DGC Magazine

“Paper is poverty....it is only the ghost of money, and not money itself.” - Thomas Jefferson 1788

Price of G o l d M o v e s A b o v e $1000 USD

September 2009
 MAGAZINE READERS: PLEASE POST IN A CONSPICUOUS PLACE--MARK HERPEL, EDITOR

UNDER EXECUTIVE ORDER

OF THE PRESIDENT Issued September 3, 2009
all U.S. persons are required to deliver or liquidate
ON OR BEFORE DECEMBER 1, 2009
all GOLD COIN, GOLD BULLION, ELECTRONIC DIGITAL GOLD,
GOLD ETF SHARES AND SECURITIZED GOLD INVESTMENTS
now owned by them to a Federal Reserve Bank, branch or agency,
or to any member bank of the Federal Reserve System.
Executive Order
FORBIDDING THE HOARDING OF GOLD COIN, GOLD BULLION, ELECTRONIC DIGITAL GOLD,
ETF SHARES, SECURITIZED GOLD INVESTMENTS, AND GOLD CERTIFICATES.
FORBIDDING THE HOARDING OF GOLD COIN, GOLD BULLION, (d) Gold coin and bullion licensed for other proper trans- actions (not involving
ELECTRONIC DIGITAL GOLD, ETF SHARE SECURITIZED GOLD hoarding) including gold coin and bullion imported for re-export or held pending action
INVESTMENTS, GOLD CERTIFICATES, AND GOLD CERTIFICATES. on application for export licenses.
By virtue of the authority vested in me by Secion 5 (b) of the Act of October 6, 1917, Section 4. Upon receipt of gold coin, gold bullion, electronic digital gold, securitized
as amended by Secion 1 of the Act of September 3, 2009 entitled “An act to provide gold investments or gold certificates delivered to it in accordance with Sections 2 or 3,
relief in the existing national emergency in banking, and for other purposes”, in which the Federal reserve bank or member bank will pay therefor an equivalent amount of
amendatory Act Congress declared that a serious emergency exists. I, Barack any form of coin or currency coined or issued under the laws of the United States.
Hussein Obama, President of the United States of America, do declare that said Section 8. The Secretary of the Treasury is hereby authorized and empowered to is-
national banking emergency still continues to exist and pursuant to said section sue such further regulations as he may deem necessary to carry out the purposes of
do hereby prohibit the hoarding of gold coin, gold bullion, electronic digital gold, this order and to issue licenses there under, through such offices or agencies as he
ETF share certificates and gold certificates within the continental United States by may designate, including licenses permitting the Federal reserve banks and member
individuals, partnerships, associations and corporations and hereby prescribe the banks of the Federal Reserve System, in return for an equivalent amount of other
following regulations for carrying out the purpose of this order. coins, currency or credit, to deliver, earmark or hold in trust gold coin and bullion to
Section 1. For the purposes of this regulation the term “hoarding” means the withdrawal or for persons showing the need for the same for any of the purposes specified in
and withholding of gold coin, gold bullion or gold certificates from the recognized and Paragraphs (a), (c) and (d) of Section 2 of these regulations.
customary channels of trade. The term “person” means any individual, partnership, Seciton 9. Whoever willfully violates any provision of this Executive Order or of these
association or corporation. regulations or any rule, regulation or license issued there under may be fined not more
    Section 2. All person are hereby required to deliver on or before December 1, 2009, than $10,000 or if a natural person, may be imprisoned for not more than ten years, or
to a Federal reserve bank or branch or agency thereof or to any member bank of the both; and any officer, director or agency of any corporation who knowingly participates
Federal Reserve System all gold coin, gold bullion, electronic digital gold, ETF share in any such violation may be punished by a like fine, imprisonment or both.
certificates and gold certificates now owned by them or coming into their ownership
on or before November 3, 2009, except the following:
   (a) Such amount of gold that may be required for legitimate and customary use in
industry, profession or art within a reasonable time, including gold prior to refining This order and these regulations may be modified or
and stocks of gold in reasonable amounts for the usual trade requirements of owners
mining and refining such gold. revoked at any time.
    (b) Gold coin and gold certificate in an amount not exceeding in the aggregate
$100.00 belonging to any one person; and gold coins having a recognized special
BARACK HUSSEIN OBAMA    
value to collectors of rare and unusual coins. The White House
    (c) Gold coin and bullion earmarked or held in trust for a recognized foreign
government or foreign central bank or the Bank for International Settlements. September 3rd, 2009

GOLD CERTIFICATES may be identified by the words “GOLD CERTIFICATE” appearing thereon. The serial
number and the Treasury seal on the face of a GOLD CERTIFICATE are printed in YELLOW. Exchange Traded Gold
Commodities or Exchange Traded Funds (ETFs) are included in the Executive Order. All Gold exchange-traded funds,
securitized gold investment and all gold bullion regulated financial products owned by U.S. citizens including allocated
gold owned through digital gold accounts are required to be surrendered.
Special attention is directed to the exceptions allowed under Section 2 fo the Executive Order

CRIMINAL PENALTIES FOR VIOLATION OF EXECUTIVE ORDER

$10,000 find or 10 years imprisonment, or both, as
provided in Section 9 of the order

This page is a spoof, it is not real(could this happen again?)

05 Barrick Gold Corporation On the cover
400oz gold bullion bar
Technically Defaults on Gold
The price of gold in U.S. Dollars has
Hedges now climbed above the $1000 level
by Patrick A. Heller
Photo courtesy of
http://www.numismaster.com/ http://www.Bullionvault.com
BullionVault is the world’s No.1 service for private investors to
buy and sell gold online. In the UK, it is the market-leader in all
05 GoldMoney Moves Into Platinum physical gold dealing and ownership.

06 Digital Gold: An Industry or Not?

by Paul Rosenberg
http://www.veraverba.com

08 Paysgold.com Debit Card Program

Now Closed

10 The End of Coercion? Editor, Mark Herpel

by Sulaiman Wilms [email protected]
Skype IM ‘digitalcurrency’
http://twitter.com/dgcmagazine
18 Not Worth a Continental DGC Magazine is published online 12 times a year.
Subscriptions are free. Industry ads are free.
By Claire Wolfe
© 2008 DGC Magazine All Rights Reserved

26 October is the Cruelest Month Legal Notice/Disclaimer: Articles and advertisements in this mag-
by Tarek Saab azine are not and should not be construed as an offer to sell or
the solicitation of an offer to sell any investment. All material in this
http://www.goldandsilvernow.com issue is based on information obtained from sources believed to
be reliable but which have not been independently verified; DGC-
magazine, the editor and contributors make no guarantee, repre-
29 e-gold Update: Owner CIP, CDD, sentation or warranty and accept no responsibility or liability as to
and Agio Fee Schedule Changes its accuracy or completeness. Expressions of opinion are those of
contributors only & individual views are subject to change without
notice. DGCmagazine and contributors assume no warranty, li-
33 Open Letter to the Builders of the ability or guarantee for the current relevance, correctness or com-
pleteness of any information provided within this publication and
New Economy will not be held liable for the consequence of reliance upon any
opinion or statement contained herein. Furthermore, DGCmaga-
zine assumes no liability for any direct or indirect loss or damage
37 Skype Now Accepts Webmoney or, in particular, for lost profit, which you may incur as a result
of the use and existence of the information, provided within this
publication. As for any product or service advertised, promoted
39 Social network Sonico has selected or which appears in this publication, readers are advised to
GlobalCollect for Latin America Biz “Use At Your Own Risk”.

DGC Magazine September 2009 Issue § 3

 http://www.wmtransfer.com
http://www.webmoney.ru

4 § DGC Magazine September 2009 Issue

 Barrick Gold Corporation GoldMoney moves into platinum
Technically Defaults on Gold GoldMoney (http://www.goldmoney.com), the
Hedges leading provider of precious metals storage in gold
and silver bullion to retail investors and digital gold
by Patrick A. Heller, Market Update currency payments, has expanded its precious metals
September 15, 2009 offering with platinum. Investors looking to diversify
http://www.numismaster.com/ their precious metal portfolio can from today buy up
quantities of platinum in their digital accounts.
Shortly after last week’s “on the record” announcement
by a Chinese official that China is going to adopt a Metal analysts suggest that an economic recovery
partial gold standard, the gold market was rocked by could lead to a strong platinum rally as the price is
the news that Barrick Gold Corporation was booking a 40% lower than 12 months ago. Platinum is the rarest
$5.6 billion loss on 9.5 million ounces of gold hedges precious metal of all. Annual production amounted to
that the company is unable to repay in kind. 5.5 million ounces in 2008 - one tenth of the amount
of gold produced in a year. Platinum is predominantly
It wasn’t that long ago Barrick officials were proclaiming used in industry where demand has increased almost
they had closed out their entire hedge book. When threefold over the past 30 years particularly due to the
questioned about an old hedge of nine million ounces expansion of the car industry which consumes half the
that was borrowed to finance the purchase of a South annual global platinum output.
African mine site, company officials downplayed the
effect by portraying the hedge as either 1) participating Demand for platinum jewellery has also increased,
in any rising gold price, or 2) effectively never having particularly in China, since prices hit bottom in
to be repaid. November 2008. Platinum currently sits at around
US$1,200 an ounce but precious metal analysts suggest
Well, when gold reached $1,000 last week, Barrick that an economic recovery will lead to a strong platinum
Gold gave up its pretense. The company announced rally. South Africa, the largest producer of platinum,
that it would be issuing $3.4 billion in new stock to has also had difficulties increasing output of the metal
be used almost exclusively as payment to settle three which in turn will contribute to a supply deficit when
million ounces of fixed-price hedges. Any remaining industrial demand increases.
funds would then be used to cover part of the 6.5
million ounces of non-priced hedges (that, as it turns GoldMoney founder James Turk said: “Platinum offers
out, are due to be repaid in a few years). the opportunity to diversify one’s precious metals
portfolio, but it is often difficult for retail investors
The issuance of shares was announced when U.S. market to locate and purchase. GoldMoney has now changed
trading hours. A number of stock brokers, who seem to that because platinum can be purchased online with the
be unaware of Barrick’s huge loss in gold hedges, have same ease and convenience that our customers purchase
regularly recommended Barrick Gold stock to their gold and silver.”
customers who wanted to “invest in gold.” As a result,
the entire issue was sold almost instantly. As with the purchasing of gold and silver, GoldMoney
customers can open an account with as little as £10 and
When foreign markets opened later, potential buyers transfer funds to specially segregated customer funds
complained so loudly about not being able to buy some accounts prior to placing a specific order for platinum.
of these shares that the company expanded the issue to Orders and payments are made through a secure online
more than $4 billion. The company also disclosed that system and processed by GoldMoney’s servers, which
it was booking a one-time loss of $5.6 billion to reflect record transactions and store currency and metal
its losses on the hedge contracts. Analysts familiar with balances. All customer metals are insured and held in
allocated storage in specialised bullion vaults in Zurich
Continued on page 35 and London, and the metals are audited annually and
reported to customers.
DGC Magazine September 2009 Issue § 5
 Digital Gold:
An Industry or Not?
by Paul Rosenberg

DGC Magazine August 2009 Issue § 6

 A
sk yourself a question: What keeps the The obvious answer to our problems is an industry
average person away from the digital gold association that we all support. Such an arrangement
business? involves no coercion and we could set it up in a
week or two, if we wanted. You don’t need me to
The root answer is almost always some version tell you what to do.
of fear: Fear of being ripped-off, fear of getting in
trouble, fear of doing something that hasn’t been So, do we want to be an industry or not? Looking
pre-approved by an authority. You would think that at our history, one would have to conclude that we
it would be in our best interests to do something do not.
about this, but it never happens. We began as a group of radical outsiders. This is
certainly understandable, since no one else had
Let’s face the fact that the digital gold business is the guts to do it. But if we want to be more than a
a wreck. We’ve had criminals using our systems, minor counter-culture group, we need to grow up.
criminals running systems, murders, and the US We have some of the most powerful and important
government on Witch Hunts. A hell of a beginning technologies on the planet, and we’re treating them
for an industry! And to make matters worse, key like disposable toys.
players in the business have taken to hating each
other railing against each other as crooks. Can you THE MERCHANTS’ GUILDS
blame people for staying away? At the end of the Dark Ages in Europe, there were
men that came to the place in their lives where
This business needs help. We are succeeding they were willing to take responsibility upon
brilliantly at driving people away. themselves and create the things they needed. They
stopped looking for some authority to do it and
IT’S TIME TO ACT LIKE ADULTS they stopped fighting amongst themselves. They
If we want this business to thrive – and for the were the despised outsiders of their era – traveling
sake of the future, it really needs to – then we’ll merchants.
have to act like adults and take responsibility for
ourselves. Really, we have to other choice. We are Long-distance trade had collapsed along with the
new and different; that makes us a target. Either we Roman Empire, and there was precious little of
tend to our own garden, or it will choke to death it in the West between the years of 500 and 1000
from weeds… which is a pretty good description A.D. Those who did engage in trade knew they had
of the current situation. a fantastic technology that everyone could profit
from, but for hundreds of years, it barely developed
Those of us who cannot behave reasonably and at all… until they decided to take control of their
honestly need to be pushed away. Those who cannot own destiny, act as a group of responsible, capable
restrain themselves from malice, obsession and adults, and get busy building what they needed.
attempts to dominate others need to be displaced. In so doing, they created much of the framework
Those who can play nice need to start ostracizing for the modern world and made excellent lives for
those who cannot. In short, we need to be like the themselves.
kids on the playground who tell Nasty Nick that
they don’t want him on their team. Are we capable of doing this? Of course, we are!
The digital gold business includes many of the
Either we can take this upon ourselves, or we most capable people on the planet!
will remain vulnerable to all sorts of attacks and But, are we willing? No, so far we are not.
abuse – some from criminals, some from the
emotionally unstable and some from the state’s Being capable doesn’t mean that you’ll ever do
agent provocateurs. anything with those abilities. And as long we busy
ourselves with petty fights, tearing each other down
So, which shall it be? Are we ready to grow up, or and wishing to enforce ideological purity, we are
not? doomed. We’ll never get close to the next step.

Flickr Image http://www.flickr.com/photos/marcobellucci/3534516458/sizes/o/ DGC Magazine September 2009 Issue § 7

 And we’ll have no one to blame but ourselves.
Paysgold.com Debit
Who are you, really? What is it that you really
want to see from the digital gold business? What
are you willing to do to get it? Are you too rigid to
Card Program
cooperate? Too cheap to invest in your industry’s
future? Now Closed
There is no golden plan and there will be no rider A surprised announcement from their web site tells
on a white horse to save you. Either you grow up of another DGC debit card program is now closed.
and take care of your business, or this business The Paysgold cards were in operation for a few years
will remain a mess… at least until better people and very popular.
arise, and make better use of the technologies you
created. Here is the notice from their web site. They are still
operating as an exchange agent.
Do you want success? Then grow up and earn it.
“Because the bank stopped the service.  We
© Copyright 2009 by Paul A. Rosenberg
do not sell the debit card any more.  Our
Paul is the author of Production Versus Plunder cards will be stopped in few days.  The old
and other books. -You can find his work at
http://www.veraverba.com users please cash out the money as soon as
possible.”

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 8 § DGC Magazine September 2009 Issue
http://www.anglofareast.com
DGC Magazine September 2009 Issue § 9
 The end of coercion?
A growing call for free currency worldwide. By Sulaiman Wilms

This article originally appeared in GLOBALIA Magazine 19.08.2009

http://www.globaliamagazine.com/

T he symptoms of the global

predicament are well known. From
the struggle to dominate contested regions
the ­­con­text and motivations involved are too diverse. A
representative of traditional ­­mone­tary ­liberalism cannot
consider himself in the same boat as a traditional Muslim
and their energy routes, to the ­anarchic jurist. Yet the question of money affects ­everybody on
priva­tisation of violence, and the blatant a daily basis.
crisis of the current financial order – all
these are ­frequently evoked. But beyond The key question is one of freedom. No ­matter which
all that, on a quite different plane, system or culture you find yourself in, the contemporary
alternative models are ­appearing and discourse on freedom ­nearly always pertains to the
­gaining wider recognition. And at their political or private realm; only seldom is a connection
heart, however differently formulated, is perceived between freedom and the individual’s
the desire for monetary freedom. ­ability to choose the means of payment he or she uses.
While “civil rights and liberties” are supposedly being
What do financial executives, Muslim defended vigorously (or imposed by force) in the Hindu
jurists, small retailers and the leading Kush, in the chaotic suburbs of Baghdad and Falluja,
Eurasian ­politicians all have in common? in the Horn of Africa and elsewhere, the ­personal and
On the face of it, nothing at all. And yet social right to choose a means of ­payment is severely
through this unlikely cross-section there is limited wherever you are in the world.
a growing awareness of the defectiveness
of the ­domi­nant financial order, coupled Think globally, act locally
with a desire for new reserve currencies, Confronted by a financial economy which has made
local ­money-flows, and the freedom to ecological destruction and profit-­driven growth its
choose a preferred mode of payment. raison d’être, people in North America and Western
Admittedly this is not a subject which Europe – and elsewhere – began to experiment with
can claim any kind of global consistency; alternative ­currencies long ago. Their interest has not

10 § DGC Magazine September 2009 Issue

Administrative Headquarters
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GoldMoney

DGC Magazine September 2009 Issue § 11

been of an academic nature, rather they have wanted make, they save five per cent. Shop-owners may
to strengthen local, ecologically ­sustainable money lose five cents whenever they have to exchange their
circulations designed to counteract the capital drainage Berkshares for dollars at the bank (which they may
brought about by globalisation. Even functionaries have to do if they want to buy something which is not
in local banks consider complementary currencies as produced ­locally), but nevertheless they are normally
one means of tackling the problems faced by local happy to be able to retain their loyal local ­customers,
communities and the way their money circulates. whom they might otherwise lose to chains like Wal-
Mart, Starbucks and Barnes & Noble.
According to the E.F. Schumacher Society, regional
currencies existing in the USA include the Humboldt “Local currencies help educate people on the importance
Community Currency in Eureka, Berkshare in the of independent businesses. They bring people away
Berkshire Region, Ithaca Hourse in Ithaca, and many from the Internet and back on to the high street,”
others. Canadian local currencies are to be found in explains Susan Witt, the founder of Berkshares.
Calgary, Salt Spring Island, Tamworth and Madawaska
Valley. Across the Atlantic there are similar projects Common to all these currencies is the attempt to
in the United Kingdom, Switzer­land, Germany and ­provide an answer to the pressure of ­globalisation –
France. In Germany, the largest regional currency is part of which is the domi­nation of retail chains over
known as the Chiemgauer, which is used successfully local traders.
in parts of the country’s south. This currency gets its
name from the region around Chiemsee lake, and it has “Regional currencies allow the regions ­concerned to
played a pioneering role in Germany. solve many of their problems themselves,” believes
regional money expert, Professor Margrit Kennedy.
The Chiemgauer is already well developed and has Proponents of Regiogeld do not want to abolish their
proven itself in practice. Many ­producers and service ­national currency, but, as economist Professor Scheiper
providers have joined in the Chiemgauer scheme, and points out, “The Euro is a world ­currency and does not
two agri­cultural economic cycles have emerged. These take account of ­regional specifics nor of the general
include a cheese dairy which pays the shepherds who well­being of the region.” Kennedy advises anyone
supply it in Chiemgauers, which these shepherds use who intends to set up a new com­plementary currency:
in turn to pay for the goods they purchase from local “Don’t promise too much – explain the pros and
retailers; the retailers then pay their supp­liers using the cons clearly in advance. It is a good idea to have the
Chiemgauer. whole experiment evaluated by a scientific insti­tu­tion.
Regional currencies are after all a new approach, and
Werner Zimmermann and his funding ­association certain prejudices must first be overcome in people’s
in the east German town of Ludwigsfelde are also minds in order to earn the necessary credibility.”
involved in a local ­currency. This Christian group
is looking for a gate through which they can escape SCO wants a new reserve currency
the financial collapse which appears imminent. To To look at the matter from a completely ­different
them the way out of the dilemma is quite clear. “The perspective, the search for alter­natives to the spiralling
solution is called Regiogeld, one-to-one with the Euro,” dollar as a reserve currency is well underway at a
explains Zimmermann, “anyone who is a member of a Eurasian level. The current shift of power towards Asian
Regionalgeld funding association can make payments power blocs has of course given life to a ­critique of the
to other members with it.” All that has to ­happen is for existing reserve currency. While typically distancing
the principle to be accepted more w­ idely. themselves from the ­foreign policies of Washington, the
big Eura­sian powers have now also begun to ­criticise
Inhabitants of the American town of Berkshire can the existing dollar-dominated financial order. Russia
purchase a Berkshare for 95 cents at any of five and China especially are interested in an alternative to
participating banks – and in return they receive a five the existing system. They, after all, have so far never
per cent discount over the dollar by spending their benefited from fluctuations in the value of the dollar
Berkshares at any of 400 participating local businesses and the quantity of dollars in circulation.
instead of using dollars. For every transaction they
12 § DGC Magazine September 2009 Issue
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Peace of Mind – Second to Nothing

DGC Magazine September 2009 Issue § 13

On 16 June 2009 the leaders of the countries belonging a new reserve ­currency, since at the present moment
to the Shanghai Cooperation Organisation put their most of the world’s trade is ­conducted in dollars. If
weight behind a Russian proposal involving the use parts of the world were to stop using the dollar, this
of ­national currencies for international settlements, as would cause the currency to lose value steadily. In de
well as introducing a common currency for the region. facto terms, he says, US consumers are “borro­wing”
This means of payment is to be the equivalent of the money from foreign suppliers like China, who in turn
ECU (European Currency Unit) which the European would like to free themselves from dependency on
Community used before the Euro was introduced. At the dollar. US journalist Nicole Kardell described the
the ­sum­mit, Russia’s president, Dimitri Medvedev, G8 statements on the subject as “very weak.” Kardell
said, that “The current structure of reserve ­curren­ believes it highly likely that the ­proposal tabled by
cies and the most important reserve ­currency – the US the Russian President and ­supported by the presidents
dollar – have not worked as they were supposed to,” of Brazil, India and China (who together with Russia
and that the Russian ­rouble “would hopefully become ­constitute what is known as the BRIC nations) has
a reserve c­ urrency in the foreseeable future.” genuine prospects of success in the future.

German journalist, Ralf Streck, believes that Most observers must by now realise, ­accor­ding to
China’s and Russia’s strategy is aimed at a “gradual Ralf Streck, that there is no getting around the BRIC
disempowerment of the dollar.” Arkadi Dvorkovitch, countries any more. With around 40 per cent of the
financial advisor to the Russian President, has world’s population, they generate approximately 15
announced that Moscow will be investing a proportion per cent of global output, and own almost half of the
of its reserves in Brazil, China and India, and that world’s foreign currency reserves.
Moscow is “expecting its partners to invest in Russian
portfolios.” For the “privatisation” of money
Many people now recognise that the ­foundational
G8 nations remain uninterested reality of modern economics is that we transact and
As it happens, Russia and China (and also, at the pay using easily ­reproducible paper money. Recent
last minute, France) wanted to put the issue of new extreme ­monetary policies – especially in the USA and
reserve currencies onto the ­agenda of this year’s G8 Western Europe – have taught us that the amount of
summit which was held from 8 to 10 July in Italy. paper money in circulation ­basically knows no limits.
French Finance Minister Lagarde declared prior to the This leads to the recurrence of dangerous “bubbles”.
summit: “We ought to discuss a better coordination And yet only by increasing the quantity of money can
of exchange rate ­policies.” Also in this con­text, at a bankrupt banks be kept alive at all.
­meeting in Aix-en-Provence, France, the minister said
that the membercountries should talk about the roles The question which has to be asked is quite obvious:
and weighting of the various currencies, since these What can be done about this Bubble Economy? In
have changed as a result of the crisis. a society which prides itself on its freedoms, it is
inevitable that sooner or later people will begin to
Observers were hardly surprised when the summit question the state’s monopoly on money. In a ground-
organisers risked a spat with Moscow and Peking in the breaking article in the Frankfurter Allgemeine Zeitung
run-up to the event, by not placing the explosive theme on 12 June 2009, authors Thorsten Polleit, Michael
on the agenda. Aside from generalised formulations von Prollius and the liberal Bundestag member, Frank
like “global imbalance”, the paper presented to Reuters Schäffler, asked openly and without any ideological
in advance of the event contained no reference to the blinkering: “What if money were a private commodity
subject at all. which had to assert itself among rivals just like any
other kind of goods?”
In a review of the goings-on at the Summit, Gerald
Celente, founder and director of the Trend Research “The first financial crisis of the 21st century was
Institute, told Russian TV ­station Russia Today that new caused by bad money.” However, “today’s methods
reserve ­cur­­ren­cies represent a threat to the American of counterfeiting money are much more sophisticated
­economy. He explained how the USA would lose with than those of the 14th ­century.” To make things
14 § DGC Magazine September 2009 Issue
DGC Magazine September 2009 Issue § 15
more complicated, commercial banks are allowed to counteracts mis-investment and therefore eco­­­no­mic
“carry on the counterfeiting of money in the form of ­crisis. (...) Good money would in the end come out on
the creation of money and credit,” claim Polleit, Von top in a free market.”
Prollius and Schäffler, “and indeed are encouraged to
continue doing so in order to stimulate the economy A dialogue of facts
and growth as the state demands.” The consequences Contrary to the notion of a Clash of Civili­sations,
of all of this are quite obvious: “The loss of trust in it would seem that, even if only ­subconsciously, an
money as a means of exchange, and the destruction awareness is developing at ­different levels not only
of the global pricing system by bad money, lead to of the importance of monetary issues but also of the
a decline in economic cooperation, a decline in necessity for new solutions.
individual trans­actions, and therefore a reduction in
global social prosperity.” The fact that criticism is coming from so many sides –
as with the desire for alter­na­tives – is testimony to the
The solution, they say, is to privatise money. “The boundary-breaking, ­connective nature of the ­question
privilege of corrupting the creation of money and of money. It may sound slogan­esque, but it does come
credit must be taken away from central and commercial down to a ­question of sustainability and ­freedom –
banks.” And part of this process, they explain, should not the freedom we might have imagined, but a new,
be to assess whether gold might be ­helpful in over­ exciting kind.
coming the crisis and creating “good money”. The
German authors espouse a system of “free banking” http://www.globaliamagazine.com/?id=792
in which a “free market currency” would offer an
alternative to the means of payment proliferated
­coercively by the state’s monopoly on money, and
which, they say, are “adrift” and “unsecured”. No-one
will choose bad money willingly if they can get good
money on the market, say the authors.

The first step, as also proposed by the ­economist,

Murray N. Rothbard, would be to bind banks’ liabilities
to money at a fixed rate of exchange. Simultaneously
– and this would affect people directly – the banks’
deposits ought to be convertible into a ­corresponding
quantity of gold.

In a second “decisive step”, the monetary ­system

could then be privatised, say the authors of the FAZ
article. People in the ­market would then have “a free
choice as to their means of payment.” But, as well as
gold it would be conceivable that other goods such as
silver, copper, platinum, wheat and shares in property
could acquire the ­status of money. In such a system,
the clear-sighted analysis states commercial banks
could still issue ­credit in relation to their deposits, yet
they would no longer be allowed to create money and
credit out of nothing.

“Free Banking promises not only better money than the

paper money issued by the state and effectively based
http://issuu.com/izmedien/docs
on coercion, it could also ensure that the economy is
less prone to fluc­tu­ation, since free-market currency
16 § DGC Magazine September 2009 Issue
http://www.bullionvault.com
DGC Magazine September 2009 Issue § 17
 4 Dollar Continental Note

(below) This note is signed by Nicholas

Garrison and Daniel Cunyngham Clymer
a Pennsylvania Attorney and Lieutenant
Colonel during the Revolutionary War.
“A curious fact of American history is
that nature prints formed the design
basis of Colonial and Continental paper
currency from the late 1730’s to around
1780. It was the statesman, inventor
and accomplished printer Benjamin
Franklin (1706-1790) who conceived of
incorporating impressions of leaves into
printed currency, possibly to exploit their
inimitable structures as a way to foil
counterfeiting.” - Pari Stave, Curator 

1/3 Dollar Continental Note

(above) Designs we created by Benjamin

Franklin and shows the thirteen linked
rings representing the colonies and
the legends “WE ARE ONE” and
“AMERICAN CONGRESS”.

Images from Mac’s Old Paper Money

http://www.macsoldpapermoney.com

18 § DGC Magazine September 2009 Issue

 Not Worth a Continental
By Claire Wolfe

Once again reporting from the near future and that -----
fabulous, floating, man-made center of hard money, Stroll along Gold Island’s most fashionable esplande,
Gold Island ... the wide pedestrian avenue adjacent to Platinum Beach,
and you can’t miss the cafe called The Black Widow.
There aren’t many Americans on Gold Island -- which Yes, it’s odd to name an eatery after a deadly spider, but
feels weird. After all, until recently, Americans and the name works. The Black Widow is wildly popular,
American pop influences were everywhere. In Siberian both with the daring young set that finds it amusing
movie houses, you’d see Leonardo di Caprio shouting to defy convention and the older, more distinguished
in Russian. In what used to be called Darkest Africa, crowd that simply likes good food.
you’d find Hannah Montana tee-shirts. All over the
world you’d see (and hear) Americans treating local The woman I mentioned owns the place and is
populations with that curious “they’ll understand generally known only as “The Widow.” But it’s not of
English if I just shout loud enough” attitude. the restaurant that I mean to speak.

Funny thing was that it usually worked. You didn’t Slip into one of the shady alleys off the esplande and
really even have to shout because billions of “furriners” into the realm of tiny specialty shops. There, adjoining
really did understand English. And still do. By default, The Black Widow, you’ll find an odd little hole-in-the-
it remains the scientific, technical, navigational, wall called A Continental. The meaning of the name
diplomatic, and commercial language of the world is lost on most of the Europeans, Asians, and Mid-
(though that’s as much due to the influence of the old Easterners who shop in the district. Passersby probably
British Empire as the later American one). think it’s an attempt at being stylishly European. But
one look through the windows at the merchandise and
The pop-cultural references are still there, too -- and those who know their monetary history understand.
probably will be for a hundred years. But Americans
themselves? Most can’t afford to travel anymore. They The store’s name refers to the old American phrase
stay at home, attempt to eke out a living, and argue over “as worthless as a Continental.” And the store sells
who’s entitled to pick the last rags of their unraveling something you’ve really got to be surprised to find on
welfare state. Those you find outside are mostly those Gold Island -- worthless money.
who got out while the getting was good, while the U.S.
dollar could still buy plane tickets and modest little Selling worthless money? Here, on this floating paean
hillside or seashore villas. to precious metals and commodity currencies? Yep. A
Continental -- which is also owned by that personage
Aside from me and a few other imported serfs, known as “The Widow” -- is both a souvenir shop and a
(workers who clean out hotel rooms or wait tables) sort of ad hoc museum dedicated to historical currencies
most Americans on Gold Island are of that sort. They’re that have gone blooey -- currencies that have blown
wealthy global entrepreneurs or humble-but-smart up because of the manipulations of monstrous money
retired people who saw what was coming and departed mavens and corrupt politicians throughout time.
for foreign shores.
Of course, even a “worthless” Roman denarius or
Today I’m here to tell you about the unique works of a a “worthless” Confederate dollar or a “worthless”
different sort of American ex-patriate -- a woman who Weimar Deutschmark is worth something today for its
lost everything in the hyperinflation and who managed rarity or curiosity value. And apparently The Widow
to claw her way back up, get here, and thrive. makes a tidy sum selling such things via her storefront
DGC Magazine September 2009 Issue § 19
business and her much larger online auction sales. Cato Institute reports from another part of the world:
Go on in. There’s a surprising lot to see in such a “Starting in 1992 and lasting 24 months, what was left
compact space. Glass display cases and racks of of Yugoslavia endured the second-highest and second-
glassine envelopes contain hyperinflated paper funny- longest hyperinflation in world history, peaking in
money from 1920s Russia, Austria, Poland, Hungary, January 1994 when prices increased by 313,000,000%
and Germany, from WWII-era Poland and Hungary in one month. In all, there were 14 maxi-devaluations
(guess those Hungarians never did learn), and from during the hyperinflation, with each of the final three
more modern China, Argentina, Peru, Bolivia, exceeding 99.9%, completely wiping out the dinar’s
Poland, Ukraine, and Russia. (Yeah, guess those value in November ‘93, December ‘93 and January
Poles and Russians didn’t learn, either.) The Widow’s ‘94.”
got failed paper currencies from Angola, Belarus,
Bosnia-Herzegovina, Brazil, Bulgaria, Israel, Japan, -----
Madagascar, Mozambique, Nicaragua, the Philippines, But back to The Widow’s little store, A Continental ...
Taiwan, Turkey, Zaire, Zimbabwe, and the United Since most customers, even educated ones, don’t know
States -- just to name a few. about the phenomenal history of hyperinflation, they
wouldn’t care to pay good metal money for a plain old
(And when I mention the U.S. I’m not talking about real or yuan or dinar or dollar or franc or metical or
just the hyperinflation that eventually followed The pengo or cruzeiro. No, what people want to buy is the
Great Crash of Ought-Whatever; the U.S. had two real story. So every defunct modern paper bill or ancient
hyperinflations and at least one near miss before that. pot-metal coin comes with an account of its sad
Guess those U.S.-ians don’t learn from their history, history. Store displays give precis accounts of the vast
either.) catastrophes behind each scrap of scrip, each tin-plated
bit of copper (that should, instead, have been silver).
Bet you didn’t know there have been so many Every phony bill comes with a sheet or more of copy
hyperinflations just in the last 100 years, eh? Not that tells its story.
to mention a lot of earlier ones. Well, some modern
inflations were a “mere” 200 percent per month or so at Look at the displays, read the text, and you can picture
their very worst -- not newsworthy, as hyperinflations the human tragedies (and occasional tragic comedies):
go, but plenty painful to the holders of all those rubles, On a wall display of ancient Roman coins: “Early
zlotys, pesos, and marks. Romans were amazingly scrupulous about obeying
their own laws governing money. They understood
But some of ‘em were worldwide whoppers and you’ve that flooding the market with increasingly valueless
got to wonder why we haven’t heard more of them. money made for bad monetary policy and dangerous
Some of the champs (according to Taylor Watkins social conditions. So they issued coins that were struck
of San Jose State University) are: Greece, 1943-44, with high-quality dies (much harder to counterfeit than
8.55 billion percent per month (in the worst month*); cast coins). These coins contained a fixed and stable
Weimar Germany, 3.5 million percent; and Hungary quantity of copper or silver. For nearly 200 years,
1944-45, 4.19 quintillion percent. Wikipedia chimes in history shows not the slightest sign of decrease in the
with some even more stunning figures you might never value of Roman money. No surprise, those were also
have heard: China 1949, highest month’s inflation 2,178 years of increasing liberty, population, and economic
percent; Zimbabwe 2008, highest month’s inflation health.
79,600,000,000 percent or to put it in more down-to-
earth terms, 98 percent per day. Zimbabwean dollars “Then along came internal corruption at the highest
kept overnight were worth half the next day. Okay, levels. And Hannibal the invader. And a series of coups,
you’ve probably heard about Zimbabwe, but did you increasing militarization, and an obsession with foreign
know that in 1949, you could buy 23,280,000 Chinese conquest (then, as conquest depleted the physical and
yuan for a single U.S. buck? moral resources of the empire, an obsession with
holding off foreign invaders). Paying soldiers became
Steve H. Hanke, professor of applied economics at everything.
Johns Hopkins University and a senior fellow at the
20 § DGC Magazine September 2009 Issue
http://www.pecunix.com

DGC Magazine September 2009 Issue § 21

“In a series of debasements the silver denarius, not as much so as the English. Once again demonstrating
originally minted at 99.0-99.5 fine, was reduced to as a ruler’s uncanny ability to place the blame on others
low as 2 percent fine. and do exactly the wrong thing, Henry VII, victor in
the aforesaid king-sized family spat, tried to prohibit
“Emperor Diocletian then issued vast amounts of the use of foreign coins in 1498. But he and his son,
debased copper coins. Showing the beginning of a trend the outsized Henry VIII, and his son, the sickly, short-
that we shall see throughout all history, when this flood lived Edward VI, went on debasing English coinage.
of debased coinage inevitably lead to price increases, Edward’s sister, Bloody Mary, was too busy with
Diocletian blamed the greed of merchants. In 301 A.D. religious obsessions and personal quirks to care one
he issued the Edict of Prices declaring fixed prices on way or another. Food prices and other prices soared.
all manner of goods -- with a death penalty for anyone
selling at higher prices. Merchants rapidly stopped “Elizabeth I inherited an impoverished and chaotic
selling. So Diocletian, rather than admitting he’d nations. With the aid of Sir Thomas Gresham (of the
made a mistake, simply issued edicts against hoarding, famous Gresham’s Law) she immediately and boldly
which, he considered, is what the merchants were set about to reform the currency, establishing the pound
doing when they refused to sell. Merchants naturally sterling -- which really was a pound of high-purity
left their trades entirely. So Diocletian, continuing to silver. She was able to do this largely via successful
show himself to be a true politician (e.g. a person who raids on Spanish ships that carried enormous quantities
believes you can create social order by issuing orders), of precious metals. But however she accomplished it,
countered with laws decreeing that every man had to she thus launched England on a course of monetary
pursue the same occupation as his father, under penalty stability that lasted until the modern era of paper
of death. money.”

“The government of Rome continued to grow. The On a display of 18th-century French livres and various
former citizens of Rome lost their liberties and ,within pre-revolutionary stock shares: “When the fabulous
fewer than 200 years from their finest and freest hour, “Sun King, “ Louis XIV, died, his extravagances had
descended into serfdom.” left France three billion livres in debt. Along came a
Scottish ‘banker’ -- actually a gambler, adventurer,
On a tray of old English coins: “After battling (and duelist, and playboy -- John Law. He promised fiscal
deliberately blinding) his older brother Robert for the salvation to the new king, Louis XV.
throne of England, Henry I (1068-1135) allowed or
encouraged the debasement of England’s silver coins. “Before John Maynard Keynes was even a twinkle
The value of England’s money then fell dramatically. in his father’s eye, Law had, on his own, invented
But of course, as usual it was not the ruler’s fault, but something very like Keynesian economics. ‘Domestic
the fault of greedy others. So in 1124, Henry ordered trade depends upon money,’ he reasoned. ‘A greater
the right hands of all mint masters cut off. This did quantity employs more people than a lesser quantity.
bring about a temporary improvement in the quality of An addition to the money adds to the value of the
coinage. But it was not to last. country.’

“His descendant Henry II reformed the English coinage “So, Law concluded, let us print more paper money
in 1158. This restored the prestige of English money and get rid of that pesky limiting factor of gold. It
for the next remarkable three centuries. will be such a stimulus! He also proposed to increase
credit and reduce the national debt by replacing it with
“Then came the War of the Roses (1455-1485). During shares in economic ventures. According to admiring
this interfamilial squabble, English currency was Law biographer Antoin E. Murphy, Law’s theories
clipped and counterfeited to within an inch of its life. ‘captured many key conceptual points which are very
(You’ll discover that most hyperinflations begin with a much a part of modern monetary theorizing.’
need to finance some war or another.) Citizens became
reluctant to use it in trade. Instead, they preferred “This is not necessarily a good thing. Law’s career in
European or Irish coins, which were also debased, but France is too complex to summarize easily. He became
22 § DGC Magazine September 2009 Issue
http://www.e-dinar.com

DGC Magazine September 2009 Issue § 23

many things at once: comptroller of the currency, founder of $2 million in bills of credit -- which soon came to be
of a central bank, creator of government monopoly called ‘Continentals.’
power, and marketer of the Louisiana Territory in North
America -- whose value he deliberately overestimated “Continentals were supposed to be redeemable in real
and whose shares he vastly oversold. If you want money at a later date -- after peace returned and farmers
the full story, google ‘Mississippi bubble’ sometime. could bear to pay higher taxes. (The bills were marked,
But another way to get an eerily similar story would ‘redeemable in Spanish milled Dollars, or the value
be to look up the more modern machinations of Alan thereof in gold or silver, according to the resolutions of
Greenspan, Ben Bernanke, and a whole host of former the CONGRESS, held at Philadelphia the 10th of May,
Goldman-Sachs executives. Or to google ‘housing A.D. 1775.’) But -- no surprise -- by the end of that
bubble’ or ‘credit bubble.’ Same thing; different era. year, the $2 million had become $5 million and within
four years, $242 million. Not only that; the bits of
“John Law became a global celebrity. He hobnobbed printed pasteboard were easily counterfeited -- which
with royals and received envoys from the pope. As the British did happily and openly.
Ben Bernanke would be (ca. 2009), he was hailed as
a financial miracle worker who saved France from “In the first year or two, few people noticed any
disaster and lifted her toward prosperity. problem. Prices remained stable, and although gold
and silver did disappear from circulation (as Gresham
“Then in January 1720, a couple of royal princes predicted), the Continentals seemed to ‘work.’
decided to cash in their shares of Law’s (and France’s)
vastly inflated “Compagnie” that was developing “By late 1776 or early 1777, however ... prices began
Louisiana. They turned in their paper and requested to rise. Still, nobody blamed the Continental. (Nobody
the gold supposedly backing it. Ooops. Multitudes of ever blames the fiat currency until every other target
their friends and fellow investors decided to follow of blame has been exhausted.) Defeats in battles, the
suit. In his capacity of Controlleur des Finances, Law experts claimed, were causing the value of their money
frantically began printing up paper money to try to to fall. No, the problem just couldn’t be in the money
appease investors and keep both his schemes and the itself.
French economy afloat. Then he tried to dam the flood
of cash-ins by making it illegal to hold large amounts “But in the end it was undeniable. The tide turned;
of gold. He tried many other things, too. But they all the U.S. won the war -- and according to the experts,
failed. the Continental should have been valuable again.
But instead of $100 in Continentals being exchanged
“France was reduced to financial chaos, ripe for the for $100 worth of gold or silver, by 1781, it took
revolution that followed a few decades later. Law was nearly $17,000 worth of Continentals to buy $100 in
impoverished and exiled. He lamented, ‘Last year precious metal. George Washington himself groused
I was the richest individual who ever lived, today I that a cartload of Continentals would scarcely buy a
have nothing, not even enough to keep alive.’” He was cartload of supplies for his soldiers. After the war, the
hardly alone. government never made any attempt to redeem the
‘money’ -- which would have required crushing taxes.
On a tray of slightly mangy U.S. revolutionary
“Continentals”: “The battles of Lexington, Concord, “According to an 1863 news article, Americans (not
and Bunker Hill were not long over. At the start of the knowing their history, even then, it appears) came to
American revolution the country’s somewhat ad hoc consider the Continental, ‘the worst example of an
Continental Congress faced the problem of raising irredeemable currency which the world has ever seen,’
enough money to continue to fight the British. With “History has its defenders of the Continental. It did,
actual funds in short supply, and no way to raise enough after all, help the colonists to beat their powerful British
tax revenues (since many of the most productive masters. But the people who actually held Continentals
citizens, the farmers, were out fighting battles), they got relentlessly screwed. They saying, “not worth a
could only create funds by borrowing. They ordered Continental” became a term of contempt that lasted
the printing of what they claimed would be a maximum clear into the 20th century.
24 § DGC Magazine September 2009 Issue
And finally on a display of recent U.S. paper: “If you’ve “The only moral that story holds is the one Santayana
looked at any of the other displays here in the store and warned us about in vain, ‘Those who cannot learn from
read their stories, do you really even need the history history are doomed to repeat it.’
of the once-almighty U.S. dollar -- the dollar everyone
was compelled to accept in trade, the paper that nearly “It’s also my story. And that’s one worth knowing. If
weighed the whole world down to its knees? you want to hear the details some time, come into the
restaurant next door. If it’s a slow time, I’ll be glad to
“You already know that story, don’t you? Because tell you my story and hear yours. -- The Widow”
it’s your story, no matter who you are or where in the
world you’re from. It’s also the same sad old historic -----
tale of governments trying to ‘stimulate’ (e.g cheat) * Figures vary on the maximum Greek hyperinflation.
their way out of war debts, the expenses of empire- This seems to be the most commonly stated, but even
building, and public extravagances -- of governments the Wikipedia article on hyperinflation differs with
blaming everyone else for government-created itself on the exact figure. That seems to be a common
troubles -- everyone from ‘greedy businessmen’ to problem with accounting for hyperinflations; things get
‘over-extended households’ to ‘foreign interests’ to so bad and events move so rapidly that nobody really
‘unregulated bankers.’ It’s a story of a con that, like knows the exact depth of the catastrophe.
a lot of cons, looks profitable for a little while, but
always, everywhere, comes to disaster.

http://www.rawgoldnigeria.com/

DGC Magazine September 2009 Issue § 25

 October is the Could it happen? If history repeats itself . . .
To put the above chart in perspective, consider that the

Cruelest Month
Dow did not fully recover its 1929 peak until 1953! The
growth was so moderate, in fact, that the Dow did not
by Tarek Saab eclipse 1,000 until 1972 - and this occurred when the US
economy was production-based.
T.S. Eliot famously declared “April is the cruelest month” Still, in October 2007 the Dow came within a hair of
in his poem, The Wasteland. Apparently, Eliot was no 14,000, representing 14x growth peak to peak in 35 years
stock investor. For those holding stocks, it is October from 1972 to 2007; a symptom of credit-induced inflation
which has been the cruelest month. October 1929. and a bubble of unimaginable proportions. During this
October 1987. October 2008 . . . Wasteland indeed. period, our economy transitioned from one of production
to service, and through that process became entirely
If analysts like Robert Prechter and the Elliott (not the unsustainable. How far can you stretch a rubber band
poet) Wave theorists are correct, and the 2009 market before it breaks?
recovery is similar to the 61% retracement in 1930
following the ‘29 crash, then we are on the verge of While the greatness of the United States has faded faster
a frightening collapse. As Prechter notes in a recent than Harrison Ford’s career, Tom Clancy hero Jack
interview: “What I have been saying publicly is that the Ryan lives on in cinema history, as does our notion of
Dow could go below 1,000 which is a radical enough patriotism, though even Ryan never saw clear and present
statement.” danger like what we are presently facing.

Does the nation sense it? Could

a monumental crash be in the
offing this fall?
The spectrum of national
pessimism varies depending
on one’s political credo; from
the communists, like our
President, to the “Hannitized”
and the Glenn Beck fans, who
still feed into the party line
shouting “mega-dittos!” and
“You’re Great American!”
from Juneau to Tallahassee.
Hannity implores his base, “let
not your heart be troubled!”
Easy for him to say. This once-
great nation remains distracted
with the prospect of national
healthcare while the economy
languishes in peril.

Those with little capital have

no choice but to weather the
storm with a combination of
precious metals and US dollars.
Those with money to invest are
seeking offshore safe havens.
Outside the far right and the
far left moves a segment of
investors looking beyond

26 § DGC Magazine September 2009 Issue

the pale of American politics to growing worldwide your money cannot make the trip? The existing threat of
sanctuaries. foreign exchange controls, as I wrote in my last article, is
an ever present danger.
Many Americans ask, where is it any better than here?
Truthfully, not too many places unless you are a socialist, Foreign productive real estate is crash proof and protective
but there are oases where freedom is a way of life and for two main reasons: 1. A producing commodity will
not a marketing slogan. Paraguay and Uruguay are two always generate income despite market fluctuations.
countries drawing international investors because of tax 2. The United States government mafia simply cannot
benefits (Paraguay’s income tax is 0%), cheap land and repatriate foreign land. (And if the real estate does not
labor, political stability, and a variety of other merits. As produce, it is exempt from US taxation as well).
free marketers know, economic stability is never built on
a mountain of credit. Also, it is difficult for a central bank It is time for another Jack Ryan-sequel to Patriot Games.
to control the population when 90% of the people do not Clancy could call it Repatriate Games, as in, protection
own bank accounts. from the government repatriating your assets, which
is happening to banking customers in Switzerland. Or
In the most recent issue of Without Borders, the Casey he could call it Expatriate Games, as in the six million
Research spin-off, authors Simon Black and Fitzroy Americans who presently live outside the United States.
McLean recommend holding 30% of one’s investment
portfolio in “foreign productive real estate.” They define Either way, now might be the time to begin thinking
this real estate as “rental property or agricultural/forestry differently. For some, freedom never came so cheaply.
which can also be used as your escape destination if
things get really bad at home.” Till next time, that’s my Saab Story.
Tarek Saab
Escape destination, indeed, not only physically, but http://www.goldandsilvernow.com
fiscally. For what good does it do to flee the country if [email protected]

http://www.goldmau.com

DGC Magazine September 2009 Issue § 27

Anybody
Seen Our
Gold?
The gold reserves of the United States have not been fully and independently audited for half a century.
Now there is proof that those gold reserves and those of other Western nations are being used for
the surreptitious manipulation of the international currency, commodity, equity, and bond markets.
The objective of this manipulation is to conceal the mismanagement of the U.S. dollar so that it might
retain its function as the world’s reserve currency. But to suppress the price of gold is to disable the
barometer of the international financial system so that all markets may be more easily manipulated.
This manipulation has been a primary cause of the catastrophic excesses in the markets that now
threaten the whole world. Surreptitious market manipulation by government is leading the world to
disaster. We want to expose it and stop it.

Who are we?

We’re the Gold Anti-Trust Action Committee Inc., a non-profit, federally tax-
exempt civil rights and educational organization formed by people who recognize
the necessity of free markets in the monetary metals. For information about
GATA, visit http://www.GATA.org

GOLD ANTI-TRUST ACTION COMMITTEE INC.

7 Villa Louisa Road, Manchester, Connecticut 06043-7541 USA
[email protected]
GATA welcomes financial contributions, which are federally tax-exempt
under Section 501-c-3 of the U.S. Internal Revenue Code. GATA is
not a registered investment adviser and this should not be considered
investment advice or an offer to buy or sell securities.

28 § DGC Magazine September 2009 Issue

e-gold Update: INFORMATION IS REQUESTED, IT MUST
BE PROVIDED BEFORE ANY INITIAL OR
FURTHER TRANSACTIONAL ACTIVITY MAY
Owner CIP, CDD, and Agio Fee BE PERMITTED. FAILURE TO PROVIDE ANY
Schedule Changes OF THE CIP, CDD, OR EDD INFORMATION
WHEN REQUESTED COULD RESULT IN
From the e-gold blog for August 2009 YOUR ACCOUNT BEING TREATED AS
http://blog.e-gold.com/2009/08/index.html ABANDONED PROPERTY AND ESCHEATED
TO GOVERNMENTAL AUTHORITIES OR
Effective immediately, e-gold requires additional FORFEITED TO THE US GOVERNMENT.
information from all e-gold account Users in
compliance with US legal requirements and e-gold’s Agio Fee Schedule Changes
“Customer Identification Program” (CIP).
Effective with the next Agio fee collection:
Owner Information (Owner CIP)
* The Agio fee rate for those e-gold accounts in
e-gold requires all Users to provide information about compliance with all e-gold CIP, CDD and EDD data
the Owner of the e-gold accounts in User’s control. collection requirements in effect at the time of Agio
ALL USERS ARE REQUIRED TO TAKE ACTION fee collection will be reduced from 1% per annum to
AT THIS TIME. 0.5% per annum.

Completion of User CIP is a prerequisite to completing * The Agio fee rate for those e-gold accounts
Owner CIP. It is imperative for any User who has not *NOT* in compliance with all e-gold CIP, CDD and
yet completed User CIP to do so immediately. EDD data collection requirements in effect at the time
of Agio fee collection will be increased from 1% per
annum to 10% per annum.
Customer Due Diligence
* e-gold accounts are deemed to be in compliance
Collection of information for identification and
(for purposes of determining which Agio fee rate
verification purposes is only one part of e-gold’s
applies) if, as of the time Agio is collected, the
broader “Customer Due Diligence” (CDD) process.
User has provided *ALL* required information and
In compliance with US requirements, e-gold requires
documents, including any additional information or
additional information about e-gold account Owners
documents requested during the review process. For
and the intended usage of their e-gold account(s) to
this reason, it is imperative that Users login regularly
prevent e-gold accounts from being used for money
in the event additional information is required.
laundering, terrorist financing or other financial
crimes. ALL USERS ARE REQUIRED TO TAKE
Agio fee schedule is available here.
ACTION AT THIS TIME TO PROVIDE REQUIRED
http://blog.e-gold.com/scheduled-agio-collection/
INFORMATION.
Advance notice of next Agio fee collection date and
Enhanced Due Diligence time is available here.
As part of its “Enhanced Due Diligence” (EDD) Further Agio Fee Schedule Changes
efforts, e-gold may request other information for http://www.e-gold.com/unsecure/fees.htm
accounts with Owners or activity meeting certain
criteria. For example, money transmitting businesses The Agio fee is the equivalent of an account
will be subject to EDD. maintenance fee. e-gold Ltd reserves the right to
make further changes to the Agio fee schedule based
PLEASE NOTE THAT IF CIP, CDD OR EDD on the costs of maintaining and enhancing the e-gold

DGC Magazine September 2009 Issue § 29

 A quick look
system. e-gold Ltd continues to review the Agio fee
schedule in view of these costs and may announce
further changes within the next 6 months.

********
inside today’s e-gold
EVEN IF YOU BELIEVE THE ACCOUNTS YOU from their stats page.
CONTROL TO BE FULLY COMPLIANT WITH
ALL OF E-GOLD’S CIP, CDD AND EDD REQUIRE-
MENTS, PLEASE MAKE A POINT TO LOGIN AT
With over 5 million accounts,
LEAST ONCE A WEEK TO SEE IF ANY ADDITION- the stats show just 325,741
AL INFORMATION HAS BEEN REQUESTED. FOR
EXAMPLE, E-GOLD INTENDS TO REQUIRE AD- which still have any metal in
DITIONAL OWNER CIP INFORMATION FOR AC-
COUNTS WHERE THE USER IS NOT THE OWNER them.
(SUCH AS ACCOUNTS OWNED BY COMPANIES)
IN THE NEAR FUTURE.
Of the 325k funded accounts,
FAILURE TO PROVIDE ANY OF THE CIP, CDD, OR
EDD INFORMATION WHEN REQUESTED COULD just over 200,000 of them
RESULT IN YOUR ACCOUNT BEING TREATED
AS ABANDONED PROPERTY AND ESCHEATED have less then $31 USD of
TO GOVERNMENTAL AUTHORITIES OR FOR-
FEITED TO THE US GOVERNMENT.
value in the account (1 gram
of gold)
------------------------------------------------------------------

Out of the entire 5.13 million

Our best wishes go out to Dr. accounts still in operation,
Jackson for a speedy resolution including funded and
to e-gold’s current regulatory
issues.
unfunded only 484 were
accessed in the last day.
The folks at DGCmagazine are
confident that e-gold’s digital There were NO e-gold spends
gold currency business will in the past 24 hours.
continue and that consumers
will eventually learn the real
advantages of digital gold over
165 account have between
conventional banking and credit
1kilo and 10 kilos of gold still
products. present.

30 § DGC Magazine September 2009 Issue

DGC Magazine September 2009 Issue § 31
 http://www.opencurrency.com

32 § DGC Magazine September 2009 Issue

Open Letter to the Builders of the New Economy
http://newcurrencyfrontiers.com

L et’s face it – we’re socially retarded.  Our social

institutions, beliefs, culture and politics are not
keeping pace with rapidly changing technology,
Economy

• Open Transport
information, environment and the economy.  We cling • Open Rules
to familiar old patterns and structures until we’re • Open Data (with Intrinsic Data Integrity)
blindsided by sudden, necessary changes. Most of us • Help Us Make This Happen in Time 
know at some level that the old financial systems are
beyond repair, but we are simply not ready to let go This is a definitely a case where timing is everything.
of them yet. Unfortunately, that won’t prevent their The more useful currencies that we can have up and
collapse.  operating BEFORE the complete collapse of the
old financial infrastructure, the better off we all are.
We Need to be Building Real Alternatives There will be less chaos, panic and disorientation if
Look. The powers behind today’s monetary system we have viable alternatives to turn to which help us
not only know the collapse is coming, but are actively feed, house and care for ourselves and our families.  
partaking in it’s demise.   They will step up to offer
a new alternative (that they still control) and exert We are working on this as fast as we can, yet we are
their influence to be sure it’s adopted.  The question still having to operate in the old economy, paying our
is whether we will continue to surrender our power to bills, our programmers, buying things the old way.
choose what we value and how to measure it back to This means that building the infrastructure for the
them again, or whether we will reclaim those capacities new economy remains a perpetual side-project not
for ourselves. moving as quickly as it could if we could devote our
full-time energies to it.  We need help. 
Let me paint a picture… Twenty-five years ago if
you had a decent size business and needed to select Funders: All financial assets in the old economy are
computer platforms for increasing the productivity of on their way to being worthless as it all unravels. If
your business, the “safe” choices were obvious. All you have holdings that you’d like to see ensure some
options were proprietary, and you generally went with tangible future wealth for you, your family or your
a big-named player who was likely to be setting the community, then investing in the capacity to create
standards and still be around to support the applications and manage that wealth directly is the wise decision.
in a few years. Help us build the infrastructure tools of the new
economy so we can help you create new kinds of
Open sourcing our currencies creates choice ... financial assets independent of the collapsing banks
The idea of many currencies competing for attention and national currencies. We’ve put about $350,000
and value may seem to you like chaos at first. of our own time and money into this so far and it
Normally we refer to that particular kind of chaos a will probably take another $500,000 to get these tools
free market. launched. Mobilize your dying assets while they’re
still worth something.
Currency Infrastructure Required for an Open

DGC Magazine September 2009 Issue § 33

 Geeks: We need all kinds of technical help: coding, of the people who use it.  We need you to spread the
designing, testing, documentation, UI, hosting, word. It is hard to shed some of the old sacred cows
scripting, etc. If you have something to offer in this and assumptions of industrial age economics, but
domain, come to  http://projects.metacurrency.org, there are many others who are ready to start.  Send
create an account, tell us how you can best contribute them this letter. Publish it on your blog. Take back
and you’ll get the inside track to the work in progress control of your finances and your future. 
and the tasks at hand. 
You can add yourself the list of builders of the new
Community Leaders:  Economic theories may be economy at http://newcurrencyfrontiers.com
interesting, but we’re much more interested in
application. If you are part of a community which Core Team:
needs tools to facilitate the movement of resources, Greg Berry – Boulder, CO
building of trust, setting up of incentives or Arthur Brock – Denver, CO
participation metrics and measures, then you should Eric Harris-Braun – Canaan, NY
be looking at implementing a currency. We have Fernanda Ibarra – Mexico City, Mexico
currency designers who can help you get started, but Alan Rosenberg – Portland, OR
the real work is in bringing people on board.  We need Jean Russell – Chicago, IL
you and you need us.  Katin Imes - Portland, OR
Adam King - New Haven, CT
People Who Understand:  If you don’t fit in one of Georg Pleger - Innsbruck, Austria 
those other categories, but you can see the value and
importance of building a solid infrastructure for our http://newcurrencyfrontiers.com/wagn/Open_Letter_to_Build-
financial future -- an infrastructure no longer ruled by ers_of_the_New_Economy
wealthy oligarchs, but under the care and management

http://www.paysbuy.com

34 § DGC Magazine September 2009 Issue

the terms of the hedges calculate that Barrick is still October.
on the hook for at least another few hundred millions
of dollars beyond what has been acknowledged. The Federal Deposit Insurance Corporation has
technically exhausted all of its assets with losses
There are two extremely important points to gain suffered from bank failures (more than 100 in the
from this development. past 12 months). In response, the FDIC has changed
its method of calculating its reserves. Now the FDIC
First, Barrick was supposed to redeem these hedges considers its assets to be part of reserves until they
by delivering physical gold. That is what the parties have to be physically dispersed rather than what is
who originally loaned the gold to Barrick wanted to owed as of the time a bank fails. So, for the time
receive. Settling some of these hedge contracts for being, FDIC is claiming that it is not out of reserves.
cash technically constitutes a default. It appears that
Barrick officials realize it is simply impossible to buy When the COMEX gold market closed above $1,000
the quantity of gold they would need to deliver against last Friday, it was the first time ever that gold had
the hedges. Barrick only produces about three million closed above $1,000 at the end of a week. Technical
ounces of gold annually, so they cannot cover their traders give heavier weight to Friday closes than to
hedges quickly out of production. Now the creditors other days of the week.
will receive cash, but where are they going to find the
gold they expected to get? Another tidbit for technical traders - the last two times
that gold reached a significant peak, the high was at
Second, the fact that Barrick decided to cash out least 25 percent above the 34-week moving average
some of its hedges with gold at $1,000 is a sign gold price. Right now, gold is only about 7 percent
company officials expect higher prices in the future. above its 34-week moving average, leaving lots of
If they thought prices would be stable or decline, room to rise.
there would be no reason to close these hedges now.
Barrick has been in the thick of partnering with the For the past few weeks, the price of gold has been
U.S. government to suppress gold prices. It did so to hammered just before and during U.S. Treasury debt
such an extent that in one suit a few years ago it tried auctions on Tuesday, Wednesday and Thursday.
to claim the U.S. government’s sovereign immunity Within minutes of the closing of the final auction,
extended to transactions the company conducted gold prices have started to rise, which is probably
for the benefit of the U.S. government (this was the one reason that gold closed strong last Friday. This
Blanchard case that was settled out of court with a weekly pattern may continue for a while, where gold
confidentiality order on all parties). is clobbered on Monday ahead of the auctions, and
isn’t allowed to climb until late Thursday afternoon.
Failure to deliver on a contract of this magnitude
could indicate that the gold market is in the initial Even in the face of huge short-selling by the U.S.
stages of a commercial signal failure. A commercial governments trading partners, gold still rose to break
signal failure occurs when parties with major short over $1,000 last week. To give you a feel for how
positions, like Barrick, start to panic to cover their aggressive are the gold price suppression efforts,
positions. In such circumstances, prices can rise last week’s COMEX commitment of traders report
sharply and quickly. showed that commercial traders, on net, shorted gold
by five million ounces in the previous week. That
Other fresh developments: amount of short trading would require one month
of global mine production to cover it. This is not a
H.R. 1207, the bill calling for an audit of the Federal sustainable pace.
Reserve (and likely also the US government’s gold
holdings) has been scheduled for a committee hearing Trading in the silver market has been extremely
on Sept. 25. Committee Chairman Barney Frank has interesting. Silver’s price has jumped 20 percent
already stated that he expects this bill to be passed in recently. Normally such a quick rise of this magnitude

DGC Magazine September 2009 Issue § 35

 http://www.goldandsilvernow.com

“Tarek Saab has begun something that

many of my friends and associates have
talked about for years!”
David Morgan

“Thank you for showing others how to do it

right!”
Jason Hommel

“GoldandSIlverNow is helping to solve the

shortage in the precious metals market!”
Fort Worth Business Press

WELCOME TO THE FREE MARKET!

Sellers get the best value for their bullion.
Buyers receive their metal immediately.
Simple as that!

www.GoldandSilverNow.com
36 § DGC Magazine September 2009 Issue
 http://xgold.ca

would lead to a noticeable increase in supply and

decline in demand. Instead, the COMEX October
contract closed last week at a higher price than the
Skype Now
September contract. The condition where future
month contracts trade higher than the spot month
is called backwardation and is a clear signal of a
Accepts
shortage of the physical commodity.

We could see lots of fireworks in both the gold and

Webmoney
(WMR)
silver markets before the end of September.

http://www.numismaster.com/ta/numis/Article.
jsp?ad=article&ArticleId=7650 Wow, Skype is now accepting Webmoney as a method
of payment. You must be located in that part of the world
for the option to be available to you and they only take

GoldMoney.com WMR purse but wow, way to go Webmoney.

Approaches Webmoney Transfer currency has more than 8,500,000

accounts and over a decade of uninterrupted online
$1 Billion in service to their clients.

Holdings WebMoney Territory today cover 8069 cities in 70

countries around the world. Click here to open a new
Webmoney account. (I highly recommend it)
Over US$704 million of gold, silver
Stay tuned for later this year (Oct 5th) when
& currencies as of 31 August 2009 DGCmagazine will be out with a huge mega double
http://www.goldmoney.com issue, “inside Webmoney” live from Moscow.

DGC Magazine September 2009 Issue § 37

 http://www.numismaster.com
38 § DGC Magazine September 2009 Issue
 Social network About Sonico.com Inc.

Sonico has selected

Founded in July 2007, Sonico is the social network
of Latin America that organizes people’s life online.
Developed with a strong emphasis in user legitimacy,
GlobalCollect for its privacy and personalization, it has been widely adopted
across Latin America. This social communication

Latin America Biz platform has over 40 million registered users and
allows individuals, organizations and brands to
interact in a useful and entertaining way. Located
Amsterdam, The Netherlands – September 15, 2009 in Buenos Aires and with a team of over 80 people,
-- The popular Latin American social networking Sonico was elected by Business Week as the 5th
platform www.sonico.com offers its over 40 million tech startup with the highest global growth potential.
registered users a safe and fun environment to connect Sonico closed its first round of capitalization of USD
and stay in touch with real-life friends, colleagues, 4.3 million in May 2008.
and family. The partnership with GlobalCollect
enables Sonico to process international online credit About GlobalCollect
card payments via Visa, MasterCard, and American GlobalCollect is the world’s premier Payment
Express for its premium subscription services. Future Service Provider of local e-payment solutions for
plans entail expanding the range of payment methods international Customer Not-Present (CNP) channels
to include local and alternative options. such as internet, mail and telephone orders, and
specialized in a wide range of industries such as travel,
Both companies had already established a fruitful ticketing, telecommunications, retail, publishing,
business relationship indirectly in 2006, when portals, online gaming, and digital content. While
GlobalCollect started processing online payments for most providers limit their services to a technical
Clon Communications - link with payment acquirers, GlobalCollect is a full
service partner consulting clients on how to increase
Sonico’s sister company - an online retailer of various transaction volumes, expand distribution channels,
prepaid cards. Based on Clon’s positive history and reduce costs by streamlining back office
with GlobalCollect – Clon’s international online processes. Through a single-interface online payment
transactions have quadrupled since then - Sonico platform, we offer access to an unrivalled portfolio of
decided to partner with GlobalCollect as well for its local and international payment methods in over 200
online payment needs. countries, including all major credit and debit cards,
direct debits, bank transfers, real-time bank transfers,
Gustavo Victorica, CFO of Sonico, said: “We chose eWallets, cash at outlets, prepaid methods, checks,
GlobalCollect on the basis of its comprehensive and invoices. http://www.globalcollect.com
portfolio of payment methods. This, plus its single-
interface payment platform supporting multi- Contact Sonico.com
currency online payment transactions will help us Florencia Sabatini
boost conversion rates.” PR Regional Manager
tel: +54 -(11) 52584286
Jan Manten, CEO of GlobalCollect, continued: e-mail: [email protected]
“We welcome the opportunity to service Sonico.
com, a popular and rapidly growing social network Contact GlobalCollect
in Latin America. We believe that this region holds Bettina Duske
tremendous growth opportunities for all sorts of Manager PR & Marketing Communications
e-commerce activities in general, which is why we tel: +31-(0)23 567 1500
have decided to open a local office in Buenos Aires e-mail: [email protected]
in the very near future.”

DGC Magazine September 2009 Issue § 39

 http://www.cashcards.net

40 § DGC Magazine September 2009 Issue