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In this blog, BullionStar shares what's happening inside BullionStar
as well as news and research from the local and global precious metals markets.

Interview Koos Jansen, Torgny Persson and Ronan Manly

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Interview with BullionStar’s three bloggers, Mr. Koos Jansen, Mr. Ronan Manly and BullionStar’s CEO, Mr. Torgny Persson,  sharing their opinions of the current monetary system, gold and central banks.

            Inside BullionStar            Ronan Manly
Koos Jansen                       Torgny Persson                     Ronan Manly

Question 1: When did you first get interested in precious metals/monetary economics?

I was always interested in precious metals without realizing it. The financial crises in 2010 however triggered my interest.

My interest in banking started at an early age. When in primary school, I was eagerly saving and depositing money received at e.g. birthdays. Whereas most friends consumed their allowances on candy, I was thrilled by the concept of getting free money (interest) displayed by the typewriting in the bank book at the end of the year. Interest rates were high in Sweden at the time (end of 80’s, beginning of 90’s) compared to the zero or even negative rates of today.

I got specifically interested in monetary economics towards the end of my Master’s Degree in Economics around 2001 and more so after studying alternative economic schools around 2004.

My interest in precious metals started from about 2001-2003 but I was already interested in monetary economics at that time.

Question 2: How did you first get interested in precious metal/monetary economics?

I was hearing about the financial crisis for a while and decided to buy a book about it. From page 1 my obsession for economics was unleashed and I started learning about precious metals.

I started my university studies in economics 1997. At first I was excited. It was a calling. I felt that economics explained everything. When I reached advanced studies at the Master’s level, I started to question what I was doing. Nerdy professors never having left the university peer reviewing each other’s absurd and abstract models having no real world applicability although pushed into policy…

Monetary economics was not covered in any detail during my studies. Money was mostly handled as an assumed constant in most models. There was never anyone mentioning or discussing modern monetary mechanics or how money was created.

This eventually led me to look for alternatives where the Austrian School of Economics theorized and incorporated monetary aspects in a more logical fashion than anything I had learnt in school. This led me towards an interest in physical precious metals around 2004.


After the internet tech stock market crashed in 2000, US and Canadian gold and silver mining stocks started to preform very strongly in 2001 and 2002, and this caught my attention. The US dollar gold price was still trading in a range below $300 at that time. I then started reading Jim Sinclair’s web site in about 2003, so by about 2003-2004 I had an interest in reading about precious metals, the gold price, and the gold miners.

Some of my undergraduate and postgraduate university courses in macroeconomics and international relations had covered the various gold standards and the Bretton Woods institutions, so I was familiar with the previous role of gold in the international system from when I studied those courses in the 1990’s.

Question 3: What recommendations do you have for individuals seeking to preserve assets and buying power in these uncertain times?

Use a share of your savings to buy physical precious metals. Buy as much as you feel comfortable with. Make sure that you don’t have to liquidate it in the short term because of the short term unpredictability of the gold price. Gold should be considered as an asset preserving wealth in the long run.

We first have to understand the difference between saving and investing. The objective of saving is to accumulate the output of your labor for future consumption or investment avoiding risk but keeping purchasing power. Investing is when you risk your capital seeking a return on your investment.Holding precious metals is saving. Purchasing stocks is investing. Gold is keeping purchasing power better than any other asset over long time periods.  Gold is the safest asset class to save in. Gold is money!Keeping funds in fiat currency is risky and even riskier if you keep it at a bank. When you deposit funds at a bank, you lose ownership of your money and instead hold a claim on them. The bank vice versa has a liability. There’s far from enough physical money for everyone to claim their money physically. The counter-party risk, not to mention the inflation risk, is very high as has been proven by history.Nothing wrong with investing, but do ensure that you keep your rainy day funds in precious metals. Also ensure that you take profits of your investments in precious metals. As precious metals is money more so than fiat currency in terms of purchasing power and stability, it’s not possible to soundly take profits from precious metals, only in precious metals.

If you have sufficient investable assets, then diversify across asset classes, both real and financial assets. Since the future is uncertain, diversification of your investment portfolio will result in a reduction of asset specific risk. Choose and implement a suitable strategic asset allocation plan, albeit one that takes into account the fact that financial market pricing signals have become less certain of late due to unprecedented market intervention by central banks.

I think real assets, including property/land, physical precious metals and artworks should play a role in an investment portfolio, if your portfolio is large enough to support these allocations. Real asset prices can go up and down like any asset, but these assets are traditional stores of value over the long-term and continue to exist through time, which is not always the case with financial securities. And, being real assets, you can also derive utility or satisfaction from property, art and precious metal ownership.

Question 4: Do you foresee any changes to the current global fiat based monetary system in the next 5 years?

Yes. There are many signs of big changes coming up. The fiat currency system is failing for all obvious reasons. Gold will surely re-enter the international monetary system. 

Yes, I believe we will witness the end of the US Dollar hegemony in the next 5 year period.

What we see currently is that structural support for the US Dollar from foreign (non-US) governments is ceasing. Surplus countries are no longer particularly interested in purchasing US Dollar denominated debt assets. The US Dollar strength we’ve seen the last couple of years have been due to support from private non-US investors. When this support is waning, there will be no one picking up the slack. An important trend is that central banks are adopting free float policies for their currencies. Recent examples of this include Switzerland depegging the Swiss Franc from the Euro and Russia allowing the Ruble to depreciate relatively uninterrupted.

The exorbitant privilege for the US of being able to run perpetual trade deficits will come to an end as foreign (non-US) demand for holding the US Dollar as reserves will decrease. The US Dollar will thus depreciate significantly.

I don’t however believe that there will be a totally new monetary system introduced within 5 years although I’m certain there’s ready made plans for the inevitability of our current system eventually failing. Gold will however likely play an increasing role for international debt settlements and serve as collateral to a larger degree. Gold as a store of value will thus be rediscovered and appreciated in international affairs again to a larger degree.

Gold will thus anew take on its historical role as an anchor for international trade. A revaluation will follow as the market places are rejuvenated with Asian countries like China and Singapore leading the development of setting up physical marketplaces for gold. The paper markets will diminish in importance over time if not default outright in case of a rapid increase in demand.


Yes, but I would say that monetary system changes will be more towards the end of the next 5 years, nearer 2020 than 2016. The world’s major central banks and multilateral financial institutions and regulators have undoubtedly studied and planned for routes out of the current quagmire. It would be naïve to think that the BIS governors and Group of Thirty (G30) central bankers have not undertaken extensive scenario planning and even policy formulation. The same would apply to the Financial Stability Board (FSB) at the BIS also. But changes will take time to introduce. I would expect the financial and monetary system to get worse before it gets better. That’s why I would say 2020.

If central banks and policy makers are enlightened, I would expect a new international financial system that includes a role for gold as a lynchpin or foundation in international currency valuations, and possibly referenced in international liquidity and settlement. If the same central bankers and policy makers are not so enlightened, the international monetary system may become even more totalitarian and interventionalist than it is now, for example, with capital controls, in an attempt to prop up and preserve the financial status quo.

Question 5: Will there be any geopolitical implications from the insatiable demand for gold in China?

Yes, I believe there will be. China will have a greater voice among the global powerhouses. Large gold reserves (official and private) are China’s key to more power, as eventually the amount of paper assets held by nations will be of less importance. It will all be about value between hard assets and goods & services, when paper loses its function as store of value.

Following the traditional culture of building a strong centralized leadership, the Chinese state has been building its domestic gold market for more than a decade. China has a long time plan of getting gold in the hands of not only the central bank but in the hands of the people. The Chinese gold markets paradoxically seem to be more market oriented than the western counterparts especially since there’s a clear divider between physical and paper markets. China controls the marketplace itself but don’t seem to manipulate the market.
BIS and western central banks likely possess knowledge of the Chinese gold accumulation but I don’t believe they are adopting a policy of hindering it as the flow of gold from west to east is buying time for the fiat currency system. If western countries were to hinder the physical gold flow eastbound, the fiat currency bluff might have been called. I thus believe it’s in the interest of the west not to hinder China in the short run. Whoever has the gold has the power. In the long run, the flow of gold to China will position China in a powerful position with much larger influence over international affairs and monetary policy than it has today.Ronan:
To the extent that China has accumulated large, but unquantified amounts of gold, China will have more monetary power and negotiating strength in any future monetary system in which gold plays a part. I don’t think the Western powers have just been sitting back unaware and uninvolved in allowing China to build up far higher gold reserves. The only logical assumption is that Western powers and their financial and intelligence strategists have no problem with this trend of gold going East. So that would suggest that gold flowing East would not, in the future world order, arouse any hostility militarily or geopolitically by the West. The conclusion is therefore that China becoming a bigger player in the monetary would is being facilitated by, or at least not hindered by, the West. So, yes, there would be geopolitical implications, but not geopolitical shocks (because all major players are, in my view, aware and in agreement with what’s happening).

Question 6: How do you view the shift in central bank policy over the last years with central banks having stopped selling gold and now instead being aggregate purchasers as well as repatriating gold?

This is another very clear sign of what’s going on. More and more nations are losing confidence in a rosy outcome.  By repatriating, countries like The Netherlands, is making sure they will come out of the euro crisis alive, will survive the demise of the US dollar and be sure the US can’t sell their gold. If you don’t have gold in your own vault you don’t own any gold. It’s as simple as that. What is remarkable is that if you pay attention it’s not hard to see what’s coming, though 99 % of the people in the west are not seeing it. In the east, the situation is different as more people are buying physical gold. In my opinion this makes gold very undervalued at this point in time and a good “investment". 

Central banks are planning for the long term. When President Nixon closed the convertibility of the US Dollar into gold internationally in 1971, it was only accepted upon the premise of cheap oil and easy credit. Central bankers were at the time planning for what seemed to be an inevitable breakdown of a seemingly weak unbacked monetary system. Fiat currencies dropped in value quickly during the 1970’s (or as some call it, gold appreciated) and a collapse seemed imminent.

In my opinion, it was the instigation of the paper gold markets that delayed the collapse of the monetary system in the 70’s. With the introduction of the futures markets, miners could sell anticipated future gold production in the marketplace which ballooned the supply.

Although it seemed that central bankers bashed gold in the 1990’s with the Central Bank Gold Agreements, I believe this was a way to stabilize the monetary markets and push the perception of the US Dollar being as good as gold.

What has changed since is that many central banks have realized that we are approaching the end of fiat currency serving the role as store of value and that it will be replaced by gold. By having a large percentage of gold in reserve, central banks can survive a possible hyperinflation very well. If currencies are hyperinflating at the same time gold appreciates in real terms, their balance sheets remains unscathed. One country which paradoxically may be in a very good position for such a shift is Greece holding more than 60 % of its reserves in gold.

The cessation of selling, or net selling, by the West and the pickup in buying from emerging market central banks is, in my view, signalling a renewed emphasis on gold by central bankers and a more prominent role for monetary gold in the future. The core BIS central banks want to preserve their remaining gold reserves, and the emerging market CBs want to play catch-up. Central banker policy on gold seems to have shifted in the early 2000s or even earlier. I think the Swiss gold sales had already been decided in the late 1990s and were just being implemented, so to speak, in the early 2000s.

The central bank selling in the 1980s and 1990s was, I think, a combination of a number of things. Firstly, as the gold price was weak, some central banks sold gold and diversified their reserves into other instruments and securities. This was just a commercial decision. Secondly, the growth in producer (gold miner) hedging and an expansion of central bank gold lending that allowed this, probably created some situations where, for convenience and political reasons, some central bank lenders closed out leases, and later on accounted for it as a sale. Thirdly, I think it’s very plausible that some of the large central bank gold holders had to sell gold as part of agreed gold transfer operations to the Middle East oil producers in part payment for oil flows to the West in the 1980s-2000s. I have seen some evidence of early discussions about such oil and gold transfers in Bank of England memos.

The gold repatriation trend seems to really be the manifestation of a combination of domestic political pressure and central bank lip service, but also a small degree of genuine central bank concern about gold in custody and on deposit. Apart from Venezuela, which was a clear case of repatriation, a lot of the other gold repatriation initiatives are more complex and serve a few purposes, both political and practical. Central bank governors in Basel cooperate closely, and have always done so. So I doubt if they are really breaking ranks currently, as much as it may look they are right now.

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