China approves gold fund of funds

HONG KONG (MarketWatch) — China’s securities regulators have given the go ahead for a mutual fund to invest in foreign exchange-traded gold funds, potentially tapping interest among mainland China investors who face negative real interest rates on their bank deposits and want to hedge against inflation.

Lion Fund Management Co. said they received approval from the China Securities Regulatory Commission on Monday to proceed with the fund, the first of its kind for mainland China, according to a statement posted on the Beijing-based fund provider’s website.

The fund has been granted permission to invest outside of China under the Qualified Domestic Institutional Investor (QDII), the fund managers said in the statement.

The fund will invest in gold-backed exchange-traded funds operated outside of China, though the fund provider’s statement didn’t specify which ETFs, or which markets, it was considering.

Hong Kong launched its own gold-ETF earlier this month, back by bullion held at a government-run depository at the city’s international airport. See report on Hong Kong’s first locally backed gold ETF.

The QDII scheme enables financial institutions to invest in overseas markets and is widely seen as a vehicle to allow capital outflows from China at a time when the currency is not freely traded, prohibiting China’s vast pool of savers from investing abroad.

One-year yuan deposits at the Bank of China Ltd., for example, fetch 2.5%, with the People’s Bank of China having last hiked its policy rate by a quarter-point in October.

However, cash kept in these savings accounts are actually losing purchasing power at a dramatic rate, as with consumer prices in October 4.4% higher than they were a year earlier, and with the inflation rate expected to hit 5% in December, according to estimates by Bank of America- Merrill Lynch.

The state-run China Daily said Tuesday that the new gold fund was the first of it its kind to be available to mainland investors.

More funds could be on the way soon, as several other fund providers have pending applications for similar products, seeking to tap rising interest among mainland Chinese investors for precious metals, the report said.

By Chris Oliver, MarketWatch

Gold bounces from lows

Investors also closely watched an escalating tension in the Korean peninsula, although dealers said there were no signs of buying related to the crisis sparked by North Korea's artillery attack on a South Korean island.

Spot gold added 73 cents to $1,362.46 an ounce by 0628 GMT, having hit an intraday low at around $1,353 - not far from a low around $1,350 seen last week. Bullion was below a lifetime high around $1,424 struck in early November. 

According to a Reuters market analyst, Wang Tao, spot gold may extend its fall towards $1,329.45 per ounce as a big downward wave "C" is progressing. 

"For today, I would look at support for gold at about $1,350. However, I think if we see a breach of this level, then we could see gold retreating further," said Ong Yi Ling, investment analyst at Phillip Futures in Singapore. 

"For the week ahead, I will also expect gold prices to pare some of its gains that was accumulated earlier last week. Currently the gold and the dollar is having a pretty strong
inverse relationship."  

U.S. gold futures hardly moved at $1,362.1 an ounce. 

The euro slipped to its lowest in two months against the dollar as the market looked past a rescue package for Ireland to other euro zone economies and a euro zone crisis resolution
mechanism. 

EU finance ministers endorsed an 85 billion-euro ($115 billion) loan package to help Dublin cover bad bank debts and bridge a huge budget deficit, and approved outlines of a permanent crisis-resolution system which could make private bond holders share the burden of restructuring sovereign debt bought after 2013.  

"The dollar is so strong, but we see buying on the physical side when trading started in Asia. That helps the market a bit. Some Chinese guys may be buying a bit," a dealer in Hong Kong said.  

"I would think $1,350 is a good support for gold, but I don't think we will go down too much even if we break that level." 

Silver also bounced on firmer gold while platinum palladium barely moved. 

The world's largest silver-backed exchange-traded fund, iShares Silver Trust , said its holdings slipped to 10,711.23 tonnes by Nov. 26 from an all-time high of 10,893.68
tonnes by Nov 23.  

In other markets, the Nikkei hit a five-month closing high as the yen softened against the dollar, while oil rose past $84 after the Irish deal.

Source : http://neftegaz.ru

Gold production in Australia rises 22% in third quarter

Australian gold production rose 22 percent to 67 tonnes in the third quarter of 2010 as miners cashed in on strong bullion prices, research released on Sunday shows.

Surbiton Associates, based in Melbourne, which keeps a tally of Australian gold output said "we are now seeing the effects of re-evaluation of known deposits and the bringing of old mines back into production, as well as some new finds, so output is increasing."

Showing the previous quarter was no flash in the pan, quarterly production of 67 tonnes was down only one third of a tonne on the June quarter, when gold production rose to its highest level in six-and-a-half years.

Strength in Australia's currency was taking some of the shine off rising world bullion prices for the nation's miners as they dig deeper for more nuggets, Sandra Close of Surbiton said.

The current Australian dollar-denominated gold price of A$1,409 per ounce is about A$150 an ounce below the all-time high of A$1,547 ounce reached in February 2009.

The result was in line with the year's upward trend in gold production, as established producers increased output, newly commissioned mines were ramped up and new or `recycled' operations came on stream

AngloGold Ashanti Ltd. this month approved development of the A$600 million ($583 million) Tropicana gold project in Western Australia.

December gold futures on the Comex division of the New York Mercantile Exchange rose $10.30, or 0.7%, to $1,362.60 per ounce. This occurred even though the dollar on Friday climbed to its strongest level against the euro in two months. Gold was even higher until Friday, when gains in the greenback exerted some pressure on commodities collectively.

Renewed hostilities on the Korean Peninsula and the ongoing European sovereign-debt saga are likely to remain in the forefront next week, and if so, could be supportive for gold.

Monday, November 29, 2010 by Proactive Investors

Gold, base metals may rise on growing demand

G Chandrashekhar

Mumbai, Nov 28

Re-emergence of sovereign debt concerns in southern Europe, strengthening dollar, quantitative easing II, continued easy money policy in the US and tightening monetary policy in major emerging markets, China's fight to contain commodity inflation – the list of factors that affect commodity markets seems rather long.

For commodity producers, QE II has provided such a tonic boost that the recent negative developments such as sovereign debt issue have failed to dampen the sentiment. Investor interest remains largely intact. Globally, in the commodity market, assets under management have reached a record $340 billion.

The emerging markets, largely represented by Asia covering China and India, are currently driving global commodity demand. In particular, industrial metals and in energy products coal are set to enjoy rising demand.

In many cases, despite road bumps, fundamentals are seen improving. Crude and copper provide a promising picture. However, if the southern European sovereign debt crisis takes turn for the worse, all bets will be off. Gold will continue to be the safe-haven metal.

The dollar appears strong relative to the euro not because of the former's fundamental merit, but simply because the latter is under strain. How the euro/dollar relationship pans put over the coming months needs to be watched closely.

Gold: The metal continues to enjoy strong investor interest despite a firming dollar. In addition to liberal US monetary policy, return of sovereign debt uncertainty in Europe has helped the precious metal stay at elevated levels, although from time to corrections are seen. Week-on-week, the metal was up 0.9 per cent last week.

In London on Friday, the PM Fix for gold was at $1,355 an ounce, down 1.3 per cent from the previous days. Silver moved down sharply losing 3 percent from the previous day to Friday AM Fix at $26.62/oz. The precious metal is likely to trade range-bound in the coming days as it looks for direction from currency markets and geopolitical developments.

Experts are near-unanimous that gold should continue to rise in 2011. However, whether it would outperform other commodities will depend on currency factor as there are competing concerns on the dollar and Euro on the risks of investing in gold. At least in the short-run, the dollar is likely to retain the bulk of its recent strength although it can weaken against the euro from time to time. Long-term investor interest remains stable.

Base metals: The complex continues to be impacted by macroeconomic data, growth concerns and monetary policy in major economies. Average prices of most base metals are likely to be higher in the first quarter of 2011, with copper in particular showing robust upside potential.

Crude: Despite considerably constructive fundamentals, the market is still concerned about revival of European sovereign debt concerns. Flow of positive macro-data will boost prices. Clearly, crude is expected to stay above $80 a barrel unless the global growth or debt concerns take a turn for the worse. Major emerging markets are seen driving growth in consumption. Crude is likely to trade in $80-90 a barrel range for some time.

Source : http://www.thehindubusinessline.com

Gold's value as a currency reserve

Gold is still considered an important reserve asset by most central banks, even though it is no longer the center of the international financial system. The most important reason is that gold is the only reserve asset that is no one's liability. This means that, unlike a currency, the value of gold cannot be affected by the economic policies of the issuing country or undermined by inflation in that country.


Gold has a track record of holding its real value over the centuries. Since gold is no-one's liability, it can not be repudiated and holding it is a safeguard against potential unforeseen crises. Gold also brings much needed diversity to a central bank portfolio due to its low correlation with key currencies and its strong inverse correlation with the US dollar. The central bank of Argentina, for example, when diversifying a portion of its reserves away from 100% reliance on the US dollar in 2004, included gold in its purchases.


Gold accounts for 9% of reserves held by central banks (valued at market prices).

Source : Responsible Gold

Gold's value as an effective portfolio diversifier

Gold is a highly effective portfolio diversifier due to its low to negative correlation with all major asset classes. Over the last 20 years, gold has shown no statistically significant correlation with equities. That applies not just to domestic US equities, but also to international equities, including those traded in London, Tokyo, Frankfurt, and so on.
Gold has also shown no statistically significant correlation with other mainstream asset classes, such as US Government bonds, Treasury Bills, and equity real estate investment trusts. The fundamental reason for this lack of correlation is that the factors driving the gold price are not the same as the factors that determine the returns on other assets. Obviously, there are some economic factors that influence the performance of all investments. But equally obviously, changes in gold supply and demand have no influence over the other asset classes.
As a rule, gold shows no statistically significant correlations with mainstream asset classes. However, there is evidence that when equities are under stress, in other words when shares are falling rapidly in value, an inverse correlation can develop between gold and equities. And this aspect of gold's behavior runs directly counter to the way other asset classes perform in stress situations.

Source: Responsible Gold

Gold as a preserver of value (inflation hedge, safe haven, etc.)

Gold is an effective hedge against inflation. In addition, gold is inversely correlated to the US dollar, making it a good currency hedge. As an asset class, gold has all the advantages of being universally regarded as a currency, without what are all too often the disadvantages of being subject to the economic and monetary policies of one particular country's government.


Source: Responsible Gold

The Currency War

1. Malaysians, including Malaysian monetary authorities seem quite happy over the appreciation of the Ringgit against the US Dollar. We think that when our currency strengthens it must be because our economy is strong, Therefore we are doing well.

2. But are we doing well? Is it the Ringgit which is appreciating or is it the US Dollar which is devaluing?

3. Actually it is the US Dollar which is devaluing. It is devaluing against most other currencies, especially against China's currency.

4. Why is the dollar devaluing? Could it be due to the currency traders selling dollars? Could it be because the balance of payment is not in US favour? 

5. Martin Wolf of the Financial Times, an expert on money have this to say. There is a global currency battle going on. "To put it crudely," he says, "the US wants to inflate the rest of the world, while the latter is trying to deflate the US. The US must win, since it has infinite ammunition; there is no limit to the dollars the Federal Reserve can create. What needs to be discussed is the terms of the world's surrender; the needed changes in nominal exchange rates and domestic policies around the world.

6. Our reserves are represented by the US Dollar, gold and other currencies which we keep in order to back the value of our Ringgit, The US clearly does not have to hold foreign currencies to back the Dollar. All the US has to is to create (print) money.

7. When we buy US Dollar bonds, we are in fact lending US Dollars to the US. When we redeem the bonds all the US has to do is to print more US Dollars to pay us.

8. How nice it would be if we can pay all our debts by just printing money.

9. There is something fishy going on and the fishy smell is very strong in the US. "Poor" China with 2.5 trillion devalued dollars in its reserve. Wonder how much Bank Negara has?

10. In the face of Governments devaluing their currencies in a currency war, what should Malaysia do? Keep the float or control? When we controlled our currency in 1998 we were called pariahs whose knowledge about finance could be wriiten on the back of a postage stamp. Now it seems many nations are using their magnifying glasses to read what is written on the back of the postage stamps.

source: http://chedet.co.cc/chedetblog/

Dr. Mahathir Mohamad

Putrajaya, Malaysia
Prime Minister of Malaysia
1981 - 2003

Kelantan Government intends to appoint a representative for the marketing of Islamic currency in China

KOTA BARU, 10 Nov: Kelantan Government intends to appoint a representative (wakalah) for the marketing of Islamic currency in China, said Chairman of the Economic Planning, Finance and Social Welfare, Datuk Husam Musa.
He said efforts were made to expand the use of Dinar and Dirham to the world.

He said the Dinar and Dirham is widely used in Indonesia is better known as the precious metal.

Similarly, he Dinar used in Granada, Spain and the United States in the form of gold coins.

"In the United States gold coin of equal weight 22 carat gold standard that was used in the international trading system.
"The standard used was similar to that used by the government Dinar Islamic Caliphate Othamiah," he said answering a question Hanifa Ahmad (Pas-Pengkalan Pasir) Dun conference today.

He also recommended the payment of domestic deposits of Indonesia used the dinar against the Rupiah in use today.
Chairman of the Committee of Women, Family and Health, Ubaidah Wan Omar said, so now more than 2,000 women were trained in various skills at the Center for Women Kelantan (PPWK).

Field of the skills taught, including sewing, embroidery and cooking.
"In the past eight women studied in the field of embroidery Bukit Tinggi, Indonesia, and now they are teaching skills to the women here," he answered questions Zulkefli Mamat (PAS-Pulai partiality).

p / s: call / sms 013-2575747 (shah) for reservations dinars and gold bars.Price is cheap dri d suggest FGAM asking price. http://www.fgjam.org.my/

History Of Gold Dinar





 In the beginning the Muslims used gold and silver by weight and the dinar and dirham that they used were made by the Persians.



Silver coin of Sasanian Yezdigird III 

Picture: Persian gold dinar Yazdgard I (399 – 420 AD)



The first dated coins that can be assigned to the Muslims are copies of silver dirham of the Sasanian Yezdigird III, struck during the Khalifate of Uthman, radiallahu anhu. These coins differ from the original ones in that an Arabic inscription is found in the obverse margins, normally reading "in the Name of Allah".
Since then the writing in Arabic of the Name of Allah and parts of Qur'an on the coins became a custom in all minting made by Muslims. 
Under what was known as the coin standard of the Khalif Umar Ibn al-Khattab, the weight of 10 dirham was equivalent to 7 dinars (mithqals).
p/s: Mithqal is a unit of mass equal to 4.25 grams and mostly used for precious metals,
Abd al-Malik ibn Marwan (646AD - 705AD) was the fifth caliph of the Umayyads, which was the ruling dynasty that built a huge medieval Islamic empire stretching west across North Africa into Spain and as Far East as Pakistan. Whilst the Anglo-Saxon kingdoms of England lacked a written language, Abd al-Malik created the world’s first widespread uniform currency - the dinar.



Gold_dinar of Abd al-Malik ibn Marwan





Although the new gold dinars and silver dirham’s were very similar in size and weight to the coins they replaced, their design for the day was completely revolutionary. Come 697AD the caliph had abandoned portraits of rulers or emblems of cities to adorn his coins in favor of simplistic inscriptions of verses from Al-Quran.
Al-Malik then decreed that the new currency should be the only one to be used throughout the entire empire, and anyone who failed to hand in their old coins for melting down and re-minting faced the death penalty.
This was the very first time that a state had defined a stable currency with such precision, producing coins in mints from as far afield as Spain to Tunisia, Azerbaijan to Afghanistan, which then for the ruler had the most advantageous position of strength since this allowed him to unify the tax systems across all the provinces.
The coins were also the very first to be marked with their individual year of issue - a practice elsewhere which became not widespread until the 15th century.
A statement of faith on the coins of Abd al-Malik states, 
‘There is no god but Allah; Muhammad is His messenger.’

In the next year he ordered the dirham’s to be minted in all the regions of the Dar-al-Islam. He ordered that the coins be stamped with the sentence: "Allah is Unique, Allah is Eternal". He ordered the removal of human figures and animals from the coins and that they be replaced with letters.
Gold and silver coins remained official currency until the fall of the Caliphate. Since then, dozens of different paper currencies were made in each of the new post-colonial national states created from the dismemberment of Dar al-Islam. This command was then carried on throughout all the history of Islam.
The dinar and the dirham were both round, and the writing was stamped in concentric circles. Typically on one side it was written the "tahlil" and the "tahmid", that is, "la ilaha illah Allah" and "alhamdulillah"; and on the other side was written the name of the Amir and the date. Later on it became common to introduce the blessings on the Prophet, salallahu alayhi wa salem, and sometimes, ayats of the Qur'an.
History has demonstrated repeatedly that paper money has been a permanent instrument of default and reducing the wealth of the Muslims. In addition, Islamic Law does not permit the use of a promise of payment as a medium of exchange.

Resources:
1. http://www.islamic-awareness.org/History/Islam/Coins/ 
2. http://en.wikipedia.org/wiki/Islamic_gold_dinar 
3. http://www.321gold.com/info/gold_dinar.html 
4. http://zakat.wordpress.com/history-of-the-gold-dinar/ 

5. http://www.coinlink.com/News/world-coins/dinar-coins-of-the-ancient-world/  

Credit for Public Dinar

What is Dinar?

Basically, Dinar is a gold coin.
The World Islamic Trading Organisation following the standard of caliph Umar Ibn al-Khattab, established the following standard:
DINAR Weight: 4.25 grams
Alloy: 22 carats (0.916) Gold

According to Islamic Law... 

The Islamic gold dinar (sometimes referred as Islamic dinar or Gold dinar) is a bullion gold coin made from 4.25 grams of 22-carat gold with historical Islamic significance.

Gold dinar may also refer to various historic gold coins denominated in dinars.

The Islamic Dirham is a specific weight of pure silver equivalent to 3.0 grams. 

Umar Ibn al-Khattab established the known standard relationship between them based on their weights: "7 dinars must be equivalent to 10 dirhams." 

"The Revelation undertook to mention them and attached many judgements to them, for example zakat, marriage, and hudud, etc., therefore within the Revelation they have to have a reality and specific measure for assessment [of zakat, etc.] upon which its judgements may be based rather than on the non-shari'i [other coins]. 

Know that there is consensus [ijma] since the beginning of Islam and the age of the Companions and the Followers that the dirham of the shari'ah is that of which ten weigh seven mithqals [weight of the dinar] of gold. . . The weight of a mithqal of gold is seventy-two grains of barley, so that the dirham which is seven-tenths of it is fifty and two-fifths grains. All these measurements are firmly established by consensus." Ibn Khaldun, Al-Muqaddimah

My First Purchase Of Gold And Became Authorised Dealer

Assalamualaikum. Alhamdulillah. After almost a year I was watching the gold price in world market, now that I am able to have my own gold. with my RM20K  capital I have made a purchase of gold with the publicgold  and register as a dealer. For my first order dated 24/10/2010 , i buy 2 of 1 dinar, 4 of 20g gold bar and 1 of 50g gold bar. At that time the cost of this item for 1 dinar only RM 620, 20g RM3002, 50g RM7470. Today look at the price chart hows the price off each item. U think about it...

Gold Is Money

Global Currency

All of today currencies are fiat currencies. Fiat currency is defines as not represent anything tangible but are only worth something due to government decree (namely legal tender laws). In the book "Principles of Economics" written by N. Gregory mention that Fiat money, such as paper dollars, is money without intrinsic value: It would be worthless if it were not used as money."

"We have gold because we cannot trust Governments."

-          President Herbert Hoover

On the other hand, gold are the currency which not created and controlled by governments. Gold was once the main currency in most of Europe, Asia and Americans for the past few thousand years which up to 1971. Gold which evolved independently as money in the word's main civilization due to the following reasons:

1.  Rare

The amount of mined gold has increased only slowly, rarely more than 2% per year. 

2. Durability
Gold won't rot, break, crumble, decay, corrode or tarnish. Gold is unaffected by air, water, and even most acids.

3.  Compact

If all the gold ever mined were made into a single cube. Its edge would be 20 meters. Not quite enough to cover a single tennis court. (http:goldnews.bullionvault.com/node/259/print)

4.  Divisibility

Easily reshape it, flatten it, and divide it into tiny pieces.

"The modern mind dislikes gold because it blurts out unpleasant truths."

-          Joseph Schumpeter (1883 - 1950)

From 1934 to 1971, government currencies were backed by gold. This defined which at any time, you able to exchange a unit of any of the world's main government currencies for a prescribed amount of gold. For an example, you could exchange 35 US dollar for one ounce of gold. But in 1971, President Richard Nixon abandoned the Bretton Woods Agreement, devalued the dollar, raised the fixed price of gold fictitiously to $37.50, and slammed shut the gold window to stop an international run on the U.S. gold reserve. This is when the fiat currency started.

Examples of other fiat currencies include:

1.   Chinese bark currency (notes printed on tree bark, as recorded by Marco Polo), 1260 - 1360. One of the earliest fiat currencies, ended in hyperinflation.

2.   Banque Royale Notes in France, the ‘Mississippi system' (designed by John Law). Issued in 1716. Collapsed worth nothing by 1720.

3.   Continental bills, printed by the US Congress during the American Revolution. Began issue in 1775, shrank to 1/40 of their original value by 1780. Hence the saying ‘not worth a Continental'.

4.   Assignats in France during the French Revolution. Issued 1790-1796, collapsed to 1/600 of their original value by 1797.

5.   Marks in Weimar Germany, after WWI. Issued from 1919 to 1924, collapsed to three trillionths of their original value. This was the currency that was carried in wheelbarrows towards the end. 

Hence from an historical perspective, the only question is how quickly the US dollar loses value, not whether it will continue to lose value. Until the 1971, a US dollar was worth 1/35 of an ounce of gold. But right till today the gold is about 1/1000 of an ounce of gold (http://www.gold-eagle.com/editorials_04/evans061304.html)

Another example, in Vietnam, gold plays an important role in the purchase of a home. From the moment a buyer and seller agree on a price to the day the paperwork and sale are completed takes a month or longer. During this time, the value of the Vietnamese currency may have fallen sharply, as the current rate of currency depreciation in that country is very rapid. Accordingly, the buyer will arrange financing with a bank not in terms of the Vietnamese dong, but in gold, which holds its value in terms of purchasing power. This arrangement means the buyer will still have enough to pay the agreed price when the sale is consummated (responsiblegold.org).

Source http://www.publicgold.com.my/content/view/42/74/lang,english/