Sunday, July 1, 2018

News Note: Keith Weiner Says "A Government is Moving Towards Issuing Gold Bonds"

Earlier on this blog we featured a speech by Dr. Judy Shelton where she called for government issued gold backed bonds. Dr. Shelton is now working in the Trump Administration as Executive Director for the European Bank for Reconstruction and Development. 

Given this history, this new article by Keith Weiner is worth noting. Mr. Weiner is a strong advocate of precious metals. In his new article, he makes what appears to be a startling statement indicating he is aware of a government "moving towards issuing gold bonds." He does not identify the government, but does imply that this news will become public in the not too distant future. Below are a couple of brief excerpts from the article and then a few added comments. (I added bold for emphasis)

"A gold bond is debt obligation that is denominated in gold, with interest and principal paid in gold. As I will explain below, it’s a way for the issuer to pay off its debt in full, and there are other advantages."

. . . . . .

"There has not been a gold bond in the U.S. for 85 years. Yet a government (which I will be able to talk about soon) is moving towards issuing gold bonds. I have written tens of thousands of words on the benefits of gold bonds to investors. Today, in light of this impending momentous event, I am writing about the benefits to the issuer of the bond, including government issuers. There are also benefits to mining companies within such government jurisdiction."

. . . . . .

"Let me address a common misconception up front. Many tend to think of a “gold backed” bond. That’s just a conventional dollar bond with gold as collateral. It’s a way to use gold to go deeper into debt, and I won’t address it further."

. . . . . .

"Fortunately, there is an elegant mechanism to get out of debt. Sell the gold bond, not for dollars or for gold, but for conventional bonds. Require buyers to redeem outstanding bonds in exchange for new gold bonds. It’s a way to replace existing dollar-denominated bonds with gold bonds."

My added comments: Just for confirmation, I reached out to Keith Weiner by email to make sure he is talking about a specific government issuing an actual gold bond. He replied as follows for confirmation:

"Thank you for your email.
I can confirm that I am working with a specific government on issuance of a gold bond.
This article is the first in a series. More next week."

Mr. Weiner also passed along this information by email:
By the way, here is the original paper I wrote on gold bonds in 2012:

Best Regards,

Here we may finally have some news that I would view as significant in terms of some potential disruption to the current monetary system. By no means would a single government issuing the kind of gold bonds described here be a complete uprooting of the current monetary system. 

However, if this news is accurate and a sovereign government does issue a gold bond like this, we do have some news to pay attention to. It will be interesting to see what government is involved. 

We should keep in mind that as we noted above, Dr. Judy Shelton has proposed that the US should begin to issue gold backed bonds on a trial basis. I had a brief twitter exchange with Dr. Shelton on this back in May of 2017. I am not clear on whether the gold backed bond Dr. Shelton talked about is the same as the gold bond described by Keith Weiner (a bond denominated in gold and paid off with gold as well as interest payments made in gold). 

Regardless of the details of how a government issued gold bond might work, if a sovereign government is about to issue one it could lead to a shakeup in the monetary system if the bonds are successful. Keith Weiner explains why this is the case in his article and he confirms to me by email that we should know more soon.

I would encourage readers to read through this information. I plan to monitor this to see what happens and will report that here.

Added note 6-29-18: So how important does Keith Weiner believe this news is regarding a government issued gold bond? Apparently, pretty important per this new twitter comment.

News note update 7-2-18: It appears from this news release that it is the state of Nevada that is introducing a bill to allow both gold and silver bonds to be issues. I will publish the full news release and some followup later this month. While some were probably expecting that the government involved with this would be a country rather than a state, it should be noted that Nevada has a huge world class gold and silver mining industry larger than many nations around the world. So it makes sense for this experiment to be tested out in Nevada.

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