Koos Jansen
BullionStar Blogs
Koos Jansen
Posted on 27 Nov 2014 by

Citibank Releases Anti-Gold Report Before Swiss Gold Referendum

Below a screen shot from a report by Citibank its global chief economist Willem Buiter, released on November 26, aimed at clarifying why gold has no value whatsoever.

Screen Shot 2014-11-27 at 10.52.56 AM

Although I can agree with his last point, I surely can’t with the rest. From my perspective these are some weird statements. A few more quotes:

…Gold is unlike any other commodity. The only things that come close to it are Bitcoin and similar digital peer-to-peer currencies. Gold is costly to extract from the earth and to refine to a reasonable degree of purity. There is an (unknown) upper limit to the total amount that is recoverable at any cost. It is costly to store. It has no significant remaining uses as a producer good – equivalent or superior alternatives exist for all its industrial uses.

…Like paper currency and Bitcoin, Gold is ‘irredeemable’.

…John Maynard Keynes once described the Gold Standard as a “barbarous relic”. From a social perspective, gold held by central banks as part of their foreign exchange reserves merits the same label, in our view.

…Because to a reasonable first approximation gold has no intrinsic value as a consumption good or a producer good, it is an example of what I call a fiat (physical) commodity. You will be familiar with fiat currency. Unlike what Wikipedia says on the subject, we argue that the essence of fiat money is not that it is money declared by a government to be legal tender. It need not derive its value from the government demanding it in payment of taxes or insisting it should be accepted within the national jurisdiction in settlement of debt. Instead the defining property of fiat money is that it has no intrinsic value; it derives any value it has only from the shared belief by a sufficient number of economic actors that it has that value.

…Gold has become a fiat commodity or a fiat commodity currency, just as the US dollar, the euro, the pound sterling and the yen (and a couple of hundred other currencies) are fiat paper currencies and as Bitcoin is a fiat virtual currency. The main differences between them are that gold, like Bitcoin, is very costly to produce, while the production of additional paper money has an extremely low marginal cost. If we count the deposits of commercial banks with the central banks, which together with currency in circulation make up the monetary base, as fiat money, then the incremental cost of fiat base money creation is zero.

…Remember, fiat money, including gold or Bitcoin, is intrinsically useless.

WOW, I’m speechless (and I’m going on vacation in 15 minutes). I’ll leave the comments up to you. Click here to read the full report.

Koos Jansen
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  • Wouter Smit

    I stopped reading after ‘bitcoin is costly to store’

    • http://www.fuckoff.com Joep Meloen

      I started laughing and enjoyed myself reading it. It felt like watching a comedy.
      The funny hing is, this complete post could be a bitcoin address.

  • Spider

    Actually the Swiss cant sell BELOW 20% of their gold reserves – they can sell anything else. Seems pretty fair to me as this would be a nice way to not allow a central banker to sell the “family gold”

    • gnarit

      No, the Swiss referendum specifically mentions that gold reserves are “inalienable”.

  • digi

    Maybe Citi should try to sell their shit to the Chinese/BRICS and see whether the sovereign funds agree with them! Fiat you can print to infinity and it has a sovereign origin. Gold is no ones money and its the only money. Argument is so pathetic, can only seem logical to people that have ZERO historical knowledge of how a true gold standard works. Maybe he should get an education from Ferdinand Lips.

  • digi

    Happy Holidays!

  • Nicolas

    Boy the anti gold propaganda has reached new lows. Describing GOLD as a fiat commodity seems out of the mouths of the FED. Utterly ridiculous and stupid. If Gold has no intrinsic value then neither to U.S. treasuries, stocks, derivatives etc.

  • gnarit

    The last point is stated based on the belief that if the Swiss referendum passes, the SNB will never be able to sell gold ever. This is not correct, if the referendum passes, the only way for the SNB to sell its gold would be by another referendum. This is one of the three purposes of the referendum, all gold sales must be approved by the Swiss people and states.

  • jwr_47

    Never saw so much nonsense in so few lines of economics’ papers. This report must have been written in a hurry – only a few hours for the Supermen to save the world…. (Central bankers seem to be “to be certified insane”; German: “unzurechnungsfähig”).

  • otoman

    I AM AFRAID the Swiss people will once again allow themselves to be brainwashed by these fiat money launderers. The Swiss people know what they know but have been made to question themselves by fear mongering political types that ONLY have their own best interests at heart. WAKE UP Swiss and GET BACK ON TRACK! Vote YES.

  • otoman

    The fiat dollar bill actually does have intrinsic value. I can use it to light a fireplace. Oh wait, I guess I need a match to light the dollar bill first. HMMM, I guess it really is worthless!

  • photontail

    That last point is bollocks too. When it starts hitting the fan, your say in the next SDR will be how much metal you have, not how many digits you can enter after Ctrl-P. You just need to open the coat and show it, no need to part.

  • timematrix

    Creating infinite digital debt out of nothing has no intrinsic value to the people. But it gives infinite value to the banks that issued them. Because the people become slaves over time. The banks can own the entire world over time. Just by creating liabilities out of nothing that has no intrinsic value. They control the supply of digital debt. They control boom and bust cycles. They determine who gets more and who gets less. They get to scoop up wealth over time. That includes human and natural resources.

  • Roberto Helering

    Saying ‘fiat currency’ meaning ‘currency without any intrinsic value’ is redundant with the expression ‘currency’. No currency has an intrinsic value. If it did, it would be a commodity, not a currency.

    Willem Buiter has a PhD in Economics… somebody that has a PhD in economics should know better.

    • Swagato Barman Roy

      LoL…Krugman does as well. So do Bernanke and Yellen.

    • KoosJansen

      Nothing has intrinsic value. ‘Things’ can have use value for us humans.

      Money never has any use value because it’s not the end goal of a participant in the economy.

  • Billy Goat

    Reading that tripe (identical to reading any Paul Krugman drivel, essentially worship of Vladimir Lenin) is the most perfect example of how to waste a Thanksgiving afternoon.

  • Chris Marcus

    If I remember correctly, the guy in the Schiff was right video who explained how peasants around the globe work 20 hours just to touch the “coveted dollar” was also from Citi.

    What a clown….

  • Fraser

    Sorry, but the man is an idiot. Gold is a commodity of the real world that has performed the role of money for 6,000 years. Fiat currency (Bitcoin and other) are all human thought constructs that humans have assumed (for some unknown reason) will be a good measure of price in the real world.

    However, since Nixon ended the “gold peg” in 1971, the price of all real world things (in USD terms) has risen by a factor of 40. Thus the USD (and other fiat currencies) are not a measure of “price” at all – but instead a measure of the stupidity of the “expert” economists who thought they would work.

    Bitcoin suffers the same problem in that it has NO connection or correlation with anything in the real world that it might try to measure. Please read the following article for a more detailed explanation and to find out why only a “gold standard” has a chance of creating the “price stable economy” that we need – and which (strangely enough) Sir Isaac Newton tried to create for us back in the 1600s :

    http://www.mineweb.com/mineweb/content/en/mineweb-editors?oid=260373&sn=Detail

  • Ivan

    The banks are really afraid of gold. Citibank is really starting to show desperation by making such a stupid report.
    Citibank in my opinion, will be one of those banks to fail when the inevitable collapse happens, and it will happen, regardless of how the Swiss vote turns out.

    Dear Banks,
    Your evil sin upon mankind is great, you have prospered through the enslavement of countless people through debt. You have stolen and built your riches upon their sweat and blood and precious lifetimes.
    Your day of reckoning approaches.

    Your end is in sight and your lies deceive us no more. – Amen.

  • Christian

    Nice analysis , I was fascinated by the information , Does someone know where my company would be able to find a template a form document to edit ?

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