- This coming week, Malaysia plays host to a strategically
important international conference entitled "GOLD INTERNATIONAL TRADE
- Strategic Positioning in the Global Monetary System".
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- The stated objectives of the conference are clear and
include discussions on the role of gold in international trade, gold-based
financing mechanisms and the use of gold in international trade settlements.
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- Speakers include representatives from Islamic Development
Bank, International Islamic University Malaysia, Central Bank of Iran,
Bahrain Monetary Agency and Islamic Chambers of Commerce USA.
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- The keynote address will be delivered by Malaysia's Prime
Minter, Datuk Seri Dr Mahathir Mohamad, who has been a long-time advocate
of the re-introduction of gold, and specifically the gold dinar as a major
international currency; "Besides being a means of payment for one
of the biggest and most homogenous communities in the world, the Islamic
dinar is also seen by many people as the only real challenge to the US
dollar." February 2002 (i)
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- The official conference website states; "1997 East
Asian and numerous other financial crises worldwide made apparent the vulnerability
of the current monetary system and the need for a more stable and just
global monetary system. In fact, since the collapse of Bretton Woods in
1971, the world monetary system has been inflationary and volatile with
the absence of a stable unit of account. . . gold in international trade
is seen as a strategic move to protect the interest of nations as far as
monetary stability, independence and justice are concerned." (emphasis
ours) (ii)
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- Clearly, when considering monetary systems, stability
is an important issue, but equally important, and one that is often overlooked,
is the issue of justice. In many peoples mind, an international payment
system based on gold addresses both these issues.
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- The last one hundred years has seen the major western
economies steadily dismantle the classic gold standard internationally,
and replace it with a "flexible" debt-based paper monetary system.
We only have to look around to see that this system has had far-reaching
and destructive implications globally, on many levels.
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- In the western world today, we have had 2-3 generations
of people that don't know or understand gold or silver, have no experience
with the precious metals from a monetary perspective, and have absolutely
no comprehension of their value.
-
- In the east however, the complete opposite is the case.
The vast majority of the population understand that gold and silver are
the only real money, while paper is just a promise to pay. Many are aware
that the west has been able to simply print paper money and send it around
the world to pay for its unquenchable consumer appetite for goods and services.
Islamic Nations have experienced and witnessed 1st hand currency crisis
as result of the international US dollar policy. They have recognised that
the US dollar system has exported massive inflation, instability and unsustainable
debt around the world. Islamic oil producing nations are well aware that
they are exchanging a strategically important and diminishing asset for
paper.
-
- This viewpoint is reflected in a public statement made
in late 2001 by the Islamic Mint, when gold dinar coins were released in
the seven Emirates of United Arab Emirates from branches of Thomas Cook
Exchange Company and the Dubai Islamic Bank, "because of the fundamental
political consequences of the introduction of paper money instruments,
the reintroduction of gold money can be expected to be an equally significant
milestone in the changing tides of the world economic & social situation.
. . there is no doubt that this work puts behind it a century of suffering
and defeat for Muslims and opens the coming age to a powerful and revived
Islam."
-
- While it has gathered attention and support in recent
years, the concept of using the Islamic dinar as day-to-day currency and
an international settlement instrument is by no means a new concept, having
its modern origins back in 1963. Some observers may claim that the driving
force behind the re-introduction of the gold dinar is religiously motivated,
while others will argue that it is stimulated more by an absence of any
viable alternative. (iii)
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- The gold dinar, and the Islamic banking model in general,
has several distinguishing features. It is governed by strict religious
laws and principles, it has a clear implementation strategy, and importantly,
is non-debt based (according to the Qur'an and the Hardith, the only lawful
money is non-usurious gold and silver).
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- At a time when the west is greatly increasing the regulatory
requirements of moving money, under Islamic law, there is total freedom
to buy, sell and possess any quantity of Dinar. It has been said that money
is like electricity and moves through the path of least resistance.
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- Whatever the outcome of this week's conference in Malaysia,
there are some certainties. Geo-politically and monetarily we are moving
into a time of rapid change. As a result of the un-sustainability, and
the debt associated with this present fiat US dollar system, Islam has
every reason to embrace a stable gold backed alternative, and are likely
to do so at an ever more rapid rate.
-
- For decades, the west has been artificially lowering
the gold price through selling and leasing, in an effort to protect and
manage a flawed and untenable paper monetary system. Meanwhile there is
growing evidence that indicates eastern and Islamic nations have been quietly
accumulating. The gold from the west has been transferring east, which
is going to have huge geo-political ramifications in tomorrow's world.
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- Islam is a vast trading block of over 1.5 billion people
that transcends political and geographical boundaries. In a world of limited
tangible supply of gold, consider the effects on the gold and broader financial
markets as these nations start to unload their US dollar reserves to implement
such a monetary system.
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- Historically, it can be seen that military might does
not save an empire that has debased its currency.
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- (i) Prime Minter, Datuk Seri Dr Mahathir Mohamad, February
2002
- (ii) Source : <http://enm.iiu.edu.my/gold2003/>http://enm.iiu.edu.my/gold2003/
- (ii) In l963 the 1st savings bank based on the Islamic
ideal of profit-sharing was established in the a small Egyptian town. A
more in-depth history is available from our 1998 article <http://www.anglofareast.com/0106.html>www.anglofareast.com/0106.html
-
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- 29 September 2003
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- Philip Judge
- © 2003
- <mailto:pjudge@anglofareast.com>pjudge@anglofareast.com
- Philip Judge is a director of The Anglo Far-East Bullion
Company, a private bullion custodial and banking company. <http://www.anglofareast.com/>www.anglofareast.com
- http://www.gold-eagle.com/editorials_03/judge092903.html
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