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Precious Metals News 20th May 2012 ______________________________________________________________________________________________________________________________

Hello Everyone! Thank you for sending in your testimonials and thank you for your time in helping us with this, very kind. I would like to put a focus on articles from various newspapers and discuss them here from time to time as the world seems so fast moving and the stuff that happened yesterday doesn’t count so much as there is something new every minute that wants our attention. But as you know; I like to transport knowledge and with knowledge comes understanding and with understanding we gain wisdom. Wisdom is knowledge put into practicable application. Wisdom is what keeps you safe in the end so we’re looking for something to understand and I must say the media is full of misinformation. But once we learned what tricks they use we gained understanding and won’t be influenced anymore. The article discussion is one of the examples. And obviously we discuss in Markets the latest movements which are in fact very interesting. We hope you find the information helpful and educational. All the best, sincerely, Stefan Kramer Director Markets: Update for the Gold Market As stated in the last two newsletters gold has a strong support line in the area in the range of $1,535 to $1,585 per ounce. Gold declined from the beginning of this week towards the $1,535 mark and wildly bounced back on Friday closing at $1,592. According to Dan Norcini there is resilience in the range of $1,615 to $1,625 if gold closes above $1,600. If gold moves up and closes above $1,600 for a few days and holds that level than this will be very bullish for gold for the rest of year. The technical picture created out of this scenario will indicate this year’s low in gold. As said in the last newsletters this is a great buying opportunity.

This week you’ll find: Markets: Update on Gold and Silver (Page 1 to 3) Radio Interview With Mark and Basil from the Out There Show (Page 3) Knowledge: Academically proven facts about the history of money. (Page 3) Bloomberg Article discussion on ‘The Gold standard’ (Page 5) Story: How to set up broadband in Ireland – A Pharmacy on a Monday and a guy called Pat. (Page 9)



Precious Metal News 20th May 2012 Please see here Dan’s latest chart:

In the coming few weeks gold should hover in the range of $1,580 and $1,615. A note for all buyers in Euro: You don’t see this strong gold price moves on a Euro basis as the Dollar became stronger going to $1.278 from $1.33 a couple of months ago. Right now the focus is in Europe on Spanish banks and Greece. Well, the situation in the US is not any better than in Europe but the focus is right now in Europe and that counts badly for the Euro. That means keep buying. Markets: Update for the Silver Market Silver bottomed out at $26 this week and it’s supposed to go down from the current level at $28.67. But as often said silver is a tiny, highly manipulated market and therefore volatility is higher. As always keep the faith if you have invested and remember to stay in long term. We move from the ‘wait’ from last week into ‘buy’ now.



Precious Metal News 20th May 2012

Radio Interview with Mark and Basil from the Out There Show Please find here a link to a radio interview I did. My interview goes from 17.30mins on and we talk about gold and the markets http://www.youtube.com/watch?v=p2F0H9bvd9o&feature=plcp&context=C4deff2aVDvjVQa1PpcFNgtZJX4bf6TnEO3A8l2eEILjLhVkmcVFM=

Knowledge: Academically proven facts about the history of money. Many of you that bought the ‘Goldbook’ know I'm a fan of monetary history as it shows clearly the cycles and how much we can learn from the past to protect and increase our wealth in today’s climate. It’s quite a statement to say: Every man-made currency failed. Gold has never failed. A couple of years ago the correct info wasn’t spread throughout the internet and it took me two years to research information. Most of the information needed to be researched from books and specialised history books on one decade for a specific country to extract this one monetary info of what happened to the currency say.



Precious Metal News 20th May 2012 And when you come across a book that contains 800 years of financial history over 80 countries that proofs the above statement, I think, wow, this is very cool – good to have this info. The following book, written by two economic professors Carmen M. Reinhart and Kenneth Rogoff is considered to be one out of the five most influential books about money and it is called: This time it’s different – Eight centuries of financial folly. I love the fact that the book is written in a normal language that the

interested reader understands. I highly recommend reading this book. Let’s look at a few immovable facts: Crises happen over the time in every country worldwide and hits emerging markets as well as industrial countries. Therefore are three main criteria:

• Crises occur despite guarantees by governments and bank

• Way out of crisis always: Continued economic recession

• The greater the crisis, or sum, the longer and more difficult

A crisis occurs usually through a bubble in different markets, most likely the housing market. The value of mortgages was in the beginning of 2008 approx. 90% from the US GDP. The current drop in house prices is as double high as in 1929. 28% compared to 14% in the year 1929. Crises are “normal” in paper-money systems.



Precious Metal News 20th May 2012 The five after-effects of crises: 1. Real estate prices: - 35% on average and require six years to recover 2. Shares: - 56% on average and require 3.5 years to recover 3. Economic slump: - 9% for an average of three years 4. Unemployment rate: +9% for an average of four years 5. Public debt rise on average by 86% In the time from 1800 – 2009 occurred: 250 Foreigndebtcrises and 68 Domesticdebtcrises From 1945 to 2007 happened 138 banking crises Conclusion: Historically all crises follow the same pattern over and over again. And the only times when there was no crises was a time when gold and silver were used as money and not being counterfeited. More books and links that help you making sound investment decisions are here on our website: http://www.celticgold.eu/en/learn/books-and-links.html You find more information on the book with links to video interviews here: http://press.princeton.edu/titles/8973.html

Bloomberg Article discussion on ‘The Gold standard’ I would like to discuss two articles here. The both original articles are attached at the end of this newsletter. First the Business Insider published an article on 20th March 2012 titled ‘Ben Bernanke Explains Why The World Will Never See Another Gold Standard’ Here is the link: http://www.businessinsider.com/ben-bernanke-explains-why-well-never-see-another-gold-standard-2012-3#ixzz1uqVTlEdR The second article was published May 2nd on Bloomberg titled ‘Gold Standard for all, from nuts to Paul Krugman’ Here is the link: http://www.bloomberg.com/news/2012-05-02/gold-standard-for-all-from-nuts-to-paul-krugman.html To summarize the two articles: Ben Bernanke explains with three arguments why there can’t be a gold standard - never.

Foreign debt = A country owes money to foreign countries, often in a foreign currency

Domestic debt = A country owes money to its own citizens in its own currency.



Precious Metal News 20th May 2012 First Bernanke explains, there is not enough gold. Second, despite long term stability, on a short term changes in gold supply cause volatility in product prices. Third, it is bad to consequently link a currency to gold and that was the reason why the Great Depression took so long to recover from. In the Bloomberg article the focus is on growth during the time of the pure gold standard from 1870 to 1913, then the period of a gold exchange standard (Bretton Woods) 1948 to 1972. The period of flexible exchange rates was then from 1972 to 2008. Author Amity Shlaes first pushes against the gold standard as ‘a terrible idea’. She writes that economists will marginalize you and consider you a weirdo if you even raise the topic of monetary policy in relation to gold. She reports the results of the growth from the three time frames with the latest Bank of England report. The Bank of England researchers Bush, Farrant and Wright published that a gold standard generally stabilizes banks and the growth during the gold exchange standard was the highest with 2.8% average annual growth. On page two of the article Amity Shlaes writes: ‘The main sacrifice in gold regimes that the authors identify is that governments lose authority to micromanage domestic economies. But given governments’ track records, that may not be such a bad thing, either.’ It is nice to see the Bloomberg article talks about the latest Bank of England report. So the Central Bankers must know by now. Will we return to a gold standard? I don’t think so as the Central Banks don’t have any gold left. The official statistics lie. The only way to find out would be to walk in and count what is there and compare the serial numbers to make sure this gold has not being lent out. The strongest argument against a Gold Standard is ‘There is not enough gold’. Let’s discuss this in a bit more depth – A price is a thought form. It is created by the human mind. If you have read the last article on ‘Interest’ you know that prices are already artificially higher than they have to be. Cut out 85% of the gas prices or reduce general prices by 70% and you come closer to what is normal. Gold is debt free which would bring prices down substantially. The world’s GDP is $70 trillion, $70,000,000,000,000. If you cut out all the unnecessary interest and taxes by 80% you come down to a real GDP of $ 14 trillion.



Precious Metal News 20th May 2012 There are 170,000 tons of total gold mined in this world. 1 ton is 1,000 kilo. One kilo of gold as of per 14th May 2012 costs $50,042 ($1,556 per Troy Ounce). 170,000,000 kilo of gold (170 million kilo) is actually worth in US$ 8,5 trillion. Conclusion: There is enough gold. But it’s not in Europe or North America. Technically not all the mined gold will be able to back a currency as much of the gold is used as jewellery. But remember the countries that have most of the gold often use jewellery gold as money, for example India. So the above conclusion may proof to be accurate. But you can easily divide any amount of gold into equal shares. Meaning you can divide a coin into four quarters or ten tenths. The truth is: The Western Economies simply don’t have any significant amounts of gold left. Bernanke should have said: There is not enough gold in our vaults anymore. The gold was sold at an average of $200 an ounce from 1944 on. It’s most important that you and your friends own gold. When the paper currency system fails, you can buy a town and lands and have it declared as a separate country if you wish. Or have your wife go for shopping and she comes back and says: ‘Hello, Darling I just bought High Street this morning – it was a bargain.’

How to set up your internet connection in rural Ireland - – A Pharmacy on a Monday and a guy called Pat. I've moved houses and settled in the beautiful west of Ireland. When I arrived, I needed to connect to the internet. As this is a rural area I knew Eircom, the official phone provider would not be able to provide internet. So what to do? Ask the locals. I drove into the next town and went to an 'Expert' electronics shop and thought this would be the only logical option. Walking into the shop, I was disturbing two guys on their Monday morning chat. The guys stopped immediately talking as I walked in and asked me 'Can I help you there?' It wasn't the usual very friendly helpful question it was more on the line: 'What do you want... I want to chat to my friend here.' So I asked what would be the best way to connect to the internet. The guy said: Go up the road to O'SH??? they have it sorted for you. Ok, thanks, man. And I wandered off.



Precious Metal News 20th May 2012 I went up the road not really knowing what I was looking for as there was no proper shop with a sign 'Internet here', or 'Get broadband now'. I walked past a pharmacy called ‘Sheahans’ and I thought, ok, that sounds like the name the guy in the expert shop said. But it's rather unusual to pop into a pharmacy and sort out your broadband connection.

Sheahans Pharmacy – The place to sort out your internet and ask for Pats number.

The sign said: Pharmacy and Digital Photos. A bit unusual but nonetheless I went in… ... and started to ask the staff about broadband internet. Apologising for the fact that I was knowingly being in a pharmacy and am aware that the only cure I'm looking for an internet connection. The pharmacist was very cool and very friendly, telling me all about the local broadband options and what to do best. He gave me a note with the mobile number of Pat. Pat’s your man, he said and the guy who runs the wireless broadband network which is the only real option in this area. I asked him why he knew so much about the broadband here and he said he has on of the masts of this network on his property. What a coincidence – a true story I swear.



Precious Metal News 20th May 2012

CELTICGOLD: Our take on the financial markets We at CELTICGOLD believe that a stratospheric rise of gold and silver happens in the next few years. Government bailouts, billions and trillions of dollars and euros of budget deficits at the expense of the taxpayer and massive money printing by central banks will result in a collapse of the major currencies. We at CELTICGOLD believe that one of the few ways to protect your wealth from the coming economic chaos is through physical ownership of the precious metals. We at CELTICGOLD further believe that one can only make sound money decisions with a basic knowledge of how the current monetary system works. We invite everyone to gain knowledge and build a true view in order to make investment decisions.

Preview for next newsletter: Article discussion ‘The Truth about Gold’ on Business Insider Story: Balancing the egg is like balancing finances

Gold Standard for All, From Nuts to Paul KrugmanBy Amity Shlaes - May 2, 2012

Nut cases. That’s what they are. And if you take an interest in them, you are a nut case, too.

That’s the consensus among credentialed economists who describe advocates of a return to the

monetary regime known as the gold standard. In fact, the economic pack will marginalize you

as a weirdo faster than you can say “Jacques Rueff,” if you even raise the topic of monetary

policy in relation to gold.

An example of such marginalizing appears in a recent issue of the Atlantic magazine. Author

Adam Ozimek lists four rules upon which economists overwhelmingly agree. Right away, that

puts readers on guard; they don’t want to be the only one to disagree with eminences.

The first rule Ozimek offers is that free trade benefits economies. So obvious. That makes the

penalty for disagreement higher. Then you read down to the final principle: “The gold standard

is a terrible idea.” By putting the proposition in such strong terms, the author raises the penalty

for disagreeing. If you don’t subscribe to this view, you risk both being classed as the kind of

genuine nut case who believes in protectionism, and enduring the disdain of other economists -

- “all economists,” as the Atlantic headline writer summarized it.

But “all economists” is not the same as “all economies.” The record of gold’s performance in all

economies over the past century is not all “terrible.” Especially not in relation to areas that

concern us today: growth, inflation or the frequency of bank crises. The problem here may lie

not with the gold bugs but with those who work so hard to isolate them.

Gold’s Real Record

Conveniently enough, the gold record happens to have been assembled recently by a highly

credentialed team at the Bank of England. In a December 2011 bank report, the authors Oliver

Bush, Katie Farrant and Michelle Wright review three eras: the period of a traditional gold

standard (1870-1913); the period of a gold-standard variant, the Bretton Woods gold-exchange

standard (1948 to 1972); and a period of flexible exchange rates (1972-2008).

The report then looks at annual real growth per capita worldwide, over many nations. Such

growth, they find, was stronger in the recent non-gold-standard modern period, averaging an

annual increase of 1.8 percent per capita, than in the classical gold-standard period before 1913,

Seite 1 von 3Gold Standard for All, From Nuts to Paul Krugman - Bloomberg

14.05.2012http://www.bloomberg.com/news/print/2012-05-02/gold-standard-for-all-from-nuts-to...

when real per- capita gross domestic product increased 1.3 percent annually. Give a point to the

gold disdainers.

But the authors also find that in the gold exchange standard years of 1948 to 1972 the world

averaged annual per- capita growth of 2.8 percent, higher than the recent gold-free era. The

gold exchange standard is a variant of the gold standard. That outcome doesn’t tell you we must

go back to the gold exchange standard yesterday. But it does suggest that figuring out how the

standard worked might prove a worthy, or at least not a ridiculous, endeavor.

Gold shone in other ways. In a gold-standard regime, money is backed by gold, so it’s

impossible, or at least more difficult, for governments to inflate. Naturally the gold standard

and Bretton Woods years therefore enjoyed lower rates of inflation compared with the most

recent era. The gold standard endures a reputation for causing more banking crises than other

monetary regimes. The Bank of England paper suggests gold stabilizes banks: The incidence of

banking crises in the non-gold-standard period is higher than the incidence in the two gold

periods.

“Overall the gold standard appeared to perform reasonably well against its financial stability

and allocative efficiency objectives,” wrote Bush, Farrant and Wright.

Stable Markets

Markets and countries enjoyed relative stability in gold- standard years, and capital in those

years flowed to worthy growth-generating projects. The main sacrifice in gold regimes that the

authors identify is that governments lose authority to micromanage domestic economies. But

given governments’ records, that may not be such a bad thing, either.

It all suggests that contempt for old gold hands such as Congressman Ron Paul of Texas might

not be warranted. And that it might be interesting to peruse the numerous gold-related

currency plans outside the door of the academic salon. Plenty of people, many former bankers,

think it is time to pass laws returning the U.S. to some version, strong or weak, of the gold

standard.

Lewis Lehrman, financier and founder of the Gilder-Lehrman Institute, which focuses on

history, recently published a plan to take the world back to gold, “The True Gold Standard.”

Charles Kadlec, another former Wall Streeter, co-wrote his own proposal, “The 21st Century

Gold Standard,” with Ralph Benko. The case for gold as a mandatory metric for the Federal

Reserve in setting interest rates is made in new legislation offered by Congressman Kevin

Brady, another Republican from Texas. Dozens of state legislatures are introducing their own

gold- or silver-related currency legislation.

One reason people slap the nut-case label on others with impunity is that for the past 30 or 40

years most economic education has systematically excluded the gold standard and its



exponents from the classroom. It’s easy to call something your professors never respected the

work of a nut case. But it’s also worthwhile to ask why the professors white out the gold

standard from the books. Perhaps it is because the systems they raved about in their

dissertations, systems of flexible exchange rates, subsequently underperformed.

This inconsistency in their own modeling is of course hard to acknowledge. Recently Bloomberg

Television drew enormous attention when co-anchor Trish Regan moderated a debate between

Ron Paul and Paul Krugman, the Nobel prize-winning New York Times columnist.

Krugman’s Nostalgia

Krugman sought to hold the middle ground, noting that all he sought, through his

recommendation that federal debt rise to 130 percent of gross domestic product, was a return

to the kind of America in which his parents lived. The professor treated the congressman’s

remarks as unscholarly; in a blog post afterward, Krugman wrote “everything Paul said about

growth after World War II was wrong.”

But Krugman too has some sorting through to do. The years when his parents lived were gold

years, the Bretton Woods gold exchange standard, a time when the federal government, except

in world war, would never had considered raising debt to 130 percent of the economy, as

Krugman suggested in the debate.

If we are going to speak of consensus, let’s not forget one that is truly universal: Our economic

system stands a good chance of breakdown in coming years. The only way to limit damage from

such a breakdown is to ready ourselves to choose other models by learning about them now.

Not to do so would be nuts.

(Amity Shlaes is a Bloomberg View columnist and the director of the Four Percent Growth

Project at the Bush Institute. The opinions expressed are her own.)

Read more opinion online from Bloomberg View.

Today’s highlights: the View editors on what’s missing from the U.S.-Afghanistan pact and

better ways to fix the farm bill; Ezra Klein on how the U.S. isn’t like Greece; Caroline Baum on

lack of alternatives to austerity; Ray Ball on pitfalls of mark-to-market accounting; Josh Barro

on new arguments for a U.S. value-added tax.

To contact the writer of this article: Amity Shlaes at [email protected].

To contact the editor responsible for this article: Katy Roberts at [email protected].

®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.



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TheDailyGold.com

Ben Bernanke Explains Why The World Will Never See Another

Gold Standard

Simone Foxman | Mar. 20, 2012, 2:22 PM | 5,801 | 39

The most controversial questions posed to Fed Chairman Ben Bernanke at his lecture to George

Washington University students today focused on one topic: gold.

While acknowledging the long history of the gold standard and its

importance in the development of central banking, Ben Bernanke

made crystal clear that we're never going back to the gold standard.

He explained that the argument supporting the gold standard has two

parts: 1) the "desire to maintain the value of the dollar"—implying a

"desire to have very low price stability, and 2) an aversion to allowing

"the central bank to respond with monetary policy to booms and

busts," explaining that "the advocates of the gold standard don't want

to give the central bank that power."

But regardless of the impetus for these arguments, he explains, a return to the gold standard now "would not be practical

for monetary reasons or policy reasons":

Bernanke pointed out various reasons that there's simply "not enough gold" to sustain today's global economy. First,

extracting gold from the ground is a costly and uncertain endeavor. There is a limited amount of gold in the world, and it

just doesn't make sense in the modern world for central or commercial banks store large amounts of gold in vaults. The

size of the gold supply and inconvenience of the metal renders it too impractical to keep up with the pace of global

commerce.

Second, while advocates of the gold standard are right that prices remain stable in the long-term, "on a year to year

basis, that's not true." Limited supplies of gold—or changes to the supply of gold—cause prices of goods to be volatile in

the short-term, regardless of long-term price stability.

In a rebuttal to the second part of that argument, Bernanke explained, "the commitment to the gold standard is that no

matter how bad [the economy gets] we're going to stick to the gold standard."

He pointed to a substantial tome of economic research finding that the gold standard aggravated the Great Depression,

saying "the gold standard was one of the main reasons the Great Depression was so bad and so long." The inability

of the Federal Reserve to control monetary policy—open up credit, address unemployment, and drive business demand—

left it with much less power to avert or mitigate the decade-long crisis. Bernanke added that countries not tied to the gold

standard also had a much easier time getting out of the Depression. In the modern world, he said, "we've seen that

problem with various kinds of fixed exchange rates."

Ultimately, he concluded that the gold standard hasn't really worked since the end of WWI. "Economic historians argue that

after World War I the labor movements became much stronger," so we consequently saw, "much more attention to

employment and business cycles." That prevents our economies from suffering exaggerated boom and bust cycles, and

allowed the Fed to mitigate the effects of the recent financial crisis.

Sorry, Ron Paul. We think Bernanke just destroyed your position.

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Tags: Ben Bernanke, Federal Reserve, Monetary Policy, Central Banks, Gold Standard, Great Depression | Get Alerts for these topics »

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