1) The Islamic Dinar is a newly created 100% gold currency that its backers hope and believe will become the currency of more than one billion Muslims. (...)
The ISLAMIC DINAR is now being privately used in more than 22 countries and is currently being minted in four countries. Eventually, the list of countries where it is traded is likely to grow to a much larger number given the large number of Islamic Countries who are members in the Islamic Development Bank, which includes some 51 countries. During 1982, the Islamic Development Bank was prescribed by the IMF as a holder of Special Drawing Rights (SDR's).
An Islamic Agency has been set up to handle accounts and payments between accounts in the city of Dubai. This will allow the use of Islamic Dinars to spread in the Muslim world as a medium of exchange. At present, this undertaking is quite modest, with only $200,000 worth of gold deposited in Dubai. Dubai is viewed as an attractive place to keep money away from the taxation authorities since there are not taxes on individuals, corporation or merchandise sales there. This spokesman for the Islamic Dinar mint also claims his organization has a good relationship with the Royal Family in Dubai, which should help the group's efforts. After the summer a campaign aimed to the Muslim world to open accounts in dinars is anticipated and the goal is to open 10,000 accounts within the first year of operation.
The organization may link up with another new and exciting development in the modern world as far as gold is concerned. They may soon be trading gold Islamic Dinars globally on the Internet through an organization located at www.e-gold.com . Readers are encouraged to visit this web site for more information, but essentially, the technology now exists to enable you to buy and sell gold right from your computer. It will be quite easy to make compatible our Islamic Agency, which will be operated by a Web Site to your e-gold Web Site.
The sponsors of the Islamic Dinar will suggest to Muslims that they convert their paper currency denominated accounts into Islamic Dinar in Dubai. In addition to tax aspects, Dubai is an appropriate place from which to launch this new banking enterprise because it is forbidden for Muslims to deposit their money with non-Muslims. In the Qur'an itself, Allah makes this prohibition (which is a command for us) clear precisely when referring to the Islamic Dinar.
On May 22 through May 24, directors of the Islamic Mint Directors from all over the world were scheduled to meet in Dubai to move this project forward. Stay tuned. I plan to tell you more about this story as it unfolds and how you may be able to begin buying gold by way of e-gold.
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2) There has even been an electronic dinar website started at www.e-dinar.com. The member countries of the Islamic Development Bank (some 51 countries) are committed to moving to the use of the Islamic Gold Dinar as a medium of exchange. The Islamic Dinar is equivalent in value to the IMF's Special Drawing Rights (SDR's) which is the unit currency of IMF and itself is backed by gold. There is also an agency in Dubai set up to handle accounts and payments between accounts. This is meant to allow the use to spread further throughout the Muslim world.
While there has been considerable press about the Islamic Dinar in Muslim countries it has caught little attention in the Western nations. That is probably because thus far it has not had much impact. But as gold continues to go higher and the US Dollar falls further that may change. We are reminded that while Gold and Silver are commodities they are also monetary assets.
While the potential for the growing use of the Islamic Gold Dinar will add to the monetary demand for gold (and silver) there is another potential monetary demand looming. That is China where the Chinese government in 2002 revived the long dormant (for 50 years) Shanghai Gold Exchange and also authorized the Bank of China and the commercial banks to trade in gold. Under the previous communist regime there was a long period of condemnation of gold.
In 2004 the people of China will be allowed to buy gold for the first time as an investment since 1949. This could be significant as for the past two years the Chinese government has been laying the groundwork. There is estimated to be upwards of US$1.3 trillion in savings currently in the Chinese banking system. These savings have helped fuel China's incredible growth but now being free to buy gold for the first time in years if even a small amount say 1% it would put pressure on the gold market to fill demands.
As well the Chinese have been openly concerned about maintaining the value of the Yuan given a long history of currency collapses. The Bank of China has been a significant purchaser of gold during the period when the announcements always seemed to be favouring that central banks were selling gold. As well the Bank of China has been a significant purchaser of US securities in order to help maintain the value of the Yuan against the US$. As a result China's foreign reserves have been growing and they want to maintain at least minimal levels of gold (2.4%) as a portion of their reserves. The Chinese are also very interested in the Islamic Gold Dinar and the possibility of backing the Yuan with gold. This could set the stage for Asian countries to be gold based in an era that the Western Nations maintain a fiat currency system.
We believe that the gold movements in the Islamic countries and China are largely being ignored in the Western nations because it has not as yet become significant. But the day of reckoning may be looming closer as the potential for a huge surge in demand from 1.3 billion Chinese and another 1.5 billion Muslims begins to take hold. India is already the world's largest consumer of Gold and if we add the potential in the Islamic countries plus China there would be two further demands for gold (and silver). One demand would be in the traditional commodity sense for jewellery and the other for monetary purposes in an area of the world that holds over half the world's population. None of this would be positive for the US$ currently the world's reserve currency.
The current weakness in gold (silver) is being driven by the desire of the Europeans and the Japanese to slow the advance of their currencies against the US$. This is temporary as each of them are in a race to the bottom in currency devaluation. But this correction is one that could last into the second quarter 2004. We have targets of at least $400 on Gold and possibly as low as $390 so investors may wish to be patient before jumping back into the gold market.
3) The e-dinar system is designed to be absolutely free of any financial risk. There can be no debt, contingent liabilities or exchange risk associated with e-dinar. Pursuant to the e-dinar Account Agreement, the physical bullion that comprises the value backing e-dinar must be insulated from physical, legal and political risks. Title is held by The e-gold/e-dinar Bullion Reserve Special Purpose Trust, a Special Purpose Trust in Bermuda that exists for the express purpose of holding bullion for the exclusive benefit of all e-dinar and e-gold account holders collectively. The bullion is held in the form of certified good delivery bars in allocated storage at the Transguard Storage Company in Dubai, UAE. Metal is held free of any lien or encumbrance whatsoever and explicitly may not be attached related to any liabilities of e-dinar Ltd./e-gold Ltd. or any other entity. No metal may be removed from storage or any other disposition made without the signatures of e-gold Ltd, e-dinar Ltd. and a third party Escrow Agent.
e-dinar FAQ
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