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Citigroup to be fined for ''control failures,'' not market manipulation
GCC Urged to Peg Its Currency to Gold
P.V. Vivekanand
Arab News
Jeddah, Saudi Arabia
Sunday, May 29, 2005
http://www.arabnews.com/?page=6ion=0&article=64538&d=29&m=5&y=2005
SHARJAH, Saudi Arabia -- The Gulf Cooperation Council
should peg its proposed currency to gold rather than
the American dollar or euro in view of the currency
fluctuations in the international market, says an
expert in currency and gold.
Dr. Ferdinand Lips told a gathering in Dubai that the
history of gold shows that despite its ups and downs
the yellow metal has proved itself to be a "safe and
tangible investment option since the value of an ounce
of gold is far greater than currencies that are being
devalued by the day."
Lips was delivering a lecture titled, "Oil for gold or
oil for paper? Financial stability, gold, and the
ongoing rise in commodity prices," organized by the
Gulf Research Center.
"Being in the midst of a global currency devaluation
scenario, it is worth noting that while oil is the
king of commodities, gold is the king of money," Lips
said, noting that oil is underpriced and that oil
producers are not getting real value by pegging it to
the dollar.
The lecture, attended by prominent members of the
banking and finance industry, dealt with how
currencies, investments, and every crucial economic
factor in the GCC countries are dependent on the US
dollar, which shows increasing signs of structural
weakness. The Gulf countries, Lips said, could escape
potential financial disaster by looking at certain
other investment alternatives.
Lips is the author of "Gold Wars: The Battle Against
Sound Money As Seen from a Swiss Perspective." He said
the GCC banks could do well to set aside a certain
percentage of their reserves in gold and to learn from
the European Central Bank's mandatory 15 percent gold
reserves rule.
Currently, the United Arab Emirates and Qatar have
sold all their reserves, while Kuwait has lent gold
and Saudi Arabia has low reserves of some 200 tons.
Lips also suggested that a monetary institute be set
up to create greater awareness of money and emphasize
the crucial need to return to "solid money."
"Gold is the insurance policy. When the rest of the
world will go down on the paper money system, invest
at least 1 percent in gold as insurance," stressed
Lips, adding that today's depreciation limits the
purchasing power of paper currencies, whereas gold is
a highly liquid asset.
"Returning to gold as a standard will also put a limit
to what governments can do," he said.
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