[tlm724] hey everyone ! ready shredders ?
Iraq forms joint panel to stabilise currency 2013-06-10 In a bid to prevent the fluctuation of the Iraqi dinar and adjust its value against world currencies, the Iraqi government on Monday (June 10th) announced that a joint committee comprised of members from the planning and finance ministries and the Iraqi Central Bank has been formed.
Iraqi government economic advisor Salam al-Quraishi said the committee will establish several controls that aim to stabilise the dinar rate of exchange level and prevent its value from dropping.
Read More Link On Right
This will be done by supporting the value of the dinar with gold and preventing traders and banks from manipulating the dollar and euro rates of exchange, http://al-shorfa.com/en_GB/articles/meii/newsbriefs/2013/06/10/newsbrief-09
[tlm724] I had the opportunity to speak with someone today who is knowledgeable about commodities and asked him about the above article, specifically this line supporting the value of the dinar with gold .
[tlm724] IHO this means the Iraqi Dinar will become a "commodity" backed currency. Now please realize that "gold" is the ONLY commodity mentioned above so we are just speculating here ! Gold being a commodity and Iraq's wealth of oil, gas, minerals and the "fertile crescent region"
and to learn more about the fertile crescent please read here http://www.bondladyscorner.com/t73853-post-for-player-the-fertile-crescent
[tlm724] but in a nutshell it is a vast area for agriculture developement, millions of acres and is the main reason BondLady brings in the agriculture articles, she knows its wealth ! And IF this is accurate and we assume the dinar will become commodity backed then that will inlcude all this wealth
[Shredd] tlm724 right
[tlm724] A commodity backed dinar will be tremendous news ! So this is what he said. This would mean that Iraq would be 100 % Basel III compliant and the dinar would be Internationally tradeable and have "legitimacy" within the worlds banking sector.
[tlm724] Being commodity backed means that Iraq cannot falsely under-value nor over-value the rate of the dinar. Nor can they have "more dinar " in circulation then their commodities can back.
[Shredd] to learn more about Basel compliance, see here: http://www.bondladyscorner.com/t70491-what-is-basel-compliance?highlight=basel
[tlm724] Thereby Iraq can't default on their currency like we recently saw in Cyprus. Again in his opinion, this appears to be the final step to Iraq making the dinar legitimate throughout the world. So when that article was posted I went back to the past as BondLady has taught us and found a few things I'd like to show then our shredders can hit it.
Economist: strengthening gold reserves would avoid Iraq from the crisis that machete areas of the dollar and the euro Date: 03/04/2013 08:16:13 Monday
excerpt from article: "that a central bank to strengthen its reserve of gold and to reduce reliance on the dollar is a positive step and will support the national economy and the Iraqi dinar" http://www.ikhnews.com/news_view_76755.html
[tlm724] reduce reliance on the dollar, support the national economy and the Iraqi dinar !
World Gold Council data: Iraq is very unlikely to put in a floor under international gold selling, but the World Gold Council showed that the nation ranked as number 54, with 29.8 tonnes. This is only 2.4% of its total foreign reserves, but one fact stood out in 2012 — it added 23.9 tonnes in August. As Iraq continues to get on with its recovery, more hard assets like gold may need to be purchased by its central bank to show additional stability for the reemerging nation. http://247wallst.com/2013/04/16/countries-buying-the-worlds-gold/
[tlm724] we see they have the goods, the gold, the oil, the vast wealth of gas and minerals and agriculture, we see they can't undervalue the currency if the above is accurate so that means a strong national currency !
[Shredd] using a gold to currency converter, that gold alone comes to over 1.545 trillion dinar but a commodity backed currency is more than just gold. We commonly think of the gold standard but this article doesn't specifically say that.
again, we are just speculating but let me throw a basis of what a commodity backed currency means.Historically, most forms of currency have had high intrinsic value - cattle, grain, metal, arrow heads, iron coins etc.
Effectively, they were a barter system - real goods on both sides of the transaction with no hidden or lingering after effects.
For a commodity to serve as the basis of currency, it must have two principle characteristics:
1. It must have widely appreciated value in its market region
2. It must be available on a reliable basis
[Shredd] The best forms of currency have been the one's which have had high intrinsic value. We all know of the wealth Iraq sits on so much more than gold so, back to the article timmy started with..... "This will be done by supporting the value of the dinar with gold ..." supporting the value of the dinar (not dollar) with gold
[Shredd] if you chew on this, the thought of moving to a commodity backed currnecy has merit but we would need to watch for more to build on this like Bondlady has taught us.....study all the news and when the next article comes in, we can better place it in the larger picture
[Shredd] so, any thoughts, comments?????
[tobyboy1] Shredd maybe as was saying they buy more gold from reserves on hand
[Shredd] tobyboy1 yes
[tlm724] Shredd it is becoming quite evident that the CBI is indeed following a set plan and thank you !
[Shredd] tlm724 yes, imo, all part of the plan and one more thought, if we see Basel compliance regarding gold in future news, this thinking has even more merit because basel requirements = capital requirements
[Shredd] supporting the value of the dinar with gold, very interesting
[dealerdean] ty again shredd and timmy
[tobyboy1] Shredd can't get much more stable than with gold
[DDF] tlm724 Shredd thank you
[tlm724] yqw and thank you
[tobyboy1] Shredd tlm724 That is an interesting and great article thanks guys
[tlm724] tobyboy1 our pleasure always
[Shredd] tobyboy1 indeed....after a run of several thousand years, gold was replaced by printed fiat currencies when even gold and silver failed to be able to keep up with the scale and complexity of a burgeoning commercial economy.
[shunshine] Thanks Timmy and Shredd very interesting.
[tobyboy1] Shredd So if they use gold do you think will cause a higher RV rate
[Shredd] i'd have to think about that......depends on how it is calculated... stored commodity or unharvested? projected or real know what I mean?To put this into perspective, just about everything has been used as currency. Many commodities have worked pretty well.
It is impossible to believe if energy had been available as a storable, transportable commodity 2000 years ago that it would not have been adopted as the only currency then and remain so today.
Wheat was actually one of the strongest!
[Shredd] heck, some think energy currency (energy certificates) should be used as the reserve currency for international exchange. So in effect, nations will be exchanging stocks of energy rather than pallets of fiat currency or flurries of keystrokes to balance their trade accounts.
This makes sense this emerging democracy sitting on amazing wealth would set a higher standard
[tlm724] tobyboy1 remember from the above they cannot under-value nor over-value their currency so what they have in wealth will determine the value and must support it
[Shredd] of course, commodities fluctuate
[DogzNova] would seem there would have to be some up and down room.. No?
[tlm724] DogzNova yes wiggle room for sure what I am referring to is going overboard so to speak. For instance at the present moment the dinar is terribly under-valued
[DogzNova] I see
[tobyboy1] tlm724 yes
[Shredd] tlm724 good talk! not bad for wingin it
[tlm724] Shredd yes thank you ! Your the best . Thanks for your patience everyone .