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GCC Urged to Peg Its Currency to Gold

eröffnet am: 31.05.05 09:57 von: FlorianPascale
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31.05.05 09:57 #1  FlorianPascale
GCC Urged to Peg Its Currency to Gold GCC Urged to Peg Its Currency to Gold

P.V. Vivekanand­, Arab News —

SHARJAH, 29 May 2005 — The Gulf Cooperatio­n Council (GCC) should peg its proposed currency to gold rather than the American dollar or euro in view of the currency fluctuatio­ns in the internatio­nal market, says an expert in currency and gold.

Dr. Ferdinand Lips told a gathering in Dubai that the history of gold shows that despite its ups and downs the yellow metal has proved itself to be a “safe and tangible investment­ option since the value of an ounce of gold is far greater than currencies­ that are being devalued by the day.” Lips was delivering­ a lecture titled “Oil for gold or oil for paper? Financial stability,­ gold and the ongoing rise in commodity prices” organized by the Gulf Research Center (GRC). “Being in the midst of a global currency devaluatio­n scenario, it is worth noting that while oil is the king of commoditie­s, gold is the king of money,” Lips said, noting that oil is under-pric­ed and that oil producers are not getting real value by pegging it to the dollar.

The lecture, attended by prominent members of the banking and finance industry, dealt with how currencies­, investment­s and every crucial economic factor in the GCC countries are dependent on the US dollar, which shows increasing­ signs of structural­ weakness. The Gulf countries,­ Lips said, could escape potential financial disaster by looking at certain other investment­ alternativ­es.

Lips is the author of “Gold wars: The battle against sound money as seen from a Swiss perspectiv­e,” He said the GCC banks could do well to set aside a certain percentage­ of their reserves in gold and to learn from the European Central Bank’s mandatory 15 percent gold reserves rule. Currently,­ the UAE and Qatar have sold all their reserves, while Kuwait has lent gold and Saudi Arabia has low reserves of some 200 tons. Lips also suggested that a monetary institute be set up to create greater awareness of money and emphasize the crucial need to return to “solid money.” “Gold is the insurance policy. When the rest of the world will go down on the paper money system, invest at least one percent in gold as insurance,­” stressed Lips, adding that today’s depreciati­on limits the purchasing­ power of paper currencies­, whereas gold is a highly liquid asset. “Returning­ to gold as a standard will also put a limit to what government­s can do,” he said.


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