fiat Currencies

      10. Hiccups in the Q3 2012 Gold Demand Report

      11. Recent Hedging Programs at Historically Low Levels and the Look-Ahead Forecast

      12. Stock to Flow Ratio STF and Gresham's Law

      13. Gresham's Law & High Quality Liquid Assets Becoming Scarcer

      14. Regulation of Gold and Reclassification of Gold as a High Quality Liquid Asset

      15. Gold as an Alternative Source of International Liquidity - A European Case Study and Use with SDRs

      16. The Zero-Risk Weighting Initiatives for Gold by WGC, Basel Committee, FDIC, OCC, & BIS

      17. Finalized Basel III Definitions of High Quality Liquid Assets Would Appear to Exclude Gold

      18. In Consideration of another Long Term Investors - Pension Funds Adding Gold to their Portfolio Diversification

      19. Gold's Role in Pension Funds Under Scrutiny - Examining Political and Legal Constraints

      20. Examining the 'Efficient Frontiers' of Emerging Central Banks & the Broadening Role of Gold as a Source of Stability

      21. Positive Skew and High Frequency Attacks by Algos

      22. Emerging Market Central Banks Remain Generally Under-allocated in Gold

      23. Gold as a Potential Future Source of Collateral for Italy & Portugal

      24. Summary

      January 14 2013

      Abstract:

      The role of gold in the international monetary system has changed significantly over the past 50 years. Most recently, central banks became net purchasers of gold in 2010 for the first time since 1988. This represents a generational shift by a group of investors that exert a major influence on the demand trends and price of gold. In addition, several new regulatory proposals and initiatives are under serious consideration following the 2008-09 financial crisis. If and when these proposals are adopted and implemented (partially or otherwise), they will serve to re-establish Gold's rightful inheritance within the international monetary system. This working paper provides an historical overview of the role of gold in the global financial architecture over the past 50 years as well as the dynamic shifts in the political and regulatory landscape that affect gold. The working paper also examines global gold demand trends broadly from the 1970s and more specifically, global gold demand trends since 2010.

      1. A Brief History from the 1960s Onward

      During the late 60s, European gov'ts were demanding payment in gold from the US, but the US refused by abandoning both the gold standard and the 1944 Bretton Woods agreement in 1971. At that time, the US Secretary of the Treasury John Connally told the rest of the world on August 15 1971, the dollar is our currency, but it's your problem. In 1971, the US gov't had begun to inflate away/monetize its debt. Worse, the adoption of fiat currencies in the 1970s has led to sovereign debt and currency problems in Japan and Europe as well. Forty two years later, the magnitude of problem Connally identified spread like an aggressive tumorous cancer. The tumor precipitated the global credit crisis that began in August 2007. Economist Alasdair Macleod recently observed in his Outlook for 2013 that:

      Government and central bank manipulation of their economies and fiat monies have succeeded in deferring the bankruptcies and liquidation of accumulated malinvestments, to the point where their cost can no longer be sustained.... By 2007/08 the accumulation of debt was too large for distorted, burdened and weakened economies to support. And this is not just a single-country problem, because it has become a problem everywhere. The United States, the United Kingdom and the Eurozone countries reached this terminal point together while Japan had been waiting in the wings for them to catch up. These nations alone account for about half global GDP.

      The coincidence of all nations following the same path to destruction is the result of international coordination that has increasingly dominated global politics since the Bretton Woods Conference in 1944. The response to the financial crisis of 2008 was to draw in more participants, leading to the G20 becoming the post-crisis forum for international economic coordination. Never in modern history have we seen so many governments agreeing to make the same mistakes; and it is hard to see, with the underlying inter-connectivity of their banks, how there is room for dissent.

      "The global banking system for the last five years has struggled with insufficient capital, over-valued collateral, and an underlying tendency for balance sheets to deflate. Their respective governments through their central

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