bjorn said:
In such a transition, physical gold and silver could present a very strong purchasing power as a means to buy useful assets before economic activity drops to virtually zero. Small silver/gold coins are preferable to big ones because they are easier to trade. Also, do not store coins in a bank vault. If the banks collapse, access to the vaults is not guaranteed.
Good advice, even if gold and silver are purchased in small physical amounts. Nothing is backing the American paper dollar. When the Stock and Bond market crashes, our economy will flat-line. On the other hand, other Countries are stocking their gold reserves to back their economies.
Russia's Central Bank purchased record amounts of gold in 2016, and plans to accelerate its purchases, retaining its spot as global leader in the growth of gold reserves. That's according to a recent survey by the GFMS analysts at Thomson Reuters. Russian economists explain the thought process behind the Bank's purchases.
Gold Bugs: Why Russia is Stacking Bullion Bricks Like There's No Tomorrow
https://sputniknews.com/russia/201704011052199028-russian-gold-purchases-analysis/
According to GFMS analysts, Russia's Central Bank purchased 201 tons of gold in 2016, more than the central bank of any other country. The Bank made its purchases over 11 consecutive months, with purchases accelerating to an average of 36 tons per month between October and November as gold prices fell.
The analysts expect Russia to continue buying large volumes of gold in 2017, predicting about 200 tons in purchases, regardless of fluctuations in gold prices, oil prices and even exchange rates. For comparison, the report estimates the total purchases of gold by other Central Banks to amount to roughly 250 tons for the year.
As of March 1 2017, Russia's sitting on 1,654.7 tons in gold reserves, making its reserves the sixth-largest in the world, behind the United States, Germany, Italy, France and China.
Commenting on the Central Bank's moves, economist Valentin Katasonov, professor of the faculty of international finance at the Moscow State Institute of International Relations, told Russia's Svobodnaya Pressa online newspaper that the Bank is making the right move.
The Bank is doing the right thing. Specialists know that today the price of the precious metal is undervalued, and significantly so. Therefore, investors looking for long-term results are investing in gold," Katasonov said.
"Of course, from the perspective of the short-term investor, such an investment means possible losses. The gold market includes very large speculators, who periodically reduce prices artificially for some period of time, making it possible for interested investors to buy gold at a lower price. But this market also has its own written and unwritten rules."
Katasonov reiterated that as far as Russia is concerned, the Central Bank's decision to stock up on gold is almost exclusively beneficial. "Among other things, it allows us to support the domestic gold mining industry, which in the 1990s and the early 2000s faced a very difficult situation. And what is especially insulting is that most of its output at the time went abroad."
Of course, the economist stressed that the introduction of a Russian gold-based currency would be even better, although there are essentially no countries remaining in the world today where paper money can be exchanged for the precious metal.
"There is an even more important purpose for gold – that of strategic reserve," the economist noted.
Factually, this is 'emergency' currency which can be used in the event of a collapse of the so-called reserve currencies, including the US dollar, or in the case of a collapse of the global financial system into a series of currency blocs – allowing for trade to occur between these blocs."
Katasonov emphasized that the world has already witnessed the latter kind of collapse – when in the 1930s the global financial system was split into several currency blocs. At the time,
gold was seen as a universal means of payment, which made it highly sought-after.
Therefore, I think that gold –as a strategic reserve – should be in the hands of the state, that is, in the hands of the Ministry of Finance. The Russian Central Bank is not an appropriate institution for this, in my opinion." The crux of the problem, according to the economist, is that the Central Bank "is not entirely [accountable] to the President or the Russian government, and is capable of making decisions which run counter to the interests of the Russian Federation, including as far as gold is concerned."
For his part, Nikita Maslennikov, an expert at the Institute of Contemporary Development, stressed that the Central Bank monitors market condition, and appropriately makes purchases during downswings. In any case, gold is a highly liquid asset.
"The Bank's goals are clear," the expert said. "Gold is a good buy when seeking to ensure the country's international position. Ratings agencies, for example, look at the size of gold reserves. Furthermore, for large players, the growth of the share of gold in a country's reserves is recognized as an indicator that the country's economic authorities are trustworthy. In fact, this indicator by itself motivates the development of trade ties."
The establishment of a clearing bank in Moscow for handling transactions in Chinese yuan is an important step facilitating more bilateral trade and investment.
China Opens Moscow Clearing Bank for Handling Transactions in Yuan
https://sputniknews.com/russia/201703271052005629-china-bank-clearing-transactions/
Russia and China are developing their economic co-operation with the establishment of a clearing center in Moscow for operations in Chinese yuan.
The Industrial and Commercial Bank of China (ICBC) officially started operating as a Chinese renminbi clearing bank in Russia on Wednesday.
"The financial regulatory authorities of China and Russia have signed a series of major agreements, which marks a new level of financial cooperation," Dmitry Skobelkin, deputy head of the Russian Central Bank, said.
"The launching of renminbi clearing services in Russia will further expand local settlement business and promote financial cooperation between the two countries," he added, Xinhua reported.
Irina Rogova, an analyst with investment fund Forex Club, told the Russian magazine Expert that the clearing center could become a large financial hub for countries in the Eurasian Economic Union.
According to the Chinese State Administration of Taxation, trade turnover between China and Russia increased by 34 percent in January, in annual terms. Bilateral trade in January 2017 amounted to $6.55 billion.
China’s exports to Russia grew 29.5 percent, reaching $3.41 billion, while imports from Russia increased by 39.3 percent – to $3.14 billion.
The creation of the clearing center enables the two countries to further increase bilateral trade and investment while decreasing their dependence on the US dollar. It will create a pool of yuan liquidity in Russia that enables transactions for trade and financial operations to run smoothly.
In expanding the use of national currencies for transactions, it could also potentially reduce the volatility of yuan and ruble exchange rates.
The clearing center is one of a range of measures the People's Bank of China and the Russian Central Bank have been looking at to deepen their co-operation.
In a sign of increasing ties, earlier this month Russia's Central Bank opened an office in Beijing. The branch is Russia's first in a foreign country and will exchange information with the Chinese financial authorities.
One measure under consideration is the joint organization of trade in gold. In recent years, China and Russia have been the world's most active buyers of the precious metal.
On a visit to China last year, deputy head of the Russian Central Bank Sergey Shvetsov said that the two countries want to facilitate more transactions in gold between the two countries.
"We discussed the question of trade in gold. The BRICS countries are large economies with large gold reserves and impressive volumes of production and purchase of this precious metal. In China, gold is traded in Shanghai, in Russia, Moscow. Our idea is to create a link between these sites in order to intensify trade between our marketplaces," Shvetsov said.
Japan has implemented a law which recognizes virtual currencies as an official method of payment.
Cash, Card, or Bitcoin: Japan Gives Virtual Currencies Official Recognition
https://sputniknews.com/asia/201704021052214913-virtual-currencies-japan-recognize-payment/
A new law giving bitcoin and other virtual currencies official recognition as a method of payment came into force in Japan on Saturday.
Virtual currencies are enjoying growing population in Japan, where domestic circulation of bitcoin, Ripple, Litecoin and others amounted to 185 billion yen ($1.67 billion) in the 2015 – 2016 fiscal year.
By 2020, the amount of bitcoin in circulation in Japan is expected to reach 1 trillion yen ($9 billion), the Nikkei Asian Review reports.
Konstantin Korishchenko of the Russian Presidential Academy of National Economy and Public Administration (RANEPA) told the Russian news agency Prime that transactions with bitcoins will have to be settled with the help of specially authorized banks.
"This means that in Japan, you can pay with bitcoin as well as yen. This will increase demand for the crypto-currency itself and the operations with it. However, all these operations have to be carried out via specially authorized organizations, 'bitcoin clearing banks.' They have serious capital requirements imposed on them," Korishchenko said.
There is currently no national framework for carrying out transactions with digital currencies and the Accounting Standards Board of Japan has been tasked with reviewing ways to regulate the use of bitcoin in Japan.
Korishchenko said that national monetary authorities are likely to try to gain control over crypto-currencies as their use becomes more widespread.
"In the foreseeable future, it is likely that we will be confronted with 'sovereign' crypto-currencies, as a kind of transition stage where a regulator will have control over the register of payments and 'electronic wallets,' which completely contradicts the main idea of such currencies."
"Nevertheless, in the digital world of the future everybody will be using them. As information technology develops it will be convenient to use one single crypto-currency, but the presence of several crypto-currencies won't present a problem. From force of habit, they might be called dollars, euros or rubles but they won't have any relation to the money we use today as they won't have any relation to the today's monetary circulation," Korishchenko said.
Korishchenko said that blockchain, a database of all bitcoin transactions which is a main component of bitcoin, could serve as a model for future transactions.
Sooner or later, digital signatures will be widely used although it remains to be seen whether a crypto-currency will be the foundation for more digital transactions.
Time will tell whether it (the digital signature of the future) will be a crypto-currency. Many experts are calling for more active use of new technologies, including blockchain, as they see considerable benefit to them," Korishchenko said.
US Senator John McCain wants to modernize US currency, including introducing a $1 coin.
Money, Money, Money: Proposed Law Would Change US Currency, Create Dollar Coin
https://sputniknews.com/us/201704011052182228-mccain-dollar-coin-bill/
McCain (R-AZ) and Senate Budget Committee Chairman Mike Enzi (R-WY) have reintroduced a bill that would make changes to the currency in the United States.
According to a press release on McCain's website, the bill, called The Currency Optimization, Innovation, and National Savings Act of 2017, or COINS Act for short, would "modernize our currency by moving to a $1 dollar coin."
According to Enzi, switching from a dollar bill to a dollar coin "could save our country $150 million a year. Overall, the lawmakers believe the currency reform will save America $16 billion over 30 years.
"With our country facing $20 trillion in debt, Congress must act to protect the American taxpayer," McCain said in a press release. "By reforming and modernizing America's outdated currency system, this commonsense bill would bring about billions in savings without raising taxes."
The idea behind the legislation is that a coin lasts much longer than a bill.
"Coins last a lot longer than paper," said Aaron Klein, former Democratic chief economist for the Senate Banking Committee. "One coin costs around 18 cents. Reprinting that dollar note seven times over 31 years costs 62 cents. You sell a dollar in 30 years for one dollar, but the cost of producing it will have gone up."
The legislation will also suspend the production of 1-cent coins, or pennies, and will tweak the composition of nickels to cut costs.
According to the lawmakers, minting of a penny already costs more than one cent per coin; the same goes for the nickel, whose composition has been proposed to be changed to 80 percent copper and 20 percent nickel.
Klein estimates that changing nickel composition would save over half a billion dollars in 30 years.
However, the bill's future is uncertain, as various lawmakers have tried to introduce a dollar coin repeatedly since 1991, when then-Representative Jim Kolbe of Arizona introduced the reform for the first time. This is McCain's third attempt already, according to Cronkite News.
"I think there's a number of reasons [for that]," Kolbe said. "There's the inertia factor. It's hard to get people to change their currency. There are special interests involved — those who manufacture the paper that is used in the currency, those that manufacture the metal slugs used for pennies — that resist this kind of change."
"No congressperson should hesitate to go back to their constituency and say, ‘I just voted to save us $16 billion, and it's not going to be an inconvenience to anybody, it will be simple," he added.