Saturday, October 7, 2017


Rogue states like Iraq and Libya can't hold a candle to Saudi Arabia when it comes to the radicalization of Islam. The controlled Saudi media doesn't mention that at least 10 of the 19 Sept. 11 hijackers were Saudis. Nor are Saudi subjects told that their kingdom has been the principal source of funding for the Taliban regime since 1996.

The conspiracy of silence also covers up the fact that Saudi government funds, coupled with generous donations from the Saudi private sector, are still funding the madrassa (religious schools) "educational" system in Pakistan that has spawned an entire generation of young boys taught to hate the United States, the "anti-Muslim superpower that is the fount of all evil."

The United States, determined not to rock the leaky Saudi boat, has been pretending it did not know that Saudi money was greasing the various relays of transnational terrorism - from madrassas to Osama bin Laden's terrorist training camps in Afghanistan. After eight years of total Koranic immersion, to the exclusion of all other disciplines, such as math and science, but generously larded with messages about how the United States is bent on the destruction of Islam, the most gung-ho boys are selected for holy warrior training. It was in these Afghan camps that bin Laden's al Qaeda operatives then picked the most promising candidates for the hall of martyrdom fame.

By ignoring royal excesses and the total lack of democratic processes, as well as a dubious level of cooperation with the FBI in tracking Saudi connections to transnational terrorism, the United States kept the oil flowing, along with Saudi billions into U.S. Treasury bonds and U.S. arms purchases.

But the Saudis are now hoist on their own petard. These same anti-American hatemongers that the Saudis have been funding also hate the tired, corrupt regimes of the Persian Gulf that have wasted their country's wealth on extravagant lifestyles. Gen. Hameed Gul, Pakistan's retired spy chief who is now "strategic adviser" to the more extreme religious parties, says the ruling royal families of the Gulf have generated hatred by the way they flout "divine law." The Saudi royals made a pact with their clergy, which is now falling apart. In return for immunity from criticism, the royals gave the Wahhabi clergy a free hand, allocating generous subsidies for Koranic schools all over the Muslim world, with an estimated annual budget of $10 billion. But now the Saudi royal regime is co-equal with the United States and Israel on the Islamist hate list.

Even non-Muslim India has received madrassa largess from the Saudis for the Koranic education of their 140 million-strong Muslim minority. Between them, the subcontinent's three principal nations - India, Bangladesh and Pakistan - hold half the world's Muslim population of 1 billion plus. More than 50 percent are younger than 25. Uday Bhaskar, deputy director of India's Institute for Defense Studies, said, "You can spot the Saudi-financed madrassas because they look cleaner, with fresh coats of paint."

The Koranic schools produce young men who can read and write, speak Arabic, and recite the holy book by heart, but have no skills. In Saudi Arabia itself, there is a deep-seated resentment among young college graduates who can't find jobs, as they didn't learn any skills either. Many drifted over to bin Laden's Afghan camps before U.S. bombs returned them to the desert. There they trained to overthrow the Saudi monarchy that still rules by divine right of kings.



CHINA gave foreign investors direct access to its gold market for the first time yesterday as the biggest gold-consuming nation seeks to exert more influence over prices while boosting the yuan's global use.

The Shanghai Gold Exchange started trading contracts in the city's free-trade zone. The contracts will be linked to its domestic spot market and are available to about 40 international members, including Goldman Sachs Group and UBS. Access was previously limited to some Chinese subsidiaries.

Gold in China this year cost between $31 (R339) an ounce more and $42 less than the London spot price, according to data compiled by Bloomberg.

China, which overtook India as the biggest bullion buyer last year, wants to establish a benchmark price in Asia by opening up trading to a larger pool of investors.

It is also pushing to reduce controls over the movement of capital across its borders after policymakers pledged last year to carry out the widest expansion of economic freedoms since the 1990s.

"It's indicative of the ambition to move the gold market more to where the consumption is," Victor Thianpiriya, a commodity strategist at Australia & New Zealand Banking Group, said by phone from Singapore. "It makes sense that price discovery occurs in the centre of consumption."

Premier Li Keqiang was scheduled yesterday to tour the free-trade zone, days before its one-year anniversary. The governor of the central bank, Zhou Xiaochuan, was due to attend the opening ceremony.



CHINA'S central bank circulated a draft plan to ease restrictions on gold imports, people with knowledge of the matter said, in a move that might lead to lower prices in the biggest market for bullion.

The People's Bank of China (PBoC) drafted a plan that would open up gold imports to qualified miners, as well as all the banks that were members of the Shanghai Gold Exchange, according to the people, who asked not to be identified because the proposal had not been made public. China Gold Coin, a maker of commemorative gold and silver coins, could also qualify to import bullion, they said.

Chinese regulators are pushing to open up the country's gold trade and lure foreign investors as part of its broader effort to link the mainland to global markets. The country began offering international institutions access to yuan-denominated gold contracts in Shanghai's free-trade zone in September, a move that may extend its influence over prices while boosting the role of its currency in global trade.

The move may further cut the premium Chinese buyers pay for gold. That spread has averaged $2.74 (R30.57) an ounce so far this year, down from an average premium of $18.75 last year, according to calculations of the difference between benchmark prices in London and contracts traded on the Shanghai Gold Exchange.


Gold prices have fallen 16 percent since reaching a record $1,900 an ounce - and could fall further in the near term. But many analysts predict gold prices will rise, perhaps to new records, in the latter half of 2012.

What is it with gold? Spot gold prices soared to a record above $1,900 an ounce in early September, dipped below $1,600 late in the month, rebounded strongly, and then fell below $1,600 again last week. That's a 16 percent decline in three months, although the shiny metal is still up for the year. Will the decline continue into 2012?

It could. Concerns about the euro debt crisis have sent investors scrambling to buy dollars as a haven from risk, rather than gold, which has caused the dollar price of gold to fall. When gold prices fell below their 200-day average last week, a technical sell signal, prices broke below $1,600 although they have recovered a little since then.

"What is surprising is that in an environment where headline risk news is bigger than ever, gold has actually fallen from its highs," Christoph Eibl, CEO and founding partner of the Swiss commodity hedge fund Tiberius, told Reuters.

With the euro debt crisis virtually certain to extend into the new year and the US economy still weak, keeping inflation tame, many analysts see gold prices could fall further. Yet, they do not anticipate any precipitous fall since gold serves as a kind of ballast to market volatility and as a store of value.


Gold prices have fallen from dizzying highs on global cues. HT explains the factors that influence its prices and its linkages to the dollar and monsoon in India.

Why do people invest in gold?

Gold is one of the several assets that people invest in. Unlike equities or bank deposits, gold is a physical asset and has been a traditional favourite for parking surplus income.

How are gold prices determined?

Gold is considered to be a safe haven asset. In times of high inflation and volatile stock markets, gold prices usually tend to go up. Its price had more than doubled from early 2009 to end of 2013 as investors in Europe and the US flocked to add more glitter to their investment portfolio rather than park funds in unstable and risky equity markets.

What triggered the fall in gold prices on Monday?

There were reports of massive selling of gold in China on Monday. According to some reports, more than 30 tonnes of gold were sold in the Shanghai spot market on Monday. The heavy selling triggered global prices to fall sharply.

What is the relationship between dollar value and gold prices?

Under normal circumstances, the value of the US dollar and price of gold are inversely related. A stronger dollar usually makes gold cheaper. This is because international prices of gold, like many other commodities, are denominated in dollars. If the dollar strengthens, it makes such commodities expensive in the other currencies. The resultant fall in demand sets off a fall in prices.

Why is the dollar strengthening against a basket of currencies?

The US Federal Reserve has hinted at the possibility of interest rate hikes this year, the first time in nearly a decade. Analysts expect the first rate hikes to come in by as early as September.

What does an interest rate hike mean for the dollar?

An interest rate hike in the US could trigger a dollar flight from emerging countries such as India. A rate hike in the US will encourage foreign, particularly US-based funds, to move money out of India to safer locations closer home. Global funds park money based on expectations of yields.



Germany -- For the great many Germans who still rue the day they had to trade their deutsche marks for euros, there has been at least one consolation. If the common currency did not work out, Germany still had huge reserves of the hardest currency of all - - gold.

Except, many people learned for the first time last year, it didn't. More than two-thirds of Germany's gold reserves, valued at 137 billion euros ($182 billion) are abroad, stored in vaults in Paris, London and, above all, New York. In fact, there is considerably more German gold in Manhattan than in Frankfurt.

On Wednesday, the German central bank said it would begin gradually repatriating some of the reserves, the second-largest stock in the world after that of the United States. The Bundesbank was responding to a public outcry last year after a clash in Parliament about whether all the gold was properly accounted for.

The goal is to house more than 50 percent of German gold in Bundesbank vaults in Frankfurt by 2020, up from a little less than a third today, the bank said. About 45 percent of the reserves are 80 feet below street level in a Federal Reserve Bank of New York vault.

The move will include the complete withdrawal of German gold stored at the Banque de France in Paris, about 11 percent of the total. Bundesbank officials were anxious to note that the decision was not a reflection of French trustworthiness. Rather, it is because France and Germany now share the euro, so there is no need for reserves as insurance against currency crises.

"The gold in Paris is in the best of hands," Carl-Ludwig Thiele, a Bundesbank executive board member, said Wednesday. "We are thankful to the Bank of France for storing it."

Still, news of the planned transfer caused some tongue-clucking in financial circles after news leaked out Tuesday.

"Central banks don't trust each other?" William H. Gross, a founder and managing director of the investment firm PIMCO, asked on Twitter.



A timeline of the precious metal's effects on the world - from gold rush to gold standard.

- 5500-2500 BC Gold is first discovered in the later part of the Stone Age, probably in Mesopotamia.

- 3000 BC Gold rings are used for payments in Egypt.

- 650 BC The Lydian Lion - a bean-shaped gold piece stamped with a lion - is considered the first true coin. It is first minted by Lydia, the ancient Greek kingdom ruled by Croesus a century later.

- 250 BC The Greek mathematician Archimedes demonstrated that the purity of gold can be determined by calculating its density (weight and amount of water it displaces- ).-

- AD 1284 Venice introduces the gold ducat, which becomes the most popular coin in world commerce for more than five centuries.

- 1511 King Ferdinand of Spain sets the tone for his expeditions to the New World, admonishing his explorers: "Get gold, humanely if you can, but at all hazards, get gold."

- 1787 First American gold coin - the Brasher doubloon - is struck by gold- and silversmith Ephraim Brasher.

- 1792 The Coinage Act puts the US on a bimetallic silver-gold standard, defining the dollar as equivalent to 24.75 grains of fine gold and 371.25 grains of fine silver.

- 1799 The first US gold rush is sparked by the discovery of a 17- pound gold nugget at Little Meadow Creek, N.C.

- 1821 Britain institutes the first gold standard.

- 1848 The discovery of gold at Sutter's sawmill near Sacramento, Calif., sparked the California gold rush and accelerated settlement of the American West.

- 1851 Australian gold rush begins in New South Wales, in the southeast.

- 1870s North American gold finds make the metal more plentiful, prompting the US, Germany, and France to adopt the gold standard, followed by many other countries.

- 1886 While digging up stones to build a house, George Harrison makes the largest gold discovery in history in Witwatersrand, South Africa. The deposit produces 40 percent of the world's gold by 1985.

- 1887 Scottish chemist John Steward MacArthur wins a British patent for the gold cyanidation process. It enables the separation of gold from ore and doubles the world gold output within 20 years.

- 1897 The Klondike gold rush sees 100,000 "stampeders" head north after gold is discovered in the Canadian Yukon the previous year.

- 1900 The Gold Standard Act places the US officially on the gold standard, a fixed exchange rate in relation to other countries on the gold standard.

- 1903 The Engelhard Corporation creates a liquid medium to print gold on surfaces - for tender and decoration. The medium becomes the basis for microcircuit printing technology.

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