Saturday, May 7, 2016

Islamacist London Mayor; Gold Set to Soar?

Gold bugs thrill at any talk of Islam reviving a gold standard.  Western observers have seized on a recent article, but wait, this is in the article:
So far, Islamic investors have been reluctant to invest in gold because to do so, they would need the metal in physical form as an underlying asset, which is rarely the case in conventional gold trade. Because of that, broadly traded gold futures do not qualify as a Shariah-compliant investment. Other conventional gold-based financial offerings in the form of derivatives are also widely viewed as unacceptable for Islamic scholars. On the other hand, investment that involves a forward purchase agreement at an agreed price against future delivery (the principle of salam) would, but there is still physical gold in the play.
Well, that says a whole lot.  (The article takes a minute to load).  First, the western observer anticipates a gold price spike due to heretofore unexercised event of speculation in gold, not trade in gold.  The same article says trade in real gold is happening, but insignificant.  So the spike in price will come due to, as the article explains, an initiative based in London and being supported by Malaysian Islamic authorities.

Could it be Islamic traders simply understand gold's proper place, and therefor have not gotten in trouble speculating in gold futures?

Anyway, there is a geography of Islamic finance, with some countries more strict that others.  Of course  London would love to lure Islamic finance under its capitalist wings, and now the City of London, home of the Anglo financial world, now has an Islamic mayor.

Then this:
London-headquartered World Gold Council (WGC), together with Kuala Lumpur-based Amanie Advisors, an independent advisory firm on Shariah investments and the Accounting and Auditing Organisation for Islamic Financial Institutions in Bahrain, now have been developing a “Shariah Standard on Gold” which aims at “providing guidance from the Shariah perspective on the usage of gold in financial and investment transactions for Islamic financial institutions and participants,” as WGC head Natalie Dempster puts it. The standard also aims to increase transparency and harmonisation of the use of gold investments and reduce unclear specifications on what’s haram and what’s halal in trading the metal.
Thanks, Natalie Dempster, for this insight into Islamic finance.

Guess which Islamic countries are the most liberal about Sharia finance, and at the same time experience the harshest market vagaries?  Why, Malaysia, Bahrain and London.

There already is a gold standard.  It is 100% private.  Those on it are safe from the vagaries of malcredit false economy.  Many on the gold standard ALSO engage in the malcredit false economy, since it is tradable,  and you can within it enjoy things you have not earned.  Someone downstream, as yet unborn, will curse your memory as they are forced to pay then for your excesses today, but hey, let them wail.

And of course, there are countless in the false economy not on the gold standard.

Finally, you can be on the gold standard with no gold, since it is possible to engage is benecredit true economy not actually owning any gold, but operating within the bounds of a gold standard.

A gold standard's main value is as a price signal to the entire market, while being a medium of exchange and store of value to individuals who engage in one-off liquidation transactions.

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