Were it not for the likelihood that the 110 tonnes of Greek Gold, held god-knows-where, but we dont, being collateral against their debts, they'd be able to set up a flexibly priced gold exchange backed currency which no matter where the gold was priced, would devastate all fiat banksters.
I am thanking Jim Sinclair for the concept here and several mining executives for the showing me there was indeed a will to create equity in metals pricing, and to quote the old expression: “WHERE THERE IS A WILL, THERE IS A WAY”, as well to give lie to all the claims it could never work.
Greece might be the guinea pig for new currency with flexible gold backing.
Maybe as a pilot project, some Bricky Bank would advance some bullion, Russia or China, against Greek collateral & production, such as food, shipping, even silver and gold production. I concur.
The trick is two-fold to setting up a gold exchange standard. First the amount of backing needs to be calculated and adjusted to back the currency issued. Thus if you have 2 Billion of the New Issue, you must have 200 Million of Gold Value to back it 10%. Should it be priced too low, the metal will be sucked from the bosom of its issuer in a NY minute.
Too high and it will not be credible. From the knowledge gained here about KRIMEX antics, it would not be unreasonable to start out with a high number, say 3,500-3,880 USD per Oz Equiv. Such a number would recognize the inflation in the domestic Greek economy, and OMG what would it do to the mine Eldorado is building there?
But I digress. Having created a central bank an authority to hold the gold and issue the currency, whose security would be guaranteed by "Certain Countries", likely the ones who advanced the gold, the Central Pricing Authority, as we could call it, would buy and sell Physical Guaranteed Good Delivery Gold against the New Issue Currency.
Now to make it work, the CPA institutes a supply demand pit and or algorithm that moves the GOLD PRICE in increments according to SUPPLY and DEMAND, with responsive daily limits. Any attempt to drain the Gold from that Treasury would be sell-defeating, and also raise hell with fiat currencies. Given daily limits, dumb tactics like trying BUY amounts like NEWMONT's Annual production (done in the TAX DAY MASSACRE), likely would double the gold price on a given day. Who in their right mind would SELL that Much Physical Gold in one day (again, considering daily limits). AS well, major adjustments can be made both to speed of response AND elasticity, depending upon density and urgency of buy and sell orders.
To prevent export of the gold, a 50% export customs fee would be charged, whereas there would be no penalty for using the New Issue Currency outside the borders of the issuer, and voila, something like a new reserve currency is born.
I do not need to define to minute levels, the safeguards and system adjustments that could be made, but they are as infinite as the attempts to evade them, and thus proof the system against the Bankster depredations.
In oil, Arabia is the arbiter of prices, setting the price for the marginal transactions. Now they just post the price, and the buyers transact. Not a lot different here, however, is the Central Pricing Facility anticpated a slow day, perhaps a standard amount of up to say, 5,000 oz were to be sold at a price equivalent to yesterdays top price of say $3810 USD @ oz, with no bid, dropping the price to 3800, and 1K oz sold, and immediately another 1K oz sold, we can see urgency, so the algorithm adjusts the price to offer the next batch at 3815, holding that price for X hours or minutes and them dropping it to 3810, and 3805 by increments of time. So you can see in modern terms how volatility would be determined by the rhythm, amount and intensity of the market dynamics, sufficient to frustrate any attempts to drain the system of Metal at low prices, and destroying the system. Gaming attempts would defeat themselves as recursive algo's drive the price up faster than the attempts to game the system could move, using volatility adjustments. In short order, gaming attempts like the TAX DAY MASSACRE in reverse, would make gaining any amount of gold sufficient to damage the system prohibitively price in addition demand for the New Issue Currency, and driving down the price of the fiat currencies used to purchase New Issue Currency to bid on the Central Pricing Facility gold. Just like you can only use Dollars to buy crude oil from the Arabian's, you would need New Issue Currency to purchase System Gold from the Central Purchasing Facility.
Would we have enough needing to be employed accounts in the country issuing new Currency to set up and monitor the accounts ? What enforcement would be necessary to extract a 50% Customs Duty in exported gold? I have heard many, many, many arguments as to why any form of Gold Backed Standard will not work, but not a one of them ever included an flexible pricing strategy that involved daily pricing of gold based on supply and demand.
Given the infinite ability to adjust the parameters of a system such as this, this seems with even Off-The-Shelf applications, there is little chance this could not work, unless, of course, someone wanted it not to work.