To begin this year 2022, nearly 90 nations, which represent over 90% of the world's gross domestic product, are in one stage or another, implementing fiat central bank digital currencies or CBDCs.
Given that the world is currently drowning in record debts and unsaved for unfunded promise piles, it makes sense governments would seek to debase their fiat currency units faster than ever. Having an intra-national fiat CBDC system to give out supplemental payments to suffering citizens makes sense while gaining further control over the underlying populace.
This week, China announced that the PBOC's fiat CBDC yuan pilot program had launched digital apps for Android and Apple phones.
And only last week, the government of Mexico announced that they will have a fiat Mexican peso program by 2024.
How will further fiat currency digitization and debasement affect the bullion market to come?
This week we will take a gander at the late November 2021 OMFIF report entitled "Central bank digital currencies and gold" implications for reserve managers.
The silver spot price dragged down near $22 oz, while the gold spot price finished just below the $1800 oz fighting line of late.
The gold-silver ratio ran up and closed at 80 to finish this week's trading.
Reports from India show that 2021 had the most significant gold bullion demand in about one decade.
India imported around 1,050 metric tonnes of gold. Or over 33.7 million troy ounces.
We have to go back to 2011 to find high gold import demand in India.
Back when the Indian rupee price of gold began to run away to record high price levels. We are now nearly +50% higher in terms of the fiat rupee gold price in 2022, yet the Indian populace is still buying gold bullion tonnage in record volumes.
To give you a different perspective of how large 1,050 metric tonnes of gold bullion is for India alone in one year. That is almost the entire gold bullion pile registered and eligible that supposedly backstops the COMEX gold futures market, which still dominates the daily gold spot price fluctuations day-to-day.
Further news on the New York Commodity Market Exchange, this week, the CME Group's COMEX lowered margin requirements for both leveraged Gold and Silver futures contract trading. This is often taken as a signal that more smaller-pocketed long traders may gain more traction in the coming weeks.
Of course, you all recall the COMEX raising silver margin requirements in late January 2021, which according to the CFTC Chairman Rostin Benham, helped to "tamp down what could have been a much worse situation in the silver market."
We are now turning our attention to bullion in the coming fiat CBDC systems being launched this decade.
This report was supported by the World Gold Council a subsidiary of the oldest central bank and fiat currency backstop in the central bank game, the Bank of England. Much of the report is noncommittal and speculative forward guessing in nature, Merely more a think piece on how gold's role may change as the fiat CBDC comes into fruition.
A link to this report is near the start of this blog post above.
The report concludes that "The only certainty is that gold investors, whether retail, institutional, or in the official sector, will have to examine closely the development of central bank digital currency, the shape it takes and its implications for policy, financial stability and global flows."
Well, that is basically “Capitan Obvious” stating the most obvious point to the matter at hand.
Back in 2018, this is how the Bank For International Settlements broke down this blooming fiat retail and wholesale CBDC vs bank deposit, vs Cash, vs Private Digital tokens or cryptocurrencies if you will. In a Money Flower graph, which stems from the only real money on the illustration physical precious metal like gold bullion.
????Obvious:— James Anderson (@jameshenryand) January 9, 2022
"The only certainty is
that #Gold investors, whether retail,
institutional, or in the official sector,
will have to examine closely the
development of CBDC, the shape it takes &
its implications for policy, financial
stability & global flows."https://t.co/Uoka9U5rcy https://t.co/c07UI0NjzM
Gold bullion in government and private investor reserves will outlast all soon to be more rapidly debasing government fiat currencies and their oncoming CBDC contrivances.
My strong suggestion remains to get yours now and soon before it becomes unaffordable and perhaps less private when doing so later this decade.
I released a Top 10 Reasons to Own Silver now, not Later video to end this week of slow trading for you silver bulls out there. I will leave a link to it here if you have not seen it yet.
See if you agree with my reasoning here.
That is all for this week's SD Bullion market update.
As always, to you out there, take great care of yourselves and those you love.